By Ellis S.B. No. 1703
Substitute the following for S.B. No. 1703:
By Hodge C.S.S.B. No. 1703
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to loan assistance for low-income individuals and
1-3 families.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 2306, Government Code, is amended by
1-6 adding Subchapter FF to read as follows:
1-7 SUBCHAPTER FF. PILOT INTERIM CONSTRUCTION LOAN PROGRAM
1-8 Sec. 2306.751. DEFINITIONS. In this subchapter:
1-9 (1) "Construction supply company" means a retail or
1-10 wholesale entity that sells construction equipment and supplies for
1-11 home construction and home improvements.
1-12 (2) "Nonprofit housing assistance organization" means
1-13 a nonprofit entity that aids low-income persons in acquiring
1-14 affordable housing and includes an entity that provides
1-15 construction equipment and supplies or technical assistance for
1-16 home construction or home improvements.
1-17 (3) "Owner-builder" means a person who owns a piece of
1-18 real property, either through a contract for deed or a warranty
1-19 deed, and who undertakes to make improvements to that property.
1-20 The term does not include a person who owns or operates a
1-21 construction business.
1-22 Sec. 2306.752. PILOT INTERIM CONSTRUCTION LOAN PROGRAM.
1-23 (a) To provide for the development of affordable housing in this
2-1 state, the department shall establish a pilot program in which the
2-2 department:
2-3 (1) cooperates with construction supply companies or
2-4 nonprofit housing assistance organizations to provide interim
2-5 construction loans for owner-builders; and
2-6 (2) provides other services that facilitate the
2-7 implementation of the program, including assistance in refinancing
2-8 interim construction loans to provide private market-rate mortgages
2-9 for owner-builders who participate in the program.
2-10 (b) An interim construction loan under this program may
2-11 provide resources to:
2-12 (1) build new residential housing; or
2-13 (2) develop, renovate, or otherwise make basic repairs
2-14 or improvements to existing residential housing.
2-15 (c) An interim construction loan under this program may not
2-16 provide resources to finance a luxury item or other improvement
2-17 that is not a basic improvement or repair necessary for a housing
2-18 unit to comply with minimum building code standards.
2-19 (d) The department may adopt rules necessary to accomplish
2-20 the purposes of this subchapter.
2-21 Sec. 2306.753. PARTICIPATION AGREEMENT. (a) Under the
2-22 program, the department may enter into a participation agreement
2-23 with one or more construction supply companies or nonprofit housing
2-24 assistance organizations to provide loan guarantees from the
2-25 department for interim construction loans made by the company or
2-26 organization to eligible owner-builders under this subchapter.
2-27 (b) The department by rule shall establish a limit for the
3-1 percentage of an interim construction loan that the department
3-2 guarantees under the program that is based on the estimated value
3-3 of the property after the improvements to the property are
3-4 completed. The department may not agree to a guarantee for an
3-5 interim builder loan issued to an owner-builder by a participating
3-6 construction supply company or nonprofit housing assistance
3-7 organization that exceeds that limit.
3-8 (c) The department may not make an agreement with a
3-9 construction supply company or nonprofit housing assistance
3-10 organization under the program unless the participation agreement
3-11 allows the department to annually renegotiate the guarantee
3-12 percentage for an interim construction loan issued by the
3-13 construction supply company or nonprofit housing assistance
3-14 organization. The department shall renegotiate the terms of an
3-15 interim construction loan guarantee when possible to obtain a
3-16 better guarantee percentage for the state from the construction
3-17 supply company or nonprofit housing assistance organization.
3-18 (d) A participating construction supply company or nonprofit
3-19 housing assistance organization may require an owner-builder to
3-20 provide a warranty deed for the property that is the proposed
3-21 subject of the interim construction loan as collateral for the
3-22 loan.
3-23 Sec. 2306.754. OWNER-BUILDER ELIGIBILITY. (a) The
3-24 department shall establish eligibility requirements for
3-25 owner-builders to participate in the program. The eligibility
3-26 requirements must include a priority for owner-builders who are
3-27 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
4-27 program; and
5-1 (2) nonprofit housing assistance organizations and
5-2 housing assistance programs to aid owner-builders who do not
5-3 qualify for private market-rate mortgages.
5-4 Sec. 2306.757. FUNDING. (a) The department may not spend
5-5 state money to fund a loan guarantee issued under this subchapter.
5-6 (b) The department shall identify funds that are appropriate
5-7 for the program.
5-8 (c) The department may cooperate with nonprofit housing
5-9 assistance organizations to establish loan guarantee pools that may
5-10 be used to obtain loans for the purposes of this subchapter.
5-11 Sec. 2306.758. REPORTING DUTIES. The department shall:
5-12 (1) compose an annual report that evaluates the
5-13 repayment history and any coinciding loan guarantee issued under a
5-14 program under this subchapter;
5-15 (2) report the loan amounts, uses, nature of
5-16 improvements funded, and the incomes of the owner-builders who
5-17 participate in the program;
5-18 (3) make recommendations to improve the effectiveness
5-19 and efficiency of the program; and
5-20 (4) deliver a copy of the report to the governor, the
5-21 lieutenant governor, and the speaker of the house of
5-22 representatives.
5-23 SECTION 2. (a) This Act takes effect September 1, 1999.
5-24 (b) The Texas Department of Housing and Community Affairs
5-25 shall deliver the first report required by Section 2306.758,
5-26 Government Code, as added by this Act, not later than January 1,
5-27 2001.
6-1 (c) The Texas Department of Housing and Community Affairs
6-2 shall select an economically distressed area, as defined by Section
6-3 16.341, Water Code, in which to implement the pilot program
6-4 required by Subchapter FF, Chapter 2306, Government Code, as added
6-5 by this Act.
6-6 (d) The Texas Department of Housing and Community Affairs
6-7 may not enter into a participation agreement under the pilot
6-8 program authorized by Subchapter FF, Chapter 2306, Government Code,
6-9 as added by this Act, on or after September 1, 2001.
6-10 SECTION 3. The importance of this legislation and the
6-11 crowded condition of the calendars in both houses create an
6-12 emergency and an imperative public necessity that the
6-13 constitutional rule requiring bills to be read on three several
6-14 days in each house be suspended, and this rule is hereby suspended.