79R31 JD-F
By: Madden H.B. No. 19
A BILL TO BE ENTITLED
AN ACT
relating to the sale of tax receivables by local governments.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle C, Title 8, Local Government Code, is
amended by adding Chapter 274 to read as follows:
CHAPTER 274. SALE OF TAX RECEIVABLES
Sec. 274.001. DEFINITIONS. In this chapter:
(1) "Date of sale" means:
(A) for a sale made through competitive bidding,
the date designated by the applicable local government for the
submission of bids; and
(B) for a sale negotiated by a local government,
the date the tax receivable sale and purchase agreement is signed.
(2) "Local government" means a county, municipality,
school district, special purpose district or authority, or other
political subdivision of this state.
(3) "Tax receivable" includes:
(A) a delinquent ad valorem tax imposed by a
local government on real property; and
(B) a delinquent assessment or other charge
imposed by a local government that is secured by a lien on real
property.
Sec. 274.002. AUTHORITY TO SELL TAX RECEIVABLES OR
UNDIVIDED INTEREST IN TAX RECEIVABLES. (a) At any time, a local
government may sell all or any part of its tax receivables,
including an undivided interest in all or any part of the
receivables.
(b) A sale by a local government of a tax receivable under
this chapter is a sale and not a borrowing by the local government.
(c) The local government shall determine the terms and
conditions of a sale of a tax receivable.
(d) The sale by a local government of a tax receivable is
governed exclusively by this chapter.
Sec. 274.003. AMOUNT OF TAX RECEIVABLE; INCLUDED COSTS.
The amount of a tax receivable sold under this chapter may include:
(1) the amount of the delinquent tax, assessment, or
other charge unpaid on the date of sale;
(2) the costs of any notice given or published under
this subchapter related to the sale of the tax receivable,
including the allocable portion of the cost of a notice that relates
to more than one tax receivable; and
(3) all penalties and interest accrued on the
delinquent tax, assessment, or other charge preceding the date of
sale.
Sec. 274.004. INTEREST ON CERTAIN TAX RECEIVABLES. After
the date of sale under this chapter of a tax receivable:
(1) interest on the tax receivable accrues on the
unpaid amount computed under Section 274.003 at a rate of one
percent for each month or portion of a month the tax receivable
remains unpaid; and
(2) Section 33.01(c), Tax Code, does not apply to any
part of the tax receivable.
Sec. 274.005. ENFORCEMENT OF TAX RECEIVABLE.
(a) Collection of a tax receivable sold under this chapter and any
related lien continues to be enforceable by the selling local
government as if the tax receivable had not been sold.
(b) The local government may not contract with an attorney
under Section 6.30(c), Tax Code, to represent the local government
to enforce the collection of a tax receivable sold under this
chapter that includes delinquent taxes if the attorney is
affiliated with the purchaser of the tax receivable.
Sec. 274.006. METHOD OF SALE. (a) A sale authorized by
this chapter may be made through:
(1) competitive bidding; or
(2) a negotiated sale.
(b) Notwithstanding any other law to the contrary, in
determining whether and to whom to award a sale of a tax receivable,
a local government may take into account any factor the local
government considers to be in the best interest of the local
government, including the price at which the tax receivable is
offered for sale and the terms and conditions of a tax receivable
purchase and sale agreement.
(c) The local government may enter into negotiations with
one or more prospective purchasers to determine the terms and
conditions under which a tax receivable is proposed to be sold.
Sec. 274.007. SALE THROUGH COMPETITIVE BIDDING. (a) A
local government that elects to sell all or part of its tax
receivables through competitive bidding shall publish a notice of
its intention to sell the tax receivables through competitive
bidding.
(b) The notice must include:
(1) the terms and conditions of the sale;
(2) the criteria by which bids will be evaluated; and
(3) a description of any other information or
documents that the local government may require a bidder to
provide.
(c) The notice must:
(1) identify separately the tax receivables intended
to be sold; or
(2) state the approximate number and aggregate amount
of those tax receivables and that a copy of a list of those tax
receivables may be obtained from the local government on request.
(d) The notice shall be published in a newspaper of general
circulation in the local government not later than the 30th day
before the date designated by the local government for the
submission of bids.
