HBA-DMD C.S.H.B. 2374 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 2374 By: Burnam Urban Affairs 3/30/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Under current law, when a building is identified as substandard the owner is allowed to submit an action plan to the municipality detailing the amount of time needed to rectify the problem, but the owner is not required to post a form of security to back the action plan. When an owner fails to comply with the plan, the municipality is forced to take action, which generally requires the expenditure of municipal funds. C.S.H.B. 2374 authorizes a municipality to require owners, lienholders, or mortgagees of buildings that exceed $100,000 in total value, to post a cash or surety bond or a letter of credit, within thirty days, to cover the costs of repair or for repairing, removing, or demolishing the building. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 214.001(k) and (m), Local Government Code, (k) Authorizes a municipality, if the owner, lienholder, or mortgagee owns property, including structures or improvements on property, within the municipal boundaries that exceeds $100,000 in total value, to require the owner, lienholder, or mortgagee to post a cash or surety bond in an amount adequate to cover the costs for the repairing, removing, or demolishing of the building. Authorizes the municipality to require, in lieu of a bond, the owner, lienholder, or mortgagee to provide a letter of credit from a financial institution or a guaranty from a third party approved by the municipality. Provides that the bond must be posted, or the letter of credit or third party guaranty provided, within thirty days of the date the order is issued by the municipality. Makes a nonsubstantive change. (m) Sets forth that this subsection does not limit the ability of a municipality to collect on a bond or other financial guaranty that may be required by Subsection (k). SECTION 2.Effective date: September 1, 1999. Makes application of SECTION 1 (Section 214.001(k), Local Government Code) of this Act prospective. SECTION 3.Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE This substitute differs from the original bill in SECTION 1 by amending Section 214.001(k) and (m), rather than Section 214.001(l), Local Government Code. In addition, SECTION 2 of this substitute makes application of Section 214.001(k) of this Act prospective. This substitute authorizes a municipality, if the owner, lienholder, or mortgage owns property, including structures or improvements on property, within the municipal boundaries that exceeds $100,000 in total value, to require the owner, lienholder, or mortgagee to post a cash or surety bond in an amount adequate to cover the costs for the repairing, removing, or demolishing of the building. Additionally, this substitute authorizes the municipality to require, in lieu of a bond, the owner, lienholder, or mortgagee to provide a letter of credit from a financial institution or a guaranty from a third party approved by the municipality and provides that the bond must be posted, or the letter of credit or third party guaranty provided, within thirty days of the date the order is issued by the municipality. Section 214.081(m), Local Government Code, is existing law being changed by this substitute to set forth that this subsection does not limit the ability of a municipality to collect on a bond or other financial guaranty that may be required by Subsection (k). Section 214.001(l), Local Government Code, of the original bill authorizes a municipality to require the owner, lienholder, or mortgagee of record of a building under the provisions of this chapter, to post a cash or surety bond in order to cover the costs for the security or repair of the building to ensure that the municipality does not incur expenses for vacating, securing, removing, or demolishing the building or relocating the building's occupants because of the failure of the owner, lienholder, or mortgagee of record to comply with the ordinance and perform the work in the allotted time.