HomeMy WebLinkAboutOrdinance 13533ORDINANCE NO. / , ~ . ~j 3 j
AN ORDINANCE AMENDING THE CODE OF THE CITY OF FORT
WORTH (1986) AS AMENDED, BY THE ADDITION OF SECTION 2-13
PRESCRIBING PROCEDURES FOR THE CONVEYANCE OF TAX
FORECLOSURE PROPERTY TO ELIGIBLE HOUSING NONPROFIT
ORGANIZATIONS FOR THE DEVELOPMENT OF HOUSING FOR
LOW INCOME HOUSEHOLDS PURSUANT TO SECTION 34.015 OF
THE TEXAS PROPERTY TAX CODE; PROVIDING THAT THIS
ORDINANCE SHALL BE CUMULATIVE OF OTHER ORDINANCES;
PROVIDING A SEVERABILITY CLAUSE; AND PROVIDING AN
EFFECTIVE DATE
WHEREAS, Section 34 015 of the Texas Property Tax Code allows the governing body
of a mumcipality to provide for the manner in which land acquired by the mumcnpality following
the foreclosure of a tax lien in favor of the mumcipality may be sold to eligible nonprofit
organizations to develop housing for low income individuals and families, and
WHEREAS, the City Council desires to implement such procedure by adoption of this
ordinance; and
WHEREAS, the objectives of implementing these procedures are to
i provide greater opportunities for decent, affordable housing to low income
individuals and households,
2. revitalize existing neighborhoods by building homes on vacant lots and
rehabilitating deteriorated or vacant homes, and
3 generate revenues by returning these properties to the tax rolls.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF FORT WORTH, TEXAS
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SECTION 1
Chapter 2 of the Code of the City of Fort Worth (1986), as amended, is amended by
adding a new Section 2-13 to read as follows.
2-13 Conveyance of tax foreclosure property to eligible housing nonprofit organizations
for the development of low income housing.
(a) Definitions.
1 Eligible property. Real property obtained by the City following the
foreclosure of a tax lien m favor of the City and other taxing entities that is capable of
being developed for low income housing.
2. Eligible housing nonprofit organization. A current and active nonprofit
organization which meets the following requirements.
(A) (1) a nonprofit corporation described by 26 U.S C. Sec. 501(c)(3) that:
i. has been incorporated m the state of Texas for at least one year;
ii. has a corporate purpose to develop affordable housing that is stated
in its articles of incorporation, bylaws or charter; and
iii. has at least one-fourth of its board of directors residing in Fort
Worth, and
iv engages pnmanly in the building, repair, rental or sale of housing
for low income individuals and families ("low income households"), or
(2) a nonprofit organization that develops housing for low income households
as a pnmary activity to promote community-based neighborhood
revitalization in the City of Fort Worth, and
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(B) has a satisfactory record nn leasing, acquiring, building or rehabilitating residential
property and selling the property to low income households for the two years
immediately preceding the application, and
(C) demonstrates financial and management capacity to complete projects on the
property after acquisition, and
(D) has the capability, upon conveyance of the property, to obtain insurance to cover
liabilities that may apse out of holding and developing the property; and
(E) has a designated person authorized by its board of directors as signatory on behalf
of the orgamzation. d.
3 Housing development as a primary activity. A nonprofit organization ns
considered to develop housing for low income households as a "primary activity" or
"engaged primarily" nn housing development activities for low income households if it:
(A) has as a corporate purpose of developing and managing affordable housing for
low income households as stated in its articles of incorporation or bylaws, and
(B) more than 50% of its budget or actual expenditures ns related to housing
development activities for low income households; or
(C) has a comprehensive or strategic revntahzation or redevelopment plan which is
approved, recognized, or acknowledged by the City and includes the provision of
housing development activities for low nncome households as a mayor strategy
4 Low income households. Individuals and/or families whose annual incomes
do not exceed 80% of the median income for the area wrath adjustments for family size, as
determined and updated by the U.S Department of Housing and Urban Development
("HUD").
