CHAPTER 379D. URBAN LAND BANK PROGRAM IN MUNICIPALITY WITH POPULATION OF 1.9 MILLION OR MORE
LOCAL GOVERNMENT CODE
TITLE 12. PLANNING AND DEVELOPMENT
SUBTITLE A. MUNICIPAL PLANNING AND DEVELOPMENT
CHAPTER 379D. URBAN LAND BANK PROGRAM
IN MUNICIPALITY WITH POPULATION OF 1.9 MILLION OR MORE
Sec. 379D.001. SHORT TITLE. This chapter may be cited as the
Urban Land Bank Program Act for a Municipality with a Population
of 1.9 Million or More.
Added by Acts 2005, 79th Leg., Ch.
795, Sec. 1, eff. September 1, 2005.
Sec. 379D.002. APPLICABILITY. This chapter applies only to a
municipality with a population of 1.9 million or more.
Added by Acts 2005, 79th Leg., Ch.
795, Sec. 1, eff. September 1, 2005.
Sec. 379D.003. DEFINITIONS. In this chapter:
(1) "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 municipality as a community housing
development organization.
(2) "Land bank" means an entity established or approved by the
governing body of a municipality for the purpose of acquiring,
holding, and transferring real property under this chapter.
(3) "Low income household" means a household with a gross income
of not greater than 80 percent of the area median family 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.
(4) "Qualified participating developer" means a developer who
meets the requirements of Section 379D.005 and includes a
qualified organization under Section 379D.012.
(5) "Urban land bank plan" or "plan" means a plan adopted by the
governing body of a municipality as provided by Section 379D.006.
(6) "Urban land bank program" or "program" means a program
adopted under Section 379D.004.
Added by Acts 2005, 79th Leg., Ch.
795, Sec. 1, eff. September 1, 2005.
Sec. 379D.004. URBAN LAND BANK PROGRAM. (a) The governing body
of a municipality may adopt an urban 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 municipality that adopts an urban
land bank program shall establish or approve a land bank for the
purpose of acquiring, holding, and transferring real property
under this chapter.
Added by Acts 2005, 79th Leg., Ch.
795, Sec. 1, eff. September 1, 2005.
Sec. 379D.005. QUALIFIED PARTICIPATING DEVELOPER. To qualify to
participate in an urban land bank program, a developer must:
(1) have built 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; and
(3) meet any other requirements adopted by the municipality in
the urban land bank plan.
Added by Acts 2005, 79th Leg., Ch.
795, Sec. 1, eff. September 1, 2005.
Sec. 379D.006. URBAN LAND BANK PLAN. (a) A municipality that
adopts an urban land bank program shall operate the program in
conformance with an urban land bank plan.
(b) The governing body of a municipality that adopts an urban
land bank program shall adopt a plan annually. The plan may be
amended from time to time.
(c) In developing the plan, the municipality shall consider
other housing plans adopted by the municipality, including 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.
(d) The plan must include the following:
(1) a list of community housing development organizations
eligible to participate in the right of second refusal provided
by Section 379D.012;
(2) a list of the parcels of real property that may become
eligible for sale to the land bank during the upcoming year;
(3) the municipality's plan for affordable housing development
on those parcels of real property; and
(4) the sources and amounts of funding anticipated to be
available from the municipality for subsidies for development of
affordable housing in the municipality, including any money
specifically available for housing developed under the program,
as approved by the governing body of the municipality at the time
the plan is adopted.
Added by Acts 2005, 79th Leg., Ch.
795, Sec. 1, eff. September 1, 2005.
Sec. 379D.007. PUBLIC HEARING ON PROPOSED PLAN. (a) Before
adopting a plan, a municipality shall hold a public hearing on
the proposed plan.
(b) The mayor or the mayor's designee shall provide notice of
the hearing to all community housing development organizations
and to neighborhood associations identified by the municipality
as serving the neighborhoods in which properties anticipated to
be available for sale to the land bank under this chapter are
located.
(c) The mayor or the mayor'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.
Added by Acts 2005, 79th Leg., Ch.
795, Sec. 1, eff. September 1, 2005.
Sec. 379D.008. PRIVATE SALE TO LAND BANK. (a) Notwithstanding
any other law and except as provided by Subsections (b) and (g),
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, as described by the municipality's health and safety
code;
(3) there are delinquent taxes on the property for each of the
preceding six 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.
(b) A property that is not improved with a habitable building or
buildings, as described by the municipality's health and safety
code, may not be sold to a land bank under this section if the
property is currently occupied by a person who has resided on the
property for at least a year.
(c) A sale of property for use in connection with the program is
a sale for a public purpose.
