79R7686 QS-F
By: Gallegos S.B. No. 1722
A BILL TO BE ENTITLED
AN ACT
relating to urban land bank demonstration programs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 379C.002, Local Government Code, is
amended to read as follows:
Sec. 379C.002. APPLICABILITY. This chapter applies only to
home-rule municipalities that[:
[(1)] have a population of 750,000 [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].
SECTION 2. Section 379C.003, Local Government Code, is
amended by amending Subdivisions (1) and (3) and adding
Subdivisions (1-a), (3-a), and (3-b) to read as follows:
(1) "Affordable" means that the monthly mortgage
payment or contract rent does not exceed 30 percent of the
applicable median family income for that unit size, in accordance
with the income and rent limit rules adopted by the Texas Department
of Housing and Community Affairs.
(1-a) "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;
(C) is governed exclusively by a board of at
least five members unrelated by blood, marriage, or business
interest; and
(D) is not controlled, directly or indirectly, by
any other party through any contract, arrangement, understanding,
relationship, voting power, affiliation, trust, proxy, power of
attorney, pooling arrangement, security, warrant, partnership,
option, discretionary account, joint venture, interlocking
directors, or other device, as evidenced by a notarized affidavit
signed by each board member.
(3) "Low income household" means a household with a
gross income of not greater than 60 [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.
(3-a) "Middle income household" means a household with
a gross income of greater than 80 percent and not greater than 100
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.
(3-b) "Moderate income household" means a household
with a gross income of greater than 60 percent and 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.
SECTION 3. Section 379C.005, Local Government Code, is
amended to read as follows:
Sec. 379C.005. QUALIFIED PARTICIPATING DEVELOPER. To
qualify to participate in an urban land bank demonstration program,
a developer must:
(1) have developed [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.
SECTION 4. Sections 379C.007(b) and (c), Local Government
Code, are amended to read as follows:
(b) The mayor [city manager] or the mayor's [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 mayor [city manager] or the mayor's [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.
SECTION 5. Section 379C.008, Local Government Code, is
amended by amending Subsections (a) and (d) and adding Subsection
(j) to read as follows:
(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 appraised by
the local appraisal district and 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;
(3) there are delinquent taxes on the property for a
total of at least five [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.
(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 30th [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.
(j) Property sold to and held by the land bank for
subsequent resale is eligible for an exemption from ad valorem
taxes for a period not to exceed three years from the date of
acquisition.
SECTION 6. Section 379C.009(d), Local Government Code, is
amended to read as follows:
(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
later of the date of the conveyance of the property from the land
bank to the qualified participating developer or the expiration of
the period specified by the municipality under Section 379C.011(d),
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.
SECTION 7. Section 379C.010, Local Government Code, is
amended by amending Subsections (a), (b), (c), and (f) and adding
Subsection (b-1) to read as follows:
(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 or moderate
income households, except that not more than 20 percent of the units
in any given area may be made available to middle income households.
(b) At least 30 [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.
(b-1) At least 50 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 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.
(c) If property is developed for rental housing, the deed
restrictions must be for a period of not less than 20 [15] years and
must require that:
(1) 100 percent of the rental units be occupied by and
affordable to 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 and
affordable to 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 and
affordable to 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.
(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 (a), (b), (b-1), (c), and (d).
SECTION 8. Section 379C.011, Local Government Code, is
amended by amending Subsections (a), (c), (d), and (e) and adding
Subsections (d-1) and (e-1) to read as follows:
(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 three-year [two-year] period
has developed [built] or rehabilitated housing units within a
one-half mile radius of the property that the land bank is offering
for sale.
(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 a right of
first refusal may be exercised.
(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 90 days in duration and begin at least three [nine] months but
not more than 26 months following [from] the date of the deed of
conveyance of the property to the land bank.
(d-1) If the land bank conveys the property to a qualified
organization before the expiration of the period specified by the
municipality under Subsection (d), the interlocal agreement
executed under Section 379C.008(a)(4) must provide tax abatement
for the property until the expiration of that period.
(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, except as provided by Subsection (e-1) 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.
(e-1) If the property sold to another qualified
participating developer under Subsection (e) is to be occupied by a
middle income household, the price for the property is the lesser of
the market value for the property or 15 percent of the qualified
developer's subsequent sales price for the property. The land bank
shall contribute any difference in the price of the property under
this subsection and the price under Subsection (e) to a fund used to
subsidize the affordability of properties to be sold to low income
households.
SECTION 9. Section 379C.013(d), Local Government Code, is
amended to read as follows:
(d) The land bank shall maintain in its records for
inspection a complete 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.
SECTION 10. (a) The changes in law made by this Act apply
only to an urban land bank demonstration program operating in
conformance with an urban land bank demonstration plan adopted by
the governing body of a municipality on or after the effective date
of this Act. An urban land bank demonstration program operating in
conformance with an urban land bank demonstration plan adopted
before the effective date of this Act is governed by the law in
effect at the time the plan was adopted until a subsequent plan is
adopted, and the former law is continued in effect for that purpose.
(b) Section 379C.008(j), Local Government Code, as added by
this Act, does not affect tax liability accruing before the
effective date of this Act. That liability continues in effect as
if this Act had not been enacted, and the former law is continued in
effect for the collection of taxes due and for civil and criminal
enforcement of the liability for those taxes.
SECTION 11. This Act takes effect September 1, 2005.