H.B. No. 3833
AN ACT
relating to the appraisal of certain real property for ad valorem
tax purposes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 23.215, Tax Code, is amended to read as
follows:
Sec. 23.215. APPRAISAL OF CERTAIN NONEXEMPT PROPERTY USED
FOR LOW-INCOME OR MODERATE-INCOME HOUSING. (a) This section
applies only to real property owned by an organization:
(1) for the purpose of renting the property [that on
the effective date of this section was rented] to a low-income or
moderate-income individual or family satisfying the organization's
income eligibility requirements [and that continues to be used for
that purpose];
(2) that is or will be [was] financed under the low
income housing tax credit program under Subchapter DD, Chapter
2306, Government Code, and subject to a land use restriction
agreement under that subchapter;
(3) that does not receive an exemption under Section
11.182 or 11.1825; and
(4) the owner of which has not entered into an
agreement with any taxing unit to make payments to the taxing unit
instead of taxes on the property.
(b) In appraising property that is under construction or
that has not reached stabilized occupancy on January 1 of the tax
year in which the property is appraised, the [The] chief appraiser
shall determine the value of [appraise] the property in the manner
provided by Section 11.1825(q) using the property's projected
income and expenses for the first full year of operation as
established and utilized in the underwriting report pertaining to
the property prepared by the Texas Department of Housing and
Community Affairs under Subchapter DD, Chapter 2306, Government
Code, and adjust that value as provided by this subsection to
determine the appraised value of the property. For a property under
construction on January 1, the chief appraiser shall adjust the
value to reflect the percentage of the construction that is
complete on January 1. For a property on which construction is
complete but that has not reached stabilized occupancy on January
1, the chief appraiser shall adjust the value to reflect the actual
occupancy of the property on January 1. For purposes of this
subsection, a property is not considered to be under construction
if the purpose of the work being performed on the property is the
maintenance or rehabilitation of the property.
(c) In appraising property for the first tax year following
the year in which construction on the property is complete and
occupancy of the property has stabilized and any tax year
subsequent to that year, the chief appraiser shall determine the
appraised value of the property in the manner provided by Section
11.1825(q).
SECTION 2. Sections 23.55(a), (b), (e), (f), (m), and (n),
Tax Code, are amended to read as follows:
(a) If the use of land that has been appraised as provided by
this subchapter changes, an additional tax is imposed on the land
equal to the difference between the taxes imposed on the land for
each of the three years preceding the year in which the change of
use occurs that the land was appraised as provided by this
subchapter and the tax that would have been imposed had the land
been taxed on the basis of market value in each of those years[,
plus interest at an annual rate of five percent calculated from the
dates on which the differences would have become due]. For purposes
of this subsection, the chief appraiser may not consider any period
during which land is owned by the state in determining whether a
change in the use of the land has occurred.
(b) A tax lien attaches to the land on the date the change of
use occurs to secure payment of the additional tax [and interest]
imposed by this section and any penalties and interest incurred if
the tax becomes delinquent. The lien exists in favor of all taxing
units for which the additional tax is imposed.
(e) Subject to Section 23.551, a determination that a change
in use of the land has occurred is made by the chief appraiser. The
chief appraiser shall deliver a notice of the determination to the
owner of the land as soon as possible after making the determination
and shall include in the notice an explanation of the owner's right
to protest the determination. If the owner does not file a timely
protest or if the final determination of the protest is that the
additional taxes are due, the assessor for each taxing unit shall
prepare and deliver a bill for the additional taxes [plus interest]
as soon as practicable. The taxes [and interest] are due and
become delinquent and incur penalties and interest as provided by
law for ad valorem taxes imposed by the taxing unit if not paid
before the next February 1 that is at least 20 days after the date
the bill is delivered to the owner of the land.
(f) The sanctions provided by Subsection (a) [of this
section] do not apply if the change of use occurs as a result of:
(1) a sale for right-of-way;
(2) a condemnation;
(3) a transfer of the property to the state or a
political subdivision of the state to be used for a public purpose;
or
(4) a transfer of the property from the state, a
political subdivision of the state, or a nonprofit corporation
created by a municipality with a population of more than one million
under the Development Corporation Act (Subtitle C1, Title 12, Local
Government Code) to an individual or a business entity for purposes
of economic development if the comptroller determines that the
economic development is likely to generate for deposit in the
general revenue fund during the next two fiscal bienniums an amount
of taxes and other revenues that equals or exceeds 20 times the
amount of additional taxes [and interest] that would have been
imposed under Subsection (a) had the sanctions provided by that
subsection applied to the transfer.