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5 Affordable housing. Housing is considered affordable if the monthly housing
cost does not exceed 30% of the household's monthly gross income. For homebuyers,
housing cost includes the payment of pnncipal, interest, taxes, and insurance. For renters,
it means the amount of rent paid, not to exceed the Fair Market Rent for comparable amts
m the area as determined by HUD For multi-family projects, at least twenty percent of
the amts should be affordable to low income households.
6 Tax resale deed without warranty. The legal instrument used by the City to
transfer rts interest and that of all the other taxing entities m the property to an eligible
housing nonprofit orgamzation pursuant to this ordinance.
7 Tax appraisal value. The value of a specific parcel of property as determined by
the Tarrant Appraisal District as of January 1 of the year the property is conveyed to an
eligible housing nonprofit orgamzahon or by an independent certified appraiser
8 Costs and expenses. Costs and expenses shall mean the costs and expenses as
provided in Sections 34 02 and 34 06 of the Texas Property Tax code.
9 Application fee. anon-refundable $100 00 fee charged by the City to
process the application of an eligible housing nonprofit organization for the conveyance
of tax foreclosure property in accordance with this ordinance.
(b) Method of sale.
1 The City may sell eligible property to an eligible housing nonprofit orgamzahon
for the development of low income .housing for an amount that is less than the lesser of:
(A) the market value specnfied m the judgment of foreclosure, or
(B) the total amount of~udgments against the property;
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2. In general, the property shall be transferred to an eligible housing nonprofit
orgamzation for an amount equal to 20% of the tax appraisal value of the property plus
costs and expenses. Provided, the Real Property Management Division of the
Engineering Department may in extraordinary circumstances recommend a higher or
lower purchase puce, but m no case shall the property be conveyed for less than the total
of the costs and expenses incurred on the property
3 All conveyance shall be approved by the City Council.
(c) Application fee.
The City shall charge an application fee for the processing of each application for the
conveyance of eligible property
(d) Procedure of sale.
The Real Property Management Division of the Engineering Department and the Housing
Department may develop procedures to implement this ordinance.
SECTION 2.
This ordinance shall be cumulative of all provisions of ordinances and of the Code of the
City of Fort Worth, Texas (1986), as amended, except where the provisions of this ordinance are in
direct conflict with the provisions of such ordinances and such Code, in which event conflicting
provisions of such ordinances and such Code are hereby repealed.
SECTION 3
It is hereby declaeed to be the intention of the City Council that the sections, paragraphs,
sentences, clauses and phrases of this ordinance are severable, and, if any phrase, clause, sentence,
paragraph or section of this ordinance shall be declared unconstitutional by the valid judgment or
decree of any court of competent jurisdiction, such unconstitutionality shall not affect any of the
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remaining phrases, clauses, sentences, paragraphs and sections of this ordinance, since the same
would have been enacted by the City Council without the incorporation in this ordinance of any
such unconstitutional phrase, clause, sentence, paragraph or section.
SECTION 4
This ordinance shall take effect and be m full force and effect from and after its passage,
and rt is so ordained.
APPROVED AS TO FORM AND LEGALITY
~~~'~
Assistant City Attorney /
DATE. ~ ~ ~ ~ /
ADOPTED• ~-- ~ ~ l ~
EFFECTIVE. `I -~~ l'6
6
PROCEDURE FOR THE CONVEYANCE OF TAX FORECLOSURE
PROPERTY TO ELIGIBLE HOUSING NONPROFIT ORGANIZATIONS FOR
THE DEVELOPMENT OF LOW INCOME HOUSING PURSUANT TO
ORDINANCE NO.
