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Title 1. Property Tax Code
Subtitle C. Taxable Property and Exemptions

Chapter 11. Taxable Property and Exemptions

Subchapter B. Exemptions.

Sec. 11.11. Public Property.
Sec. 11.111. Public Property Used to Provide Transitional Housing for Indigent Persons.
Sec. 11.12. Federal Exemptions.
Sec. 11.13. Residence Homestead.
Sec. 11.14. Tangible Personal Property Not Producing Income.
Sec. 11.142. Repealed in 2003.
Sec. 11.145. Income Producing Tangible Personal Property Having Value Less than $500.
Sec. 11.146. Mineral Interest Having Value of Less than $500.
Sec. 11.15. Family Supplies.
Sec. 11.16. Farm Products.
Sec. 11.161. Implements of Husbandry.
Sec. 11.17. Cemeteries.
Sec. 11.18. Charitable Organizations.
Sec. 11.1801. Charity Care and Community Benefits Requirements for Charitable Hospital.
Sec. 11.181. Charitable Organizations Improving Property for Low-Income Housing.
Sec. 11.182. Community Housing Development Organizations Improving Property for Low-Income and Moderate-Income Housing: Property Previously Exempt.
Sec. 11.1825. Organizations Constructing or Rehabilitating Low-Income Housing: Property Not Previously Exempt.
Sec. 11.1826. Monitoring of Compliance With Low-Income and Moderate-Income Housing Exemptions.
Sec. 11.183. Association Providing Assistance to Ambulatory Health Care Centers.
Sec. 11.184. Organizations Engaged Primarily in Performing Charitable Functions.
Sec. 11.185. Colonia Model Subdivision Program.
Sec. 11.19. Youth Spiritual, Mental, and Physical Development Associations.
Sec. 11.20. Religious Organizations.
Sec. 11.201. Additional Tax on Sale of Certain Religious Organization Property.
Sec. 11.21. Schools.
Sec. 11.22. Disabled Veterans.
Sec. 11.23. Miscellaneous Exemptions.
Sec. 11.24. Historic Sites.
Sec. 11.25. Marine Cargo Containers Used Exclusively in International Commerce.
Sec. 11.251. Tangible Personal Property Exempt.
Sec. 11.252. Motor Vehicles Leased for Personal Use.
Sec. 11.26. Limitation of School Tax on Homesteads of Elderly or Disabled.
Sec. 11.261. Limitation of County, Municipal, or Junior College District Tax on Homesteads of Disabled and Elderly.
Sec. 11.27. Solar and Wind-Powered Energy Devices.
Sec. 11.271. Offshore Drilling Equipment Not in Use.
Sec. 11.28. Property Exempted from City Taxation by Agreement.
Sec. 11.29. Intracoastal Waterway Dredge Disposal Site.
Sec. 11.30. Nonprofit Water Supply or Wastewater Service Corporation.
Sec. 11.31. Pollution Control Property.
Sec. 11.32. Certain Water Conservation Initiatives.
Sec. 11.33. Raw Cocoa and Green Coffee Held in Harris County.

[Sections 11.34 to 11.40 reserved for expansion]

Sec. 11.1801. Charity Care and Community Benefits Requirements for Charitable Hospital

(a) To qualify as a charitable organization under Section 11.18(d)(1), a nonprofit hospital or hospital system must provide charity care and community benefits as follows:

(1) charity care and government-sponsored indigent health care must be provided at a level that is reasonable in relation to the community needs, as determined through the community needs assessment, the available resources of the hospital or hospital system, and the tax-exempt benefits received by the hospital or hospital system;

(2) charity care and government-sponsored indigent health care must be provided in an amount equal to at least four percent of the hospital's or hospital system's net patient revenue;

(3) charity care and government-sponsored indigent health care must be provided in an amount equal to at least 100 percent of the hospital's or hospital system's tax-exempt benefits, excluding federal income tax; or

(4) charity care and community benefits must be provided in a combined amount equal to at least five percent of the hospital's or hospital system's net patient revenue, provided that charity care and government-sponsored indigent health care are provided in an amount equal to at least four percent of net patient revenue.

(b) A nonprofit hospital that has been designated as a disproportionate share hospital under the state Medicaid program in the current year or in either of the previous two fiscal years shall be considered to have provided a reasonable amount of charity care and government-sponsored indigent health care and is considered to be in compliance with the standards in Subsection (a).

(c) A hospital operated on a nonprofit basis that is located in a county with a population of less than 58,000 and in which the entire county or the population of the entire county has been designated as a health professionals shortage area is considered to be in compliance with the standards in Subsection (a).

(d) A hospital providing health care services to inpatients or outpatients without receiving any payment for providing those services from any source, including the patient or person legally obligated to support the patient, third-party payors, Medicare, Medicaid, or any other state or local indigent care program but excluding charitable donations, legacies, bequests, or grants or payments for research, is considered to be in compliance with the standards in Subsection (a).

(e) For purposes of complying with Subsection (a)(4), a hospital or hospital system may not change its existing fiscal year unless the hospital or hospital system changes its ownership or corporate structure as a result of a sale or merger.

(f) For purposes of this section, a hospital that complies with Subsection (a)(1) or that is considered to be in compliance with the standards in Subsection (a) under Subsection (b), (c), or (d) shall be excluded in determining a hospital system's compliance with the standards in Subsection (a)(2), (3), or (4).

(g) For purposes of this section, "charity care," "government-sponsored indigent health care," "health care organization," "hospital system," "net patient revenue," "nonprofit hospital," and "tax-exempt benefits" have the meanings assigned by Sections 311.031 and 311.042, Health and Safety Code. A determination of the amount of community benefits and charity care and government-sponsored indigent health care provided by a hospital or hospital system and the hospital's or hospital system's compliance with Section 311.045, Health and Safety Code, shall be based on the most recently completed and audited prior fiscal year of the hospital or hospital system.

(h) The providing of charity care and government-sponsored indigent health care in accordance with Subsection (a)(1) shall be guided by the prudent business judgment of the hospital, which will ultimately determine the appropriate level of charity care and government-sponsored indigent health care based on the community needs, the available resources of the hospital, the tax-exempt benefits received by the hospital, and other factors that may be unique to the hospital, such as the hospital's volume of Medicare and Medicaid patients. These criteria shall not be determinative factors, but shall be guidelines contributing to the hospital's decision along with other factors that may be unique to the hospital. The formulas in Subsections (a)(2), (3), and (4) shall also not be considered determinative of a reasonable amount of charity care and government-sponsored indigent health care.

(i) The requirements of this section shall not apply to the extent a hospital or hospital system demonstrates that reductions in the amount of community benefits, charity care, and government-sponsored indigent health care are necessary to maintain financial reserves at a level required by a bond covenant or are necessary to prevent the hospital or hospital system from endangering its ability to continue operations, or if the hospital or hospital system, as a result of a natural or other disaster, is required substantially to curtail its operations.

(j) In any fiscal year that a hospital or hospital system, through unintended miscalculation, fails to meet any of the standards in Subsection (a) or fails to be considered to be in compliance with the standards in Subsection (a) under Subsection (b), (c), or (d), the hospital or hospital system shall not lose its tax-exempt status without the opportunity to cure the miscalculation in the fiscal year following the fiscal year the failure is discovered by both meeting one of the standards and providing an additional amount of charity care and government-sponsored indigent health care that is equal to the shortfall from the previous fiscal year. A hospital or hospital system may apply this provision only once every five years.

Added by 2001 Tex. Laws, p. 4298, ch. 1420, Sec. 18.001(a).

Cross References:
Annual application required, see Sec. 11.43(b).
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.

Sec. 11.181. Charitable Organizations Improving Property for Low-Income Housing

(a) An organization is entitled to an exemption from taxation of improved or unimproved real property it owns if the organization:

(1) meets the requirements of a charitable organization provided by Sections 11.18(e) and (f);

(2) owns the property for the purpose of building or repairing housing on the property primarily with volunteer labor to sell without profit to an individual or family satisfying the organization's low-income and other eligibility requirements; and

(3) engages exclusively in the building, repair, and sale of housing as described by Subdivision (2), and related activities.

(b) Property may not be exempted under Subsection (a) after the third anniversary of the date the organization acquires the property.

(c) An organization entitled to an exemption under Subsection (a) is also entitled to an exemption from taxation of any building or tangible personal property the organization owns and uses in the administration of its acquisition, building, repair, or sale of property. To qualify for an exemption under this subsection, property must be used exclusively by the charitable organization, except that another individual or organization may use the property for activities incidental to the charitable organization's use that benefit the beneficiaries of the charitable organization.

(d) For the purposes of Subsection (e), the chief appraiser shall determine the market value of property exempted under Subsection (a) and shall record the market value in the appraisal records.

(e) If the organization that owns improved or unimproved real property that has been exempted under Subsection (a) sells the property to a person other than an individual or family satisfying the organization's low-income or other eligibility requirements, a penalty is imposed on the property equal to the amount of the taxes that would have been imposed on the property in each tax year that the property was exempted from taxation under Subsection (a), plus interest at an annual rate of 12 percent calculated from the dates on which the taxes would have become due.

(f) The charitable organization and the purchaser of the property from that organization are jointly and severally liable for the penalty and interest imposed under Subsection (e). A tax lien in favor of all taxing units for which the penalty is imposed attaches to the property to secure payment of the penalty and interest.

(g) The chief appraiser shall make an entry in the appraisal records for the property against which a penalty under Subsection (e) is imposed and shall deliver written notice of the imposition of the penalty and interest to the charitable organization and to the person who purchased the property from that organization.

