86R11704 JAM-F
By: Lucio S.B. No. 1117
A BILL TO BE ENTITLED
AN ACT
relating to the authority of a municipality to adopt a land bank
program.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 379E.002, Local Government Code, is
amended to read as follows:
Sec. 379E.002. APPLICABILITY; CONSTRUCTION WITH OTHER LAW.
This chapter applies only to a municipality:
(1) to which Chapter 379C or 379D does not apply; [and]
(2) that does not operate a land bank under Chapter
379F; and
(3) that has not ever adopted a homestead land bank
program under Subchapter E, Chapter 373A.
SECTION 2. Subtitle A, Title 12, Local Government Code, is
amended by adding Chapter 379F to read as follows:
CHAPTER 379F. MUNICIPAL LAND BANK PROGRAM
Sec. 379F.001. APPLICABILITY; CONSTRUCTION WITH OTHER LAW.
This chapter applies only to a municipality:
(1) to which Chapter 379C or 379D does not apply;
(2) that does not operate a land bank under Chapter
379E; and
(3) that has not ever adopted a homestead land bank
program under Subchapter E, Chapter 373A.
Sec. 379F.002. 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 municipality as a
community housing development organization.
(3) "Land bank" means an entity established or
approved by the governing body of a municipality 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 municipality as provided by Section
379F.005.
(5) "Land bank program" or "program" means a program
adopted under Section 379F.003.
(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 metropolitan statistical area in which the
municipality is located, 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 379F.004 and
includes a qualified organization under Section 379F.010.
Sec. 379F.003. LAND BANK PROGRAM. (a) The governing body
of a municipality 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 municipality 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. 379F.004. 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 municipality; and
(3) meet any other requirements adopted by the
municipality in the land bank plan.
Sec. 379F.005. LAND BANK PLAN. (a) A municipality that
adopts a land bank program shall operate the program in conformance
with a land bank plan.
(b) The governing body of a municipality 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 municipality shall consider
any other housing plans adopted by the municipality, including any
fair housing plans and policies adopted or agreed to by the
municipality.
(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 379F.010;
(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 municipality'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 municipality for subsidies for development of
affordable housing in the municipality, including any money
specifically available for housing developed under the program, as
approved by the governing body of the municipality at the time the
plan is adopted.
Sec. 379F.006. PUBLIC HEARING ON PROPOSED PLAN. (a) Before
adopting a plan, a municipality shall hold a public hearing on the
proposed plan.
(b) The city manager or the city manager's designee shall
provide notice of the hearing to all community housing development
organizations and to neighborhood associations identified by the
municipality as serving the neighborhoods in which properties
anticipated to be available for sale to the land bank under this
chapter are located.
(c) The city manager or the city manager'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. 379F.007. 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) there are delinquent taxes on the property for a
total of at least five years; and
(3) the municipality 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. 379F.008. 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 municipality 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 municipality.
(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. 379F.009. 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, the deed
restrictions must require that, in any given fiscal year:
(1) at least 50 percent of the units must be sold to
families 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 metropolitan statistical area
in which the units are located; and
(2) the remaining units must be sold to families 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 metropolitan statistical area in which the
units are located.
(c) If property is developed and used for rental housing,
the deed restrictions must be for a period of not less than 20 years
and must require that at least 80 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 metropolitan
statistical area in which the units are located, as determined
annually by the United States Department of Housing and Urban
Development, and must also require that:
(1) at least 40 percent of the rental units 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 metropolitan
statistical area in which the units are located, as determined
annually by the United States Department of Housing and Urban
Development; or
(2) at least 20 percent of the units 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 metropolitan
statistical area in which the units are located, 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 municipality
on a reporting form provided by or acceptable to the municipality.
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 municipality
may modify or add to the deed restrictions imposed under this
section. Any modifications or additions made by the governing body
of the municipality must be adopted by the municipality as part of
its plan and must comply with the restrictions set forth in
Subsections (b), (c), and (d).
Sec. 379F.010. 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 municipality, 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 two-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 municipality 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
municipality under Subsection (d), the interlocal agreement
executed under Section 379F.007(a)(3) 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 municipality 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 municipality 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 379F.008(d).
Sec. 379F.011. OPEN RECORDS AND MEETINGS. The land bank
shall comply with the requirements of Chapters 551 and 552,
Government Code.
Sec. 379F.012. 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 municipality 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 municipality.
(c) For purposes of evaluating the effectiveness of the
program, the land bank shall submit an annual performance report to
the municipality 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 municipality 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 municipality as serving the
neighborhoods in which properties sold to the land bank under this
chapter are located.
(f) The land bank and the municipality shall maintain copies
of the performance report available for public review.
SECTION 3. 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 379F, 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 4. 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 5. This Act takes effect September 1, 2019.