Relating to the exemption from ad valorem taxation of property owned by certain nonprofit corporations, located in a populous county, and used to promote agriculture, support youth, and provide educational support in the community.

Contracts

• Triple Net (NNN) Leases: Landlords must audit all commercial leases. While the underlying property becomes exempt, Section 1(n) mandates that for-profit leasehold interests remain taxable.
• Lease Amendments: Revise standard lease templates to explicitly state that tenants are responsible for taxes assessed on their specific leasehold interest, even if the landlord’s fee simple interest is exempt.

Hiring/Training

• Governance: Boards of Directors must vote to amend Bylaws and Articles of Incorporation to strictly align with the "Charitable, Educational, AND Scientific" statutory requirement.
• Operations: Facility managers must be trained to log property usage. Only property *actively used* for the statutory purposes qualifies; mixed-use or investment-held land must be segregated in internal records.

Reporting & Record-Keeping

• Form 50-114: Prepare to file the *Application for Charitable Organization Property Tax Exemption* with HCAD in Q1 2026.
• Proof of Science: Compile curriculum or program data demonstrating the organization's "scientific" activities (e.g., agricultural science, STEM grants, livestock genetics) to substantiate the new governance clause.

Fees & Costs

• Legal Costs: Immediate budget allocation required for corporate counsel to amend governance documents and review lease structures.
• Insurance: With the elimination of property tax overhead, conduct a review of property insurance coverage to ensure replacement cost values are accurate, as the asset's financial profile will shift significantly.