Bill Text: TX SB629 | 2017-2018 | 85th Legislature | Engrossed


Bill Title: Relating to liability for interest if land appraised for ad valorem tax purposes as agricultural or open-space land is sold or diverted to a different use.

Spectrum: Moderate Partisan Bill (Republican 10-3)

Status: (Engrossed - Dead) 2017-05-15 - Referred to Ways & Means [SB629 Detail]

Download: Texas-2017-SB629-Engrossed.html
 
 
  By: Schwertner, et al. S.B. No. 629
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to liability for interest if land appraised for ad valorem
  tax purposes as agricultural or open-space land is sold or diverted
  to a different use.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Sections 23.46(c) and (d), Tax Code, are amended
  to read as follows:
         (c)  If land that has been designated for agricultural use in
  any year is sold or diverted to a nonagricultural use, the total
  amount of additional taxes for the three years preceding the year in
  which the land is sold or diverted [plus interest at the rate
  provided for delinquent taxes] becomes due.  Subject to Subsection
  (f), a determination that the land has been diverted to a
  nonagricultural use is made by the chief appraiser.  For purposes of
  this subsection, the chief appraiser may not consider any period
  during which land is owned by the state in determining whether the
  land has been diverted to a nonagricultural use.  The chief
  appraiser shall deliver a notice of the determination to the owner
  of the land 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 [plus interest]
  as soon as practicable after the change of use occurs.  If the
  additional taxes are due because of a sale of the land, the assessor
  for each taxing unit shall prepare and deliver the bill as soon as
  practicable after the sale occurs.  The taxes [and interest] are due
  and become delinquent and incur penalties and interest as provided
  by law for other delinquent 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 land.
         (d)  A tax lien attaches to the land on the date the sale or
  change of use occurs to secure payment of the additional tax [and
  interest] imposed by Subsection (c) [of this section] and any
  penalties and interest incurred if the tax becomes delinquent. The
  lien exists in favor of all taxing units for which the additional
  tax is imposed.
         SECTION 2.  Sections 23.47(c) and (d), Tax Code, are amended
  to read as follows:
         (c)  A provision in an instrument pertaining to a loan
  secured by a lien in favor of the lender on land appraised according
  to this subchapter that requires the borrower to make a payment to
  protect the lender from loss because of the imposition of
  additional taxes [and interest] under Section 23.46 is void unless
  the provision:
               (1)  requires the borrower to pay into an escrow
  account established by the lender an amount equal to the additional
  taxes [and interest] that would be due under Section 23.46 if a sale
  or change of use occurred on January 1 of the year in which the loan
  is granted or amended;
               (2)  requires the escrow account to bear interest to be
  credited to the account monthly;
               (3)  permits the lender to apply money in the escrow
  account to the payment of a bill for additional taxes [and interest]
  under Section 23.46 before the loan is paid and requires the lender
  to refund the balance remaining in the escrow account after the bill
  is paid to the borrower; and
               (4)  requires the lender to refund the money in the
  escrow account to the borrower on the payment of the loan.
         (d)  On the request of the borrower or the borrower's
  representative, the assessor for each taxing unit shall compute the
  additional taxes [and interest] that would be due that taxing unit
  under Section 23.46 if a sale or change of use occurred on January 1
  of the year in which the loan is granted or amended. The assessor
  may charge a reasonable fee not to exceed the actual cost of making
  the computation.
         SECTION 3.  Sections 23.55(a), (b), (e), (f), (m), and (n),
  Tax Code, are amended to read as follows:
         (a)  If the use of land that has been appraised as provided by
  this subchapter changes, an additional tax is imposed on the land
  equal to the difference between the taxes imposed on the land for
  each of the five years preceding the year in which the change of use
  occurs that the land was appraised as provided by this subchapter
  and the tax that would have been imposed had the land been taxed on
  the basis of market value in each of those years[, plus interest at
  an annual rate of seven percent calculated from the dates on which
  the differences would have become due]. For purposes of this
  subsection, the chief appraiser may not consider any period during
  which land is owned by the state in determining whether a change in
  the use of the land has occurred.
         (b)  A tax lien attaches to the land on the date the change of
  use occurs to secure payment of the additional tax [and interest]
  imposed by this section and any penalties and interest incurred if
  the tax becomes delinquent. The lien exists in favor of all taxing
  units for which the additional tax is imposed.
         (e)  Subject to Section 23.551, a determination that a change
  in use of the land has occurred is made by the chief appraiser.  The
  chief appraiser shall deliver a notice of the determination to the
  owner of the land 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 [plus interest]
  as soon as practicable.  The taxes [and interest] 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 land.
         (f)  The sanctions provided by Subsection (a) [of this
