HBA-KDB S.B. 1711 77(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 1711
By: Van de Putte
Ways & Means
5/4/2001
Engrossed



BACKGROUND AND PURPOSE 

According to a recent Attorney General opinion (JC-0300), tax abatements
can only be granted to an owner of real property that is located in a
reinvestment zone. The owner of a leasehold interest is thus subject to the
state property tax. This may cause a problem for communities promoting
economic development in reinvestment zones that may seek to use tax
abatements to encourage individuals or corporations to lease property in
such zones.   Senate Bill 1711 authorizes a taxing unit to grant tax
abatements to an owner of a leasehold interest of real property located in
a reinvestment zone.  

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

Senate Bill 1711 amends the Tax Code to provide that the owner of a
leasehold interest in real property is considered to be the owner of real
property, for the purposes of the Property Redevelopment and Tax Abatement
Act.  The bill authorizes a tax abatement agreement entered into by a
taxing unit with the owner of a leasehold interest to apply to the taxable
value, if any, of the leasehold interest in the same manner as a tax
abatement agreement with the owner of real property would apply to the
taxable value of the real property and tangible personal property located
on the leased premises in the same manner as a tax abatement agreement with
the owner of real property would apply to the tangible personal property
located on the real property. 

EFFECTIVE DATE

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