SB 545

84(R) - 2015
Senate Finance
Senate Finance

Vote Recommendation

  • Neutral
  • Neutral
  • Neutral
  • Positive
  • Neutral


Larry Taylor

Bill Caption

Relating to the exemption from ad valorem taxation of real property leased to and used by certain schools.

Fiscal Notes

A fiscal note dated April 20, 2015 indicates that passage of the bill would grant a property tax exemption on the real property a person owns and leases to a qualified school under certain conditions. To the extent that public schools with taxing authority lease the property, there could be a gain to those school districts if the school district property tax loss was more than offset by the gain from the facilities rent reduction based on the total property tax reduction provided by the bill. To the extent that schools without taxing authority lease the property there would be a tax revenue loss to the public school districts with taxing authority and a cost to the state through the operation of the school funding formula.

Bill Analysis

Senate Bill 545 would amend Chapter 11 of the Tax Code related to taxable property and exemptions to create an exemption from ad valorem taxation of real property leased to and used by certain schools.


Owners of real property leased to certain schools (as described by Section 11.21 (d) of the Tax Code) would be entitled to an exemption from taxation of the real property if the real property is used exclusively by the school for educational functions and is reasonably necessary for the operation of the school, if the owner certifies by affidavit to the school that the rent of the lease would be reduced by the amount by which the taxes would be reduced, if the owner would provide to the school the amount by which the taxes would be reduced, how the rent would be reduced to reflect the exemption, and if the rent actually reflects the reduction in taxes.


If passed, Senate Bill 545 would take effect on January 1, 2016 only if Senate Joint Resolution 30 is approved by voters.


Senate Bill 545 is the enabling legislation for SJR 30.

Vote Recommendation Notes

05/24/15 update:

An amendment was introduced and accepted on the Senate floor. The amendment would specify that to be eligible for an exemption under the related section, a person owns and leases to an open-enrollment charter school authorized by Subchapter D, Chapter 12, Education Code, that is qualified as provided by Section 11.21(d) of the Tax Code.

We continue to support this bill.

The second chamber sponsor is Representative Jim Murphy.

First chamber recommendation:

Current law provides that a person is entitled to an exemption from taxation of buildings and tangible personal property that the person owns and uses for a school (Section 11.21 of the Tax Code).


Senate Bill 545 would provide the same exemption for a person who owns real property and leases it to a school, with the condition that the reduction in the amount of taxation be fully reflected in a reduction in the rent of the lease to the school.


The functional effect of Senate Bill 545 would be to reduce facilities costs for charter schools which are public schools that do not receive funding in the same way as traditional public schools do. This goal would be achieved by reducing the property tax for the property owner and requiring that the benefit of the tax reduction be passed on to the renter, in this case a charter school.

Traditional public schools have taxing authority and do not have to pay property taxes. The practical result of this legislation would be to treat charter schools and some private schools the same as traditional public schools by removing the tax burden they bear when they rent facilities from private property owners. As a result we support this legislation on limited government grounds.