Anchía Bill Raises Tax Increment Zone Residential Limit To 40 Percent

The text as introduced · 1,099 words

By: Anchía
H.B. No. 5451

A BILL TO BE ENTITLED

AN ACT

relating to the treatment of certain residence homesteads for

purposes of the Tax Increment Financing Act.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 311.002(1), Tax Code, is amended to read

as follows:

(1) "Project costs" means the expenditures made or

estimated to be made and monetary obligations incurred or estimated

to be incurred by the municipality or county designating a

reinvestment zone that are listed in the project plan as costs of

public works, public improvements, programs, or other projects

benefiting the zone, plus other costs incidental to those

expenditures and obligations. "Project costs" include:

(A) capital costs, including the actual costs of

the acquisition and construction of public works, public

improvements, new buildings, structures, and fixtures; the actual

costs of the acquisition, demolition, alteration, remodeling,

repair, or reconstruction of existing buildings, structures, and

fixtures; the actual costs of the remediation of conditions that

contaminate public or private land or buildings; the actual costs

of the preservation of the facade of a public or private building;

the actual costs of the demolition of public or private buildings;

and the actual costs of the acquisition of land and equipment and

the clearing and grading of land;

(B) financing costs, including all interest paid

to holders of evidences of indebtedness or other obligations issued

to pay for project costs and any premium paid over the principal

amount of the obligations because of the redemption of the

obligations before maturity;

(C) real property assembly costs;

(D) professional service costs, including those

incurred for architectural, planning, engineering, and legal

advice and services;

(E) imputed administrative costs, including

reasonable charges for the time spent by employees of the

municipality or county in connection with the implementation of a

project plan;

(F) relocation costs;

(G) organizational costs, including the costs of

conducting environmental impact studies or other studies, the cost

of publicizing the creation of the zone, and the cost of

implementing the project plan for the zone;

(H) interest before and during construction and

for one year after completion of construction, whether or not

capitalized;

(I) the cost of operating the reinvestment zone

and project facilities;

(J) the amount of any contributions made by the

municipality or county from general revenue for the implementation

of the project plan;

(K) the costs of school buildings, other

educational buildings, other educational facilities, or other

buildings owned by or on behalf of a school district, community

college district, or other political subdivision of this state;

[ and ]

(L) payments made at the discretion of the

governing body of the municipality or county that the governing

body finds necessary or convenient to the creation of the zone or to

the implementation of the project plans for the zone ; and

(M) payments made as part of a reinvestment zone

stability program established under Section 311.0111 .

SECTION 2. Section 311.006(a), Tax Code, is amended to read

as follows:

(a) A municipality may not designate a reinvestment zone if:

(1) more than 40 [ 30 ] percent of the property in the

proposed zone[ , excluding property that is publicly owned, ] is used

for residential purposes , excluding property that is:

(A) publicly owned; or

(B) a residence homestead owned by a legacy

homeowner, as those terms are defined by Section 311.0111 ; or

(2) the total appraised value of taxable real property

in the proposed zone and in existing reinvestment zones exceeds:

(A) 25 percent of the total appraised value of

taxable real property in the municipality and in the industrial

districts created by the municipality, if the municipality has a

population of 100,000 or more; or

(B) 50 percent of the total appraised value of

taxable real property in the municipality and in the industrial

districts created by the municipality, if the municipality has a

population of less than 100,000.

SECTION 3. Chapter 311, Tax Code, is amended by adding

Section 311.0111 to read as follows:

Sec. 311.0111. REINVESTMENT ZONE STABILITY PROGRAM. (a)

In this section:

(1) "Legacy homeowner" means the owner of a residence

homestead located in a reinvestment zone who has continuously

resided in and received an exemption under Section 11.13 for the

homestead for at least seven years preceding the date the governing

body of the county or municipality designated the zone in which the

homestead is located and meets certain conditions imposed under the

project plan under Section 311.011.

(2) "Program" means a reinvestment zone stability

program established under this section.

(3) "Residence homestead" has the meaning assigned by

Section 11.13.

(b) The project plan prepared and adopted by the board of

directors of a reinvestment zone under Section 311.011 may

authorize the board of directors to establish a reinvestment zone

stability program, the purpose of which is to ensure that all

residents of the zone benefit from its designation. The governing

body of the county or municipality that designated the zone and any

affiliated community organizations may participate in the

development of the program. As part of a program established under

this section, the board may dedicate, pledge, or otherwise provide

for the use of money in the tax increment fund established for the

zone to prevent homeowner displacement by providing conditional

annual payments on behalf of legacy homeowners to offset the

increase in ad valorem taxes imposed on the residence homesteads of

those homeowners that is attributable to the increase in property

values associated with the development or redevelopment of property

in the zone.

(c) If the project plan for a reinvestment zone authorizes

annual payments on behalf of legacy homeowners, the plan must

provide that:

(1) the legacy homeowner must meet and maintain

certain conditions, including meeting an income eligibility

requirement;

(2) the amount of an annual payment made under the

program on behalf of a legacy homeowner may not exceed the amount

determined for that homeowner under Subsection (d); and

(3) the period of time for which annual payments may be

made on behalf of a legacy homeowner may not exceed 10 years.

(d) The maximum amount of an annual payment that may be made

on behalf of a legacy homeowner for a tax year is equal to the

positive difference, if any, between the following amounts:

(1) the ad valorem taxes due on the homeowner's

homestead for that tax year; and

(2) the ad valorem taxes due on the homeowner's

homestead for the tax year in which the reinvestment zone in which

the homestead is located was designated.

SECTION 4. This Act takes effect September 1, 2025.