By Burnam H.B. No. 3607 76R9336 DB-D A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the preservation of long-term affordable housing. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Chapter 2306, Government Code, is amended by 1-5 adding Subchapter EE to read as follows: 1-6 SUBCHAPTER EE. AFFORDABLE HOUSING PRESERVATION 1-7 Sec. 2306.801. APPLICATION. (a) This subchapter applies 1-8 only to a property owner of a multifamily housing development that 1-9 is insured or assisted under a federal program, including a 1-10 program under: 1-11 (1) Section 221(d)(3), National Housing Act (12 U.S.C. 1-12 Section 1715l); 1-13 (2) Section 236, National Housing Act (12 U.S.C. 1-14 Section 1715z-1); 1-15 (3) Section 515, Housing Act of 1949 (42 U.S.C. 1-16 Section 1485); or 1-17 (4) Section 8, United States Housing Act of 1937 (42 1-18 U.S.C. Section 1437f). 1-19 (b) This section does not apply to the disposal of property 1-20 because of: 1-21 (1) a governmental taking by eminent domain or 1-22 negotiated purchase; 1-23 (2) a foreclosure action; 1-24 (3) a transfer by gift, devise, or operation of law; 2-1 or 2-2 (4) a sale to a person who would be entitled to an 2-3 interest in the property if the property owner died intestate. 2-4 Sec. 2306.802. PROPERTY OWNER RESTRICTION. Except as 2-5 provided by this subchapter, a property owner under this subchapter 2-6 may not sell, lease, or otherwise dispose of a multifamily housing 2-7 development that is insured or assisted under a federal program if 2-8 that action will cause the disruption or discontinuance of: 2-9 (1) the federal insurance or assistance; or 2-10 (2) the provision of low income housing assistance to 2-11 residents of the development. 2-12 Sec. 2306.803. NOTICE OF INTENT. (a) A property owner of a 2-13 multifamily housing development subject to the restriction under 2-14 Section 2306.802 who intends to sell, lease, or otherwise dispose 2-15 of the development shall provide notice to: 2-16 (1) the residents of the development and the residents 2-17 association of the development; 2-18 (2) the department; 2-19 (3) the local housing authority with jurisdiction over 2-20 the geographic area in which the development is located; and 2-21 (4) the governing body of the municipality in which 2-22 the development is located. 2-23 (b) The notice required under Subsection (a) must provide: 2-24 (1) the essential terms of the sale or lease, 2-25 including relevant pricing and financing requirements, that the 2-26 property owner intends to accept; 2-27 (2) a list of the people receiving the notice and a 3-1 statement that each person listed in the notice has a right of 3-2 first refusal according to the priorities established under Section 3-3 2306.805; 3-4 (3) a statement of residents' rights and sources of 3-5 technical assistance in a form prescribed by the department; and 3-6 (4) relevant information regarding the financial 3-7 requirements and economic status of the development. 3-8 Sec. 2306.804. RIGHT OF FIRST REFUSAL. (a) Except as 3-9 provided by Section 2306.801(b), the department or a person who is 3-10 provided notice as required by Section 2306.803 has a right of 3-11 first refusal to purchase or lease the multifamily housing 3-12 development if: 3-13 (1) not later than the 180th day after the date the 3-14 property owner provides notice under Section 2306.803, the 3-15 department or person submits a proposed purchase or lease agreement 3-16 to the property owner with substantially equivalent terms as the 3-17 terms the property owner intends to accept according to the 3-18 required notice; and 3-19 (2) not later than the first anniversary of the date 3-20 of the submission of a proposed purchase or lease agreement, the 3-21 department or person: 3-22 (A) tenders the purchase amount or the 3-23 appropriate lease amount; and 3-24 (B) obtains the necessary financing to purchase 3-25 or lease the development. 3-26 (b) The property owner may not unreasonably refuse to enter 3-27 into or unreasonably delay the execution of a purchase or lease 4-1 agreement with the department or person if the department or person 4-2 has complied with Subsection (a). The property owner may require a 4-3 person offering to lease the development to place in escrow an 4-4 amount necessary to pay the lease for a period of not more than one 4-5 year after the effective date of the lease agreement. 4-6 (c) A majority of the residents or the residents association 4-7 of a development may conclude an agreement with a nonprofit 4-8 organization or private purchaser in which the nonprofit 4-9 organization or private purchaser agrees to represent the residents 4-10 and maintain the development in a manner that preserves the 4-11 development's low income housing benefits. A nonprofit 4-12 organization or private purchaser under this subsection takes the 4-13 right of first refusal held by the residents or the residents 4-14 association of a development and is subject to the requirements of 4-15 this section. 4-16 Sec. 2306.805. PRIORITY OF RIGHT OF FIRST REFUSAL. The 4-17 right of first refusal under this subchapter is provided according 4-18 to the priorities as follows to: 4-19 (1) the residents of the development or the residents 4-20 association of the development or the nonprofit organization or 4-21 private purchaser that agrees to represent the residents or the 4-22 residents association under Section 2306.804(c); 4-23 (2) the department; 4-24 (3) the local housing authority with jurisdiction over 4-25 the geographic area in which the development is located; and 4-26 (4) the governing body of the municipality in which 4-27 the development is located. 5-1 SECTION 2. Subchapter A, Chapter 2306, Government Code, is 5-2 amended by adding Section 2306.008 to read as follows: 5-3 Sec. 2306.008. FEDERAL MATCHING GRANTS. The department 5-4 shall emphasize the development of programs under this chapter in a 5-5 manner that maximizes federal matching grants to preserve long-term 5-6 affordability for low income housing under federal programs, 5-7 including programs under: 5-8 (1) Section 221(d)(3), National Housing Act (12 U.S.C. 5-9 Section 1715l); 5-10 (2) Section 236, National Housing Act (12 U.S.C. 5-11 Section 1715z-1); 5-12 (3) Section 515, Housing Act of 1949 (42 U.S.C. 5-13 Section 1485); and 5-14 (4) Section 8, United States Housing Act of 1937 (42 5-15 U.S.C. Section 1437f). 5-16 SECTION 3. (a) This Act takes effect September 1, 1999, and 5-17 applies to a multifamily housing development described by Section 5-18 2306.801, Government Code, as added by this Act, that a property 5-19 owner intends to sell, lease, or otherwise dispose of on or after 5-20 January 1, 2000. 5-21 (b) The Texas Department of Housing and Community Affairs 5-22 shall prepare the statement required by Section 2306.803(b)(3), 5-23 Government Code, as added by this Act, not later than January 1, 5-24 2000. 5-25 SECTION 4. The importance of this legislation and the 5-26 crowded condition of the calendars in both houses create an 5-27 emergency and an imperative public necessity that the 6-1 constitutional rule requiring bills to be read on three several 6-2 days in each house be suspended, and this rule is hereby suspended.