88R10204 JAM-D

By: Garcia H.B. No. 2476

A BILL TO BE ENTITLED

AN ACT

relating to the adoption of a veterans' land bank program by the Texas State Affordable Housing Corporation.

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

SECTION 1. Section 2306.566(c), Government Code, is amended to read as follows:

(c) The corporation's plan must include:

(1) specific proposals to help serve rural and other underserved areas of the state; and

(2) the veterans' land bank plan developed under Section 2306.5622.

SECTION 2. Subchapter Y, Chapter 2306, Government Code, is amended by adding Section 2306.5622 to read as follows:

Sec. 2306.5622. VETERANS' LAND BANK PROGRAM. (a) In this section:

(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.

(2) "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 a municipality or county as a community housing development organization.

(3) "Low-income household" means a household with an income of not greater than 60 percent of the area median family income, based on gross household income, adjusted for household size, for a municipality or, if located in an area that is not part of a municipality, a county, as determined annually by the United States Department of Housing and Urban Development.

(4) "Qualified participating developer" means a developer who meets the requirements of Subsection (f) and includes a qualified organization under Subsection (t).

(5) "Veteran" has the meaning provided by Section 161.001, Natural Resources Code.

(6) "Veterans' land bank" means an entity established or approved by the corporation for the purpose of acquiring, holding, and transferring unimproved real property under this section to provide affordable housing for veterans who are members of low-income households.

(7) "Veterans' land bank plan" or "plan" means a plan adopted by the corporation as provided by Subsection (g).

(8) "Veterans' land bank program" or "program" means a program adopted under Subsection (c).

(b) This section controls to the extent of any conflict between this section and another provision of this chapter.

(c) The corporation shall adopt a veterans' land bank program and establish or approve a veterans' land bank for the purpose of acquiring, holding, and transferring unimproved real property under this section to provide affordable housing for veterans who are members of low-income households.

(d) Property held by the veterans' land bank must include property acquired in the manner provided by Subsection (i) and may include other property acquired by or transferred to the veterans' land bank.

(e) A sale or other transfer of property for use in connection with the program is a sale for a public purpose.

(f) To qualify to participate in the program, a developer must:

(1) have developed three or more housing units within the three-year period preceding the submission of a proposal to the veterans' land bank seeking to acquire real property from the veterans' land bank;

(2) have a development plan approved by the corporation for the veterans' land bank property; and

(3) meet any other requirements adopted by the corporation in the veterans' land bank plan.

(g) The corporation shall operate the program in conformance with a veterans' land bank plan. The corporation shall adopt a plan annually. The plan may be amended from time to time. In developing the plan, the corporation shall consider any other housing plans adopted by a municipality or county in which the corporation intends to implement the program. The plan must include the corporation's plan for affordable housing development on parcels of real property.

(h) Before adopting a plan, the corporation shall hold a public hearing on the proposed plan. The corporation shall provide notice of the hearing to all community housing development organizations and to neighborhood associations identified by the corporation as serving the neighborhoods in which properties anticipated to be available for sale or transfer to the veterans' land bank under this section are located. The corporation shall make copies of the proposed plan available to the public not later than the 30th day before the date of the public hearing.

(i) Notwithstanding any other law and except as provided by Subsection (m), property that is ordered sold pursuant to foreclosure of a tax lien may be sold in a private sale to a veterans' 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 building or buildings;

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

(4) all taxing units that are parties to the tax suit have executed 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 veterans' land bank.

(j) 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.

(k) For any sale of property under Subsection (i), each person who was a defendant to the judgment, or that person's attorney, shall be given, not later than the 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.

(l) After receipt of the notice required by Subsection (k) 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 Subsection (i).

(m) If the officer charged with the sale receives a written request as provided by Subsection (l), the officer shall sell the property as otherwise provided in Section 34.01, Tax Code.

(n) The owner of the property subject to sale may not receive any proceeds of a sale under this section. However, the owner does not have any personal liability for a deficiency of the judgment as a result of a sale under this section.

(o) 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 veterans' 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.

(p) The deed of conveyance of the property sold to a veterans' land bank under Subsection (i) conveys to the veterans' land bank the right, title, and interest acquired or held by each taxing unit that was a party to the judgment, subject to the right of redemption.

(q) Each subsequent resale by a veterans' land bank of property acquired by the veterans' land bank under Subsection (i) must comply with the conditions of this subsection. Within the 10-year period following the date of acquisition, the veterans' land bank must sell a property to a qualified participating developer for the purpose of construction of affordable housing for sale or rent to veterans who are members of low-income households. If after 10 years a qualified participating developer has not purchased the property, the property shall be transferred from the veterans' land bank to the taxing units who were parties to the judgment for disposition as otherwise allowed under the law. The deed conveying a property sold by the veterans' 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 veterans' land bank to the qualified participating developer, the property will revert to the veterans' land bank for subsequent resale to another qualifying participating developer or conveyance to the taxing units who were parties to the judgment for disposition as otherwise allowed under the law.

