Exhibit B Policy for the Sale of Tax Foreclosed Property

Purpose

Adopted by the Waco City Council on September 19, 2023

The purpose of this policy is to outline the City’s policy and some of its procedures for the sale of tax foreclosed property. It is the intent of the City of Waco that this policy furthers the City’s goals to place the tax foreclosed property back on the tax rolls, encourage revitalization of the City, and ensure appropriate development.

I. Definitions

  1. Adjudged Value: The market value set by the court in the tax foreclosure lawsuit on the date of trial.
  2. Court Costs: The costs charged by the court for the tax foreclosure suit.
  3. Disqualified Buyer: is defined as a person or entity that:
    1. is delinquent on any tax account for City of Waco, a school district located in the city limits of Waco, McLennan County College, or McLennan County;
    2. owes past due amounts owed to the city of Waco for mowing, water bills, library fines, hotel sales tax, abatement of other nuisances by the city or demolition of substandard structures; or
    3. has received a notice of violation or a citation regarding any building in the City or inspection code and/or ordinance from the City of Waco and such notice or violation has not been resolved; or
    4. City of Waco employees or their immediate family.
  4. Minimum Bid: The lowest acceptable price set for the property.
  5. Non-Buildable Property: Narrow strips of land, or land that because of its shape, lack of access to public roads or utilities, or small area cannot be used independently under its current zoning or under applicable subdivision or other development control ordinances.
  6. Property Manager: The person who is charged with operating the day to day functions and oversight of the tax-foreclosed properties.
  7. Purchase Agreement Packet: The purchase agreement, waiver of liability and disclaimer and conditions of sale agreement.
  8. Qualified Builder: A builder who registers with the City of Waco’s Housing and Community Development Department as an affordable housing builder.

II. Administration

  1. Tax foreclosed properties will be managed by the City of Waco Property Manager.

  2. The Property Manager will offer tax foreclosed property for sale in accordance with this Policy and Procedures.

  3. Subject to D below, all Tax Foreclosed Properties may be sold under one of the following Purchase Programs:
    1. Taxing Entities Purchase;
    2. Targeted Housing Development by City;
    3. Affordable Housing Development by a CHDO;
    4. Direct Sale;
    5. Sealed Bid Sale; or
    6. Constable Resale.

  4. Notwithstanding C above, so long as all of the all the taxing entities who were a party to the judgment agree, a tax foreclosed property may be sold through another process that is not outlined in this policy.

  5. Upon receiving the tax foreclosed property, the Property Manager will first offer the sale of the property through the Taxing Entities Purchase Program.

    If not purchased under this program, the property will then be available for the Targeted Housing Development Program. If the Property has not been placed in the Targeted Housing Development Program, it will be offered for sale in the Affordable Housing Development by a CHDO Program. If not purchased under the above programs, the Property Manager will offer the property for sale under the direct sale, bid sale, or constable tax-resale programs. The Property Manager will use his or her discretion to determine which of these sales programs to sell the tax foreclosed property.

  6. The Property Manager will list all of the tax foreclosed property on the City of Waco’s website upon receiving the constable deed. The Property Manager will classify the property as “available for sale,” “sale pending,” “Taxing Entities Sales Program,” “Targeted Housing Development Program,” or “Affordable Housing Development by a CHDO.” In addition, the Property Manager will make available a list of tax foreclosed properties for sale at the property management office.

  7. As a component of selling a property, the City may require a Development Agreement that will be submitted simultaneously with the sale being submitted to the City Council for approval.

  8. Under the terms of the interlocal agreement, so long as the sale of the tax foreclosed property follows this policy, the conveyance of the tax foreclosed property shall occur upon execution of the deed after approval of the sale by the City Council for the City of Waco in an open public meeting.

  9. Under the terms of the interlocal agreement, the taxing entities authorize the City Manager for the City of Waco to execute the tax resale deed on their behalf.

  10. Under the terms of the interlocal agreement, taxing entities relinquish their interest for purposes of any City easement. The City will bear the cost of any survey needed for the easement.

  11. Under any Purchase Program, the buyer will be responsible for all costs of survey, title commitment, title insurance, tap and impact fees, and any other costs.

