S.B. No. 1908

AN ACT relating to affordable housing and to the receivership and rehabilitation of certain property; providing an administrative penalty. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Subsections (d) and (i), Section 403.302, Government Code, are amended to read as follows: (d) For the purposes of this section, “taxable value” means the market value of all taxable property less: (1) the total dollar amount of any residence homestead exemptions lawfully granted under Section 11.13(b) or (c), Tax Code, in the year that is the subject of the study for each school district; (2) one-half of the total dollar amount of any residence homestead exemptions granted under Section 11.13(n), Tax Code, in the year that is the subject of the study for each school district; (3) the total dollar amount of any exemptions granted before May 31, 1993, within a reinvestment zone under agreements authorized by Chapter 312, Tax Code; (4) subject to Subsection (e), the total dollar amount of any captured appraised value of property that: (A) is within a reinvestment zone created on or before May 31, 1999, or is proposed to be included within the boundaries of a reinvestment zone as the boundaries of the zone and the proposed portion of tax increment paid into the tax increment fund by a school district are described in a written notification provided by the municipality or the board of directors of the zone to the governing bodies of the other taxing units in the manner provided by Section 311.003(e), Tax Code, before May 31, 1999, and within the boundaries of the zone as those boundaries existed on September 1, 1999, including subsequent improvements to the property regardless of when made; (B) generates taxes paid into a tax increment fund created under Chapter 311, Tax Code, under a reinvestment zone financing plan approved under Section 311.011(d), Tax Code, on or before September 1, 1999; and (C) is eligible for tax increment financing under Chapter 311, Tax Code; (5) for a school district for which a deduction from taxable value is made under Subdivision (4), an amount equal to the taxable value required to generate revenue when taxed at the school district’s current tax rate in an amount that, when added to the taxes of the district paid into a tax increment fund as described by Subdivision (4)(B), is equal to the total amount of taxes the district would have paid into the tax increment fund if the district levied taxes at the rate the district levied in 2005; (6) the total dollar amount of any captured appraised value of property that: (A) is within a reinvestment zone: (i) created on or before December 31, 2008, by a municipality with a population of less than 18,000; and (ii) the project plan for which includes the alteration, remodeling, repair, or reconstruction of a structure that is included on the National Register of Historic Places and requires that a portion of the tax increment of the zone be used for the improvement or construction of related facilities or for affordable housing; (B) generates school district taxes that are paid into a tax increment fund created under Chapter 311, Tax Code; and (C) is eligible for tax increment financing under Chapter 311, Tax Code; (7) the total dollar amount of any exemptions granted under Section 11.251, Tax Code; (8) [(7)] the difference between the comptroller’s estimate of the market value and the productivity value of land that qualifies for appraisal on the basis of its productive capacity, except that the productivity value estimated by the comptroller may not exceed the fair market value of the land; (9) [(8)] the portion of the appraised value of residence homesteads of individuals who receive a tax limitation under Section 11.26, Tax Code, on which school district taxes are not imposed in the year that is the subject of the study, calculated as if the residence homesteads were appraised at the full value required by law; (10) [(9)] a portion of the market value of property not otherwise fully taxable by the district at market value because of: (A) action required by statute or the constitution of this state that, if the tax rate adopted by the district is applied to it, produces an amount equal to the difference between the tax that the district would have imposed on the property if the property were fully taxable at market value and the tax that the district is actually authorized to impose on the property, if this subsection does not otherwise require that portion to be deducted; or (B) action taken by the district under Subchapter B or C, Chapter 313, Tax Code; (11) [(10)] the market value of all tangible personal property, other than manufactured homes, owned by a family or individual and not held or used for the production of income; (12) [(11)] the appraised value of property the collection of delinquent taxes on which is deferred under Section 33.06, Tax Code; (13) [(12)] the portion of the appraised value of property the collection of delinquent taxes on which is deferred under Section 33.065, Tax Code; and (14) [(13)] the amount by which the market value of a residence homestead to which Section 23.23, Tax Code, applies exceeds the appraised value of that property as calculated under that section. (i) If the comptroller determines in the annual study that the market value of property in a school district as determined by the appraisal district that appraises property for the school district, less the total of the amounts and values listed in Subsection (d) as determined by that appraisal district, is valid, the comptroller, in determining the taxable value of property in the school district under Subsection (d), shall for purposes of Subsection (d)(14) [(d)(13)] subtract from the market value as determined by the appraisal district of residence homesteads to which Section 23.23, Tax Code, applies the amount by which that amount exceeds the appraised value of those properties as calculated by the appraisal district under Section 23.23, Tax Code. If the comptroller determines in the annual study that the market value of property in a school district as determined by the appraisal district that appraises property for the school district, less the total of the amounts and values listed in Subsection (d) as determined by that appraisal district, is not valid, the comptroller, in determining the taxable value of property in the school district under Subsection (d), shall for purposes of Subsection (d)(14) [(d)(13)] subtract from the market value as estimated by the comptroller of residence homesteads to which Section 23.23, Tax Code, applies the amount by which that amount exceeds the appraised value of those properties as calculated by the appraisal district under Section 23.23, Tax Code. SECTION 2. Chapter 2306, Government Code, is amended by adding Subchapter MM to read as follows: SUBCHAPTER MM. TEXAS FIRST-TIME HOMEBUYER PROGRAM Sec. 2306.1071. DEFINITIONS. In this subchapter: (1) “First-time homebuyer” means a person who has not owned a home during the three years preceding the date on which an application under this subchapter is filed. (2) “Home” means a dwelling in this state in which a first-time homebuyer intends to reside as the homebuyer’s principal residence. (3) “Mortgage lender” has the meaning assigned by Section 2306.004. (4) “Program” means the Texas First-Time Homebuyer Program. Sec. 2306.1072. TEXAS FIRST-TIME HOMEBUYER PROGRAM. (a) The Texas First-Time Homebuyer Program shall facilitate the origination of single-family mortgage loans for eligible first-time homebuyers. (b) The program may include down payment and closing cost assistance. Sec. 2306.1073. ADMINISTRATION OF PROGRAM; RULES. (a) The department shall administer the program. (b) The board shall adopt rules governing: (1) the administration of the program; (2) the making of loans under the program; (3) the criteria for approving participating mortgage lenders; (4) the use of insurance on the loans and the homes financed under the program, as considered appropriate by the board to provide additional security for the loans; (5) the verification of occupancy of the home by the homebuyer as the homebuyer’s principal residence; and (6) the terms of any contract made with any mortgage lender for processing, originating, servicing, or administering