  section] do not apply if the change of use occurs as a result of:
               (1)  a sale for right-of-way;
               (2)  a condemnation;
               (3)  a transfer of the property to the state or a
  political subdivision of the state to be used for a public purpose;
  or
               (4)  a transfer of the property from the state, a
  political subdivision of the state, or a nonprofit corporation
  created by a municipality with a population of more than one million
  under the Development Corporation Act (Subtitle C1, Title 12, Local
  Government Code) to an individual or a business entity for purposes
  of economic development if the comptroller determines that the
  economic development is likely to generate for deposit in the
  general revenue fund during the next two fiscal bienniums an amount
  of taxes and other revenues that equals or exceeds 20 times the
  amount of additional taxes [and interest] that would have been
  imposed under Subsection (a) had the sanctions provided by that
  subsection applied to the transfer.
         (m)  For purposes of determining whether a transfer of land
  qualifies for the exemption from additional taxes provided by
  Subsection (f)(4), on an application of the entity transferring or
  proposing to transfer the land or of the individual or entity to
  which the land is transferred or proposed to be transferred, the
  comptroller shall determine the amount of taxes and other revenues
  likely to be generated as a result of the economic development for
  deposit in the general revenue fund during the next two fiscal
  bienniums. If the comptroller determines that the amount of those
  revenues is likely to equal or exceed 20 times the amount of
  additional taxes [and interest] that would be imposed under
  Subsection (a) if the sanctions provided by that subsection applied
  to the transfer, the comptroller shall issue a letter to the
  applicant stating the comptroller's determination and shall send a
  copy of the letter by regular mail to the chief appraiser.
         (n)  Within one year of the conclusion of the two fiscal
  bienniums for which the comptroller issued a letter as provided
  under Subsection (m), the board of directors of the appraisal
  district, by official board action, may direct the chief appraiser
  to request the comptroller to determine if the amount of revenues
  was equal to or exceeded 20 times the amount of taxes [and interest]
  that would have been imposed under Subsection (a). The comptroller
  shall issue a finding as to whether the amount of revenue met the
  projected increases. The chief appraiser shall review the results
  of the comptroller's finding and shall make a determination as to
  whether sanctions under Subsection (a) should be imposed. If the
  chief appraiser determines that the sanctions provided by
  Subsection (a) shall be imposed, the sanctions shall be based on the
  date of the transfer of the property under Subsection (f)(4).
         SECTION 4.  Sections 23.58(c) and (d), Tax Code, are amended
  to read as follows:
         (c)  A provision in an instrument pertaining to a loan
  secured by a lien in favor of the lender on land appraised according
  to this subchapter that requires the borrower to make a payment to
  protect the lender from loss because of the imposition of
  additional taxes [and interest] under Section 23.55 is void unless
  the provision:
               (1)  requires the borrower to pay into an escrow
  account established by the lender an amount equal to the additional
  taxes [and interest] that would be due under Section 23.55 if a
  change of use occurred on January 1 of the year in which the loan is
  granted or amended;
               (2)  requires the escrow account to bear interest to be
  credited to the account monthly;
               (3)  permits the lender to apply money in the escrow
  account to the payment of a bill for additional taxes [and interest]
  under Section 23.55 before the loan is paid and requires the lender
  to refund the balance remaining in the escrow account after the bill
  is paid to the borrower; and
               (4)  requires the lender to refund the money in the
  escrow account to the borrower on the payment of the loan.
         (d)  On the request of the borrower or the borrower's
  representative, the assessor for each taxing unit shall compute the
  additional taxes [and interest] that would be due that taxing unit
  under Section 23.55 if a change of use occurred on January 1 of the
  year in which the loan is granted or amended. The assessor may
  charge a reasonable fee not to exceed the actual cost of making the
  computation.
         SECTION 5.  Sections 23.46(c) and (d), Tax Code, as amended
  by this Act, apply only to a sale or diversion to a nonagricultural
  use of land appraised under Subchapter C, Chapter 23, Tax Code, that
  occurs on or after the effective date of this Act.
         SECTION 6.  Sections 23.47(c) and (d), Tax Code, as amended
  by this Act, apply only to a loan secured by a lien on land
  designated for agricultural use that is contracted for on or after
  the effective date of this Act.
         SECTION 7.  Sections 23.55(a), (b), (e), (f), (m), and (n),
  Tax Code, as amended by this Act, apply only to a change of use of
  land appraised under Subchapter D, Chapter 23, Tax Code, that
  occurs on or after the effective date of this Act.
         SECTION 8.  Sections 23.58(c) and (d), Tax Code, as amended
  by this Act, apply only to a loan secured by a lien on open-space
  land that is contracted for on or after the effective date of this
  Act.
         SECTION 9.  This Act takes effect September 1, 2017.
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