SRC-SEW S.B. 322 77(R)BILL ANALYSIS


Senate Research CenterS.B. 322
By: Lucio
Intergovernmental Relations
7/9/2001
Enrolled


DIGEST AND PURPOSE 

Under current state law, the Sunset Advisory Commission is charged with
reviewing state agencies on a periodic schedule.  During the interim of the
76th Texas Legislature, the Sunset Advisory Commission conducted a standard
review of the Texas Department of Housing and Community Affairs
(department) and made certain recommendations in a legislative report.
S.B. 322 continues the department for another two years and enacts some of
the Sunset Commission's recommendations relating to the continuation and
functions of the department and to other matters relating to housing or
community development, including the creation of the Manufactured Housing
Board. 

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the governing board of the
Texas Department of Housing and Community Affairs in SECTION 1.05 (Section
2306.032, Government Code); SECTION 1.06 (Section 2306.0321, Government
Code); SECTION 1.08 (Section 2306.052, Government Code); SECTION 2.02
(Section 2306.142, Government Code); and SECTION 8.01 (Section 2306.6721)
of this bill. 

Rulemaking authority is expressly granted to the Texas Department of
Housing and Community Affairs (department) in SECTION 1.17 (Section
2306.111, Government Code); SECTION 1.20  (Section 2306.1711, Government
Code); SECTION 1.30 (Section 2306.6728, Government Code); SECTION 2.10
(Section 2306.755, Government Code); SECTION 2.13 (Section 2306.786,
Government Code); SECTION 4.02 (Section 2306.0724, Government Code);
SECTION 8.01 (Section 2306.6704, Government Code); and to the department in
conjunction with the state Commission on Human Rights in SECTION 1.23
(Section 2306.257, Government Code) of this bill. 

Rulemaking authority is expressly granted to the Manufactured Housing Board
within the Texas Department of Housing and Community Affairs in SECTION
1.29 (Sections 2306.6020 and 2306.6023, Government Code); and SECTION 1.35
(Section 7, Article 5221f, V.T.C.S.) of this bill. 

SECTION BY SECTION ANALYSIS

ARTICLE 1

SECTION 1.01  Amends Section 2306.001, Government Code, to set forth the
purposes of the Texas Department of Housing and Community Affairs
(department). 

SECTION 1.02.  Amends Section 2306.021(b), Government Code, to provide that
the composition of the department includes any other division created by
the director under Section 2306.0521.   

SECTION 1.03.  Amends Chapter 2306B, Government Code, by amending Sections
2306.022, 2306.024, 2306.025, 2306.027, and 2306.033-2306.035 and adding
Section 2306.028, as follows: 

Sec.  2306.022.  Provides that, unless continued in existence as provided
by that chapter, the department is abolished and this chapter expires
September 1, 2003, rather than 2001. 
 
Sec. 2306.024.  Provides that the governing board of the department (board)
consists of seven public (rather than nine) members appointed by the
governor. 

Sec. 2306.025.  Provides that the terms of two or three members expire on
January 31 of each odd-numbered year. 

Sec. 2306.027.  (a) Requires the governor to appoint to the board public
members who have a demonstrated interest in issues related to housing and
community support services.  Requires a person appointed to the board to be
a registered voter in the state and prohibits the person from holding
another public office.  Deletes text regarding individuals representing
institutions, local government, housing construction, community-based
nonprofit housing organizations, realtors or housing developers,
individuals and families of low or very low income, and public members. 
  
(b)  Requires appointments to the board to be made without regard to the
race, color, disability (rather than handicap)  sex, religion, age, or
national origin of the appointees and to be made in a manner that produces
representation on the board of the different geographical regions of this
state.  Requires appointments to the board to broadly reflect the economic,
cultural, and social diversity of the state, including ethnic minorities,
people with disabilities, and women.  Deletes text regarding 2306.026. 

(c) Prohibits a person from being a member of the board under certain
conditions. Deletes text regarding place 2 on the board.  

Sec. 2306.028.  TRAINING. (a) Prohibits a person who is appointed to and
qualifies for office as a member of the board from voting, deliberating, or
being counted as a member in attendance at a meeting of the board until the
person completes a training program that complies with this section. 

(b)  Sets forth requirements regarding the information provided by the
training program.  

(c)  Provides that a person appointed to the board is entitled to
reimbursement, as provided by the General Appropriations Act, for the
travel expenses incurred in attending the training program regardless of
whether the attendance at the program occurs before or after the person
qualifies for office. 

Sec.  2306.033.  Sets forth guidelines regarding grounds for removal from
the board.  Provides that the validity of an action of the board is not
affected by the fact that it is taken when a ground for removal of a board
member exists.  Sets forth guidelines regarding notification of potential
grounds for removal from the board. 

Sec. 2306.034. (a) Deletes text prohibiting certain persons from being a
member of the board or an employee of the department who is exempt from the
state's position classification plan or is compensated at or above the
amount prescribed by the General Appropriations Act for step 1, salary
group 17, of the position classification salary schedule.  Redesignates
text from current Subsection (b) and redefines "Texas trade association." 