Added by 1993 Tex. Laws, p. 1478, ch. 345, Sec. 1.

Cross References:
Annual application required, see Sec. 11.43(c).
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.
Exception from January 1 qualifications, see Sec. 11.42(a).
Exemption application form, see Sec. 11.436 and Rule Sec. 9.415.
Prorating taxes, see Sec. 26.111.
Model application form, see Rule Sec. 9.415.

Notes:
To qualify for property tax exemption, an organization's dissolution clause must provide for transfer to another federally exempt organization or to the state of Texas. Transferring to a for-profit organization and to the U. S. Department of Housing and Urban Development does not meet the qualification test for the exemption. Texas VOA Elderly Housing, Inc. v. Montgomery County Appraisal District, 990 S.W.2d 938 (Tex. App.-Beaumont 1999).

A nonprofit housing finance corporation created subsidiary corporations to which it loaned money to operate housing projects. The subsidiary corporations were entitled to exemption because the parent corporation had equitable title to the property owned by the corporations. Harris County Appraisal District v. Southeast Texas Housing Finance Corporation, 991 S.W.2d 18 (Tex. App.-Amarillo 1998).

Sec. 11.182. Community Housing Development Organizations Improving Property for Low-Income and Moderate-Income Housing: Property Previously Exempt

(a) In this section:

(1) "Cash flow" means the amount of money generated by a housing project for a fiscal year less the disbursements for that fiscal year for operation and maintenance of the project, including:

(A) standard property maintenance;

(B) debt service;

(C) employee compensation;

(D) fees required by government agencies;

(E) expenses incurred in satisfaction of requirements of lenders, including reserve requirements;

(F) insurance; and

(G) other justifiable expenses related to the operation and maintenance of the project.

(2) "Community housing development organization" has the meaning assigned by 42 U.S.C. Section 12704.

(b) An organization is entitled to an exemption from taxation of improved or unimproved real property it owns if the organization:

(1) is organized as a community housing development organization;

(2) meets the requirements of a charitable organization provided by Sections 11.18(e) and (f);

(3) owns the property for the purpose of building or repairing housing on the property to sell without profit to a low-income or moderate-income individual or family satisfying the organization's eligibility requirements or to rent without profit to such an individual or family; and

(4) engages exclusively in the building, repair, and sale or rental of housing as described by Subdivision (3) and related activities.

(c) Property owned by the organization may not be exempted under Subsection (b) after the third anniversary of the date the organization acquires the property unless the organization is offering to rent or is renting the property without profit to a low-income or moderate-income individual or family satisfying the organization's eligibility requirements.

(d) A multifamily rental property consisting of 36 or more dwelling units owned by the organization that is exempted under Subsection (b) may not be exempted in a subsequent tax year unless in the preceding tax year the organization spent, for eligible persons in the county in which the property is located, an amount equal to at least 40 percent of the total amount of taxes that would have been imposed on the property in that year without the exemption on social, educational, or economic development services, capital improvement projects, or rent reduction. This subsection does not apply to property acquired by the organization using tax-exempt bond financing after January 1, 1997, and before December 31, 2001.

(e) In addition to meeting the applicable requirements of Subsections (b) and (c), to receive an exemption under Subsection (b) for improved real property that includes a housing project constructed after December 31, 2001, and financed with qualified 501(c)(3) bonds issued under Section 145 of the Internal Revenue Code of 1986, tax-exempt private activity bonds subject to volume cap, or low-income housing tax credits, the organization must:

(1) control 100 percent of the interest in the general partner if the project is owned by a limited partnership;

(2) comply with all rules of and laws administered by the Texas Department of Housing and Community Affairs applicable to community housing development organizations; and

(3) submit annually to the Texas Department of Housing and Community Affairs and to the governing body of each taxing unit for which the project receives an exemption for the housing project evidence demonstrating that the organization spent an amount equal to at least 90 percent of the project's cash flow in the preceding fiscal year as determined by the audit required by Subsection (g), for eligible persons in the county in which the property is located, on social, educational, or economic development services, capital improvement projects, or rent reduction.

(f) An organization entitled to an exemption under Subsection (b) is also entitled to an exemption from taxation of any building or tangible personal property the organization owns and uses in the administration of its acquisition, building, repair, sale, or rental of property. To qualify for an exemption under this subsection, property must be used exclusively by the organization, except that another person may use the property for activities incidental to the organization's use that benefit the beneficiaries of the organization.

(g) To receive an exemption under Subsection (b) or (f), an organization must annually have an audit prepared by an independent auditor. The audit must include a detailed report on the organization's sources and uses of funds. A copy of the audit must be delivered to the Texas Department of Housing and Community Affairs and to the chief appraiser of the appraisal district in which the property subject to the exemption is located.

