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Title 1. Property Tax Code
Subtitle D. Appraisal and Assessment

Chapter 23. Appraisal Methods and Procedures
Subchapter D. Appraisal of Agricultural Land

Sec. 23.51. Definitions.
Sec. 23.52. Appraisal of Qualified Agricultural Land.
Sec. 23.521. Standards for Qualification of Land for Appraisal Based on Wildlife Management.
Sec. 23.53. Capitalization Rate.
Sec. 23.54. Application.
Sec. 23.541. Late Application for Appraisal as Agricultural Land.
Sec. 23.55. Change of Use of Land.
Sec. 23.56. Land Ineligible for Appraisal as Open-Space Land.
Sec. 23.57. Action on Applications.
Sec. 23.58. Loan Secured by Lien on Open-Space Land.
Sec 23.59. Appraisal of Open-Space Land that is Converted to Timber Production.

[Sections 23.60 to 23.70 reserved for expansion]

Sec. 23.51. Definitions.

In this subchapter:

(1) "Qualified open-space land" means land that is currently devoted principally to agricultural use to the degree of intensity generally accepted in the area and that has been devoted principally to agricultural use or to production of timber or forest products for five of the preceding seven years or land that is used principally as an ecological laboratory by a public or private college or university. Qualified open-space land includes all appurtenances to the land. For the purposes of this subdivision, appurtenances to the land means private roads, dams, reservoirs, water wells, canals, ditches, terraces, and other reshapings of the soil, fences, and riparian water rights.

(2) "Agricultural use" includes but is not limited to the following activities: cultivating the soil, producing crops for human food, animal feed, or planting seed or for the production of fibers; floriculture, viticulture, and horticulture; raising or keeping livestock; raising or keeping exotic animals for the production of human food or of fiber, leather, pelts, or other tangible products having a commercial value; and planting cover crops or leaving land idle for the purpose of participating in any governmental program or normal crop or livestock rotation procedure. The term also includes the use of land to produce or harvest logs and posts for the use in constructing or repairing fences, pens, barns, or other agricultural improvements on adjacent qualified open-space land having the same owner and devoted to a different agricultural use. The term also includes the use of land for wildlife management.

(3) "Category" means the value classification of land considering the agricultural use to which the land is principally devoted. Categories of land may include but are not limited to irrigated cropland, dry cropland, improved pasture, native pasture, orchard, and waste and may be further divided according to soil type, soil capability, irrigation, general topography, geographical factors, and other factors which influence the productive capacity of the category. The chief appraiser shall obtain information from the Texas Agricultural Extension Service, Soil Conservation Service, and other recognized agricultural sources for the purposes of determining the categories of production existing in the appraisal district.

(4) "Net to land" means the average annual net income derived from the use of open-space land that would have been earned from the land during the five-year period preceding the year before the appraisal by an owner using ordinary prudence in the management of the land and the farm crops or livestock produced or supported on the land and, in addition, any income received from hunting or recreational leases. The chief appraiser shall calculate net to land by considering the income that would be due to the owner of the land under cash lease, share lease, or whatever lease arrangement is typical in that area for that category of land, and all expenses directly attributable to the agricultural use of the land by the owner shall be subtracted from this owner income and the results shall be used in income capitalization. In calculating net to land, a reasonable deduction shall be made for any depletion that occurs of underground water used in the agricultural operation.

(5) "Income capitalization" means the process of dividing net to land by the capitalization rate to determine the appraised value.

(6) "Exotic animal" means a species of game not indigenous to this state, including axis deer, nilga antelope, red sheep, or other cloven-hoofed ruminant mammals, or exotic fowl as defined by Section 142.001, Agriculture Code.

(7) "Wildlife management" means actively using land that at the time the wildlife-management use began was appraised as qualified open-space land under this subchapter in at least three of the following ways to propagate a sustaining breeding, migrating, or wintering population of indigenous wild animals for human use, including food, medicine, or recreation:

(A) habitat control;

(B) erosion control;

(C) predator control;

(D) providing supplemental supplies of water;

(E) providing supplemental supplies of food;

(F) providing shelter; and

(G) making of census counts to determine population.

Amended by 1981 Tex. Laws (1st C.S.), p. 142, ch. 13, Sec. 67; amended by 1985 Tex. Laws, p. 1084, ch. 207, Sec. 1; amended by 1987 Tex. Laws, ch. 773, Sec. 1 and ch. 780, Secs. 1 and 2; amended by 1989 Tex. Laws, p. 3598, ch. 796, Sec. 19; amended by 1991 Tex. Laws, p. 1978, ch. 560, Sec. 1; amended by 1993 Tex. Laws, p. 393, ch. 203, Sec. 6; amended by 1995 Tex. Laws, p. 4449, ch. 911, Sec. 1.