(b)  Prohibits a person from being a member of the board and from being a
department employee employed in a "bona fide executive, administrative, or
professional capacity," as that phrase is used for purposes of establishing
an exemption to the overtime provisions of the federal Fair Labor Standards
Act of 1938 (29 U.S.C. Section 201 et seq.) under certain conditions. 
  
Sec. 2306.035.  Prohibits a person from being (rather than serving as) a
member of the board or acting as the director of the department or the
general counsel to the board or the  department if the person is required
to register as a lobbyist under Chapter 305 because of the person's
activities for compensation on behalf of a profession related to the
operation of the department. 

SECTION 1.04.  Amends Section 2306.030(a), Government Code, to require the
governor to designate a member of the board (rather than appoint a
presiding officer from the board members) as the presiding officer of the
board to serve in that capacity at the will of the governor.   

SECTION 1.05.  Amends Section 2306.032, Government Code, by adding
Subsections (c)-(g), as follows: 
 
(c)  Requires all materials in the possession of the department that are
relevant to a matter proposed for discussion at a board meeting to be
posted on the department's website, made available in hard-copy format at
the department, filed with the secretary of state for publication by
reference in the Texas Register, and disseminated by any other means
required by this chapter or by Chapter 551. 

(d)  Requires the materials described by Subsection (c) to be made
available to the public as required by Subsection (c) by a certain date.
Prohibits the board from considering at the meeting any material that is
not made available to the public by the date required by this subsection. 

  (e)  Requires the agenda for a board meeting to state each project the
staff is    recommending for assistance by the department. 
 
(f)  Requires the board, for each item on the board's agenda at the
meeting, to provide for public comment after the presentation made by
department staff and the motions made by the board on that topic. 

  (g)  Requires the board to adopt rules that give the public a reasonable
amount of   time for testimony at meetings. 

SECTION 1.06.  Amends Chapter 2306B, Government Code, by adding Section
2306.0321, as follows: 

Sec. 2306.0321.  APPEAL OF BOARD AND DEPARTMENT DECISIONS.  Requires the
board to adopt rules outlining a formal process for appealing board and
department decisions. Requires the rules to specify certain requirements
for appealing a board or department decision. 
  
SECTION 1.07.  Amends Chapter 2306C, Government Code, by adding Sections
2306.051, 2306.0521, and 2306.057, as follows: 

Sec. 2306.051.  SEPARATION OF RESPONSIBILITIES.  Requires the board to
develop and implement policies that clearly separate the policy-making
responsibilities of the board and the management responsibilities of the
director and staff of the department. 

Sec. 2306.0521.  ORGANIZATIONAL FLEXIBILITY OF DEPARTMENT. 
Authorizes the director, with the approval of the board, notwithstanding
Section 2306.021(b) or any other provision of this chapter, to perform
certain functions.   
 Provides that this section does not apply to the manufactured housing
division. 

Sec. 2306.057.  COMPLIANCE ASSESSMENT REQUIRED FOR PROJECT   APPROVAL BY
BOARD. Requires the department, through the division with responsibility
for compliance matters, before the board approves any project application
submitted under this chapter, to perform certain functions.  Requires the
written report described by Subsection  (a)(2) to be included in the
applicable project file for board and department review.  Requires the
board to fully document and disclose any instances in which the board
approves a project application despite any noncompliance history associated
with the project, applicant, or affiliate.  

SECTION 1.08.  Amends Section 2306.052, Government Code, by amending
Subsection (c) and adding Subsections (e) and (f), as follows: 

(c) Requires the director to develop and implement the policies established
by the board that define the responsibilities of each division in the
department.  Deletes text regarding the director, board, and staff of the
department, the community affairs division, and the housing finance
division. 

(e) Requires the board to adopt rules and requires the director to develop
and implement a program to train employees on the public information
requirements of Chapter 552.  Requires the director to monitor the
compliance of employees with those requirements. 

(f) Requires the director to use existing department resources to provide
the board with any administrative support necessary for the board to
exercise its duties regarding the implementation of this chapter, including
certain specific resources. 

SECTION 1.09.  Amends Chapter 2306D, Government Code, by amending Section
2306.061 and adding Sections 2306.0631 and 2306.081, as follows: 

Sec. 2306.061.  New heading:  STANDARDS OF CONDUCT.  Requires the director
or the director's designee to become aware of and provide to members of the
board and to department employees, as often as necessary, certain
information.  Makes conforming changes. 

Sec. 2306.0631.  STATE EMPLOYEE INCENTIVE PROGRAM.  Requires the director
or the director's designee to provide to department employees information
and training on the benefits and methods of participation in the state
employee incentive program under Chapter 2108B. 

Sec. 2306.081.  PROJECT COMPLIANCE; DATABASE. (a) Requires the department,
through the division responsible for compliance matters, to monitor for
compliance with all applicable requirements the entire construction phase
associated with any project under this chapter.  Requires the monitoring
level for each project to be based on the amount of risk associated with
the project. 
 
(b)  Requires the department, after completion of a project's construction
phase, to periodically review the performance of the project to confirm the
accuracy of the department's initial compliance evaluation during the
construction phase. 

(c)  Requires the department to use the division responsible for credit
underwriting matters and the division responsible for compliance matters to
determine the amount of risk associated with each project. 

(d)  Requires the department to create an easily accessible database that
contains all project compliance information developed under this chapter. 

SECTION 1.10.  Amends Sections 2306.066(b) and (c), Government Code, as
follows: 

(b)  Requires the department to maintain a file on (rather than keep
information about) each written complaint filed with the department.
Deletes text regarding the  department's authority.  Sets forth
requirements for the file. 

(c)  Requires the department to provide to the person filing the complaint
and to each person who is a subject of the complaint a copy of the
department's policies and procedures relating to complaint investigation
and resolution.  Requires the department, at least quarterly until final
disposition of the complaint, to notify the person filing the complaint and
each person who is a subject of the complaint of the status of the
investigation unless the notice would jeopardize an undercover
investigation.  Makes conforming changes. 

SECTION 1.11.  Amends Section 2306.0661, Government Code, as follows:

Sec. 2306.0661. (a) Provides that, except as provided by Subsection (b),
this section applies only to certain programs and plans.  

(b) Requires the department to encourage informed and effective public
participation in the department's programs and plans by (rather than
through) holding, on at least an annual basis in each uniform service
region of the state, a consolidated public hearing in which the department
solicits and accepts public comments regarding certain programs. 

  (c) No changes in text.

(d) Deletes text regarding the department, in scheduling a hearing, making
a reasonable effort to inform interested persons and organizations of the
hearing.  Makes a conforming change. 

(e) Requires, at least six weeks before the date of the hearing, all
materials in the possession of the department that are relevant to a matter
proposed for discussion at a consolidated public hearing under this section
to be sent to interested persons and organizations, posted on the
department's website, made available in hard-copy format at the department,
filed with the secretary of state for publication by reference in the Texas
Register, and disseminated by any other means required by this chapter or
by Chapter 551. 

SECTION 1.12.  Amends Section 2306.067, Government Code, by adding
Subsection (d), to authorize the director to enter into an agreement with
the manufactured housing division to loan or assign department employees,
equipment, and facilities to that division. 

SECTION 1.13.  Amends Section 2306.0721, Government Code, by amending
Subsection (c) and adding Subsection (f), as follows: 

(c) Requires the plan to include certain estimates, analyses, inventories,
information, and summaries.  Makes conforming changes. 

(f) Authorizes the director to subdivide the uniform state service regions
as necessary for purposes of the state low income housing plan. 

SECTION 1.14.  Amends Section 2306.0722, Government Code, to require the
department, under certain conditions, to meet with regional planning
commissions created under Chapter 391 (Regional Planning Commissions),
Local Government Code.  Requires the director, in preparing the annual
report under Section 2306.072 and the state low income housing plan under
Section 2306.0721, to use the most recent census data combined with
existing data from local housing and community service providers in the
state, including public housing authorities, housing finance corporations,
community housing development organizations, and community action agencies. 

 SECTION 1.15.  Amends Section 2306.0723(a), Government Code, to delete
text requiring public hearings to be held in Dallas or Fort Worth, El Paso,
Houston, San Antonio, the Lower Rio Grande Valley, and at least two
additional municipalities selected by the department to represent
geographically diverse communities. 

SECTION 1.16.  Amends Section 2306.092, Government Code, as follows:

Sec.  2306.092.  New heading: DUTIES REGARDING CERTAIN PROGRAMS CREATED
UNDER FEDERAL LAW.  Requires the department to perform certain functions
regarding certain programs created under federal law. 

SECTION 1.17.  Amends Section 2306.111, Government Code, by amending
Subsection (d) and adding Subsections (g) and (h), as follows: 

(d) Requires the department to allocate certain funds and commitments to
each uniform state service region based on a formula developed by the
department that is based on the need for housing assistance and the
availability of housing resources, provided that the allocations are
consistent with applicable federal and state requirements and limitations.
Requires the department to use the information contained in its annual
state low income housing plan and other appropriate data to develop the
formula.   

(g) Requires the department, for each uniform state service region, to
establish funding priorities to ensure that certain conditions are met. 
  
(h) Requires the department by rule to adopt a policy providing for the
reallocation of financial assistance administered by the department,
including financial assistance related to bonds issued by the department,
if the department's obligation with respect to that assistance is
prematurely terminated. 

SECTION 1.18.  Amends Chapter 2306F, Government Code, by adding Sections
2306.1111, 2306.1112, and 2306.1113, as follows: 

 Sec. 2306.1111.  UNIFORM APPLICATION AND FUNDING CYCLE. 
Requires the department, notwithstanding any other state law and to the
extent consistent with federal law, to establish a uniform application and
funding cycle for all single-family and multifamily housing programs
administered by the department under this chapter.  Requires the
department, wherever possible, to use uniform threshold requirements for
multifamily housing program applications. 

Sec. 2306.1112.  EXECUTIVE AWARD AND REVIEW ADVISORY COMMITTEE. Requires
the department to establish an executive award and review advisory
committee to make recommendations to the board regarding funding and
allocation decisions.  Sets forth guidelines regarding the members and
functions of the advisory committee.  Provides that the advisory committee
is not subject to Chapter 2110. 

Sec.  2306.1113.  EX-PARTE COMMUNICATIONS.  Prohbits a member of the board
or the advisory committee established under Section 2306.1112, during the
period beginning on the date a project application is filed and ending on
the date the board makes a final decision with respect to any approval of
that application, from communicating with certain persons. Authorizes such
communication to occur, notwithstanding this section, at any board meeting
or public hearing held with respect to the application. 

SECTION 1.19.  Amends Chapter 2306F Government Code, by adding Section
2306.127, as follows: 

 Sec. 2306.127.  PRIORITY FOR CERTAIN COMMUNITIES.  Requires the
department, in a manner consistent with the regional allocation formula
described under Section 2306.111(d), to give priority through its housing
program scoring criteria to certain communities. 

SECTION 1.20.  Amends Chapter 2306H, Government Code, by adding Section
2306.1711, as follows: 

Sec. 2306.1711.  RULEMAKING PROCEDURES FOR CERTAIN PROGRAMS. Requires the
department to adopt rules outlining formal rulemaking procedures for the
low income housing tax credit program and the multifamily housing mortgage
revenue bond program in accordance with Chapter 2001.  Sets forth
requirements for adopted rules.  Requires the department to provide for
public input before adopting rules for programs with requests for proposals
and notices of funding availability. 

SECTION 1.21.  Amends Section 2306.252, Government Code, by amending
Subsection (b) and adding Subsections (d)-(g), as follows: 

(b) Requires the department, through the center, to perform certain
functions. 

(d) Requires the center to serve as a housing and community services
clearinghouse to provide certain information to certain parties. 

(e) Requires the center to compile the department's reports into an
integrated format and to compile and maintain a list of all affordable
housing resources in the state, organized by community. 

(f) Requires the information required under Subsections (d) and (e) to be
readily available in certain formats. 
  
(g) Requires the center to provide information regarding the department's
housing and community affairs programs to the Texas Information and
Referral Network for inclusion in the statewide information and referral
network as required by Section 531.0312. 

SECTION 1.22.  (a) Amends Section 2306.255(b), Government Code, to require
the office established by the department to promote initiatives for
colonias (office), to the extent possible, to encourage conversion of a
contract for deed under the program into a general warranty deed. 

(b) Provides that the change in law made by this section applies only to a
contract for deed that is converted into a warranty deed on or after the
effective date of this Act.   

SECTION 1.23.  Amends Chapter 2306K, Government Code, by adding Sections
2306.256 and 2306.257, as follows: 
 
Sec. 2306.256.  AFFORDABLE HOUSING PRESERVATION PROGRAM. Requires the
department to develop and implement a program to preserve affordable
housing in this state. Sets forth requirements for the program. 
 
Sec. 2306.257.  APPLICANT COMPLIANCE WITH STATE AND FEDERAL LAWS
PROHIBITING DISCRIMINATION:  CERTIFICATION AND MONITORING. (a) Authorizes
the department to provide assistance through a housing program under this
chapter only to an applicant who certifies the applicant's compliance with
certain laws. 
  
(b)  Requires the department, in conjunction with the state Commission on
Human Rights, to adopt certain rules governing the certification process
described by this  section. 

(c)  Authorizes sanctions imposed under Subsection (b)(3) to include
certain items and to be imposed in addition to any action taken by the
state Commission on Human Rights. 

(d)  Requires the department to promptly notify the state Commission on
Human Rights if the department determines that a program participant may
have failed to comply with the laws listed by Subsection (a). 

SECTION 1.24.  Amends Sections 2306.358(a), (a-1), and (b), Government
Code, as follows: 

(a)  Deletes text regarding the allocation of at least 50 percent of the
total annual issuance amount for new construction or acquisition with
substantial rehabilitation. Makes conforming changes.  Deletes text
defining "substantial rehabilitation."  

  (a-1) Makes a nonsubstantive change.

(b) Requires the department and the Bond Review Board to review the
memorandum of understanding annually to determine the specific amount of
bonds to be issued in each fiscal year.  

SECTION 1.25.  Amends Section 2306.431, Government Code, by adding
Subsection (c) to require any bonds submitted by the department to the
attorney general under this section to include a certification by the board
that home mortgage loans made using the proceeds of the bonds do not
include a mandatory arbitration requirement. 

SECTION 1.26.   Amends the heading to Chapter 2306Z, Government Code, to
read as follows: 

SUBCHAPTER Z.  COLONIAS

SECTION 1.27.  Amends Chapter 2306Z, Government Code, by amending Sections
2306.584 and 2306.585 and adding Sections 2306.590 and 2306.591, as
follows: 

Sec. 2306.584.  New heading:  COLONIA RESIDENT ADVISORY COMMITTEE. 
Requires the board, rather than the department, to appoint not fewer than
five persons who are residents of colonias to serve on a colonia resident
advisory committee.  Makes conforming changes. 

Sec. 2306.585.  New heading:  DUTIES OF COLONIA RESIDENT ADVISORY
COMMITTEE.  Makes conforming changes.   

Sec. 2306.590.  COLONIA INITIATIVES ADVISORY COMMITTEE. Requires the board
to establish a colonia initiatives advisory committee that is composed of
certain members appointed by the department.  Requires each member of the
colonia initiatives advisory committee other than the public member to
reside within 150 miles of the international border of this state.
Requires the colonia initiatives advisory committee to perform certain
functions. 

Sec. 2306.591.  BIENNIAL ACTION PLAN. (a) Requires the office established
by the department to promote initiatives for colonias (office) to prepare a
biennial action plan addressing certain issues. 

(b)  Requires the office to solicit public comments regarding the plan at a
public hearing. Sets forth guidelines regarding publishing an initial and
final draft of the plan. 

 (c)  Requires the office, after the public hearing, to publish a final
plan that meets certain requirements.      

(d) Requires the office to send the final plan to the colonia initiatives
advisory committee for review and comment.  Requires the office, after
receiving comments, to send the plan to the board for final approval, with
the comments of the colonia initiatives advisory committee attached to the
plan. 

SECTION 1.28.  Amends Section 2306.589(c), Government Code, to authorize
the department to use money in the colonia set-aside fund for specific
activities that assist colonias, including reimbursement of colonia
resident advisory committee members and colonia initiatives advisory
committee members for their reasonable expenses in the manner provided by
Chapter 2110 (rather than Article 6252-33, Revised Statutes), or the
General Appropriations Act. 
  
SECTION 1.29.  Amends Chapter 2306AA, Government Code, as follows:

SUBCHAPTER AA.  MANUFACTURED HOUSING DIVISION

Sec. 2306.6001.  Redesignated from Section 2306.601. DEFINITIONS.  Defines
"division," "division director," and "Manufactured Housing Board."  

 Sec.  2306.6002.  Makes conforming changes.

Sec.  2306.6003.  MANUFACTURED HOUSING BOARD. Provides that the
Manufactured Housing Board (MHB) is an independent entity within the
department, is administratively attached to the department, and is not an
advisory body to the department.  Requires MHB to carry out the functions
and duties conferred on MHB by this subchapter and by other law. 

Sec. 2306.6004.  MANUFACTURED HOUSING BOARD MEMBERSHIP. Provides that MHB
consists of five public members appointed by the governor.  Sets forth
eligibility requirements for MHB.  Sets forth prohibitions concerning
eligibility.  Requires appointments to MHB to be made without regard to the
race, color, disability, sex, religion, age, or national origin of the
appointees. 

Sec. 2306.6005.  CONFLICT OF INTEREST. Defines "Texas trade association"
under this section.  Prohibits a person from being a member of MHB and from
being a division employee employed in a "bona fide executive,
administrative, or professional capacity," as that phrase is used for
purposes of establishing an exemption to the overtime provisions of the
federal Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.),
under certain conditions.  Prohibits a person from being a member of MHB or
acting as the general counsel to MHB or the division under certain
conditions. 

Sec. 2306.6006.  TERMS; VACANCY.  Sets forth guidelines regarding the terms
of the members of MHB and vacancies on MHB. 

Sec. 2306.6007.  PRESIDING OFFICER.  Requires the governor to designate a
member of MHB as the presiding officer of MHB to serve in that capacity at
the will of the governor. 

Sec. 2306.6008.  GROUNDS FOR REMOVAL. Sets forth guidelines regarding the
grounds for removal from MHB and notification of potential grounds for
removal.  Provides that the validity of an action of MHB is not affected by
the fact that it is taken when a ground for removal of a board member
exists. 

Sec. 2306.6009.  REIMBURSEMENT.  Sets forth guidelines concerning
reimbursement for certain expenses. 
  
Sec. 2306.6010.  MEETINGS.  Sets forth guidelines regarding MHB meetings. 

Sec. 2306.6011.  TRAINING. Prohibits a person who is appointed to and
qualifies for office as a member of MHB from voting, deliberating, or being
counted as a member in attendance at a meeting of MHB until the person
completes a training program that complies with this section. Sets forth
guidelines for information included in the training program.  Provides that
a person appointed to MHB is entitled to reimbursement, as provided by the
General Appropriations Act, for the travel expenses incurred in attending
the training program regardless of whether the attendance at the program
occurs before or after the person qualifies for office. 

Sec. 2306.6012.  APPROPRIATIONS; DONATIONS. Requires the legislature to
separately appropriate money to MHB within the appropriations to the
department for all matters relating to the operation of the division.
Authorizes MHB to accept gifts and grants of money or property under this
subchapter and requires MHB to spend the money and use the property for the
purpose for which the donation was made, with certain exceptions. 

Sec. 2306.6013.  BUDGET; SHARING OF DEPARTMENT PERSONNEL, EQUIPMENT, AND
FACILITIES.  Requires MHB to develop a budget for the operations of the
department relating to the division.  Requires MHB to reduce administrative
costs by entering into an agreement with the department to enable the
sharing of department personnel, equipment, and facilities. 

