JH C.S.H.B. 2577 75(R)    BILL ANALYSIS

C.S.H.B. 2577
By: Hill
Committee Report (Substituted)


Chapter 2166 of the Government Code is entitled Building Construction and
Acquisition.  The law applies to building construction by the state.  The
chapter is contained within Title 10, Subtitle D of the Government Code,
which contains the State Purchasing and General Services Act. This
subchapter sets out the powers and responsibilities of the General
Services Commission.   

Chapter 2167 of the Government Code is entitled Lease of Space for State
Agencies and is also contained in Subtitle D.  Chapter 2306 of the
Government Code is contained in Subtitle G, Economic Development Programs
Involving Both State and Local Governments.  Chapter 2306 creates and
governs the Texas Department of Housing and Community Affairs.  The
department is declared by statute to be "a public and official agency of
the state and is a political and corporate body."  Government Code Section
2306.021.  It comprises three divisions:  the community affairs division,
the housing finance division, and the manufactured housing division, in
addition to others created by the director.  It is governed by a
nine-member board appointed by the governor.  The executive director is
appointed by, and serves at the pleasure of, the governor. 

Among the statutory purposes of the department are providing housing needs
to persons of low and moderate income, preserving and developing
neighborhoods and communities, and assisting local governments in
financial, social, and environmental matters and in the delivery of
essential public services. 

Chapter 11 of the Human Resources Code, also proposed for amendment by
this legislation, contains the general provisions for Title 2 of the Human
Resources Code governing the Texas Department of Human Resources.  Chapter
34 of the Human Resources Code, proposed for repeal by this legislation,
contains provisions for temporary emergency relief programs administered
by the Department of Human Services. 


Generally redefines the powers, functions, and duties of the Department of
Housing and Community Affairs, and the renamed Texas State Affordable
Housing Corporation, with emphasis on housing responsibilities. 


This bill would grant authority to the Department of Housing and Community
Affairs to adopt: 
 1. RULES to allow testimony and comments at public hearings via the
Internet   regarding housing programs (Section 12 of the bill; Government
Code Section   2306.0661(c)(6)). 
 2.                                           RULES for sanctions for
failing to disclose fees and other information by certain   applicants for
assistance (Section 27 of the bill; Government Code Section
 3. RULES establishing criteria for applicants for emergency relief and
nutrition   programs (Section 46 of the bill; Government Code Section
 4.  STANDARDS for county participation in emergency relief programs
(Section 46   of the bill; Government Code Section 2306.653(f)). 
  5. CRITERIA for scoring applicants in low income housing tax credit
program   (Section 47 of the bill; Government Code Section 2306.672(a)). 
 6. RULES for department purchase of low income tax credit property
(Section 47 of   the bill; Government Code SEction 2306.674). 
 7. PROCEDURES for fair and equal access by applicants in low income
housing tax   credit program (Section 47 of the bill; Government Code
Section 2306.676). 

SECTION 1.  Exempts from statute governing state building construction and
acquisitions             projects of the Department of Housing and
Community Affairs and the Texas State             Affordable Housing

SECTION 2.  Exempts from statute regulating the lease of space for state
agencies residential             property held by the Department of
Housing and Community Affairs and the Texas             State Affordable
Housing Corporation offered to very low-to-moderate income   persons. 

SECTION 3.  Clerical statutory redesignation of department's supervisory
authority over                           temporary emergency relief

SECTION 4. Expands purposes of department to include housing needs of very
low income   families, including housing cooperation efforts for very low
and extremely low   incomes. 

SECTION 5.  Includes among definitions, new definition for "contract for
deed," "individuals   and families of extremely low income," and "state
low income housing plan."    Corrects statutory references to Internal
Revenue Code and Texas Tax Code   regarding the definition of
"economically depressed or blighted area."  Redefines   "elderly
individual" to be one of  age specified by department board or federal
law; deletes former definition of  individual reaching 60 years of age.
Deletes   from definition "mortgage" and "mortgage loan" requirement that
obligation,   deeds, notes, and other obligations be interest bearing.
Includes in definition of   "public agency" the department itself.
Includes in definition of "real estate owned   contractor" contractors
with department.  Redefines "reserve fund" to be any   established by the

SECTION 6.  Statutory redesignation.

SECTION 7.  Adds "community development division" to those divisions
constituting the             Department of Housing and Community Affairs.
Existing divisions include              community affairs division,
housing finance division, and manufactured housing             division.
Other divisions may be created by department director. 

