By: Lucio S.B. No. 1117

A BILL TO BE ENTITLED

AN ACT

relating to the functions of certain urban land bank programs.

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

SECTION 1. Section 379E.003, Local Government Code, is amended by amending Subdivision (3) and adding Subdivision (4-a) to read as follows:

(3) "Land bank" means an entity established or approved by the governing body of a municipality to exercise [for] the powers [purpose] of acquiring, holding, developing, and transferring [unimproved] real property under this chapter.

(4-a) "Moderate income household" means a household that:

(A) requires assistance in securing sanitary, decent, and safe housing, considering:

(i) the amount of the total income available for housing needs of the individuals or families who are members of the household;

(ii) the size of the household;

(iii) the cost and condition of available housing facilities;

(iv) the ability of the individuals or families who are members of the household to compete successfully in the private housing market and to pay the amounts required by that market for sanitary, decent, and safe housing; and

(v) standards that are established for the purpose of federal programs and that use income to determine eligibility for the programs; and

(B) does not qualify as a low income household.

SECTION 2. Section 379E.004(b), Local Government Code, is amended to read as follows:

(b) The governing body of a municipality that adopts an urban land bank program shall establish or approve a land bank to exercise [for] the powers [purpose] of acquiring, holding, developing, and transferring [unimproved] real property under this chapter.

SECTION 3. Section 379E.005, Local Government Code, is amended to read as follows:

Sec. 379E.005. QUALIFIED PARTICIPATING DEVELOPER. To qualify to participate in an urban land bank program, a developer other than the land bank must:

(1) have developed 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 by the land bank or the municipality; and

(3) meet any other requirements adopted by the municipality in the urban land bank plan.

SECTION 4. Section 379E.006(c), Local Government Code, is amended to read as follows:

(c) In developing the plan, the municipality shall consider any other housing plans adopted by the municipality, including any [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.

SECTION 5. Section 379E.008(a), Local Government Code, is amended 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 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 or an uninhabitable building or buildings that are occupied as a residence by an owner or tenant who is legally entitled to occupy the building or buildings;

(3) there are delinquent taxes on the property for a total of at least five 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.

SECTION 6. Section 379E.009, Local Government Code, is amended to read as follows:

Sec. 379E.009. SUBSEQUENT RESALE OR DEVELOPMENT BY LAND BANK. (a) Within the five-year period following the date [Each subsequent resale] of acquisition of a property [acquired] by a land bank, the land bank [under this chapter must comply with the conditions of this section.

[(b) Within the three-year period following the date of acquisition, the land bank] must:

(1) sell the [a] property to a qualified participating developer for the purpose of construction or rehabilitation of affordable housing for sale or rent to low or moderate income households; or

(2) develop the property for the purposes described by Subdivision (1).

(b) If after five [three] years a qualified participating developer has not purchased the property or the land bank has not developed 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 three-year [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 three-year [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 development by the land bank, 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.

(e) Each subsequent resale that a land bank makes to a qualified participating developer with respect to a property acquired by the land bank under this chapter must comply with the conditions of this section.

SECTION 7. Sections 379E.010(a), (b), (c), and (d), Local Government Code, are amended to read as follows:

(a) The land bank shall impose deed restrictions on property developed by the land bank or sold to qualified participating developers requiring the development and subsequent sale or rental of the property to low or moderate income households.

(b) For land bank properties developed by the land bank for sale, and for [At least 25 percent of the] land bank properties sold to a qualified participating developer for development for sale, in [during] any given fiscal year:

(1) at least 45 percent of the properties must [to] be deed restricted for sale [developed for sale shall be deed restricted for sale] to households with a [gross] household income of [incomes] not more [greater] than 80 [60] percent of the area median family income, based on gross household income, adjusted for household size, for the metropolitan statistical area in which the properties are [municipality is] located, as determined annually by the United States Department of Housing and Urban Development;

(2) at least 25 percent of the properties must be deed restricted for sale to households with a household income of not more than 60 percent of the area median family income, based on gross household income, adjusted for household size, for the metropolitan statistical area in which the properties are located, as determined annually by the United States Department of Housing and Urban Development; and

(3) the remaining properties must be deed restricted for sale to households with a household income of not more than 120 percent of the area median family income, based on gross household income, adjusted for household size, for the metropolitan statistical area in which the properties are located, as determined annually by the United States Department of Housing and Urban Development.

(c) If property is developed and used for rental housing, the deed restrictions must be for a period of not less than 30 [20] years and must require that 100 percent of the units are occupied by and affordable to households with incomes not greater than 80 percent of area median family income, based on gross household income, adjusted for household size, for the metropolitan statistical area in which the units are located, as determined annually by the United States Department of Housing and Urban Development, and must also require that of those units:

(1) at least 40 [100] percent are [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 units are [municipality is] located, as determined annually by the United States Department of Housing and Urban Development; and

(2) at least 20 [40] percent are [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 units are [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].

(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 or acceptable to 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.

