By Ellis S.B. No. 1502
Substitute the following for S.B. No. 1502:
By Hill C.S.S.B. No. 1502
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to certain fees and bonds issued by the Texas Department
1-3 of Housing and Community Affairs.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 2306.205, Government Code, is amended by
1-6 adding Subsection (f) to read as follows:
1-7 (f) In addition to other amounts transferred into the
1-8 housing trust fund under this section, and subject to Subsection
1-9 (e), the department shall transfer into the fund the amount of any
1-10 issuance fees, asset oversight fees, and servicing fees the
1-11 department receives in relation to the administration of its
1-12 501(c)(3) bond program that exceeds the amount needed by the
1-13 department to pay its operating and overhead costs and fund
1-14 reserves, which may include an insurance reserve or credit
1-15 enhancement reserve, established by the board in administering the
1-16 program. In this subsection, "501(c)(3) bond program" means:
1-17 (1) the department's issuance of bonds the proceeds of
1-18 which the department is obligated to lend only to an organization
1-19 described in Section 501(c)(3) of the Internal Revenue Code of 1986
1-20 (26 U.S.C., Section 501(c)(3)) that is exempt from federal income
1-21 taxation under Section 501(a) of the Internal Revenue Code of 1986
1-22 (26 U.S.C., Section 501(a)(3)); and
1-23 (2) the loans made by the department with the proceeds
1-24 of those bonds and the department's administration of those loans.
2-1 SECTION 2. Subchapter P, Chapter 2306, Government Code, is
2-2 amended by adding Section 2306.358 to read as follows:
2-3 Sec. 2306.358. ISSUANCE OF QUALIFIED 501(c)(3) BONDS. (a)
2-4 Of the total qualified 501(c)(3) bonds issued under Section 145 of
2-5 the Internal Revenue Code of 1986 (26 U.S.C. Section 145) in each
2-6 fiscal year, the department shall allocate qualified 501(c)(3)
2-7 bonding authority as follows:
2-8 (1) not less than 50 percent of the total annual
2-9 issuance amount authorized through the memorandum of understanding
2-10 in Subsection (b) is reserved for the purposes of new construction
2-11 or acquisition with substantial rehabilitation;
2-12 (2) not more than 25 percent of the total annual
2-13 issuance amount authorized through the memorandum of understanding
2-14 in Subsection (b) may be used for projects in any one metropolitan
2-15 area; and
2-16 (3) not less than 15 percent of the annual issuance
2-17 amount authorized through the memorandum of understanding in
2-18 Subsection (b) is reserved for projects in rural areas.
2-19 (a-1) For the purposes of Subsection (a):
2-20 (1) "Rural area" and "metropolitan area" shall be
2-21 defined through the memorandum of understanding in Subsection (b).
2-22 (2) "Substantial rehabilitation" means rehabilitation
2-23 of a project with a rehabilitation cost of not less than $5,000 per
2-24 unit.
2-25 (b) A qualified 501(c)(3) bond may not be issued unless
2-26 approved by the Bond Review Board. The Bond Review Board shall
2-27 enter into a memorandum of understanding with the department
3-1 specifying the amount of bonds to be issued for each fiscal year.
3-2 The Bond Review Board may not approve a proposal to issue qualified
3-3 501(c)(3) bonds unless the bonds meet the requirements of this
3-4 section, and any other applicable laws.
3-5 (c) In addition to the requirements of Section 145 of the
3-6 Internal Revenue Code of 1986 (26 U.S.C. Section 145), a qualified
3-7 501(c)(3) organization shall:
3-8 (1) demonstrate to the department that the project is
3-9 underwritten to:
3-10 (A) ensure that the project is efficiently
3-11 administered and financially viable; and
3-12 (B) minimize the risk of the organization's
3-13 default;
3-14 (2) ensure that at least 60 percent of the housing to
3-15 be provided under the project is affordable housing provided to
3-16 individuals and families of low and very low income and:
3-17 (A) at least 40 percent of the units in a
3-18 multifamily development are affordable to individuals and families
3-19 with incomes at or below 60 percent of the median family income,
3-20 adjusted for family size; or
3-21 (B) at least 20 percent of the units in a
3-22 multifamily development are affordable to individuals and families
3-23 with incomes at or below 50 percent of the median family income,
3-24 adjusted for family size; and
3-25 (3) enter into an agreement with the department in
3-26 which the 501(c)(3) organization:
3-27 (A) agrees during the term of the agreement to
4-1 reserve at least 60 percent of the housing to be provided under the
4-2 project for individuals and families of low and very low income;
4-3 (B) ensures that the reserved housing will
4-4 remain affordable to individuals and families of low and very low
4-5 income during the term of the agreement;
4-6 (C) agrees not to discriminate against a tenant
4-7 applicant solely because the applicant receives public rental
4-8 assistance payments, except if at least 15 percent of the housing
4-9 units provided under the project are occupied by tenants who
4-10 receive public rental assistance payments; and
4-11 (D) agrees to restrict the rents charged on
4-12 those units reserved for individuals and families of low and very
4-13 low income at 30 percent of the area median income adjusted for
4-14 family size and utility allowance, unless this requirement is
4-15 waived or modified on a case-by-case basis by the board, and
4-16 approved by the Bond Review Board, if both boards determine that
4-17 the waiver or modification is necessary for an area of the state
4-18 because the area's median income would prevent the construction of
4-19 new affordable projects.
4-20 (d) Subsection (c)(3)(C) does not prohibit an organization
4-21 from requiring a tenant applicant who receives public assistance to
4-22 meet the organization's standard criteria for occupancy, including
4-23 such criteria as satisfactory creditworthiness and lack of criminal
4-24 history.
4-25 (e) The agreement provided for in Subsection (c)(3) may
4-26 provide for the lease or sale of the project to a nonprofit
4-27 corporation approved by the department subject to the conditions
5-1 specified in Subsection (c).
5-2 (f) Neither the department nor the Texas State Affordable
5-3 Housing Corporation may use state or federal money to provide for
5-4 the credit enhancement of a bond issued under this section unless
5-5 the credit enhancement would facilitate the issuance of bonds for
5-6 the purpose of financing the creation or preservation of affordable
5-7 housing by 501(c)(3) nonprofit entities.
5-8 (g) In lieu of complying with the set-aside requirements
5-9 specified in Subsection (c)(2), a qualified 501(c)(3) organization
5-10 may comply with such other set-asides or restrictions as are
5-11 approved by the Internal Revenue Service as a basis for the
5-12 determination letter addressed to the qualified 501(c)(3)
5-13 organization.
5-14 (h) For purposes of this section, "rural area" and
5-15 "metropolitan area" shall be defined through the memorandum of
5-16 understanding provided for in Subsection (b) of this section.
5-17 SECTION 3. The importance of this legislation and the
5-18 crowded condition of the calendars in both houses create an
5-19 emergency and an imperative public necessity that the
5-20 constitutional rule requiring bills to be read on three several
5-21 days in each house be suspended, and this rule is hereby suspended,
5-22 and that this Act take effect and be in force from and after its
5-23 passage, and it is so enacted.