By: West  S.B. No. 1205
         (In the Senate - Filed February 27, 2009; March 13, 2009,
  read first time and referred to Committee on Intergovernmental
  Relations; April 6, 2009, reported adversely, with favorable
  Committee Substitute by the following vote:  Yeas 4, Nays 0;
  April 6, 2009, sent to printer.)
 
  COMMITTEE SUBSTITUTE FOR S.B. No. 1205 By:  West
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to community land trusts.
         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 373B to read as follows:
  CHAPTER 373B. COMMUNITY LAND TRUSTS
         Sec. 373B.001.  DEFINITION. In this chapter, "community
  housing development organization" has the meaning assigned by 42
  U.S.C. Section 12704.
         Sec. 373B.002.  CREATION OR DESIGNATION. The governing body
  of a municipality or county by ordinance or order may create or
  designate one or more community land trusts, including a housing
  finance corporation established under Chapter 394 or a land trust
  operated by a community housing development organization certified
  by the municipality or county, to operate in the municipality or
  county.
         Sec. 373B.003.  NATURE OF TRUST. A community land trust
  created or designated under Section 373B.002 must be a nonprofit
  organization that is:
               (1)  created to acquire and hold land for the benefit of
  developing and preserving long-term affordable housing in the
  municipality or county; and
               (2)  exempt from federal income taxation under Section
  501(a), Internal Revenue Code of 1986, by being certified as an
  exempt organization under Section 501(c)(3) of that code.
         Sec. 373B.004.  PURPOSES OF TRUST. The purposes of a trust
  are to:
               (1)  provide affordable housing for low-income and
  moderate-income residents in the community;
               (2)  promote resident ownership of housing;
               (3)  keep housing affordable for future residents; and
               (4)  capture the value of public investment for
  long-term community benefit.
         Sec. 373B.005.  OWNERSHIP OF LAND AND HOUSING UNITS. A
  community land trust may retain title to land it acquires and may:
               (1)  sell housing units located on the land and lease
  the land under ground leases with terms of at least 50 years; or
               (2)  lease housing units located on the land.
         Sec. 373B.006.  QUALIFICATIONS OF PURCHASERS OR LESSEES OF
  HOUSING UNITS. (a)  A community land trust may sell housing units
  only to families with a yearly income at the time of sale at or below
  80 percent of the area median family income, adjusted for family
  size.
         (b)  Notwithstanding Subsection (a), if the housing units
  are located on tracts of land owned by the community land trust that
  constitute a contiguous geographic area, the trust may sell not
  more than 20 percent of the housing units to families with a yearly
  income at the time of sale at or below 120 percent of the area median
  family income, adjusted for family size.
         (c)  At least 25 percent of the housing units sold by the
  trust must be sold to families with a yearly income at the time of
  sale at or below 60 percent of the area median family income,
  adjusted for family size.
         (d)  A community land trust may lease housing units only to
  families with a yearly income at the time of lease at or below 60
  percent of the area median family income, adjusted for family size.
         Sec. 373B.007.  RELATION TO OTHER LAW. This chapter does not
  preclude the creation of a land trust by a nonprofit organization,
  including a community housing development organization, under
  other statutory or common law or the operation of that land trust
  inside or outside a municipality or county that has created or
  designated a trust under Section 373B.002.
         Sec. 373B.008.  APPLICABILITY OF CHAPTER TO TRUST OPERATED
  BY HOUSING FINANCE CORPORATION. Section 373B.003 does not apply to
  a community land trust operated in the municipality or county by a
  housing finance corporation established under Chapter 394.
         SECTION 2.  Subchapter B, Chapter 11, Tax Code, is amended by
  adding Sections 11.1827 and 11.1828 to read as follows:
         Sec. 11.1827.  COMMUNITY LAND TRUST. (a)  In this section,
  "community land trust" means a community land trust created or
  designated under Section 373B.002, Local Government Code.
