1-1 By: Garcia, et al. (Senate Sponsor - Lucio) H.B. No. 2281 1-2 (In the Senate - Received from the House May 14, 1999; 1-3 May 14, 1999, read first time and referred to Committee on 1-4 Intergovernmental Relations; May 14, 1999, reported favorably by 1-5 the following vote: Yeas 3, Nays 0; May 14, 1999, sent to 1-6 printer.) 1-7 A BILL TO BE ENTITLED 1-8 AN ACT 1-9 relating to a program of the Texas Department of Housing and 1-10 Community Affairs to promote for-profit construction of affordable 1-11 homes for low and very low income homebuyers. 1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-13 SECTION 1. Chapter 2306, Government Code, is amended by 1-14 adding Subchapter EE to read as follows: 1-15 SUBCHAPTER EE. BUILDER INCENTIVE PARTNERSHIP PROGRAM 1-16 Sec. 2306.701. DEFINITIONS. In this subchapter: 1-17 (1) "Builder" means a person who builds or develops a 1-18 housing subdivision. 1-19 (2) "Cooperative purchase agreement" means an 1-20 agreement described by Section 2306.703. 1-21 (3) "Corporation" means the Texas State Affordable 1-22 Housing Corporation. 1-23 (4) "Cost plus profit structure" means a profit 1-24 structure that sets a fixed monetary profit due for the sale of a 1-25 home as opposed to a profit structure that sets a variable amount 1-26 of profit due for the sale of a home that is based on a percentage 1-27 of the sale price of the home. 1-28 (5) "Program" means the builder incentive partnership 1-29 program developed under this subchapter. 1-30 Sec. 2306.702. BUILDER INCENTIVE PARTNERSHIP PROGRAM. (a) 1-31 The department shall develop and maintain a builder incentive 1-32 partnership program that: 1-33 (1) provides for the development of affordable housing 1-34 subdivisions in this state; and 1-35 (2) does not encourage the further growth of colonias 1-36 in this state. 1-37 (b) To accomplish the goals of this subchapter, the 1-38 department shall: 1-39 (1) determine geographic areas that are in need of 1-40 affordable housing; 1-41 (2) provide for affordable housing development 1-42 projects in those areas by entering into a partnership agreement 1-43 with: 1-44 (A) an eligible builder or developer; and 1-45 (B) housing assistance agencies or other 1-46 nonprofit entities that provide housing assistance to low and very 1-47 low income homebuyers; and 1-48 (3) work with the corporation, the builder or 1-49 developer, or housing assistance agencies or other nonprofit 1-50 entities that provide housing assistance to low and very low income 1-51 homebuyers to obtain housing assistance for homebuyers who purchase 1-52 homes built under the program. 1-53 Sec. 2306.703. COOPERATIVE PURCHASE AGREEMENT. (a) The 1-54 department shall negotiate and conclude a cooperative purchase 1-55 agreement with a housing assistance agency or other nonprofit 1-56 entity for each project under the program. 1-57 (b) Under the cooperative purchase agreement for a specific 1-58 project under the program, a housing assistance agency or other 1-59 nonprofit entity must agree: 1-60 (1) to use funds that the department may provide or 1-61 funds maintained by the agency or entity from other sources to 1-62 guarantee a negotiated portion of the purchase price of a 1-63 negotiated number of houses to be built under the project; and 1-64 (2) at the option of the builder, to purchase homes 2-1 built under the project at cost if the homes do not have a 2-2 qualified purchaser within 30 days of the date of completion of the 2-3 construction. 2-4 (c) The department may provide alternative or additional 2-5 conditions under the cooperative purchase agreement as necessary to 2-6 accomplish the purposes of this subchapter. 2-7 Sec. 2306.704. BUILDER PARTNERSHIP AGREEMENT. (a) Under a 2-8 partnership agreement for a specific project, the department and 2-9 the builder must agree to: 2-10 (1) the terms of a cooperative purchase agreement 2-11 between the department and a housing assistance agency or other 2-12 nonprofit entity that provides housing assistance to low and very 2-13 low income homebuyers; 2-14 (2) the type, style, and number of houses to be built 2-15 under the partnership, within the specifications required by 2-16 Section 2306.707; 2-17 (3) the types of housing assistance to be applied for 2-18 eligible low and very low income homebuyers who purchase homes 2-19 built under the program; and 2-20 (4) any other term that the department determines 2-21 appropriate. 