(h) Subsections (d) and (e)(3) do not apply to property owned by an organization if:

(1) the entity that provided the financing for the acquisition or construction of the property:

(A) requires the organization to make payments in lieu of taxes to the school district in which the property is located; or

(B) restricts the amount of rent the organization may charge for dwelling units on the property; or

(2) the organization has entered into an agreement with each taxing unit for which the property receives an exemption to spend in each tax year for the purposes provided by Subsection (d) or (e)(3) an amount equal to the total amount of taxes imposed on the property in the tax year preceding the year in which the organization acquired the property.

(i) If any property owned by an organization receiving an exemption under this section has been acquired or sold during the preceding year, such organization shall file by March 31 of the following year with the chief appraiser in the county in which the relevant property is located on a form promulgated by the comptroller of public accounts, a list of such properties acquired or sold during the preceding year.

(j) An organization may not receive an exemption under Subsection (b) or under Subsection (f), as added by Chapter 1191, Acts of the 77th Legislature, Regular Session, 2001, for property for a tax year beginning on or after January 1, 2004, unless the organization received an exemption under that subsection for that property for any part of the 2003 tax year.

Added by Acts 1997, 75th Leg., ch. 715, 2, eff. Jan. 1, 1998. Amended by Acts 2001, 77th Leg., ch. 842, 2, 4, eff. June 14, 2001; Acts 2001, 77th Leg., ch. 1191, 1, eff. Jan. 1, 2002; Acts 2003, 78th Leg., ch. 1156, 1, 2, eff. Jan. 1, 2004; Acts 2003, 78th Leg., ch. 1275, 2(120), eff. Sept. 1, 2003.

Cross References:
Annual application required, see Sec. 11.43(c).
Conflicts with United States government contract, see Sec. 11.424.
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.
Exception from January 1 qualifications, see Sec. 11.436.
Exemption application form, see Sec. 11.436 and Rule Sec. 9.415.
Prorating taxes, see Sec. 26.111.
Model application form, see Rule Sec. 9.415.

Notes:
For a housing project to qualify for an exemption under section 11.182(e) the project must be constructed after December 31, 2001. Thus, because the property in this case was constructed well before this date, the court held the applicant was not entitled to an exemption under this statute. American Housing Found. v. Brazos County Appraisal District, 166 S.W.3d 885, (Tex. App.-Waco 2005, pet. filed).

Where a company is a qualified subordinate unit of a qualified, parent organization, there is no distinction that can be made between the two entities for purposes of disqualifying the subordinate unit from obtaining an exemption under section 11.182. Orange County Appraisal District v. Agape Neighborhood Improvement, Inc., 57 S.W.3d 597 (Tex. App.-Beaumont 2001, pet. denied).

To qualify for property tax exemption, an organization's dissolution clause must provide for transfer to another federally exempt organization or to the state of Texas. Transferring to a for-profit organization and to the U. S. Department of Housing and Urban Development does not meet the qualification test for the exemption. Texas VOA Elderly Housing, Inc. v. Montgomery County Appraisal District, 990 S.W.2d 938 (Tex. App.-Beaumont 1999).

A nonprofit housing finance corporation created subsidiary corporations to which it loaned money to operate housing projects. The subsidiary corporations were entitled to exemption because the parent corporation had equitable title to the property owned by the corporations. Harris County Appraisal District v. Southeast Texas Housing Finance Corporation, 991 S.W.2d 18 (Tex. App.-Amarillo 1998).

To qualify for an exemption from taxation of its real property under Tax Code Section 11.182, a particular community housing development organization must first satisfy the requirements of Texas Constitution Article VIII, Section 2(a). Then it must satisfy all the requirements of Tax Code Section 11.182. The chief appraiser for the appraisal district in which the particular organization's property is located is authorized to determine in the first instance whether the property is exempt. The burden is on the organization seeking an exemption to show that it is entitled to the exemption. Op. Tex. Att'y Gen. No. JC-0576 (2002).

Sec. 11.1825. Organizations Constructing or Rehabilitating Low-Income Housing: Property Not Previously Exempt

(a) An organization is entitled to an exemption from taxation of real property owned by the organization that the organization constructs or rehabilitates and uses to provide housing to individuals or families meeting the income eligibility requirements of this section.

(b) To receive an exemption under this section, an organization must meet the following requirements:

(1) for at least the preceding three years, the organization:

(A) has been exempt from federal income taxation under Section 501(a), Internal Revenue Code of 1986, as amended, by being listed as an exempt entity under Section 501(c)(3) of that code;

(B) has met the requirements of a charitable organization provided by Sections 11.18(e) and (f); and

(C) has had as one of its purposes providing low-income housing;

(2) a majority of the members of the board of directors of the organization have their principal place of residence in this state;

(3) at least two of the positions on the board of directors of the organization must be reserved for and held by:

(A) an individual of low income as defined by Section 2306.004, Government Code, whose principal place of residence is located in this state;

(B) an individual whose residence is located in an economically disadvantaged census tract as defined by Section 783.009(b), Government Code, in this state; or

(C) a representative appointed by a neighborhood organization in this state that represents low-income households; and

(4) the organization must have a formal policy containing procedures for giving notice to and receiving advice from low-income households residing in the county in which a housing project is located regarding the design, siting, development, and management of affordable housing projects.

