Texas 2023 - 88th Regular

Texas Senate Bill SB879 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New	Differences
1	1	88R6688 RDS-D
2	2	By: Creighton S.B. No. 879
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	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 COMMERCIAL
23	23	REAL PROPERTY. (a) In this section:
24	24	(1) "Commercial real property" means real property
25	25	zoned or otherwise authorized for and actually used for a purpose
26	26	other than single-family use, multifamily use, heavy industrial
27	27	use, or use as a quarry.
28	28	(2) "Disaster recovery program" means a disaster
29	29	recovery program funded with community development block grant
30	30	disaster recovery money authorized by federal law.
31	31	(3) "New improvement" means an improvement to
32	32	commercial real property made after the most recent appraisal of
33	33	the property that increases the market value of the property and the
34	34	value of which is not included in the appraised value of the
35	35	property for the preceding tax year. The term does not include
36	36	repairs to or ordinary maintenance of an existing structure or the
37	37	grounds or another feature of the property.
38	38	(b) This section does not apply to property appraised under
39	39	Subchapter C, D, E, F, G, or H.
40	40	(c) Notwithstanding the requirements of Section 25.18 and
41	41	regardless of whether the appraisal office has appraised the
42	42	property and determined the market value of the property for the tax
43	43	year, an appraisal office may increase the appraised value of a
44	44	parcel of commercial real property for a tax year to an amount not
45	45	to exceed the lesser of:
46	46	(1) the market value of the property for the most
47	47	recent tax year that the market value was determined by the
48	48	appraisal office; or
49	49	(2) the sum of:
50	50	(A) five percent of the appraised value of the
51	51	property for the preceding tax year;
52	52	(B) the appraised value of the property for the
53	53	preceding tax year; and
54	54	(C) the market value of all new improvements to
55	55	the property.
56	56	(d) When appraising a parcel of commercial real property,
57	57	the chief appraiser shall:
58	58	(1) appraise the property at its market value; and
59	59	(2) include in the appraisal records both the market
60	60	value of the property and the amount computed under Subsection
61	61	(c)(2).
62	62	(e) The limitation provided by Subsection (c) takes effect
63	63	as to a parcel of commercial real property on January 1 of the tax
64	64	year following the first tax year in which the owner owns the
65	65	property on January 1 and in which the property meets the definition
66	66	of commercial real property. The limitation expires on January 1 of
67	67	the tax year following the first tax year in which the owner of the
68	68	property ceases to own the property or the property no longer meets
69	69	the definition of commercial real property.
70	70	(f) For purposes of Subsection (e), a person who acquired
71	71	commercial real property to which this section applies before the
72	72	2023 tax year is considered to have acquired the property on January
73	73	1, 2023.
74	74	(g) Notwithstanding Subsections (a)(3) and (c) and except
75	75	as provided by Subdivision (2) of this subsection, an improvement
76	76	to property that would otherwise constitute a new improvement is
77	77	not treated as a new improvement if the improvement is a replacement
78	78	structure for a structure that was rendered unusable by a casualty
79	79	or by wind or water damage. For purposes of appraising the property
80	80	under Subsection (c) in the tax year in which the structure would
81	81	have constituted a new improvement:
82	82	(1) the appraised value the property would have had in
83	83	the preceding tax year if the casualty or damage had not occurred is
84	84	considered to be the appraised value of the property for that year,
85	85	regardless of whether that appraised value exceeds the actual
86	86	appraised value of the property for that year as limited by
87	87	Subsection (c); and
88	88	(2) the replacement structure is considered to be a
89	89	new improvement only if:
90	90	(A) the square footage of the replacement
91	91	structure exceeds that of the replaced structure as that structure
92	92	existed before the casualty or damage occurred; or
93	93	(B) the exterior of the replacement structure is
94	94	of higher quality construction and composition than that of the
95	95	replaced structure.
