Texas 2023 - 88th Regular

Texas House Bill HB2989 Compare Versions

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1	1	88R1349 RDS-D
2	2	By: Metcalf H.B. No. 2989
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to a limitation on increases in the appraised value of
8	8	certain commercial real property for ad valorem tax purposes.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 1.12(d), Tax Code, is amended to read as
11	11	follows:
12	12	(d) For purposes of this section, the appraisal ratio of a
13	13	homestead to which Section 23.23 applies or of commercial real
14	14	property to which Section 23.231 applies is the ratio of the
15	15	property's market value as determined by the appraisal district or
16	16	appraisal review board, as applicable, to the market value of the
17	17	property according to law. The appraisal ratio is not calculated
18	18	according to the appraised value of the property as limited by
19	19	Section 23.23 or 23.231.
20	20	SECTION 2. Subchapter B, Chapter 23, Tax Code, is amended by
21	21	adding Section 23.231 to read as follows:
22	22	Sec. 23.231. LIMITATION ON APPRAISED VALUE OF CERTAIN
23	23	COMMERCIAL REAL PROPERTY. (a) In this section:
24	24	(1) "Commercial real property" means real property
25	25	that is held or used for the production of income.
26	26	(2) "Disaster recovery program" means a disaster
27	27	recovery program funded with community development block grant
28	28	disaster recovery money authorized by federal law.
29	29	(3) "New improvement" means an improvement to
30	30	commercial real property made after the most recent appraisal of
31	31	the property that increases the market value of the property and the
32	32	value of which is not included in the appraised value of the
33	33	property for the preceding tax year. The term does not include
34	34	repairs to or ordinary maintenance of an existing structure or the
35	35	grounds or another feature of the property.
36	36	(b) This section applies only to a parcel of commercial real
37	37	property with a market value of $10 million or less for the tax year
38	38	in which the limitation provided by Subsection (d) takes effect as
39	39	to the property.
40	40	(c) This section does not apply to property appraised under
41	41	Subchapter C, D, E, F, G, or H.
42	42	(d) Notwithstanding the requirements of Section 25.18 and
43	43	regardless of whether the appraisal office has appraised the
44	44	property and determined the market value of the property for the tax
45	45	year, an appraisal office may increase the appraised value of a
46	46	parcel of commercial real property for a tax year to an amount not
47	47	to exceed the lesser of:
48	48	(1) the market value of the property for the most
49	49	recent tax year that the market value was determined by the
50	50	appraisal office; or
51	51	(2) the sum of:
52	52	(A) 10 percent of the appraised value of the
53	53	property for the preceding tax year;
54	54	(B) the appraised value of the property for the
55	55	preceding tax year; and
56	56	(C) the market value of all new improvements to
57	57	the property.
58	58	(e) When appraising a parcel of commercial real property,
59	59	the chief appraiser shall:
60	60	(1) appraise the property at its market value; and
61	61	(2) include in the appraisal records both the market
62	62	value of the property and the amount computed under Subsection
63	63	(d)(2).
64	64	(f) The limitation provided by Subsection (d) takes effect
65	65	as to a parcel of commercial real property on January 1 of the tax
66	66	year following the first tax year in which the owner owns the
67	67	property on January 1 and in which the property meets the definition
68	68	of commercial real property. The limitation expires on January 1 of
69	69	the tax year following the first tax year in which the owner of the
70	70	property ceases to own the property or the property no longer meets
71	71	the definition of commercial real property.
72	72	(g) For purposes of Subsection (f), a person who acquired a
73	73	parcel of commercial real property before the 2023 tax year is
74	74	considered to have acquired the property on January 1, 2023.