SECTION 8. Sections 379E.013(c) and (d), Local Government Code, are amended to read as follows:

(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, develops, 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 mailing 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 purchaser [developer];

(D) the [purchase] price paid by the purchaser [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 the land bank or 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 for [filed by] the property [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 the land bank or 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 9. Section 11.18(d), Tax Code, is amended to read as follows:

(d) A charitable organization must be organized exclusively to perform religious, charitable, scientific, literary, or educational purposes and, except as permitted by Subsections (h) and (l), engage exclusively in performing one or more of the following charitable functions:

(1) providing medical care without regard to the beneficiaries' ability to pay, which in the case of a nonprofit hospital or hospital system means providing charity care and community benefits in accordance with Section 11.1801;

(2) providing support or relief to orphans, delinquent, dependent, or handicapped children in need of residential care, abused or battered spouses or children in need of temporary shelter, the impoverished, or victims of natural disaster without regard to the beneficiaries' ability to pay;

(3) providing support without regard to the beneficiaries' ability to pay to:

(A) elderly persons, including the provision of:

(i) recreational or social activities; and

(ii) facilities designed to address the special needs of elderly persons; or

(B) the handicapped, including training and employment:

(i) in the production of commodities; or

(ii) in the provision of services under 41 U.S.C. Sections 8501-8506;

(4) preserving a historical landmark or site;

(5) promoting or operating a museum, zoo, library, theater of the dramatic or performing arts, or symphony orchestra or choir;

(6) promoting or providing humane treatment of animals;

(7) acquiring, storing, transporting, selling, or distributing water for public use;

(8) answering fire alarms and extinguishing fires with no compensation or only nominal compensation to the members of the organization;

(9) promoting the athletic development of boys or girls under the age of 18 years;

(10) preserving or conserving wildlife;

(11) promoting educational development through loans or scholarships to students;

(12) providing halfway house services pursuant to a certification as a halfway house by the parole division of the Texas Department of Criminal Justice;

(13) providing permanent housing and related social, health care, and educational facilities for persons who are 62 years of age or older without regard to the residents' ability to pay;

(14) promoting or operating an art gallery, museum, or collection, in a permanent location or on tour, that is open to the public;

(15) providing for the organized solicitation and collection for distributions through gifts, grants, and agreements to nonprofit charitable, education, religious, and youth organizations that provide direct human, health, and welfare services;

(16) performing biomedical or scientific research or biomedical or scientific education for the benefit of the public;

(17) operating a television station that produces or broadcasts educational, cultural, or other public interest programming and that receives grants from the Corporation for Public Broadcasting under 47 U.S.C. Section 396, as amended;

(18) providing housing for low-income and moderate-income families, for unmarried individuals 62 years of age or older, for handicapped individuals, and for families displaced by urban renewal, through the use of trust assets that are irrevocably and, pursuant to a contract entered into before December 31, 1972, contractually dedicated on the sale or disposition of the housing to a charitable organization that performs charitable functions described by Subdivision (9);

(19) providing housing and related services to persons who are 62 years of age or older in a retirement community, if the retirement community provides independent living services, assisted living services, and nursing services to its residents on a single campus:

(A) without regard to the residents' ability to pay; or

(B) in which at least four percent of the retirement community's combined net resident revenue is provided in charitable care to its residents;

(20) providing housing on a cooperative basis to students of an institution of higher education if:

(A) the organization is exempt from federal income taxation under Section 501(a), Internal Revenue Code of 1986, as amended, by being listed as an exempt entity under Section 501(c)(3) of that code;

(B) membership in the organization is open to all students enrolled in the institution and is not limited to those chosen by current members of the organization;

(C) the organization is governed by its members; and

(D) the members of the organization share the responsibility for managing the housing;

(21) acquiring, holding, and transferring unimproved real property under an urban land bank demonstration program established under Chapter 379C, Local Government Code, as or on behalf of a land bank;

(22) acquiring, holding, and transferring [unimproved] real property under an urban land bank program established under Chapter 379E, Local Government Code, as or on behalf of a land bank;

(23) providing housing and related services to individuals who:

(A) are unaccompanied and homeless and have a disabling condition; and

(B) have been continuously homeless for a year or more or have had at least four episodes of homelessness in the preceding three years;

(24) operating a radio station that broadcasts educational, cultural, or other public interest programming, including classical music, and that in the preceding five years has received or been selected to receive one or more grants from the Corporation for Public Broadcasting under 47 U.S.C. Section 396, as amended; or

(25) providing, without regard to the beneficiaries' ability to pay, tax return preparation services and assistance with other financial matters.

SECTION 10. The changes in law made by this Act to Chapter 379E, Local Government Code, apply only to a property acquired by a land bank on or after the effective date of this Act. A property acquired by a land bank before the effective date of this Act is governed by the law in effect immediately before the effective date of this Act, and the former law is continued in effect for that purpose.

SECTION 11. Section 11.18, Tax Code, as amended by this Act, applies only to an ad valorem tax year that begins on or after the effective date of this Act.

SECTION 12. This Act takes effect September 1, 2019.