Sec. 2306.6014.  DIVISION DIRECTOR.  Requires MHB to employ the division
director. Provides that the division director is MHB's chief executive and
administrative officer.  Provides that the division director is charged
with administering, enforcing, and carrying out the functions and duties
conferred on the division director by this subchapter and by other law.
Provides that the division director serves at the pleasure of MHB. 

Sec. 2306.6015.  Redesignated from existing 2306.602.  Authorizes the
division director to employ staff as necessary to perform the work of the
division and to prescribe their duties and compensation.  Makes a
conforming change. 

Sec. 2306.6016.  SEPARATION OF RESPONSIBILITIES.  Requires MHB to develop
and implement policies that clearly separate the policy-making
responsibilities of MHB and the management responsibilities of the division
director and staff of the division. 

Sec. 2306.6017.  STANDARDS OF CONDUCT.  Requires the division director or
the division director's designee to provide to members of MHB and to
division employees, as often as necessary, information regarding the
requirements for office or employment under this subchapter, including
information regarding a person's responsibilities under applicable laws
relating to standards of conduct for state officers or employees. 

Sec. 2306.6018.  EQUAL EMPLOYMENT OPPORTUNITY.  Requires the division
director or the division director's designee to prepare and maintain a
written policy statement that implements a program of equal employment
opportunity to ensure that all personnel decisions are made without regard
to race, color, disability, sex, religion, age, or national origin and
requires the statement to include certain items and meet certain
requirements. 
 
Sec. 2306.6019.  STATE EMPLOYEE INCENTIVE PROGRAM.  Requires the division
director or the division director's designee to provide to division
employees information and training on the benefits and methods of
participation in the state employee incentive program under Subchapter B,
Chapter 2108. 

Sec. 2306.6020.  Redesignated from existing Section 2306.603.  Requires
MHB, rather than  the director, to adopt rules as necessary to implement
this subchapter and to administer and enforce the manufactured housing
program through the division.   Makes conforming changes. 
 
Sec. 2306.6021.  PUBLIC PARTICIPATION.  Requires MHB to develop and
implement policies that provide the public with a reasonable opportunity to
appear before MHB and to speak on any issue under the jurisdiction of the
division. 

Sec. 2306.6022.  COMPLAINTS. Requires the division to maintain a file on
each written complaint filed with the division and requires the file to
include certain items.  Requires the division to provide to the person
filing the complaint and to each person who is a subject of the complaint a
copy of the division's policies and procedures relating to complaint
investigation and resolution.  Requires the division, at least quarterly
until final disposition of the complaint, to notify the person filing the
complaint and each person who is a subject of the complaint of the status
of the investigation unless the notice would jeopardize an undercover
investigation. Provides that, unless otherwise confidential by law, the
records of a license holder or other person that are required or obtained
by the division or its agents or employees in connection with the
investigation of a complaint are subject to the requirements of Chapter
552.   

Sec. 2306.6023.  Redesignated from existing Section 2306.604.  Makes
conforming changes, including transferring to MHB rulemaking authority
previously granted to the director.  Requires MHB, rather than the
governing board of the department (board), to assess certain administrative
penalties.  Requires the division director to give notice of MHB's order to
the person charged.  Requires the notice of MHB's order to the person
charged to include a statement of the right of the person charged to
judicial review of MHB's, rather than the commission's, order.  Requires
the person charged, by a certain date, if the person files a petition for
judicial review contesting the fact of the violation, the amount of the
penalty, or both the fact of the violation and the amount of the penalty,
to forward the amount assessed to the division, rather than the department,
for deposit in an escrow account.  Makes conforming changes. 

 Deletes existing Section 2306.605 regarding the acceptance of donations.

SECTION 1.30.  Amends Chapter 2306DD, Government Code, by adding Sections
2306.6728 and 2306.6729, as follows: 

Sec. 2306.6728.  DEPARTMENT POLICY AND PROCEDURES REGARDING RECIPIENTS OF
CERTAIN FEDERAL HOUSING ASSISTANCE. (a) Requires the department by rule to
adopt a policy regarding the admittance to low income housing tax credit
properties of income-eligible individuals and families receiving assistance
under Section 8, United States Housing Act of 1937 (42 U.S.C. Section
1437f).   

(b) Requires the policy to provide a reasonable minimum income standard,
not otherwise to be prohibited by this chapter, to be used by owners of low
income housing tax credit properties and to place reasonable limits on the
use of any other factors that impede the admittance of individuals and
families described by Subsection (a) to those properties, including credit
histories, security deposits, and employment histories. 

(c)  Requires the department by rule to establish procedures to monitor low
income housing tax credit properties that refuse to admit individuals and
families described by Subsection (a).  Requires the department by rule to
establish enforcement mechanisms with respect to those properties,
including a range of sanctions to be imposed against the owners of those
properties. 

Sec. 2306.6729.  QUALIFIED NONPROFIT ORGANIZATION.  Authorizes a qualified
nonprofit organization to compete in any low income housing tax credit
allocation pool,  including certain stated pools.  Requires a qualified
nonprofit organization submitting an application under this subchapter to
have a controlling interest in the project proposed to be financed with a
low income housing tax credit from the nonprofit allocation pool. 