75	75	(h) Notwithstanding Subsections (a)(3) and (d) and except
76	76	as provided by Subdivision (2) of this subsection, an improvement
77	77	to property that would otherwise constitute a new improvement is
78	78	not treated as a new improvement if the improvement is a replacement
79	79	structure for a structure that was rendered unusable by a casualty
80	80	or by wind or water damage. For purposes of appraising the property
81	81	under Subsection (d) in the tax year in which the structure would
82	82	have constituted a new improvement:
83	83	(1) the appraised value the property would have had in
84	84	the preceding tax year if the casualty or damage had not occurred is
85	85	considered to be the appraised value of the property for that year,
86	86	regardless of whether that appraised value exceeds the actual
87	87	appraised value of the property for that year as limited by
88	88	Subsection (d); and
89	89	(2) the replacement structure is considered to be a
90	90	new improvement only if:
91	91	(A) the square footage of the replacement
92	92	structure exceeds that of the replaced structure as that structure
93	93	existed before the casualty or damage occurred; or
94	94	(B) the exterior of the replacement structure is
95	95	of higher quality construction and composition than that of the
96	96	replaced structure.
97	97	(i) Notwithstanding Subsection (h)(2), and only to the
98	98	extent necessary to satisfy the requirements of a disaster recovery
99	99	program, a replacement structure described by that subdivision is
100	100	not considered to be a new improvement if to satisfy the
101	101	requirements of the disaster recovery program it was necessary
102	102	that:
103	103	(1) the square footage of the replacement structure
104	104	exceed that of the replaced structure as that structure existed
105	105	before the casualty or damage occurred; or
106	106	(2) the exterior of the replacement structure be of
107	107	higher quality construction and composition than that of the
108	108	replaced structure.
109	109	SECTION 3. Sections 25.19(b) and (g), Tax Code, are amended
110	110	to read as follows:
111	111	(b) The chief appraiser shall separate real from personal
112	112	property and include in the notice for each:
113	113	(1) a list of the taxing units in which the property is
114	114	taxable;
115	115	(2) the appraised value of the property in the
116	116	preceding year;
117	117	(3) the taxable value of the property in the preceding
118	118	year for each taxing unit taxing the property;
119	119	(4) the appraised value of the property for the
120	120	current year, the kind and amount of each exemption and partial
121	121	exemption, if any, approved for the property for the current year
122	122	and for the preceding year, and, if an exemption or partial
123	123	exemption that was approved for the preceding year was canceled or
124	124	reduced for the current year, the amount of the exemption or partial
125	125	exemption canceled or reduced;
126	126	(4-a) a statement of whether the property qualifies for
127	127	the limitation on appraised value provided by Section 23.231;
128	128	(5) in italic typeface, the following statement: "The
129	129	Texas Legislature does not set the amount of your local taxes. Your
130	130	property tax burden is decided by your locally elected officials,
131	131	and all inquiries concerning your taxes should be directed to those
132	132	officials";
133	133	(6) a detailed explanation of the time and procedure
134	134	for protesting the value;
135	135	(7) the date and place the appraisal review board will
136	136	begin hearing protests;
137	137	(8) an explanation of the availability and purpose of
138	138	an informal conference with the appraisal office before a hearing
139	139	on a protest; and
140	140	(9) a brief explanation that the governing body of
141	141	each taxing unit decides whether or not taxes on the property will
142	142	increase and the appraisal district only determines the value of
143	143	the property.
144	144	(g) By April 1 or as soon thereafter as practicable if the
145	145	property is a single-family residence that qualifies for an
146	146	exemption under Section 11.13, or by May 1 or as soon thereafter as
147	147	practicable in connection with any other property, the chief
148	148	appraiser shall deliver a written notice to the owner of each
149	149	property not included in a notice required to be delivered under
150	150	Subsection (a), if the property was reappraised in the current tax
151	151	year, if the ownership of the property changed during the preceding
152	152	year, or if the property owner or the agent of a property owner
153	153	authorized under Section 1.111 makes a written request for the
154	154	notice. The chief appraiser shall separate real from personal
155	155	property and include in the notice for each property:
156	156	(1) the appraised value of the property in the
157	157	preceding year;
158	158	(2) the appraised value of the property for the
159	159	current year and the kind of each partial exemption, if any,
160	160	approved for the current year;
161	161	(2-a) a statement of whether the property qualifies
162	162	for the limitation on appraised value provided by Section 23.231;
163	163	(3) a detailed explanation of the time and procedure
164	164	for protesting the value; and
165	165	(4) the date and place the appraisal review board will
166	166	begin hearing protests.
