AN ACT
1-1 relating to loan assistance for low-income individuals and
1-2 families.
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 FF to read as follows:
1-6 SUBCHAPTER FF. PILOT INTERIM CONSTRUCTION LOAN PROGRAM
1-7 Sec. 2306.751. DEFINITIONS. In this subchapter:
1-8 (1) "Construction supply company" means a retail or
1-9 wholesale entity that sells construction equipment and supplies for
1-10 home construction and home improvements.
1-11 (2) "Nonprofit housing assistance organization" means
1-12 a nonprofit entity that aids low-income persons in acquiring
1-13 affordable housing and includes an entity that provides
1-14 construction equipment and supplies or technical assistance for
1-15 home construction or home improvements.
1-16 (3) "Owner-builder" means a person who owns a piece of
1-17 real property, either through a contract for deed or a warranty
1-18 deed, and who undertakes to make improvements to that property.
1-19 The term does not include a person who owns or operates a
1-20 construction business.
1-21 Sec. 2306.752. PILOT INTERIM CONSTRUCTION LOAN PROGRAM.
1-22 (a) To provide for the development of affordable housing in this
1-23 state, the department shall establish a pilot program in which the
1-24 department:
2-1 (1) cooperates with construction supply companies or
2-2 nonprofit housing assistance organizations to provide interim
2-3 construction loans for owner-builders; and
2-4 (2) provides other services that facilitate the
2-5 implementation of the program, including assistance in refinancing
2-6 interim construction loans to provide private market-rate mortgages
2-7 for owner-builders who participate in the program.
2-8 (b) An interim construction loan under this program may
2-9 provide resources to:
2-10 (1) build new residential housing; or
2-11 (2) develop, renovate, or otherwise make basic repairs
2-12 or improvements to existing residential housing.
2-13 (c) An interim construction loan under this program may not
2-14 provide resources to finance a luxury item or other improvement
2-15 that is not a basic improvement or repair necessary for a housing
2-16 unit to comply with minimum building code standards.
2-17 (d) The department may adopt rules necessary to accomplish
2-18 the purposes of this subchapter.
2-19 Sec. 2306.753. PARTICIPATION AGREEMENT. (a) Under the
2-20 program, the department may enter into a participation agreement
2-21 with one or more construction supply companies or nonprofit housing
2-22 assistance organizations to provide loan guarantees from the
2-23 department for interim construction loans made by the company or
2-24 organization to eligible owner-builders under this subchapter.
2-25 (b) The department by rule shall establish a limit for the
2-26 percentage of an interim construction loan that the department
3-1 guarantees under the program that is based on the estimated value
3-2 of the property after the improvements to the property are
3-3 completed. The department may not agree to a guarantee for an
3-4 interim builder loan issued to an owner-builder by a participating
3-5 construction supply company or nonprofit housing assistance
3-6 organization that exceeds that limit.
3-7 (c) The department may not make an agreement with a
3-8 construction supply company or nonprofit housing assistance
3-9 organization under the program unless the participation agreement
3-10 allows the department to annually renegotiate the guarantee
3-11 percentage for an interim construction loan issued by the
3-12 construction supply company or nonprofit housing assistance
3-13 organization. The department shall renegotiate the terms of an
3-14 interim construction loan guarantee when possible to obtain a
3-15 better guarantee percentage for the state from the construction
3-16 supply company or nonprofit housing assistance organization.
3-17 (d) A participating construction supply company or nonprofit
3-18 housing assistance organization may require an owner-builder to
3-19 provide a warranty deed for the property that is the proposed
3-20 subject of the interim construction loan as collateral for the
3-21 loan.
3-22 Sec. 2306.754. OWNER-BUILDER ELIGIBILITY. (a) The
3-23 department shall establish eligibility requirements for
3-24 owner-builders to participate in the program. The eligibility
3-25 requirements must include a priority for owner-builders who are
3-26 individuals or families of very low or extremely low income.
4-1 (b) The department may select nonprofit housing assistance
4-2 organizations to certify the eligibility of owner-builders to
4-3 participate in the interim construction loan program. A nonprofit
4-4 housing assistance organization selected by the department shall
4-5 use the eligibility requirements established by the department to
4-6 certify the eligibility of an owner-builder for the program.
