Amends TCA Title 6, Chapter 51.

Present law authorizes an incorporated city or town to do the following:<br /> <br /> (1) Contract its limits within a given territory as long as three-fourths of the qualified voters voting in an election assent to such contraction; and<br /> <br /> (2) After notice and public hearing, contract its limits within a given territory upon its own initiative by ordinance when it appears in the best interest of the affected territory. However, present law prohibits such contraction from occurring:<br /> <br /> (A) Unless a majority of the total membership of the city legislative body approves the contraction; and<br /> <br /> (B) If opposed by a majority of the voters residing within the area to be deannexed. The concurrence of a majority of the voters is presumed unless a petition objecting to deannexation signed by 10 percent of the registered voters residing within the area proposed to be deannexed is filed with the city recorder 75 days following the final reading of the ordinance. If a petition is filed, then a referendum must be held at the next general election to ascertain the will of the voters residing in the area that the city proposes to deannex. If a majority of those voting in the referendum fail to vote for the deannexation, then the ordinance is void and the matter may not be considered again for two years. If a majority vote for deannexation, then the ordinance becomes effective upon certification of the result of the referendum.<br /> <br /> AGRICULTURAL REAL PROPERTY<br /> <br /> This bill adds to the present law by authorizing owners of real property used primarily for agricultural purposes who reside in a territory previously annexed by ordinance upon the initiative of the municipality to petition the municipality to deannex such agricultural property, if some portion of the property lies within one mile of the existing municipal boundaries. The petition must include a copy of the ordinance that includes the map of the plat seeking deannexation. The map must be the same map the municipality used to annex the territory. Upon receiving the petition, the municipality must determine the debt amount owed, if any, within 30 days. The deannexation of the property becomes operative 90 days after receipt of the petition.<br /> <br /> This bill does not require a municipal utility to cease providing electrical service, sanitary sewer service, other utility services, or street lighting in the territory excluded from the municipality's corporate limits.<br /> <br /> As used in this bill, "property used primarily for agricultural purposes" means property owned or operated by a person whose federal income tax return contains the following:<br /> <br /> (1) Business activity on IRS schedule F, profit or loss from farming, and the business activity reflected on the form is related to the property that is the subject of the petition; or<br /> <br /> (2) Farm rental activity on IRS form 4835, farm rental income and expenses on schedule E, supplemental income and loss, and the farm rental activity reflected on the form is related to the property that is the subject of the petition.<br /> <br /> EFFECTIVE DATE OF CONTRACTION AND CONTINUING JURISDICTON FOR TAXATION<br /> <br /> Except for responsibility for debt contracted prior to the surrender of jurisdiction, present law provides that municipal jurisdiction ceases over the territory excluded from the municipality's corporate limits on the effective date of the ordinance if the contraction is done by ordinance, or on the date of the certification of the results of the election if the contraction is done by election. However, present law authorizes the municipality to continue to levy and collect taxes on property in the excluded territory to pay the excluded territory's proportion of any debt contracted prior to the exclusion.<br /> <br /> This bill changes present law in the following ways:<br /> <br /> (1) It provides that municipal jurisdiction ceases also upon the operative date of a contraction accomplished through a petition by an owner of property used primarily for agricultural purposes as described above; and<br /> <br /> (2) It only allows the municipality to continue to levy and collect taxes on property in excluded territory to pay the excluded territory's proportion of any debt newly contracted after the territory was annexed and prior to the exclusion.<br /> <br /> ON APRIL 20, 2023, THE HOUSE ADOPTED AMENDMENT #1 AND PASSED HOUSE BILL 938, AS AMENDED.<br /> <br /> AMENDMENT #1 revises this bill to authorize owners of real property used primarily for agricultural purposes who reside in a territory previously annexed by ordinance that was not annexed through a referendum or a request of the property owner may petition the municipality to deannex such property if: <br /> <br /> (1) The deannexation of the property does not create an area of unincorporated territory that is completely surrounded by municipal boundaries; and <br /> <br /> (2) The owner at the time the petition is made: <br /> <br /> (A) Is the same owner as when the property was annexed; or <br /> <br /> (B) Acquired the property as an heir to the owner when the property was annexed.<br /> <br /> This amendment adds to the definition of "property used for primarily agricultural purposes " the requirement that the tax return contain one or more of the factors for at least five years and the following new factors: <br /> <br /> (1) The person who owns or operates the property is a qualified farmer or nurseryman; <br /> <br /> (2) The property was classified at the time of annexation and has continued being classified as agricultural land or forest land; and <br /> <br /> (3) The property has been maintained in use of agriculture since annexation occurred.<br /> <br /> ON APRIL 20, 2023, THE SENATE SUBSTITUTED HOUSE BILL 938 FOR SENATE BILL 851, ADOPTED AMENDMENT #1, AND PASSED HOUSE BILL 938, AS AMENDED.<br /> <br /> AMENDMENT #1 makes the changes as described below.<br /> <br /> This amendment revises the provision that provides that owners of real property used primarily for agricultural purposes who reside in a territory previously annexed by ordinance that was not annexed through a referendum or a request of the property owner may petition the municipality to deannex such property, if: (A) the deannexation of the property does not create an area of unincorporated territory that is completely surrounded by municipal boundaries; and (B) the owner at the time the petition is made is the same owner as when the property was annexed; or acquired the property as an heir to the owner when the property was annexed. <br /> <br /> This amendment rewrites the above provision to, instead, provide that owners of real property used primarily for agricultural purposes who reside in a territory previously annexed by ordinance upon the initiative of the municipality may petition the municipality to deannex such property, if: (A) the deannexation of the property does not create an area of unincorporated territory that is completely surrounded by municipal boundaries; and (B) the owner of some or all of the property at the time the petition is made is the same owner as when the property was annexed; or a direct descendant of the person who owned the property at the time of annexation.<br /> <br /> This amendment removes the five-year requirement for certain items being containing on a person's federal income tax return. This amendment also removes certain items as being required to be contained on the person's federal income tax return.<br /> <br /> ON APRIL 21, 2023, THE HOUSE NONCONCURRED IN SENATE AMENDMENT #1.<br /> <br /> ON APRIL 21, 2023, THE SENATE REFUSED TO RECEDE FROM ITS ADOPTION OF SENATE AMENDMENT #1.<br /> <br /> ON APRIL 21, 2023, THE HOUSE REFUSED TO RECEDE IN ITS ACTION IN NONCONCURRING IN SENATE AMENDMENT #1, AND APPOINTED A CONFERENCE COMMITTEE.<br /> <br /> ON APRIL 21, 2023, THE HOUSE ADOPTED THE CONFERENCE COMMITTEE REPORT AND MADE IT THE ACTION OF THE HOUSE.<br /> <br /> ON APRIL 21, 2023, THE SENATE ADOPTED THE CONFERENCE COMMITTEE REPORT AND MADE IT THE ACTION OF THE SENATE.<br />