Cross References:

Constitutional authorization, see art. VIII, Sec. 1-d-1, Tex. Const.
Special appraisal records, see Sec. 25.011.
Listing in appraisal records, see Sec. 25.02(a)(5).
Manual on open-space valuation, see Rule Sec. 9.4001.

Notes:

Wildlife management changes by HB 1358, 74th Leg., apply to taxes imposed for tax years beginning on or after January 1, 1996.

Including land used as ecological laboratories in the definition of qualified open-space land does not violate the Texas Constitution. The word "purposes" in the clause "farm and ranch purposes" indicated that the Legislature can give productive capacity appraisal to property that, although not strictly a farm or ranch, is devoted to the furtherance of farming and ranching. The Legislature and taxing units have consistently interpreted "open-space land devoted to farm or ranch purposes" to include ecological laboratories. Nootsie, LTD. and State of Texas v. Williamson County Appraisal District, 925 S.W.2d 659 (Tex. 1996).

A landowner may use his or her land for recreation, and still receive an open-space designation as long as the land is principally used for agricultural purposes. Therefore, the inclusion of the phrase, "use of land ... principally for recreation, or as a hobby," in the definition of "agricultural use" in a jury charge was not improper. Tarrant Appraisal Dist. v. Moore, 845 S.W.2d 820 (Tex. 1993).

Open-space valuation does not apply to improvements. Land is separate from improvements. Walker v. Appraisal Review Bd. for Guadalupe County Appraisal Dist., 846 S.W.2d 14 (Tex. App.-San Antonio 1992, writ denied).

Sec. 23.51 is constitutional. The requirement of a prior use history does not violate the constitutional guarantee of equal protection of the laws. Michael McCormick v. Attorney General of Texas and Denton County Appraisal District, 822 S.W.2d 814 (Tex. App.-Fort Worth 1992, no writ).

A "crop" is defined as a plant or animal or plant or animal product that can be grown and harvested extensively for profit or subsistence. A category of land is created by taking into account the typical uses of the land. Rusk Industries v. Hopkins County Tax Appraisal District and Hopkins County Appraisal Review Board, 818 S.W.2d 111 (Tex. App.-Texarkana 1991, writ denied).

Bees are not like cows, and land foraged by bees is not entitled to open-space valuation. Pizzitola v. Galveston County Central Appraisal District, 808 S.W.2d 244 (Tex. App.-Houston [1st Dist.] 1991).

Degree of intensity requirement applies only to current year's use. Where taxpayer cultivated all land that could be cultivated and used entire tract to the degree of intensity typical for the area, land could qualify for 1-d-1 appraisal. Fact that crop was not harvested did not negate land's agricultural use. Hays County Appraisal District v. Robinson, 809 S.W.2d 328 (Tex. App.-Austin 1991).

Taxpayer could qualify entire tract for 1-d-1 agricultural appraisal although a portion of the land was not used for agriculture because county was building a road across it. Dallas CAD v. Seven Investment Company and Dallas CAD v. Las Colinas Corporation, 813 S.W.2d 197 (Tex. App.- Dallas 1991), rev'd on other grounds 835 S.W.2d 75 (Tex. 1992).

Land used exclusively to graze horses qualifies for agricultural appraisal, even though the horses themselves are used for recreational purposes. Kerr Central Appraisal District v. Stacy, 775 S.W.2d 739 (Tex. App.-San Antonio 1989, writ denied).

Taxpayer's appeal of productivity denial for tax years 1985-87 presented same issues and facts on the raising of deer as a qualifying land use as 1982-84 appeal, had no reasonable grounds, was taken for delay only and without sufficient cause; thus, taxpayer must pay frivolous appeal damages under Appellate Court Rule 84. Bower v. Edward County Appraisal District, 752 S.W.2d 629 (Tex. App.-San Antonio 1988, writ denied).

Where testimony showed taxpayer used small tract of land for suitable purpose, pastured more sheep than the land would carry, supplementing grazing with commercial feed, and used land as a typically prudent manager would, and no evidence to the contrary was presented, trial court finding that land was not principally devoted to agriculture to the degree of intensity typical for the area was not supported by any evidence. Riess v. Appraisal District of Williamson County, 735 S.W.2d 633 (Tex. App.-Austin 1987, writ denied).

Intensity of use test applies only to current use, not to historical use over preceding seven years. Taxpayer whose land was devoted principally to agricultural use, for five of the seven preceding years met the five-year test even though land was not used to the degree of intensity typical in the area during those years. Id.

Permitting wild deer to eat natural vegetation or raising deer for human consumption are not agricultural uses of land that allow a taxpayer to qualify for special appraisal as open-space land. The trial court properly developed a jury charge based on guidelines adopted by the State Property Tax Board that excluded the raising of deer from the definition of an agricultural use. Bower v. Edwards County Appraisal District, 697 S.W.2d 528 (Tex. App. -San Antonio 1985, no writ).

