By: Lucio S.B. No. 1115
(In the Senate - Filed February 26, 2019; March 7, 2019,
read first time and referred to Committee on Intergovernmental
Relations; April 15, 2019, reported adversely, with favorable
Committee Substitute by the following vote: Yeas 6, Nays 1;
April 15, 2019, sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR S.B. No. 1115 By: Lucio
A BILL TO BE ENTITLED
AN ACT
relating to the authority of a county to adopt a land bank program.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle B, Title 12, Local Government Code, is
amended by adding Chapter 388 to read as follows:
CHAPTER 388. LAND BANK PROGRAM
Sec. 388.001. DEFINITIONS. In this chapter:
(1) "Affordable" means that the monthly mortgage
payment or contract rent does not exceed 30 percent of the
applicable median family income for that unit size, in accordance
with the income and rent limit rules adopted by the Texas Department
of Housing and Community Affairs.
(2) "Community housing development organization" or
"organization" means an organization that:
(A) meets the definition of a community housing
development organization in 24 C.F.R. Section 92.2; and
(B) is certified by the county as a community
housing development organization.
(3) "Land bank" means an entity established or
approved by the governing body of a county to exercise the powers of
acquiring, holding, developing, and transferring real property
under this chapter.
(4) "Land bank plan" or "plan" means a plan adopted by
the governing body of a county as provided by Section 388.004.
(5) "Land bank program" or "program" means a program
adopted under Section 388.002.
(6) "Low income household" means a household with an
income of not greater than 80 percent of the area median family
income, based on gross household income, adjusted for household
size, for the county, as determined annually by the United States
Department of Housing and Urban Development.
(7) "Moderate income household" means a household
that:
(A) requires assistance in securing sanitary,
decent, and safe housing, considering:
(i) the amount of the total income
available for housing needs of the individuals or families who are
members of the household;
(ii) the size of the household;
(iii) the cost and condition of available
housing facilities;
(iv) the ability of the individuals or
families who are members of the household to compete successfully
in the private housing market and to pay the amounts required by
that market for sanitary, decent, and safe housing; and
(v) standards that are established for the
purpose of federal programs and that use income to determine
eligibility for the programs; and
(B) does not qualify as a low income household.
(8) "Qualified participating developer" means a
developer who meets the requirements of Section 388.003 and
includes a qualified organization under Section 388.009.
Sec. 388.002. LAND BANK PROGRAM. (a) The governing body
of a county may adopt a land bank program in which the officer
charged with selling real property ordered sold pursuant to
foreclosure of a tax lien may sell certain eligible real property by
private sale for purposes of affordable housing development as
provided by this chapter.
(b) The governing body of a county that adopts a land bank
program shall establish or approve a land bank to exercise the
powers of acquiring, holding, developing, and transferring real
property under this chapter.
Sec. 388.003. QUALIFIED PARTICIPATING DEVELOPER. To
qualify to participate in a land bank program, a developer other
than the land bank must:
(1) have developed three or more housing units within
the three-year period preceding the submission of a proposal to the
land bank seeking to acquire real property from the land bank;
(2) have a development plan approved for the land bank
property by the land bank or the county; and
(3) meet any other requirements adopted by the county
in the land bank plan.
Sec. 388.004. LAND BANK PLAN. (a) A county that adopts a
land bank program shall operate the program in conformance with a
land bank plan.
(b) The governing body of a county that adopts a land bank
program shall adopt a plan annually. The plan may be amended from
time to time.
(c) In developing the plan, the county shall consider any
other housing plans adopted by the county, including any fair
housing plans and policies adopted or agreed to by the county.
(d) The plan must include the following:
(1) a list of community housing development
organizations eligible to participate in the right of first refusal
provided by Section 388.009;
(2) a list of the parcels of real property that may
become eligible for sale to the land bank during the next year;
(3) the county's plan for affordable housing
development on those parcels of real property; and
(4) the sources and amounts of money anticipated to be
available from the county for subsidies for development of
affordable housing in the county, including any money specifically
available for housing developed under the program, as approved by
the governing body of the county at the time the plan is adopted.
Sec. 388.005. PUBLIC HEARING ON PROPOSED PLAN. (a) Before
adopting a plan, a county shall hold a public hearing on the
proposed plan.