the loans. Sec. 2306.1074. ELIGIBILITY. (a) To be eligible for a mortgage loan under this subchapter, a homebuyer must: (1) qualify as a first-time homebuyer under this subchapter; (2) have an income of not more than 115 percent of area median family income or 140 percent of area median family income in targeted areas; and (3) meet any additional requirements or limitations prescribed by the department. (b) To be eligible for a loan under this subchapter to assist a homebuyer with down payment and closing costs, a homebuyer must: (1) qualify as a first-time homebuyer under this subchapter; (2) have an income of not more than 80 percent of area median family income; and (3) meet any additional requirements or limitations prescribed by the department. (c) The department may contract with other agencies of the state or with private entities to determine whether applicants qualify as first-time homebuyers under this section or otherwise to administer all or part of this section. Sec. 2306.1075. FEES. The board of directors of the department may set and collect from each applicant any fees the board considers reasonable and necessary to cover the expenses of administering the program. Sec. 2306.1076. FUNDING. (a) The department shall ensure that a loan under this section is structured in a way that complies with any requirements associated with the source of the funds used for the loan. (b) In addition to funds set aside for the program under Section 1372.023, the department may solicit and accept gifts and grants for the purposes of this section. SECTION 3. Subsection (c), Section 2306.111, Government Code, as amended by Chapters 1367 and 1448, Acts of the 77th Legislature, Regular Session, 2001, is reenacted and amended to read as follows: (c) In administering federal housing funds provided to the state under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. Section 12701 et seq.), the department shall expend: (1) [at least] 95 percent of these funds for the benefit of non-participating small cities and rural areas that do not qualify to receive funds under the Cranston-Gonzalez National Affordable Housing Act directly from the United States Department of Housing and Urban Development; and (2) five percent of these[. All] funds [not set aside under this subsection shall be used] for the benefit of persons with disabilities who live in any area of this state [areas other than non-participating areas]. SECTION 4. Section 2306.111, Government Code, is amended by amending Subsections (d), (d-1), (e), (f), and (g) and adding Subsections (d-2) and (d-3) to read as follows: (d) The department shall allocate housing funds provided to the state under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. Section 12701 et seq.), housing trust funds administered by the department under Sections 2306.201-2306.206, and commitments issued under the federal low income housing tax credit program administered by the department under Subchapter DD to all urban [urban/exurban] areas and rural areas of each uniform state service region based on a formula developed by the department under Section 2306.1115 [that is based on tho need for housing assistance and the availability of housing resources in those urban/exurban areas and rural areas, provided that the allocations are consistent with applicable federal and state requirements and limitations. The department shall use the information contained in its annual state low income housing plan and shall use other appropriate data to develop the formula]. If the department determines under the formula that an insufficient number of eligible applications for assistance out of funds or credits allocable under this subsection are submitted to the department from a particular uniform state service region, the department shall use the unused funds or credits allocated to that region for all urban [urban/exurban] areas and rural areas in other uniform state service regions based on identified need and financial feasibility. (d-1) In allocating low income housing tax credit commitments under Subchapter DD, the department shall, before applying the regional allocation formula prescribed by Section 2306.1115, set aside for at-risk developments, as defined by Section 2306.6702, not less than the minimum amount of housing tax credits required under Section 2306.6714. Funds or credits are not required to be allocated according to the regional allocation formula under Subsection (d) if: (1) the funds or credits are reserved for contract-for-deed conversions or for set-asides mandated by state or federal law[;] and [(2)] each contract-for-deed allocation or set-aside allocation equals not more than 10 percent of the total allocation of funds or credits for the applicable program; (2) the funds or credits are allocated by the department primarily to serve persons with disabilities; or (3) the funds are housing trust funds administered by the department under Sections 2306.201-2306.206 that are not otherwise required to be set aside under state or federal law and do not exceed $3 million during each application cycle. (d-2) In allocating low income housing tax credit commitments under Subchapter DD, the department shall allocate five percent of the housing tax credits in each application cycle to developments that receive federal financial assistance through the Texas Rural Development Office of the United States Department of Agriculture. Any funds allocated to developments under this subsection that involve rehabilitation must come from the funds set aside for at-risk developments under Section 2306.6714 and any additional funds set aside for those developments under Subsection (d-1). This subsection does not apply to a development financed wholly or partly under Section 538 of the Housing Act of 1949 (42 U.S.C. Section 1490p-2). (d-3) In allocating low income tax credit commitments under Subchapter DD, the department shall allocate to developments in rural areas 20 percent or more of the housing tax credits in the state in the application cycle, with $500,000 or more in housing tax credits being reserved for each uniform state service region under this subsection. Any amount of housing tax credits set aside for developments in a rural area in a specific uniform state service region under this subsection that remains after the initial allocation of housing tax credits is available for allocation to developments in any other rural area first, and then is available to developments in urban areas of any uniform state service region. (e) The department shall include in its annual low income housing plan under Section 2306.0721: (1) the formula developed by the department under Section 2306.1115 [Subsection (d)]; and (2) the allocation targets established under the formula for the urban [urban/exurban] areas and rural areas of each uniform state service region. (f) The department shall include in its annual low income housing report under Section 2306.072 the amounts of funds and credits allocated to the urban [urban/exurban] areas and rural areas of each uniform state service region in the preceding year for each federal and state program affected by the requirements of Subsection (d). (g) For all urban [urban/exurban] areas and rural areas of each uniform state service region, the department shall establish funding priorities to ensure that: (1) funds are awarded to project applicants who are best able to meet recognized needs for affordable housing, as determined by department rule; (2) when practicable and when authorized under Section 42, Internal Revenue Code of 1986 (26 U.S.C. Section 42), the least restrictive funding sources are used to serve the lowest income residents; and (3) funds are awarded based on a project applicant’s ability, when consistent with Section 42, Internal Revenue Code of 1986 (26 U.S.C. Section 42), practicable, and economically feasible, to: (A) provide the greatest number of quality residential units; (B) serve persons with the lowest percent area median family income; (C) extend the duration of the project to serve a continuing public need; (D) use other local funding sources to minimize the amount of state subsidy needed to complete the project; and (E) provide integrated, affordable housing for individuals and families with different levels