(e) The local government may reject any or all bids or may
accept any combination of bids received in a sale conducted through
competitive bidding.
Sec. 274.008. SALE THROUGH NEGOTIATED SALE. (a) A local
government that elects to sell all or a part of its tax receivables
through a negotiated sale shall publish a notice of its intention to
sell tax receivables through a negotiated sale.
(b) The notice must:
(1) state that a request for statements of interest to
purchase tax receivables is available at the location specified in
the notice; and
(2) include any requirement by the local government
for a person seeking to purchase tax receivables to provide the
local government any information or documents.
(c) The notice must:
(1) identify separately the tax receivables intended
to be sold; or
(2) state the approximate number and aggregate amount
of those tax receivables and that a copy of a list of those tax
receivables may be obtained from the local government on request.
(d) The notice shall be published in a newspaper of general
circulation in the local government not later than the 30th day
before the date designated by the local government for the receipt
of statements of interest.
Sec. 274.009. NOTICE TO AFFECTED PROPERTY OWNERS. (a) A
local government may not sell a tax receivable unless the local
government notifies the owner of the property associated with the
tax receivable, by first class mail sent to the address of record of
the owner, of the proposed sale by the local government of the tax
receivable.
(b) The notice shall be mailed to the property owner not
later than the 30th day before the date of sale.
(c) The notice must:
(1) include a description of the real property
associated with the tax receivable, by block and lot or by other
means sufficient to identity and locate the property, and may
include other identifying information that the local government
considers appropriate;
(2) state the amount of the tax receivable;
(3) state that the tax receivable associated with the
property may be sold as provided by this chapter if the amounts due
on the property remain unpaid; and
(4) describe the provisions of Sections 274.016 and
274.017.
(d) The local government may not proceed with the sale of
the tax receivable if the property owner pays the full amount of the
tax receivable associated with the property before the sale of the
tax receivable is completed.
Sec. 274.010. POSTPONEMENT OR CANCELLATION OF SALE
AUTHORIZED. (a) A local government may postpone or cancel any
proposed sale of a tax receivable for which notice has been
published.
(b) A local government is not liable for damages as a result
of the postponement or cancellation of a proposed sale of tax
receivables and a cause of action does not arise from a postponement
or cancellation of a proposed sale.
Sec. 274.011. PURCHASE AND SALE AGREEMENTS. (a) A local
government may enter into a purchase and sale agreement with the
purchaser of a tax receivable sold under this chapter.
(b) A purchase and sale agreement may contain any term,
provision, condition, representation, or warranty consistent with
this chapter that, in the judgment of the local government, is
necessary or in the best interest of the local government.
(c) A purchase and sale agreement must specify:
(1) the purchase price of each tax receivable covered
by the agreement, which amount may:
(A) be more or less than the face amount of the
tax receivable; and
(B) include nonmonetary consideration; and
(2) any other amounts that may be made available to the
local government on a contingent basis under the terms of the
agreement.
(d) A purchase and sale agreement may require the local
government to:
(1) repurchase a tax receivable, or to substitute
another tax receivable of equivalent value, under conditions that
may be specified in the agreement;
(2) sell to the purchaser subsequent tax receivables
associated with the property on substantially the same terms as
those on which the initial tax receivable was sold; and
(3) take action in connection with the servicing and
collection of the tax receivables as specified in the agreement.
Sec. 274.012. TAX RECEIVABLE CERTIFICATES; ISSUANCE AND
OPERATION; TRANSFERABILITY. (a) On the sale by a local government
of a tax receivable, the local government shall issue to the
purchaser a tax receivable certificate evidencing the sale and
transfer of the tax receivable to the purchaser.
(b) A tax receivable certificate operates to transfer and
assign the tax receivable for the amount provided by Section
274.003 and interest on any unpaid amounts of the tax receivable
that accrues under Section 274.004 on and after the date of sale to
the date of payment.
(c) The holder of a tax receivable certificate may transfer
the certificate to any other person.
