88R1084 TJB-D     By: Davis H.B. No. 1189       A BILL TO BE ENTITLED   AN ACT   relating to limitations on the appraised value of certain real   property in specified areas for ad valorem tax purposes.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 1.12(d), Tax Code, is amended to read as   follows:          (d)  For purposes of this section, the appraisal ratio of   real property [a homestead] to which Section 23.23, 23.231, or   23.232 applies is the ratio of the property's market value as   determined by the appraisal district or appraisal review board, as   applicable, to the market value of the property according to law.   The appraisal ratio is not calculated according to the appraised   value of the property as limited by Section 23.23, 23.231, or   23.232.          SECTION 2.  Subchapter B, Chapter 23, Tax Code, is amended by   adding Sections 23.231 and 23.232 to read as follows:          Sec. 23.231.  TEMPORARY LIMITATION ON APPRAISED VALUE OF   CERTAIN REAL PROPERTY IN SPECIFIED AREAS. (a)  In this section:                (1)  "Census tract" means the geographic area   identified as a "tract" on the 2020 Census TIGER/Line Shapefiles,   prepared by the federal Bureau of the Census for the Twenty-fourth   Decennial Census of the United States, enumerated as of April 1,   2020.                (2)  "Eligible property" means real property that:                      (A)  is:                            (i)  a residence homestead; or                            (ii)  an undeveloped lot, subject to   Subsection (f); and                      (B)  is located in one of the following census   tracts:                            (i)  Dallas County tract 002703; or                            (ii)  Harris County tract 210900, 211000,   211101, 211102, 211200, or 211700.                (3)  "Residence homestead" has the meaning assigned by   Section 11.13.          (b)  The governing body of a municipality, county, or school   district may by official action adopt a limitation as prescribed by   this section on the appraised value of all eligible property   located in the taxing unit adopting the limitation.  The governing   body of a municipality, county, or school district may not repeal,   rescind, or take other action to negate the adoption of the   limitation once adopted under this subsection.          (c)  Notwithstanding the requirements of Sections 23.23 and   25.18, and regardless of whether the appraisal office has appraised   the property and determined the market value of the property for the   tax year, an appraisal office may increase the appraised value of   eligible property for a tax year to which a limitation under this   section applies for purposes of taxation of the property by the   taxing unit that adopted the limitation to an amount not to exceed   the lesser of:                (1)  the appraised value of the property as otherwise   determined by law; or                (2)  the appraised value of the property for the tax   year preceding the tax year in which the limitation adopted by that   taxing unit first applies, as provided by Subsection (e).          (d)  When appraising eligible property, the chief appraiser   shall:                (1)  appraise the property as otherwise determined by   law; and                (2)  include in the appraisal records:                      (A)  the appraised value of the property   determined under Subdivision (1); and                      (B)  the amount determined under Subsection   (c)(2) applicable to each taxing unit that has adopted the   limitation.          (e)  Except as provided by Subsection (f), a limitation once   adopted by a governing body under this section applies to each tax   year:                (1)  beginning with:                      (A)  the tax year in which the governing body   adopts the limitation, if the governing body adopts the limitation   on or before April 1; or                      (B)  the tax year following the tax year in which   the governing body adopts the limitation, if the governing body   adopts the limitation after April 1; and                (2)  ending with the 2039 tax year.          (f)  A limitation adopted under this section as applied to a   vacant lot expires on the earlier of:                (1)  January 1 following the end of the fifth tax year   for which the limitation applies, unless:                      (A)  a single-family residence has been   constructed on the property; and                      (B)  the owner of the residence has qualified the   property as the owner's residence homestead; or                (2)  January 1 of the tax year in which the vacant lot   is:                      (A)  developed for a purpose other than as a   single-family residence; or                      (B)  developed as a single-family residence but   not qualified as the residence homestead of an owner of the   property.          (g)  This section expires January 1, 2040.          Sec. 23.232.  LIMITATION ON APPRAISED VALUE OF RAPIDLY   APPRECIATING RESIDENCE HOMESTEADS IN SPECIFIED AREAS. (a) In this   section:                (1)  "Census tract" means the geographic area   identified as a "tract" on the 2020 Census TIGER/Line Shapefiles,   prepared by the federal Bureau of the Census for the Twenty-fourth   Decennial Census of the United States, enumerated as of April 1,   2020.                (2)  "Disaster recovery program" means the disaster   recovery program administered by the General Land Office or by a   political subdivision of this state that is funded with community   development block grant disaster recovery money authorized by   federal law.                (3)  "New improvement" means an improvement to a   rapidly appreciating residence homestead made after the most recent   appraisal of the property that increases the market value of the   property and the value of which is not included in the appraised   value of the property for the preceding tax year. The term does not   include repairs to or ordinary maintenance of an existing structure   or the grounds or another feature of the property.                (4)  "Rapidly appreciating residence homestead" means   real property:                      (A)  that is a residence homestead;                      (B)  that is located in Dallas County census tract   004300, 010101, 010102, 010500, 010601, 010602, or 020500;                      (C)  for which the owner was granted a residence   homestead exemption in the 2017, 2018, 2019, 2020, 2021, 2022,   2023, and 2024 tax years; and                      (D)  for which the market value for the 2024 tax   year is at least 25 percent higher than the market value of the   property for the 2017 tax year.                (5)  "Residence homestead" has the meaning assigned by   Section 11.13.          (b)  Notwithstanding the requirements of Sections 23.23 and   25.18, and regardless of whether the appraisal office has appraised   the property and determined the market value of the property for the   tax year, an appraisal office may increase the appraised value of a   rapidly appreciating residence homestead for a tax year to an   amount not to exceed the lesser of:                (1)  the market value of the property for the most   recent tax year that the market value was determined by the   appraisal office; or                (2)  the sum of:                      (A)  the appraised value of the property for the   2017 tax year; and                      (B)  the market value of all new improvements to   the property.          (c)  When appraising a rapidly appreciating residence   homestead, the chief appraiser shall:                (1)  appraise the property at its market value; and                (2)  include in the appraisal records:                      (A)  the market value of the property; and                      (B)  the amount determined under Subsection   (b)(2).          (d)  The limitation provided by Subsection (b) expires on   January 1 of the first tax year that neither the owner of the   property when the limitation took effect nor the owner's spouse or   surviving spouse qualifies for an exemption under Section 11.13.          (e)  Notwithstanding Subsection (b), and except as provided   by Subdivision (2), an improvement to property that would otherwise   constitute a new improvement is not treated as a new improvement if   the improvement is a replacement structure for a structure that was   rendered uninhabitable or unusable by a casualty or by wind, fire,   or water damage. For purposes of appraising the property under   Subsection (b) in the tax year in which the structure would have   constituted a new improvement:                (1)  the appraised value the property would have had in   the preceding tax year if the casualty or damage had not occurred is   considered to be the appraised value of the property for that year,   regardless of whether that appraised value exceeds the actual   appraised value of the property for that year as limited by   Subsection (b); and                (2)  the replacement structure is considered to be a   new improvement only if:                      (A)  the square footage of the replacement   structure exceeds that of the replaced structure as that structure   existed before the casualty or damage occurred; or                      (B)  the exterior of the replacement structure is   of higher quality construction and composition than that of the   replaced structure.          (f)  Notwithstanding Subsection (e)(2), and only to the   extent necessary to satisfy the requirements of the disaster   recovery program, a replacement structure described by that   subdivision is not considered to be a new improvement if to satisfy   the requirements of the disaster recovery program it was necessary   that:                (1)  the square footage of the replacement structure   exceed that of the replaced structure as that structure existed   before the casualty or damage occurred; or                (2)  the exterior of the replacement structure be of   higher quality construction and composition than that of the   replaced structure.          SECTION 3.  