Texas House Bill HB398

Texas 2023 - 88th Regular

• Filed: 11/14/22

Caption

Relating to an exemption from ad valorem taxation of property owned by an economic development corporation and used for a public purpose.

Impact

The introduction of HB 398 is seen as a necessary step to eliminate ambiguities related to tax exemptions for economic development corporations. By clearly defining that properties used for public purposes are exempt from ad valorem taxes, this bill helps align local governance with state tax policies, potentially enhancing the ability of these corporations to undertake initiatives that benefit their communities. It specifically addresses concerns raised in previous sessions regarding the limitations on tax exemptions, notably the three-year cap that some argued impeded rural community development.

Summary

House Bill 398 aims to provide an exemption from ad valorem taxation for properties owned by Type A and Type B economic development corporations when these properties are utilized for public purposes. This legislation seeks to enhance the clarity surrounding tax exemptions that these corporations can receive, thus ensuring uniform application across regions within Texas. The bill specifically amends Section 11.11 of the Texas Tax Code, with the effective date set for January 1, 2024. This focus on economic development reflects a commitment by the Legislature to support public projects that contribute to community well-being and growth.

Sentiment

General sentiment surrounding HB 398 appears to be positive, particularly among proponents of economic development, including representatives from various corporations and appraisal districts. They have expressed that enhanced clarity around tax exemptions will support projects that serve public interests. Although there may be some contention surrounding local government influences and the equitable distribution of benefits, the consensus seems to favor the bill's potential to facilitate economic progress.

Contention

While the bill’s primary goal is to provide tax relief for economic development initiatives, there remains an undercurrent of concern regarding its implications for local governance. Some stakeholders advocate for local authorities to retain the ability to manage exemptions autonomously, fearing that state-level mandates may overlook specific community needs. This tension between state oversight and local control will likely be an important aspect of the ongoing debate as the bill progresses through legislative discussions.

Texas Constitutional Statutes Affected

Tax Code

• Chapter 11. Taxable Property And Exemptions
  • Section: 11

Local Government Code

• Chapter 504. Type A Corporations
  • Section: New Section

• Chapter 505. Type B Corporations
  • Section: New Section