AGENDA CAPTION:
Title
Consider approval of Ordinance 2024-19, on one reading, approving and establishing an exemption from the assessment of the city’s ad valorem property tax for eligible child-care facilities pursuant to section 11.36 of the Texas Tax code; declaring an emergency; and providing that this ordinance shall be effective after one reading.
Body
Meeting date: April 16, 2024
Department: Finance
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Funds Required: No
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Prior Council Action: None
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Background Information:
During the 88th Regular Session, the Texas Legislature passed enabling legislation to place a constitutional amendment on the ballot for voters on November 7, 2023, which upon said vote passed with strong bipartisan support, thereby allowing cities and counties to have the option to provide an exemption from ad valorem property taxation of between 50 to 100 percent of the appraised value of all or a part of real property used to operate a commercial child-care facility.
S.B. 1145 provides a pathway to provide licensed child-care providers some relief from increasing taxes. S.B. 1145 is designed to provide licensed child-care providers relief from higher taxes regardless of whether they own the facilities or rent the property in which their child-care centers are located.
In order to ensure that landlords pass tax savings on to child-care center tenants in the landlord's property, the bill proposes that the owner of the property in which a child-care center is a tenant must include with their application for a tax exemption, an affidavit to the chief appraiser of the local appraisal district indicating that the property owner has provided to the child-care facility a disclosure showing the amount by which the property taxes are reduced, and that the rent charged for the lease of the facility is reduced by an equal amount.
For those properties which are taxed as a single taxed entity but which are subdivided for tenants or other businesses, the bill provides that only the square footage used for a child-care center and its activities may be utilized to calculate the tax exemption by the local appraisal district.
Child-care centers must meet the following criteria to be eligible for the exemption:
• be a licensed child-care facility;
• be a Texas Workforce Commission (TWC) Texas Rising Star program participant; and
• have at least 20 percent of their children enrolled in TWC’s Child Care Services program.
According to information available on TWC’s website, there are currently up to 4 facilities that may qualify. Two of the facilities are stand alone and paid a combined amount in city taxes of under $2,500. The other two facilities are part of a multi-business site and the amount of exemption that would be granted is indeterminable at this time.
To be effective for the upcoming 2024 property tax levy, child-care facilities must apply for the exemption by May 1, 2024. Ordinances typically require two readings, and the second reading of this ordinance would not occur until May 7, 2024. The ordinance is considered an emergency ordinance requiring only one reading to get tax relief to qualifying child-care facilities.
Council Committee, Board/Commission Action:
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Alternatives:
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Recommendation:
Approve the ordinance establishing a 100% exemption for the appraised value of real property used to operate a qualifying and licensed child-care facility.