(r) The veterans' land bank shall impose, in accordance with this subsection and Subsection (s), deed restrictions on property sold to qualified participating developers requiring the development and subsequent sale or rental of the property to veterans who are members of low-income households. At least 25 percent of the veterans' land bank properties sold during any given state fiscal year to be developed for sale shall be deed restricted for sale to households with incomes not greater than 60 percent of the area median family income, based on gross household income, adjusted for household size, for the applicable municipality or, if located in an area that is not part of a municipality, the applicable county, as determined annually by the United States Department of Housing and Urban Development. If property is developed for rental housing, the deed restrictions must be for a period of not less than 20 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 applicable municipality or, if located in an area that is not part of a municipality, the applicable county, 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 applicable municipality or, if located in an area that is not part of a municipality, the applicable county, 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 applicable municipality or, if located in an area that is not part of a municipality, the applicable county, as determined annually by the United States Department of Housing and Urban Development.

(s) The deed restrictions relating to rental housing under this subsection and Subsection (r) must require the owner to file an annual occupancy report with the corporation on a reporting form provided by the corporation. 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. Except as otherwise provided by this subsection, if the deed restrictions imposed under this subsection or Subsection (r) are for a term of years, the deed restrictions renew automatically. The veterans' land bank or the corporation may modify or add to the deed restrictions imposed under this subsection or Subsection (r). Any modifications or additions made by the corporation must be adopted by the corporation as part of its plan.

(t) The veterans' land bank shall first offer for sale to qualified organizations any property acquired by the veterans' land bank under Subsection (i). 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. The corporation shall specify in its plan the period during which the right of first refusal provided by this subsection may be exercised by a qualified organization. That period must be at least nine months but not more than 26 months from the date of the deed of conveyance of the property to the veterans' land bank. If the veterans' land bank conveys the property to a qualified organization before the expiration of the period specified by the corporation under this subsection, the interlocal agreement executed under Subsection (i)(4) must provide tax abatement for the property until the expiration of that period. During the specified period, the veterans' land bank may not sell the property to a qualified participating developer other than a qualified organization. If all qualified organizations notify the veterans' 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, the veterans' land bank may sell the property to any other qualified participating developer at the same price that the veterans' land bank offered the property to the qualified organizations. In its plan, the corporation shall establish the additional period, if any, that a property may be held in the veterans' land bank once an offer has been received and accepted from a qualified organization or other qualified participating developer. If more than one qualified organization expresses an interest in exercising its right of first refusal, the organization that has designated the most geographically compact area encompassing a portion of the property shall be given priority. In its plan, the corporation may provide for other rights of first refusal for any other nonprofit corporation exempted from federal income tax under Section 501(c)(3), Internal Revenue Code of 1986, as amended, provided that the preeminent right of first refusal is provided to qualified organizations as provided by this subsection. The veterans' land bank is not required to provide a right of first refusal to qualified organizations under this subsection if the veterans' land bank is selling property that reverted to the veterans' land bank under Subsection (q) or was acquired by the veterans' land bank in a manner other than that provided by Subsection (i). In this subsection, "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 or county certifying the organization, a portion of the property that the veterans' 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 period has developed or rehabilitated housing units within a two-mile radius of the property that the veterans' land bank is offering for sale.

(u) The veterans' land bank shall comply with the requirements of Chapters 551 and 552. The veterans' 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 veterans' land bank and all transactions in relation to its property.

(v) For purposes of evaluating the effectiveness of the program, the veterans' land bank shall submit an annual performance report to the corporation not later than November 1 of each year in which the veterans' land bank acquires or sells property under this section. The performance report must include:

(1) a complete and detailed written accounting of all money and properties received and disbursed by the veterans' land bank during the preceding state fiscal year;

(2) for each property acquired by the veterans' land bank during the preceding state fiscal year:

(A) the street address of the property;

(B) the legal description of the property;

(C) the date the veterans' land bank took title to the property;

(D) the name and mailing address of the property owner of record at the time of the acquisition;

(E) the amount of taxes and other costs owed at the time of the foreclosure if the property was acquired under Subsection (i); and

(F) the assessed value of the property on the tax roll at the time of the foreclosure if the property was acquired under Subsection (i);

(3) for each property sold by the veterans' land bank during the preceding state 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;

(D) the price paid by the purchaser;

(E) the maximum incomes allowed for the households by the terms of the sale; and

(F) the source and amount of any public subsidy made available to facilitate the sale or rental of the property to a veteran who is a member of a household within the targeted income levels;

(4) for each property sold by a qualified participating developer during the preceding state 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 filed by the owner with the veterans' land bank.

(w) The veterans' land bank shall provide copies of the performance report to any taxing units who were parties to a sale of property under Subsection (i). The veterans' land bank shall provide notice of the availability of the performance report for review to the organizations and neighborhood associations identified by the corporation as serving the neighborhoods in which are located properties sold or transferred to the veterans' land bank under this section. The veterans' land bank and the corporation shall maintain copies of the performance report available for public review.

(x) The veterans' 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.

SECTION 3. Sections 11.18(d) and (o), Tax Code, are 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;

(22-a) acquiring, holding, and transferring unimproved real property under a veterans' land bank program established under Section 2306.5622, Government Code, as or on behalf of a veterans' 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.

(o) For purposes of Subsection (a)(2), real property acquired, held, and transferred by an organization that performs the function described by Subsection (d)(21), [or] (22), or (22-a) is considered to be used exclusively by the qualified charitable organization to perform that function.

SECTION 4. 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 5. This Act takes effect September 1, 2023.