HB 5451

relating to the treatment of certain residence homesteads for
purposes of the Tax Increment Financing Act.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Section 311.002(1), Tax Code, is amended to read
(1)  "Project costs" means the expenditures made or
estimated to be made and monetary obligations incurred or estimated
to be incurred by the municipality or county designating a
reinvestment zone that are listed in the project plan as costs of
public works, public improvements, programs, or other projects
benefiting the zone, plus other costs incidental to those
expenditures and obligations.  "Project costs" include:
(A)  capital costs, including the actual costs of
the acquisition and construction of public works, public
improvements, new buildings, structures, and fixtures; the actual
costs of the acquisition, demolition, alteration, remodeling,
repair, or reconstruction of existing buildings, structures, and
fixtures; the actual costs of the remediation of conditions that
contaminate public or private land or buildings; the actual costs
of the preservation of the facade of a public or private building;
the actual costs of the demolition of public or private buildings;
and the actual costs of the acquisition of land and equipment and
the clearing and grading of land;
(B)  financing costs, including all interest paid
to holders of evidences of indebtedness or other obligations issued
to pay for project costs and any premium paid over the principal
amount of the obligations because of the redemption of the
(C)  real property assembly costs;
(D)  professional service costs, including those
incurred for architectural, planning, engineering, and legal
(E)  imputed administrative costs, including
reasonable charges for the time spent by employees of the
municipality or county in connection with the implementation of a
(G)  organizational costs, including the costs of
conducting environmental impact studies or other studies, the cost
of publicizing the creation of the zone, and the cost of
implementing the project plan for the zone;
(H)  interest before and during construction and
for one year after completion of construction, whether or not
(I)  the cost of operating the reinvestment zone
(J)  the amount of any contributions made by the
municipality or county from general revenue for the implementation
(K)  the costs of school buildings, other
educational buildings, other educational facilities, or other
buildings owned by or on behalf of a school district, community
college district, or other political subdivision of this state;
(L)  payments made at the discretion of the
governing body of the municipality or county that the governing
body finds necessary or convenient to the creation of the zone or to
the implementation of the project plans for the zone; and
(M)  payments made as part of a reinvestment zone
stability program established under Section 311.0111.
SECTION 2.  Section 311.006(a), Tax Code, is amended to read
(a)  A municipality may not designate a reinvestment zone if:
(1)  more than 40 [30] percent of the property in the
proposed zone[, excluding property that is publicly owned,] is used
for residential purposes, excluding property that is:
(B)  a residence homestead owned by a legacy
homeowner, as those terms are defined by Section 311.0111; or
(2)  the total appraised value of taxable real property
in the proposed zone and in existing reinvestment zones exceeds:
(A)  25 percent of the total appraised value of
taxable real property in the municipality and in the industrial
districts created by the municipality, if the municipality has a
population of 100,000 or more; or
(B)  50 percent of the total appraised value of
taxable real property in the municipality and in the industrial
districts created by the municipality, if the municipality has a
population of less than 100,000.
SECTION 3.  Chapter 311, Tax Code, is amended by adding
Section 311.0111 to read as follows:
Sec. 311.0111.  REINVESTMENT ZONE STABILITY PROGRAM.  (a)
(1)  "Legacy homeowner" means the owner of a residence
homestead located in a reinvestment zone who has continuously
resided in and received an exemption under Section 11.13 for the
homestead for at least seven years preceding the date the governing
body of the county or municipality designated the zone in which the
homestead is located and meets certain conditions imposed under the
project plan under Section 311.011.
(2)  "Program" means a reinvestment zone stability
program established under this section.
(3)  "Residence homestead" has the meaning assigned by
(b)  The project plan prepared and adopted by the board of
directors of a reinvestment zone under Section 311.011 may
authorize the board of directors to establish a reinvestment zone
stability program, the purpose of which is to ensure that all
residents of the zone benefit from its designation.  The governing
body of the county or municipality that designated the zone and any
affiliated community organizations may participate in the
development of the program.  As part of a program established under
this section, the board may dedicate, pledge, or otherwise provide
for the use of money in the tax increment fund established for the
zone to prevent homeowner displacement by providing conditional
annual payments on behalf of legacy homeowners to offset the
increase in ad valorem taxes imposed on the residence homesteads of
those homeowners that is attributable to the increase in property
values associated with the development or redevelopment of property
(c)  If the project plan for a reinvestment zone authorizes
annual payments on behalf of legacy homeowners, the plan must
(1)  the legacy homeowner must meet and maintain
certain conditions, including meeting an income eligibility
(2)  the amount of an annual payment made under the
program on behalf of a legacy homeowner may not exceed the amount
determined for that homeowner under Subsection (d); and
(3)  the period of time for which annual payments may be
made on behalf of a legacy homeowner may not exceed 10 years.
(d)  The maximum amount of an annual payment that may be made
on behalf of a legacy homeowner for a tax year is equal to the
positive difference, if any, between the following amounts:
(1)  the ad valorem taxes due on the homeowner's
homestead for that tax year; and
(2)  the ad valorem taxes due on the homeowner's
homestead for the tax year in which the reinvestment zone in which
the homestead is located was designated.
SECTION 4.  This Act takes effect September 1, 2025.