Bill Text: TX HB5 | 2017 | 85th Legislature 1st Special Session | Introduced
Bill Title: Relating to a limitation on increases in the appraised value for ad valorem tax purposes of commercial or industrial real property.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2017-07-24 - Referred to Ways & Means [HB5 Detail]
Download: Texas-2017-HB5-Introduced.html
| 85S11062 SMH-D | ||
| By: Bonnen of Brazoria | H.B. No. 5 | |
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| relating to a limitation on increases in the appraised value for ad | ||
| valorem tax purposes of commercial or industrial real property. | ||
| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
| SECTION 1. Section 1.12(d), Tax Code, is amended to read as | ||
| follows: | ||
| (d) For purposes of this section, the appraisal ratio of a | ||
| homestead to which Section 23.23 applies or of commercial or | ||
| industrial real property to which Section 23.231 applies is the | ||
| ratio of the property's market value as determined by the appraisal | ||
| district or appraisal review board, as applicable, to the market | ||
| value of the property according to law. The appraisal ratio is not | ||
| calculated according to the appraised value of the property as | ||
| limited by Section 23.23 or 23.231. | ||
| SECTION 2. Subchapter B, Chapter 23, Tax Code, is amended by | ||
| adding Section 23.231 to read as follows: | ||
| Sec. 23.231. LIMITATION ON APPRAISED VALUE OF COMMERCIAL OR | ||
| INDUSTRIAL REAL PROPERTY. (a) In this section, "new improvement" | ||
| means an improvement to commercial or industrial real property made | ||
| after the most recent appraisal of the property that increases the | ||
| market value of the property and the value of which is not included | ||
| in the appraised value of the property for the preceding tax | ||
| year. The term does not include repairs to or ordinary maintenance | ||
| of an existing structure or the grounds or another feature of the | ||
| property. | ||
| (b) This section does not apply to: | ||
| (1) residential property; | ||
| (2) a mineral interest; or | ||
| (3) property appraised under Subchapter C, D, E, F, G, | ||
| or H. | ||
| (c) Notwithstanding the requirements of Section 25.18 and | ||
| regardless of whether the appraisal office has appraised the | ||
| property and determined the market value of the property for the tax | ||
| year, an appraisal office may increase the appraised value of a | ||
| parcel of commercial or industrial real property for a tax year to | ||
| an amount not to exceed the lesser of: | ||
| (1) the market value of the property for the most | ||
| recent tax year that the market value was determined by the | ||
| appraisal office; or | ||
| (2) the sum of: | ||
| (A) 20 percent of the appraised value of the | ||
| property for the preceding tax year; | ||
| (B) the appraised value of the property for the | ||
| preceding tax year; and | ||
| (C) the market value of all new improvements to | ||
| the property. | ||
| (d) When appraising a parcel of commercial or industrial | ||
| real property, the chief appraiser shall: | ||
| (1) appraise the property at its market value; and | ||
| (2) include in the appraisal records both the market | ||
| value of the property and the amount computed under Subsection | ||
| (c)(2). | ||
| (e) The limitation provided by Subsection (c) takes effect | ||
| as to a parcel of commercial or industrial real property on January | ||
| 1 of the tax year following the first tax year in which the owner | ||
| owns the property on January 1 and in which the property qualifies | ||
| as commercial or industrial real property under this section. | ||
| Except as provided by Subsection (f), the limitation expires on | ||
| January 1 of the tax year following the first tax year in which the | ||
| owner of the property ceases to own the property or the property | ||
| ceases to qualify as commercial or industrial real property. | ||
| (f) If property subject to a limitation under this section | ||
| is owned by two or more persons, the limitation expires on January 1 | ||
| of the tax year following the first tax year in which the ownership | ||
| of at least a 50 percent interest in the property is sold or | ||
| otherwise transferred. | ||
| (g) Notwithstanding Subsections (a) and (c) and except as | ||
| provided by Subdivision (2) of this subsection, an improvement to | ||
| property that would otherwise constitute a new improvement is not | ||
| treated as a new improvement if the improvement is a replacement | ||
| structure for a structure that was rendered unusable by a casualty | ||
| or by wind or water damage. For purposes of appraising the property | ||
| under Subsection (c) in the tax year in which the structure would | ||
| have constituted a new improvement: | ||
| (1) the appraised value the property would have had in | ||
| the preceding tax year if the casualty or damage had not occurred is | ||