(b) The county clerk or the county clerk's designee shall
provide notice of the hearing to all community housing development
organizations and to neighborhood associations identified by the
county as serving the neighborhoods in which properties anticipated
to be available for sale to the land bank under this chapter are
located.
(c) The county clerk or the county clerk's designee shall
make copies of the proposed plan available to the public not later
than the 60th day before the date of the public hearing.
Sec. 388.006. PRIVATE SALE TO LAND BANK.
(a) Notwithstanding any other law and except as provided by
Subsection (f), property that is ordered sold pursuant to
foreclosure of a tax lien may be sold in a private sale to a land
bank by the officer charged with the sale of the property without
first offering the property for sale as otherwise provided by
Section 34.01, Tax Code, if:
(1) the market value of the property as specified in
the judgment of foreclosure is less than the total amount due under
the judgment, including all taxes, penalties, and interest, plus
the value of nontax liens held by a taxing unit and awarded by the
judgment, court costs, and the cost of the sale;
(2) the property is not improved with a habitable
building or buildings or an uninhabitable building or buildings
that are occupied as a residence by an owner or tenant who is
legally entitled to occupy the building or buildings;
(3) there are delinquent taxes on the property for a
total of at least five years; and
(4) the county has executed with the other taxing
units that are parties to the tax suit an interlocal agreement that
enables those units to agree to participate in the program while
retaining the right to withhold consent to the sale of specific
properties to the land bank.
(b) A sale of property for use in connection with the
program is a sale for a public purpose.
(c) If the person being sued in a suit for foreclosure of a
tax lien does not contest the market value of the property in the
suit, the person waives the right to challenge the amount of the
market value determined by the court for purposes of the sale of the
property under Section 33.50, Tax Code.
(d) For any sale of property under this chapter, each person
who was a defendant to the judgment, or that person's attorney,
shall be given, not later than the 90th day before the date of sale,
written notice of the proposed method of sale of the property by the
officer charged with the sale of the property. Notice shall be
given in the manner prescribed by Rule 21a, Texas Rules of Civil
Procedure.
(e) After receipt of the notice required by Subsection (d)
and before the date of the proposed sale, the owner of the property
subject to sale may file with the officer charged with the sale a
written request that the property not be sold in the manner provided
by this chapter.
(f) If the officer charged with the sale receives a written
request as provided by Subsection (e), the officer shall sell the
property as otherwise provided in Section 34.01, Tax Code.
(g) The owner of the property subject to sale may not
receive any proceeds of a sale under this chapter. However, the
owner does not have any personal liability for a deficiency of the
judgment as a result of a sale under this chapter.
(h) Notwithstanding any other law, if consent is given by
the taxing units that are a party to the judgment, property may be
sold to the land bank for less than the market value of the property
as specified in the judgment or less than the total of all taxes,
penalties, and interest, plus the value of nontax liens held by a
taxing unit and awarded by the judgment, court costs, and the cost
of the sale.
(i) The deed of conveyance of the property sold to a land
bank under this section conveys to the land bank the right, title,
and interest acquired or held by each taxing unit that was a party
to the judgment, subject to the right of redemption.
Sec. 388.007. SUBSEQUENT RESALE OR DEVELOPMENT BY LAND
BANK. (a) Within the five-year period following the date of
acquisition of a property by a land bank, the land bank must:
(1) sell the property to a qualified participating
developer for the purpose of construction or rehabilitation of
affordable housing for sale or rent to low or moderate income
households; or
(2) develop the property for the purposes described by
Subdivision (1).
(b) If after five years a qualified participating developer
has not purchased the property or the land bank has not developed
the property, the property shall be transferred from the land bank
to the taxing units who were parties to the judgment for disposition
as otherwise allowed under the law.
(c) Unless the county increases the amount in its plan, the
number of properties acquired by a qualified participating
developer under this section on which development has not been
completed may not at any given time exceed three times the annual
average residential production completed by the qualified
participating developer during the preceding three-year period as
determined by the county.
(d) The deed conveying a property sold by the land bank must
include a right of reverter so that if the qualified participating
developer does not apply for a construction permit and close on any
construction financing within the three-year period following the
date of the conveyance of the property from the land bank to the
qualified participating developer, the property will revert to the
land bank for development by the land bank, subsequent resale to
another qualifying participating developer, or conveyance to the
taxing units who were parties to the judgment for disposition as
otherwise allowed under the law.