Sections 25.19(b) and (g), Tax Code, are amended   to read as follows:          (b)  The chief appraiser shall separate real from personal   property and include in the notice for each:                (1)  a list of the taxing units in which the property is   taxable;                (2)  the appraised value of the property in the   preceding year;                (3)  the taxable value of the property in the preceding   year for each taxing unit taxing the property;                (4)  the appraised value of the property for the   current year, the kind and amount of each exemption and partial   exemption, if any, approved for the property for the current year   and for the preceding year, and, if an exemption or partial   exemption that was approved for the preceding year was canceled or   reduced for the current year, the amount of the exemption or partial   exemption canceled or reduced;                (4-a)  a statement of whether the property qualifies   for a limitation on appraised value under Section 23.231 or 23.232;                (5)  in italic typeface, the following statement: "The   Texas Legislature does not set the amount of your local taxes. Your   property tax burden is decided by your locally elected officials,   and all inquiries concerning your taxes should be directed to those   officials";                (6)  a detailed explanation of the time and procedure   for protesting the value;                (7)  the date and place the appraisal review board will   begin hearing protests;                (8)  an explanation of the availability and purpose of   an informal conference with the appraisal office before a hearing   on a protest; and                (9)  a brief explanation that the governing body of   each taxing unit decides whether or not taxes on the property will   increase and the appraisal district only determines the value of   the property.          (g)  By April 1 or as soon thereafter as practicable if the   property is a single-family residence that qualifies for an   exemption under Section 11.13, or by May 1 or as soon thereafter as   practicable in connection with any other property, the chief   appraiser shall deliver a written notice to the owner of each   property not included in a notice required to be delivered under   Subsection (a), if the property was reappraised in the current tax   year, if the ownership of the property changed during the preceding   year, or if the property owner or the agent of a property owner   authorized under Section 1.111 makes a written request for the   notice.  The chief appraiser shall separate real from personal   property and include in the notice for each property:                (1)  the appraised value of the property in the   preceding year;                (2)  the appraised value of the property for the   current year and the kind of each partial exemption, if any,   approved for the current year;                (2-a)  a statement of whether the property qualifies   for a limitation on appraised value under Section 23.231 or 23.232;                (3)  a detailed explanation of the time and procedure   for protesting the value; and                (4)  the date and place the appraisal review board will   begin hearing protests.          SECTION 4.  Section 41.41(a), Tax Code, is amended to read as   follows:          (a)  A property owner is entitled to protest before the   appraisal review board the following actions:                (1)  determination of the appraised value of the   owner's property or, in the case of land appraised as provided by   Subchapter C, D, E, or H, Chapter 23, determination of its appraised   or market value;                (2)  unequal appraisal of the owner's property;                (3)  inclusion of the owner's property on the appraisal   records;                (4)  denial to the property owner in whole or in part of   a partial exemption;                (4-a)  determination that the owner's property does not   qualify for a limitation on appraised value under Section 23.231 or   23.232;                (5)  determination that the owner's land does not   qualify for appraisal as provided by Subchapter C, D, E, or H,   Chapter 23;                (6)  identification of the taxing units in which the   owner's property is taxable in the case of the appraisal district's   appraisal roll;                (7)  determination that the property owner is the owner   of property;                (8)  a determination that a change in use of land   appraised under Subchapter C, D, E, or H, Chapter 23, has occurred;   or                (9)  any other action of the chief appraiser, appraisal   district, or appraisal review board that applies to and adversely   affects the property owner.          SECTION 5.  Section 42.26(d), Tax Code, is amended to read as   follows:          (d)  For purposes of this section, the value of the property   subject to the suit and the value of a comparable property or sample   property that is used for comparison must be the market value   determined by the appraisal district when the property is [a   residence homestead] subject to a [the] limitation on appraised   value under [imposed by] Section 23.23, 23.231, or 23.232.          SECTION 6.  This Act applies only to the appraisal of real   property for ad valorem tax purposes for a tax year that begins on   or after the effective date of this Act.          SECTION 7.  This Act takes effect January 1, 2024, but only   if the constitutional amendment proposed by the 88th Legislature,   Regular Session, 2023, to authorize the legislature to provide for   limitations on the appraised value of certain real property in   specified areas for ad valorem tax purposes is approved by the   voters. If that amendment is not approved by the voters, this Act   has no effect.