87R7949 JAM-D     By: Hernandez H.B. No. 2236       A BILL TO BE ENTITLED   AN ACT   relating to the authority of a county to adopt a land bank program.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle B, Title 12, Local Government Code, is   amended by adding Chapter 388 to read as follows:   CHAPTER 388. LAND BANK PROGRAM          Sec. 388.001.  DEFINITIONS. In this chapter:                (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 the county as a community   housing development organization.                (3)  "Land bank" means an entity established or   approved by the governing body of a county for the purpose of   acquiring, holding, and transferring unimproved real property   under this chapter.                (4)  "Land bank plan" or "plan" means a plan adopted by   the governing body of a county as provided by Section 388.004.                (5)  "Land bank program" or "program" means a program   adopted under Section 388.002.                (6)  "Low income household" means a household with an   income of not greater than 80 percent of the area median family   income, based on gross household income, adjusted for household   size, for the county, as determined annually by the United States   Department of Housing and Urban Development.                (7)  "Qualified participating developer" means a   developer who meets the requirements of Section 388.003 and   includes a qualified organization under Section 388.009.          Sec. 388.002.  LAND BANK PROGRAM. (a) The governing body of   a county may adopt a land bank program in which the officer charged   with selling real property ordered sold pursuant to foreclosure of   a tax lien may sell certain eligible real property by private sale   for purposes of affordable housing development as provided by this   chapter.          (b)  The governing body of a county that adopts a land bank   program shall establish or approve a land bank for the purpose of   acquiring, holding, and transferring unimproved real property   under this chapter.          (c)  A land bank program established under this chapter may   not operate in a municipality that:                (1)  has adopted an urban land bank program under   Chapter 373A, 379C, 379D, or 379E; or                (2)  operates a land bank as a local government   corporation under Subchapter D, Chapter 431, Transportation Code.          Sec. 388.003.  QUALIFIED PARTICIPATING DEVELOPER.  To   qualify to participate in a land bank 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   land bank seeking to acquire real property from the land bank;                (2)  have a development plan approved by the county for   the land bank property; and                (3)  meet any other requirements adopted by the county   in the land bank plan.          Sec. 388.004.   LAND BANK PLAN. (a) A county that adopts a   land bank program shall operate the program in conformance with a   land bank plan.          (b)  The governing body of a county that adopts a land bank   program shall adopt a plan annually. The plan may be amended from   time to time.          (c)  In developing the plan, the county shall consider any   other housing plans adopted by the county, including any fair   housing plans and policies adopted or agreed to by the county.          (d)  The plan must include the following:                (1)  a list of community housing development   organizations eligible to participate in the right of first refusal   provided by Section 388.009;                (2)  a list of the parcels of real property that may   become eligible for sale to the land bank during the next year;                (3)  the county's plan for affordable housing   development on those parcels of real property; and                (4)  the sources and amounts of money anticipated to be   available from the county for subsidies for development of   affordable housing in the county, including any money specifically   available for housing developed under the program, as approved by   the governing body of the county at the time the plan is adopted.          Sec. 388.005.  PUBLIC HEARING ON PROPOSED PLAN. (a) Before   adopting a plan, a county shall hold a public hearing on the   proposed plan.          (b)  The county clerk or the county clerk's designee shall   provide notice of the hearing to all community housing development   organizations and to neighborhood associations identified by the   county as serving the neighborhoods in which properties anticipated   to be available for sale to the land bank under this chapter are   located.          (c)  The county clerk or the county clerk'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.          Sec. 388.006.  PRIVATE SALE TO LAND BANK. (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 building or   buildings;                (3)  there are delinquent taxes on the property for a   total of at least five years; and                (4)  the county 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.          (b)  A sale of property for use in connection with the   program is a sale for a public purpose.          (c)  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.          (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 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.          (e)  After receipt of the notice required by Subsection (d)   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 this chapter.          (f)  If the officer charged with the sale receives a written   request as provided by Subsection (e), the officer shall sell the   property as otherwise provided in Section 34.01, Tax Code.          (g)  The owner of the property subject to sale may not   receive any proceeds of a sale under this chapter. However, the   owner does not have any personal liability for a deficiency of the   judgment as a result of a sale under this chapter.          (h)  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 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.          (i)  The deed of conveyance of the property sold to a land   bank under this section conveys to the 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.          Sec. 388.007.  