SECTION 1.31.  Amends Section 531.0312, Government Code, by adding
Subsection (d) to require the Texas Department of Housing and Community
Affairs (department) to provide the Texas Information and Referral Network
with information regarding the department's housing and community affairs
programs for inclusion in the statewide information and referral network.
Requires the department to provide the information in a form determined by
the commissioner and to update the information at least quarterly. 

SECTION 1.32.  Amends Section 1372.023, Government Code, as follows:
 
Sec. 1372.023.  New heading:  DEDICATION OF PORTIONS OF STATE CEILING TO
TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS.  (a) Provides that,
until August 15 (rather than 25), of that portion of the state ceiling that
is available exclusively for reservations by issuers of qualified mortgage
bonds, one-third is available exclusively to the Texas Department of
Housing and Community Affairs for the purpose of issuing qualified mortgage
bonds.   

(b) Provides that, until August 25, of that portion of the state ceiling
that is available exclusively for reservations by issuers of qualified
residential rental project bonds, onefourth is available exclusively to the
Texas Department of Housing and Community Affairs (department) in the
manner described by Section 1372.0231. 

(c) Prohibits the department from reserving a portion of the state ceiling
that is available exclusively for reservations by issuers of qualified
residential rental project bonds other than the portion dedicated to the
department under this Subsection (b). 

SECTION 1.33.  Amends Section 1372.025(b), Government Code, to provide that
Subsection (a) does not apply to qualified mortgage bonds or qualified
residential rental project bonds made available exclusively to the Texas
Department of Housing and Community Affairs under Section 1372.023. 

SECTION 1.34.  Amends Sections 3(3), (7), and (8), Texas Manufactured
Housing Standards Act (Article 5221f, V.T.C.S.), to redefine "board,"
"department," and "director."   
 
SECTION 1.35.  Amends Section 7, Texas Manufactured Housing Standards Act
(Article 5221f, V.T.C.S.), by amending Subsections (g) and (k) and adding
Subsections (t)-(y), as follows: 

(g)  Authorizes the Manufactured Housing Board (MHB) within the Texas
Department of Housing and Community Affairs (department) by rule to adopt a
system under which licenses expire on various dates during the year.
Requires the department, for the year in which the license expiration date
is changed, to prorate license fees on a monthly basis so that each license
holder pays only that portion of the license fee that is allocable to the
number of months during which the license is valid.  Provides that, on
renewal of the license on the new expiration date, the total license
renewal fee is payable. 

(k) Authorizes the department to place on probation a person whose license
is suspended. Authorizes the department, if a license suspension is
probated, to require the person to perform certain functions. 
 
(t)  Prohibits a person whose license has expired from engaging in
activities that require a license until the license has been renewed. 

(u)  Authorizes a person whose license has been expired for 90 days or less
to renew the  license by paying to the department a renewal fee that is
equal to 1-1/2 times the normally required renewal fee. 

(v)  Authorizes a person whose license has been expired for more than 90
days but less than one year to renew the license by paying to the
department a renewal fee that is equal to two times the normally required
renewal fee. 

(w)  Prohibits a person whose license has been expired for one year or more
from renewing the license.  Authorizes the person to obtain a new license
by complying with the requirements and procedures for obtaining an original
license. 

(x)  Authorizes a person who was licensed in this state, moved to another
state, and is currently licensed and has been in practice in the other
state for the two years preceding the date of application to obtain a new
license without fulfilling the instruction requirements of Subsection (o).
Requires the person to pay to the department a fee that is equal to two
times the normally required renewal fee for the license. 

(y)  Requires the department, by a certain date, to send written notice of
the impending expiration to the person at the person's last known address
according to the records of the department. 

SECTION 1.36.  Amends Section 7(s), Texas Manufactured Housing Standards
Act (Article 5221f, V.T.C.S.), as added by Chapter 351, Acts of the 76th
Legislatue, Regular Session, 1999, to add a reference regarding consistency
with Section 18(e) of this Act.  

SECTION 1.37.  Amends Section 7A, Texas Manufactured Housing Standards Act
(Article 5221f, V.T.C.S.), as follows: 
 
Sec. 7A.  Authorizes the department, rather than the director, to
recognize, prepare, or administer certification programs for persons
regulated under this Act.  Deletes text regarding continuing education
programs.  Requires the MHB to recognize, prepare, or administer continuing
education programs for its license holders.  Requires a license holder to
participate in the continuing education programs to the extent required by
the board to keep the person's license.  Authorizes the MHB, to prepare or
administer a certification program or a continuing education program under
this section, to contract with a private, nonprofit, tax-exempt
organization listed in Section 501(c)(3), Internal Revenue Code of 1986 (26
U.S.C. Section 501(c)(3)) or with an educational institution. 
Requires the department to issue appropriate certificates to those persons
who complete a certification program or who participate in a continuing
education program under this section. 

