BILL ANALYSIS


                                                        S.B. 1151
                                                        By: Ellis
                                                          Finance
                                                         05-10-95
                                       Committee Report (Amended)
BACKGROUND

Local governments in Texas have accumulated millions of dollars in
delinquent property tax receivables.  Due to the costs associated
with collection, many local governments have been unable to
maximize their returns on these assets.  In many instances, these
receivables sit uncollected on a local government's books until
they are eventually written off, representing millions of dollars
of lost revenue.

As an innovative solution to this problem, various local
governments have recognized the advantages of transferring
delinquent tax receivables, known as "tax liens" to private
entities which are willing to pay cash for these liens.  By
purchasing a tax lien from a local government, the purchaser
typically steps into the shoes of the government and is entitled to
collect the tax itself through the same procedure that the
government would have used.  By selling tax liens, the local
government realizes certain benefits.

PURPOSE

As proposed, S.B. 1151 authorizes a governing body of a tax unit to
provide for the sale and transfer of tax liens.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 32.06, Tax Code, as follows:

     Sec.  32.06.  TRANSFER OF TAX LIEN.  (b)  Authorizes the
     governing body of a taxing unit to adopt, in the manner
     required by law for official action by the body, a procedure
     to provide for the sale and transfer by the taxing unit of any
     tax lien existing in its favor which represents a delinquent
     tax.  Authorizes a taxing unit to sell or transfer a tax lien
     on a residence homestead, as defined by Section 11.13, under
     this subsection only if all or part of the delinquent tax on
     that residence homestead has been delinquent for at least
     three years.  Requires the provisions of the procedure to be
     those deemed appropriate by the governing body, subject to the
     provisions of this section.  Authorizes tax liens of a taxing
     unit to be sold and transferred pursuant to this subsection to
     any person, in any lot or block, and for any purchase price
     deemed appropriate by the governing body, provided that, prior
     to any such sale and transfer, the collector for the taxing
     unit shall cause to be inserted in the legal organ for the
     taxing unit once a week for two consecutive weeks, the second
     publication being at least 30 days prior to the sale and
     transfer, a notice listing all the names of all delinquent
     taxpayers and the related properties subject to such sale and
     transfer.  Requires the sale and transfer of each tax lien
     pursuant to this subsection to be evidenced by a sworn
     document issued by the taxing unit reciting the full amount of
     the tax lien, including penalties and interest then accrued,
     and naming the purchaser of the tax lien, the delinquent
     taxpayer, and the related property.  Authorizes the taxing
     unit to set a minimum price for the sale and to accept or
     reject any offer made to purchase the lien.
     
     (c)  Makes conforming and nonsubstantive changes.
       
       (d)  Requires the transferee of a tax lien and any assignee
       or successor in interest of such transferee to be subrogated
       to and to have the same rights, powers, liens, and priority
       of payments as might have been exercised or claimed by the
       taxing unit before the transfer, including the right to
       collect the full amount of the delinquent tax together with
       all penalties, interest, and other amounts provided by law
       and the right to foreclose the lien in the manner provided
       by law for foreclosure of tax liens.  Authorizes a taxing
       unit to provide in its procedure for the sale and transfer
       of a tax lien under Subsection (b) limitations on the
       authority of the transferee of the lien to protect a
       delinquent taxpayer from abusive, deceptive, or unfair debt
       collection practices and to provide as a sanction for a
       violation of a limitation the reversion of the transferee's
       interest in the lien to the taxing unit.  Redesignates
       existing Subsection (c).
       
       (e)-(g)  Redesignate existing Subsections (d)-(f).
       
       (h)  Prohibits a suit to foreclose a tax lien transferred as
       provided by Subsection (a) of this section from being
       instituted within one year from the date on which the lien
       is recorded in all counties in which the property is
       located.  Prohibits a suit to foreclose a tax lien
       transferred as provided by Subsection (b) of this section
       from being instituted within 60 days from the date on which
       the lien is recorded in all counties in which the property
       is located.  Redesignates existing Subsection (g).
       
       (i)-(k)  Redesignate existing Subsections (i)-(j).  Makes
       conforming and nonsubstantive changes.
     SECTION 2.     Emergency clause.
           Effective date:  upon passage.