By Hill, Ehrhardt, Cuellar, Coleman, Bailey,          H.B. No. 2577

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the Texas Department of Housing and Community Affairs

 1-3     and to low income and affordable housing.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Section 2166.003(a), Government Code, is amended

 1-6     to read as follows:

 1-7           (a)  Unless otherwise provided, this chapter does not apply

 1-8     to:

 1-9                 (1)  a project constructed by and for the Texas

1-10     Department of Transportation;

1-11                 (2)  a project constructed by and for a state

1-12     institution of higher education;

1-13                 (3)  a pen, shed, or ancillary building constructed by

1-14     and for the Department of Agriculture for the processing of

1-15     livestock before export;

1-16                 (4)  a project constructed by the Parks and Wildlife

1-17     Department;

1-18                 (5)  a repair or rehabilitation project, except a major

1-19     renovation, of buildings and grounds on the commission inventory;

1-20                 (6)  a repair and rehabilitation project of another

1-21     using agency, if all labor for the project is provided by the

1-22     regular maintenance force of the using agency under specific

1-23     legislative authorization and the project does not require the

1-24     advance preparation of working plans or drawings;  [or]

1-25                 (7)  a repair and rehabilitation project involving the

 2-1     use of contract labor, if the project has been excluded from this

 2-2     chapter by commission rule and does not require the advance

 2-3     preparation of working plans or drawings; or

 2-4                 (8)  a repair, rehabilitation, or construction project

 2-5     on property owned by the Texas Department of Housing and Community

 2-6     Affairs or the Texas State Affordable Housing Corporation.

 2-7           SECTION 2.  Section 2167.001(b), Government Code, is amended

 2-8     to read as follows:

 2-9           (b)  This chapter does not apply to:

2-10                 (1)  aircraft hangar space;

2-11                 (2)  radio antenna space;

2-12                 (3)  boat storage space;

2-13                 (4)  vehicle parking space;

2-14                 (5)  residential space for a Texas Department of Mental

2-15     Health and Mental Retardation program;

2-16                 (6)  residential space for a Texas Youth Commission

2-17     program;

2-18                 (7)  space to be used for less than one month for

2-19     meetings, conferences, conventions, seminars, displays,

2-20     examinations, auctions, or similar purposes;

2-21                 (8)  district office space for members of the

2-22     legislature;  [or]

2-23                 (9)  space used by the Texas Employment Commission; or

2-24                 (10)  residential property acquired by the Texas

2-25     Department of Housing and Community Affairs or the Texas State

2-26     Affordable Housing Corporation that is offered for sale or rental

2-27     to individuals and families of low or very low income or families

 3-1     of moderate income.

 3-2           SECTION 3.  Section 2305.033(a), Government Code, is amended

 3-3     to read as follows:

 3-4           (a)  The Texas Department of Housing and Community Affairs is

 3-5     the supervising state agency for the emergency nutrition and

 3-6     temporary emergency relief program established under Subchapter AA,

 3-7     Chapter 2306 [Chapter 34, Human Resources Code].

 3-8           SECTION 4.  Section 2306.001, Government Code, is amended to

 3-9     read as follows:

3-10           Sec. 2306.001.  Purposes.  The purposes of the department are

3-11     to:

3-12                 (1)  assist local governments in:

3-13                       (A)  providing essential public services for

3-14     their residents; and

3-15                       (B)  overcoming financial, social, and

3-16     environmental problems;

3-17                 (2)  provide for the housing needs of individuals and

3-18     families of low and very low income and families of moderate

3-19     income;

3-20                 (3)  contribute to the preservation, development, and

3-21     redevelopment of neighborhoods and communities, including

3-22     cooperation in the preservation of government-assisted housing

3-23     occupied by individuals and families of very low and extremely low

3-24     income;

3-25                 (4)  assist the governor and the legislature in

3-26     coordinating federal and state programs affecting local government;

3-27     and

 4-1                 (5)  inform state officials and the public of the needs

 4-2     of local government.

 4-3           SECTION 5.  Section 2306.004, Government Code, is amended to

 4-4     read as follows:

 4-5           Sec. 2306.004.  DEFINITIONS.  In this chapter:

 4-6                 (1)  "Board" means the governing board of the

 4-7     department.

 4-8                 (2)  "Bond" means an evidence of indebtedness or other

 4-9     obligation, regardless of the source of payment, issued by the

4-10     department under Subchapter P, including a bond, note, or bond or

4-11     revenue anticipation note, regardless of whether the obligation is

4-12     general or special, negotiable or nonnegotiable, in bearer or

4-13     registered form, in certified or book-entry form, in temporary or

4-14     permanent form, or with or without interest coupons.

4-15                 (3)  "Contract for Deed" means a seller-financed

4-16     contract for the conveyance of real property under which:

4-17                       (A)  legal title does not pass to the purchaser

4-18     until the consideration of the contract is fully paid to the

4-19     seller; and

4-20                       (B)  the seller's remedy for nonpayment is

4-21     recision or forfeiture or acceleration of any remaining payments

4-22     rather than judicial or nonjudicial foreclosure.

4-23                 (4)  "Department" means the Texas Department of Housing

4-24     and Community Affairs.

4-25                 (5) [(4)]  "Director" means the executive director of

4-26     the department.

4-27                 (6) [(5)]  "Economically depressed or blighted area"

 5-1     means an area:

 5-2                       (A)  that is a qualified census tract as defined

 5-3     by Section 143(j), Internal Revenue Code of 1986 (26 U.S.C. Section

 5-4     143(j)) or has been determined by the housing finance division to

 5-5     be [a qualified census tract or] an area of chronic economic

 5-6     distress under  Section 143 [103A], Internal Revenue Code of 1986

 5-7     [1954] (26 U.S.C. Section 143 [103A]);

 5-8                       (B)  established in a municipality that has a

 5-9     substantial number of substandard, slum, deteriorated, or

5-10     deteriorating structures and that suffers from a high relative rate

5-11     of unemployment; or

5-12                       (C)  that has been designated as [designed and

5-13     included in] a reinvestment zone [tax increment district created]

5-14     under Chapter 311, Tax Code [695, Acts of the 66th Legislature,

5-15     Regular Session, 1979 (Article 1066d, Vernon's Texas Civil

5-16     Statutes)].

5-17                 (7) [(6)]  "Elderly individual" means an individual [60

5-18     years] of an age specified by the board or by the applicable

5-19     federal program [or older].

5-20                 (8) [(7)]  "Family of moderate income" means a family:

5-21                       (A)  that is determined by the board to require

5-22     assistance, taking into account:

5-23                             (i)  the amount of the total income

5-24     available for housing needs  of the individuals and families;

5-25                             (ii)  the size of the family;

5-26                             (iii)  the cost and condition of available

5-27     housing facilities;

 6-1                             (iv)  the ability of the individuals and

 6-2     families to compete successfully in the private housing market and

 6-3     to pay the amounts required by private enterprise for sanitary,

 6-4     decent, and safe housing; and

 6-5                             (v)  standards established for various

 6-6     federal programs determining eligibility based on income; and

 6-7                       (B)  that does not qualify as a family of low

 6-8     income.

 6-9                 (9) [(8)]  "Federal government" means the United States

6-10     of America and includes any corporate or other instrumentality of

6-11     the United States of America, including the Resolution Trust

6-12     Corporation.

6-13                 (10) [(9)]  "Federal mortgage" means a mortgage loan

6-14     for residential housing:

6-15                       (A)  that is made by the federal government; or

6-16                       (B)  for which a commitment to make has been

6-17     given by the federal government.

6-18                 (11) [(10)]  "Federally assisted new communities" means

6-19     federally assisted areas that receive or will receive assistance in

6-20     the form of loan guarantees under Title X of the National Housing

6-21     Act (12 U.S.C. Section 1701 et seq.), and a portion of that

6-22     federally assisted area has received grants under Section 107(a)(1)

6-23     of the Housing and Community Development Act of 1974, as amended

6-24     (42 U.S.C. Section 5301 et seq.).

6-25                 (12) [(11)]  "Federally insured mortgage" means a

6-26     mortgage loan for residential housing that:

6-27                       (A)  is insured or guaranteed by the federal

 7-1     government; or

 7-2                       (B)  the federal government has committed to

 7-3     insure or guarantee.

 7-4                 (13) [(12)]  "Housing development" means property or

 7-5     work or a  project, building, structure, facility, or undertaking,

 7-6     whether existing, new construction, remodeling, improvement, or

 7-7     rehabilitation, that meets or is designed to meet minimum property

 7-8     standards required by the department and that is financed under the

 7-9     provisions of this chapter for the primary purpose of providing

7-10     sanitary, decent, and safe dwelling accommodations for rent, lease,

7-11     use, or purchase by individuals and families of low and very low

7-12     income and families of moderate income in need of housing.  The

7-13     term includes:

7-14                       (A)  buildings, structures, land, equipment,

7-15     facilities, or other real or personal properties that are

7-16     necessary, convenient, or desirable appurtenances, including

7-17     streets, water, sewers, utilities, parks, site preparation,

7-18     landscaping, stores, offices, and other nonhousing facilities, such

7-19     as administrative, community, and recreational facilities the

7-20     department determines to be necessary, convenient, or desirable

7-21     appurtenances; and

7-22                       (B)  single and multifamily dwellings in rural

7-23     and urban areas.

7-24                 (14) [(13)]  "Housing sponsor" means:

7-25                       (A)  an individual, including an individual or

7-26     family of low and very low income or family of moderate income,

7-27     joint venture, partnership, limited partnership, trust, firm,

 8-1     corporation, or cooperative that is approved by the department as

 8-2     qualified to own, construct, acquire, rehabilitate, operate,

 8-3     manage, or maintain a housing development, subject to the

 8-4     regulatory powers of the department and other terms and conditions

 8-5     in this chapter; or

 8-6                       (B)  in an economically depressed or blighted

 8-7     area, or in a federally assisted new community located within a

 8-8     home-rule municipality, the term may include an individual or

 8-9     family whose income exceeds the moderate income level if at least

8-10     90 percent of the total mortgage amount available under a mortgage

8-11     revenue bond issue is designated for individuals and families of

8-12     low income or families of moderate income.

8-13                 (15) [(14)]  "Individuals and families of low income"

8-14     means individuals and families earning not more than 80 percent of

8-15     the area median income or applicable federal poverty line, as

8-16     determined under Section 2306.123 or Section 2306.1231.

8-17                 (16) [(15)]  "Individuals and families of very low

8-18     income" means individuals and families earning not more than 60

8-19     percent of the area median income or applicable federal poverty

8-20     line, as determined under Section 2306.123 or Section 2306.1231.

8-21                 (17)  "Individuals and families of extremely low

8-22     income" means individuals and families earning not more than 30

8-23     percent of the area median income or applicable federal poverty

8-24     line, as determined under Section 2306.123 or Section 2306.1231.

8-25                 (18) [(16)]  "Land development" means:

8-26                       (A)  acquiring land for residential housing

8-27     construction; and

 9-1                       (B)  making, installing, or constructing

 9-2     nonresidential improvements that the department determines are

 9-3     necessary or desirable for a housing development to be financed by

 9-4     the department, including:

 9-5                             (i)  waterlines and water supply

 9-6     installations;

 9-7                             (ii)  sewer lines and sewage disposal

 9-8     installations;

 9-9                             (iii)  steam, gas, and electric lines and

9-10     installations; and

9-11                             (iv)  roads, streets, curbs, gutters, and

9-12     sidewalks, whether on or off the site.

9-13                 (19) [(17)]  "Local government" means a county,

9-14     municipality, special district, or any other political subdivision

9-15     of the state, a public, nonprofit housing finance corporation

9-16     created under Chapter 394, Local Government Code, or a combination

9-17     of those entities.

9-18                 (20) [(18)]  "Mortgage" means an [interest-bearing]

9-19     obligation, including a mortgage, mortgage deed, bond, note, deed

9-20     of trust, or other instrument, that is a lien:

9-21                       (A)  on real property; or

9-22                       (B)  on a leasehold under a lease having a

9-23     remaining term that, at the time the lien is acquired, does not

9-24     expire until after the maturity date of the [interest-bearing]

9-25     obligation secured by the lien.