(c) Notwithstanding Subsection (b), an owner of real property that is not an organization described by that subsection is entitled to an exemption from taxation of property under this section if the property otherwise qualifies for the exemption and the owner is:

(1) a limited partnership of which an organization that meets the requirements of Subsection (b) controls 100 percent of the general partner interest; or

(2) an entity the parent of which is an organization that meets the requirements of Subsection (b).

(d) If the owner of the property is an entity described by Subsection (c), the entity must:

(1) be organized under the laws of this state; and

(2) have its principal place of business in this state.

(e) A reference in this section to an organization includes an entity described by Subsection (c).

(f) For property to be exempt under this section, the organization must own the property for the purpose of constructing or rehabilitating a housing project on the property and:

(1) renting the housing to individuals or families whose median income is not more than 60 percent of the greater of:

(A) the area median family income for the household's place of residence, as adjusted for family size and as established by the United States Department of Housing and Urban Development; or

(B) the statewide area median family income, as adjusted for family size and as established by the United States Department of Housing and Urban Development; or

(2) selling single-family dwellings to individuals or families whose median income is not more than the greater of:

(A) the area median family income for the household's place of residence, as adjusted for family size and as established by the United States Department of Housing and Urban Development; or

(B) the statewide area median family income, as adjusted for family size and as established by the United States Department of Housing and Urban Development.

(g) Property may not receive an exemption under this section unless at least 50 percent of the total square footage of the dwelling units in the housing project is reserved for individuals or families described by Subsection (f).

(h) The annual total of the monthly rent charged or to be charged for each dwelling unit in the project reserved for an individual or family described by Subsection (f) may not exceed 30 percent of the area median family income for the household's place of residence, as adjusted for family size and as established by the United States Department of Housing and Urban Development.

(i) Property owned for the purpose of constructing a housing project on the property is exempt under this section only if:

(1) the property is used to provide housing to individuals or families described by Subsection (f); or

(2) the housing project is under active construction or other physical preparation.

(j) For purposes of Subsection (i)(2), a housing project is under physical preparation if the organization has engaged in architectural or engineering work, soil testing, land clearing activities, or site improvement work necessary for the construction of the project or has conducted an environmental or land use study relating to the construction of the project.

(k) An organization may not receive an exemption for a housing project constructed by the organization if the construction of the project was completed before January 1, 2004.

(l) If the property is owned for the purpose of rehabilitating a housing project on the property:

(1) the original construction of the housing project must have been completed at least 10 years before the date the organization began actual rehabilitation of the project;

(2) the person from whom the organization acquired the project must have owned the project for at least five years, if the organization is not the original owner of the project;

(3) the organization must provide to the chief appraiser and, if the project was financed with bonds, the issuer of the bonds a written statement prepared by a certified public accountant stating that the organization has spent on rehabilitation costs at least the greater of $5,000 or the amount required by the financial lender for each dwelling unit in the project; and

(4) the organization must maintain a reserve fund for replacements:

(A) in the amount required by the financial lender; or

(B) if the financial lender does not require a reserve fund for replacements, in an amount equal to $300 per unit per year.

(m) Beginning with the 2005 tax year, the amount of the reserve required by Subsection (l)(4)(B) is increased by an annual cost-of-living adjustment determined in the manner provided by Section 1(f)(3), Internal Revenue Code of 1986, as amended, substituting "calendar year 2004" for the calendar year specified in Section 1(f)(3)(B) of that code.

(n) A reserve must be established for each dwelling unit in the property, regardless of whether the unit is reserved for an individual or family described by Subsection (f). The reserve must be maintained on a continuing basis, with withdrawals permitted:

(1) only as authorized by the financial lender; or

(2) if the financial lender does not require a reserve fund for replacements, only to pay the cost of capital improvements needed for the property to maintain habitability under the Minimum Property Standards of the United States Department of Housing and Urban Development or the code of a municipality or county applicable to the property, whichever is more restrictive.

(o) For purposes of Subsection (n)(2), "capital improvement" means a property improvement that has a depreciable life of at least five years under generally accepted accounting principles, excluding typical "make ready" expenses such as expenses for plasterboard repair, interior painting, or floor coverings.

(p) If the organization acquires the property for the purpose of constructing or rehabilitating a housing project on the property, the organization must be renting or offering to rent the applicable square footage of dwelling units in the property to individuals or families described by Subsection (f) not later than the third anniversary of the date the organization acquires the property.