of income. SECTION 5. Subchapter F, Chapter 2306, Government Code, is amended by adding Section 2306.1115 to read as follows: Sec. 2306.1115. REGIONAL ALLOCATION FORMULA. (a) To allocate housing funds under Section 2306.111(d), the department shall develop a formula that: (1) includes as a factor the need for housing assistance and the availability of housing resources in an urban area or rural area; (2) provides for allocations that are consistent with applicable federal and state requirements and limitations; and (3) includes other factors determined by the department to be relevant to the equitable distribution of housing funds under Section 2306.111(d). (b) The department shall use information contained in its annual state low income housing plan and other appropriate data to develop the formula under this section. SECTION 6. Subsection (b), Section 2306.6710, Government Code, is amended to read as follows: (b) If an application satisfies the threshold criteria, the department shall score and rank the application using a point system that: (1) prioritizes in descending order criteria regarding: (A) financial feasibility of the development based on the supporting financial data required in the application that will include a project underwriting pro forma from the permanent or construction lender; (B) quantifiable community participation with respect to the development, evaluated on the basis of written statements from any neighborhood organizations on record with the state or county in which the development is to be located and whose boundaries contain the proposed development site; (C) the income levels of tenants of the development; (D) the size and quality of the units; (E) the commitment of development funding by local political subdivisions; (F) the level of community support for the application, evaluated on the basis of written statements from the state representative or the state senator that represents the district containing the proposed development site [elected officials]; (G) the rent levels of the units; (H) the cost of the development by square foot; [and] (I) the services to be provided to tenants of the development; and (J) whether, at the time the complete application is submitted or at any time within the two-year period preceding the date of submission, the proposed development site is located in an area declared to be a disaster under Section 418.014; (2) uses criteria imposing penalties on applicants or affiliates who have requested extensions of department deadlines relating to developments supported by housing tax credit allocations made in the application round preceding the current round or a developer or principal of the applicant that has been removed by the lender, equity provider, or limited partners for its failure to perform its obligations under the loan documents or limited partnership agreement; and (3) encourages applicants to provide free notary public service to the residents of the developments for which the allocation of housing tax credits is requested. SECTION 7. Section 2306.004, Government Code, is amended by amending Subdivisions (4), (7), and (14) and adding Subdivisions (4-a), (12-a), (23-a), (23-b), (26-a), (28-a), (28-b), (35), and (36) to read as follows: (4) “Department” means the Texas Department of Housing and Community Affairs or any successor agency. (4-a) “Development funding” means: (A) a loan or grant; or (B) an in-kind contribution, including a donation of real property, a fee waiver for a building permit or for water or sewer service, or a similar contribution that: (i) provides an economic benefit; and (ii) results in a quantifiable cost reduction for the applicable development. (7) “Elderly individual” means an individual 62 [60] years of age or older or of an age specified by the applicable federal program. (12-a) “Grant” means financial assistance that is awarded in the form of money to a housing sponsor for a specific purpose and that is not required to be repaid. For purposes of this chapter, a grant includes a forgivable loan. (14) “Housing sponsor” means[: [(A)] an individual, [including an individual or family of low and very low income or family of moderate income,] joint venture, partnership, limited partnership, trust, firm, corporation, limited liability company, other form of business organization, or cooperative that is approved by the department as qualified to own, construct, acquire, rehabilitate, operate, manage, or maintain a housing development, subject to the regulatory powers of the department and other terms and conditions in this chapter[; or [(B) in an economically depressed or blighted area, or in a federally assisted new community located within a home-rule municipality, the term may include an individual or family whose income exceeds the moderate income level if at least 90 percent of the total mortgage amount available under a mortgage revenue bond issue is designated for individuals and families of low income or families of moderate income]. (23-a) “Neighborhood organization” means an organization that is composed of persons living near one another within the organization’s defined boundaries for the neighborhood and that has a primary purpose of working to maintain or improve the general welfare of the neighborhood. A neighborhood organization includes a homeowners’ association or a property owners’ association. (23-b) “New construction” means any construction to a development or a portion of a development that does not meet the definition of rehabilitation under this section. (26-a) “Rehabilitation” means the improvement or modification of an existing residential development through an alteration, addition, or enhancement. The term includes the demolition of an existing residential development and the reconstruction of any development units, but does not include the improvement or modification of an existing residential development for the purpose of an adaptive reuse of the development. (28-a) “Rural area” means an area that is located: (A) outside the boundaries of a primary metropolitan statistical area or a metropolitan statistical area; (B) within the boundaries of a primary metropolitan statistical area or a metropolitan statistical area, if the statistical area has a population of 25,000 or less and does not share a boundary with an urban area; or (C) in an area that is eligible for funding by the Texas Rural Development Office of the United States Department of Agriculture, other than an area that is located in a municipality with a population of more than 50,000. (28-b) “Rural development” means a development or proposed development that is located in a rural area, other than rural new construction developments with more than 80 units. (35) “Uniform application and funding cycle” means an application and funding cycle established under Section 2306.1111. (36) “Urban area” means the area that is located within the boundaries of a primary metropolitan statistical area or a metropolitan statistical area other than an area described by Subdivision (28-a)(B) or eligible for funding as described by Subdivision (28-a)(C). SECTION 8. Subsections (b) through (e), Section 2306.032, Government Code, are amended to read as follows: (b) The board shall keep [complete] minutes and complete transcripts of board meetings. The department shall post the transcripts on its website and shall otherwise maintain all accounts, minutes, and other records related to the meetings [shall be maintained by the department]. (c) All materials provided to the board [in the possession of the department] that are relevant to a matter proposed for discussion at a board meeting must be posted on the department’s website not later than the third day before the date of the meeting[, made available in hard-copy format at the department, filed with the secretary of state for publication by reference in the Texas Register, and disseminated by any other means required by this chapter or by Chapter 551]. (d) Any materials made available to the board by the department at a board meeting [The materials described by Subsection (c)] must be made available in hard copy format to the members of the public in attendance at [as required by Subsection (c) not later than the seventh day before the date of] the meeting. [The board may