4-7 Sec. 2306.755. PARTICIPANT DUTIES. A construction supply
4-8 company or nonprofit housing assistance organization that
4-9 participates in the program shall:
4-10 (1) administer the interim construction loan;
4-11 (2) provide technical assistance to the owner-builder
4-12 for improvements made to the property;
4-13 (3) perform the necessary inspections for improvements
4-14 made to the property; and
4-15 (4) warrant that funds provided under the interim
4-16 construction loan have been used exclusively for eligible purposes
4-17 under this subchapter.
4-18 Sec. 2306.756. REFINANCING ASSISTANCE. (a) The department
4-19 shall assist an owner-builder who obtains an interim construction
4-20 loan under the program to refinance the loan to:
4-21 (1) pay the balance of the interim construction loan;
4-22 and
4-23 (2) obtain a mortgage loan on the improved property.
4-24 (b) The department shall identify:
4-25 (1) private lenders to provide private market-rate
4-26 mortgages for low-income owner-builders who obtain loans under the
5-1 program; and
5-2 (2) nonprofit housing assistance organizations and
5-3 housing assistance programs to aid owner-builders who do not
5-4 qualify for private market-rate mortgages.
5-5 Sec. 2306.757. FUNDING. (a) The department may not spend
5-6 state money to fund a loan guarantee issued under this subchapter.
5-7 (b) The department shall identify funds that are appropriate
5-8 for the program.
5-9 (c) The department may cooperate with nonprofit housing
5-10 assistance organizations to establish loan guarantee pools that may
5-11 be used to obtain loans for the purposes of this subchapter.
5-12 Sec. 2306.758. REPORTING DUTIES. The department shall:
5-13 (1) compose an annual report that evaluates the
5-14 repayment history and any coinciding loan guarantee issued under a
5-15 program under this subchapter;
5-16 (2) report the loan amounts, uses, nature of
5-17 improvements funded, and the incomes of the owner-builders who
5-18 participate in the program;
5-19 (3) make recommendations to improve the effectiveness
5-20 and efficiency of the program; and
5-21 (4) deliver a copy of the report to the governor, the
5-22 lieutenant governor, and the speaker of the house of
5-23 representatives.
5-24 SECTION 2. (a) This Act takes effect September 1, 1999.
5-25 (b) The Texas Department of Housing and Community Affairs
5-26 shall deliver the first report required by Section 2306.758,
6-1 Government Code, as added by this Act, not later than January 1,
6-2 2001.
6-3 (c) The Texas Department of Housing and Community Affairs
6-4 shall select an economically distressed area, as defined by Section
6-5 16.341, Water Code, or a census tract delineated by the United
6-6 States Bureau of the Census in which the median family income as
6-7 reported by the bureau is less than 80 percent of the area median
6-8 family income in which to implement the pilot program required by
6-9 Subchapter FF, Chapter 2306, Government Code, as added by this Act.
6-10 (d) The Texas Department of Housing and Community Affairs
6-11 may not enter into a participation agreement under the pilot
6-12 program authorized by Subchapter FF, Chapter 2306, Government Code,
6-13 as added by this Act, on or after September 1, 2001.
6-14 SECTION 3. The importance of this legislation and the
6-15 crowded condition of the calendars in both houses create an
6-16 emergency and an imperative public necessity that the
6-17 constitutional rule requiring bills to be read on three several
6-18 days in each house be suspended, and this rule is hereby suspended.
S.B. No. 1703
________________________________ ________________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1703 passed the Senate on
April 29, 1999, by the following vote: Yeas 30, Nays 0;
May 27, 1999, Senate refused to concur in House amendment and
requested appointment of Conference Committee; May 28, 1999, House
granted request of the Senate; May 30, 1999, Senate adopted
Conference Committee Report by a viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1703 passed the House, with
amendment, on May 26, 1999, by a non-record vote; May 28, 1999,
House granted request of the Senate for appointment of Conference
Committee; May 30, 1999, House adopted Conference Committee Report
by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
________________________________
Date
________________________________
Governor