H.B. No. 2801
AN ACT
relating to urban land bank demonstration programs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle A, Title 12, Local Government Code, is
amended by adding Chapter 379C to read as follows:
CHAPTER 379C. URBAN LAND BANK DEMONSTRATION PROGRAM
Sec. 379C.001. SHORT TITLE. This chapter may be cited as
the Urban Land Bank Demonstration Program Act.
Sec. 379C.002. APPLICABILITY. This chapter applies only to
home-rule municipalities that:
(1) have a population of 1.18 million or more; and
(2) are located predominantly in a county that has a
total area of less than 1,000 square miles.
Sec. 379C.003. DEFINITIONS. In this chapter:
(1) "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.
(2) "Land bank" means an entity established or
approved by the governing body of a municipality for the purpose of
acquiring, holding, and transferring unimproved real property
under this chapter.
(3) "Low income household" means a household with a
gross income of not greater than 80 percent of the area median
family 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.
(4) "Qualified participating developer" means a
developer who meets the requirements of Section 379C.005 and
includes a qualified organization under Section 379C.011.
(5) "Urban land bank demonstration plan" or "plan"
means a plan adopted by the governing body of a municipality as
provided by Section 379C.006.
(6) "Urban land bank demonstration program" or
"program" means a program adopted under Section 379C.004.
Sec. 379C.004. URBAN LAND BANK DEMONSTRATION PROGRAM. (a)
The governing body of a municipality may adopt an urban land bank
demonstration 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 an
urban land bank demonstration program shall establish or approve a
land bank for the purpose of acquiring, holding, and transferring
unimproved real property under this chapter.
Sec. 379C.005. QUALIFIED PARTICIPATING DEVELOPER. To
qualify to participate in an urban land bank demonstration program,
a developer must:
(1) have built 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 by the
municipality for the land bank property; and
(3) meet any other requirements adopted by the
municipality in the urban land bank demonstration plan.
Sec. 379C.006. URBAN LAND BANK DEMONSTRATION PLAN. (a) A
municipality that adopts an urban land bank demonstration program
shall operate the program in conformance with an urban land bank
demonstration plan.
(b) The governing body of a municipality that adopts an
urban land bank demonstration program shall adopt a plan annually.
The plan may be amended from time to time.
(c) In developing the plan, the municipality shall consider
other housing plans adopted by the municipality, including the
comprehensive plan submitted to the United States Department of
Housing and Urban Development and all 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 379C.011;
(2) a list of the parcels of real property that may
become eligible for sale to the land bank during the upcoming year;
(3) the municipality's plan for affordable housing
development on those parcels of real property; and
(4) the sources and amounts of funding 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. 379C.007. 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. 379C.008. 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 building or
buildings;
(3) there are delinquent taxes on the property for
each of the preceding six years; and
(4) 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. 379C.009. SUBSEQUENT RESALE BY LAND BANK. (a) Each
subsequent resale of property acquired by a land bank under this
chapter must comply with the conditions of this section.
(b) The land bank must sell a property to a qualified
participating developer within the three-year period following the
date of acquisition for the purpose of construction of affordable
housing for sale or rent to low income households. If after three
years a qualified participating developer has not purchased 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 two-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 two-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 subsequent resale to another qualified participating
developer or conveyance to the taxing units who were parties to the
judgment for disposition as otherwise allowed under the law.
Sec. 379C.010. RESTRICTIONS ON OCCUPANCY AND USE OF
PROPERTY. (a) The land bank shall impose deed restrictions on
property sold to qualified participating developers requiring the
development and sale or rental of the property to low income
households.
(b) At least 25 percent of the land bank properties sold
during any given fiscal year to be developed for sale shall be deed
restricted for sale to households with gross household incomes not
greater than 60 percent of the area median family 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.
(c) If property is developed for rental housing, the deed
restrictions must be for a period of not less than 15 years and must
require that:
(1) 100 percent of the rental units be occupied by
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
municipality is located, as determined annually by the United
States Department of Housing and Urban Development;
(2) 40 percent of the units be occupied by 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
municipality is located, as determined annually by the United
States Department of Housing and Urban Development; or
(3) 20 percent of the units be occupied by households
with incomes not greater than 30 percent of 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.
(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 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. 379C.011. 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 two-year period has built or
rehabilitated housing units within a one-half 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.
(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) 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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 379C.009(d).
Sec. 379C.012. OPEN RECORDS AND MEETINGS. The land bank
shall comply with the requirements of Chapters 551 and 552,
Government Code.
Sec. 379C.013. 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 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 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
developer;
(D) the purchase price paid by the developer;
(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 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 filed by the owner with the land bank.
(d) The land bank shall maintain in its records for
inspection a copy of the sale settlement statement for each
property sold by 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 2. This Act takes effect September 1, 2003.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2801 was passed by the House on May
16, 2003, by a non-record vote.
______________________________
Chief Clerk of the House
I certify that H.B. No. 2801 was passed by the Senate on May
28, 2003, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor