88R1655 RDS-F
By: Hefner H.B. No. 3691
A BILL TO BE ENTITLED
AN ACT
relating to the exemption from ad valorem taxation of certain
property owned by a charitable organization that is engaged in
providing housing and related facilities and services to persons
who are at least 62 years of age.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 11.18(d), Tax Code, is amended to read as
follows:
(d) A charitable organization must be organized exclusively
to perform religious, charitable, scientific, literary, or
educational purposes and, except as permitted by Subsections (h)
and (l), engage exclusively in performing one or more of the
following charitable functions:
(1) providing medical care without regard to the
beneficiaries' ability to pay, which in the case of a nonprofit
hospital or hospital system means providing charity care and
community benefits in accordance with Section 11.1801;
(2) providing support or relief to orphans, delinquent
or [,] dependent[, or handicapped] children in need of residential
care, children with disabilities in need of residential care,
abused or battered spouses or children in need of temporary
shelter, the impoverished, or victims of natural disaster without
regard to the beneficiaries' ability to pay;
(3) providing support without regard to the
beneficiaries' ability to pay to:
(A) elderly persons, including the provision of:
(i) recreational or social activities; and
(ii) facilities designed to address the
special needs of elderly persons; or
(B) persons with disabilities [the handicapped],
including training and employment:
(i) in the production of commodities; or
(ii) in the provision of services under 41
U.S.C. Sections 8501-8506;
(4) preserving a historical landmark or site;
(5) promoting or operating a museum, zoo, library,
theater of the dramatic or performing arts, or symphony orchestra
or choir;
(6) promoting or providing humane treatment of
animals;
(7) acquiring, storing, transporting, selling, or
distributing water for public use;
(8) answering fire alarms and extinguishing fires with
no compensation or only nominal compensation to the members of the
organization;
(9) promoting the athletic development of boys or
girls under the age of 18 years;
(10) preserving or conserving wildlife;
(11) promoting educational development through loans
or scholarships to students;
(12) providing halfway house services pursuant to a
certification as a halfway house by the parole division of the Texas
Department of Criminal Justice;
(13) providing permanent housing and related social,
health care, and educational facilities for persons who are 62
years of age or older:
(A) without regard to the residents' ability to
pay; or
(B) as an organization described by Section
11.1802;
(14) promoting or operating an art gallery, museum, or
collection, in a permanent location or on tour, that is open to the
public;
(15) providing for the organized solicitation and
collection for distributions through gifts, grants, and agreements
to nonprofit charitable, education, religious, and youth
organizations that provide direct human, health, and welfare
services;
(16) performing biomedical or scientific research or
biomedical or scientific education for the benefit of the public;
(17) operating a television station that produces or
broadcasts educational, cultural, or other public interest
programming and that receives grants from the Corporation for
Public Broadcasting under 47 U.S.C. Section 396, as amended;
(18) providing housing for low-income and
moderate-income families, for unmarried individuals 62 years of age
or older, for [handicapped] individuals with disabilities, and for
families displaced by urban renewal, through the use of trust
assets that are irrevocably and, pursuant to a contract entered
into before December 31, 1972, contractually dedicated on the sale
or disposition of the housing to a charitable organization that
performs charitable functions described by Subdivision (9);
(19) providing housing and related services to persons
who are 62 years of age or older in a retirement community, if the
retirement community provides independent living services,
assisted living services, and nursing services to its residents on
a single campus:
(A) without regard to the residents' ability to
pay; [or]
(B) in which at least four percent of the
retirement community's combined net resident revenue is provided in
charitable care to its residents; or
(C) as an organization described by Section
11.1802;
(20) providing housing on a cooperative basis to
students of an institution of higher education if:
(A) the organization is exempt from federal
income taxation under Section 501(a), Internal Revenue Code of
1986, as amended, by being listed as an exempt entity under Section
501(c)(3) of that code;
(B) membership in the organization is open to all
students enrolled in the institution and is not limited to those
chosen by current members of the organization;
(C) the organization is governed by its members;
and
(D) the members of the organization share the
responsibility for managing the housing;
(21) acquiring, holding, and transferring unimproved
real property under an urban land bank demonstration program
established under Chapter 379C, Local Government Code, as or on
behalf of a land bank;
(22) acquiring, holding, and transferring unimproved
real property under an urban land bank program established under
Chapter 379E, Local Government Code, as or on behalf of a land bank;
(23) providing housing and related services to
individuals who:
(A) are unaccompanied and homeless and have a
disabling condition; and
(B) have been continuously homeless for a year or
more or have had at least four episodes of homelessness in the
preceding three years;
(24) operating a radio station that broadcasts
educational, cultural, or other public interest programming,
including classical music, and that in the preceding five years has
received or been selected to receive one or more grants from the
Corporation for Public Broadcasting under 47 U.S.C. Section 396, as
amended; or
(25) providing, without regard to the beneficiaries'
ability to pay, tax return preparation services and assistance with
other financial matters.
