Gutierrez’s bill on tax breaks for leased hospital land

The text as introduced · 623 words

89R15638 DRS-F

By: Gutierrez
S.B. No. 2517

A BILL TO BE ENTITLED

AN ACT

relating to the exemption from ad valorem taxation of real property

leased to certain local public entities for use as a hospital and

related health care services.

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

SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by

adding Section 11.1802 to read as follows:

Sec. 11.1802. REAL PROPERTY LEASED FOR CERTAIN HOSPITAL

USE. (a) A person is entitled to an exemption from taxation of the

portion of the real property that the person owns and leases to a

governmental entity established under Subchapter B, Chapter 265,

Health and Safety Code, for use as a hospital and the provision of

related health care services if:

(1) the portion of the real property that is leased to

the entity is:

(A) used exclusively by the entity for the

operation or administration of the hospital and the provision of

related health care services by the hospital; and

(B) reasonably necessary for a purpose described

by Paragraph (A); and

(2) the owner of the portion of the real property that

is leased to the entity certifies by affidavit to the entity that:

(A) if the lease agreement requires the entity to

pay the taxes imposed on the real property as a portion of the total

consideration paid to the property owner under the agreement, the

owner will reduce the total consideration required to be paid by the

entity under the lease agreement by an amount equal to the amount by

which the taxes on the real property are reduced as a result of the

exemption by providing a monthly or annual credit against the total

consideration due under the agreement; or

(B) if the lease agreement requires the entity to

pay the taxes imposed on the real property directly to the collector

for the applicable taxing unit or to the owner or the property

manager separately from the payment of rent to the property owner

under the agreement, the entity is no longer required to pay the

taxes to the collector, owner, or property manager, as applicable,

and the rent charged to the entity under the agreement is not

affected unless a term of the agreement specifically provides for a

change in the amount of the rent.

(b) A property owner required to provide an affidavit

described by Subsection (a)(2)(A) to a governmental entity shall:

(1) annually provide the entity with a disclosure

document stating the amount by which the taxes on the real property

are reduced as a result of the exemption and the method the owner

will implement to ensure that the total consideration for the lease

of the real property fully reflects the total amount of that

reduction; and

(2) reduce the total consideration for the lease of

the real property through a monthly or annual credit against the

total consideration to reflect the amount by which the taxes on the

real property are reduced as a result of the exemption.

(c) Section 25.07 does not apply to a leasehold interest in

real property for which the owner receives an exemption under this

section.

SECTION 2. This Act applies only to ad valorem taxes imposed

for a tax year beginning on or after the effective date of this Act.

SECTION 3. This Act takes effect January 1, 2026, but only

if the constitutional amendment proposed by the 89th Legislature,

Regular Session, 2025, authorizing the legislature to exempt from

ad valorem taxation real property leased to certain local public

entities for use as a hospital and related health care services is

approved by the voters. If that amendment is not approved by the

voters, this Act has no effect.