9-26                 (21) [(19)]  "Mortgage lender" means a bank, trust

9-27     company, savings bank, mortgage company, mortgage banker, credit

 10-1    union, national banking association, savings and loan association,

 10-2    life insurance company, or other financial institution authorized

 10-3    to transact business in this state and approved as a mortgage

 10-4    lender by the department.

 10-5                (22) [(20)]  "Mortgage loan" means an

 10-6    [interest-bearing] obligation secured by a mortgage.

 10-7                (23) [(21)]  "Municipality" includes only a

 10-8    municipality in this state.

 10-9                (24) [(22)]  "Public agency" means the department or

10-10    any [an] agency, board, authority, department, commission,

10-11    political subdivision, municipal corporation, district, public

10-12    corporation, body politic, or instrumentality of this state,

10-13    including a county, municipality, housing authority,

10-14    state-supported institution of higher education, school district,

10-15    junior college, other district or authority, or other type of

10-16    governmental entity of this state.

10-17                (25) [(23)]  "Real estate owned contractor" means a

10-18    person required to meet the obligations of a contract with the

10-19    department [housing finance division] for managing and marketing

10-20    foreclosed property.

10-21                (26) [(24)]  "Real property" means land, including

10-22    improvements and fixtures on the land, property of any nature

10-23    appurtenant to the land or used in connection with the land, and a

10-24    legal or equitable estate, interest, or right in land, including

10-25    leasehold interests, terms for years, and a judgment, mortgage, or

10-26    other lien.

10-27                (27) [(25)]  "Reserve fund" means any [the housing

 11-1    finance division's] reserve fund established by the department.

 11-2                (28) [(26)]  "Residential housing" means a specific

 11-3    work or improvement undertaken primarily to provide dwelling

 11-4    accommodations, including the acquisition, construction,

 11-5    reconstruction, remodeling, improvement, or rehabilitation of land

 11-6    and buildings and improvements to the buildings for residential

 11-7    housing and other incidental or appurtenant nonhousing facilities.

 11-8                (29) [(27)]  "Servicer" means a person required to meet

 11-9    contractual obligations with the housing finance division or with a

11-10    mortgage lender relating to a loan financed under Subchapter J,

11-11    including:

11-12                      (A)  purchasing mortgage certificates backed by

11-13    mortgage loans;

11-14                      (B)  collecting principal and interest from the

11-15    borrower;

11-16                      (C)  sending principal and interest payments to

11-17    the division;

11-18                      (D)  preparing periodic reports;

11-19                      (E)  notifying the primary mortgage and pool

11-20    insurers of delinquent and foreclosed loans; and

11-21                      (F)  filing insurance claims on foreclosed

11-22    property.

11-23                (30)  "State low income housing plan" means the

11-24    comprehensive and integrated plan for the state assessment of

11-25    housing needs and allocation of housing resources.

11-26          SECTION 6.  Section 2306.007(a), Government Code, is amended

11-27    to read as follows:

 12-1          (a)  To establish an economically depressed or blighted area

 12-2    under Section 2306.004(6)(B) [2306.004(5)(B)] or (C), the governing

 12-3    body of a municipality must hold a public hearing and find that the

 12-4    area:

 12-5                (1)  substantially impairs or arrests the sound growth

 12-6    of the municipality; or

 12-7                (2)  is an economic or social liability and is a menace

 12-8    to the public health, safety, morals, or welfare in its present

 12-9    condition and use.

12-10          SECTION 7.  Section 2306.021(b), Government  Code, is amended

12-11    to read as follows:

12-12          (b)  The department is composed of:

12-13                (1)  the community affairs division;

12-14                (2)  the housing finance division;

12-15                (3)  the manufactured housing division; [and]

12-16                (4)  the community development division; and

12-17                (5)  any other division created by the director.

12-18          SECTION 8.  Section 2306.032(b), Government Code, is amended

12-19    to read as follows:

12-20          (b)  The board shall keep complete minutes of board meetings.

12-21    The accounts, minutes, and other records shall be maintained by

12-22    [kept at the principal office of] the department.

12-23          SECTION 9.  Section 2306.033, Government Code, is amended by

12-24    amending Subsection (a) and adding Subsection (d) to read as

12-25    follows:

12-26          (a)  It is a ground for removal from the board that a member:

12-27                (1)  does not have at the time of appointment the

 13-1    qualifications required by Section 2306.026, 2306.027, or 2306.028

 13-2    for appointment to the board;

 13-3                (2)  does not maintain during the service on the board

 13-4    the qualifications required by Section 2306.026, 2306.027, or

 13-5    2306.028 for appointment to the board;

 13-6                (3)  violates a prohibition established by Section

 13-7    2306.034 or 2306.035;

 13-8                (4)  cannot discharge the member's duties for a

 13-9    substantial part of the term for which the member is appointed

13-10    because of illness or disability; [or]

13-11                (5)  is absent from more than half of the regularly

13-12    scheduled meetings of the board that the member is eligible to

13-13    attend during a calendar year unless the absence is excused by

13-14    majority vote of the board; or

13-15                (6)  engages in misconduct or unethical or criminal

13-16    behavior.

13-17          (d)  If a person has knowledge that a member of the board may

13-18    have engaged in criminal behavior or misconduct, the person shall

13-19    notify the presiding officer of the board.  The presiding officer

13-20    shall refer the allegation to the Travis County district attorney

13-21    for investigation.

13-22          SECTION 10.  Subchapter B, Chapter 2306, Government Code, is

13-23    amended by adding Section 2306.039 to read as follows:

13-24          Sec. 2306.039.  OPEN MEETINGS AND OPEN RECORDS.  (a)  Except

13-25    as provided by Subsection (b), the department and the Texas State

13-26    Affordable Housing Corporation are subject to Chapters 551 and 552.

13-27          (b)  This section does not apply to the personal financial

 14-1    information submitted by an individual or family for a loan, grant,

 14-2    or other housing assistance under a program administered by the

 14-3    department or the Texas State Affordable Housing Corporation or

 14-4    from bonds issued by the department, except that the department and

 14-5    the corporation are permitted to disclose information about any

 14-6    applicant in a form that does not reveal the identity of the

 14-7    individual or family for purposes of determining eligibility for

 14-8    programs and in preparing reports required under this chapter.

 14-9          SECTION 11.  Section 2306.053(b), Government Code, is amended

14-10    to read as follows:

14-11          (b)  The department may:

14-12                (1)  sue and be sued, or plead and be impleaded;

14-13                (2)  act for and on behalf of this state;

14-14                (3)  adopt an official seal or alter it;

14-15                (4)  adopt and enforce bylaws and rules;

14-16                (5)  contract with the federal government, state, any

14-17    public agency, mortgage lender, person, or other entity;

14-18                (6)  designate mortgage lenders to act for the

14-19    department for the origination, processing, and servicing of the

14-20    department's mortgage loans under conditions agreed to by the

14-21    parties;

14-22                (7)  provide, contract, or arrange for consolidated

14-23    processing of a housing development to avoid duplication;

14-24                (8)  encourage homeless individuals and individuals of

14-25    low or very low income to attend the department's educational

14-26    programs and assist those individuals in attending the programs;

14-27                (9)  appoint and determine the qualifications, duties,

 15-1    and tenure of its agents, counselors, and professional advisors,

 15-2    including accountants, appraisers, architects, engineers, financial

 15-3    consultants, housing construction and financing experts, and real

 15-4    estate consultants;

 15-5                (10)  administer federal housing, community affairs, or

 15-6    community development programs, including the low income housing

 15-7    tax credit program;

 15-8                (11)  establish eligibility criteria for individuals

 15-9    and families of low, very low, and families of moderate income to

15-10    participate in and benefit from programs administered by the

15-11    department;

15-12                (12)  execute funding agreements;

15-13                (13)  obtain, retain, and disseminate records and other

15-14    documents in electronic form; and

15-15                (14) [(12)]  do all things necessary, convenient, or

15-16    desirable to carry out the powers expressly granted or necessarily

15-17    implied by this chapter.

15-18          SECTION 12.  Subchapter D, Chapter 2306, Government Code, is

15-19    amended by adding Section 2306.0661 to read as follows:

15-20          Sec. 2306.0661.  PUBLIC HEARINGS.  (a)  This section applies

15-21    only to state-funded housing programs, programs funded with bond

15-22    proceeds, the low income housing tax credit program, and the state

15-23    low income housing plan.  Federally funded programs shall comply

15-24    with the federal public participation requirements and Chapter

15-25    2105, if applicable.

15-26          (b)  The department shall encourage informed and effective

15-27    public participation in the department's programs and plans through

 16-1    holding public hearings and soliciting and accepting public

 16-2    comments during those hearings.  In holding a public hearing, the

 16-3    department shall ensure that:

 16-4                (1)  the location of the hearing is:

 16-5                      (A)  in a public building or facility accessible

 16-6    to the public;

 16-7                      (B)  accessible to persons with disabilities; and

 16-8                      (C)  reasonably accessible by public

 16-9    transportation, if available;

16-10                (2)  hearings are scheduled at times when working and

16-11    nonworking people can attend; and

16-12                (3)  child care is provided where practical.

16-13          (c)  In scheduling a public hearing, the department shall:

16-14                (1)  publish notice of the time, place, and subject of

16-15    the hearing in the Texas Register and a newspaper of general

16-16    circulation in the community in which the hearing is to be held at

16-17    least seven days before the date of the hearing.  Whenever

16-18    practical, the department shall publish notice of the time, place,

16-19    and subject of the hearing in the Texas Register and a newspaper of

16-20    general circulation in the community in which the hearing is to be

16-21    held at least thirty days before the date of the hearing;

16-22                (2)  provide notice of the hearing to each public

16-23    library, in the community in which the hearing is to be held, for

16-24    posting in a public area of the library;

16-25                (3)  provide notice of the hearing to:

16-26                      (A)  each member of the board;

16-27                      (B)  each member of the advisory committee

 17-1    consulted by the department during preparation of the state low

 17-2    income housing plan; and

 17-3                      (C)  each member of the legislature;

 17-4                (4)  make a reasonable effort to inform interested

 17-5    persons and organizations of the hearing;

 17-6                (5)  make information about the hearing, including, if

 17-7    appropriate, the qualified allocation plan, application forms for a

 17-8    low income housing tax credit, and the state low income housing

 17-9    plan, available on the Internet in accordance with Section

17-10    2306.077; and

17-11                (6)  provide an opportunity for persons to transmit on

17-12    the Internet written testimony or comments on a subject of a

17-13    hearing in accordance with rules adopted by the board.

17-14          SECTION 13.  Section 2306.072, Government Code, is amended to

17-15    read as follows:

17-16          Sec. 2306.072.  ANNUAL LOW INCOME HOUSING REPORT.  (a)  Not

17-17    later than March 1 [the 100th day after the last day] of each [the

17-18    fiscal] year, the director shall prepare and submit to the board an

17-19    annual report of the department's housing activities for the

17-20    preceding [fiscal] year.

17-21          (b)  Not later than the 30th day after the date the board

17-22    receives the report, the board shall submit the report to the

17-23    governor, lieutenant governor, speaker of the house of

17-24    representatives, and members of any legislative oversight committee

17-25    [legislature].

