HBA-KDB C.S.H.B. 2175 77(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2175
By: Hochberg
Ways & Means
4/8/2001
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

The Texas Medical Center Central Heating and Cooling Services Cooperative
Association (TECO) is a Texas nonprofit cooperative association that
currently has an exemption from ad valorem taxes.  As a cooperative, TECO
has not yet been able to use tax exempt financing for its plant capital
needs, but is attempting to change its status to a nonprofit corporation
exempt from federal income taxes under Section 501(c)(3) of the Internal
Revenue Code.  However, TECO will no longer be exempt from ad valorem
taxation of its properties if TECO becomes a nonprofit corporation.  A
change to the exemption of ad valorem taxation of property would eliminate
the benefit from the use of tax exempt finances for its plant capital
needs.  C.S.H.B. 2175 provides that a nonprofit corporation that engages
exclusively in providing chilled water and steam to an eligible
health-related institution is entitled to an exemption from taxation of the
property the corporation owns, as though such property were owned and used
by the state for health or educational purposes. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

C.S.H.B. 2175 amends the Tax Code to provide that a corporation organized
under the Texas Non-Profit Corporation Act that engages exclusively in
providing chilled water and steam to an eligible health-related institution
is entitled to an exemption from taxation of the property the corporation
owns, as though such property were owned and held by the state and used for
health or educational purposes. 

EFFECTIVE DATE

On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001. 

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 2175 modifies the original bill by providing that a nonprofit
corporation is entitled to exemption from taxation only if the corporation
engages exclusively in providing chilled water and steam to an eligible
health-related institution.  The original bill exempted a nonprofit
corporation that provided chilled water and steam to eligible
health-related institutions.  The substitute modifies the original to
conform to Texas Legislative Council format.