(e) Each subsequent resale that a land bank makes to a
qualified participating developer with respect to a property
acquired by the land bank under this chapter must comply with the
conditions of this section.
Sec. 388.008. RESTRICTIONS ON OCCUPANCY AND USE OF
PROPERTY. (a) The land bank shall impose deed restrictions on
property developed by the land bank or sold to qualified
participating developers requiring the development and subsequent
sale or rental of the property to low or moderate income households.
(b) For land bank properties developed by the land bank for
sale, and for land bank properties sold to a qualifying
participating developer for development for sale, in any given
fiscal year:
(1) at least 45 percent of the properties must be deed
restricted for sale to households with a household income of not
more than 80 percent of the area median family income, based on
gross household income and adjusted for household size, for the
county in which the properties are located;
(2) at least 25 percent of the properties must be deed
restricted for sale to households with a household income of not
more than 60 percent of the area median family income, based on
gross household income and adjusted for household size, for the
county in which the properties are located; and
(3) the remaining properties must be deed restricted
for sale to households with a household income of not more than 120
percent of the area median family income, based on gross household
income and adjusted for household size, for the county in which the
properties are located.
(c) If property is developed and used for rental housing,
the deed restrictions must be for a period of not less than 30 years
and must require that 100 percent of the units are occupied by and
affordable to households with incomes not greater than 80 percent
of area median family income, based on gross household income,
adjusted for household size, for the county, as determined annually
by the United States Department of Housing and Urban Development,
and must also require that, of those units:
(1) at least 40 percent are occupied by and affordable
to households with incomes not greater than 60 percent of area
median family income, based on gross household income, adjusted for
household size, for the county, as determined annually by the
United States Department of Housing and Urban Development; and
(2) at least 20 percent are occupied by and affordable
to households with incomes not greater than 50 percent of area
median family income, based on gross household income, adjusted for
household size, for the county, as determined annually by the
United States Department of Housing and Urban Development.
(d) The deed restrictions under Subsection (c) must require
the owner to file an annual occupancy report with the county on a
reporting form provided by or acceptable to the county. The deed
restrictions must also prohibit any exclusion of an individual or
family from admission to the development based solely on the
participation of the individual or family in the housing choice
voucher program under Section 8, United States Housing Act of 1937
(42 U.S.C. Section 1437f), as amended.
(e) Except as otherwise provided by this section, if the
deed restrictions imposed under this section are for a term of
years, the deed restrictions shall renew automatically.
(f) The land bank or the governing body of the county may
modify or add to the deed restrictions imposed under this section.
Any modifications or additions made by the governing body of the
county must be adopted by the county as part of its plan and must
comply with the restrictions set forth in Subsections (b), (c), and
(d).
Sec. 388.009. RIGHT OF FIRST REFUSAL. (a) In this
section, "qualified organization" means a community housing
development organization that:
(1) contains within its designated geographical
boundaries of operation, as set forth in its application for
certification filed with and approved by the county, a portion of
the property that the land bank is offering for sale;
(2) has built at least three single-family homes or
duplexes or one multifamily residential dwelling of four or more
units in compliance with all applicable building codes within the
preceding two-year period and within the organization's designated
geographical boundaries of operation; and
(3) within the preceding three-year period has
developed or rehabilitated housing units within a five-mile radius
of the property that the land bank is offering for sale.
(b) The land bank shall first offer a property for sale to
qualified organizations.
(c) Notice must be provided to the qualified organizations
by certified mail, return receipt requested, not later than the
60th day before the beginning of the period in which a right of
first refusal may be exercised.
(d) The county shall specify in its plan the period during
which the right of first refusal provided by this section may be
exercised by a qualified organization. That period must be at
least nine months but not more than 26 months from the date of the
deed of conveyance of the property to the land bank.
(e) If the land bank conveys the property to a qualified
organization before the expiration of the period specified by the
county under Subsection (d), the interlocal agreement executed
under Section 388.006(a)(4) must provide tax abatement for the
property until the expiration of that period.
(f) During the specified period, the land bank may not sell
the property to a qualified participating developer other than a
qualified organization. If all qualified organizations notify the
land bank that they are declining to exercise their right of first
refusal during the specified period, or if an offer to purchase the
property is not received from a qualified organization during that
period, the land bank may sell the property to any other qualified
participating developer at the same price that the land bank
offered the property to the qualified organizations.