167	167	SECTION 4. Section 41.41(a), Tax Code, is amended to read as
168	168	follows:
169	169	(a) A property owner is entitled to protest before the
170	170	appraisal review board the following actions:
171	171	(1) determination of the appraised value of the
172	172	owner's property or, in the case of land appraised as provided by
173	173	Subchapter C, D, E, or H, Chapter 23, determination of its appraised
174	174	or market value;
175	175	(2) unequal appraisal of the owner's property;
176	176	(3) inclusion of the owner's property on the appraisal
177	177	records;
178	178	(4) denial to the property owner in whole or in part of
179	179	a partial exemption;
180	180	(4-a) determination that the owner's property does not
181	181	qualify for the limitation on appraised value provided by Section
182	182	23.231;
183	183	(5) determination that the owner's land does not
184	184	qualify for appraisal as provided by Subchapter C, D, E, or H,
185	185	Chapter 23;
186	186	(6) identification of the taxing units in which the
187	187	owner's property is taxable in the case of the appraisal district's
188	188	appraisal roll;
189	189	(7) determination that the property owner is the owner
190	190	of property;
191	191	(8) a determination that a change in use of land
192	192	appraised under Subchapter C, D, E, or H, Chapter 23, has occurred;
193	193	or
194	194	(9) any other action of the chief appraiser, appraisal
195	195	district, or appraisal review board that applies to and adversely
196	196	affects the property owner.
197	197	SECTION 5. Section 42.26(d), Tax Code, is amended to read as
198	198	follows:
199	199	(d) For purposes of this section, the value of the property
200	200	subject to the suit and the value of a comparable property or sample
201	201	property that is used for comparison must be the market value
202	202	determined by the appraisal district when the property is [a
203	203	residence homestead] subject to the limitation on appraised value
204	204	imposed by Section 23.23 or 23.231.
205	205	SECTION 6. Sections 403.302(d) and (i), Government Code,
206	206	are amended to read as follows:
207	207	(d) For the purposes of this section, "taxable value" means
208	208	the market value of all taxable property less:
209	209	(1) the total dollar amount of any residence homestead
210	210	exemptions lawfully granted under Section 11.13(b) or (c), Tax
211	211	Code, in the year that is the subject of the study for each school
212	212	district;
213	213	(2) one-half of the total dollar amount of any
214	214	residence homestead exemptions granted under Section 11.13(n), Tax
215	215	Code, in the year that is the subject of the study for each school
216	216	district;
217	217	(3) the total dollar amount of any exemptions granted
218	218	before May 31, 1993, within a reinvestment zone under agreements
219	219	authorized by Chapter 312, Tax Code;
220	220	(4) subject to Subsection (e), the total dollar amount
221	221	of any captured appraised value of property that:
222	222	(A) is within a reinvestment zone created on or
223	223	before May 31, 1999, or is proposed to be included within the
224	224	boundaries of a reinvestment zone as the boundaries of the zone and
225	225	the proposed portion of tax increment paid into the tax increment
226	226	fund by a school district are described in a written notification
227	227	provided by the municipality or the board of directors of the zone
228	228	to the governing bodies of the other taxing units in the manner
229	229	provided by former Section 311.003(e), Tax Code, before May 31,
230	230	1999, and within the boundaries of the zone as those boundaries
231	231	existed on September 1, 1999, including subsequent improvements to
232	232	the property regardless of when made;
233	233	(B) generates taxes paid into a tax increment
234	234	fund created under Chapter 311, Tax Code, under a reinvestment zone
235	235	financing plan approved under Section 311.011(d), Tax Code, on or
236	236	before September 1, 1999; and
237	237	(C) is eligible for tax increment financing under
238	238	Chapter 311, Tax Code;
239	239	(5) the total dollar amount of any captured appraised
240	240	value of property that:
241	241	(A) is within a reinvestment zone:
242	242	(i) created on or before December 31, 2008,
243	243	by a municipality with a population of less than 18,000; and
244	244	(ii) the project plan for which includes
245	245	the alteration, remodeling, repair, or reconstruction of a
246	246	structure that is included on the National Register of Historic
247	247	Places and requires that a portion of the tax increment of the zone
248	248	be used for the improvement or construction of related facilities
249	249	or for affordable housing;
250	250	(B) generates school district taxes that are paid
251	251	into a tax increment fund created under Chapter 311, Tax Code; and