The calculation of a "net-to-land" factor using the cash lease method, the share lease method or the reasonable alternatives if cash lease and share lease cannot be used is constitutional. Since this appraisal method for agricultural land was created to promote the preservation of these lands, the chief appraiser must use the "net-to-land" factor to calculate the land's productivity value. The Comptroller's (formerly, State Property Tax Board's) Manual for the Appraisal of Agricultural Land properly discusses the best methodology to make these calculations. Op. Tex. Att'y Gen. No. DM-355 (1995).

The statutory definition of agriculture includes fish and other forms of aquatic life. However, the mere harvesting of fish or shellfish from the natural environment would not qualify as an agricultural use. Op. Tex. Att'y Gen. No. JM-87 (1983).

Sec. 23.52. Appraisal of Qualified Agricultural Land.

(a) The appraised value of qualified open-space land is determined on the basis of the category of the land, using accepted income capitalization methods applied to average net to land. The appraised value so determined may not exceed the market value as determined by other appraisal methods.

(b) The chief appraiser shall determine the appraised value according to this subchapter and, when requested by a landowner, the appraised value according to Subchapter C of this chapter of each category of open-space land owned by that landowner and shall make each value and the market value according to the preceding year's appraisal roll available to a person seeking to apply for appraisal as provided by this subchapter or as provided by Subchapter C of this chapter.

(c) The chief appraiser may not change the appraised value of a parcel of open-space land unless the owner has applied for and the land has qualified for appraisal as provided by this subchapter or by Subchapter C of this chapter or unless the change is made as a result of a reappraisal.

(d) The comptroller by rule shall develop and distribute to each appraisal office appraisal manuals setting forth this method of appraising qualified open-space land, and each appraisal office shall use the appraisal manuals in appraising qualified open-space land. The comptroller by rule shall develop and the appraisal office shall enforce procedures to verify that land meets the conditions contained in Subdivision (1) of Section 23.51 of this code. The rules, before taking effect, must be approved by a majority vote of a committee comprised of the following officials or their designees: the governor, the comptroller, the attorney general, the agriculture commissioner, and the Commissioner of the General Land Office.

(e) For the purposes of Section 23.55 of this code, the chief appraiser also shall determine the market value of qualified open-space land and shall record both the market value and the appraised value in the appraisal records.

(f) The appraisal of minerals or subsurface rights to minerals is not within the provisions of this subchapter.

(g) Repealed in 2001.

Amended by 1981 Tex. Laws (1st C.S.), p. 143, ch. 13, Sec. 68; amended by 1991 Tex. Laws (2nd C.S.), p. 31, ch. 6, Sec. 24; amended by 1995 Tex. Laws, p. 4459, ch. 911, Sec. 2; amended by HB 3123, 77th Tex. Leg., 2001, eff. September 1, 2001.

Cross References:

Valuation of open-space and agricultural lands, see Rule Sec. 9.4001.
Valuation of wildlife management lands, see Rule Sec. 9.2.001.

Notes:

The method of valuation of open-space land used by an appraisal district was not arbitrary or capricious. The court found ample evidence supporting the conclusion, including appraisal district compliance with agricultural manuals setting forth methods, and expert witness testimony establishing the reasonableness of appraisal district values. Walker v. Appraisal Review Bd. for Guadalupe County Appraisal Dist., 846 S.W.2d 14 (Tex. App.-San Antonio 1993, writ denied).

State-owned land used for public purposes and exempt under Tax Code Section 11.11 is not subject to the agricultural use rollback tax in Tax Code Section 23.55. Opinion No. JM-949 (1988) held that acquisition alone does not trigger the rollback tax provisions. The rollback tax process is triggered when a change of use occurs from an agricultural use to a nonagricultural use. No Texas courts have addressed directly the rollback tax provision with regard to the state acquiring and changing a qualified land's use. The opinion disagreed with the State Property Tax Board's position in its 1990 rule for the Manual for the Appraisal of Agricultural Land that governmental acquisition and change of use of qualified agricultural land triggered the rollback provisions. Op. Tex. Att'y Gen. No. DM-448 (1997).

The calculation of a "net-to-land" factor using the cash lease method, the share lease method or the reasonable alternatives if cash lease and share lease cannot be used is constitutional. Since this appraisal method for agricultural land was created to promote the preservation of these lands, the chief appraiser must use the "net-to-land" factor to calculate the land's productivity value. The Comptroller's (formerly, State Property Tax Board's) Manual for the Appraisal of Agricultural Land properly discusses the best methodology to make these calculations. Op. Tex. Att'y Gen. No. DM-355 (1995).

Sec. 23.521. Standards for Qualification of Land for Appraisal Based on Wildlife Management Use.