17-26          (c)  The report must include:

17-27                (1)  a complete operating and financial statement of

 18-1    the department;

 18-2                (2)  a comprehensive statement of the activities of the

 18-3    department during the preceding [fiscal] year to address the needs

 18-4    identified in the state low income housing plan prepared as

 18-5    required by Section 2306.0721, including:

 18-6                      (A)  a statistical and narrative analysis of the

 18-7    department's performance in addressing the housing needs of

 18-8    individuals and families of low and very low income;

 18-9                      (B)  the ethnic and racial composition of

18-10    individuals and families applying for and receiving assistance from

18-11    each housing-related program operated by the department; and

18-12                      (C)  the department's progress in meeting the

18-13    goals established in the previous housing plan;

18-14                (3)  an explanation of the efforts made by the

18-15    department to ensure the participation of individuals of low income

18-16    and their community-based institutions in [every aspect of]

18-17    department programs that affect them;

18-18                (4)  a statement of the evidence that the department

18-19    has made an affirmative effort to ensure the involvement of

18-20    individuals of low income and their community-based institutions in

18-21    the allocation of funds and the planning process;

18-22                (5)  a statistical analysis, delineated according to

18-23    each ethnic and racial group served by the department, that

18-24    indicates the progress made by the department in implementing the

18-25    state low income housing plan in each of the uniform state service

18-26    regions; [and]

18-27                (6)  an analysis of fair housing opportunities in each

 19-1    housing development that receives financial assistance from the

 19-2    department that includes the following information for each housing

 19-3    development that contains 20 or more living units:

 19-4                      (A)  the street address and municipality or

 19-5    county in which the property is located;

 19-6                      (B)  the total number of units reported by

 19-7    bedroom size;

 19-8                      (C)  the total number of units designed for

 19-9    individuals who are physically challenged or who have special needs

19-10    and the number of these individuals served annually as reported by

19-11    each housing sponsor;

19-12                      (D)  a statistical analysis of average rents

19-13    reported by county [region, as defined in the comprehensive housing

19-14    affordability strategy];

19-15                      (E)  the race or ethnic makeup of each project as

19-16    reported annually by each housing sponsor;

19-17                      (F)  the number of units occupied by individuals

19-18    receiving government-supported housing assistance as reported by

19-19    each housing sponsor;

19-20                      (G)  a statement as to whether the department has

19-21    been notified of a violation of the fair housing law that has been

19-22    filed with the United States Department of Housing and Urban

19-23    Development, the Commission on Human Rights, or the United States

19-24    Department of Justice; and

19-25                      (H)  a statement as to whether the development

19-26    has any instances of material noncompliance with bond indentures or

19-27    deed restrictions discovered through the normal monitoring

 20-1    activities and procedures that include meeting occupancy

 20-2    requirements or rent restrictions imposed by deed restriction or

 20-3    financing agreements; and

 20-4                (7)  a report on the geographic distribution of low

 20-5    income housing tax credits, the amount of unused low income housing

 20-6    tax credits, and the amount of low income housing tax credits

 20-7    received from the federal pool of unused funds from other states.

 20-8          (d)  The annual report submitted in each even-numbered year

 20-9    must:

20-10                (1)  include recommendations designed to strengthen and

20-11    support the Neighborhood Partnership Program in providing home

20-12    ownership opportunities to individuals and families of low and very

20-13    low income; and

20-14                (2)  describe in detail actions the department has

20-15    taken to assist small municipalities and rural areas in obtaining

20-16    matching funds from public and private sources for participation in

20-17    the Neighborhood Partnership Program.

20-18          SECTION 14.  Section 2306.0721, Government Code, is amended

20-19    to read as follows:

20-20          Sec. 2306.0721.  LOW INCOME HOUSING PLAN.  (a)  Not later

20-21    than March 1 [the 100th day after the last day] of each [the

20-22    fiscal] year, the director shall prepare and submit to the board an

20-23    integrated state low income housing plan for the next year.

20-24          (b)  Not later than the 30th day after the date the board

20-25    receives the plan, the board shall submit the plan to the governor,

20-26    lieutenant governor, and the speaker of the house of

20-27    representatives [legislature].

 21-1          (c)  The plan must include:

 21-2                (1)  an estimate and analysis of the housing needs of

 21-3    the following populations in the state:

 21-4                      (A)  individuals and families of moderate, low,

 21-5    and very low income;

 21-6                      (B)  individuals with special needs; and

 21-7                      (C)  homeless individuals;

 21-8                (2)  a proposal to use all available housing resources

 21-9    to address the housing needs of the populations described by

21-10    Subdivision (1) by establishing funding levels for all

21-11    housing-related programs;

21-12                (3)  an estimate of the number of federally assisted

21-13    housing units available for individuals and families of low and

21-14    very low income and individuals with special needs in each county

21-15    [uniform state service region in the state];

21-16                (4)  a description of state programs [rules and

21-17    policies] that govern the use of all available housing resources;

21-18                (5)  a resource allocation plan that targets all

21-19    available housing resources to individuals and families of low and

21-20    very low income and individuals with special needs;

21-21                (6)  a description of the department's efforts to

21-22    monitor and analyze the unused or underused federal resources of

21-23    other state agencies for housing-related services and services for

21-24    homeless individuals and the department's recommendations to ensure

21-25    the full use by the state of all available federal resources for

21-26    those services; [and]

21-27                (7)  strategies to provide housing for individuals and

 22-1    families with special needs;

 22-2                (8)  a description of the department's efforts to

 22-3    encourage the construction of housing units that incorporate energy

 22-4    efficient construction and appliances; and

 22-5                (9)  any other housing-related information that the

 22-6    state is required to include in the one-year action plan of the

 22-7    consolidated plan submitted annually to the United States

 22-8    Department of Housing and Urban Development.

 22-9          (d)  The priorities and policies in another plan adopted by

22-10    the department must be consistent to the extent practical with the

22-11    priorities and policies established in the state low income housing

22-12    plan.

22-13          (e)  To the extent consistent with federal law, the

22-14    preparation and publication of the state low income housing plan

22-15    shall be consistent with the filing and publication deadlines

22-16    required of the department for the consolidated plan.

22-17          SECTION 15.  Section 2306.0722, Government Code, is amended

22-18    to read as follows:

22-19          Sec. 2306.0722.  PREPARATION OF PLAN AND REPORT.  (a)  Before

22-20    preparing the annual low income housing report under Section

22-21    2306.072 and the state low income housing plan under Section

22-22    2306.0721, the department shall meet with representatives of groups

22-23    with an interest in low income housing, nonprofit housing

22-24    organizations, managers, owners, and developers of affordable

22-25    housing, local government officials, and residents of low income

22-26    housing.  The department shall obtain the comments and suggestions

22-27    of the representatives, officials, and residents about the

 23-1    prioritization and allocation of the department's resources in

 23-2    regard to housing.

 23-3          (b)  In preparing the annual report under Section 2306.072

 23-4    and the state low income housing plan under Section 2306.0721, the

 23-5    director shall:

 23-6                (1)  coordinate local, state, and federal housing

 23-7    resources, including tax exempt housing bond financing and low

 23-8    income housing tax credits;

 23-9                (2)  set priorities for the available housing resources

23-10    to help the neediest individuals;

23-11                (3)  evaluate the success of publicly supported housing

23-12    programs;

23-13                (4)  survey and identify the unmet housing needs of

23-14    individuals the department is required to assist;

23-15                (5)  ensure that housing programs benefit an individual

23-16    without regard to the individual's race, ethnicity, sex, or

23-17    national origin;

23-18                (6)  develop housing opportunities for individuals and

23-19    families of low and very low income and individuals with special

23-20    housing needs;

23-21                (7)  develop housing programs through an open, fair,

23-22    and public process;

23-23                (8)  set priorities for assistance in a manner that is

23-24    appropriate and consistent with the housing needs of the

23-25    populations described by Section 2306.0721(c)(1); [and]

23-26                (9)  incorporate recommendations that are consistent

23-27    with the consolidated plan [comprehensive housing affordability

 24-1    strategy and performance report] submitted annually by the state to

 24-2    the United States Department of Housing and Urban Development;

 24-3                (10)  identify the organizations and individuals

 24-4    consulted by the department in preparing the annual report and

 24-5    state low income housing plan and summarize and incorporate

 24-6    comments and suggestions provided under Subsection (a) as the board

 24-7    determines to be appropriate;

 24-8                (11)  develop a plan to respond to changes in federal

 24-9    funding and programs for the provision of affordable housing; and

24-10                (12)  use the following standardized categories to

24-11    describe the income of program applicants and beneficiaries:

24-12                      (A)  0 to 30 percent of area median income

24-13    adjusted for family size;

24-14                      (B)  more than 30 to 60 percent of area median

24-15    income adjusted for family size;

24-16                      (C)  more than 60 to 80 percent of area median

24-17    income adjusted for family size;

24-18                      (D)  more than 80 to 115 percent of area median

24-19    income adjusted for family size; or

24-20                      (E)  more than 115 percent of area median income

24-21    adjusted for family size.

24-22          SECTION 16.  Section 2306.0723, Government  Code, is amended

24-23    to read as follows:

24-24          Sec. 2306.0723.  PUBLIC PARTICIPATION REQUIREMENTS

24-25    [HEARINGS].  (a)  The department shall hold [a] public hearings

24-26    [hearing] on [the annual report and] the annual state low income

24-27    housing plan and report before the director submits the report and

 25-1    the plan to the board. Public hearings shall be held in Dallas or

 25-2    Fort Worth, El Paso, Houston, San Antonio, and at least three

 25-3    additional municipalities selected by the department to represent

 25-4    geographically diverse communities. The department shall provide

 25-5    notice of the public hearings as required by Section  2306.0661,

 25-6    except that the department must publish notice of both hearings not

 25-7    later than the 30th day before the date of the first public

 25-8    hearing.  The published notice must include a summary of the report

 25-9    and plan.  The department shall accept comments on the report and

25-10    plan at the public hearings and for at least 30 days after the date

25-11    of the publication of the notice of the hearings.

25-12          (b)  In addition to any other necessary topics relating to

25-13    the report and the plan, each public hearing required by Subsection

25-14    (a) must address:

25-15                (1)  infrastructure needs;

25-16                (2)  home ownership programs;

25-17                (3)  rental housing programs;

25-18                (4)  housing repair programs; and

25-19                (5)  the concerns of individuals with special needs, as

25-20    defined by Section 2306.511.

25-21          (c)  The board shall hold a public hearing on the state low

25-22    income housing report and plan before the board submits the report

25-23    and the plan to the governor, lieutenant governor, speaker of the

25-24    house of representatives, and members of the legislature.

25-25          (d) [(c)]  The board shall include with the report and the

25-26    plan the board submits to the governor, lieutenant governor,

25-27    speaker of the house of representatives, members of the [and]

 26-1    legislature, and members of the advisory board formed by the

 26-2    department to advise on the consolidated plan a written summary

 26-3    [report] of public comments on the report and the plan.

 26-4          SECTION 17.  Section 2306.076(a), Government Code, is amended

 26-5    to  read as follows:

 26-6          (a)  The board may purchase from department funds liability

 26-7    insurance for the director, [and] board members, [and] officers,

 26-8    and employees of the department.

 26-9          SECTION 18.  Subchapter D, Chapter 2306, Government Code, is

26-10    amended by adding Section 2306.077 to read as follows:

26-11          Sec. 2306.077.  INTERNET AVAILABILITY.  (a)  In this section,

26-12    "Internet" means the largest, nonproprietary, nonprofit,

26-13    cooperative, public computer network, popularly known as the

26-14    Internet.

26-15          (b)  The department, to the extent it considers it to be

26-16    feasible and appropriate, shall make information on the

26-17    department's  programs, public hearings, and scheduled public

26-18    meetings available to the public on the Internet.

26-19          (c)  The access to information allowed by this section is in

26-20    addition to the public's free access to the information through

26-21    other electronic or print distribution of the information and does

26-22    not alter, diminish, or relinquish any copyright or other

26-23    proprietary interest or entitlement of this state or a private

26-24    entity under contract with this state.

26-25          SECTION 19.  The heading of Subchapter E, Chapter 2306,

26-26    Government Code, is amended to read as follows:

26-27               SUBCHAPTER E. COMMUNITY AFFAIRS AND COMMUNITY

 27-1                           DEVELOPMENT PROGRAMS

 27-2          SECTION 20.  Subchapter E, Chapter 2306, Government Code, is

 27-3    amended by adding Section 2306.094 to read as follows:

 27-4          Sec. 2306.094.  SERVICES FOR THE HOMELESS.  The department

 27-5    shall administer the state's allocation of federal funds provided

 27-6    under the Emergency Shelter Grants Program (42 U.S.C. Section 11371

 27-7    et seq.), as amended, or its successor program, and any other

 27-8    federal funds provided for the benefit of homeless individuals and

 27-9    families.

27-10          SECTION 21.  Section 2306.097, Government Code, is amended to

27-11    read as follows:

27-12          Sec. 2306.097.  ENERGY SERVICES PROGRAM FOR LOW-INCOME

27-13    INDIVIDUALS.  [(a)]  The Energy Services Program for Low-Income

27-14    Individuals [is in the community affairs division.]

27-15          [(b)  The program] shall operate in conjunction with the

27-16    community services block grant program and has jurisdiction and

27-17    responsibility for administration of the following elements of the

27-18    State Low-Income Energy Assistance Program, from whatever sources

27-19    funded:

27-20                (1)  the Energy Crisis Intervention Program;

27-21                (2)  the weatherization program; and

27-22                (3)  the Low-Income Home Energy Assistance Program.