SUBSEQUENT RESALE BY LAND BANK. (a) Each   subsequent resale by a land bank of property acquired by 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 sell a property to a qualified   participating developer for the purpose of construction of   affordable housing for sale or rent to low income households.          (c)  If after three years a qualified participating   developer has not purchased 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.          (d)  Unless the county 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 two-year period as   determined by the county.          (e)  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   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 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.          Sec. 388.008.  RESTRICTIONS ON OCCUPANCY AND USE OF   PROPERTY. (a) The land bank shall impose deed restrictions on   property sold to qualified participating developers requiring the   development and subsequent sale or rental of the property to low   income households.          (b)  At least 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 incomes not greater than 60   percent of the area median family income, based on gross household   income, adjusted for household size, for the county, 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 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 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 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 county, 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 county on a   reporting form provided by the county. 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).          (e)  Except as otherwise provided by this section, if the   deed restrictions imposed under this section are for a term of   years, the deed restrictions shall renew automatically.          (f)  The land bank or the governing body of the county may   modify or add to the deed restrictions imposed under this section.   Any modifications or additions made by the governing body of the   county must be adopted by the county as part of its plan and must   comply with the restrictions set forth in Subsections (b), (c), and   (d).          Sec. 388.009.  RIGHT OF FIRST REFUSAL. (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 county, 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 period has   developed or rehabilitated housing units within a two-mile radius   of the property that the land bank is offering for sale.          (b)  The land bank shall first offer a property for sale to   qualified organizations.          (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 county 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 nine months but not more than 26 months from the date of the   deed of conveyance of the property to the land bank.          (e)  If the land bank conveys the property to a qualified   organization before the expiration of the period specified by the   county under Subsection (d), the interlocal agreement executed   under Section 388.006(a)(4) must provide tax abatement for the   property until the expiration of that period.          (f)  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, 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.          (g)  In its plan, the county shall establish the amount of   additional time, if any, that a property may be held in the land   bank once an offer has been received and accepted from a qualified   organization or other qualified participating developer.          (h)  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.          (i)  In its plan, the county 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, provided that the preeminent right of first refusal is   provided to qualified organizations as provided by this section.          (j)  The land bank is not required to provide a right of first   refusal to qualified organizations under this section if the land   bank is selling property that reverted to the land bank under   Section 388.007(e).          Sec. 388.010.  OPEN RECORDS AND MEETINGS. The land bank   shall comply with the requirements of Chapters 551 and 552,   Government Code.          Sec. 388.011.  RECORDS; AUDIT; REPORT. (a) The 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 land bank and all transactions in relation to its   property.          (b)  The land bank shall file with the county not later than   the 90th day after the close of the fiscal year annual audited   financial statements prepared by a certified public accountant.   The financial transactions of the land bank are subject to audit by   the county.          (c)  For purposes of evaluating the effectiveness of the   program, the land bank shall submit an annual performance report to   the county not later than November 1 of each year in which the land   bank acquires 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;                      (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   provided by the county to facilitate the sale or rental of the   property to a household within the targeted income levels;                (4)  for each property sold by 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 filed by the 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 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.          (e)  The land bank shall provide copies of the performance   report to the taxing units who were parties to the judgment of   foreclosure and shall provide notice of the availability of the   performance report for review to the organizations and neighborhood   associations identified by the county as serving the neighborhoods   in which properties sold to the land bank under this chapter are   located.          (f)  The land bank and the county shall maintain copies of   the performance report available for public review.          SECTION 2.  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 land bank program established   under Chapter 388, 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.          (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 3.  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 4.  This Act takes effect September 1, 2021.