(a) The Parks and Wildlife Department, with the assistance of the comptroller, shall develop standards for determining whether land qualifies under Section 23.51(7) for appraisal under this subchapter. The comptroller by rule shall adopt the standards developed by the Parks and Wildlife Department and distribute those rules to each appraisal district. On request of the Parks and Wildlife Department, the Texas Agricultural Extension Service shall assist the department in developing the standards.

(b) The standards adopted under Subsection (a) may require that a tract of land be a specified minimum size to qualify under Section 23.51(7) for appraisal under this subchapter, taking into consideration one or more of the following factors:

(1) the activities listed in Section 23.51(7);

(2) the type of indigenous wild animal population the land is being used to propagate;

(3) the region in this state in which the land is located; and

(4) any other factor the Parks and Wildlife Department determines is relevant.

(c) The standards adopted under Subsection (a) may include specifications for a written management plan to be developed by a landowner if the landowner receives a request for a written management plan from a chief appraiser as part of a request for additional information under Section 23.57.

(d) In determining whether land qualifies under Section 23.51(7) for appraisal under this subchapter, the chief appraiser and the appraisal review board shall apply the standards adopted under Subsection (a) and, to the extent they do not conflict with those standards, the appraisal manuals developed and distributed under Section 23.52(d).

Added by HB 3123, 77th Tex. Leg., 2001, eff. September 1, 2001.

Cross References:

Parks and Wildlife Department Standards adopted by Comptroller rule, see Rule Sec. 9.4003.

Notes:

HB 3123, 77th Tex. Leg, 2001, states that the Parks and Wildlife Department, with the assistance of the comptroller, shall develop the standards required by Section 23.521, Tax Code. As soon as practicable after those standards are developed, the comptroller by rule shall adopt those standards and distribute those rules to each appraisal district as required. The rules apply to tax years beginning on or after January 1, 2002.

Sec. 23.53. Capitalization Rate.

The capitalization rate to be used in determining the appraised value of qualified open-space land as provided by this subchapter is 10 percent or the interest rate specified by the Farm Credit Bank of Texas or its successor on December 31 of the preceding year plus 2-1/2 percentage points, whichever percentage is greater.

Amended by 1995 Tex. Laws, p. 3375, ch. 579, Sec. 4.

Sec. 23.54. Application.

(a) A person claiming that his land is eligible for appraisal under this subchapter must file a valid application with the chief appraiser.

(b) To be valid, the application must:

(1) be on a form provided by the appraisal office and prescribed by the comptroller; and

(2) contain the information necessary to determine the validity of the claim.

(c) The comptroller shall include on the form a notice of the penalties prescribed by Section 37.10, Penal Code, for making or filing an application containing a false statement. The comptroller, in prescribing the contents of the application form, shall require that the form permit a claimant who has previously been allowed appraisal under this subchapter to indicate that previously reported information has not changed and to supply only the eligibility information not previously reported.

(d) The form must be filed before May 1. However, for good cause the chief appraiser may extend the filing deadline for not more than 60 days.

(e) If a person fails to file a valid application on time, the land is ineligible for appraisal as provided by this subchapter for that year. Once an application is filed and appraisal under this subchapter is allowed, the land is eligible for appraisal under this subchapter in subsequent years without a new application unless the ownership of the land changes or its eligibility under this subchapter ends. However, the chief appraiser if he has good cause to believe the land's eligibility under this subchapter has ended, may require a person allowed appraisal under this subchapter in a prior year to file a new application to confirm that the land is currently eligible under this subchapter by delivering a written notice that a new application is required, accompanied by the application form, to the person who filed the application that was previously allowed.

(f) The appraisal office shall make a sufficient number of printed application forms readily available at no charge.

(g) Each year the chief appraiser for each appraisal district shall publicize, in a manner reasonably designed to notify all residents of the district, the requirements of this section and the availability of application forms.

(h) A person whose land is allowed appraisal under this subchapter shall notify the appraisal office in writing before May 1 after eligibility of the land under this subchapter ends or after a change in the category of agricultural use. If a person fails to notify the appraisal office as required by this subsection a penalty is imposed on the property equal to 10 percent of the difference between the taxes imposed on the property in each year it is erroneously allowed appraisal under this subchapter and the taxes that would otherwise have been imposed.

(i) The chief appraiser shall make an entry in the appraisal records for the property against which the penalty is imposed indicating liability for the penalty and shall deliver a written notice of imposition of the penalty to the person who owns the property. The notice shall include a brief explanation of the procedures for protesting the imposition of the penalty. The assessor for each taxing unit that imposed taxes on the property on the basis of appraisal under this subchapter shall add the amount of the penalty to the unit's tax bill for taxes on the property against which the penalty is imposed. The penalty shall be collected at the same time and in the same manner as the taxes on the property against which the penalty is imposed. The amount of the penalty constitutes a lien on the property against which the penalty is imposed and accrues penalty and interest in the same manner as a delinquent tax.