27-23          SECTION 22.  Section 2306.099, Government Code, is amended to

27-24    read as follows:

27-25          Sec. 2306.099.  TRANSFER OF FEDERAL FUNDS.  (a)  The

27-26    department may enter into an interagency agreement with the Texas

27-27    Department of Commerce to reimburse the Texas Department of

 28-1    Commerce for providing on behalf of the department marketing, [and]

 28-2    underwriting, and any other services on the portion of the federal

 28-3    community  development block grant funds allocated by the

 28-4    department for economic development activities.

 28-5          (b)  The department shall allocate not more than 20 percent

 28-6    of the federal funds received by the department to the Texas

 28-7    Department of Commerce to be used for economic development

 28-8    activities.

 28-9          (c)  The activities undertaken by the Texas Department of

28-10    Commerce under this section must be monitored [approved]  by the

28-11    department.

28-12          SECTION 23.  Section 2306.111, Government Code, is amended to

28-13    read as follows:

28-14          Sec. 2306.111.  HOUSING FUNDS.  (a)  The department, through

28-15    the housing finance [any] division, shall administer all [the]

28-16    federal housing  funds provided to the state under the

28-17    Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.

28-18    Section 12704 et seq.) or any other affordable housing program.

28-19          (b)  The housing finance division shall adopt a goal to apply

28-20    an aggregate [a] minimum of 25 percent of the division's  total

28-21    housing funds toward housing assistance for individuals and

28-22    families of extremely low and very low income.

28-23          SECTION 24.  Section 2306.142, Government Code, is amended to

28-24    read as follows:

28-25          Sec. 2306.142.  AUTHORIZATION OF BONDS.  In its discretion,

28-26    the board shall authorize all bonds issued by the department

28-27    [housing finance division].

 29-1          SECTION 25.  Section 2306.171, Government Code, is amended to

 29-2    read as follows:

 29-3          Sec. 2306.171.  GENERAL DUTIES OF DEPARTMENT RELATING TO

 29-4    PURPOSES OF HOUSING FINANCE DIVISION.  The department shall:

 29-5                (1)  develop policies and programs designed to increase

 29-6    the number of individuals and families of extremely low, [and] very

 29-7    low, and low income and families of moderate income  that

 29-8    participate in the housing finance division's programs;

 29-9                (2)  work with municipalities, counties, public

29-10    agencies, housing sponsors, and nonprofit and for profit

29-11    corporations to  provide:

29-12                      (A)  information on division programs; and

29-13                      (B)  technical assistance to municipalities,

29-14    counties, and nonprofit corporations;

29-15                (3)  encourage private for profit and nonprofit

29-16    corporations and state organizations to match the division's funds

29-17    to assist in providing affordable housing to individuals and

29-18    families of low and very low income and families of moderate

29-19    income;

29-20                (4)  provide matching funds to municipalities,

29-21    counties, public agencies, housing sponsors, and nonprofit

29-22    developers who qualify under the division's programs; and

29-23                (5)  administer the state's allocation of federal funds

29-24    provided under the rental rehabilitation grant program authorized

29-25    by Section 17, Title I, of the United States Housing Act of 1937

29-26    (42 U.S.C. Section 1437o).

29-27          SECTION 26.  Section 2306.177, Government Code, is amended to

 30-1    read as follows:

 30-2          Sec. 2306.177.  HEARINGS.  The department may:

 30-3                (1)  conduct hearings; and

 30-4                (2)  take testimony and proof, under oath, at public

 30-5    hearings, on matters necessary to carry out the department's

 30-6    [housing finance division's] purposes.

 30-7          SECTION 27.  Subchapter H, Chapter 2306, Government Code, is

 30-8    amended by adding Section 2306.184 to read as follows:

 30-9          Sec. 2306.184.  DISCLOSURE OF FEES.  (a)  This section does

30-10    not apply to an application submitted by an individual or family

30-11    for a loan, grant, or other assistance under a program administered

30-12    by the department or the Texas State Affordable Housing Corporation

30-13    or from bonds issued by the department.

30-14          (b)  An application for a loan, grant, or other assistance

30-15    for an eligible affordable housing project or activity under a

30-16    program administered by the department or the Texas State

30-17    Affordable Housing Corporation or from bonds issued by the

30-18    department must include:

30-19                (1)  the name of each person expected to charge the

30-20    applicant a project development fee or project operation fee;

30-21                (2)  the nature and amount of each project development

30-22    fee and project operation fee the applicant is expected to pay; and

30-23                (3)  any interlocking interests of persons listed under

30-24    Subdivision (1).

30-25          (c)  Not later than the 30th day after the date the term of a

30-26    project for which an application was granted for a grant, loan, or

30-27    other assistance described by Subsection (b) expires, the recipient

 31-1    must provide to the department a statement that includes:

 31-2                (1)  the name of each person to whom the recipient paid

 31-3    a project development fee or project operation fee during the term

 31-4    of the project;

 31-5                (2)  the nature and amount of each project development

 31-6    fee and project operation fee paid by the recipient during the term

 31-7    of the project; and

 31-8                (3)  any interlocking interests of persons listed under

 31-9    Subdivision (1).

31-10          (d)  The department shall adopt rules governing penalties and

31-11    sanctions under this section for a person who:

31-12                (1)  does not provide the information required by this

31-13    section; or

31-14                (2)  knowingly discloses false information.

31-15          (e)  In this section:

31-16                (1)  "Project development fee" means a fee charged in

31-17    connection with the planning, design, or development of an

31-18    affordable housing project, including an application fee, tax

31-19    credit consulting fee, development consulting fee, mortgage

31-20    brokerage fee, and financial advising fee.

31-21                (2)  "Project operation fee" means a fee charged in

31-22    connection with the operation, construction, management, or

31-23    administration of an affordable housing project, including a

31-24    management fee, asset management fee, incentive management fee,

31-25    general partner fee, construction supervision fee, and construction

31-26    management fee.

31-27          SECTION 28.  Section 2306.201(b), Government Code, is amended

 32-1    to read as follows:

 32-2          (b)  The fund consists of:

 32-3                (1)  appropriations or transfers made to the fund;

 32-4                (2)  unencumbered fund balances; [and]

 32-5                (3)  public or private gifts or grants;

 32-6                (4)  investment income; and

 32-7                (5)  funds from any other source.

 32-8          SECTION 29.  Section 2306.202, Government Code, is amended to

 32-9    read as follows:

32-10          Sec. 2306.202.  USE OF HOUSING TRUST FUND.  (a)  The

32-11    department, through the housing finance division, shall use the

32-12    housing trust fund to provide loans, grants, or other comparable

32-13    forms of assistance to local units of government, public housing

32-14    authorities, nonprofit organizations, and income-eligible

32-15    individuals, families, and  households to finance, acquire,

32-16    rehabilitate, and develop decent, safe, and sanitary housing.  In

32-17    each biennium the first $2.6 million available through the housing

32-18    trust fund for loans, grants, or other comparable forms of

32-19    assistance shall be set aside and made available exclusively for

32-20    local units of government, public housing authorities, and

32-21    nonprofit organizations.  Any additional funds may also be made

32-22    available to for-profit organizations so long as at least 45

32-23    percent of available funds in excess of the first $2.6 million

32-24    shall be made available to nonprofit organizations for the purpose

32-25    of acquiring, rehabilitating, and developing decent, safe, and

32-26    sanitary housing.  The remaining portion shall be competed for by

32-27    nonprofit organizations, for-profit organizations, and other

 33-1    eligible entities.  Notwithstanding any other section of this

 33-2    chapter, the department may also use the fund to acquire property

 33-3    to endow  the fund.

 33-4          (b)  Use of the fund is limited to providing:

 33-5                (1)  assistance for individuals and families of low and

 33-6    very low income;  [and]

 33-7                (2)  technical assistance and capacity building to

 33-8    nonprofit organizations engaged in developing housing for

 33-9    individuals and families of low and very low income; and

33-10                (3)  security for repayment of revenue bonds issued to

33-11    finance housing for individuals and families of low and very low

33-12    income.

33-13          SECTION 30.  Section 2306.205, Government Code, is amended by

33-14    adding Subsection (f) to read as follows:

33-15          (f)  In addition to the money transferred into the housing

33-16    trust fund under this section, and subject to Subsection (e), the

33-17    department shall transfer into the fund the amount of any

33-18    origination fee, asset oversight fee, and servicing fee the

33-19    department or the Texas State Affordable Housing Corporation

33-20    receives in relation to the administration of its 501(c)(3) bond

33-21    program established pursuant to Section 2306.358 that exceeds the

33-22    amount needed by the department or the Texas State Affordable

33-23    Housing Corporation to pay its operating and overhead costs and

33-24    fund reserves, including an insurance reserve or credit enhancement

33-25    reserve established by the board in administering the program.

33-26          SECTION 31.  Section 2306.207(a), Government Code, is amended

33-27    to read as follows:

 34-1          (a)  The department [housing finance division] may create a

 34-2    reserve fund with the comptroller [state treasurer] out of:

 34-3                (1)  proceeds from the sale of the department's

 34-4    [division's] bonds; or

 34-5                (2)  other resources.

 34-6          SECTION 32.  Section 2306.232, Government Code, is amended to

 34-7    read as follows:

 34-8          Sec. 2306.232.  TEXAS HOUSING AGENCY LOAN OR GUARANTEE.  A

 34-9    loan or guarantee made by the Texas Housing Agency becomes a loan

34-10    or guarantee of the department [housing finance division].

34-11          SECTION 33.  Section 2306.251, Government Code, is amended as

34-12    follows:

34-13          Sec. 2306.251.  PROPERTY OWNERSHIP PROGRAM.  (a)  While it is

34-14    not the intent of the legislature that the department compete with

34-15    the private sector by becoming a long-term owner of real property

34-16    merely for the purpose of owning, managing, and operating tenant

34-17    properties, the [The] department may acquire, [and] own,

34-18    reconstruct, rehabilitate, manage, or operate real property:

34-19                (1)  on an interim basis for sale or rental to:

34-20                      (A) [(1)]  individuals and families of low and

34-21    very low income and families of moderate income; and

34-22                      (B) [(2)]  nonprofit housing organizations and

34-23    other housing organizations to serve the needs of individuals and

34-24    families of low and very low income and families of moderate

34-25    income;

34-26                (2)  for a period of time not to exceed 10 years for

34-27    the purposes of:

 35-1                      (A)  preserving publicly financed or subsidized

 35-2    housing; or

 35-3                      (B)  participating in a risk-sharing program

 35-4    entered into with the United States Department of Housing and Urban

 35-5    Development, any other insurer or guarantor of any United States

 35-6    Department of Housing and Urban Development-related indebtedness, a

 35-7    government sponsored enterprise, a housing finance agency or

 35-8    corporation, or a public housing authority.

 35-9          (b)  [Property acquired by the department must qualify for

35-10    home mortgage insurance after rehabilitation.]

35-11          [(c)]  The department may use money from the housing trust

35-12    fund, unencumbered fund balances, fees received by the housing

35-13    finance division, proceeds from the sale or rental of real

35-14    property, distribution of earnings under Section 2306.557, or

35-15    appropriations, allocations, grants, or gifts from any public or

35-16    private source to purchase property under this section.

35-17          (c)  If the department uses the housing trust fund to finance

35-18    real property acquisitions, it [(d)  The housing finance division]

35-19    may not use more than 10 percent of the yearly balance of the

35-20    [housing trust] fund to acquire the real property.

35-21          (d) [(e)]  If the department acquires property under this

35-22    section, the department shall submit an annual report to the  board

35-23    that includes an analysis of [have an independent audit conducted

35-24    annually to analyze] the property ownership program's:

35-25                (1)  financial stability;

35-26                (2)  cost-effectiveness; and

35-27                (3)  effectiveness in serving individuals and families

 36-1    of low and very low income and families of moderate income.

 36-2          SECTION 34.  Section 2306.252, Government Code, is amended to

 36-3    read as follows:

 36-4          Sec. 2306.252.  [LOW AND VERY LOW INCOME] HOUSING RESOURCE

 36-5    CENTER.  (a)  The board shall establish a [low and very low income]

 36-6    housing resource center in the housing finance division.

