JH C.S.H.B. 2141 75(R)BILL ANALYSIS


URBAN AFFAIRS
C.S.H.B. 2141
By: Keel
3-27-97
Committee Report (Substituted)


BACKGROUND 

At present, by following a detailed notice and hearing procedure, a City
may require substandard property to be repaired or order its demolition.
If demolition is ordered and the property owner fails to take action, the
City may demolish the property and file a lien, but not foreclose that
lien, for the funds expended for demolition.  The lone exception was
authorized by the 74th Legislature, allowing foreclosure of a lien for
such costs as part of a proceeding to foreclose a lien for ad valorem
taxes.  The recent amendment was of substantial assistance in many
instances but there are a number of circumstances around the state in
which cities do not have an effective remedy. 

When building ownership is fractionalized into numerous units, there would
be multiple tax foreclosures, not just one tax.  Assuming a city
demolishes such a property, it would have to join as a party in multiple
lawsuits to foreclose tax liens on the separate units.  The expected costs
of such multiple litigation, in addition to the demolition costs,
exacerbate the financial obstacle. Additionally, the uncertainty of when,
if ever, the city would be able to foreclose its lien against a majority
of the ownership interests, the growing total investment of the city in
the project and the difficulty of obtaining a reasonable sales price for a
fractional property interest diminish prospects for the city to ever
recover its initial investment.   
 
Chapter 214 of the Local Government Code is entitled Municipal Regulation
of Structures.  It contains provisions regulating dangerous buildings,
plumbing and sewers, swimming pool enclosures, among others.  Subchapter A
to be amended by this bill, authorizes municipal regulation by ordinance
of substandard buildings.  Section 214.004, added by the legislature in
1995, is proposed for amendment by this legislation.  This section
currently permits most cities to foreclose on a lien assessed to reimburse
a municipality expenses for demolishing or otherwise rectifying
substandard structures.  Under current law this lien is foreclosed in a
tax lien proceeding, pursuant to the Tax Code.  

PURPOSE

This legislation would permit the foreclosure of a substandard building
lien in a judicial proceeding in addition to Tax Code proceedings.   

RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Local Government Code Section 214.004 to permit a Type A
general law   municipality or a home-rule municipality to foreclose on a
substandard building     lien in favor of the city in a judicial
proceeding to recover demolition expenses.    Lien must be in existence
for more than 180 days.  Property taxes must also be   delinquent. 

SECTION 2.  Emergency clause.
 
  

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute deletes the requirement that the municipality obtain an
appraisal before demolition of a primary structure, deletes requirement
that structure be unoccupied, and deletes requirement that structure be
divided into four taxable units.  The substitute adds requirement that
lien to be foreclosed be in existence for 180 days.