         (b)  In addition to any other exemption to which the trust
  may be entitled, a community land trust is entitled to an exemption
  from taxation by a taxing unit of land owned by the trust, together
  with the housing units located on the land if they are owned by the
  trust, if:
               (1)  the trust:
                     (A)  meets the requirements of a charitable
  organization provided by Sections 11.18(e) and (f);
                     (B)  owns the land for the purpose of leasing the
  land and selling or leasing the housing units located on the land as
  provided by Chapter 373B, Local Government Code; and
                     (C)  engages exclusively in the sale or lease of
  housing as described by Paragraph (B) and related activities; and
               (2)  the exemption is adopted by the governing body of
  the taxing unit before July 1 in the manner provided by law for
  official action by the body.
         (c)  Property owned by a community land trust may not be
  exempted under Subsection (b) after the third anniversary of the
  date the trust acquires the property unless the trust is offering to
  sell or lease or is leasing the property as provided by Chapter
  373B, Local Government Code.
         (d)  A community land trust entitled to an exemption from
  taxation by a taxing unit under Subsection (b) is also entitled to
  an exemption from taxation by the taxing unit of any building or
  tangible personal property the trust owns and uses in the
  administration of its acquisition, construction, repair, sale, or
  leasing of property. To qualify for an exemption under this
  subsection, property must be used exclusively by the organization,
  except that another person may use the property for activities
  incidental to the trust's use that benefit the beneficiaries of the
  trust.
         Sec. 11.1828.  MONITORING OF COMPLIANCE BY COMMUNITY LAND
  TRUST WITH AFFORDABLE HOUSING EXEMPTION. (a)  To receive an
  exemption under Section 11.1827, a community land trust must
  annually have an audit prepared by an independent auditor. The
  audit must include:
               (1)  a detailed report on the trust's sources and uses
  of funds; and
               (2)  any other information required by the governing
  body of the municipality or county that created or designated the
  trust under Section 373B.002, Local Government Code.
         (b)  A copy of the audit must be delivered to:
               (1)  the governing body of the municipality or county
  or an entity designated by the governing body; and
               (2)  the chief appraiser of the appraisal district in
  which the property subject to the exemption is located.
         SECTION 3.  Subsection (c), Section 11.43, Tax Code, is
  amended to read as follows:
         (c)  An exemption provided by Section 11.13, 11.17, 11.18,
  11.182, 11.1827, 11.183, 11.19, 11.20, 11.21, 11.22, 11.23(h), (j),
  or (j-1), 11.29, 11.30, or 11.31, once allowed, need not be claimed
  in subsequent years, and except as otherwise provided by Subsection
  (e), the exemption applies to the property until it changes
  ownership or the person's qualification for the exemption changes.
  However, the chief appraiser may require a person allowed one of the
  exemptions in a prior year to file a new application to confirm the
  person's current qualification for the exemption by delivering a
  written notice that a new application is required, accompanied by
  an appropriate application form, to the person previously allowed
  the exemption.
         SECTION 4.  Section 23.21, Tax Code, is amended by adding
  Subsections (c) and (d) to read as follows:
         (c)  In appraising land or a housing unit that is leased by a
  community land trust created or designated under Section 373B.002,
  Local Government Code, to a family meeting the income-eligibility
  standards established by Section 373B.006 of that code under
  regulations or restrictions limiting the amount that the family may
  be required to pay for the rental or lease of the property, the
  chief appraiser shall take into account the extent to which that use
  and limitation reduce the market value of the property.
         (d)  In appraising a housing unit that the owner or a
  predecessor of the owner acquired from a community land trust
  created or designated under Section 373B.002, Local Government
  Code, and that is located on land owned by the trust and leased by
  the owner of the housing unit, the chief appraiser shall take into
  account the extent to which any regulations or restrictions
  limiting the right of the owner of the housing unit to sell the
  housing unit, including any limitation on the price for which the
  housing unit may be sold, reduce the market value of the housing
  unit.
         SECTION 5.  This Act applies only to ad valorem taxes imposed
  for a tax year beginning on or after the effective date of this Act.
         SECTION 6.  This Act takes effect January 1, 2010.
 
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