252	252	(C) is eligible for tax increment financing under
253	253	Chapter 311, Tax Code;
254	254	(6) the total dollar amount of any exemptions granted
255	255	under Section 11.251 or 11.253, Tax Code;
256	256	(7) the difference between the comptroller's estimate
257	257	of the market value and the productivity value of land that
258	258	qualifies for appraisal on the basis of its productive capacity,
259	259	except that the productivity value estimated by the comptroller may
260	260	not exceed the fair market value of the land;
261	261	(8) the portion of the appraised value of residence
262	262	homesteads of individuals who receive a tax limitation under
263	263	Section 11.26, Tax Code, on which school district taxes are not
264	264	imposed in the year that is the subject of the study, calculated as
265	265	if the residence homesteads were appraised at the full value
266	266	required by law;
267	267	(9) a portion of the market value of property not
268	268	otherwise fully taxable by the district at market value because of
269	269	action required by statute or the constitution of this state, other
270	270	than Section 11.311, Tax Code, that, if the tax rate adopted by the
271	271	district is applied to it, produces an amount equal to the
272	272	difference between the tax that the district would have imposed on
273	273	the property if the property were fully taxable at market value and
274	274	the tax that the district is actually authorized to impose on the
275	275	property, if this subsection does not otherwise require that
276	276	portion to be deducted;
277	277	(10) the market value of all tangible personal
278	278	property, other than manufactured homes, owned by a family or
279	279	individual and not held or used for the production of income;
280	280	(11) the appraised value of property the collection of
281	281	delinquent taxes on which is deferred under Section 33.06, Tax
282	282	Code;
283	283	(12) the portion of the appraised value of property
284	284	the collection of delinquent taxes on which is deferred under
285	285	Section 33.065, Tax Code;
286	286	(13) the amount by which the market value of property
287	287	[a residence homestead] to which Section 23.23 or 23.231, Tax Code,
288	288	applies exceeds the appraised value of that property as calculated
289	289	under Section 23.23 or 23.231, Tax Code, as applicable [that
290	290	section]; and
291	291	(14) the total dollar amount of any exemptions granted
292	292	under Section 11.35, Tax Code.
293	293	(i) If the comptroller determines in the study that the
294	294	market value of property in a school district as determined by the
295	295	appraisal district that appraises property for the school district,
296	296	less the total of the amounts and values listed in Subsection (d) as
297	297	determined by that appraisal district, is valid, the comptroller,
298	298	in determining the taxable value of property in the school district
299	299	under Subsection (d), shall for purposes of Subsection (d)(13)
300	300	subtract from the market value as determined by the appraisal
301	301	district of properties [residence homesteads] to which Section
302	302	23.23 or 23.231, Tax Code, applies the amount by which that amount
303	303	exceeds the appraised value of those properties as calculated by
304	304	the appraisal district under Section 23.23 or 23.231, Tax Code, as
305	305	applicable. If the comptroller determines in the study that the
306	306	market value of property in a school district as determined by the
307	307	appraisal district that appraises property for the school district,
308	308	less the total of the amounts and values listed in Subsection (d) as
309	309	determined by that appraisal district, is not valid, the
310	310	comptroller, in determining the taxable value of property in the
311	311	school district under Subsection (d), shall for purposes of
312	312	Subsection (d)(13) subtract from the market value as estimated by
313	313	the comptroller of properties [residence homesteads] to which
314	314	Section 23.23 or 23.231, Tax Code, applies the amount by which that
315	315	amount exceeds the appraised value of those properties as
316	316	calculated by the appraisal district under Section 23.23 or 23.231,
317	317	Tax Code, as applicable.
318	318	SECTION 7. This Act applies only to the appraisal of
319	319	commercial real property for ad valorem tax purposes for a tax year
320	320	that begins on or after the effective date of this Act.
321	321	SECTION 8. This Act takes effect January 1, 2024, but only
322	322	if the constitutional amendment proposed by the 88th Legislature,
323	323	Regular Session, 2023, to authorize the legislature to limit the
324	324	maximum appraised value of certain commercial real property for ad
325	325	valorem tax purposes is approved by the voters. If that amendment
326	326	is not approved by the voters, this Act has no effect.