1-1 By: Marchant (Senate Sponsor - Carona) H.B. No. 2798
1-2 (In the Senate - Received from the House May 12, 1997;
1-3 May 13, 1997, read first time and referred to Committee on Finance;
1-4 May 16, 1997, reported favorably by the following vote: Yeas 9,
1-5 Nays 0; May 16, 1997, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to tax-exempt private activity bonds.
1-9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10 SECTION 1. Effective January 1, 1998, Section 1, Chapter
1-11 1092, Acts of the 70th Legislature, Regular Session, 1987 (Article
1-12 5190.9a, Vernon's Texas Civil Statutes), is amended to read as
1-13 follows:
1-14 Sec. 1. DEFINITIONS. For purposes of this Act:
1-15 (1) "Available" means any amount of the state ceiling
1-16 set aside for reservations by an issuer upon compliance with the
1-17 terms of this Act.
1-18 (2) "Board" means the bond review board created under
1-19 Chapter 1078, Acts of the 70th Legislature, Regular Session, 1987
1-20 (Article 717k-7, Vernon's Texas Civil Statutes).
1-21 (3) "Bonds" means and includes all bonds,
1-22 certificates, notes, and other obligations authorized to be issued
1-23 by any issuer by any statute, city home-rule charter, or the Texas
1-24 Constitution and which are subject to the limitations of Section
1-25 146 of the code.
1-26 (4) "Close" or "closing" means the issuance and
1-27 delivery of bonds by an issuer in exchange for the required payment
1-28 therefor, or in the case of mortgage credit certificates, the date
1-29 when an issuer elects not to issue qualified mortgage bonds and
1-30 establish a mortgage credit certificate program under Section 25 of
1-31 the code. The term does not include a delivery of bonds if the
1-32 expenditure of the proceeds of the bonds is conditioned on
1-33 obtaining credit enhancement in support of the bonds.
1-34 (5) "Code" means the Internal Revenue Code of 1986,
1-35 as the same from time to time may be amended.
1-36 (6) "Housing finance corporation" means a corporation
1-37 created under Chapter 394, Local Government Code (Texas Housing
1-38 Finance Corporations Act).
1-39 (7) "Issuer" means any department, board, authority,
1-40 agency, subdivision, municipal corporation, political subdivision,
1-41 body politic, or instrumentality of the State of Texas of every
1-42 kind or type whatsoever and any nonprofit corporation acting for or
1-43 on behalf of any of the foregoing.
1-44 (8) "Local population" means the population in the
1-45 local government [governmental] unit or units on whose behalf the
1-46 housing finance corporation is created as determined in the most
1-47 recent federal census. If two local government [governmental]
1-48 units which overlap have created housing finance corporations that
1-49 have the power to issue bonds to provide financing for home
1-50 mortgages, prior to the submission of the application for
1-51 reservation or carryforward by either corporation there shall be
1-52 excluded from the population of the larger local government
1-53 [governmental] unit that portion of the population of any smaller
1-54 local government [governmental] unit having a population as
1-55 determined in the most recent federal census of 20,000 or more
1-56 which is within the larger local government [governmental] unit,
1-57 unless the smaller local government [governmental] unit assigns its
1-58 authority to issue bonds, based upon its population, to the larger
1-59 local government [governmental] unit. For purposes of this Act,
1-60 the term "local government" has ["local governmental unit" shall
1-61 have] the same meaning as in Chapter 394, Local Government Code
1-62 (Texas Housing Finance Corporations Act).
1-63 (9) "Locally voted issue" means an issue of bonds
1-64 which has been authorized pursuant to a referendum approved by the
2-1 voters of a political subdivision of the State of Texas.
2-2 (10) "Mortgage credit certificate" means a certificate
2-3 of the nature described in Section 25 of the code.
2-4 (11) "Private activity bond" has the meaning given
2-5 that term under Section 141(a) of the code.
2-6 (12) "Project" means any eligible facility, as
2-7 described in the application for reservation or carryforward,
2-8 proposed to be financed, in whole or in part, by an issue of bonds.
2-9 With respect to qualified mortgage bonds or student loan bonds, the
2-10 board shall consider the project or purpose to be the provision of
2-11 financial assistance to qualifying mortgagors or students within
2-12 all or any portion of the jurisdiction of the issuer. For purposes
2-13 of this definition, jurisdiction of the issuer is determined on the
2-14 date the application for reservation is delivered to the board.
2-15 (13) "Qualified bond" has the meaning given that term
2-16 under Section 141(e) of the code.
2-17 (14) [(13)] "Qualified mortgage bond" has the meaning
2-18 given that term under Section 143(a) of the code; and for the
2-19 purposes of this Act, the term "qualified mortgage bond" shall
2-20 include mortgage credit certificates.
2-21 (15) [(14)] "Qualified small issue bond" has the
2-22 meaning given that term under Section 144(a) of the code.
2-23 (16) "Qualified student loan bond" has the meaning
2-24 given that term under Section 144(b) of the code.
2-25 (17) [(15)] "Related person" has the meaning given
2-26 that term under Section 144(a)(3) of the code.
2-27 (18) [(16)] "Reservation" means a reservation of a
2-28 portion of the state ceiling for a specific bond issue.
2-29 (19) [(17)] "State-voted issue" means an issue of
2-30 bonds which has been authorized pursuant to a statewide referendum
2-31 approved by the voters of the State of Texas.
2-32 (20) [(18)] "State ceiling" means the amount of
2-33 authority in the State of Texas to issue tax-exempt private
2-34 activity bonds during the calendar year, as determined under
2-35 Section 146(d) of the code.
2-36 (21) [(19)] "Qualified residential rental project
2-37 issue" means an issue of bonds for a qualified residential rental
2-38 project, as that term is defined under Section 142(d) of the code.
2-39 (22) [(20)] "Tax-exempt enterprise zone facility
2-40 bonds" has the meaning given that term under Section 1394 of the
2-41 code.
2-42 SECTION 2. Effective January 1, 1998, Section 2, Chapter
2-43 1092, Acts of the 70th Legislature, Regular Session, 1987 (Article
2-44 5190.9a, Vernon's Texas Civil Statutes), is amended to read as
2-45 follows:
2-46 Sec. 2. ALLOCATION AND RESERVATION SYSTEM. (a) The state
2-47 ceiling for each calendar year is allocated to issuers that issue
2-48 private activity bonds. Except as provided by Section 3 of this
2-49 Act, reservations are granted in the order of receipt by the board
2-50 of an application for a reservation, regardless of the amount of
2-51 the issue.
2-52 (b) Prior to September 1, (1) 31.5 [28] percent of the state
2-53 ceiling is available exclusively for reservations by issuers of
2-54 qualified mortgage bonds, (2) 13 [17.5] percent of the state
2-55 ceiling is available exclusively for reservations by issuers of
2-56 state-voted issues for the purpose of issuing a state-voted issue,
2-57 (3) 7.5 percent of the state ceiling is available exclusively for
2-58 reservations by issuers of qualified small issue bonds and
2-59 tax-exempt enterprise zone facility bonds, (4) 7.5 [five] percent
2-60 of the state ceiling is available exclusively for reservations by
2-61 issuers of qualified residential rental project issues; [and] (5)
2-62 11 percent of the state ceiling is available exclusively for
2-63 reservations by issuers of qualified student loan bonds authorized
2-64 by Section 53.47, Education Code; and (6) 29.5 [42] percent of the
2-65 state ceiling is available exclusively for reservations by all
2-66 other issuers of bonds requiring an allocation.
2-67 (c) If applications for state-voted issues received prior to
2-68 January 2, from issuers described in Subsection (b)(2) of this
2-69 section, total more than 13 percent of the available state ceiling
3-1 for that program year, the incremental amount of state-voted
3-2 ceiling requested in excess of 13 percent, up to 17.5 percent of
3-3 state ceiling, will be removed from the state ceiling available to
3-4 other issuers on January 2 and made available for those additional
3-5 state-voted applications. The remaining portion of state ceiling
3-6 will be made available according to Subsection (b) of this section.
3-7 (d) Of that portion of the state ceiling that is available
3-8 exclusively for reservations by issuers of qualified mortgage
3-9 bonds, one-third of said portion shall be made available
3-10 exclusively to the Texas Department of Housing and Community
3-11 Affairs for the purpose of issuing qualified mortgage bonds until
3-12 August 25.
3-13 (e) [(d)] On and after September 1, that portion of the
3-14 state ceiling available for reservations shall become available to
3-15 any issuer for any bonds requiring an allocation, subject to the
3-16 provisions of Section 3 of this Act.
3-17 (f) [(e)] If any particular type of bonds do not qualify on
3-18 January 2 of any year for treatment as tax-exempt obligations under
3-19 the provisions of the code, then the provisions of Subsection
3-20 (b)(1), (2), (3), (4), [or] (5), or (6) of this section, as
3-21 applicable, shall be of no effect for such year, and the portion of
3-22 the state ceiling that is available exclusively for reservations by
3-23 issuers of the type of applicable bonds shall be reallocated
3-24 proportionately by March 1 for reservations by each other category
3-25 of issuers under Subsection (b) of this section.
3-26 (g) [(f)] Subsection (f) [(e)] of this section does not
3-27 apply to qualified mortgage bonds made available exclusively to the
3-28 Texas Department of Housing and Community Affairs under Subsection
3-29 (d) [(c)] of this section.
3-30 (h) [(g)] In addition to the amount provided in Subsection
3-31 (d) [(c)] of this section, $20,000,000 in reservations for each
3-32 year for the years 1996 and 1997 is available to the Texas
3-33 Department of Housing and Community Affairs from that portion of
3-34 the state ceiling that is available exclusively for reservations by
3-35 issuers of qualified mortgage bonds for the purpose of issuing
3-36 qualified mortgage bonds until August 25.
3-37 (i) [(h)] A bond issued for the reservation made by
3-38 Subsection (h) [(g)] of this section must:
3-39 (1) be used to finance or refinance single-family home
3-40 construction, reconstruction, or acquisition or to finance or
3-41 refinance contracts for deed for single-family housing; and
3-42 (2) target families that earn 60 percent or less of
3-43 the median family income in a colonia, as defined by Section 916 of
3-44 Pub. L. No. 101-625.
3-45 SECTION 3. Effective January 1, 1998, Section 3(c), Chapter
3-46 1092, Acts of the 70th Legislature, Regular Session, 1987 (Article
3-47 5190.9a, Vernon's Texas Civil Statutes), is amended to read as
3-48 follows:
3-49 (c) The board shall not grant a reservation of a portion of
3-50 the state ceiling to any issuer prior to January 2 [10]. If two or
3-51 more issuers apply for a reservation of state ceiling for the
3-52 upcoming program year in a category described in Subsections
3-53 (b)(2), (b)(3), (b)(4), and (b)(6) [(b)(5)] of Section 2 of this
3-54 Act on or before October 20 [January 10], reservations within that
3-55 category shall be granted from the state ceiling available in that
3-56 category in an order determined by the board by lot. If two or
3-57 more housing finance corporations apply for a reservation of state
3-58 ceiling for the upcoming program year in the category described by
3-59 Section 2(b)(1) of this Act on or before October 20 [January 10],
3-60 reservations within that category shall be granted from the state
3-61 ceiling available in that category according to the following
3-62 categories of priority: (1) the first category of priority shall
3-63 include those applications for a reservation filed by housing
3-64 finance corporations which filed an application for a reservation
3-65 on behalf of the same local population prior to September 1 of the
3-66 previous calendar year, but which did not receive a reservation
3-67 during such year; (2) [the second category of priority shall
3-68 include those applications for a reservation filed by housing
3-69 finance corporations to which state ceiling could not be made
4-1 available by August 31 for that calendar year because of the
4-2 application of Section 4(b) of this Act; (3)] the second [third]
4-3 category of priority shall include those applications for a
4-4 reservation not included in the first category [and second
4-5 categories] of priority; (3) a priority under (1) of an issuer
4-6 composed of more than one jurisdiction is not affected by the
4-7 issuer's loss of a sponsoring governmental unit and that unit's
4-8 population base if the dollar amount of the application has not
4-9 increased; and (4) within each category or priority, reservations
4-10 shall be granted in reverse calendar year order of the most recent
4-11 closing of qualified mortgage bonds applicable to [by] each housing
4-12 finance corporation, with the most recent closing being the last to
4-13 receive a reservation and with those housing finance corporations
4-14 that have never received a reservation for mortgage revenue bonds
4-15 being the first to receive a reservation, and, in the case of
4-16 closings occurring on the same date, reservations shall be granted
4-17 in an order determined by the board by lot. The most recent
4-18 closing applicable to: (A) a newly created housing finance
4-19 corporation that was created by a local government or local
4-20 governments that had previously sponsored an existing housing
4-21 finance corporation or a disbanded housing finance corporation, is
4-22 the most recent closing of qualified mortgage bonds the proceeds of
4-23 which were available to the population of the housing finance
4-24 corporation; (B) a housing finance corporation sponsored by a
4-25 local government that has participated in the program of another
4-26 housing finance corporation, is the most recent closing of
4-27 qualified mortgage bonds the proceeds of which were available to
4-28 the population of the housing finance corporation; and (C) all
4-29 other housing finance corporations, is the most recent closing of
4-30 qualified mortgage bonds by the housing finance corporation. In no
4-31 event will a housing finance corporation or its sponsoring local
4-32 government be allowed to achieve an advantage in the determination
4-33 of its last closing date by creating or disbanding from a housing
4-34 finance corporation. If two or more higher education authorities
4-35 apply for a reservation of state ceiling for the upcoming year in
4-36 the category described by Section 2(b)(5) of this Act on or before
4-37 October 20, reservations within that category shall be granted from
4-38 the state ceiling available in that category in reverse calendar
4-39 year order of the most recent closing of qualified student loan
4-40 bonds by each higher education authority, with the most recent
4-41 closing being the last to receive a reservation, and, in the case
4-42 of closings occurring on the same date, reservations shall be
4-43 granted in an order determined by the board by lot. All
4-44 applications for a reservation filed after October 20 [January 10]
4-45 by any issuer for the issuance of bonds shall be accepted by the
4-46 board in their order of receipt. [A priority under (1) of an
4-47 issuer composed of more than one jurisdiction is not affected by
4-48 the issuer's loss of a sponsoring governmental unit and that unit's
4-49 population base if the dollar amount of the application has not
4-50 increased.]
4-51 SECTION 4. Effective January 1, 1998, Section 3(a), Chapter
4-52 1092, Acts of the 70th Legislature, Regular Session, 1987 (Article
4-53 5190.9a, Vernon's Texas Civil Statutes), is amended to read as
4-54 follows:
4-55 (a) For any one project, no issuer[:]
4-56 [(1)] prior to September 1, shall receive reservations
4-57 in excess of:
4-58 (1) [(A)] $25,000,000 for issuers described by Section
4-59 2(b)(1) of this Act other than the Texas Department of Housing and
4-60 Community Affairs;
4-61 (2) [(B)] $50,000,000 for issuers described by Section
4-62 2(b)(2) of this Act other than the Texas Higher Education
4-63 Coordinating Board and $75,000,000 for the Texas Higher Education
4-64 Coordinating Board;
4-65 (3) [(C)] an amount as limited by the code for issuers
4-66 described by Section 2(b)(3) of this Act;
4-67 (4) [(D)] $15,000,000 or 15 percent of the amount set
4-68 aside for this purpose, whichever is less, for issuers described by
4-69 Section 2(b)(4) of this Act;
5-1 (5) $35,000,000 for higher education authorities
5-2 authorized by Section 53.47, Education Code, and described by
5-3 Section 2(b)(5) of this Act; and
5-4 (6) [(E)] $25,000,000 for issuers described by Section
5-5 2(b)(6) [2(b)(5)] of this Act [except higher education authorities
5-6 authorized by Section 53.47, Education Code; and]
5-7 [(F) $35,000,000 for higher education
5-8 authorities authorized by Section 53.47, Education Code; and]
5-9 [(2) prior to November 1, shall receive reservations
5-10 in excess of $100,000,000].
5-11 SECTION 5. Sections 3(d) and (e), Chapter 1092, Acts of the
5-12 70th Legislature, Regular Session, 1987 (Article 5190.9a, Vernon's
5-13 Texas Civil Statutes), are amended to read as follows:
5-14 (d) An application for a reservation may not be submitted
5-15 and a reservation may not be granted after December 1 of the
5-16 current program year.
5-17 (e) If any portion of state ceiling in any category
5-18 described in Section 2(b) of this Act from which issuers were
5-19 granted reservations becomes available in that category before June
5-20 1, those amounts shall be aggregated and reservations shall be
5-21 granted from that category on June 1. If any portion of state
5-22 ceiling from which issuers were granted reservations becomes
5-23 available in that category after June 1 and before August 25, those
5-24 amounts shall be aggregated and reservations shall be granted from
5-25 that category on August 25. The department may also grant a
5-26 reservation to an issuer at any time on or after January 2 [10] if
5-27 the amount of state ceiling available in any category exceeds the
5-28 amount of state ceiling applied for in that category.
5-29 SECTION 6. Effective January 1, 1998, Section 4(a), Chapter
5-30 1092, Acts of the 70th Legislature, Regular Session, 1987 (Article
5-31 5190.9a, Vernon's Texas Civil Statutes), is amended to read as
5-32 follows:
5-33 (a) An application for a reservation for a particular
5-34 program year may be filed by an issuer on or after October 10 of
5-35 the preceding year [January 2] and must be on a form prescribed by
5-36 the board and signed by a member or officer of the issuer and must
5-37 state:
5-38 (1) the maximum amount of the bonds in the issue
5-39 requiring an allocation pursuant to Section 146 of the code;
5-40 (2) the purpose of the bonds or a functional
5-41 description of the project, including the identification of the
5-42 user of the proceeds or project financed thereby;
5-43 (3) whether the bonds are qualified bonds;
5-44 (4) if the bonds are qualified bonds, the paragraph of
5-45 Section 141(e)(1) of the code that applies, and if Section
5-46 141(e)(1)(A) of the code applies, the paragraph of Section 142(a)
5-47 of the code that applies;
5-48 (5) if the bonds are not qualified bonds, that Section
5-49 141(b)(5) of the code applies, or in the case of transition rule
5-50 projects, the paragraph of the Tax Reform Act of 1986 that applies;
5-51 (6) a statement by the issuer, other than an issuer of
5-52 a state-voted issue or the Texas Department of Housing and
5-53 Community Affairs, that bonds are not being issued for the same
5-54 stated purpose for which the issuer has received sufficient
5-55 carryforward during a prior year or for which there exists
5-56 unexpended proceeds from a prior issue or issues of bonds issued by
5-57 the same issuer, or based on the issuer's population, unless such
5-58 issuer provides evidence that a binding contract or binding
5-59 contracts have been entered into to expend the unexpended proceeds
5-60 within 12 months after the date of receipt by the board of an
5-61 application for a reservation; and
5-62 (7) other information that the board may require.
5-63 SECTION 7. Section 4(c), Chapter 1092, Acts of the 70th
5-64 Legislature, Regular Session, 1987 (Article 5190.9a, Vernon's Texas
5-65 Civil Statutes), is amended to read as follows:
5-66 (c) The board may not accept applications for more than one
5-67 project located at, or related to, a business operation at a
5-68 particular site for [in] any one program [calendar] year.
5-69 SECTION 8. Section 6(c), Chapter 1092, Acts of the 70th
6-1 Legislature, Regular Session, 1987 (Article 5190.9a, Vernon's Texas
6-2 Civil Statutes), is amended to read as follows:
6-3 (c) If the issuer does not timely submit the documents and
6-4 fee required by this section, the issue's reservation is canceled
6-5 and during the [90 day] period described by Section 7(a) of this
6-6 Act beginning on the reservation date of the canceled reservation:
6-7 (1) the issuer or any other issuer may not submit an
6-8 application for a reservation for the same project; and
6-9 (2) the issuer is eligible for a carryforward
6-10 designation for the project only as provided by Section 9 of this
6-11 Act.
6-12 SECTION 9. Sections 7(a) and (c), Chapter 1092, Acts of the
6-13 70th Legislature, Regular Session, 1987 (Article 5190.9a, Vernon's
6-14 Texas Civil Statutes), are amended to read as follows:
6-15 (a) Except as provided in Subsection (b) of this section,
6-16 the issuer, other than an issuer that received a reservation of
6-17 state ceiling from the category described by Section 2(b)(1) of
6-18 this Act, shall close on the bonds for which a reservation has been
6-19 granted not later than the 120th [90th] day after the reservation
6-20 date. An issuer of qualified mortgage revenue bonds shall close on
6-21 the bonds for which a reservation has been granted not later than
6-22 the 180th day after the reservation date.
6-23 (c) If the issuer does not timely close on the bonds, the
6-24 issue's reservation is canceled and during the 150-day [120-day]
6-25 period beginning on the reservation date of the canceled
6-26 reservation, or during the 210-day period beginning on the
6-27 reservation date of the canceled reservation for Section 2(b)(1)
6-28 issuers:
6-29 (1) the issuer or any other issuer may not submit an
6-30 application for a reservation for the same project; and
6-31 (2) the issuer is eligible for a carryforward
6-32 designation for the project only as provided by Section 9 of this
6-33 Act.
6-34 SECTION 10. This Act takes effect immediately except as
6-35 otherwise provided by this Act.
6-36 SECTION 11. The importance of this legislation and the
6-37 crowded condition of the calendars in both houses create an
6-38 emergency and an imperative public necessity that the
6-39 constitutional rule requiring bills to be read on three several
6-40 days in each house be suspended, and this rule is hereby suspended,
6-41 and that this Act take effect and be in force according to its
6-42 terms, and it is so enacted.
6-43 * * * * *