City of Dallas

City of Dallas

2013State Legislative Proposal

Department:Housing Department

Proposal:Amendments to the Urban Land Bank Demonstration Program Act

Action: Modify the state Land Bank statute to reduce the number of required housing units built by a qualified participating developer from three to one; expand the definition of an eligible adjacent property owner to include any owner of adjacent property;allow the earlier transfer of property not suitable for residential development to the taxing units at any time and allow for the sale directly to a church oran entity with the power of eminent domain or to a religious institution.

Background: The Land Bank has been in operation since January, 2004. As of July 31March 31, 2012, it has reviewed in excess of 4,000prospective lots for eligibility and submitted over 2,000 of these lots for foreclosure. Of these prospective cases, over 1,4300 foreclosure suits have been filed, 84238 lots have been purchased by the Land Bank, 37549 lots have been sold to developers with 1120 lots pending sale and 1596 affordable homes have been constructed and 15218sold. The experience gained during that time by the Cityhas highlighted the need for statutory changes:

1. QUALIFIED PARTICIPATING DEVELOPER(Local Government Code Section 379C.005) Under the statute, a qualified participating developer must have built three or more housing units within the three-year period preceding the submission of a proposal to acquire property. Due to soft market conditions, reducing the number of units constructed to one or more units will present an opportunity for more developers to participate in the Land Bank Program.

Proposal is to reduce the required number of constructed housing units by a qualified participating developer from 3 to 1.

2. PROPERTY DETERMINED TO BE INAPPROPRIATE FOR RESIDENTIAL DEVELOPMENT: RIGHT OF FIRST REFUSAL(Local Government Code Section 379C.0106) Under the statute, the Land Bank can sell property that is not appropriate for residential development to an eligible adjacent property owner, who is defined as a person who owns the adjacent property and has continuously occupied that property as a primary residence for the preceding two years. Expanding the definition of an eligible adjacent property owner to include any owner of adjacent propertywill allow for easier disposition of undevelopable vacant Land Bank lots and will allow the lots to return to the tax rolls.Any proposed sale will be at the sole discretion of the Land Bank.

Proposal is to change the definition of eligible adjacent property owner to include any owner of adjacent property.Also, allowing the transfer of property not suitable for residential development to the taxing units at any time will reduce maintenance cost for the Land Bank.[s1]

3. SUBSEQUENT RESALE BY LAND BANK (Local Government Code Section 379C.009) Under the statute, the Land Bank must sell a property to a qualified participating developer within four years of acquisition. If the Land Bank has not sold a property within the four-year time period, the property must be transferred to the taxing entities. Eliminating the need for the Land Bank to hold a property for four years before transferring the property to the taxing entities, in cases where the Land Bank has determined that a property is not suitable for residential development or not saleable by the Land Bank for some other reason, would allow the properties to be sold by the taxing entities without Land Bank-related restrictions and return to the tax rolls and reduce Land Bank maintenance and administrative costs related to the property. Additionally, it would be helpful to allow the Land Bank, if it so chooses, to sell property directly to an entity with the power of eminent domain [s2]so that the Land Bank can avoid eminent domain proceedings or to a religious institution. Any proposed sale will be at the sole discretion of the Land Bank.

Proposal is to allow transfer of non-suitable property to taxing entities prior to the four year holding period. Also, allow the sale directly to an entity with the power of eminent domain or to a religious institution. Selling property directly to a church or entity with the power of eminent domain during the four-year time period will reduce maintenance cost for the Land Bank.

Recommendation: To amend the current Land Bank statute to reduce the number of required housing units built by a qualified participating developer, to expand the definition of an eligible adjacent property owner, to allow for earlier transfer of property to the taxing units and to allow sale directly to a church oranentity with the power of eminent domain or to a religious institution.

Impact: Modifying the state Land Bank statute willallow time for market conditions to improve,expand development opportunities andimprove neighborhoods.

[s1]SFH: This last sentence is unnecessary since you’re requesting that any adjacent landowner be eligible in the previous sentence.

[s2]SFH: I don’t think you want to allow transfer to churches unless they’re adjacent….too broad.