The following procedures shall be used for transfemng eligible tax foreclosure
property to eligible nonprofit organizations pursuant to Ordinance No. ("the
Ordinance")
1 The Real Property Management (RPM) division of the Engineering Department
shall provide the following City Departments with a wntten nonce which includes a list
of tax foreclosure properties. Development, Environmental Management, Housing, Parks
and Community Services, Transportahon/Public Works, and Water Deparhnents. These
departments will be contacted to determine if a particular property should be retained by
the City of Fort Worth for any reason (e.g., easements, nght of way, park land, housing
programs). The City Departments shall have sixty (60) days from the date of the notice,
with the option to extend for another 30 days, to request that the City retain the property
RPM shall also provide all other local taxing entities with the same list and allow them
thirty (30) days from the date of the notice to decide whether they need a specific piece of
property for their projects. If RPM or the Housing Department receives a request from a
City department or a taxing entity, the subject property may be released from the
available list for conveyance under this ordinance until such time it is no longer needed
by the City or another taxing entity
2. Applications from nonprofit organizations for housing initiatives including the
conveyance of City tax foreclosure property under the Ordinance shall be made to the
Housing Department. A nonprofit organization shall pay the City a $100 (non-
refundable) Application Fee for each property requested. The application shall include
the location and description of the property being requested, the orgamzation's
development plans (including specifications, estimated cost, and sales puce) for the
property, and the estimated time line m the marketing and sale of the property
3 The Housing Department shall determine and certify the eligibility of a non-profit
orgamzation to acquire City tax foreclosure property under this ordinance. Thereafter,
the Housing Department shall forward qualified applications to RPM.
4 RPM shall review the application to verify availability of property and the
applicable tax foreclosure judgment and market value of the property, and determine the
amount for which a piece of property may be conveyed. In general, the property shall be
transferred to the eligible housing nonprofit organization for an amount equal to 20% of
the fair market value of the property as defined in the Ordinance plus costs and expenses.
Provided, RPM may in extraordinary circumstances recommend a higher or lower puce,
but in no case shall the property be conveyed for less than the total of the costs and
expenses incurred on the property The Tax Resale Deed Without Warranty shall include
the following statement: "This quit claim is made subject to, and grantee acknowledges,
the nght of redemption as provided in Sections 34 OS and 34.21 of the Texas Property
Tax Code, V T C.A."
5 RPM shall notify the Code Enforcement Division of the City Services Department
to hold m abeyance any scheduled demolition of structure on the subject property
6 RPM shall obtain City Council's pnor approval of the conveyance of the property
and the terms of conveyance.
7 It is the responsibility of the recipient organization to select the title company,
provide any required closing documents, pay all costs associated with closing and arrange
for the closing on the property
8. RPM shall furnish information to the Housing Department on each property
conveyed under this ordinance, including the name of the organization, property
description, tax appraisal value of the property, taxes, fees and other amounts paid by the
organization for the property
9 Immediately following the date of closing, the recipient organization shall be
responsible for all maintenance of the acquired property The organization shall also start
construction or rehabilitation of the property according to rts approved plans and m
compliance with the Housing Quality Standards set forth m 24 CFR 882.109, other
applicable federal, state and local laws and regulations as well as City Codes and
ordinances. Following completion of construction or rehabilitation, the property .must be
sold, leased, or used by the nonprofit organization for affordable housing for low income
households. The recipient organization shall ensure that the property is used for
affordable housing for low income households for a penod of at least five (5) years from
the date of its conveyance to a quaflified homebuyer or issuance of certificate of
occupancy
10 The Housing Department shall monitor housing development activities in
accordance with the terms set forth m the Ordinance and in this procedure. Any violation
by a housing nonprofit organization of the terms of the Ordinance and the procedure shall
constitute grounds for rejection of any future application by the organization to acquire
property under the Ordinance, at the discretion of the City
11 The terms and definitions used m the procedure shall be the same as defined in
the Ordinance.
12. The terms of the procedure may be amended from time to time by RPM and
Housing Department to ensure compliance with applicable laws and the Ordinance.