(d) 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.
(e) 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 30th 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.
(f) After receipt of the notice required by Subsection (e) 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.
(g) If the officer charged with the sale receives a written
request as provided by Subsection (f), the officer shall sell the
property as otherwise provided in Section 34.01, Tax Code.
(h) 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.
(i) 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.
(j) 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 owned by the defendants included in the foreclosure
judgment, including the defendants' right to the use and
possession of the property, subject only to the defendants' right
of redemption, the terms of a recorded restrictive covenant
running with the land that was recorded before January 1 of the
year in which the tax lien on the property arose, a recorded lien
that arose under that restrictive covenant that was not
extinguished in the judgment foreclosing the tax lien, and each
valid easement of record as of the date of the sale that was
recorded before January 1 of the year the tax lien arose.
Added by Acts 2005, 79th Leg., Ch.
795, Sec. 1, eff. September 1, 2005.
Sec. 379D.009. SUBSEQUENT RESALE BY LAND BANK. (a) Each
subsequent resale of property acquired by a land bank under this
chapter must comply with the conditions of this section.
(b) Except as provided by Section 379D.011, the land bank must
sell a property to a qualified participating developer within the
five-year period following the date of acquisition for the
purpose of construction of affordable housing for sale or rent to
low income households. If after five 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.
(c) 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 units produced and completed
by the qualified participating developer during the preceding
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 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 qualified participating developer or conveyance to the
taxing units who were parties to the judgment for disposition as
otherwise allowed under the law.
Added by Acts 2005, 79th Leg., Ch.
795, Sec. 1, eff. September 1, 2005.
Sec. 379D.010. RESTRICTIONS ON OCCUPANCY AND USE OF PROPERTY.
(a) The land bank shall impose deed restrictions with
appropriate terms and conditions on property sold to qualified
participating developers and eligible adjacent property owners
that require:
(1) the development and sale or rental of the property to low
income households, if the property is sold to a qualified
participating developer; or
(2) the use of the property to be consistent and compatible with
the residential character of the neighborhood and any applicable
standards for use adopted by the land bank, if the property is
sold to an eligible adjacent property owner.
(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 gross household incomes
not greater than 60 percent of the area median family 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.
(c) Housing developed under this chapter may consist of one to
four residential units. At least one unit of any structure with
two to four units must be owned and occupied as a primary
residence by a low income household. The remaining units may be
rental units if each tenant household meets the income
eligibility requirements of a low income household.
(d) Notwithstanding Subsection (c), housing developed under this
chapter may consist of one to eight residential units, all of
which may be rental units, if:
(1) each tenant household meets the income eligibility
requirements of a low income household;
(2) the housing is located in an area that:
(A) is adjacent to the central business district of the
municipality; and
(B) has a number of owner-occupied households that does not
exceed 25 percent of the total number of households in the area;
and
(3) the median income of households for the area described by
Subdivision (2) is less than 50 percent of the median income of
households for the municipality.
Added by Acts 2005, 79th Leg., Ch.
795, Sec. 1, eff. September 1, 2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1034, Sec. 9, eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
1341, Sec. 30, eff. September 1, 2007.
Sec. 379D.011. RIGHT OF FIRST REFUSAL IN ELIGIBLE ADJACENT
PROPERTY OWNERS; CONDITIONS OF PURCHASE. (a) Property acquired
by the land bank shall be offered for sale, at fair market value
as determined by the appraisal district in which the property is
located, to eligible adjacent property owners under a right of
first refusal on terms and conditions developed by the land bank
that are consistent with this chapter.
(b) To be eligible to exercise a right of first refusal under
this section, an owner of property adjacent to property acquired
by the land bank:
(1) must have owned and continuously occupied that property for
at least the five preceding years as that person's principal
residence; and
(2) must meet any eligibility requirements adopted by the land
bank.
(c) An adjacent property owner who purchases property under this
section may not lease, sell, or otherwise transfer the property
to another party before the 10th anniversary of the date the
adjacent property owner purchases the property. This prohibition
does not apply to a transfer of property, as allowed by policies
adopted by the land bank:
(1) to a family member of the adjacent property owner; or
(2) in the case of the death of the adjacent property owner.
Added by Acts 2005, 79th Leg., Ch.
795, Sec. 1, eff. September 1, 2005.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1034, Sec. 10, eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
1341, Sec. 31, eff. September 1, 2007.
Sec. 379D.012. RIGHT OF SECOND REFUSAL IN QUALIFIED
ORGANIZATIONS. (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 municipality, 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 two-year period has built or
rehabilitated housing units within a two-mile radius of the
property that the land bank is offering for sale.