SECTION 2. Subchapter B, Chapter 11, Tax Code, is amended by
adding Section 11.1802 to read as follows:
Sec. 11.1802. REQUIREMENTS FOR CERTAIN CHARITABLE
ORGANIZATIONS PROVIDING HOUSING AND SERVICES TO THE ELDERLY. (a)
In this section:
(1) "Charitable housing and services" means the
following provided by a charitable organization to a person 62
years of age or older in financial need:
(A) housing, including as an independent living
facility, assisted living facility, or nursing facility; and
(B) any service designed to meet the unique needs
of a person 62 years of age or older, including:
(i) independent living services;
(ii) assisted living services;
(iii) nursing facility services;
(iv) social services;
(v) health services, including subsidized
health services;
(vi) services provided through a
government-sponsored program, including through Medicaid or
another federal, state, or local indigent health care program based
on financial need;
(vii) educational services; and
(viii) donations.
(2) "Net resident revenue" means a charitable
organization's total revenue from providing housing and services to
residents of a facility operated by the organization who are 62
years of age or older, less all allowances and discounts on
residents' accounts, including:
(A) debts that are in default;
(B) contractual adjustments;
(C) teaching allowances;
(D) policy discounts;
(E) administrative adjustments; and
(F) other deductions from revenue.
(3) "Very low-income" has the meaning assigned by 12
U.S.C. Section 1701q(k)(8).
(b) To qualify as a charitable organization under Section
11.18(d)(13)(B) or (19)(C), an organization must:
(1) except as provided by Subsection (c), provide
charitable housing and services in an unreimbursed amount that is
not less than four percent of the charitable organization's net
resident revenue;
(2) be located in a county with a population of less
than 58,000 in which the entire county or the population of the
entire county has been designated a health professionals shortage
area; or
(3) operate a housing development restricted to very
low-income persons who are 62 years of age or older.
(c) A charitable organization described by Subsection
(b)(1) of this section that qualified for an exemption under
Section 11.18(d)(13)(B) or (19)(C) in the preceding tax year and
otherwise qualifies for the exemption in the current tax year is
entitled to the exemption if the organization demonstrates that:
(1) a reduction in the amount of charitable housing
and services prescribed by Subsection (b)(1) is necessary:
(A) to maintain financial reserves at a level
required by a debt obligation;
(B) to prevent the organization from endangering
its ability to continue operating; or
(C) in response to a natural or other disaster;
or
(2) subject to Subsection (e), through unintended
miscalculation, the organization failed in the preceding tax year
to provide charitable housing and services in the amount prescribed
by Subsection (b)(1).
(d) Subject to Subsection (e), a charitable organization
that failed to provide charitable housing and services in the
preceding tax year in the amount prescribed by Subsection (b)(1) of
this section as described by Subsection (c)(2) of this section is
entitled to an exemption under Section 11.18(d)(13)(B) or (19)(C)
for the current tax year, but not for more than one tax year in each
five tax years.
(e) A charitable organization to which Subsection (d)
applies is not entitled to an exemption under Section
11.18(d)(13)(B) or (19)(C) in the tax year following the current
tax year unless the organization in the current tax year provides
charitable housing and services in an amount at least equal to the
sum of:
(1) the amount prescribed by Subsection (b)(1) for the
current tax year; and
(2) the amount for the preceding tax year by which the
organization failed to meet the requirement prescribed by
Subsection (b)(1).
(f) A charitable organization that fails to satisfy the
requirements prescribed by Subsection (e) for the current tax year
is liable for the amount of the tax, plus penalties and interest,
that would have otherwise been imposed for both the preceding and
current tax years, calculated as if the taxes were delinquent on
February 1 of the tax year following the tax year for which the tax
would otherwise have been imposed.
SECTION 3. The changes in law made by this Act apply only to
an ad valorem tax year that begins on or after the effective date of
this Act.
SECTION 4. This Act takes effect January 1, 2024.