CHAPTER 379D. URBAN LAND BANK PROGRAM IN MUNICIPALITY WITH POPULATION OF 1.9 MILLION OR MORE

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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.

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.

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.

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.

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.

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.

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.

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.

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;

(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;

(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;

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.

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