HBA-AMW H.B. 3383 77(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 3383 By: Davis, Yvonne Ways & Means 7/19/2001 Enrolled BACKGROUND AND PURPOSE Under state law, properties owned by community housing development organizations (organizations) are exempt from ad valorem taxation. However, concerns exist that some organizations are taking advantage of the exemption without reinvesting the savings that are realized by the organization's tax exempt status and are not using surplus revenue generated by affordable housing units to maintain the property or offer other support services. House Bill 3383 prohibits rental property owned by an organization from being exempted from taxation in a subsequent tax year unless in the preceding tax year the organization spent a certain percentage of the exemption in that year on specified development services. 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 House Bill 3383 amends the Tax Code to prohibit a multifamily rental property consisting of 36 or more dwelling units owned by a community housing development organization (organization) from being exempted from taxation in a subsequent tax year unless in the preceding tax year the organization spent, for eligible persons in the county in which the property is located, an amount equal to at least 40 percent of the total amount of taxes that would have been imposed on the property in that year without the exemption on social, educational, economic development services, capital improvement projects, or rent reduction. The bill specifies that the provisions regarding the exemption do not apply to property acquired by the organization using tax exempt bond financing after January 1, 1997, and before December 31, 2001. The bill sets forth requirements for and exceptions to exemption from taxation in a subsequent tax year for improved real property that includes a housing project constructed after December 31, 2001, and financed with certain qualified bonds or low-income housing tax credits. The bill provides than an organization must annually have an audit prepared by an independent auditor to receive an exemption for improved or unimproved real property or to receive an exemption from taxation of any building or tangible personal property the organization owns and uses in the administration of its acquisition, building, repair, sale, or rental of property. The bill specifies what the audit must include. EFFECTIVE DATE January 1, 2002.