SECTION 8.  Deletes requirement that department records be maintained at
principal office. 

SECTION 9. Adds provision for removal of board members for misconduct and
requires   referral to district attorney. 

SECTION 10. Adds provision regarding application of open meetings and open
records acts. 

SECTION 11. Adds authority for department to execute funding agreements
and disseminate   information in electronic form.  

SECTION 12. Adds provisions governing the conduct of  public hearings by
department relating   to housing programs. 

SECTION 13.  Requires annual low income housing reports prepared by
department director to   be submitted to department board, governor,
lieutenant governor, speaker, and   oversight committee.  Report to
address housing activities. 

SECTION 14. Changes date for submission date of low income housing plan.
Requires plan to              be submitted to governor and legislative
leaders.  Adds requirement that plan   include estimate of number of
housing units receiving state assistance and other   requirements. 

SECTION 15. Requires department director to incorporate in the annual low
income housing              report and the low income housing plan
recommendations consistent with                 consolidated plans
submitted by state to HUD.  Requires consultation with private   and
public sector in preparation of report and plan and makes other
requirements.   Establishes standardized categories of income. 

SECTION 16. Requires additional second public hearing for adoption of
annual state low income              housing plan and report.  Requires
public hearings in specified municipalities and   requires public hearings
to address specified needs and programs relating to   housing.  Requires
report to be submitted to governor, legislative members and   advisory
SECTION 17.  Permits department to purchase liability insurance for
employees, in addition to               directors, board members, and
other officials. 

SECTION 18. Requires department to make information available on Internet.

SECTION 19.  Changes heading of Chapter 2306, Subchapter E, to read:
Community Affairs and              Community Development Programs. 

SECTION 20. Adds provision to Chapter 2306, Subchapter E, to require
department to                administer federal funds granted  to state
for benefit of homeless. 

SECTION 21. Removes responsibilities for energy services program for low
income from              community affairs division. 

SECTION 22. Permits interagency agreement between Department of Housing
and Community             Affairs and Department of Commerce for
reimbursement for general services   relating to community development
block grant. Requires economic development   activities to be monitored
rather than approved by the Department of Housing and   Community Affairs. 

SECTION 23. Requires the Department of Housing and Community Affairs to
administer federal              housing funds through its housing finance
division.  Requires aggregate goal of   25% of housing funds to be applied
to persons of extremely low and very low   income. 

SECTION 24. Permits authorization by department board all bonds issued by
department rather              than housing finance division. 

SECTION 25. Adds families of extremely low and moderate income to those
for whom the   department is required to develop policies for housing
participation.  Adds   counties and for-profit corporations to those with
whom department may     cooperate. 

SECTION 26. Permits testimony at a hearing for any department function,
rather than limited to              housing finance division. 

SECTION 27. Requires disclosure of fees and other information by certain
housing applicants. 

SECTION 28. Adds investment income and any other income to housing trust

 SECTION 29. Requires distribution of housing trust fund to profit,
non-profit, and other entities   at specified levels.  Permits housing
trust fund to be used as security for revenue   bonds, and to acquire
property to endow fund.  

SECTION 30. Requires transfer of certain 501(c)(3) fees into housing trust

SECTION 31. Replaces housing finance division with department as to
creation of reserve fund              with comptroller, rather than state

SECTION 32. Replaces housing finance division with a department regarding
loans and                            guarantees made by Texas Housing

SECTION 33. Adds authority of the department to reconstruct and manage
real property.  Makes   legislative declaration regarding ownership of
property by state.  Adds families   of moderate income to those entitled
to rent or purchase property.  Permits   department to require property
for purpose of participating in federal risk-sharing   program and
preserving public housing, with time period limitation of ten years.
Deletes requirement that property acquired by the department qualify for
home   mortgage insurance after rehabilitation.  Entitles the department
to use fees, real   property proceeds, and distribution of certain
earnings for purpose of purchasing   property.  Requires annual report
relating to property acquired; deletes audit   requirement.. 

SECTION 34. Deletes requirement that housing resources center focus on low
income      assistance.  Requires center to assist in the development of
housing policy and   providing information. 

SECTION 35. Replaces housing finance division with the department
regarding rule or contract    compliance by housing sponsors. 

SECTION 36.  Replaces housing finance division with the department
regarding regulation of    retirement of capital investment or stock

SECTION 37.  Adds other obligations including contracts for deeds to those
instruments which    the department may purchase. 

SECTION 38.  Authorizes the department to issue qualified 501(c)(3) bonds
pursuant to the    Internal Revenue Code. 