| considered to be the appraised value of the property for that year, | ||
| regardless of whether that appraised value exceeds the actual | ||
| appraised value of the property for that year as limited by | ||
| Subsection (c); and | ||
| (2) the replacement structure is considered to be a | ||
| new improvement only if: | ||
| (A) the square footage of the replacement | ||
| structure exceeds that of the replaced structure as that structure | ||
| existed before the casualty or damage occurred; or | ||
| (B) the exterior of the replacement structure is | ||
| of higher quality construction and composition than that of the | ||
| replaced structure. | ||
| (h) In this subsection, "disaster recovery program" means | ||
| the disaster recovery program administered by the General Land | ||
| Office that is funded with community development block grant | ||
| disaster recovery money authorized by the Consolidated Security, | ||
| Disaster Assistance, and Continuing Appropriations Act, 2009 (Pub. | ||
| L. No. 110-329), and the Consolidated and Further Continuing | ||
| Appropriations Act, 2012 (Pub. L. No. 112-55). Notwithstanding | ||
| Subsection (g)(2), and only to the extent necessary to satisfy the | ||
| requirements of the disaster recovery program, a replacement | ||
| structure described by that subdivision is not considered to be a | ||
| new improvement if to satisfy the requirements of the disaster | ||
| recovery program it was necessary that: | ||
| (1) the square footage of the replacement structure | ||
| exceed that of the replaced structure as that structure existed | ||
| before the casualty or damage occurred; or | ||
| (2) the exterior of the replacement structure be of | ||
| higher quality construction and composition than that of the | ||
| replaced structure. | ||
| SECTION 3. Sections 25.19(b) and (g), Tax Code, are amended | ||
| to read as follows: | ||
| (b) The chief appraiser shall separate real from personal | ||
| property and include in the notice for each: | ||
| (1) a list of the taxing units in which the property is | ||
| taxable; | ||
| (2) the appraised value of the property in the | ||
| preceding year; | ||
| (3) the taxable value of the property in the preceding | ||
| year for each taxing unit taxing the property; | ||
| (4) the appraised value of the property for the | ||
| current year, the kind and amount of each exemption and partial | ||
| exemption, if any, approved for the property for the current year | ||
| and for the preceding year, and, if an exemption or partial | ||
| exemption that was approved for the preceding year was canceled or | ||
| reduced for the current year, the amount of the exemption or partial | ||
| exemption canceled or reduced; | ||
| (4-a) a statement of whether the property qualifies | ||
| for the limitation on appraised value provided by Section 23.231; | ||
| (5) if the appraised value is greater than it was in | ||
| the preceding year, the amount of tax that would be imposed on the | ||
| property on the basis of the tax rate for the preceding year; | ||
| (6) in italic typeface, the following | ||
| statement: "The Texas Legislature does not set the amount of your | ||
| local taxes. Your property tax burden is decided by your locally | ||
| elected officials, and all inquiries concerning your taxes should | ||
| be directed to those officials"; | ||
| (7) a detailed explanation of the time and procedure | ||
| for protesting the value; | ||
| (8) the date and place the appraisal review board will | ||
| begin hearing protests; and | ||
| (9) a brief explanation that the governing body of | ||
| each taxing unit decides whether or not taxes on the property will | ||
| increase and the appraisal district only determines the value of | ||
| the property. | ||
| (g) By April 1 or as soon thereafter as practicable if the | ||
| property is a single-family residence that qualifies for an | ||
| exemption under Section 11.13, or by May 1 or as soon thereafter as | ||
| practicable in connection with any other property, the chief | ||
| appraiser shall deliver a written notice to the owner of each | ||
| property not included in a notice required to be delivered under | ||
| Subsection (a), if the property was reappraised in the current tax | ||
| year, if the ownership of the property changed during the preceding | ||
| year, or if the property owner or the agent of a property owner | ||
| authorized under Section 1.111 makes a written request for the | ||
| notice. The chief appraiser shall separate real from personal | ||
| property and include in the notice for each property: | ||
| (1) the appraised value of the property in the | ||
| preceding year; | ||
| (2) the appraised value of the property for the | ||
| current year and the kind of each partial exemption, if any, | ||
| approved for the current year; | ||
| (2-a) a statement of whether the property qualifies | ||
| for the limitation on appraised value provided by Section 23.231; | ||