96	96	(h) Notwithstanding Subsection (g)(2), and only to the
97	97	extent necessary to satisfy the requirements of a disaster recovery
98	98	program, a replacement structure described by that subdivision is
99	99	not considered to be a new improvement if to satisfy the
100	100	requirements of the disaster recovery program it was necessary
101	101	that:
102	102	(1) the square footage of the replacement structure
103	103	exceed that of the replaced structure as that structure existed
104	104	before the casualty or damage occurred; or
105	105	(2) the exterior of the replacement structure be of
106	106	higher quality construction and composition than that of the
107	107	replaced structure.
108	108	SECTION 3. Sections 25.19(b) and (g), Tax Code, are amended
109	109	to read as follows:
110	110	(b) The chief appraiser shall separate real from personal
111	111	property and include in the notice for each:
112	112	(1) a list of the taxing units in which the property is
113	113	taxable;
114	114	(2) the appraised value of the property in the
115	115	preceding year;
116	116	(3) the taxable value of the property in the preceding
117	117	year for each taxing unit taxing the property;
118	118	(4) the appraised value of the property for the
119	119	current year, the kind and amount of each exemption and partial
120	120	exemption, if any, approved for the property for the current year
121	121	and for the preceding year, and, if an exemption or partial
122	122	exemption that was approved for the preceding year was canceled or
123	123	reduced for the current year, the amount of the exemption or partial
124	124	exemption canceled or reduced;
125	125	(4-a) a statement of whether the property qualifies for
126	126	the limitation on appraised value provided by Section 23.231;
127	127	(5) in italic typeface, the following statement: "The
128	128	Texas Legislature does not set the amount of your local taxes. Your
129	129	property tax burden is decided by your locally elected officials,
130	130	and all inquiries concerning your taxes should be directed to those
131	131	officials";
132	132	(6) a detailed explanation of the time and procedure
133	133	for protesting the value;
134	134	(7) the date and place the appraisal review board will
135	135	begin hearing protests;
136	136	(8) an explanation of the availability and purpose of
137	137	an informal conference with the appraisal office before a hearing
138	138	on a protest; and
139	139	(9) a brief explanation that the governing body of
140	140	each taxing unit decides whether or not taxes on the property will
141	141	increase and the appraisal district only determines the value of
142	142	the property.
143	143	(g) By April 1 or as soon thereafter as practicable if the
144	144	property is a single-family residence that qualifies for an
145	145	exemption under Section 11.13, or by May 1 or as soon thereafter as
146	146	practicable in connection with any other property, the chief
147	147	appraiser shall deliver a written notice to the owner of each
148	148	property not included in a notice required to be delivered under
149	149	Subsection (a), if the property was reappraised in the current tax
150	150	year, if the ownership of the property changed during the preceding
151	151	year, or if the property owner or the agent of a property owner
152	152	authorized under Section 1.111 makes a written request for the
153	153	notice. The chief appraiser shall separate real from personal
154	154	property and include in the notice for each property:
155	155	(1) the appraised value of the property in the
156	156	preceding year;
157	157	(2) the appraised value of the property for the
158	158	current year and the kind of each partial exemption, if any,
159	159	approved for the current year;
160	160	(2-a) a statement of whether the property qualifies for
161	161	the limitation on appraised value provided by Section 23.231;
162	162	(3) a detailed explanation of the time and procedure
163	163	for protesting the value; and
164	164	(4) the date and place the appraisal review board will
165	165	begin hearing protests.