III. Terms of Tax Foreclosed Property Sales

  1. All tax foreclosed properties shall be sold "AS IS" with no warranty, either expressed or implied.
    1. The City will make no guarantee as to the availability of utilities to the property.
    2. No warranty, written, expressed or implied, will be made regarding the property as to the suitability of use of for building/construction of any structure(s), suitability for habitation, compliance with City codes, or clear title. It is the sole responsibility of the bidder or buyer to examine the property, research building codes, encumbrances, zoning designations, physical location, and all other aspects of the property prior to submitting a bid on that property. The bid documents, or the offer to purchase if a bid is not required, shall contain all of the above disclaimers. The bidder/buyer shall agree to these terms.

  2. All tax foreclosed properties shall be sold subject to the prior owner's right of redemption.

  3. If a tax foreclosed property’s zoning is in conflict with the City of Waco’s comprehensive plan, the Property Manager shall submit the tax foreclosed property to the Planning Department for a zoning change. Conveyance of the property shall only occur after the property’s zoning is in conformance with the City of Waco’s comprehensive plan.

  4. It is the buyer's responsibility to examine all applicable building codes and ordinances to determine if the property in question can be used for the buyer's intended purpose.

  5. A Purchase Agreement Packet for property will not be accepted from any Disqualified Buyer.

  6. The City of Waco can reject any offer to purchase the tax foreclosed property for any reason.

  7. The tax foreclosed property shall be conveyed through a tax resale deed, which shall include the retention of all existing easements and right of ways, whether of record or not.

  8. It is the buyer’s responsibility to provide a development plan and construction timeline within one hundred eighty (180) days of purchase.

IV. Taxing Entities Purchase Program

  1. Upon receiving the tax foreclosed property, the Property Manager will send the list and a property location map of tax foreclosed properties to all of the taxing entities who were a party to the tax foreclosed lawsuit to determine if the tax entity would like to purchase the property for its governmental use.

  2. Taxing entities will have 60 days to determine if the taxing entities would like to purchase the property.

  3. The sales price for the tax foreclosed property, under the taxing entity purchase program, shall be $10.00 per property (additional consideration is the governmental use).

  4. For properties purchased under this program, the taxing entities shall send a check payable to the City of Waco for disbursement and a description of the governmental use.

  5. Upon the earlier of the expiration of 60 days (from the time the taxing entities were sent the list of properties) or the taxing entities notifying the Property Manager that the taxing entity is not interested in purchasing the property, the property will be offered to the Targeted Housing Development Program from day 61(from the time the taxing entities were sent the list of properties) to day 90 and then offered to Affordable Housing Development by CHDO Purchase Program for low to moderate income owner occupant at day 91 to day 120. If the property is not sold within 120 days (from the time the taxing entities were sent the list of properties), the properties will be offered for sale under any of the Direct Sale Program, the Bid Sale Program, and the Constable Re-Sale Program.

  6. Although a buyer may express an interest in a property during the time periods in IV.E. above, the property will not be transferred to the buyer until after the expiration of the redemptive period established by state law.

V. Targeted Housing Development Program by City

  1. As set forth in the interlocal agreement between the taxing entities, tax foreclosed properties may be held by the City of Waco for affordable housing development by the City on its behalf or on behalf of a Qualified Builder.

  2. The City has from 61 (from the time the taxing entities were sent the list of properties) to 90 days to decide whether to include a property in this program. A Targeted Housing Committee made up of the Director of Planning or designee, Director of Housing & Community Development or designee, the property manager, and any other person appointed by the City Manager shall make this decision.

  3. The proposed use of the property may be either single family or multi-family housing.

  4. The tax foreclosed property can be held for 2 years for future affordable housing development.

  5. These properties may be sold to Qualified Builders through a Request for Proposals process. The Qualified Builder must pay $500.00 or court costs, whichever is greater, and propose a development plan.

VI. Affordable Housing Development by CHDO Purchase Program

  1. After the tax foreclosed Property is released from the Taxing Entity Purchase Program and Targeted Housing Development Program, the tax foreclosed property will be offered for sale on day 91 to City of Waco Certified Community Housing Development Organizations (“CHDOs”) for the development of quality affordable housing for low to moderate income owner occupied residence.

  2. The Property Manager will send the list of available properties to the CHDOs in order for the certified CHDOs to determine if they would like to purchase the property for the development of quality affordable housing for low to moderate income owner occupied housing.

  3. The CHDOs will have 30 days from the day the list is sent to contact the Property Manager and submit a written offer to purchase the property. If no offer is received by the Property Manager within the 30 days, the tax foreclosed property will be offered for sale under the Direct Sales Program, Bid Sale Program or Constable Resale Program.