(g) In its plan, the county shall establish the amount of
additional time, if any, that a property may be held in the land
bank once an offer has been received and accepted from a qualified
organization or other qualified participating developer.
(h) If more than one qualified organization expresses an
interest in exercising its right of first refusal, the organization
that has designated the most geographically compact area
encompassing a portion of the property shall be given priority.
(i) In its plan, the county may provide for other rights of
first refusal for any other nonprofit corporation exempted from
federal income tax under Section 501(c)(3), Internal Revenue Code
of 1986, as amended, provided that the preeminent right of first
refusal is provided to qualified organizations as provided by this
section.
(j) The land bank is not required to provide a right of first
refusal to qualified organizations under this section if the land
bank is selling property that reverted to the land bank under
Section 388.007(d).
Sec. 388.010. OPEN RECORDS AND MEETINGS. The land bank
shall comply with the requirements of Chapters 551 and 552,
Government Code.
Sec. 388.011. RECORDS; AUDIT; REPORT. (a) The land bank
shall keep accurate minutes of its meetings and shall keep accurate
records and books of account that conform with generally accepted
principles of accounting and that clearly reflect the income and
expenses of the land bank and all transactions in relation to its
property.
(b) The land bank shall file with the county not later than
the 90th day after the close of the fiscal year annual audited
financial statements prepared by a certified public accountant.
The financial transactions of the land bank are subject to audit by
the county.
(c) For purposes of evaluating the effectiveness of the
program, the land bank shall submit an annual performance report to
the county not later than November 1 of each year in which the land
bank acquires, develops, or sells property under this chapter. The
performance report must include:
(1) a complete and detailed written accounting of all
money and properties received and disbursed by the land bank during
the preceding fiscal year;
(2) for each property acquired by the land bank during
the preceding fiscal year:
(A) the street address of the property;
(B) the legal description of the property;
(C) the date the land bank took title to the
property;
(D) the name and mailing address of the property
owner of record at the time of the foreclosure;
(E) the amount of taxes and other costs owed at
the time of the foreclosure; and
(F) the assessed value of the property on the tax
roll at the time of the foreclosure;
(3) for each property sold by the land bank during the
preceding fiscal year to a qualified participating developer:
(A) the street address of the property;
(B) the legal description of the property;
(C) the name and mailing address of the
purchaser;
(D) the price paid by the purchaser;
(E) the maximum incomes allowed for the
households by the terms of the sale; and
(F) the source and amount of any public subsidy
provided by the county to facilitate the sale or rental of the
property to a household within the targeted income levels;
(4) for each property sold by the land bank or a
qualified participating developer during the preceding fiscal
year, the buyer's household income and a description of all use and
sale restrictions; and
(5) for each property developed for rental housing
with an active deed restriction, a copy of the most recent annual
report for the property.
(d) The land bank shall maintain in its records for
inspection a copy of the sale settlement statement for each
property sold by the land bank or a qualified participating
developer and a copy of the first page of the mortgage note with the
interest rate and indicating the volume and page number of the
instrument as filed with the county clerk.
(e) The land bank shall provide copies of the performance
report to the taxing units who were parties to the judgment of
foreclosure and shall provide notice of the availability of the
performance report for review to the organizations and neighborhood
associations identified by the county as serving the neighborhoods
in which properties sold to the land bank under this chapter are
located.
(f) The land bank and the county shall maintain copies of
the performance report available for public review.