ADOPTED•
(Date)
Director, Engineering Department
Director, Housing Department
City ®f'~'®~ ~'vrth, 7"~x~s
~~ ~ ~n~l ~~v~~
DATE REFERENCE NUMBER LOG NAME PAGE
7/28/98 **GQ12284 05LOW 1 of 2
SUBJECT ORDINANCE ESTABLISHING PROCEDURES FOR THE CONVEYANCE OF TAX
FORECLOSURE PROPERTY TO QUALIFIED NONPROFIT ORGANIZATIONS FOR
LOW WCOME HOUSING
RECOMMENDATION
It is recommended that the City Council
Adopt the attached "Ordinance for the Conveyance of Tax Foreclosure Property to Eligible
Nonprofit Organizations for the Development of Housing far Low Income Individuals and Families
Pursuant to Section 34 015 of the Texas Property Tax Code", and
2. Authorize the City Manager to enter into interlocal agreements other taxing entities, to obtain their
consent of the sale method as stated in the ordinance, and for the City Manager to be authorized as
the signatory on the Tax Resale Deed used to convey property pursuant to the ordinance.
DISCUSSION
Section 34 015 of the Texas Property Tax Code, as amended in 1997, allows municipalities to
determine the manner in which tax foreclosure properties can be transferred to qualified nonprofit
organizations for the development of low income housing The statute enables the City to sell the
properties to qualified nonprofit organizations without competitive bids for less than the judgment
amount or the fair market value as specified in the tax foreclosure lawsuit judgment.
The City's current policy on the conveyance of all surplus property (including tax foreclosure property)
was shared with and approved by other local taxing entities. Tarrant County, as a condition of its
approval of the current policy, required that the City insert a "reverter clause" into the tax resale deed
for any property conveyed to nonprofit organizations for less than the judgment amount or fair market
value The reverter clause states that if the property is sold to anon-profit organization within fve (5)
years from the date of the conveyance and it ceases to be iow income housing, it automatically reverts
back to the City-trustee for all the taxing entities. The reverter clause has made it extremely difficult for
individual purchasers to obtain permanent mortgage financing.
The staff from the City of Fort Worth Law and Housing Departments and the Real Property
Management Division of the Engineering Department developed the proposed ordinance to 1)
implement Sec. 34 015, 2) encourage the development of affordable housing and 3) place vacant
properties back on the tax rolls. Adoption of the proposed ordinance will also provide an incentive for
qualified nonprofit organizations, including the Fort Worth Housing Finance Corporation, to expand their
activities through acquisition of vacant properties, construction of new houses or rehabilitation of
existing houses. These activities are particularly important in revitalizing the central city neighborhoods
where affordable housing is most needed Because the proposed deed under this ordinance does not
include the reverter clause, it will also attract more private lending institutions to provide financing
assistance to low-income buyers.
City of Fort Worth, Texas
~1-~Ayar And C~unc~l C~mmun~cntian
DATE
7/28/98 REFERENCE NUMBER
**G-12284 LOG NAME
05LOW PAGE
2 of 2
SUBJECT ORDINANCE ESTABLISHING PROCEDURES FOR THE CONVEYANCE OF TAX
FORECLOSURE PROPERTY TO QUALIFIED NONPROFIT ORGANIZATIONS FOR
LOW INCOME HOUSING
The Safety and' Community Development Committee endorsed the procedures in the proposed
ordinance on April 14, 1998 A copy of the procedure is attached for additional information to the City
Council. City staff have also provided other local taxing entities with a copy of the proposed ordinance,
considered their comments and requested their consent to the conveyance method stated in the
ordinance
This is a city-wide program and covers all Council ,Districts.
FISCAL INFORMATION/CERTIFIGQTinN
The Finance Director certifies that this action will have no material effect on City funds.
LW:j
Submitted for City Manager's FUND ACCOUNT CENTER AMOUNT CITY SECRETARY
Office by: (to}
APPROVED
Libby Watson 6183 T`f GOUNC~L
OrigiaatfagDepartmentIiead: Gi
Jerome Walker 7537 (from) ~~~- 2~
Additional Information Contact: ., lxtc.~~J
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City Socretarp of tTaR~
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t Wort2e
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Jerome Walker 7537 ,
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