not consider at the meeting any material that is not made available to the public by the date required by this subsection.] (e) The board shall conduct its meetings in accordance with Chapter 551, except as otherwise required by this chapter [The agenda for a board meeting must state each project the staff is recommending for assistance by the department]. SECTION 9. Section 2306.039, Government Code, is amended to read as follows: Sec. 2306.039. OPEN MEETINGS AND OPEN RECORDS. (a) Except as provided by Subsections [Subsection] (b) and (c), the department and the Texas State Affordable Housing Corporation are subject to Chapters 551 and 552. (b) Chapters 551 and 552 do [This section does] not apply to the personal or business financial information, including social security numbers, taxpayer identification numbers, or bank account numbers, submitted by a housing sponsor or an individual or family to receive [for] a loan, grant, or other housing assistance under a program administered by the department or the Texas State Affordable Housing Corporation or from bonds issued by the department, except that the department and the corporation are permitted to disclose information about any applicant in a form that does not reveal the identity of the sponsor, individual, or family for purposes of determining eligibility for programs and in preparing reports required under this chapter. (c) The department’s internal auditor, fraud prevention coordinator, or ethics advisor may meet in an executive session of the board to discuss issues related to fraud, waste, or abuse. SECTION 10. Subchapter B, Chapter 2306, Government Code, is amended by adding Sections 2306.040 through 2306.0503 to read as follows: Sec. 2306.040. DEPARTMENT PARTICIPATION IN LEGISLATIVE HEARING. On request, the department shall participate in any public hearing conducted by a legislator to discuss a rule to be adopted by the department. Sec. 2306.041. IMPOSITION OF PENALTY. The board may impose an administrative penalty on a person who violates this chapter or a rule or order adopted under this chapter. Sec. 2306.042. AMOUNT OF PENALTY. (a) The amount of an administrative penalty may not exceed $1,000 for each violation. Each day a violation continues or occurs is a separate violation for purposes of imposing a penalty. (b) The amount of the penalty shall be based on: (1) the seriousness of the violation, including: (A) the nature, circumstance, extent, and gravity of any prohibited act; and (B) the hazard or potential hazard created to the health, safety, or economic welfare of the public; (2) the history of previous violations; (3) the amount necessary to deter a future violation; (4) efforts made to correct the violation; and (5) any other matter that justice may require. (c) The board by rule or through procedures adopted by the board and published in the Texas Register shall develop a standardized penalty schedule based on the criteria listed in Subsection (b). Sec. 2306.043. REPORT AND NOTICE OF VIOLATION AND PENALTY. (a) If the director determines that a violation occurred, the director shall issue to the board a report stating: (1) the facts on which the determination is based; and (2) the director’s recommendation on the imposition of the penalty, including a recommendation on the amount of the penalty. (b) Not later than the 14th day after the date the report is issued, the director shall give written notice of the report to the person. (c) The notice must: (1) include a brief summary of the alleged violation; (2) state the amount of the recommended penalty; and (3) inform the person of the person’s right to a hearing before the board on the occurrence of the violation, the amount of the penalty, or both. Sec. 2306.044. PENALTY TO BE PAID OR HEARING REQUESTED. (a) Not later than the 20th day after the date the person receives the notice, the person in writing may: (1) accept the determination and recommended penalty of the director; or (2) make a request for a hearing before the board on the occurrence of the violation, the amount of the penalty, or both. (b) If the person accepts the determination and recommended penalty of the director, the board by order shall approve the determination and impose the recommended penalty. Sec. 2306.045. HEARING. (a) If the person requests a hearing before the board or fails to respond in a timely manner to the notice, the director shall set a hearing and give written notice of the hearing to the person. (b) The board shall hold the hearing and make findings of fact and conclusions of law about the occurrence of the violation and the amount of a proposed penalty. Sec. 2306.046. DECISION BY BOARD. (a) Based on the findings of fact and conclusions of law, the board by order may: (1) find that a violation occurred and impose a penalty; or (2) find that a violation did not occur. (b) The notice of the board’s order given to the person must include a statement of the right of the person to judicial review of the order. Sec. 2306.047. OPTIONS FOLLOWING DECISION: PAY OR APPEAL. Not later than the 30th day after the date the board’s order becomes final, the person shall: (1) pay the penalty; or (2) file a petition for judicial review contesting the occurrence of the violation, the amount of the penalty, or both. Sec. 2306.048. STAY OF ENFORCEMENT OF PENALTY. (a) Within the 30-day period prescribed by Section 2306.047, a person who files a petition for judicial review may: (1) stay enforcement of the penalty by: (A) paying the penalty to the court for placement in an escrow account; or (B) giving the court a supersedeas bond approved by the court that: (i) is for the amount of the penalty; and (ii) is effective until all judicial review of the board’s order is final; or (2) request the court to stay enforcement of the penalty by: (A) filing with the court a sworn affidavit of the person stating that the person is financially unable to pay the penalty and is financially unable to give the supersedeas bond; and (B) sending a copy of the affidavit to the director by certified mail. (b) If the director receives a copy of an affidavit under Subsection (a)(2), the director may file with the court, not later than the fifth day after the date the copy is received, a contest to the affidavit. (c) The court shall hold a hearing on the facts alleged in the affidavit as soon as practicable and shall stay the enforcement of the penalty on finding that the alleged facts are true. The person who files an affidavit has the burden of proving that the person is financially unable to pay the penalty and to give a supersedeas bond. Sec. 2306.049. DECISION BY COURT. (a) Judicial review of a board order imposing an administrative penalty is by trial de novo. (b) If the court sustains the finding that a violation occurred, the court may uphold or reduce the amount of the penalty and order the person to pay the full or reduced amount of the penalty. (c) If the court does not sustain the finding that a violation occurred, the court shall order that a penalty is not owed and may award the person reasonable attorney’s fees. Sec. 2306.050. REMITTANCE OF PENALTY AND INTEREST. (a) If the person paid the penalty and if the amount of the penalty is reduced or the penalty is not upheld by the court, the court shall order, when the court’s judgment becomes final, that the appropriate amount plus accrued interest be remitted to the person. (b) The interest accrues at the rate charged on loans to depository institutions by the New York Federal Reserve Bank. (c) The interest shall be paid for the period beginning on the date the penalty is paid and ending on the date the penalty is remitted. Sec. 2306.0501. RELEASE OF BOND. (a) If the person gave a supersedeas bond and the penalty is not upheld by the court, the court shall order, when the court’s judgment becomes final, the release of the bond. (b) If the person gave a supersedeas bond and the amount of the penalty is reduced, the court shall order the release of the bond after the person pays the reduced amount. Sec. 2306.0502. COLLECTION OF PENALTY. (a) If the person does not pay the penalty and the enforcement of the penalty is not stayed, the penalty may be collected. (b) The attorney general may sue to collect the penalty. Sec. 2306.0503. ADMINISTRATIVE PROCEDURE. A