(q) If property qualifies for an exemption under this section, the chief appraiser shall use the income method of appraisal as provided by Section 23.012 to determine the appraised value of the property. In appraising the property, the chief appraiser shall:

(1) consider the restrictions provided by this section on the income of the individuals or families to whom the dwelling units of the housing project may be rented and the amount of rent that may be charged for purposes of computing the actual rental income from the property or projecting future rental income; and

(2) use the same capitalization rate that the chief appraiser uses to appraise other rent-restricted properties.

(r) Not later than January 31 of each year, the appraisal district shall give public notice in the manner determined by the district, including posting on the district's website if applicable, of the capitalization rate to be used in that year to appraise property receiving an exemption under this section.

(s) Unless otherwise provided by the governing body of a taxing unit any part of which is located in a county with a population of at least 1.4 million under Subsection (x), the amount of the exemption under this section from taxation is 50 percent of the appraised value of the property.

(t) Notwithstanding Section 11.43(c), an exemption under this section does not terminate because of a change in ownership of the property if:

(1) the property is foreclosed on for any reason and, not later than the 30th day after the date of the foreclosure sale, the owner of the property submits to the chief appraiser evidence that the property is owned by:

(A) an organization that meets the requirements of Subsection (b); or

(B) an entity that meets the requirements of Subsections (c) and (d); or

(2) in the case of property owned by an entity described by Subsections (c) and (d), the organization meeting the requirements of Subsection (b) that controls the general partner interest of or is the parent of the entity as described by Subsection (c) ceases to serve in that capacity and, not later than the 30th day after the date the cessation occurs, the owner of the property submits evidence to the chief appraiser that the organization has been succeeded in that capacity by another organization that meets the requirements of Subsection (b).

(u) The chief appraiser may extend the deadline provided by Subsection (t)(1) or (2), as applicable, for good cause shown.

(v) Notwithstanding any other provision of this section, an organization may not receive an exemption from taxation by a taxing unit any part of which is located in a county with a population of at least 1.4 million unless the exemption is approved by the governing body of the taxing unit in the manner provided by law for official action.

(w) To receive an exemption under this section from taxation by a taxing unit for which the approval of the governing body of the taxing unit is required by Subsection (v), an organization must submit to the governing body of the taxing unit a written request for approval of the exemption from taxation of the property described in the request.

(x) Not later than the 60th day after the date the governing body of the taxing unit receives a written request under Subsection (w) for an exemption under this section, the governing body shall:

(1) approve the exemption in the amount provided by Subsection (s);

(2) approve the exemption in a reasonable amount other than the amount provided by Subsection (s); or

(3) deny the exemption if the governing body determines that:

(A) the taxing unit cannot afford the loss of ad valorem tax revenue that would result from approving the exemption; or

(B) additional housing for individuals or families meeting the income eligibility requirements of this section is not needed in the territory of the taxing unit.

(y) Not later than the fifth day after the date the governing body of the taxing unit takes action under Subsection (x), the taxing unit shall issue a letter to the organization stating the governing body's action and, if the governing body denied the exemption, stating whether the denial was based on a determination under Subsection (x)(3)(A) or (B) and the basis for the determination. The taxing unit shall send a copy of the letter by regular mail to the chief appraiser of each appraisal district that appraises the property for the taxing unit. The governing body may charge the organization a fee not to exceed the administrative costs of processing the request of the organization, approving or denying the exemption, and issuing the letter required by this subsection. If the chief appraiser determines that the property qualifies for an exemption under this section and the governing body of the taxing unit approves the exemption, the chief appraiser shall grant the exemption in the amount approved by the governing body.

Added by Acts 2003, 78th Leg., ch. 1156, 3, eff. Jan. 1, 2004.

Cross References:
Annual application required, see Sec. 11.43(c).
Conflicts with United States government contract, see Sec. 11.424.
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.
Exception from January 1 qualifications, see Sec. 11.436.
Exemption application form, see Sec. 11.436 and Rule Sec. 9.415.
Prorating taxes, see Sec. 26.111.
Model application form, see Rule Sec. 9.415.

Sec. 11.1826. Monitoring of Compliance With Low-Income and Moderate-Income Housing Exemptions.

(a) In this section, "department" means the Texas Department of Housing and Community Affairs.

(b) Property may not be exempted under Section 11.1825 for a tax year unless the organization owning or controlling the owner of the property has an audit prepared by an independent auditor covering the organization's most recent fiscal year. The audit must be conducted in accordance with generally accepted accounting principles. The audit must include an opinion on whether:

(1) the financial statements of the organization present fairly, in all material respects and in conformity with generally accepted accounting principles, the financial position, changes in net assets, and cash flows of the organization; and

(2) the organization has complied with all of the terms and conditions of the exemption under Section 11.1825.

(c) Not later than the 180th day after the last day of the organization's most recent fiscal year, the organization must deliver a copy of the audit to the department and the chief appraiser of the appraisal district in which the property is located.

(d) Notwithstanding any other provision of this section, if the property contains not more than 36 dwelling units, the organization may deliver to the department and the chief appraiser a detailed report and certification as an alternative to an audit.

(e) Property may not be exempted under Section 11.182 for a tax year unless the organization owning or controlling the owner of the property complies with this section, except that the audit required by this section must address compliance with the requirements of Section 11.182.

(f) All information submitted to the department or the chief appraiser under this section is subject to required disclosure, is excepted from required disclosure, or is confidential in accordance with Chapter 552, Government Code, or other law.

Added by Acts 2003, 78th Leg., ch. 1156, 3, eff. Jan. 1, 2004.

Sec. 11.183. Association Providing Assistance to Ambulatory Health Care Centers

(a) An association is entitled to an exemption from taxation of the property it owns and uses exclusively for the purposes for which the association is organized if the association:

(1) is exempt from federal income taxation under Section 501(a), Internal Revenue Code of 1986, 1 as an organization described by Section 501(c)(3) 2 of that code;

(2) complies with the criteria for a charitable organization under Sections 11.18(e) and (f);

(3) except as provided by Subsection (b), engages exclusively in providing assistance to ambulatory health care centers that provide medical care to individuals without regard to the individuals' ability to pay, including providing policy analysis, disseminating information, conducting continuing education, providing research, collecting and analyzing data, or providing technical assistance to the health care centers;

(4) is funded wholly or partly, or assists ambulatory health care centers that are funded wholly or partly, by a grant under Section 330, Public Health Service Act (42 U.S.C. Section 254b), and its subsequent amendments; and

(5) does not perform abortions or provide abortion referrals or provide assistance to ambulatory health care centers that perform abortions or provide abortion referrals.

(b) Use of the property by a person other than the association does not affect the eligibility of the property for an exemption authorized by this section if the use is incidental to use by the association and limited to activities that benefit:

(1) the ambulatory health care centers to which the association provides assistance; or

(2) the individuals to whom the health care centers provide medical care.

(c) Performance of noncharitable functions by the association does not affect the eligibility of the property for an exemption authorized by this section if those other functions are incidental to the association's charitable functions.

Added by 1999 Tex. Laws, p. 3245, ch. 675, Sec. 1.

Cross References:
Annual application not required, see Sec. 11.43(c).
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.
Exemption application form, see Rule Sec. 9.415.
Filing deadline, see Sec. 11.43(d).

Sec. 11.184. Organizations Engaged Primarily in Performing Charitable Functions

(a) In this section:

(1) "Local charitable organization" means an organization that:

(A) is a chapter, subsidiary, or branch of a statewide charitable organization; and

(B) with respect to its activities in this state, is engaged primarily in performing functions listed in Section 11.18(d).

(2) "Qualified charitable organization" means a statewide charitable organization or a local charitable organization.

(3) "Statewide charitable organization" means a statewide organization that, with respect to its activities in this state, is engaged primarily in performing functions listed in Section 11.18(d).

(b) An exemption under this section may not be granted unless the exemption is adopted either:

(1) by the governing body of the taxing unit; or

(2) by a favorable vote of a majority of the qualified voters of the taxing unit at an election called by the governing body of a taxing unit, and the governing body shall call the election on the petition of at least 20 percent of the number of qualified voters who voted in the preceding election of the taxing unit.

(c) If approved under Subsection (b), a qualified charitable organization is entitled to an exemption from taxation of:

(1) the buildings and other real property and the tangible personal property that:

(A) are owned by the organization; and

(B) except as permitted by Subsection (d), are used exclusively by the organization and other organizations eligible for an exemption from taxation under this section or Section 11.18; and

(2) the real property owned by the organization consisting of:

(A) an incomplete improvement that:

(i) is under active construction or other physical preparation; and

(ii) is designed and intended to be used exclusively by the organization and other organizations eligible for an exemption from taxation under this section or Section 11.18; and

(B) the land on which the incomplete improvement is located that will be reasonably necessary for the use of the improvement by the organization and other organizations eligible for an exemption from taxation under this section or Section 11.18.

(d) Use of exempt property by persons who are not charitable organizations eligible for an exemption from taxation under this section or Section 11.18 does not result in the loss of an exemption authorized by this section if the use is incidental to use by those charitable organizations and limited to activities that benefit the charitable organization that owns or uses the property.