| (3) a detailed explanation of the time and procedure | ||
| for protesting the value; and | ||
| (4) the date and place the appraisal review board will | ||
| begin hearing protests. | ||
| SECTION 4. Section 41.41(a), Tax Code, is amended to read as | ||
| follows: | ||
| (a) A property owner is entitled to protest before the | ||
| appraisal review board the following actions: | ||
| (1) determination of the appraised value of the | ||
| owner's property or, in the case of land appraised as provided by | ||
| Subchapter C, D, E, or H, Chapter 23, determination of its appraised | ||
| or market value; | ||
| (2) unequal appraisal of the owner's property; | ||
| (3) inclusion of the owner's property on the appraisal | ||
| records; | ||
| (4) denial to the property owner in whole or in part of | ||
| a partial exemption; | ||
| (4-a) determination that the owner's property does not | ||
| qualify for the limitation on appraised value provided by Section | ||
| 23.231; | ||
| (5) determination that the owner's land does not | ||
| qualify for appraisal as provided by Subchapter C, D, E, or H, | ||
| Chapter 23; | ||
| (6) identification of the taxing units in which the | ||
| owner's property is taxable in the case of the appraisal district's | ||
| appraisal roll; | ||
| (7) determination that the property owner is the owner | ||
| of property; | ||
| (8) a determination that a change in use of land | ||
| appraised under Subchapter C, D, E, or H, Chapter 23, has occurred; | ||
| or | ||
| (9) any other action of the chief appraiser, appraisal | ||
| district, or appraisal review board that applies to and adversely | ||
| affects the property owner. | ||
| SECTION 5. Section 42.26(d), Tax Code, is amended to read as | ||
| follows: | ||
| (d) For purposes of this section, the value of the property | ||
| subject to the suit and the value of a comparable property or sample | ||
| property that is used for comparison must be the market value | ||
| determined by the appraisal district when the property is [ |
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| imposed by Section 23.23 or 23.231. | ||
| SECTION 6. Sections 403.302(d) and (i), Government Code, | ||
| are amended to read as follows: | ||
| (d) For the purposes of this section, "taxable value" means | ||
| the market value of all taxable property less: | ||
| (1) the total dollar amount of any residence homestead | ||
| exemptions lawfully granted under Section 11.13(b) or (c), Tax | ||
| Code, in the year that is the subject of the study for each school | ||
| district; | ||
| (2) one-half of the total dollar amount of any | ||
| residence homestead exemptions granted under Section 11.13(n), Tax | ||
| Code, in the year that is the subject of the study for each school | ||
| district; | ||
| (3) the total dollar amount of any exemptions granted | ||
| before May 31, 1993, within a reinvestment zone under agreements | ||
| authorized by Chapter 312, Tax Code; | ||
| (4) subject to Subsection (e), the total dollar amount | ||
| of any captured appraised value of property that: | ||
| (A) is within a reinvestment zone created on or | ||
| before May 31, 1999, or is proposed to be included within the | ||
| boundaries of a reinvestment zone as the boundaries of the zone and | ||
| the proposed portion of tax increment paid into the tax increment | ||
| fund by a school district are described in a written notification | ||
| provided by the municipality or the board of directors of the zone | ||
| to the governing bodies of the other taxing units in the manner | ||
| provided by former Section 311.003(e), Tax Code, before May 31, | ||
| 1999, and within the boundaries of the zone as those boundaries | ||
| existed on September 1, 1999, including subsequent improvements to | ||
| the property regardless of when made; | ||
| (B) generates taxes paid into a tax increment | ||
| fund created under Chapter 311, Tax Code, under a reinvestment zone | ||
| financing plan approved under Section 311.011(d), Tax Code, on or | ||
| before September 1, 1999; and | ||
| (C) is eligible for tax increment financing under | ||
| Chapter 311, Tax Code; | ||
| (5) the total dollar amount of any captured appraised | ||
| value of property that: | ||
| (A) is within a reinvestment zone: | ||
| (i) created on or before December 31, 2008, | ||
| by a municipality with a population of less than 18,000; and | ||
| (ii) the project plan for which includes | ||
| the alteration, remodeling, repair, or reconstruction of a | ||
| structure that is included on the National Register of Historic | ||
| Places and requires that a portion of the tax increment of the zone | ||
| be used for the improvement or construction of related facilities | ||
| or for affordable housing; | ||
| (B) generates school district taxes that are paid | ||
| into a tax increment fund created under Chapter 311, Tax Code; and | ||
| (C) is eligible for tax increment financing under | ||