Sec. 274.013. CONTENTS OF TAX RECEIVABLE CERTIFICATE. (a)
Each tax receivable certificate must contain a transfer and
assignment by the local government of the tax receivables
transferred to the purchaser and must state:
(1) the date of the sale;
(2) the aggregate amount of the tax receivables
transferred to the purchaser;
(3) as separate items, the amounts included in each
tax receivable of:
(A) any delinquent ad valorem tax, assessment, or
other charge owed to the local government;
(B) the cost of any notice given or published
under this chapter;
(C) all penalties and interest accrued on the
delinquent taxes, assessments, or other charges preceding the date
of sale; and
(D) the rate of interest that accrues on the
unpaid amount of the tax receivable; and
(4) a description of the real property associated with
each tax receivable, by block and lot or by other means sufficient
to identify and locate the property.
(b) A tax receivable certificate shall be executed by the
tax collector for the local government or a person designated by the
tax collector and acknowledged in the manner required for a deed to
be recorded in this state.
(c) A tax receivable certificate may evidence the transfer
of more than one tax receivable relating to more than one property.
Sec. 274.014. REPLACEMENT TAX RECEIVABLE CERTIFICATES. (a)
On application to the collector for a local government accompanied
by proof sufficient to show that a tax receivable certificate
issued on behalf of the local government under this chapter is lost,
the tax collector or a person designated by the tax collector may
execute and issue a replacement tax receivable certificate to the
applicant or the person entitled to the original replacement
certificate.
(b) The tax collector for the local government, in the
collector's discretion, may require the applicant or other person
to post a bond of indemnity in favor of the local government.
Sec. 274.015. ENTITLEMENT TO PROCEEDS OF TAX SALE. (a)
This section applies to real property associated with a tax
receivable sold under this chapter if the property is sold in
compliance with an order of sale following a suit for foreclosure of
a local government's lien on the property, regardless of whether
the suit to foreclose the lien is brought by the local government
that sold the tax receivable or by another local government.
(b) From the proceeds of a sale of the property under
Section 34.01, Tax Code, or of the resale of the property under
Section 34.05, Tax Code, the holder of the applicable tax
receivable certificate is entitled to receive an amount equal to
the amount the local government that sold the tax receivable
certificate would otherwise be entitled to receive.
Sec. 274.016. DUTY OF LOCAL GOVERNMENT TO PAY OVER CERTAIN
MONEY. A local government shall promptly pay over to the holder of
a tax receivable certificate, or to the person designated in
writing by the holder, any money received by the local government in
connection with the tax receivable evidenced by the tax receivable
certificate.
Sec. 274.017. LIMITATIONS ON LOCAL GOVERNMENTS. (a) A
local government may not:
(1) cancel, reduce, or compromise any tax, assessment,
or other charge, or any penalties or interest, included in a tax
receivable sold under this chapter; or
(2) extend the time for payment of the amounts due.
(b) The governing body of a local government may not waive
under Section 33.011, Tax Code, any penalty or interest on a
delinquent ad valorem tax included in a tax receivable sold under
this chapter.
(c) The tax collector for a local government may not enter
into an installment payment agreement under Section 31.02, Tax
Code, with a person delinquent in the payment of ad valorem taxes
included in a tax receivable sold under this chapter.
Sec. 274.018. AFFIDAVITS OF PUBLICATION AND MAILING. (a)
Each local government that sells a tax receivable under this
chapter shall obtain and preserve affidavits of the publication and
mailing of all advertisements and notices required by this chapter
to be published and mailed.
(b) An affidavit of publication and mailing is presumptive
proof of the related publication and mailing in any court of this
state.
Sec. 274.019. PUBLIC INFORMATION. Information collected,
assembled, or maintained in connection with the sale of a tax
receivable of a local government and in connection with the
issuance of a tax receivable certificate under this chapter is
public information that is available to the public under Chapter
552, Government Code.
SECTION 2. Section 1.04(6), Tax Code, is amended to read as
follows:
(6) "Intangible personal property" means a claim,
interest (other than an interest in tangible property), right, or
other thing that has value but cannot be seen, felt, weighed,
measured, or otherwise perceived by the senses, although its
existence may be evidenced by a document. The term [It] includes:
(A) a stock, bond, note or account receivable,
franchise, license or permit, demand or time deposit, certificate
of deposit, share account, share certificate account, share deposit
account, insurance policy, annuity, pension, cause of action,
contract, and goodwill; and
(B) a tax receivable under Chapter 274, Local
Government Code, or a tax receivable certificate issued under that
chapter.
SECTION 3. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2005.