(b) If all eligible adjacent property owners fail to exercise
the right of first refusal under Section 379D.011, the land bank
shall offer a property for sale to qualified organizations that
are eligible to acquire additional properties from the land bank
under Section 379D.009(c). If a qualified organization is not
eligible to acquire additional properties under that subsection
at the time the property first becomes available for sale, the
land bank is not required to hold the property from sale until
the organization becomes eligible to purchase the property by the
right of second refusal described by this section.
(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 the right of
second refusal may be exercised.
(d) The municipality shall specify in its plan the period during
which the right of second refusal provided by this section may be
exercised by a qualified organization. That period must be at
least 90 days in duration and begin after the period in which the
right of first refusal described by Section 379D.011 may be
exercised and at least three months but not more than 26 months
from the date of the deed of conveyance of the property to the
land bank.
(e) During the period specified for the right of second refusal
under Subsection (d), 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 second
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.
(f) In its plan, the municipality 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.
(g) If more than one qualified organization expresses an
interest in exercising its right of second refusal, the
organization that has designated the most geographically compact
area encompassing a portion of the property shall be given
priority.
(h) In its plan, the municipality may provide for other rights
of second 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 second
refusal is provided to qualified organizations as provided by
this section.
(i) The land bank is not required to provide a right of second
refusal to qualified organizations under this section if the land
bank is selling property that reverted to the land bank under
Section 379D.009(d).
Added by Acts 2005, 79th Leg., Ch.
795, Sec. 1, eff. September 1, 2005.
Sec. 379D.013. OPEN RECORDS AND MEETINGS. The land bank shall
comply with the requirements of Chapters 551 and 552, Government
Code.
Added by Acts 2005, 79th Leg., Ch.
795, Sec. 1, eff. September 1, 2005.
Sec. 379D.014. 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 municipality 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 municipality.
(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 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 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 developer;
(D) the purchase price paid by the 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 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 municipality as
serving the neighborhoods in which properties sold to the land
bank under this chapter are located.
(f) The land bank and the municipality shall maintain copies of
the performance report available for public review.
Added by Acts 2005, 79th Leg., Ch.
795, Sec. 1, eff. September 1, 2005.
Sec. 379D.015. EFFECT OF SALE TO LAND BANK OR SUBSEQUENT
PURCHASERS OR LENDERS FOR VALUE; LIMITATION ON CERTAIN CAUSES OF
ACTION. After the first anniversary of a sale of property to a
land bank under this chapter:
(1) a third party, other than a qualified participating
developer or eligible adjacent property owner who purchased the
property from the land bank under this chapter or a person with a
cause of action based on a right, title, interest, or other claim
described by Subdivision (2)(A)(ii), may not bring a cause of
action to set aside or otherwise challenge the sale of the
property to the land bank, including a cause of action that is
brought against:
(A) a qualified participating developer or eligible adjacent
property owner who purchases property from the land bank under
Section 379D.009 or 379D.011, as applicable; or
(B) any other subsequent purchaser for value or lender for
value; and
(2) a qualified participating developer or eligible adjacent
property owner who purchases property from a land bank under this
chapter or any other subsequent purchaser for value or, if
applicable, a lender for a developer, owner, or purchaser
described by this subdivision or any other subsequent lender for
value:
(A) has, with the following characteristics, a full title to the
property:
(i) except as provided by Subparagraph (ii), the title is not
subject to any right, title, interest, or other claim a person
acquired in the property before or after the sale of the property
to the land bank, including a right of first refusal, right of
second refusal, and any other right, title, interest, or other
claim provided by this chapter, other than the right of reverter
provided by Section 379D.009(d); and
(ii) the title is subject only to:
(a) the recorded restrictive covenants, liens, and valid
easements of record described by Section 34.01(n), Tax Code;
(b) any rights of redemption applicable to the property;
(c) any cause of action to impeach the property deed based on a
claim of fraud;
(d) the right of reverter provided by Section 379D.009(d) and
the recorded deed restrictions described by Section 379D.010; and
(e) any right, title, interest, or other claim with respect to
the property that arose after the sale of the property to the
land bank under a law other than this chapter; and
(B) may conclusively presume that:
(i) the sale of the property to the land bank under this chapter
was valid; and
(ii) a mortgage on or a subsequent sale of the property complies
with this chapter and is subject only to a right, title,
interest, or other claim provided by Paragraph (A)(ii).
Added by Acts 2007, 80th Leg., R.S., Ch.
1034, Sec. 11, eff. September 1, 2007.
Added by Acts 2007, 80th Leg., R.S., Ch.
1341, Sec. 32, eff. September 1, 2007.