SECTION 2. Sections 11.18(d) and (o), Tax Code, are amended
to read as follows:
(d) A charitable organization must be organized exclusively
to perform religious, charitable, scientific, literary, or
educational purposes and, except as permitted by Subsections (h)
and (l), engage exclusively in performing one or more of the
following charitable functions:
(1) providing medical care without regard to the
beneficiaries' ability to pay, which in the case of a nonprofit
hospital or hospital system means providing charity care and
community benefits in accordance with Section 11.1801;
(2) providing support or relief to orphans,
delinquent, dependent, or handicapped children in need of
residential care, abused or battered spouses or children in need of
temporary shelter, the impoverished, or victims of natural disaster
without regard to the beneficiaries' ability to pay;
(3) providing support without regard to the
beneficiaries' ability to pay to:
(A) elderly persons, including the provision of:
(i) recreational or social activities; and
(ii) facilities designed to address the
special needs of elderly persons; or
(B) the handicapped, including training and
employment:
(i) in the production of commodities; or
(ii) in the provision of services under 41
U.S.C. Sections 8501-8506;
(4) preserving a historical landmark or site;
(5) promoting or operating a museum, zoo, library,
theater of the dramatic or performing arts, or symphony orchestra
or choir;
(6) promoting or providing humane treatment of
animals;
(7) acquiring, storing, transporting, selling, or
distributing water for public use;
(8) answering fire alarms and extinguishing fires with
no compensation or only nominal compensation to the members of the
organization;
(9) promoting the athletic development of boys or
girls under the age of 18 years;
(10) preserving or conserving wildlife;
(11) promoting educational development through loans
or scholarships to students;
(12) providing halfway house services pursuant to a
certification as a halfway house by the parole division of the Texas
Department of Criminal Justice;
(13) providing permanent housing and related social,
health care, and educational facilities for persons who are 62
years of age or older without regard to the residents' ability to
pay;
(14) promoting or operating an art gallery, museum, or
collection, in a permanent location or on tour, that is open to the
public;
(15) providing for the organized solicitation and
collection for distributions through gifts, grants, and agreements
to nonprofit charitable, education, religious, and youth
organizations that provide direct human, health, and welfare
services;
(16) performing biomedical or scientific research or
biomedical or scientific education for the benefit of the public;
(17) operating a television station that produces or
broadcasts educational, cultural, or other public interest
programming and that receives grants from the Corporation for
Public Broadcasting under 47 U.S.C. Section 396, as amended;
(18) providing housing for low-income and
moderate-income families, for unmarried individuals 62 years of age
or older, for handicapped individuals, and for families displaced
by urban renewal, through the use of trust assets that are
irrevocably and, pursuant to a contract entered into before
December 31, 1972, contractually dedicated on the sale or
disposition of the housing to a charitable organization that
performs charitable functions described by Subdivision (9);
(19) providing housing and related services to persons
who are 62 years of age or older in a retirement community, if the
retirement community provides independent living services,
assisted living services, and nursing services to its residents on
a single campus:
(A) without regard to the residents' ability to
pay; or
(B) in which at least four percent of the
retirement community's combined net resident revenue is provided in
charitable care to its residents;
(20) providing housing on a cooperative basis to
students of an institution of higher education if:
(A) the organization is exempt from federal
income taxation under Section 501(a), Internal Revenue Code of
1986, as amended, by being listed as an exempt entity under Section
501(c)(3) of that code;
(B) membership in the organization is open to all
students enrolled in the institution and is not limited to those
chosen by current members of the organization;
(C) the organization is governed by its members;
and
(D) the members of the organization share the
responsibility for managing the housing;
(21) acquiring, holding, and transferring unimproved
real property under an urban land bank demonstration program
established under Chapter 379C, Local Government Code, as or on
behalf of a land bank;
(22) acquiring, holding, and transferring unimproved
real property under an urban land bank program established under
Chapter 379E, Local Government Code, as or on behalf of a land bank;
(22-a) acquiring, holding, developing, and
transferring real property under a land bank program established
under Chapter 388, Local Government Code, as or on behalf of a land
bank;
(23) providing housing and related services to
individuals who:
(A) are unaccompanied and homeless and have a
disabling condition; and
(B) have been continuously homeless for a year or
more or have had at least four episodes of homelessness in the
preceding three years;
(24) operating a radio station that broadcasts
educational, cultural, or other public interest programming,
including classical music, and that in the preceding five years has
received or been selected to receive one or more grants from the
Corporation for Public Broadcasting under 47 U.S.C. Section 396, as
amended; or
(25) providing, without regard to the beneficiaries'
ability to pay, tax return preparation services and assistance with
other financial matters.
(o) For purposes of Subsection (a)(2), real property
acquired, held, and transferred by an organization that performs
the function described by Subsection (d)(21), [or] (22), or (22-a)
is considered to be used exclusively by the qualified charitable
organization to perform that function.
SECTION 3. Section 11.18, Tax Code, as amended by this Act,
applies only to an ad valorem tax year that begins on or after the
effective date of this Act.
SECTION 4. This Act takes effect September 1, 2019.
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