 36-7          (b)  The center shall:

 36-8                (1)  provide educational material to housing advocates,

 36-9    housing sponsors, borrowers, and tenants;

36-10                (2)  provide technical assistance to nonprofit housing

36-11    sponsors; and

36-12                (3)  [focus on marketing loans and other programs of

36-13    the housing finance division to individuals and families of low and

36-14    very low income; and]

36-15                [(4)]  assist [lenders] in the development of housing

36-16    policy, including the annual state low income housing plan and

36-17    report and the consolidated plan [marketing loans to individuals

36-18    and families of low and very low income].

36-19          (c)  The housing resource center is intended to assist

36-20    individuals, local organizations, and local governments in

36-21    providing for the housing needs of individuals and families in

36-22    their communities by providing information available to the center

36-23    to housing contractors, nonprofit housing sponsors, community-based

36-24    organizations, and local governments on:

36-25                (1)  local housing needs;

36-26                (2)  housing programs;

36-27                (3)  available funding sources; and

 37-1                (4)  programs that affect the creation, improvement, or

 37-2    preservation of housing affordable to individuals and families of

 37-3    low and very low income.

 37-4          SECTION 35.  Section 2306.267, Government Code, is amended to

 37-5    read as follows:

 37-6          Sec. 2306.267.  COMPLIANCE WITH APPLICABLE LAWS, RULES, AND

 37-7    CONTRACT TERMS.  The department may order a housing sponsor to

 37-8    perform or refrain from performing certain acts in order to comply

 37-9    with the law, department [housing finance division] rules, or terms

37-10    of a contract or agreement to which the housing sponsor is a party.

37-11          SECTION 36.  Section 2306.270, Government Code, is amended to

37-12    read as follows:

37-13          Sec. 2306.270.  REGULATION OF RETIREMENT OF CAPITAL

37-14    INVESTMENT OR REDEMPTION OF STOCK.  The department shall regulate

37-15    the retirement of a capital investment or the redemption of stock

37-16    of a limited profit housing sponsor if the retirement or

37-17    redemption, when added to a dividend or other distribution, exceeds

37-18    in any one fiscal year the permitted percentage, as allowed by the

37-19    department [housing finance division's rules], of the original face

37-20    amount of the limited profit housing sponsor's investment or equity

37-21    in a housing development.

37-22          SECTION 37.  Section 2306.291(a), Government Code, is amended

37-23    to read as follows:

37-24          (a)  The department may purchase and take assignments from

37-25    mortgage lenders or the federal government of notes and other

37-26    obligations, including contracts for deed and mortgages, evidencing

37-27    loans or interest in loans for the construction, remodeling,

 38-1    improvement, [or] rehabilitation, purchase, leasing, or refinancing

 38-2    of housing developments for individuals and families of low and

 38-3    very low income and families of moderate income.

 38-4          SECTION 38.  Section 2306.351(a), Government Code, is amended

 38-5    to read as follows:

 38-6          (a)  The department may issue bonds under this chapter,

 38-7    including qualified 501(c)(3) bonds under Section 145,  Internal

 38-8    Revenue Code of 1986 (26 U.S.C. Section 145),  and may:

 38-9                (1)  provide for and secure payment of the bonds;

38-10                (2)  provide for the rights of the holders of the

38-11    bonds, as permitted by this chapter and the Texas Constitution; and

38-12                (3)  purchase, hold, cancel, resell, or otherwise

38-13    dispose of its bonds, subject to restrictions in a resolution

38-14    authorizing issuance of its bonds.

38-15          SECTION 39.  Section 2306.357, Government Code, is amended to

38-16    read as follows:

38-17          Sec. 2306.357.  BONDS ISSUED BY TEXAS HOUSING AGENCY.  A

38-18    general obligation or revenue bond issued by the Texas Housing

38-19    Agency becomes a general obligation or revenue bond of the

38-20    department [housing finance division].

38-21          SECTION 40.  Subchapter P, Chapter 2306, Government Code, is

38-22    amended by adding Section 2306.358 to read as follows:

38-23          Sec. 2306.358.  ISSUANCE OF QUALIFIED 501(c)(3) BONDS.  (a)

38-24    Of the total qualified 501(c)(3) bonds issued under Section 145 of

38-25    the Internal Revenue Code of 1986 (26 U.S.C. Section 145) in each

38-26    fiscal year,  it is the express intent of the legislature that the

38-27    department shall allocate qualified 501(c)(3) bonding authority as

 39-1    follows:

 39-2                (1)  at least 50 percent of the total annual issuance

 39-3    amount authorized through the memorandum of understanding provided

 39-4    for in Subsection (b) of this section is reserved for the purposes

 39-5    of new construction or acquisition with substantial rehabilitation;

 39-6                (2)  not more than 25 percent of the total annual

 39-7    issuance amount authorized through the memorandum of understanding

 39-8    provided for in Subsection (b) of this section may be used for

 39-9    projects in any one metropolitan area; and

39-10                (3)  at least 15 percent of the annual issuance amount

39-11    authorized through the memorandum of understanding provided for in

39-12    Subsection (b) of this section is reserved for projects in rural

39-13    areas.

39-14          (a-1)  For the purposes of Subsection (a):

39-15                (1)  "Rural area" and "metropolitan area" shall be

39-16    defined through the memorandum of understanding provided for in

39-17    Subsection (b) of this section.

39-18                (2)  "Substantial rehabilitation" means rehabilitation

39-19    of a project with a minimum of $5,000 of rehabilitation cost per

39-20    unit.

39-21          (b)  A qualified 501(c)(3) bond may not be issued unless

39-22    approved by the Bond Review Board.  In addition, the Bond Review

39-23    Board shall enter into a memorandum of understanding with the

39-24    department specifying the amount of bonds to be issued in each

39-25    fiscal year.  The Bond Review Board may not approve a proposal to

39-26    issue qualified 501(c)(3) bonds unless they meet the requirements

39-27    of this section, including the memorandum of understanding, and all

 40-1    other laws that may apply.

 40-2          (c)  In addition to the requirements of Section 145 of the

 40-3    Internal Revenue Code of 1986 (26 U.S.C. Section 145), a qualified

 40-4    501(c)(3) organization must:

 40-5                (1)  demonstrate to the department that the project is

 40-6    carefully and conservatively underwritten to:

 40-7                      (A)  ensure that the project is well run, well

 40-8    maintained, and financially viable; and 

 40-9                      (B)  minimize the risk of the organization's

40-10    default;

40-11                (2)  ensure that at least 60 percent of the housing to

40-12    be provided under the project is affordable housing provided to

40-13    individuals and families of low and very low income and:

40-14                      (A)  at least 40 percent of the units in a

40-15    multifamily development are affordable to individuals and families

40-16    with incomes at or below 60 percent of the median family income,

40-17    adjusted for family size; or

40-18                      (B)  at least 20 percent of the units in a

40-19    multifamily development are affordable to individuals and families

40-20    with incomes at or below 50 percent of the median family income,

40-21    adjusted for family size; and

40-22                (3)  enter into an agreement with the department in

40-23    which the 501(c)(3) organization:

40-24                      (A)  agrees during the term of the agreement to

40-25    reserve at least 60 percent of the housing to be provided under the

40-26    project for individuals and families of low and very low income;

40-27                      (B)  ensures that the reserved housing will

 41-1    remain affordable to individuals and families of low and very low

 41-2    income during the term of the agreement;

 41-3                      (C)  agrees to not discriminate against a tenant

 41-4    applicant solely because the applicant receives public rental

 41-5    assistance payments, except if at least 15 percent of the housing

 41-6    units provided under the project are occupied by tenants who

 41-7    receive public rental assistance payments; and

 41-8                      (D)  agrees to restrict the rents charged on

 41-9    those units reserved for individuals and families of low and very

41-10    low income at 30 percent of the area median income adjusted for

41-11    family size and utility allowance, unless this requirement is

41-12    waived or modified on a case-by-case basis by the board, and

41-13    approved by the Bond Review Board, if both boards determine that

41-14    the waiver or modification is necessary for an area of the state

41-15    because the area's median income would prevent the construction of

41-16    new affordable projects.

41-17          (d)  Subsection (c)(3)(C) does not prohibit an organization

41-18    from requiring a tenant applicant who receives public assistance to

41-19    meet the organization's standard criteria for occupancy, including

41-20    such criteria as satisfactory creditworthiness and lack of criminal

41-21    history.

41-22          (e)  The agreement provided for in Subsection (c)(3) may

41-23    provide for the lease or sale of the project to a nonprofit

41-24    corporation approved by the department subject to the conditions

41-25    specified in Subsection (c).

41-26          (f)  Neither the department nor the Texas State Affordable

41-27    Housing Corporation may use state or federal money to provide for

 42-1    credit enhancement of a bond issued under this section unless the

 42-2    credit enhancement would facilitate the issuance of bonds for the

 42-3    purpose of financing the creation or preservation of affordable

 42-4    housing by 501(c)(3) nonprofit entities.

 42-5          (g)  In lieu of complying with the set-aside requirements

 42-6    specified in Subsection (c)(2), a qualified 501(c)(3) organization

 42-7    may comply with such other set-asides or restrictions as are

 42-8    approved by the Internal Revenue Service as a basis for the

 42-9    determination letter addressed to the qualified 501(c)(3)

42-10    organization.

42-11          (h)  For purposes of this section, "rural area" and

42-12    "metropolitan area" shall be defined through the memorandum of

42-13    understanding provided for in Subsection (b) of this section.

42-14          SECTION 41.  Section 2306.375, Government Code, is amended to

42-15    read as follows:

42-16          Sec. 2306.375.  PERSONAL LIABILITY OF BOARD MEMBER OR

42-17    DIRECTOR.  A member of the board or the director is not liable

42-18    personally for bonds issued or contracts executed by the department

42-19    or for any other action taken in accordance with the powers  and

42-20    duties authorized by this chapter [housing finance division].

42-21          SECTION 42.  Section 2306.411(a), Government Code, is amended

42-22    to read as follows:

42-23          (a)  In addition to other security for the department's bonds

42-24    authorized by this chapter, payment of the principal and interest

42-25    and redemption premium, if any, on the department's bonds may be

42-26    secured by a first or subordinate lien on and pledge of all or part

42-27    of:

 43-1                (1)  the department's assets and real, personal, or

 43-2    mixed property, including:

 43-3                      (A)  mortgages or other obligations securing the

 43-4    assets of property;

 43-5                      (B)  investments; and

 43-6                      (C)  trust agreements or trust indentures

 43-7    administered by one or more corporate trustees as allowed by the

 43-8    board; and

 43-9                (2)  the reserves or funds of the department [housing

43-10    finance division].

43-11          SECTION 43.  Section 2306.412(a), Government Code, is amended

43-12    to read as follows:

43-13          (a)  A lien on or pledge of revenues, income, assets,

43-14    reserves, funds, or other resources of the department [housing

43-15    finance division], as authorized by this chapter, is valid and

43-16    binding from the time of payment for and delivery of the bonds

43-17    authorized by the board resolution creating or confirming the lien

43-18    or pledge.

43-19          SECTION 44.  Section 2306.491, Government Code, is amended to

43-20    read as follows:

43-21          Sec. 2306.491.  BONDS NEGOTIABLE INSTRUMENTS.

43-22    Notwithstanding any other statute, a bond and interest coupon

43-23    issued and delivered by the department [housing finance division]

43-24    is a negotiable instrument under the Uniform Commercial Code,

43-25    except that the bond may be registered or subject to registration

43-26    under this chapter.

43-27          SECTION 45.  Subchapter Y, Chapter 2306, Government Code, as

 44-1    added by Chapter 76, Acts of the 74th Legislature, Regular Session,

 44-2    1995, is amended to read as follows:

 44-3        SUBCHAPTER Y.  TEXAS STATE AFFORDABLE HOUSING CORPORATION 

 44-4          Sec. 2306.551.  DEFINITION.  In this subchapter,

 44-5    "corporation" means the Texas State Affordable Housing Corporation.

 44-6          Sec. 2306.552.  CREATION.  (a)  The existence of the Texas

 44-7    State Affordable Housing Corporation, or any similarly named

 44-8    corporation, begins on the date that the secretary of state issues

 44-9    the certificate of incorporation.