(m) For purposes of determining whether a transfer of land
qualifies for the exemption from additional taxes provided by
Subsection (f)(4), on an application of the entity transferring or
proposing to transfer the land or of the individual or entity to
which the land is transferred or proposed to be transferred, the
comptroller shall determine the amount of taxes and other revenues
likely to be generated as a result of the economic development for
deposit in the general revenue fund during the next two fiscal
bienniums. If the comptroller determines that the amount of those
revenues is likely to equal or exceed 20 times the amount of
additional taxes [and interest] that would be imposed under
Subsection (a) if the sanctions provided by that subsection applied
to the transfer, the comptroller shall issue a letter to the
applicant stating the comptroller's determination and shall send a
copy of the letter by regular mail to the chief appraiser.
(n) Within one year of the conclusion of the two fiscal
bienniums for which the comptroller issued a letter as provided
under Subsection (m), the board of directors of the appraisal
district, by official board action, may direct the chief appraiser
to request the comptroller to determine if the amount of revenues
was equal to or exceeded 20 times the amount of taxes [and interest]
that would have been imposed under Subsection (a). The comptroller
shall issue a finding as to whether the amount of revenue met the
projected increases. The chief appraiser shall review the results
of the comptroller's finding and shall make a determination as to
whether sanctions under Subsection (a) should be imposed. If the
chief appraiser determines that the sanctions provided by
Subsection (a) shall be imposed, the sanctions shall be based on the
date of the transfer of the property under Subsection (f)(4).
SECTION 3. Sections 23.58(c) and (d), Tax Code, are amended
to read as follows:
(c) A provision in an instrument pertaining to a loan
secured by a lien in favor of the lender on land appraised according
to this subchapter that requires the borrower to make a payment to
protect the lender from loss because of the imposition of
additional taxes [and interest] under Section 23.55 is void unless
the provision:
(1) requires the borrower to pay into an escrow
account established by the lender an amount equal to the additional
taxes [and interest] that would be due under Section 23.55 if a
change of use occurred on January 1 of the year in which the loan is
granted or amended;
(2) requires the escrow account to bear interest to be
credited to the account monthly;
(3) permits the lender to apply money in the escrow
account to the payment of a bill for additional taxes [and interest]
under Section 23.55 before the loan is paid and requires the lender
to refund the balance remaining in the escrow account after the bill
is paid to the borrower; and
(4) requires the lender to refund the money in the
escrow account to the borrower on the payment of the loan.
(d) On the request of the borrower or the borrower's
representative, the assessor for each taxing unit shall compute the
additional taxes [and interest] that would be due that taxing unit
under Section 23.55 if a change of use occurred on January 1 of the
year in which the loan is granted or amended. The assessor may
charge a reasonable fee not to exceed the actual cost of making the
computation.
SECTION 4. Sections 23.76(a), (b), and (e), Tax Code, are
amended to read as follows:
(a) If the use of land that has been appraised as provided by
this subchapter changes, an additional tax is imposed on the land
equal to the difference between the taxes imposed on the land for
each of the three years preceding the year in which the change of
use occurs that the land was appraised as provided by this
subchapter and the tax that would have been imposed had the land
been taxed on the basis of market value in each of those years[,
plus interest at an annual rate of five percent calculated from the
dates on which the differences would have become due].
(b) A tax lien attaches to the land on the date the change of
use occurs to secure payment of the additional tax [and interest]
imposed by this section and any penalties and interest incurred if
the tax becomes delinquent. The lien exists in favor of all taxing
units for which the additional tax is imposed.
(e) A determination that a change in use of the land has
occurred is made by the chief appraiser. The chief appraiser shall
deliver a notice of the determination to the owner of the land as
soon as possible after making the determination and shall include
in the notice an explanation of the owner's right to protest the
determination. If the owner does not file a timely protest or if
the final determination of the protest is that the additional taxes
are due, the assessor for each taxing unit shall prepare and deliver
a bill for the additional taxes [and interest] as soon as
practicable after the change of use occurs. The taxes [and
interest] are due and become delinquent and incur penalties and
interest as provided by law for ad valorem taxes imposed by the
taxing unit if not paid before the next February 1 that is at least
20 days after the date the bill is delivered to the owner of the
land.
SECTION 5. Sections 23.86(a) and (b), Tax Code, are amended
to read as follows:
(a) If land that has been appraised under this subchapter is
no longer subject to a deed restriction or is diverted to a use
other than recreational, park, or scenic uses, an additional tax is
imposed on the land equal to the difference between the taxes
imposed on the land for each of the three [five] years preceding the
year in which the change of use occurs or the deed restriction
expires that the land was appraised as provided by this subchapter
and the tax that would have been imposed had the land not been
restricted to recreational, park, or scenic uses in each of those
years[, plus interest at an annual rate of seven percent calculated
from the dates on which the differences would have become due].