proceeding to impose the penalty is considered to be a contested case under Chapter 2001. SECTION 11. Section 2306.054, Government Code, is amended by amending Subsection (a) and adding Subsection (c) to read as follows: (a) The governor or director may appoint special advisory councils to: (1) assist the department in reviewing [adopting] basic policy; or (2) offer advice on technical aspects of certain programs. (c) A special advisory council is subject to Chapter 2110, including Section 2110.008(a) but not including Section 2110.008(b). SECTION 12. Subsection (a), Section 2306.057, Government Code, is amended to read as follows: (a) Before the board approves any project application submitted under this chapter, the department, through the division with responsibility for compliance matters, shall: (1) assess: (A) the compliance history in this state of the applicant and any affiliate of the applicant with respect to all applicable requirements; and (B) the compliance issues associated with the proposed project; and (2) provide to the board a written report regarding the results of the assessments described by Subdivision (1). SECTION 13. Subsection (a), Section 2306.069, Government Code, is amended to read as follows: (a) With the approval of the attorney general, the department may hire appropriate [The department shall obtain and evaluate information regarding the affirmative action policies and practices of proposed outside legal counsel. The department must include the evaluation in a request to the attorney general for] outside legal counsel. SECTION 14. Section 2306.070, Government Code, is amended to read as follows: Sec. 2306.070. BUDGET. (a) In preparing the department’s legislative appropriations request, the department shall also prepare: (1) a report detailing the fees received, on a cash basis, for each activity administered by the department during each of the three preceding years; (2) an operating budget for the housing finance division; and (3) an explanation of any projected increase or decrease of three percent or more in fees estimated for the operating budget as compared to the fees received in the most recent budget year. (b) The department shall submit the report, operating budget, and explanation to the Legislative Budget Board, the Senate Finance Committee, and the House Appropriations Committee. SECTION 15. Subsections (a) and (b), Section 2306.072, Government Code, are amended to read as follows: (a) Not later than March [December] 18 of each year, the director shall prepare and submit to the board an annual report of the department’s housing activities for the preceding year. (b) Not later than the 30th day after the date the board receives and approves the report, the board shall submit the report to the governor, lieutenant governor, speaker of the house of representatives, and members of any legislative oversight committee. SECTION 16. Subsections (a) and (b), Section 2306.0721, Government Code, are amended to read as follows: (a) Not later than March [December] 18 of each year, the director shall prepare and submit to the board an integrated state low income housing plan for the next year. (b) Not later than the 30th day after the date the board receives and approves the plan, the board shall submit the plan to the governor, lieutenant governor, and the speaker of the house of representatives. SECTION 17. Section 2306.0723, Government Code, is amended to read as follows: Sec. 2306.0723. REPORT CONSIDERED AS RULE [PUBLIC PARTICIPATION REQUIREMENTS]. [(a)] The department shall consider the annual low income housing report to be a rule and in developing the report shall follow rulemaking procedures required by Chapter 2001 [hold public hearings on the annual state low income housing plan and report before the director submits the report and the plan to the board. The department shall provide notice of the public hearings as required by Section 2306.0661. The published notice must include a summary of the report and plan. The department shall accept comments on the report and plan at the public hearings and for at least 30 days after the date of the publication of the notice of the hearings]. [(b) In addition to any other necessary topics relating to the report and the plan, each public hearing required by Subsection (a) must address: [(1) infrastructure needs; [(2) home ownership programs; [(3) rental housing programs; [(4) housing repair programs; and [(5) the concerns of individuals with special needs, as defined by Section 2306.511. [(c) The board shall hold a public hearing on the state low income housing report and plan before the board submits the report and the plan to the governor, lieutenant governor, speaker of the house of representatives, and members of the legislature. [(d) The board shall include with the report and the plan the board submits to the governor, lieutenant governor, speaker of the house of representatives, members of the legislature, and members of the advisory board formed by the department to advise on the consolidated plan a written summary of public comments on the report and the plan.] SECTION 18. Section 2306.082, Government Code, is amended by amending Subsections (b) and (c) and adding Subsections (d), (e), and (f) to read as follows: (b) The department’s procedures relating to alternative dispute resolution must designate [conform, to the extent possible, to any model guidelines issued by] the State Office of Administrative Hearings as the primary mediator and, to the extent practicable, conform to any guidelines or rules issued by that office [for the use of alternative dispute resolution by state agencies]. (c) The department shall designate a [trained] person employed by or appointed to the office of the director but who is not in the legal division to coordinate and process requests for the alternative dispute resolution procedures. The person must receive training from an independent source in alternative dispute resolution not later than the 180th day after the date the person was designated to coordinate and process requests for the alternative dispute resolution procedures[: [(1) coordinate the implementation of the policy adopted under Subsection (a); [(2) serve as a resource for any training needed to implement the procedures for negotiated rulemaking or alternative dispute resolution; and [(3) collect data concerning the effectiveness of those procedures, as implemented by the department]. (d) The department shall notify a person requesting the alternative dispute resolution procedures that: (1) an alternative dispute resolution decision is not binding on the state; and (2) the department will mediate in good faith. (e) The alternative dispute resolution procedures may be requested before the board makes a final decision. (f) Notwithstanding any other provision of this section, the alternative dispute resolution procedures may not be used to unnecessarily delay a proceeding under this chapter. SECTION 19. Section 2306.092, Government Code, is amended to read as follows: Sec. 2306.092. DUTIES REGARDING CERTAIN PROGRAMS CREATED UNDER FEDERAL LAW. The department shall administer, as appropriate under policies established by the board: (1) state responsibilities for programs created under the federal Economic Opportunity Act of 1964 (42 U.S.C. Section 2701 et seq.); (2) programs assigned to the department under the Omnibus Budget Reconciliation Act of 1981 (Pub.L. No. 97-35); and (3) other federal acts creating economic opportunity programs assigned to the department. SECTION 20. Section 2306.1111, Government Code, is amended to read as follows: Sec. 2306.1111. UNIFORM APPLICATION AND FUNDING CYCLES [CYCLE]. (a) Notwithstanding any other state law and to the extent consistent with federal law, the department shall establish [a] uniform application and funding cycles [cycle] for all competitive single-family and multifamily housing programs administered by the department under this chapter, other than programs involving the issuance of private activity bonds. (b) Wherever possible, the department shall use uniform threshold requirements for single-family and multifamily housing program applications, including uniform threshold requirements relating to market studies and environmental reports. SECTION 21. Subsections (b), (c), and (d), Section 2306.1112, Government Code, are amended to read as follows: (b) The advisory committee must include representatives from [is composed of the director, the administrator of each of the department’s programs, and one representative from each of] the department’s [planning,] underwriting[,] and compliance functions and from the divisions responsible for administering federal housing funds provided to the state under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. Section 12701 et seq.) and for administering low income housing tax credits. (c) [The advisory committee shall develop the funding priorities required by Section 2306.111(g) and shall make funding and allocation recommendations to the board based on the ability of applicants to meet those priorities. [(d)] The advisory committee is not subject to Chapter 2110. SECTION 22. Section 2306.1113, Government Code, is amended by amending Subsections (a), (a-1), and (b) and adding Subsection (c) to read as follows: (a) During the period beginning on the date [a] project applications are [application is] filed in an application cycle and ending on the date the board makes a final decision with respect to the [any] approval of any [that] application in that cycle, a member of the board may not communicate with the following persons: (1) an [the] applicant or a related party, as defined by state law, including board rules, and federal law; and (2) any person who is: (A) active in the construction, rehabilitation, ownership, or control of a [the] proposed project, including: (i) a general partner or contractor; and (ii) a principal or affiliate of a general partner or contractor; or (B) employed as a consultant, lobbyist, or attorney by an [the] applicant or a related party. (a-1) Subject to Subsection (a-2), during the period beginning on the date [a] project applications are [application is] filed in an application cycle and ending on the date the board makes a final decision with respect to the [any] approval of any [that] application in that cycle, an employee of the department may communicate about an [the] application with the following persons: (1) the applicant or a related party, as defined by state law, including board rules, and federal law; and (2) any person who is: (A) active in the construction, rehabilitation, ownership, or control of the proposed project, including: (i) a general partner or contractor; and (ii) a principal or affiliate of a general partner or contractor; or (B) employed as a consultant, lobbyist, or attorney by the applicant or a related party. (b) Notwithstanding Subsection (a) or (a-1), a board member or department employee may communicate without restriction with a person listed in Subsection (a) or (a-1) during [at] any board meeting or public hearing held with respect to the application, but not during a recess or other nonrecord portion of the meeting or hearing. (c) Subsection (a) does not prohibit the board from participating in social events at which a person with whom communications are prohibited may or will be present, provided that all matters related to applications to be considered by the board will not be discussed. SECTION 23. Subsection (b), Section 2306.185, Government Code, is amended to read as follows: (b) In implementing Subsection (a)(1) and in developing underwriting standards and application scoring criteria for the award of loans, grants, or tax credits to multifamily developments, the department shall ensure that the economic benefits of longer affordability terms, for specific terms of years as established by the board, and below market rate rents are accurately assessed and considered. SECTION 24. Section 2306.229, Government Code, is amended by adding Subsection (c) to read as follows: (c) For each loan made for the development of multifamily housing with funds provided to the state under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. Section 12701 et seq.), the department shall obtain a mortgagee’s title policy in the amount of the loan. The department may not designate a specific title insurance company to provide the mortgagee title policy or require the borrower to provide the policy from a specific title insurance company. The borrower shall select the title insurance company to close the loan and to provide the mortgagee title policy. SECTION 25. Subsection (a), Section 2306.359, Government Code, is amended to read as follows: (a) In evaluating an application for an issuance of private activity bonds, the department shall score and rank the application using a point system based on criteria that are adopted by the department, including criteria[: [(1)] regarding: (1) [(A)] the income levels of tenants of the development, consistent with the funding priorities provided by Section 1372.0321; (2) [(B)] the rent levels of the units; (3) [(C)] the level of community support for the application; (4) [(D)] the period of guaranteed affordability for low income tenants; (5) [(E)] the cost per unit of the development; (6) [(F)] the size, quality, and amenities of the units; (7) [(G)] the services to be provided to tenants of the development; and (8) [(H) the commitment of development funding by local political subdivisions that enables additional units for individuals and families of very low income; and [(I)] other criteria as developed by the board[; and [(2) imposing penalties on applicants who have requested extensions of department deadlines relating to developments supported by an issuance of private activity bonds made in the application round preceding the current round]. SECTION 26. Subsection (a), Section 2306.514, Government Code, is amended to read as follows: (a) If a person is awarded state or federal funds by the department to construct single family affordable housing for individuals and families of low and very low income, the affordable housing identified on the person’s funding application must be constructed so that: (1) at least one entrance door, whether located at the front, side, or back of the building: (A) is on an accessible route served by a ramp or no-step entrance; and (B) has at least a standard 36-inch door; (2) on the first floor of the building: (A) each interior door is at least a standard 32-inch door, unless the door provides access only to a closet of less than 15 square feet in area; (B) each hallway has a width of at least 36 inches and is level, with ramped or beveled changes at each door threshold; (C) each bathroom wall is reinforced for potential installation of grab bars; (D) each electrical panel [or breaker box], light switch, or thermostat is not higher than 48 inches above the floor; and (E) each electrical plug or other receptacle is at least 15 inches above the floor; and (3) if the applicable building code or codes do not prescribe another location for the breaker boxes, each breaker box is located not higher than 48 inches above the floor inside the building on the first floor. SECTION 27. Subchapter DD, Chapter 2306, Government Code, is amended by adding Section 2306.6735 to read as follows: Sec. 2306.6735. REQUIRED LEASE AGREEMENT PROVISIONS. A lease agreement with a tenant in a development supported with a housing tax credit allocation must: (1) include any applicable federal or state standards identified by department rule that relate to the termination or nonrenewal of the lease agreement; and (2) be consistent with state and federal law. SECTION 28. Subchapter DD, Chapter 2306, Government Code, is amended by adding Section 2306.67171 to read as follows: Sec. 2306.67171. ELECTRONIC MAIL NOTIFICATION SERVICE. (a) The department shall maintain an electronic mail notification service to which any person in this state may electronically subscribe to receive information concerning the status of pre-applications and applications under this subchapter. (b) The electronic mail notification service maintained under Subsection (a) must: (1) allow a subscriber to request for a zip code notification of: (A) the filing of any pre-application or application concerning a development that is or will be located in the zip code; (B) the posting of the board materials for board approval of a list of approved applications or the issuance of final allocation commitments for applications described by Paragraph (A); and (C) any public hearing to be held concerning an application or pre-application described by Paragraph (A); and (2) respond to a subscriber via electronic mail not later than the later of: (A) the 14th day after the date the department receives notice of an event described by Subdivision (1); or (B) if applicable, the date or dates specified by Section 2306.6717(a). (c) The department may include in an electronic mail notification sent to a subscriber any applicable information described by Section 2306.6717. SECTION 29. Section 214.003, Local Government Code, is amended by amending Subsections (a), (b), (h), (k), (l), (n), (o), and (p) and adding Subsection (h-1) to read as follows: (a) A home-rule municipality may bring an action in district court against an owner of [residential] property that is not in substantial compliance with the municipal ordinances regarding: (1) fire protection; (2) structural integrity; (3) zoning; or (4) disposal of refuse. (b) Except as provided by Subsection (c), the court may appoint as a receiver for the property a nonprofit organization with a demonstrated record of rehabilitating [residential] properties if the court finds that: (1) the structures on the property are in violation of the standards set forth in Section 214.001(b) and an ordinance described by Subsection (a); (2) notice of violation was given to the record owner of the property; and (3) a public hearing as required by Section 214.001(d) has been conducted. (h) On the completion of the restoration of [to] the property to [of] the minimum code standards of the municipality or guidelines for rehabilitating historic property, or before petitioning a court for termination of the receivership under Subsection (l): (1) the receiver shall file with the court a full accounting of all costs and expenses incurred in the repairs, including reasonable costs for labor and supervision, [and] all income received from the property, and, at the receiver’s discretion, a receivership fee of 10 percent of those costs and expenses; (2) if the income exceeds the total of the cost and expense of rehabilitation and any receivership fee, the rehabilitated property shall be restored to the owners and any net income shall be returned to the owners; and (3) if the total of the costs and expenses and any receivership fee exceeds [exceed] the income received during the receivership, the receiver may [shall] maintain control of the property until the time all rehabilitation and maintenance costs and any receivership fee are recovered, or until the receivership is terminated. (h-1) A receiver shall have a lien on the property under receivership for all of the receiver’s unreimbursed costs and expenses and any receivership fee. (k) The court may not appoint a receiver for any property that[: [(1)] is an owner-occupied, single-family residence[; or [(2) is zoned nonresidential and used in a nonresidential character]. (l) A receiver appointed by a district court under this section, or the home-rule municipality that filed the action under which the receiver was appointed, may petition the court to terminate the receivership and order the sale of the property[: [(1) if the receiver has been in control of the property for more than two years and no legal owner has been identified after a diligent search; or [(2)] after the receiver has been in control of the property for more than one year [three years], if an owner has been [identified and] served with notice [notices] but has failed to assume control or repay all rehabilitation and maintenance costs and any receivership fee of the receiver. (n) The court may order the sale of the property if the court finds that: (1) notice was given to each record owner of the property and each lienholder of record; (2) the receiver has been in control of the property for more than one year [two years and no legal owner has been identified after a diligent search, or the receiver has been in control of the property for more than three years] and an owner has [been identified but has] failed to repay all rehabilitation and maintenance costs and any receivership fee of the receiver; and (3) no lienholder of record has intervened in the action and offered to repay the costs and any receivership fee of the receiver and assume control of the property. (o) The court shall order the sale to be conducted by the petitioner in the same manner that a sale is conducted under Chapter 51, Property Code. If the record owners and lienholders are identified, notice of the date and time of the sale must be sent in the same manner as provided by Chapter 51, Property Code. If the owner cannot be located after due diligence, the owner may be served notice by publication. The receiver may bid on the property at the sale and may use a lien granted under Subsection (h-1) as credit toward the purchase. The petitioner shall make a report of the sale to the court. (p) The court shall confirm the sale and order a distribution of the proceeds of the sale in the following order: (1) court costs; (2) costs and expenses of the receiver, and any lien held by the receiver; and (3) other valid liens. SECTION 30. Subsection (a), Section 379D.010, Local Government Code, is amended to read as follows: (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. SECTION 31. Section 379D.011, Local Government Code, is amended to read as follows: 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. SECTION 32. Chapter 379D, Local Government Code, is amended by adding Section 379D.015 to read as follows: 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). SECTION 33. Subtitle A, Title 12, Local Government Code, is amended by adding Chapter 379E to read as follows: CHAPTER 379E. URBAN LAND BANK PROGRAM Sec. 379E.001. SHORT TITLE. This chapter may be cited as the Urban Land Bank Program Act. Sec. 379E.002. APPLICABILITY; CONSTRUCTION WITH OTHER LAW. This chapter applies only to a municipality: (1) to which Chapter 379C or 379D does not apply; and (2) that has not ever adopted a homestead land bank program under Subchapter E, Chapter 373A. Sec. 379E.003. 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 municipality as a community housing development organization. (3) “Land bank” means an entity established or approved by the governing body of a municipality for the purpose of acquiring, holding, and transferring unimproved real property under this chapter. (4) “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. (5) “Qualified participating developer” means a developer who meets the requirements of Section 379E.005 and includes a qualified organization under Section 379E.011. (6) “Urban land bank plan” or “plan” means a plan adopted by the governing body of a municipality as provided by Section 379E.006. (7) “Urban land bank program” or “program” means a program adopted under Section 379E.004. Sec. 379E.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 unimproved real property under this chapter. Sec. 379E.005. QUALIFIED PARTICIPATING DEVELOPER. To qualify to participate in an urban 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 municipality for the land bank property; and (3) meet any other requirements adopted by the municipality in the urban land bank plan. Sec. 379E.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 first refusal provided by Section 379E.011; (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 municipality’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 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. Sec. 379E.007. PUBLIC HEARING ON PROPOSED PLAN. (a) Before adopting a plan, a municipality shall hold a public hearing on the proposed plan. (b) The city manager or the city manager’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 city manager or the city manager’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. 379E.008. 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 municipality has executed with the other taxing units that are parties to the tax suit an interlocal agreement that enables those units to agree to participate in the program while retaining the right to withhold consent to the sale of specific properties to the land bank. (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 must 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. 