44-10          (b)  The charter of the corporation must establish the

44-11    corporation as nonprofit and specifically dedicate the

44-12    corporation's activities to the public purpose authorized by this

44-13    subchapter [benefit of the department].

44-14          (c)  The creation of the corporation does not limit or impair

44-15    the rights, powers, and duties of the department under this

44-16    chapter.

44-17          Sec. 2306.553.  PURPOSES.  (a)  The public purpose of the

44-18    corporation is to perform activities and services that the

44-19    corporation's board of directors determines will promote the public

44-20    health, safety, and welfare through the provision of adequate,

44-21    safe, and sanitary housing for individuals and families of low and

44-22    very low income and families of moderate income.  The activities

44-23    and services shall include engaging in mortgage banking activities

44-24    and lending transactions and acquiring, holding, selling, or

44-25    leasing real or personal property [corporation shall carry out the

44-26    public purposes of this chapter on behalf of the state].

44-27          (b)  The corporation's primary public purpose is to

 45-1    facilitate the provision of housing and the making of affordable

 45-2    loans to individuals and families of low and very low income and

 45-3    families of moderate income.  The corporation may make loans for

 45-4    single family homes only to individuals and families of low and

 45-5    very low income and families of moderate income.  The corporation

 45-6    may make loans for multifamily developments if:

 45-7                (1)  at least 40 percent of the units in a multifamily

 45-8    development are affordable to individuals and families with incomes

 45-9    at or below 60 percent of the median family income, adjusted for

45-10    family size; or

45-11                (2)  at least 20 percent of the units in a multifamily

45-12    development are affordable to individuals and families with incomes

45-13    at or below 50 percent of the median family income, adjusted for

45-14    family size [corporation may engage only in the performance of

45-15    charitable functions].

45-16          (c)  To the extent reasonably practicable, the corporation

45-17    shall use the services of banks, community banks, savings banks,

45-18    thrifts, savings and loan associations, private mortgage companies,

45-19    nonprofit organizations, and other lenders for the origination of

45-20    all loans contemplated by this subchapter and assist the lenders in

45-21    providing credit to individuals and families of low and very low

45-22    income and families of moderate income.

45-23          Sec. 2306.554.  BOARD OF DIRECTORS AND OFFICERS.

45-24                      (a)  The [members of the board serve as the]

45-25    board of directors of the corporation consists of six members as

45-26    follows:

45-27                (1)  the presiding officer of the board of directors of

 46-1    the department;

 46-2                (2)  the presiding officer of the programs committee of

 46-3    the board of directors of the department; and

 46-4                (3)  four members of the board of directors of the

 46-5    corporation shall be appointed by the governor and shall represent

 46-6    any of the following areas:

 46-7                      (A)  state or federal savings banks or savings

 46-8    and loan associations;

 46-9                      (B)  community banks with assets of $200 million

46-10    or less;

46-11                      (C)  large metropolitan banks with assets of more

46-12    than $1 billion;

46-13                      (D)  asset management companies;

46-14                      (E)  mortgage servicing companies;

46-15                      (F)  builders;

46-16                      (G)  real estate developers;

46-17                      (H)  real estate brokers;

46-18                      (I)  community or economic development

46-19    organizations;

46-20                      (J)  private mortgage companies;

46-21                      (K)  nonprofit housing development companies;

46-22                      (L)  attorneys;

46-23                      (M)  investment bankers;

46-24                      (N)  underwriters;

46-25                      (O)  private mortgage insurance companies;

46-26                      (P)  appraisers;

46-27                      (Q)  property management companies;

 47-1                      (R)  financial advisors;

 47-2                      (S)  nonprofit foundations;

 47-3                      (T)  financial advisors; or

 47-4                      (U)  any other area of expertise that the

 47-5    governor finds necessary for the successful operation of the

 47-6    corporation.

 47-7          (b)  The governor shall appoint a presiding officer from the

 47-8    members who are not also serving as members of the board of

 47-9    directors of the department.

47-10          (c)  A member of the corporation's board of directors is not

47-11    entitled to compensation, except for the members who are also

47-12    members of the department's board of directors, but is entitled to

47-13    reimbursement of travel expenses incurred by the member while

47-14    conducting the business of the board, as provided by the General

47-15    Appropriations Act.

47-16          (d)  The director of the department shall serve ex officio as

47-17    president of the corporation.  The president is not entitled to

47-18    compensation, unless the president is not also the executive

47-19    director of the department, but is entitled to reimbursement from

47-20    the corporation of travel expenses incurred by the member while

47-21    conducting the business of the board, as provided by the General

47-22    Appropriations Act.  The director of the department shall serve as

47-23    president of the corporation only if the director has experience in

47-24    the field of mortgage banking or residential lending as

47-25    demonstrated by:

47-26                (1)  employment in one or more middle or upper level

47-27    management positions for at least two years with a mortgage bank,

 48-1    commercial bank, thrift, savings and loan association, private

 48-2    mortgage company, mortgage servicing entity, or other financial

 48-3    institution; or

 48-4                (2)  employment in a position of providing legal or

 48-5    consulting services related to mortgage banking or residential

 48-6    lending to any one of the type of entities listed in Subsection

 48-7    (d)(1) for at least five years.

 48-8          (e)  If the director does not satisfy the requirements of

 48-9    Subsection (d)(1) or (2), the corporation shall employ, for

48-10    compensation to be determined by the corporation's board of

48-11    directors, an individual that satisfies the requirements of

48-12    Subsection (d)(1) or (2) to serve as president of the corporation.

48-13          (f)  The corporation may purchase, with corporation funds,

48-14    liability insurance for each of the members of the corporation's

48-15    board of directors, officers, and other employees of the

48-16    corporation in an amount that the corporation's board of directors

48-17    considers reasonably necessary to:

48-18                (1)  insure against foreseeable liabilities; and

48-19                (2)  provide for all costs of defending against those

48-20    liabilities, including, without limitation, court costs and

48-21    attorney's fees.

48-22          Sec. 2306.555.  POWERS.  (a)  The corporation has the powers

48-23    [and is subject to the limitations] provided for the department

48-24    under this chapter.

48-25          (b)  In addition to the powers granted by Subsection (a), the

48-26    corporation has all rights and powers necessary to accomplish its

48-27    public purpose, including the powers to:

 49-1                (1)  purchase, service, sell, lend on the security of,

 49-2    or otherwise transact in:

 49-3                      (A)  mortgages, including federal mortgages and

 49-4    federally insured mortgages;

 49-5                      (B)  mortgage loans;

 49-6                      (C)  deeds of trust; and

 49-7                      (D)  loans or other advances of credit secured by

 49-8    liens against manufactured housing;

 49-9                (2)  guarantee or insure timely payment of mortgage

49-10    loans and loans or other advances of credit secured by liens

49-11    against manufactured housing, provided that the corporation's

49-12    liability on that guaranty or insurance is limited to the assets of

49-13    a guaranty fund or self-insurance fund established and maintained

49-14    by the corporation;

49-15                (3)  make mortgage loans and loans or other advances of

49-16    credit secured by liens against manufactured housing to individuals

49-17    and families of low to moderate income;

49-18                (4)  make mortgage loans to provide temporary or

49-19    permanent financing or refinancing for housing or land

49-20    developments, including refunding outstanding obligations,

49-21    mortgages, or advances issued for those purposes;

49-22                (5)  borrow, give security, pay interest or other

49-23    return, or issue bonds or other obligations, including notes,

49-24    debentures, or mortgage-backed securities, provided that each bond

49-25    or other obligation issued by the corporation must contain a

49-26    statement that the state is not obligated to pay the principal of

49-27    or any premium or interest on the bond or other obligation and that

 50-1    the full faith and credit and the taxing power of the state are not

 50-2    pledged, given, or loaned to the payment;

 50-3                (6)  acquire, hold, invest, use, pledge, reserve, and

 50-4    dispose of its assets, revenues, income, receipts, funds, and money

 50-5    from every source and to select one or more depositories, inside or

 50-6    outside the state, subject to the terms of any resolution,

 50-7    indenture, or other contract under which any bonds or other

 50-8    obligations are issued or any guaranty or insurance is provided;

 50-9                (7)  establish, charge, and collect fees, charges, and

50-10    penalties in connection with the programs, services, and activities

50-11    of the corporation;

50-12                (8)  procure insurance and pay premiums on insurance of

50-13    any type, in amounts, and from insurers as the corporation's board

50-14    of directors considers necessary and advisable to further the

50-15    corporation's public purpose, including, subject to Section

50-16    2306.554(f), liability insurance for the members of the

50-17    corporation's board of directors and the officers and other

50-18    employees of the corporation;

50-19                (9)  make, enter into, and enforce contracts,

50-20    agreements, leases, indentures, mortgages, deeds, deeds of trust,

50-21    security agreements, pledge agreements, credit agreements, and

50-22    other instruments with any person, including a mortgage lender,

50-23    servicer, housing sponsor, the federal government, or any public

50-24    agency, on terms the corporation determines may be acceptable;

50-25                (10)  own, rent, lease, or otherwise acquire, accept,

50-26    or hold real, personal, or mixed property, or any interest in

50-27    property, by purchase, exchange, gift, assignment, transfer,

 51-1    foreclosure, mortgage, sale, lease, or otherwise and hold, manage,

 51-2    operate, or improve real, personal, or mixed property, regardless

 51-3    of location;

 51-4                (11)  sell, lease, encumber, mortgage, exchange,

 51-5    donate, convey, or otherwise dispose of any or all of its

 51-6    properties or any interest in its properties, deeds of trust, or

 51-7    mortgage lien interest owned by it or under its control or custody,

 51-8    or in its possession, and release or relinquish any right, title,

 51-9    claim, lien, interest, easement, or demand, however acquired,

51-10    including any equity or right of redemption in property foreclosed

51-11    by it, by public or private sale, with or without public bidding;

51-12                (12)  lease or rent any improvements, lands, or

51-13    facilities from any person;

51-14                (13)  request, accept, and use gifts, loans, donations,

51-15    aid, guaranties, allocations, subsidies, grants, or contributions

51-16    of any item of value to further its public purpose; and

51-17                (14)  exercise [Except as specifically provided by this

51-18    subchapter, the corporation has] the rights and powers of a

51-19    nonprofit corporation incorporated under the Texas Non-Profit

51-20    Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil

51-21    Statutes).

51-22          (c)  In exercising the foregoing powers granted to it under

51-23    this chapter, the corporation shall not compete with private

51-24    lenders and shall not originate or make any loan that can or would

51-25    be made at the same time by a private lender on substantially the

51-26    same or better terms within the submarket in which the loan is

51-27    proposed to be made, and, to the extent practical, the corporation

 52-1    shall rely on private mortgage companies, banks, savings banks,

 52-2    thrifts, savings and loan associations, or other similar loan

 52-3    originating entities to originate loans.  The corporation may act

 52-4    as co-originator in a loan where the funding resources emanate from

 52-5    the corporation.

 52-6          (d)  All of the mortgage banking operations shall be

 52-7    dedicated to the furtherance of facilitating affordable housing

 52-8    finance for the ultimate benefit of individuals and families of low

 52-9    and very low income and families of moderate income who, generally,

52-10    are not afforded housing finance options through conventional

52-11    lending channels.

52-12          (e)  The corporation may contract with the department and

52-13    with bond counsel, financial advisors, [or] underwriters, or other

52-14    providers of professional or consulting services.

52-15          (f)  The corporation shall pay its expenses from any

52-16    available fund without resort to the general revenues of the state,

52-17    except as specifically appropriated by the legislature.

52-18          (g)  The department may not transfer any funds to the

52-19    corporation to support the administration of the corporation or to

52-20    subsidize its operations in any way.  The department shall be fully

52-21    compensated by the corporation for any property or employees that

52-22    are shared by the corporation and the department, and it is the

52-23    intent of the legislature that no employees be shared beyond the

52-24    time at which such sharing is absolutely necessary.  This

52-25    subsection does not prohibit the corporation from receiving grants,

52-26    loans, or other program funds of a kind that are available to other

52-27    nonprofit corporations, or from using that portion of the program

 53-1    funds that are allowed for administration of the program for

 53-2    administrative purposes.

 53-3          (h)  Transfers of property from the department to the

 53-4    corporation shall be fully compensated.