166	166	SECTION 4. Section 41.41(a), Tax Code, is amended to read as
167	167	follows:
168	168	(a) A property owner is entitled to protest before the
169	169	appraisal review board the following actions:
170	170	(1) determination of the appraised value of the
171	171	owner's property or, in the case of land appraised as provided by
172	172	Subchapter C, D, E, or H, Chapter 23, determination of its appraised
173	173	or market value;
174	174	(2) unequal appraisal of the owner's property;
175	175	(3) inclusion of the owner's property on the appraisal
176	176	records;
177	177	(4) denial to the property owner in whole or in part of
178	178	a partial exemption;
179	179	(4-a) determination that the owner's property does not
180	180	qualify for the limitation on appraised value provided by Section
181	181	23.231;
182	182	(5) determination that the owner's land does not
183	183	qualify for appraisal as provided by Subchapter C, D, E, or H,
184	184	Chapter 23;
185	185	(6) identification of the taxing units in which the
186	186	owner's property is taxable in the case of the appraisal district's
187	187	appraisal roll;
188	188	(7) determination that the property owner is the owner
189	189	of property;
190	190	(8) a determination that a change in use of land
191	191	appraised under Subchapter C, D, E, or H, Chapter 23, has occurred;
192	192	or
193	193	(9) any other action of the chief appraiser, appraisal
194	194	district, or appraisal review board that applies to and adversely
195	195	affects the property owner.
196	196	SECTION 5. Section 42.26(d), Tax Code, is amended to read as
197	197	follows:
198	198	(d) For purposes of this section, the value of the property
199	199	subject to the suit and the value of a comparable property or sample
200	200	property that is used for comparison must be the market value
201	201	determined by the appraisal district when the property is [a
202	202	residence homestead] subject to the limitation on appraised value
203	203	imposed by Section 23.23 or 23.231.
204	204	SECTION 6. Sections 403.302(d) and (i), Government Code,
205	205	are amended to read as follows:
206	206	(d) For the purposes of this section, "taxable value" means
207	207	the market value of all taxable property less:
208	208	(1) the total dollar amount of any residence homestead
209	209	exemptions lawfully granted under Section 11.13(b) or (c), Tax
210	210	Code, in the year that is the subject of the study for each school
211	211	district;
212	212	(2) one-half of the total dollar amount of any
213	213	residence homestead exemptions granted under Section 11.13(n), Tax
214	214	Code, in the year that is the subject of the study for each school
215	215	district;
216	216	(3) the total dollar amount of any exemptions granted
217	217	before May 31, 1993, within a reinvestment zone under agreements
218	218	authorized by Chapter 312, Tax Code;
219	219	(4) subject to Subsection (e), the total dollar amount
220	220	of any captured appraised value of property that:
221	221	(A) is within a reinvestment zone created on or
222	222	before May 31, 1999, or is proposed to be included within the
223	223	boundaries of a reinvestment zone as the boundaries of the zone and
224	224	the proposed portion of tax increment paid into the tax increment
225	225	fund by a school district are described in a written notification
226	226	provided by the municipality or the board of directors of the zone
227	227	to the governing bodies of the other taxing units in the manner
228	228	provided by former Section 311.003(e), Tax Code, before May 31,
229	229	1999, and within the boundaries of the zone as those boundaries
230	230	existed on September 1, 1999, including subsequent improvements to
231	231	the property regardless of when made;
232	232	(B) generates taxes paid into a tax increment
233	233	fund created under Chapter 311, Tax Code, under a reinvestment zone
234	234	financing plan approved under Section 311.011(d), Tax Code, on or
235	235	before September 1, 1999; and
236	236	(C) is eligible for tax increment financing under
237	237	Chapter 311, Tax Code;
238	238	(5) the total dollar amount of any captured appraised
239	239	value of property that:
240	240	(A) is within a reinvestment zone:
241	241	(i) created on or before December 31, 2008,
242	242	by a municipality with a population of less than 18,000; and
243	243	(ii) the project plan for which includes
244	244	the alteration, remodeling, repair, or reconstruction of a
245	245	structure that is included on the National Register of Historic
246	246	Places and requires that a portion of the tax increment of the zone
247	247	be used for the improvement or construction of related facilities
248	248	or for affordable housing;
249	249	(B) generates school district taxes that are paid
250	250	into a tax increment fund created under Chapter 311, Tax Code; and
251	251	(C) is eligible for tax increment financing under
252	252	Chapter 311, Tax Code;