(e) Before an organization may submit an application for an exemption under this section, the organization must apply to the comptroller for a determination of whether the organization is engaged primarily in performing functions listed in Section 11.18(d) and is eligible for an exemption under this section. In making the determination, the comptroller shall consider:

(1) whether the organization is recognized by the Internal Revenue Service as a tax-exempt organization under Section 501 of the Internal Revenue Code of 1986;

(2) whether the organization holds a letter of exemption issued by the comptroller certifying that the organization is entitled to issue an exemption certificate under Section 151.310;

(3) whether the charter or bylaws of the organization require charitable work or public service;

(4) the amount of monetary support contributed or in-kind charitable or public service performed by the organization in proportion to:

(A) the organization's operating expenses;

(B) the amount of dues received by the organization; and

(C) the taxes imposed on the organization's property during the preceding year if the property was taxed in that year or, if the property was exempt from taxation in that year, the taxes that would have been imposed on the property if it had not been exempt from taxation; and

(5) any other factor the comptroller considers relevant.

(f) Not later than the 30th day after the date the organization submits an application under Subsection (e), the comptroller may request that the organization provide additional information the comptroller determines necessary. Not later than the 90th day after the date the application is submitted or, if applicable, the date the additional information is provided, the comptroller shall issue a letter to the organization stating the comptroller's determination.

(g) The comptroller may:

(1) adopt rules to implement this section;

(2) prescribe the form of an application for a determination letter under this section; and

(3) charge an organization a fee not to exceed the administrative costs of processing a request, making a determination, and issuing a determination letter under this section.

(h) An organization applying for an exemption under this section shall submit with the application a copy of the determination letter issued by the comptroller under Subsection (f). The chief appraiser shall accept the copy of the letter as conclusive evidence as to whether the organization engages primarily in performing charitable functions and is eligible for an exemption under this section.

(i) A property may not be exempted under Subsection (c)(2) for more than three years.

(j) For purposes of Subsection (c)(2), an incomplete improvement is under physical preparation if the charitable organization has:

(1) engaged in architectural or engineering work, soil testing, land clearing activities, or site improvement work necessary for the construction of the improvement; or

(2) conducted an environmental or land use study relating to the construction of the improvement.

(k) An exemption under this section expires at the end of the fifth tax year after the year in which the exemption is granted. To continue to receive an exemption under this section after that year, the organization must obtain a new determination letter and reapply for the exemption.

Added by Acts 2001, 77th Leg., ch. 1040, 1, eff. Sept. 1, 2001. Amended by Acts 2003, 78th Leg., ch. 288, 1.02, eff. June 18, 2003; Acts 2003, 78th Leg., ch. 288, 2.02, eff. Jan. 1, 2006.

Cross References:
One-time application required, see Sec. 11.43(b).
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.
Exception from January 1 qualifications, see Sec. 11.436.
Exemption application form, see Rule Sec. 9.415.
Prorating taxes, see Sec. 26.111.
Model application form, see Rule Sec. 9.415.

Notes:
Acts 2003, 78th Leg., ch. 288, 1.02 applies for the 2003 tax year regardless of whether the property owner applied for the exemption as long as the owner qualified for the three years preceding the 2003 tax year. Beginning with the 2006 tax year, the time frame in which an incomplete improvement can qualify as exempt is changed back to be three years.

Sec. 11.185. Colonia Model Subdivision Program

(a) An organization is entitled to an exemption from taxation of unimproved real property it owns if the organization:

(1) meets the requirements of a charitable organization provided by Sections 11.18(e) and (f);

(2) purchased the property or is developing the property with proceeds of a loan made by the Texas Department of Housing and Community Affairs under the colonia model subdivision program under Subchapter GG, Chapter 2306, Government Code; and

(3) owns the property for the purpose of developing a model colonia subdivision.

(b) Property may not be exempted under Subsection (a) after the fifth anniversary of the date the organization acquires the property.

(c) An organization entitled to an exemption under Subsection (a) is also entitled to an exemption from taxation of any building or tangible personal property the organization owns and uses in the administration of its acquisition, building, repair, or sale of property. To qualify for an exemption under this subsection, property must be used exclusively by the charitable organization, except that another individual or organization may use the property for activities incidental to the charitable organization's use that benefit the beneficiaries of the charitable organization.

(d) For the purposes of Subsection (e), the chief appraiser shall determine the market value of property exempted under Subsection (a) and shall record the market value in the appraisal records.

(e) If the organization that owns improved or unimproved real property that has been exempted under Subsection (a) sells the property to a person other than a person described by Section 2306.786(b)(1), Government Code, a penalty is imposed on the property equal to the amount of the taxes that would have been imposed on the property in each tax year that the property was exempted from taxation under Subsection (a), plus interest at an annual rate of 12 percent computed from the dates on which the taxes would have become due.

Added Acts 2001, 77th Leg., ch. 1367, 2.14, eff. Sept. 1, 2001. Renumbered from V.T.C.A., Tax Code 11.184 by Acts 2003, 78th Leg., ch. 1275, 2(121), eff. Sept. 1, 2003.

Cross References:
Annual application required, see Sec. 11.43(b).
Constitutional authorization, see art. VIII, Sec. 2, Tex. Const.
Filing deadline, see Sec. 11.43(d).