(j) If the chief appraiser discovers that appraisal under this subchapter has been erroneously allowed in any one of the five preceding years because of failure of the person whose land was allowed appraisal under this subchapter to give notice that its eligibility has ended, he shall add the difference between the appraised value of the land under this subchapter and the market value of the land to the appraisal roll as provided by Section 25.21 of this code for other property that escapes taxation.

Amended by 1981 Tex. Laws (1st C.S.), p. 143, ch. 13, Sec. 69; amended by 1991 Tex. Laws (2nd C.S.), p. 31, ch. 6, Sec. 25; amended by 1993 Tex. Laws, p. 4446, ch. 1031, Sec. 14.

Cross References:

Special use application forms, see Rule Sec. 9.402.
Contents of tax bills, see Sec. 31.01(d).

Notes:

Requesting a new application for open-space land appraisal provides a mechanism by which the chief appraiser can obtain needed information; the chief appraiser does not have to make individual determinations before requiring a new application. A new application mailed to the taxpayer's correct address and not returned by the postal service gives the taxpayer sufficient notice. Peil v. Waller County Appraisal District, 737 S.W.2d 33 (Tex. App.-Houston 1987, no writ).

To qualify land for agricultural use appraisal, the property owner must timely apply. Art. 8, Secs. 1-d and 1-d-1, Tex. Const., grant the legislature the authority to set limitations and sanctions. Fisher v. Kerr County, 739 S.W.2d 434 (Tex. App.-San Antonio 1987, no writ).

Sec. 23.541. Late Application for Appraisal as Agricultural Land.

(a) The chief appraiser shall accept and approve or deny an application for appraisal under this subchapter after the deadline for filing it has passed if it is filed before approval of the appraisal records by the appraisal review board.

(b) If appraisal under this subchapter is approved when the application is filed late, the owner is liable for a penalty of 10 percent of the difference between the amount of tax imposed on the property and the amount that would be imposed if the property were taxed at market value.

(c) The chief appraiser shall make an entry on the appraisal records indicating the person's liability for the penalty and shall deliver written notice of imposition of the penalty, explaining the reason for its imposition, to the person.

(d) The tax assessor for a taxing unit that taxes land based on an appraisal under this subchapter after a late application shall add the amount of the penalty to the owner's tax bill, and the tax collector for the unit shall collect the penalty at the time and in the manner he collects the tax. The amount of the penalty constitutes a lien against the property against which the penalty is imposed, as if it were a tax, and accrues penalty and interest in the same manner as a delinquent tax.

Added by 1981 Tex. Laws (1st C.S.), p. 144, ch. 13, Sec. 70.

Cross References:

Approval of appraisal records by appraisal review board, see Sec. 25.24.
Contents of tax bill, see Sec. 31.01(d).
Penalties and interest on a delinquent tax, see Sec. 33.01.

Notes:

To qualify land for agricultural use appraisal, the property owner must timely apply. Art. 8, Secs. 1-d and 1-d-1, Tex. Const., grant the legislature the authority to set limitations and sanctions. Fisher v. Kerr County, 739 S.W.2d 434 (Tex. App.-San Antonio 1987, no writ).

Sec. 23.55. Change of Use of Land.

(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 incurred. The lien exists in favor of all taxing units for which the additional tax is imposed.

(c) The additional tax imposed by this section does not apply to a year for which the tax has already been imposed.

(d) If the change of use applies to only part of a parcel that has been appraised as provided by this subchapter, the additional tax applies only to that part of the parcel and equals the difference between the taxes imposed on that part of the parcel and the taxes that would have been imposed had that part been taxed on the basis of market value.

(e) 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; or

(3) a transfer of the property to the state or a political subdivision of the state to be used for a public purpose.

(g) If the use of the land changes to a use that qualifies under Subchapter E of this chapter, the sanctions provided by Subsection (a) of this section do not apply.

(h) Additional taxes, if any, for a year in which land was designated for agricultural use as provided by Subchapter C of this chapter (or Article VIII, Section 1-d, of the constitution) are determined as provided by that subchapter, and the additional taxes imposed by this section do not apply for that year.

(i) The use of land does not change for purposes of Subsection (a) of this section solely because the owner of the land claims it as part of his residence homestead for purposes of Section 11.13 of this code.

(j) The sanctions provided by Subsection (a) of this section do not apply to land owned by an organization that qualifies as a religious organization under Section 11.20(c) of this code if the organization converts the land to a use for which the land is eligible for an exemption under Section 11.20 of this code within five years.