253	253	(6) the total dollar amount of any exemptions granted
254	254	under Section 11.251 or 11.253, Tax Code;
255	255	(7) the difference between the comptroller's estimate
256	256	of the market value and the productivity value of land that
257	257	qualifies for appraisal on the basis of its productive capacity,
258	258	except that the productivity value estimated by the comptroller may
259	259	not exceed the fair market value of the land;
260	260	(8) the portion of the appraised value of residence
261	261	homesteads of individuals who receive a tax limitation under
262	262	Section 11.26, Tax Code, on which school district taxes are not
263	263	imposed in the year that is the subject of the study, calculated as
264	264	if the residence homesteads were appraised at the full value
265	265	required by law;
266	266	(9) a portion of the market value of property not
267	267	otherwise fully taxable by the district at market value because of
268	268	action required by statute or the constitution of this state, other
269	269	than Section 11.311, Tax Code, that, if the tax rate adopted by the
270	270	district is applied to it, produces an amount equal to the
271	271	difference between the tax that the district would have imposed on
272	272	the property if the property were fully taxable at market value and
273	273	the tax that the district is actually authorized to impose on the
274	274	property, if this subsection does not otherwise require that
275	275	portion to be deducted;
276	276	(10) the market value of all tangible personal
277	277	property, other than manufactured homes, owned by a family or
278	278	individual and not held or used for the production of income;
279	279	(11) the appraised value of property the collection of
280	280	delinquent taxes on which is deferred under Section 33.06, Tax
281	281	Code;
282	282	(12) the portion of the appraised value of property
283	283	the collection of delinquent taxes on which is deferred under
284	284	Section 33.065, Tax Code;
285	285	(13) the amount by which the market value of property
286	286	[a residence homestead] to which Section 23.23 or 23.231, Tax Code,
287	287	applies exceeds the appraised value of that property as calculated
288	288	under Section 23.23 or 23.231, Tax Code, as applicable [that
289	289	section]; and
290	290	(14) the total dollar amount of any exemptions granted
291	291	under Section 11.35, Tax Code.
292	292	(i) If the comptroller determines in the study that the
293	293	market value of property in a school district as determined by the
294	294	appraisal district that appraises property for the school district,
295	295	less the total of the amounts and values listed in Subsection (d) as
296	296	determined by that appraisal district, is valid, the comptroller,
297	297	in determining the taxable value of property in the school district
298	298	under Subsection (d), shall for purposes of Subsection (d)(13)
299	299	subtract from the market value as determined by the appraisal
300	300	district of properties [residence homesteads] to which Section
301	301	23.23 or 23.231, Tax Code, applies the amount by which that amount
302	302	exceeds the appraised value of those properties as calculated by
303	303	the appraisal district under Section 23.23 or 23.231, Tax Code, as
304	304	applicable. If the comptroller determines in the study that the
305	305	market value of property in a school district as determined by the
306	306	appraisal district that appraises property for the school district,
307	307	less the total of the amounts and values listed in Subsection (d) as
308	308	determined by that appraisal district, is not valid, the
309	309	comptroller, in determining the taxable value of property in the
310	310	school district under Subsection (d), shall for purposes of
311	311	Subsection (d)(13) subtract from the market value as estimated by
312	312	the comptroller of properties [residence homesteads] to which
313	313	Section 23.23 or 23.231, Tax Code, applies the amount by which that
314	314	amount exceeds the appraised value of those properties as
315	315	calculated by the appraisal district under Section 23.23 or 23.231,
316	316	Tax Code, as applicable.
317	317	SECTION 7. This Act applies only to the appraisal of
318	318	commercial real property for ad valorem tax purposes for a tax year
319	319	that begins on or after the effective date of this Act.
320	320	SECTION 8. This Act takes effect January 1, 2024, but only
321	321	if the constitutional amendment proposed by the 88th Legislature,
322	322	Regular Session, 2023, to authorize the legislature to limit the
323	323	maximum appraised value of commercial real property for ad valorem
324	324	tax purposes to 105 percent or more of the appraised value of the
325	325	property for the preceding tax year is approved by the voters. If
326	326	that amendment is not approved by the voters, this Act has no
327	327	effect.