S.B. No. 356
relating to an urban land bank program in certain municipalities.
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 379D to read as follows:
CHAPTER 379D. URBAN LAND BANK PROGRAM
IN MUNICIPALITY WITH POPULATION OF 1.9 MILLION OR MORE
Sec. 379D.001. SHORT TITLE. This chapter may be cited as
the Urban Land Bank Program Act for a Municipality with a Population
of 1.9 Million or More.
Sec. 379D.002. APPLICABILITY. This chapter applies only to
a municipality with a population of 1.9 million or more.
Sec. 379D.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 real property under this
(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
(4) "Qualified participating developer" means a
developer who meets the requirements of Section 379D.005 and
includes a qualified organization under Section 379D.012.
(5) "Urban land bank plan" or "plan" means a plan
adopted by the governing body of a municipality as provided by
(6) "Urban land bank program" or "program" means a
program adopted under Section 379D.004.
Sec. 379D.004. URBAN LAND BANK PROGRAM. (a) The governing
body of a municipality may adopt an urban 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 an
urban land bank program shall establish or approve a land bank for
the purpose of acquiring, holding, and transferring real property
under this chapter.
Sec. 379D.005. QUALIFIED PARTICIPATING DEVELOPER. To
qualify to participate in an urban land bank program, a developer
(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 plan.
Sec. 379D.006. URBAN LAND BANK PLAN. (a) A municipality
that adopts an urban land bank program shall operate the program in
conformance with an urban land bank plan.
(b) The governing body of a municipality that adopts an
urban 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
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 second
refusal provided by Section 379D.012;
(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. 379D.007. PUBLIC HEARING ON PROPOSED PLAN.
(a) Before adopting a plan, a municipality shall hold a public
hearing on the proposed plan.
(b) The mayor or the mayor'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 mayor or the mayor'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. 379D.008. PRIVATE SALE TO LAND BANK. (a)
Notwithstanding any other law and except as provided by Subsections
(b) and (g), 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 habitable
building or buildings, as described by the municipality's health
and safety code;
(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
(b) A property that is not improved with a habitable
building or buildings, as described by the municipality's health
and safety code, may not be sold to a land bank under this section if
the property is currently occupied by a person who has resided on
the property for at least a year.
(c) A sale of property for use in connection with the
program is a sale for a public purpose.
(d) 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.
(e) 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 30th 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
(f) After receipt of the notice required by Subsection (e)
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.
(g) If the officer charged with the sale receives a written
request as provided by Subsection (f), the officer shall sell the
property as otherwise provided in Section 34.01, Tax Code.
(h) 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.
(i) 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.
(j) 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 owned by the defendants included in the foreclosure
judgment, including the defendants' right to the use and possession
of the property, subject only to the defendants' right of
redemption, the terms of a recorded restrictive covenant running
with the land that was recorded before January 1 of the year in
which the tax lien on the property arose, a recorded lien that arose
under that restrictive covenant that was not extinguished in the
judgment foreclosing the tax lien, and each valid easement of
record as of the date of the sale that was recorded before January 1
of the year the tax lien arose.
Sec. 379D.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) Except as provided by Section 379D.011, the land bank
must sell a property to a qualified participating developer within
the five-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 five 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) 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 units produced and 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. 379D.010. RESTRICTIONS ON OCCUPANCY AND USE OF
PROPERTY. (a) The land bank shall impose deed restrictions with
appropriate terms and conditions on property sold to qualified
participating developers and eligible adjacent property owners
that require 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) Housing developed under this chapter may consist of one
to four residential units. At least one unit of any structure with
two to four units must be owned and occupied as a primary residence
by a low income household. The remaining units may be rental units
if each tenant household meets the income eligibility requirements
of a low income household.
(d) Notwithstanding Subsection (c), housing developed under
this chapter may consist of one to eight residential units, all of
which may be rental units, if:
(1) each tenant household meets the income eligibility
requirements of a low income household;
(2) the housing is located in an area that:
(A) is adjacent to the central business district
of the municipality; and
(B) has a number of owner-occupied households
that does not exceed 25 percent of the total number of households in
the area; and
(3) the median income of households for the area
described by Subdivision (2) is less than 50 percent of the median
income of households for the municipality.
Sec. 379D.011. RIGHT OF FIRST REFUSAL IN ELIGIBLE ADJACENT
PROPERTY OWNERS. (a) Property acquired by the land bank shall be
offered for sale to eligible adjacent property owners under a right
of first refusal on terms and conditions developed by the land bank
that are consistent with this chapter.
(b) To be eligible to exercise a right of first refusal
under this section, an owner of property adjacent to property
acquired by the land bank must have owned and continuously occupied
that property for at least the five preceding years as that person's
Sec. 379D.012. RIGHT OF SECOND REFUSAL IN QUALIFIED
ORGANIZATIONS. (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 two-mile radius of the
property that the land bank is offering for sale.
(b) If all eligible adjacent property owners fail to
exercise the right of first refusal under Section 379D.011, the
land bank shall offer a property for sale to qualified
organizations that are eligible to acquire additional properties
from the land bank under Section 379D.009(c). If a qualified
organization is not eligible to acquire additional properties under
that subsection at the time the property first becomes available
for sale, the land bank is not required to hold the property from
sale until the organization becomes eligible to purchase the
property by the right of second refusal described by this section.
(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 the right of
second refusal may be exercised.
(d) The municipality shall specify in its plan the period
during which the right of second refusal provided by this section
may be exercised by a qualified organization. That period must be
at least 90 days in duration and begin after the period in which the
right of first refusal described by Section 379D.011 may be
exercised and at least three 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 period specified for the right of second
refusal under Subsection (d), 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 second
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 second refusal, the
organization that has designated the most geographically compact
area encompassing a portion of the property shall be given
(h) In its plan, the municipality may provide for other
rights of second refusal for any other nonprofit corporation
exempted from federal income tax under Section 501(c)(3), Internal
Revenue Code of 1986, provided that the preeminent right of second
refusal is provided to qualified organizations as provided by this
(i) The land bank is not required to provide a right of
second refusal to qualified organizations under this section if the
land bank is selling property that reverted to the land bank under
Sec. 379D.013. OPEN RECORDS AND MEETINGS. The land bank
shall comply with the requirements of Chapters 551 and 552,
Sec. 379D.014. 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
(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
(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
(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
(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
(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, 2005.
President of the Senate Speaker of the House
I hereby certify that S.B. No. 356 passed the Senate on
May 9, 2005, by the following vote: Yeas 29, Nays 2; and that the
Senate concurred in House amendment on May 27, 2005, by the
following vote: Yeas 29, Nays 0.
Secretary of the Senate
I hereby certify that S.B. No. 356 passed the House, with
amendment, on May 25, 2005, by a non-record vote.
Chief Clerk of the House