(j) The sanctions provided by Subsection (a) do not apply to a change in use of land if:

(1) the land is located in an unincorporated area of a county with a population of less than 100,000;

(2) the land does not exceed five acres;

(3) the land is owned by a not-for-profit cemetery organization;

(4) the cemetery organization dedicates the land for a cemetery purpose;

(5) the cemetery organization has not dedicated more than five acres of land in the county for a cemetery purpose in the five years preceding the date the cemetery organization dedicates the land for a cemetery purpose; and

(6) the land is adjacent to a cemetery that has been in existence for more than 100 years.

(k) In Subsection (j), "cemetery," "cemetery organization," and "cemetery purpose" have the meanings assigned those terms by Section 711.001, Health and Safety Code.

(l) The sanctions provided by Subsection (a) of this section do not apply to land owned by an organization that qualifies as a religious organization under Section 11.20(c) of this code if the organization converts the land to a use for which the land is eligible for an exemption under Section 11.20 of this code within five years.

Amended by 1981 Tex. Laws (1st C.S.), p. 145, ch. 13, Sec. 71; amended by 1983 Tex. Laws, p. 4147, ch. 652, Sec. 2; amended by 1983 Tex. Laws, p. 4824, ch. 851, Sec. 12; amended by 1989 Tex. Laws, p. 3598, ch. 796, Sec. 20; amended by 1995 Tex. Laws, p. 3188, ch. 471, Sec. 2, and by p. 4182, ch. 811, Sec. 1; amended by 1997 Tex. Laws, p. 712, ch. 165, Sec. 31.01 (74); p. 1475, ch. 345, Sec. 5; p. 1483, ch. 351, Sec. 1; and, p. 5289, ch. 1411, Sec. 8.

Cross References:

Rollback procedures compared, see Rule Sec. 9.4001.
Contents of tax bills, see Sec. 31.01(c)(3).
Cemetery definitions, see Sec. 711.001, Health and Safety Code.
Cemetery property tax exemption, see Sec. 11.17.
Church property tax exemption, see Sec. 11.20.
Notice of additional tax liability, see Sec. 5.010, Property Code.

Notes:

HB 2383, 75th Tex. Leg., eff. June 20, 1997, provides that the change to Section 23.55(j), by the 74th Tex. Leg., 1995, applies to a change of use of land: (1) on or after June 12, 1995; or (2) before June 12, 1995, if: (A) the change of use occurred on or after June 12, 1990; and (B) on June 12, 1995, the owner of the land had not been determined to be liable for the sanctions provided by Section 23.55(a), Tax Code, by a final and nonappealable order or judgment.

Because owners of agricultural land are informed of the appraised market value of their land in the notices of appraised value, they are sufficiently alerted to any error in the appraised market value at the time of the appraisal. Therefore, even though they are not taxed on the market value of their land, these owners have the right to protest the appraised market value immediately upon receiving their notice of appraised value, long before any rollback tax may be imposed because of a change in use. Any motion made pursuant to Section 25.25(d), including a motion to correct the appraised market value of agricultural property, must be filed before the date the yearly property taxes - not the rollback taxes - on the subject land become delinquent. Tarrant Appraisal District and Tarrant Appraisal Review Board v. Gateway Center Associates, Ltd., 34 S.W.3d 712 (Tex. App.- Fort Worth [2nd Dist.] 2000, pet. denied).

A property owner's ability to change the approved tax appraisal rolls is clearly limited. Any motion made pursuant to Section 25.25(d), including a motion to correct the appraised market value of agricultural property, must be filed before the date the yearly property taxes - not the rollback taxes - on the subject land become delinquent. The term "taxes" used in Section 25.25(d) refers only to the yearly property taxes. Anderton v. Rockwall Central Appraisal District and Appraisal Review Board, 26 S.W.3d 539 (Tex. App.- Dallas [5th Dist.] 2000).

The legislative changes in 1995 and 1997 that exempted certain property owned by a religious organization from rollback taxes are not retroactive to rollback taxes assessed in 1992. Hilltop Baptist Temple, Inc. v. Williamson County Appraisal District, 995 S.W.2d 905 (Tex. App. - Austin 1999).

Property Tax Code Section 23.55 and the Comptroller's Manual for the Appraisal of Agricultural Land indicate that a rollback assessment is both a penalty and a tax, imposed to prevent individuals from taking their property out of agricultural production. The rollback tax therefore could not be imposed against the federal government, since the federal government's agency is not liable for the penalty because there is no express congressional waiver for such a penalty. Resolution Trust Corporation v. Tarrant County Appraisal District, 926 S.W.2d 797 (Tex. App.-Fort Worth 1996, rehearing overruled).

A property owner denied an agricultural use appraisal and subject to the agricultural rollback tax is entitled to notice of the denial and opportunity to protest the denial as a right of due process of law. State, County of Bexar v. Southoaks Development Company, Inc., 920 S.W.2d 330 (Tex. App.-San Antonio 1995).

Qualification of agricultural open-space land owned by a youth development association qualified for a property tax exemption does not itself constitute a change of use for purposes of the rollback tax, when the land continues to be used for agricultural purposes. Referring to Opinion No. JM-667 (1987), no change of use occurs if the land continues to be used for agricultural purposes even though the land may no longer qualify for open-space land appraisal. Op. Tex. Att'y Gen. No. JC-299 (2000).

State-owned land used for public purposes and exempt under Tax Code Section 11.11 is not subject to the agricultural use rollback tax in Tax Code Section 23.55. Opinion No. JM-949 (1988) held that acquisition alone does not trigger the rollback tax provisions. The rollback tax process is triggered when a change of use occurs from an agricultural use to a nonagricultural use. No Texas courts have addressed directly the rollback tax provision with regard to the state acquiring and changing a qualified land's use. The opinion disagreed with the State Property Tax Board's position in its 1990 rule for the Manual for the Appraisal of Agricultural Land that governmental acquisition and change of use of qualified agricultural land triggered the rollback provisions. Op. Tex. Att'y Gen. No. DM-448 (1997).

Only the chief appraiser has authority to determine under Property Tax Code Section 23.55 of a change in use to trigger imposing the rollback tax on land previously receiving agricultural appraisal. A tax collector has no authority to accept payment of rollback taxes prior to the taxes' imposition. Tex. Att'y Gen. LO-95-054 (1995).

A tax assessor-collector may continue to collect additional taxes under Sec. 23.55(e) only if the collector sent the landowner a statement for the taxes before September 1, 1989. September 1, 1989 represents the effective date of the amendment to Sec. 23.55(e), which transferred authority for determination of the use of agricultural land from the assessor to the chief appraiser. Op. Tex. Att'y Gen. No. DM-220 (1993).

No rollback of taxes occurs when 1-d-1 land is taken in an eminent domain proceeding. Op. Tex. Att'y Gen. No. JM-949 (1988).

When a taxpayer's land that has previously qualified for open-space land valuation no longer qualifies for the special valuation because it is not devoted to agricultural use to the degree of intensity generally accepted in the area, no rollback tax may be imposed unless the land's actual use is changed. Op. Tex. Att'y Gen. No. JM-667 (1987).

Sec. 23.56. Land Ineligible for Appraisal as Open-Space Land.

Land is not eligible for appraisal as provided by this subchapter if:

(1) the land is located inside the corporate limits of an incorporated city or town, unless:

(A) the city or town is not providing the land with governmental and proprietary services substantially equivalent in standard and scope to those services it provides in other parts of the city or town with similar topography, land utilization, and population density; or

(B) the land has been devoted principally to agricultural use continuously for the preceding five years;

(2) the land is owned by an individual who is a nonresident alien or by a foreign government if that individual or government is required by federal law or by rule adopted pursuant to federal law to register his ownership or acquisition of that property; or

(3) the land is owned by a corporation, partnership, trust, or other legal entity if the entity is required by federal law or by rule adopted pursuant to federal law to register its ownership or acquisition of that land and a nonresident alien or a foreign government or any combination of nonresident aliens and foreign governments own a majority interest in the entity.

Notes:

Section 23.56(3) violates the equal rights amendment of the Texas Constitution, art. I, Sec. 3, based upon the Supreme Court's ruling in HL Farm v. Self. GNB, Inc. v. Collin County Appraisal District, 894 S.W.2d 659 (Tex. 1994).

After the Texas Supreme Court held Section 23.56(3) unconstitutional, the court of appeals held that the taxpayer was not entitled to open-space designation for 1990, 1991, and 1993, because the taxpayer failed to exhaust its administrative remedies when it was denied the special appraisal. Refunds for taxes previously paid under the statute declared invalid would be only to taxpayers who had followed administrative procedures and timely filed it for each tax year. Henderson County Appraisal District v. HL Farm Corporation, 956 S.W.2d 672 (Tex. App. - Eastland 1997).

An appraisal district may not deny open-space land appraisal to a non-resident corporation solely because of the status as a non-resident. HL Farm Corp. v. Henderson County Appraisal District, 894 S.W.2d 830 (Tex. App.-Tyler 1995, no writ).

In a case involving the denial of an open-space land designation to a foreign corporation, based upon Property Tax Code Sec. 23.56(3), the Texas Supreme Court found that the classification created by Sec. 23.56(3), which excludes foreign owners from receiving an open-space land designation, was not rationally related to the promotion and preservation of open-space land. As a result, the Court held that Sec. 23.56(3), Tax Code, violates the equal rights amendment of the Texas Constitution, art. 1, Sec. 3. This opinion reverses the court of appeals' judgment in HL Farm Corp. v. Self, 820 S.W.2d 372 (Tex. App.-Dallas 1991). The Court also disapproved Alexander Ranch, Inc. v. Central Appraisal District of Erath County, 733 S.W.2d 303 (Tex. App.-Eastland 1987, writ ref'd n.r.e.). HL Farm Corporation v. Self, 877 S.W.2d 288 (Tex. 1994).