  4. Upon receipt of the Purchase Agreement Packet, the Property Manager will verify with the Housing and Community Development Department that the CHDO has received federal funds to construct the home on the property or that the CHDO has funds to complete construction of the home within 15 months of conveyance.

  5. The CHDO will be required to build based upon the current building standards set forth by the Housing and Community Development Department.

  6. The sales price for each lot shall be $500.00 or court costs, whichever is greater and a reverter clause conditioned on completion of the house within 2 years. The CHDO must submit payment and the Purchase Agreement Packet to City of Waco prior to the end of the 30th day from the day the list is sent to the CHDO.

VII. Direct Sales Program

  1. After being offered under the Taxing Entity Purchase Program, the Targeted Housing Development Program, and the Housing Development Purchase Program, the Tax Foreclosed property may be offered through a Direct Sales Program or any other sale process determined by the Property Manager.

  2. If the Property Manager receives two or more requests to purchase a tax foreclosed property within six months of the date the deed was recorded transferring the property to the City of Waco as trustee, the Property Manager will put the property on the first available bid sale. Thereafter, all properties shall be sold on a “first come first served basis.”

  3. If the Property Manager receives only one request to purchase the tax foreclosed property within 6 months of the date the deed was recorded transferring the property to the City of Waco as trustee, the Property Manager will offer the property to the interested party if the property has not been sold under the Taxing Entity Purchase Program, the Targeted Housing Development Programs, or the Affordable Housing Development Purchase Program.

  4. The sales price under the Direct Sale Program shall be:
    1. For Buildable Properties The lesser of:
      1. the adjudged value;
      2. 40% of MCAD; or
      3. Court Costs and a reverter clause conditioned on completion of the house within 2 years.
    2. For Non-Buildable Properties The lesser of:
      1. the adjudged value;
      2. 25% of MCAD; or
      3. Court Costs.

        Property Manager at their discretion can increase the sales price to include costs of surveys, appraisals, or price the property at a higher market value.

  5. Persons interested in purchasing a tax foreclosed property shall submit a completed Purchase Agreement Packet to the Property Manager with only the pricing terms as stated in D above. The Purchase Agreement Packet can be found at www.Waco-Texas.com or CityOfWacoProperties.com or at the Property Manager’s Office. In order to be considered complete, the prospective buyer must submit a completed Purchase Agreement Packet and payment. Payment must be in the form of a certified check or a money order made payable to the City of Waco.

  6. Upon receiving Purchase Agreement Packet and payment, the Property Manager shall review the packet to make sure it is complete and the interested buyer is qualified to purchase a tax foreclosed property, and so long as there is not a prior completed Purchase Agreement Packet for the tax foreclosed property, the Property Manager will present the packet to the City of Waco City Council for approval.

VIII. Sealed Bid Sale

  1. If the tax foreclosed property is not being sold under another purchase program, the property will be placed on the first available bid sale. Sealed bid sales are held in accordance to the Standards of Practice for Purchasing Department and Standards of Practice for the Property Management Department

  2. The Minimum Bid will be determined as follows:
    1. First Sale -- 40% of MCAD Value or the Direct Sale price, whichever is less; or if property has aged two or more years from deed recording date, the property may start at second sale price;
    2. Second Sale --15% of MCAD Value;
    3. Third Sale --5% of MCAD Value; and
    4. Fourth Sale -- $10.00 with a reverter clause conditioned upon the completion of the house within 2 years.

  3. The City Council of the City of Waco reserves the right to reject any bid.

IX. Constable Re-Sales

  1. Public Auction of Tax Foreclosed Properties Conducted by the Constable of McLennan County- Re-sales

    1. The Property Manager is authorized to request the McLennan County Constable to place properties for sale using the public auction process in accordance with Section 34.05 of the Texas Tax Code.

    2. The Minimum Bid will be determined as follows:
      1. First Sale -- 40% of MCAD Value or the Direct Sale price, whichever is less; or if property has aged two or more years from deed recording date, the property may start at second sale price;
      2. Second Sale --15% of MCAD Value;
      3. Third Sale --5% of MCAD Value; and
      4. Fourth Sale -- $10.00 with a reverter clause conditioned upon the completion of the house within 2 years.

  2. The Property Manager is authorized to remove properties from the delinquent tax sale auction resale list after it has been through one constable sale.

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