2-22 (b) The builder shall market the homes built under the 2-23 program to individuals and families who qualify for housing 2-24 assistance under department programs in the same manner in which 2-25 private housing development projects are marketed to the general 2-26 public. 2-27 (c) The department may not enter into a partnership 2-28 agreement for a specific project with a builder unless the builder 2-29 agrees to issue the builder's standard warranties for materials and 2-30 labor to the first owner-occupant of a home purchased under this 2-31 program. 2-32 Sec. 2306.705. COST PLUS PROFIT STRUCTURE. (a) The builder 2-33 in the partnership agreement may require homebuyers to purchase a 2-34 home under a cost plus profit structure. 2-35 (b) If a builder requires a cost plus profit structure, the 2-36 department and the builder must agree in the partnership agreement 2-37 to a reasonable profit for the builder for each type of home built 2-38 under the program. 2-39 (c) For the purposes of the partnership agreement and 2-40 housing finance assistance by the department or the corporation, 2-41 the profit set under the cost plus profit structure for a home 2-42 built under the program is part of the purchase price of the home. 2-43 Sec. 2306.706. FUNDING. (a) The department and the 2-44 corporation may not spend state money to fund the guaranteed 2-45 purchase agreement required by this subchapter. 2-46 (b) The department and the corporation shall cooperate to 2-47 identify sources of funds that are appropriate for the program. 2-48 Sec. 2306.707. HOUSING STANDARDS. (a) The department shall 2-49 establish and maintain standards for the homes built under the 2-50 program. The standards must include: 2-51 (1) the minimum quality of construction and amenities 2-52 required; 2-53 (2) a cost not to exceed $70,000; 2-54 (3) a style and type of home that can accommodate 2-55 additional construction, but that is flexible enough to serve one 2-56 family; and 2-57 (4) other criteria that the department may provide. 2-58 (b) The department may require the construction of a 2-59 specific number of homes to be determined by the department that 2-60 must meet access standards, including: 2-61 (1) 32-inch wide doors; 2-62 (2) 36-inch wide hallways; 2-63 (3) light switches 15 inches from the floor; and 2-64 (4) at least one entrance to the home without steps. 2-65 Sec. 2306.708. HOMEBUYER PROGRAMS. (a) The department and 2-66 the corporation shall cooperate to identify: 2-67 (1) private lenders to provide private market-rate 2-68 mortgages for low and very low income homebuyers who purchase homes 2-69 under the program; and 3-1 (2) housing assistance programs for low and very low 3-2 income homebuyers who do not qualify for private market-rate 3-3 mortgages. 3-4 (b) The department and the corporation shall provide other 3-5 housing assistance for low and very low income homebuyers as 3-6 necessary to accomplish the purposes of this subchapter. 3-7 Sec. 2306.709. SUSTAINABLE BUILDING. To encourage the use 3-8 of sustainable products and techniques in the construction of 3-9 affordable housing, the department in cooperation with the 3-10 corporation, governmental entities, and nonprofit organizations 3-11 involved in the development and promotion of sustainable 3-12 construction, shall assist builders in identifying information on 3-13 sustainable building resources and techniques. 3-14 Sec. 2306.710. RULEMAKING AUTHORITY. The department may 3-15 adopt rules necessary to accomplish the purposes of this 3-16 subchapter. 3-17 SECTION 2. This Act takes effect September 1, 1999. 3-18 SECTION 3. The importance of this legislation and the 3-19 crowded condition of the calendars in both houses create an 3-20 emergency and an imperative public necessity that the 3-21 constitutional rule requiring bills to be read on three several 3-22 days in each house be suspended, and this rule is hereby suspended. 3-23 * * * * *