SECTION 39.  Replaces housing finance division with department regarding
liability for bonds   issued by Texas Housing Agency. 

SECTION 40. Makes allocation of 501(c)(3) bond proceeds between rural and
metropolitan   areas, as defined.  Requires approval of a bond review
board.  Makes other   requirements of qualified 501(c)(3) organizations
regarding housing projects.    Prohibits department and corporation from
using state or federal money for credit   enhancement of bond issue, with

SECTION 41.  Expands non-liability of board members and department
director for bonds,    contracts, and other actions of the department,
rather than only housing finance   division. 

SECTION 42. Replaces housing finance division with department regarding
security for     department bonds. 

SECTION 43.  Replaces housing finance division with department regarding
validity of liens and    pledges. 

 SECTION 44. Replaces housing finance division with department regarding
negotiability of   bonds. 

SECTION 45. Renames Texas Housing Corporation to the Texas State
Affordable Housing   Corporation and specifies purposes of corporation,
establishes membership of   board of directors, specifies powers of
corporation to include mortgage     transactions, holding property, and
making loans. Makes other requirements of   corporation including reports,
audits, and personal liabilities.  Exempts     corporation from taxation. 

SECTION 46. Adds Chapter 2306, Subchapter AA, Emergency Nutrition and
Temporary    Emergency Relief Program, formerly Human Resources Code,
Chapter 34. 
  Applicants include counties, political subdivisions, and non profits.
Includes   emergency nutrition program.  Establishes formulas.  Assistance
includes utilities,   food, housing, and clothing for needy. 

SECTION 47. Adds provisions governing low income housing tax credit
program, including   deadlines, requirements of applicants, sale of
property, fees and public hearings. 

SECTION 48.  Deletes repealed reference from definitions in Human
Resources Code,      Chapter 11. 

SECTION 49. Changes time frame regarding issuance of private activity

SECTION 50.  Repeals Government Code Section 2306.122, requiring annual
report regarding    findings of housing finance division as to ethnicity
and income of applicants,    amounts funded, and geographic locations;
repeals Government Code Section    2306.143 regarding board approval of
annual reports from housing finance    division; repeals Government Code
Section 2306.513(e) regarding payment of    services rendered by the Texas
Department on Aging; repeals Human Resources    Code Chapter 34. 

SECTION 51.  Effective date September 1, 1997.

SECTION 52.  Transitional provision regarding lawsuits.

SECTION 53.  Emergency clause.


The substitute:
 -expands the purposes provision of the department  (Section 4 of the bill)
 -adds definition of extremely low income and state low income housing
plan(Section 5) 
 -adds provisions regarding removal of board members (Section 9)
 -adds provisions concerning open meetings and open records acts (Section
 -reinstates current law providing that department may sue and be sued
(Section 11) 
 -adds provisions relating to public hearings (Section 12)
 -entitles oversight committee to receive low-income housing report
(Section 13) 
 -restores current law requirements relating to annual report, including
operating and     financial statement, statistical and narrative analysis,
and applicant information  
    (Section 13)
 -adds other requirements of annual report, including geographic
distribution of low   income housing tax credits; even-numbered year
report to include information   relating to Neighborhood Partnership
Programs (Section 13) 
 -restores current law requirements of a low income housing plan and adds
new     requirements for plan (Section 14) 
 -adds provisions requiring consultation in preparation of low income
housing plan and   adds other requirements for plan (Section 15) 
 -changes public hearing requirements to include specified topics (Section
  -adds Internet provision (Section 18)
 -restores federal fund allocation to Department of Commerce (Section 22) 
 -adds aggregate goal provision for housing fund (Section 23)
 -adds "extremely low" income to duties of housing finance division
(Section 25) 
 -adds disclosure of the fees provision (Section 27)
 -adds distribution provision of housing trust fund (Section 29)
 -adds fund transfer provision relating to housing trust fund (Section 30)
 -adds legislative intent provision relating to property ownership program
and restores   current law provision relating to interim basis for sale
and rental, and adds 10-year   provision regarding property ownership
(Section 33) 
 -adds expanded purposes of housing resource center (Section 34)
 -adds provision regarding issuance 501(c)(3) bonds (Section 40)
 - adds provisions changing name, powers, purposes, and board membership
of Texas   Housing Corporation, renamed Texas State Affordable Housing
Corporation   (Section 45) 
 -adds provisions relating to low income housing tax credit program
(Section 47) 
 -changes the time period for private activity bonds (Section 49)