 53-5          Sec. 2306.556.  [TAX] EXEMPT FROM TAXATION AND REGISTRATION.

 53-6    (a)  The corporation is exempt from all taxation by the state or a

 53-7    political subdivision of the state, including a municipality.

 53-8          (b)  A bond or other obligation issued by the corporation is

 53-9    an exempt security under The Securities Act (Article 581-1 et seq.,

53-10    Vernon's Texas Civil Statutes), and unless specifically provided

53-11    otherwise, under any subsequently enacted securities act.  Any

53-12    contract, guaranty, or other document executed in connection with

53-13    the issuance of the bond or other obligation is not an exempt

53-14    security under that Act, and unless specifically provided

53-15    otherwise, under any subsequently enacted securities act.

53-16          Sec. 2306.557.  DISTRIBUTION OF EARNINGS.  Any part of

53-17    earnings remaining after payment of expenses and any establishment

53-18    of reserves by the corporation's board of directors may not inure

53-19    to any person except that the corporation shall deposit these

53-20    excess earnings with the department to the credit of the housing

53-21    trust [general revenue] fund established by Section 2306.201 [for

53-22    the benefit of the department] if the corporation's board of

53-23    directors determines that sufficient provision has been made for

53-24    the full payment of the expenses, bonds, and other obligations of

53-25    the corporation and for any establishment of reserves by the

53-26    corporation's board of directors.

53-27          Sec. 2306.558.  ALTERATION AND TERMINATION.  (a)  Subject to

 54-1    this subchapter and the prohibition on the impairment of contracts

 54-2    in the law of this state, the corporation's board of directors by

 54-3    written resolution may alter the structure, organization, programs,

 54-4    or activities of the corporation or terminate and dissolve the

 54-5    corporation.

 54-6          (b)  The corporation's board of directors shall dissolve the

 54-7    corporation if the board by resolution determines that:

 54-8                (1)  the purposes for which the corporation was formed

 54-9    have been substantially fulfilled; and

54-10                (2)  all bonds and other obligations issued by the

54-11    corporation and all guaranties and insurance and other contractual

54-12    obligations  have been fully paid or provision for that payment has

54-13    been made.

54-14          (c)  On dissolution, the title to funds and properties

54-15    previously owned by the corporation shall be transferred to the

54-16    department.

54-17          Sec. 2306.559.  REPORTING REQUIREMENTS [ANNUAL REPORT].  (a)

54-18    The corporation shall file an annual report of the financial

54-19    activity of the corporation with the department.  Not later than

54-20    the 30th day after the date the corporation's board of directors

54-21    receives the report, the corporation's board of directors shall

54-22    submit the report to the governor, lieutenant governor, speaker of

54-23    the house of representatives, comptroller, and Legislative Budget

54-24    Board.

54-25          (b)  The corporation shall file the report before the 90th

54-26    day after the last day of the corporation's fiscal year.

54-27          (c)  The corporation shall prepare the report in accordance

 55-1    with generally accepted accounting principles.

 55-2          (d)  The report must include:

 55-3                (1)  a statement of support, revenue, and expenses and

 55-4    change in fund balances;

 55-5                (2)  a statement of functional expenses; and

 55-6                (3)  balance sheets for all funds.

 55-7          (e)  The corporation shall file quarterly performance reports

 55-8    with the department.

 55-9          (f)  Promptly on receipt, the corporation shall file with the

55-10    Bond Review Board a report for the preceding fiscal year.  The

55-11    report must contain the status of all outstanding debts and

55-12    obligations of the corporation, the status of collateral pledged as

55-13    security for those debts and obligations, and a maturity and

55-14    payment schedule for those debts and obligations.

55-15          Sec. 2306.560.  AUDIT.  (a)  The corporation shall hire an

55-16    independent certified public accountant to audit the corporation's

55-17    books and accounts for each fiscal year.  The corporation shall

55-18    file a copy of the audit with the department.  Not later than the

55-19    30th day after the date the corporation's board of directors

55-20    receives the audit, the corporation's board of directors shall

55-21    submit the audit to the governor, lieutenant governor, speaker of

55-22    the house of representatives, comptroller, Bond Review Board, State

55-23    Auditor's Office, and Legislative Budget Board.

55-24          (b)  The corporation is subject to audit by the state

55-25    auditor.

55-26          (c)  The corporation shall submit budget and financial

55-27    information to the legislative budget office as required by the

 56-1    director of the legislative budget office.

 56-2          Sec. 2306.561.  LIABILITY.  (a)  The directors, officers, and

 56-3    employees of the corporation are not personally liable for bonds or

 56-4    other obligations issued or contracts, guaranties, or insurance

 56-5    executed by the corporation, or for any other action taken in

 56-6    accordance with the powers and duties authorized by this subchapter

 56-7    or in the good faith belief that that action was taken in

 56-8    accordance with the powers and duties authorized by this

 56-9    subchapter.

56-10          (b)  The directors and officers of the corporation are immune

56-11    from civil liability to the same extent that a volunteer who serves

56-12    as an officer, director, or trustee of a charitable organization is

56-13    immune from civil liability under Chapter 84, Civil Practice and

56-14    Remedies Code.

56-15          (c)  The civil liability of an employee of the corporation is

56-16    limited to the same extent that the civil liability of an employee

56-17    of a charitable organization is limited under Chapter 84, Civil

56-18    Practice and Remedies Code.

56-19          (d)  The limitations on liability contained in this section

56-20    do not limit or impair the limitations on liability otherwise

56-21    available to the corporation's directors, officers, and employees.

56-22          SECTION 46.  Chapter 2306, Government Code, is amended by

56-23    adding Subchapter AA to read as follows:

56-24        SUBCHAPTER AA. EMERGENCY NUTRITION AND TEMPORARY EMERGENCY

56-25                              RELIEF PROGRAM

56-26          Sec. 2306.651.  DEFINITIONS.  In this subchapter:

56-27                (1)  "Applicant" means the commissioners court of a

 57-1    county, the governing body of another political subdivision, or a

 57-2    nonprofit organization.

 57-3                (2)  "Nonprofit organization" means a private,

 57-4    nonprofit, tax-exempt corporation under Section 501(c)(3), Internal

 57-5    Revenue Code of 1986 (26 U.S.C. Section 501(c)(3)).

 57-6                (3)  "Program" means a system of providing temporary

 57-7    emergency relief to needy persons.

 57-8          Sec. 2306.652.  TEMPORARY EMERGENCY RELIEF PROGRAM.  (a)  The

 57-9    department shall establish a temporary emergency relief program to

57-10    assist counties, in cooperation with other public entities and

57-11    nonprofit organizations, in meeting the needs of individuals and

57-12    families for temporary emergency relief.

57-13          (b)  The department shall establish the emergency nutrition

57-14    program as part of the temporary emergency relief program

57-15    established under this subchapter to meet the unmet need for

57-16    emergency food assistance.  The department shall administer the

57-17    emergency nutrition program in the same fashion and under the same

57-18    procedures as govern the administration of the temporary emergency

57-19    relief program.

57-20          Sec. 2306.653.  APPLICATION.  (a) A county may apply to the

57-21    department for a grant-in-aid to establish and administer a program

57-22    under this subchapter.

57-23          (b)  If a county declines to act, the department may accept

57-24    applications from other political subdivisions or from nonprofit

57-25    organizations.  The political subdivision or nonprofit organization

57-26    must first notify the county judge of its intention to submit an

57-27    application for a grant-in-aid.

 58-1          (c)  An application submitted under this section must provide

 58-2    evidence that a county requires assistance and that the applicant

 58-3    has consulted with public entities, nonprofit organizations,

 58-4    voluntary associations, representatives of low-income persons, and

 58-5    other groups involved in providing assistance to needy persons.

 58-6          (d)  The department shall adopt rules establishing the

 58-7    criteria for determining whether an applicant qualifies under this

 58-8    subchapter.  The department may approve only one program for each

 58-9    county.

58-10          (e)  A decision by a county to administer a program under

58-11    this subchapter remains in effect until the county notifies the

58-12    department that the county no longer wants to participate in the

58-13    program.  If a county decides to discontinue its participation, the

58-14    department may choose an applicant as an alternative participant as

58-15    prescribed by Subsection (b) of this section and by department

58-16    rules.

58-17          (f)  The department shall develop standards and procedures

58-18    for the program that permit all counties in the state to

58-19    participate.

58-20          Sec. 2306.654.  LOCAL ALLOCATION.  (a)  State funds provided

58-21    to a local applicant under this subchapter may not be used for

58-22    local administrative costs.

58-23          (b)  An allocation to a county from the program established

58-24    by Section 2306.652 shall be based on the county's demonstrated

58-25    need for the money.  The formula used by the department to allocate

58-26    the money shall include:

58-27                (1)  the number of unemployed persons in the county

 59-1    during the  most recent 12-month period for which data is available

 59-2    compared to the number of unemployed people in the state during

 59-3    that same 12-month period; and

 59-4                (2)  the number of people at or below the poverty line

 59-5    in the county during the most recent 12-month period for which data

 59-6    is available compared to the number of people at or below the

 59-7    poverty line in the state during that same 12-month period.

 59-8          Sec. 2306.655.  LOCAL PLAN; DISBURSEMENT.  (a)  An applicant

 59-9    must submit to the department a plan for providing emergency

59-10    relief.

59-11          (b)  The plan must contain a description of the target

59-12    population, the eligibility criteria for receipt of services, the

59-13    nature and scope of benefits to be provided, methods of

59-14    administration, and a budget.

59-15          (c)  The plan must also show evidence of consultation with

59-16    the entities listed in Section 2306.653(c).

59-17          (d)  On certification by the department that the applicant

59-18    qualifies under this subchapter, the department shall disburse

59-19    money available for that purpose to the applicant to be used to

59-20    establish a program in the affected county.

59-21          Sec. 2306.656.  ELIGIBILITY FOR ASSISTANCE.  (a)  Each

59-22    county, political subdivision, or nonprofit organization approved

59-23    by the department for establishing a program shall establish its

59-24    own criteria for persons eligible to receive benefits under the

59-25    program and shall include the criteria in the plan for providing

59-26    emergency relief submitted to the department.

59-27          (b)  Before establishing eligibility and the frequency and

 60-1    duration of benefits provided under the program, the county,

 60-2    political subdivision, or nonprofit organization shall allow

 60-3    adequate notice and opportunity for public comment, including

 60-4    comments from entities listed in Section 2306.653(c).

 60-5          (c)  A county, political subdivision, or nonprofit

 60-6    organization may not set the eligibility level at less than 75

 60-7    percent of the federal poverty level based on the federal Office of

 60-8    Management and Budget poverty index in effect at the time the plan

 60-9    is submitted to the department.

60-10          (d)  Assistance to persons eligible to participate in a

60-11    program authorized by this subchapter shall be provided through

60-12    vouchers and purchased services in accordance with the approved

60-13    plan submitted to the department.  The assistance may include the

60-14    provision of utilities, food, housing, and clothing to needy

60-15    persons.

60-16          (e)  Records pertaining to a program under this subchapter

60-17    are subject to audit by the department, an auditor approved by the

60-18    department, or the state auditor.

60-19          Sec. 2306.657.  REPORTS AND PUBLIC NOTICES.  (a)  As part of

60-20    the annual report required by Section 2306.072, Government Code,

60-21    the director shall include a written report describing and

60-22    analyzing the operation of programs under this subchapter.

60-23          (b)  A county, political subdivision, or nonprofit

60-24    organization funded under this subchapter shall assure the

60-25    department that information is provided to the public regarding

60-26    eligibility for and the nature of a program operated under this

60-27    subchapter.

 61-1          Sec. 2306.658.  RELATIONSHIP TO FEDERAL LAW.  (a)  If a

 61-2    federal law or regulation is changed without making a provision for

 61-3    temporary waivers to allow compliance with state law and, as a

 61-4    result of this change, there is insufficient time to comply with

 61-5    all the procedures required by this subchapter, the agency or

 61-6    entity affected may act so as to comply with federal law and shall

 61-7    comply with the applicable procedures required by this subchapter

 61-8    as soon as possible.

 61-9          (b)  If a federal statute or court order conflicts with this

61-10    subchapter, the federal law or court order prevails over this

61-11    subchapter.

61-12          SECTION 47.  Chapter 2306, Government Code, is amended by

61-13    adding Subchapter BB to read as follows:

61-14           SUBCHAPTER BB.  LOW INCOME HOUSING TAX CREDIT PROGRAM

61-15          Sec. 2306.671.  DEADLINES FOR ALLOCATION OF LOW INCOME

61-16    HOUSING TAX CREDITS.  (a)  Not later than November 15 of each year,

61-17    the department shall prepare and submit to the board for adoption

61-18    the qualified allocation plan required by federal law for use by

61-19    the department in setting criteria and priorities for the

61-20    allocation of tax credits under the low income housing tax credit

61-21    program.

61-22          (b)  The board shall adopt and submit to the governor the

61-23    qualified allocation plan not later than January 31.

61-24          (c)  The governor shall approve, reject, or modify and

61-25    approve the qualified allocation plan not later than February 28.

61-26          (d)  An applicant for a low income housing tax credit to be

61-27    issued a commitment during the initial allocation cycle in a

 62-1    calendar year must submit an application to the department not

 62-2    later than May 15.

 62-3          (e)  The board shall issue a commitment for allocation for

 62-4    the initial cycle of low income housing tax credits each year in

 62-5    accordance with the qualified allocation plan not later than July

 62-6    31.

 62-7          Sec. 2306.672.  SCORING OF APPLICATIONS.  (a)  The goal of

 62-8    the low income housing tax credit program is to provide permanent

 62-9    affordable housing.  In allocating low income housing tax credits,

62-10    the department shall score each application using a point system

62-11    based on criteria adopted by the department that are consistent

62-12    with the department's housing goals. The department shall publish

62-13    in the qualified allocation plan any discretionary factor that the

62-14    department will consider in scoring an application.

62-15          (b)  If an applicant meets the department's scoring and

62-16    underwriting criteria, the department shall add:

62-17                (1)  five bonus points to the applicant's score if the

62-18    applicant agrees to provide to a qualified nonprofit organization

62-19    or tenant organization a right of first refusal to purchase the

62-20    property to which the tax credit applies at the minimum price

62-21    provided in, and in accordance with the requirements of, Section

62-22    42(i)(7), Internal Revenue Code of 1986 (26 U.S.C. Section

62-23    42(i)(7)); and

62-24                (2)  two bonus points to the applicant's score if the

62-25    application is received within the first 10 days of the application

62-26    acceptance period.

62-27          (c)  The department shall provide the score of each

 63-1    application on each criterion to the board and the governor.  The

 63-2    results of the scoring shall be available to the public.

 63-3          (d)  Upon awarding tax credit allocations, the board shall

 63-4    document the reasons for each project's selection, including an

 63-5    explanation of all discretionary factors used in making its

 63-6    determination.

 63-7          Sec. 2306.673.  SALE OF CERTAIN LOW INCOME HOUSING TAX CREDIT

 63-8    PROPERTY.  (a)  Not later than two years before the expiration of

 63-9    the compliance period, a recipient of a low income housing tax

63-10    credit who agreed to provide a right of first refusal under Section

63-11    2306.672(b)(1) and who intends to sell the property shall notify

63-12    the department of the recipient's intent to sell.  The recipient

63-13    shall notify qualified nonprofit organizations and tenant

63-14    organizations of the opportunity to purchase the property.

63-15          (b)  The recipient may:

63-16                (1)  during the first six-month period after notifying

63-17    the department, negotiate or enter into a purchase agreement only

63-18    with a qualified nonprofit organization that is also a community

63-19    housing development organization as defined by the federal home

63-20    investment partnership program;

63-21                (2)  during the second six-month period after notifying

63-22    the department, negotiate or enter into a purchase agreement with

63-23    any qualified nonprofit organization or tenant organization; and

63-24                (3)  during the year before the expiration of the

63-25    compliance period, negotiate or enter into a purchase agreement

63-26    with the department or any qualified nonprofit organization or

63-27    tenant organization approved by the department.

 64-1          (c)  Notwithstanding an agreement under Section

 64-2    2306.672(b)(1), a recipient of a low income housing tax credit may

 64-3    sell property to which the tax credit applies to any purchaser

 64-4    after the expiration of the compliance period if a qualified

 64-5    nonprofit organization  or tenant organization does not offer to

 64-6    purchase the property at the minimum price provided by Section

 64-7    42(i)(7), Internal Revenue Code of 1986 (26 U.S.C. Section

 64-8    42(i)(7)), and the department declines to purchase the property.

 64-9          (d)  In this section, "compliance period" has the meaning

64-10    assigned by Section 42(i)(1), Internal Revenue Code of 1986 (26

64-11    U.S.C. Section 42(i)(1)).

64-12          Sec. 2306.674.  DEPARTMENT PURCHASE OF LOW INCOME HOUSING TAX

64-13    CREDIT PROPERTY.  The board by rule may develop and implement a

64-14    program to purchase low income housing tax credit property that is

64-15    not purchased by a qualified nonprofit organization or tenant

64-16    organization.  The department may not purchase low income housing

64-17    tax credit property if the board finds that the purchase is not in

64-18    the best interest of the state.

64-19          Sec. 2306.675.  ALLOCATION OF LOW INCOME HOUSING TAX CREDIT.

64-20    (a)  Department staff shall provide recommendations to the board

64-21    concerning the financial or programmatic viability of each

64-22    application for a low income housing tax credit before the board

64-23    makes a decision relating to the allocation of tax credits.

64-24          (b)  Not later than the deadline specified in Section

64-25    2306.671(e), the board shall issue a commitment for tax credits

64-26    available to the  department.  Concurrently with the issuance of a

64-27    commitment for initial tax credits, the board shall establish a

 65-1    waiting list of additional applications, ranked in descending order

 65-2    of priority, to be issued a commitment for tax credits if

 65-3    additional credits become available.

 65-4          Sec. 2306.676.  EQUAL ACCESS TO PROGRAM.  The department

 65-5    shall establish procedures through the qualified allocation plan to

 65-6    ensure that each applicant for a low income housing tax credit has

 65-7    a fair and equal opportunity to submit or resubmit an application

 65-8    and submit for consideration any authorized supplementary materials

 65-9    and information.

65-10          Sec. 2306.677.  BOARD INFLUENCE PROHIBITED.  (a)  A board

65-11    member may not contact department staff in any manner with the

65-12    intent to influence the processing of an application for a low

65-13    income housing tax credit.

65-14          (b)  During the period between the department's initial

65-15    solicitation of applications for tax credits and the final issuance

65-16    of commitments of tax credits by the board, a member of the board

65-17    may not have contact with the department staff concerning an

65-18    application, other than written communications or public oral

65-19    communications during a public meeting of the department.  A

65-20    written communication authorized by this subsection is subject to

65-21    disclosure as a public record.

65-22          Sec. 2306.678.  FEES.  (a)  A fee charged by the department

65-23    to an applicant for a low income housing tax credit may not be

65-24    excessive and must reflect the department's actual costs in

65-25    processing applications and providing copies of documents in

65-26    connection with the allocation process.

65-27          (b)  The department shall refund a fee charged to an

 66-1    applicant if the department does not score the applicant's

 66-2    application, except  the department may retain a reasonable portion

 66-3    of the fee to compensate the department for costs associated with

 66-4    the application.

 66-5          Sec. 2306.679.  PUBLIC INFORMATION AND HEARINGS ON PROGRAM.

 66-6    (a)  The department shall provide information regarding the low

 66-7    income housing tax credit program, including notices of public

 66-8    hearings, meetings, and opening and closing dates for applications

 66-9    for a low income housing tax credit, to local housing departments,

66-10    newspapers, nonprofit organizations, on-site property managers of

66-11    occupied projects that are the subject of tax credit applications

66-12    for posting in prominent locations at those projects, and other

66-13    interested persons and community groups, who request the

66-14    information.

66-15          (b)  The department shall hold at least three public hearings

66-16    in different regions of the state to receive public comments on low

66-17    income housing tax credit applications.

66-18          SECTION 48.  Section 11.001, Human Resources Code, is amended

66-19    to read as follows:

66-20          Sec. 11.001.  Definitions.  Except as provided by Section

66-21    [34.002 or] 40.001, in this title:

66-22                (1)  "Board" means the Texas Board of Human Services.

66-23                (2)  "Department" means the Texas Department of Human

66-24    Services.

66-25                (3)  "Commissioner" means the Commissioner of Human

66-26    Services.

66-27                (4)  "Assistance" means all forms of assistance and

 67-1    services for needy persons authorized by Subtitle C.

 67-2                (5)  "Financial assistance" means money payments for

 67-3    needy persons authorized by Chapter 31.

 67-4                (6)  "Medical assistance" means assistance for needy

 67-5    persons authorized by Chapter 32.

 67-6          SECTION 49.  Sections 7(a) and (c), Chapter 1092, Acts of the

 67-7    70th Legislature, Regular Session, 1987 (Article 5190.9a, Vernon's

 67-8    Texas Civil Statutes), are amended to read as follows:

 67-9          (a)  Except as provided in Subsection (b) of this section,

67-10    the issuer shall close on the bonds for which a reservation has

67-11    been granted not later than the 150th [90th] day after the

67-12    reservation date.

67-13          (c)  If the issuer does not timely close on the bonds, the

67-14    issue's reservation is canceled and during the 180-day [120-day]

67-15    period  beginning on the reservation date of the canceled

67-16    reservation:

67-17                (1)  the issuer or any other issuer may not submit an

67-18    application for a reservation for the same project; and

67-19                (2)  the issuer is eligible for a carryforward

67-20    designation for the project only as provided by Section 9 of this

67-21    Act.

67-22          SECTION 50.  Section 395.016, Local Government Code, is

67-23    amended by adding Subsection (g) to read as follows:

67-24          (g)  Notwithstanding Subsections (a)-(e) and Section 395.017,

67-25    the political subdivision may reduce or waive an impact fee for any

67-26    service unit that would qualify as affordable housing under 42

67-27    U.S.C. Section 12745, as amended, once the service unit is

 68-1    constructed.  If affordable housing as defined by 42 U.S.C. Section

 68-2    12745, as amended, is not constructed, the political subdivision

 68-3    may reverse its decision to waive or reduce the impact fee, and the

 68-4    political subdivision may assess an impact fee at any time during

 68-5    the development approval or building process or after the building

 68-6    process if an impact fee was not already assessed.

 68-7          SECTION 51.  Effective January 1, 1998, Subchapter B, Chapter

 68-8    23, Tax Code, is amended by adding Section 23.21 to read as

 68-9    follows:

68-10          Sec. 23.21.  PROPERTY USED TO PROVIDE AFFORDABLE HOUSING.  In

68-11    appraising real property that is rented or leased to a low-income

68-12    individual or family meeting income-eligibility standards

68-13    established by the owner of the property under regulations or

68-14    restrictions limiting to a percentage of the individual's or the

68-15    family's income the amount that the individual or family may be

68-16    required to pay for the rental or lease of the property, the chief

68-17    appraiser shall take into account the extent to which that use and

68-18    limitation reduce the market value of the property.

68-19          SECTION 52.  The following laws are repealed:

68-20                (1)  Sections 2306.122, 2306.143, and 2306.513(e),

68-21    Government Code; and

68-22                (2)  Chapter 34, Human Resources Code.

68-23          SECTION 53.  Section 395.016(g), Local Government Code, as

68-24    added by this Act, applies to any assessed or unassessed impact fee

68-25    that is not collected before the effective date of this Act. An

68-26    impact fee that is collected before the effective date of this Act

68-27    is governed by the law in effect on the day it was collected, and

 69-1    the former law is continued in effect for that purpose.

 69-2          SECTION 54.  This Act takes effect September 1, 1997.

 69-3          SECTION 55.  The change in law made to Section 2306.053,

 69-4    Government Code, by this Act applies to a cause of action filed on

 69-5    or after the effective date of this Act.  A cause of action filed

 69-6    before the effective date of this Act is governed by the law in

 69-7    existence when the cause of action was filed, and that law is

 69-8    continued in effect for that purpose.

 69-9          SECTION 56.  The importance of this legislation and the

69-10    crowded condition of the calendars in both houses create an

69-11    emergency and an imperative public necessity that the

69-12    constitutional rule requiring bills to be read on three several

69-13    days in each house be suspended, and this rule is hereby suspended.