By: Taylor of Collin	S.B. No. 1275

	A BILL TO BE ENTITLED
	AN ACT
	relating to the appraisal for ad valorem tax purposes of certain
	nonexempt property used for low-income or moderate-income housing.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 1.07(d), Tax Code, is amended to read as
	follows:
	(d)  A notice required by Section 11.43(q), 11.45(d),
	23.215(g), 23.44(d), 23.46(c) or (f), 23.54(e), 23.541(c),
	23.55(e), 23.551(a), 23.57(d), 23.76(e), 23.79(d), or 23.85(d)
	must be sent by certified mail.
	SECTION 2.  Section 23.215, Tax Code, is amended to read as
	follows:
	Sec. 23.215.  APPRAISAL OF CERTAIN NONEXEMPT PROPERTY USED
	FOR LOW-INCOME OR MODERATE-INCOME HOUSING.  (a)  This section
	applies only to real property owned by an organization:
	(1)  for the purpose of renting the property [that on
	the effective date of this section was rented] to a low-income or
	moderate-income individual or family satisfying the organization's
	income eligibility requirements [and that continues to be used for
	that purpose];
	(2)  that was financed under the low income housing tax
	credit program under Subchapter DD, Chapter 2306, Government Code,
	and is subject to a land use restriction agreement under that
	subchapter that has not expired or been terminated;
	(3)  that does not receive an exemption under Section
	11.182 or 11.1825; and
	(4)  the owner of which has not entered into an
	agreement with any taxing unit to make payments to the taxing unit
	instead of taxes on the property.
	(b)  In appraising property that is under active
	construction or lease up on January 1 of the tax year in which the
	property is appraised, the [The] chief appraiser shall determine
	the appraised value of [appraise] the property in the manner
	provided by Section 11.1825(q), provided that the chief appraiser
	shall estimate the property's gross income potential and operating
	expenses based on the property's projected income and expenses for
	the first full year of operation as contained in the underwriting
	report pertaining to the property prepared by the Texas Department
	of Housing and Community Affairs under Subchapter DD, Chapter 2306,
	Government Code, as adjusted to reflect the percentage of
	construction of the property that is complete as of January 1
	calculated as the total construction cost expended as of January 1
	divided by the construction budget for a property under active
	construction and, for properties undergoing lease up, as adjusted
	to reflect the actual occupancy.
	(c)  In appraising property for the first tax year following
	the completion of active construction and stabilization of the
	property, the chief appraiser shall determine the appraised value
	of the property in the manner provided by Section 11.1825(q).
	(d)  In appraising property for any subsequent tax year after
	the first year following completion of active construction and
	stabilization of the property, the chief appraiser shall determine
	the appraised value of the property by adjusting the appraised
	value of the property for the preceding tax year by the percentage
	change in the net income of the property in the preceding year as
	compared to the year preceding that year.
	(d-1)  Notwithstanding Subsection (d), for the 2018 tax
	year, in appraising property that was not under active construction
	in 2017, the chief appraiser shall determine the appraised value of
	the property by adjusting the average appraised value of the
	property for the preceding three-year period by the percentage
	change in the net income of the property in the 2017 tax year as
	compared to the 2016 tax year.  This subsection expires January 1,
	2019.
	(e)  If property appraised under this section is sold and is
	no longer subject to a land use restriction agreement described by
	Subsection (a)(2) after the sale, the property is no longer
	eligible for appraisal under this section and an additional tax is
	imposed on the property.  The additional tax due is an amount equal
	to the difference between the taxes imposed on the property for each
	of the three years preceding the year in which the property is sold
	that the property was appraised as provided by this section and the
	taxes that would have been imposed had the property been appraised
	at the sale price in each of those years, indexed using each year's
	net income percentage change derived from subsection (d).  A tax
	lien attaches to the property on the date the property is sold to
	secure payment of the additional tax imposed by this
	subsection.  The lien exists in favor of all taxing units for which
	the additional tax is imposed.  The additional tax imposed by this
	subsection does not apply to a year for which the tax has already
	been paid off of the sale price.
	(f)  A determination that property is no longer eligible for
	appraisal under this section is made by the chief appraiser.  The
	chief appraiser shall deliver a notice of the determination to the
	owner of the property as soon as possible after making the
	determination and shall include in the notice an explanation of the
	owner's right to protest the determination.  If the owner does not
	file a timely protest or if the final determination of the protest
	is that the additional taxes are due, the assessor for each taxing
	unit shall prepare and deliver a bill for the additional taxes as
	soon as practicable.  The taxes are due and become delinquent and
	incur penalties and interest as provided by law for ad valorem taxes
	imposed by the taxing unit if not paid before the next February 1
	that is at least 20 days after the date the bill is delivered to the
	owner of the property.
	(g)  Notwithstanding any other law, a property owner may not
	bring a protest under Section 41.43(b)(3) for any tax year in which
	the appraised value of the owner's property is determined by
	adjusting the property's appraised value by the percentage change
	in the net income of the property as provided by this section.
	(g-1)  Notwithstanding any other law, a property appraised
	under this section may not be utilized as a comparable property for
	any property that is not appraised under this section.
	(h)  For purposes of this section, the chief appraiser shall
	determine the percentage change in the net income of property using
	generally accepted appraisal standards for expenses, based on
	information contained in:
	(1)  an audit of the organization that owns the
	property prepared by an independent auditor covering the relevant
	fiscal period; or
	(2)  the most recent annual owner's compliance report
	filed by the organization that owns the property with the Texas
	Department of Housing and Community Affairs.
	(i)  Not later than May 1 of each year, an owner shall deliver
	to the chief appraiser the audit or annual owner's compliance
	report for the preceding year.  The chief appraiser may extend the
	deadline for good cause shown.
	SECTION 3.  The change in law made by this Act applies only
	to an ad valorem tax year that begins on or after January 1, 2018.
	SECTION 4.  This Act takes effect January 1, 2018.