379E.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) 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. 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. (c) Unless the municipality increases the amount in its plan, the number of properties acquired by a qualified participating developer under this section on which development has not been completed may not at any 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 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. Sec. 379E.010. 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 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 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) 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 metropolitan statistical area in which the municipality is located, 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 metropolitan statistical area in which the municipality is located, as determined annually by the United States Department of Housing and Urban Development; or (3) 20 percent of the units be occupied by and affordable to households with incomes not greater than 30 percent of area median family income, based on gross household income, adjusted for household size, for the metropolitan statistical area in which the municipality is located, as determined annually by the United States Department of Housing and Urban Development. (d) The deed restrictions under Subsection (c) must require the owner to file an annual occupancy report with the municipality on a reporting form provided by the municipality. The deed restrictions must also prohibit any exclusion of an individual or family from admission to the development based solely on the participation of the individual or family in the housing choice voucher program under Section 8, United States Housing Act of 1937 (42 U.S.C. Section 1437f), as amended. (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 municipality may modify or add to the deed restrictions imposed under this section. Any modifications or additions made by the governing body of the municipality must be adopted by the municipality as part of its plan and must comply with the restrictions set forth in Subsections (b), (c), and (d). Sec. 379E.011. 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 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 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 municipality 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 municipality under Subsection (d), the interlocal agreement executed under Section 379E.008(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 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. (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 municipality 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 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 379E.009(d). Sec. 379E.012. OPEN RECORDS AND MEETINGS. The land bank shall comply with the requirements of Chapters 551 and 552, Government Code. Sec. 379E.013. 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. SECTION 34. Section 11.18, Tax Code, is amended by amending Subsection (d) and adding Subsection (o) 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 to elderly persons, including the provision of recreational or social activities and facilities designed to address the special needs of elderly persons, or to the handicapped, without regard to the beneficiaries’ ability to pay; (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 pardons and paroles 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; [or] (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; or (21) 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. (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) is considered to be used exclusively by the qualified charitable organization to perform that function. SECTION 35. Section 403.302, Government Code, as amended by this Act, applies only to an annual school district property value study conducted for a tax year that begins on or after January 1, 2008. SECTION 36. The changes in law made by this Act to Section 214.003, Local Government Code, apply only to a receivership established on or after the effective date of this Act. A receivership established before the effective date of this Act is governed by the law in effect when the receivership was established, and the former law is continued in effect for that purpose. SECTION 37. Section 379D.015, Local Government Code, as added by this Act, applies only to a cause of action that accrues on or after the effective date of this Act and concerns property that is first purchased by a land bank under Section 379D.015, Local Government Code, on or after the effective date of this Act. SECTION 38. 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 39. (a) The Texas Department of Housing and Community Affairs shall adopt the rules required by Section 2306.1073, Government Code, as added by this Act, not later than December 1, 2007. (b) The changes in law made by this Act apply only to an application for assistance from the Texas First-Time Homebuyer Program that is filed on or after January 1, 2008. SECTION 40. The changes in law made by this Act relating to the evaluation of applications for financial assistance administered by the Texas Department of Housing and Community Affairs apply only to an application submitted on or after the effective date of this Act. An application submitted before the effective date of this Act is governed by the law in effect when the application was submitted, and the former law is continued in effect for that purpose. SECTION 41. The change in law made by this Act applies only to an application for a low income housing tax credit filed on or after the effective date of this Act. An application filed before the effective date of this Act is governed by the law in effect on the date the application was filed, and the former law is continued in effect for that purpose. SECTION 42. The following provisions of the Government Code are repealed: (1) Sections 2306.021, 2306.062, 2306.0631, 2306.0661, Subsection (h), Section 2306.0721, Section 2306.079, Subsection (e), Section 2306.081, Section 2306.254, Subsections (b), (c), and (d), Section 2306.257, and Section 2306.806; (2) Subchapter N, Chapter 2306; (3) Subchapter O, Chapter 2306; (4) Subchapter BB, Chapter 2306; (5) Subchapter CC, Chapter 2306; (6) Subchapter EE, Chapter 2306; and (7) Subsection (g), Section 2306.6710, Government Code, is repealed. SECTION 43. It is the intent of the legislature that the passage by the 80th Legislature, Regular Session, 2007, of another bill that amends Chapter 2306, Government Code, and the amendments made by this Act shall be harmonized, if possible, as provided by Subsection (b), Section 311.025, Government Code, so that effect may be given to each. If the amendments made by this Act to Chapter 2306, Government Code, and the amendments made to Chapter 2306, Government Code, by any other bill are irreconcilable, it is the intent of the legislature that this Act prevail, regardless of the relative dates of enactment of this Act and the other bill or bills, but only to the extent that any differences are irreconcilable. SECTION 44. This Act takes effect on September 1, 2007. ______________________________ ______________________________ President of the Senate            Speaker of the House I hereby certify that S.B. No. 1908 passed the Senate on May 3, 2007, by the following vote: Yeas 28, Nays 2; May 25, 2007, Senate refused to concur in House amendments and requested appointment of Conference Committee; May 26, 2007, House granted request of the Senate; May 27, 2007, Senate adopted Conference Committee Report by the following vote: Yeas 28, Nays 1. ______________________________ Secretary of the Senate I hereby certify that S.B. No. 1908 passed the House, with amendments, on May 23, 2007, by the following vote: Yeas 142, Nays 0, two present not voting; May 26, 2007, House granted request of the Senate for appointment of Conference Committee; May 27, 2007, House adopted Conference Committee Report by the following vote: Yeas 113, Nays 26, three present not voting. ______________________________ Chief Clerk of the House Approved: ______________________________ Date ______________________________ Governor