81R25125 JTS-D

By: Martinez H.B. No. 3240

Substitute the following for H.B. No. 3240:

By: Alvarado C.S.H.B. No. 3240

A BILL TO BE ENTITLED

AN ACT

relating to a municipal program for foreclosure on and improvement of certain property, and the subsequent sale of the property as affordable housing.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle A, Title 8, Local Government Code, is amended by adding Chapter 255 to read as follows:

CHAPTER 255. FORECLOSURE, IMPROVEMENT, AND SALE AS AFFORDABLE

HOUSING OF CERTAIN PROPERTIES BY MUNICIPALITY

Sec. 255.001. DEFINITION. In this chapter, "program" means a program adopted by ordinance under Section 255.002 for the foreclosure and improvement of a property and subsequent sale of the property as affordable housing.

Sec. 255.002. ADOPTION OF PROGRAM BY ORDINANCE. A municipality by ordinance may adopt a program to allow the municipality to foreclose on certain properties and delay the payment of back taxes to other taxing entities until the property has been improved and sold as affordable housing.

Sec. 255.003. PROGRAM REQUIREMENTS. An ordinance adopted under this chapter must:

(1) provide criteria for determining the kinds of properties that would be eligible for the program, including a requirement that a property be located in the municipality's corporate boundaries;

(2) require the municipality to sell a property under the program to a state or federally recognized affordable housing program, except as provided by Section 255.007;

(3) require the municipality to make a reasonable effort to maximize the sales price of the property;

(4) allow the municipality to negotiate with another taxing entity to establish an amount to be paid for back taxes owed to the other entity on the property;

(5) allow the municipality to retain proceeds from the sale of the property after payment of taxes owed to the other taxing entities; and

(6) allow the municipality to retain an amount from the proceeds of the sale equal to the increase in the value of the property due to the improvement, as authorized by Section 34.06(g), Tax Code.

Sec. 255.004. MUNICIPALITY AS TRUSTEE. After foreclosure of a property under the program, the municipality:

(1) has the sole authority to improve and sell the property; and

(2) acts as a trustee of the property on behalf of the other taxing entities.

Sec. 255.005. PAYMENT OF AMOUNTS OWED TO OTHER TAXING ENTITIES. (a) Except as provided by Subsection (b), a municipality that forecloses, converts, and sells a property under a program shall pay to each other taxing entity owed taxes on the property an amount equal to the amount negotiated by the municipality and the entity on the sale of the property.

(b) Notwithstanding Section 34.06(e), Tax Code, a municipality is not required to pay another taxing entity any amount for penalties or interest associated with taxes owed on a property sold under a program if the improvement and sale of the property as affordable housing provides a public benefit to the taxpayers of the other taxing entity.

Sec. 255.006. INTERLOCAL AGREEMENT. If a municipality enters into an interlocal agreement with all of the other taxing entities in the municipality for the foreclosure on and improvement of property and subsequent sale of the property as affordable housing, the interlocal agreement controls over this chapter.

Sec. 255.007. INABILITY TO SELL PROPERTY TO AFFORDABLE HOUSING PROGRAM. (a) If a municipality has made reasonable efforts to sell a property foreclosed on and improved under this chapter to a state or federally recognized affordable housing program and is unable to do so, the municipality may sell the property to another purchaser. If the municipality sells the property to a purchaser other than a state or federally recognized affordable housing program:

(1) the municipality must pay to the other taxing entities the negotiated amount of the taxes owed to the other entity on the property, subject to Subsection (b), and may not retain an amount under Section 34.06(g), Tax Code; and

(2) Section 255.005(b) does not apply and the municipality must pay to the other taxing entities penalties and interest owed on the taxes owed to the entity.

(b) If the proceeds of a sale of a property under this section are not sufficient to cover the payment of taxes owed to other taxing entities, the municipality shall make payments to the other entities from the sales proceeds on a pro rata basis.

SECTION 2. Section 34.06, Tax Code, is amended by amending Subsection (c) and adding Subsection (g) to read as follows:

(c) The purchasing taxing unit shall first retain an amount from the proceeds to reimburse the unit for reasonable costs, as defined by Section 34.21, incurred by the unit for:

(1) maintaining, preserving, and safekeeping the property;

(2) marketing the property for resale; [and]

(3) costs described by Subsection (f); and

(4) improvement of the property under Subsection (g).

(g) If a municipality forecloses on a property, improves the property, and sells the property to a state or federally recognized affordable housing program under a program established under Chapter 255, Local Government Code, the municipality may retain an amount from the sale that is equal to the increase in value of the property from improvements made by the municipality for the sale to the affordable housing program.

SECTION 3. This Act takes effect September 1, 2009.