Provisions denying agricultural appraisal if land is owned by an alien or a foreign government do not violate equal protection clauses of the Texas and U.S. Constitution, art. VII, Sec. 1-d-1, is intended to protect family farms. HL Farm Corporation v. Self, 877 S.W.2d 288 (Tex. 1994).

Agricultural corporation not owned by Netherlands nationals was properly denied agricultural appraisal. Treaty between U. S. and Netherlands would, however, allow a corporation owned by Netherlands nationals to receive agricultural appraisal. Hidalgo County Appraisal District v. Engfar N.V. and Monfar N.V., 756 S.W.2d 754 (Tex. App.-Corpus Christi 1989, no writ).

Purpose of open-space appraisal is to preserve and benefit family farms. Tax Code Sec. 23.56, providing that land owned by a corporation controlled by non-resident aliens, does not qualify for open-space appraisal, supersedes Sec. 5.005, Property Code, providing that aliens have the same property rights as U.S. Citizens. Sec. 23.56 does not violate equal protection clause of U.S. Constitution. Alexander Ranch, Inc. v. Central Appraisal District of Erath County, 733 S.W.2d 303 (Tex. App. -Eastland 1987, writ ref'd n.r.e.), rev'd by HL Farm Corporation v. Self, 877 S.W.2d 288 (Tex. 1994).

Sec. 23.57. Action on Applications.

(a) The chief appraiser shall determine separately each applicant's right to have his land appraised under this subchapter. After considering the application and all relevant information, the chief appraiser shall, as the law and facts warrant:

(1) approve the application and allow appraisal under this subchapter;

(2) disapprove the application and request additional information from the applicant in support of the claim; or

(3) deny the application.

(b) If the chief appraiser requests additional information from an applicant, the applicant must furnish it within 30 days after the date of the request or the application is denied. However, for good cause shown the chief appraiser may extend the deadline for furnishing the information by written order for a single period not to exceed 15 days.

(c) The chief appraiser shall determine the validity of each application for appraisal under this subchapter filed with him before he submits the appraisal records for review and determination of protests as provided by Chapter 41 of this code.

(d) If the chief appraiser denies an application, he shall deliver a written notice of the denial to the applicant within five days after the date he makes the determination. He shall include with the notice a brief explanation of the procedures for protesting his action and a full explanation of the reasons for denial of the application.

Added by 1981 Tex. Laws (1st C.S.), p. 145, ch. 13, Sec. 72.

Cross References:

Chief appraiser must deliver notice of denial before submitting records to appraisal review board, see Sec. 25.22(a).
Property owner may protest denial of special appraisal, see Sec. 41.41(1).
Improper grant of special appraisal, see Sec. 23.54(j).
Challenge of improper grant of special appraisal, see Sec. 41.03(4).
Chief appraiser must deliver notice denying special appraisal before submitting records to appraisal review board, see Sec. 25.22(a).

Sec. 23.58. Loan Secured by Lien on Open-Space Land.

(a) A lender may not require as a condition to granting or amending the terms of a loan secured by a lien in favor of the lender on land appraised according to this subchapter that the borrower waive the right to the appraisal or agree not to apply for or receive the appraisal.

(b) 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 is void to the extent that the provision attempts to require the borrower to waive the right to the appraisal or to prohibit the borrower from applying for or receiving the appraisal.

(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.

(e) In this section, "lender" has the meaning assigned by Section 23.47(e).

Added by 1995 Tex. Laws, p. 852, ch. 82, Sec. 2.

Cross References:

Loan secured on agricultural-use land, see Sec. 23.47.
Rollback taxes for sale or change of use, see Sec. 23.55.
Rollback tax procedures compared, see Rule Sec. 9.4001.

Sec. 23.59. Appraisal of Open-Space Land that is Converted to Timber Production.

(a) If land that has been appraised under this subchapter for at least five preceding years is converted to production of timber after September 1, 1997, the owner may elect to have the land continue to be appraised under this subchapter for 15 years after the date of the conversion, so long as the land qualifies for appraisal as timber land under Subchapter E. In that event, the land is deemed to be the same category of land under this subchapter as it was immediately before conversion to timber production.

(b) The election must be made by a new application filed as provided by Section 23.54 and remains in effect for 15 years or until a change in use of the land occurs.

(c) This section applies to the appraisal of land converted to timber production only until the end of the tax year in which the 15th anniversary of the date of the conversion occurs. In the 16th and subsequent years, the land shall be appraised as timber land as provided by Subchapter E, so long as it qualifies as timber land under Subchapter E.

Added by 1997 Tex. Laws., p. 2452, ch. 765, Sec. 1.

[Sections 23.60 to 23.70 reserved for expansion]