| Chapter 311, Tax Code; | ||
| (6) the total dollar amount of any exemptions granted | ||
| under Section 11.251 or 11.253, Tax Code; | ||
| (7) the difference between the comptroller's estimate | ||
| of the market value and the productivity value of land that | ||
| qualifies for appraisal on the basis of its productive capacity, | ||
| except that the productivity value estimated by the comptroller may | ||
| not exceed the fair market value of the land; | ||
| (8) the portion of the appraised value of residence | ||
| homesteads of individuals who receive a tax limitation under | ||
| Section 11.26, Tax Code, on which school district taxes are not | ||
| imposed in the year that is the subject of the study, calculated as | ||
| if the residence homesteads were appraised at the full value | ||
| required by law; | ||
| (9) a portion of the market value of property not | ||
| otherwise fully taxable by the district at market value because of: | ||
| (A) action required by statute or the | ||
| constitution of this state, other than Section 11.311, Tax Code, | ||
| that, if the tax rate adopted by the district is applied to it, | ||
| produces an amount equal to the difference between the tax that the | ||
| district would have imposed on the property if the property were | ||
| fully taxable at market value and the tax that the district is | ||
| actually authorized to impose on the property, if this subsection | ||
| does not otherwise require that portion to be deducted; or | ||
| (B) action taken by the district under Subchapter | ||
| B or C, Chapter 313, Tax Code, before the expiration of the | ||
| subchapter; | ||
| (10) the market value of all tangible personal | ||
| property, other than manufactured homes, owned by a family or | ||
| individual and not held or used for the production of income; | ||
| (11) the appraised value of property the collection of | ||
| delinquent taxes on which is deferred under Section 33.06, Tax | ||
| Code; | ||
| (12) the portion of the appraised value of property | ||
| the collection of delinquent taxes on which is deferred under | ||
| Section 33.065, Tax Code; and | ||
| (13) the amount by which the market value of property | ||
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| applies exceeds the appraised value of that property as calculated | ||
| under Section 23.23 or 23.231, Tax Code, as applicable [ |
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| (i) If the comptroller determines in the study that the | ||
| market value of property in a school district as determined by the | ||
| appraisal district that appraises property for the school district, | ||
| less the total of the amounts and values listed in Subsection (d) as | ||
| determined by that appraisal district, is valid, the comptroller, | ||
| in determining the taxable value of property in the school district | ||
| under Subsection (d), shall for purposes of Subsection (d)(13) | ||
| subtract from the market value as determined by the appraisal | ||
| district of properties [ |
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| 23.23 or 23.231, Tax Code, applies the amount by which that amount | ||
| exceeds the appraised value of those properties as calculated by | ||
| the appraisal district under Section 23.23 or 23.231, Tax Code, as | ||
| applicable. If the comptroller determines in the study that the | ||
| market value of property in a school district as determined by the | ||
| appraisal district that appraises property for the school district, | ||
| less the total of the amounts and values listed in Subsection (d) as | ||
| determined by that appraisal district, is not valid, the | ||
| comptroller, in determining the taxable value of property in the | ||
| school district under Subsection (d), shall for purposes of | ||
| Subsection (d)(13) subtract from the market value as estimated by | ||
| the comptroller of properties [ |
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| Section 23.23 or 23.231, Tax Code, applies the amount by which that | ||
| amount exceeds the appraised value of those properties as | ||
| calculated by the appraisal district under Section 23.23 or 23.231, | ||
| Tax Code, as applicable. | ||
| SECTION 7. This Act applies only to the appraisal of | ||
| commercial or industrial real property for ad valorem tax purposes | ||
| for a tax year that begins on or after the effective date of this | ||
| Act. | ||
| SECTION 8. This Act takes effect January 1, 2018, but only | ||
| if the constitutional amendment proposed by the 85th Legislature, | ||
| 1st Called Session, 2017, to authorize the legislature to limit | ||
| increases in the appraised value of commercial or industrial real | ||
| property for ad valorem tax purposes to 20 percent or more of the | ||
| appraised value of the property for the preceding tax year is | ||
| approved by the voters. If that amendment is not approved by the | ||
| voters, this Act has no effect. | ||