(b) A tax lien attaches to the land on the date the change of
use occurs or the deed restriction expires to secure payment of the
additional tax [and interest] imposed by this section and any
penalties and interest incurred if the tax becomes delinquent. The
lien exists in favor of all taxing units for which the additional
tax is imposed.
SECTION 6. Sections 23.96(a) and (b), Tax Code, are amended
to read as follows:
(a) If airport property that has been appraised under this
subchapter is no longer subject to a deed restriction, an
additional tax is imposed on the property equal to the difference
between the taxes imposed on the property for each of the three
[five] years preceding the year in which the deed restriction
expires that the property was appraised as provided by this
subchapter and the tax that would have been imposed had the property
not been restricted to use as public access airport property in each
of those years[, plus interest at an annual rate of seven percent
calculated from the dates on which the differences would have
become due].
(b) A tax lien attaches to the property on the date the deed
restriction expires to secure payment of the additional tax [and
interest] imposed by this section and any penalties and interest
incurred if the tax becomes delinquent. The lien exists in favor of
all taxing units for which the additional tax is imposed.
SECTION 7. Sections 23.9807(a), (b), (c), and (f), Tax
Code, are amended to read as follows:
(a) If the use of land that has been appraised as provided by
this subchapter changes to a use that qualifies the land for
appraisal under Subchapter E, an additional tax is imposed on the
land equal to [the sum of:
[(1)] the difference between:
(1) [(A)] the taxes imposed on the land for each of the
three [five] years preceding the year in which the change of use
occurs that the land was appraised as provided by this subchapter;
and
(2) [(B)] the taxes that would have been imposed had
the land been appraised under Subchapter E in each of those years[;
and
[(2) interest at an annual rate of seven percent
calculated from the dates on which the differences would have
become due].
(b) If the use of land that has been appraised as provided by
this subchapter changes to a use that does not qualify the land for
appraisal under Subchapter E or under this subchapter, an
additional tax is imposed on the land equal to [the sum of:
[(1)] the difference between:
(1) [(A)] the taxes imposed on the land for each of the
three [five] years preceding the year in which the change of use
occurs that the land was appraised as provided by this subchapter;
and
(2) [(B)] the taxes that would have been imposed had
the land been taxed on the basis of market value in each of those
years[; and
[(2) interest at an annual rate of seven percent
calculated from the dates on which the differences would have
become due].
(c) A tax lien attaches to the land on the date the change of
use occurs to secure payment of the additional tax [and interest]
imposed by this section and any penalties and interest incurred if
the tax becomes delinquent. The lien exists in favor of all taxing
units for which the additional tax is imposed.
(f) A determination that a change in use of the land has
occurred is made by the chief appraiser. The chief appraiser shall
deliver a notice of the determination to the owner of the land as
soon as possible after making the determination and shall include
in the notice an explanation of the owner's right to protest the
determination. If the owner does not file a timely protest or if
the final determination of the protest is that the additional taxes
are due, the assessor for each taxing unit shall prepare and deliver
a bill for the additional taxes [and interest] as soon as
practicable after the change of use occurs. The taxes [and
interest] are due and become delinquent and incur penalties and
interest as provided by law for ad valorem taxes imposed by the
taxing unit if not paid before the next February 1 that is at least
20 days after the date the bill is delivered to the owner of the
land.
SECTION 8. The change in law made by Section 23.215, Tax
Code, as amended by this Act, applies only to an ad valorem tax year
that begins on or after January 1, 2022.
SECTION 9. Section 23.55, Tax Code, as amended by this Act,
applies only to a change of use of land appraised under Subchapter
D, Chapter 23, Tax Code, that occurs on or after the effective date
of this Act.
SECTION 10. Section 23.58, Tax Code, as amended by this Act,
applies only to a loan secured by a lien on open-space land that is
contracted for on or after the effective date of this Act.
SECTION 11. Section 23.76, Tax Code, as amended by this Act,
applies only to a change of use of land appraised under Subchapter
E, Chapter 23, Tax Code, that occurs on or after the effective date
of this Act.
SECTION 12. Section 23.86, Tax Code, as amended by this Act,
applies only to a change of use of land appraised under Subchapter
F, Chapter 23, Tax Code, that occurs on or after the effective date
of this Act.
SECTION 13. Section 23.96, Tax Code, as amended by this Act,
applies only to a change of use of land appraised under Subchapter
G, Chapter 23, Tax Code, that occurs on or after the effective date
of this Act.
SECTION 14. Section 23.9807, Tax Code, as amended by this
Act, applies only to a change of use of land appraised under
Subchapter H, Chapter 23, Tax Code, that occurs on or after the
effective date of this Act.
SECTION 15. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2021.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3833 was passed by the House on May 8,
2021, by the following vote: Yeas 136, Nays 2, 1 present, not
voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 3833 was passed by the Senate on May
27, 2021, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor