HBA-MPA H.B. 3059 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3059
By: Hill
Urban Affairs
3/23/1999
Introduced


BACKGROUND AND PURPOSE 

Currently, the Texas State Affordable Housing Corporation (TSAHC) is
granted powers above and beyond those granted to the Texas Department of
Housing and Community Affairs (TDHCA) in order to produce financing support
for affordable housing initiatives in Texas, and to allow TSAHC to leverage
limited state and federal funds by partnering with private lenders and
accessing secondary market capital.  This may present a conflict with the
non-compete provision of the law.  Under current law, TSAHC must remit all
excess net revenue to the housing trust fund.  If TSAHC were allowed to
retain some part of its annual net revenue it would be able to build equity
to sustain operations and have the ability to access a larger pool of
financing.   

The law currently requires the executive director of TDHCA to serve as the
president of TSAHC, and for the presiding officer of the programs committee
TDHCA board and four other board members to serve on the TSAHC board of
directors.  This can create conflicting agendas and the appearance of
impropriety, and restrict the ability of TSAHC to secure the most qualified
individual to serve as president.  Additionally, there are currently six
members on the board of TSAHC.  This presents the possibility of deadlocked
votes on some decisions. 

H.B. 3059 reduces the number of board members to five, and removes the
requirement that the executive director of TDHCA serve as the president of
TSAHC, and the presiding officer of the programs committee of the TDHCA
board and four of the other board members serve on the TSAHC board of
directors.  This bill also clarifies the language dealing with TSAHC
competing with private entities, and allows TSAHC to use its excess
earnings in new and existing affordable housing initiatives.  

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 2306.554, Government Code, to provide that the
board of directors of the Texas State Affordable Housing Corporation
(corporation) consists of five, rather than six, directors appointed by the
governor who represent any of the enumerated groups.  Requires the
corporation to employ a qualified individual to serve as president of the
corporation, for compensation determined by the board of directors.
Deletes the provision that includes the executive director as presiding
officer, and the presiding officer of the program committee, and four other
members of the board of directors of the Texas Department of Housing and
Community Affairs (department), on the corporation board. Makes conforming
and nonsubstantive changes. Redesignates Paragraphs (A)-(U) as Subdivisions
(1)-(21). 

SECTION 2.  Amends Sections 2306.555(b) and (c), Government Code, to
prohibit the corporation from actively competing with private lenders and
not originate or make a loan that would be made under the same
circumstances by a private lender on substantially the same or better terms
within the submarket in which the loan is proposed to be made.  Deletes the
requirement that the corporation rely on private mortgage companies, banks,
savings banks, thrifts, savings and loan associations, or other similar
entities to originate loans and authorize the corporation to act as
originator in cases where it is the funding source.  Makes conforming and
nonsubstabtive changes. 
 
SECTION 3. Amends Section 2306.557, Government Code, to require the
department  to use  excess earnings, remaining after payment of expenses
and establishment of reserves, to further the corporation's new or existing
affordable housing initiatives.  Deletes the requirement that the
corporation deposit excess earnings to the credit of the housing trust
fund. 

SECTION 4.  (a)  Effective date: September 1, 1999.

(b)  Requires the governor to appoint a person to serve on the board of
directors of the corporation as required by Section 2306.554(a), as amended
by this Act, as soon as possible after the effective date of this Act.
Provides that until the person appointed by the governor under this
subsection assumes office the members appointed under Section 2306.554(a),
before amended by this Act, continue to serve on the corporation's board. 

SECTION 5.  Emergency clause.