SECTION 1.38. (a) Provides that the nine members of the governing board
(board) of the Texas Department of Housing and Community Affairs
(department) who are serving immediately before September 1, 2001, continue
to serve as the governing board of the department on and after that date
regardless of whether those members meet the membership requirements
prescribed by Chapter 2306B, Government Code, as amended by this Act.
Provides, however, that the positions of those nine members are abolished
on the date on which a majority of the seven board membership positions
that are created under Chapter 2306B, Government Code, as amended by this
Act, are filled by appointment by the governor and the appointees qualify
for office. 

(b)  Requires the governor to make the seven appointments to the board
under Chapter 2306B, Government Code, as amended by this Act, as soon as
possible on or after September 1, 2001.  Requires the governor, in making
the initial appointments, to designate two members for terms expiring
January 31, 2003, two members for terms expiring January 31, 2005, and
three members for terms expiring January 31, 2007. Authorizes the governor
to reappoint any person to the board who served as a member  of the board
before September 1, 2001. 

(c)  Provides that the changes in law made by this Act in amending Chapter
2306B, Government Code, do not affect the ability of the director of the
department who is serving on the effective date of this Act to continue to
serve in that capacity until the governing board of the department
appointed by the governor under Chapter 2306B, Government Code, as amended
by this Act, employs a new director under Chapter 2306. 
 
SECTION 1.39. (a) Requires the governor to make the appointments to the
Manufactured Housing Board created by Chapter 2306AA, Government Code, as
amended by this Act, as soon as possible on or after September 1, 2001.
Requires the governor, in making the initial appointments, to designate one
member for a term expiring January 31, 2003, two members for terms expiring
January 31, 2005, and two members for terms expiring January 31, 2007. 
 
(b)  Authorizes the director of the Texas Department of Housing and
Community Affairs (department), until the Manufactured Housing Board
employs a division director for the manufactured housing division of the
department, to continue to carry out the functions of the division director
for that division. 

SECTION 1.40.  Requires the new governing board (board) of the Texas
Department of Housing and Community Affairs (department) appointed by the
governor under Chapter 2306B, Government Code, as amended by this Act, as
soon as practicable after the effective date of this Act, to develop a
strategic action plan to implement the requirements of this Act.  Requires
the board to employ a director to provide and monitor the provision of
administrative support to the board to assist in implementing the plan.
Requires the director to evaluate the organizational structure of the
department, including the evaluation of essential management positions, and
to make any organizational changes necessary to implement the plan and the
other requirements of this Act. 

SECTION 1.41. Requires the Sunset Advisory Commission (commission), not
later than December 31, 2002, to evaluate the success of the Texas
Department of Housing and Community Affairs (department) in implementing
the requirements of this Act before that date, including actions taken by
the department with respect to certain issues.  Requires the commission,
before January 1, 2003, to report the results of evaluation to the
presiding officer of each house of the legislature. 

SECTION 1.42.  Provides that the rules of the Texas Department of Housing
and Community Affairs relating to the administration and enforcement of the
Texas Manufactured Housing Standards Act (Article 5221f, V.T.C.S.) are
continued in effect as rules of the manufactured housing division of the
Texas Department of Housing and Community Affairs until amended or repealed
by that division. Provides that each affected license, certificate, permit,
bond, order, security, or registration issued or regulated by the Texas
Department of Housing and Community Affairs is continued in effect as a
license, certificate, permit, bond, order, security, or registration of the
manufactured housing division of the Texas Department of Housing and
Community Affairs. 

SECTION 1.43.  Provides that a complaint or investigation relating to the
administration and enforcement of the Texas Manufactured Housing Standards
Act (Article 5221f, V.T.C.S.) and pending before the Texas Department of
Housing and Community Affairs on August 31, 2001, is transferred without
change in status to the manufactured housing division of the Texas
Department of Housing and Community Affairs on the effective date of this
Act.  Provides that a contested case relating to the administration and
enforcement of the Texas Manufactured Housing Standards Act (Article 5221f,
V.T.C.S.) and pending before the Texas Department of Housing and Community
Affairs on August 31, 2001, is transferred to the jurisdiction of the
manufactured housing division of the Texas Department of Housing and
Community Affairs on the effective date of this Act, and actions taken in
the proceeding shall be treated as if taken by that division. 
 
 SECTION 1.44.  Provides that a reference in a law to the Texas Department
of Housing and Community Affairs relating to the administration and
enforcement of the Texas Manufactured Housing Standards Act (Article 5221f,
Vernon's Texas Civil Statutes) means the manufactured housing division of
the Texas Department of Housing and Community Affairs. 

SECTION 1.45.  Repealers:  Sections 2306.023 (Separation of Divisions),
2306.026 (Board Places), and 2306.052(d) (regarding Director's Powers and
Duties), Government Code. 

SECTION 1.46.  Repealer: Section 7(s), Texas Manufactured Housing Standards
Act (Article 5221f, V.T.C.S.), as added by Chapter 1369, Acts of the 76th
Legislature, Regular Session, 1999. 
 
SECTION 1.47.  Provides that a member of the governing board of the Texas
Department of Housing and Community Affairs or of the Manufactured Housing
Board is not subject to the prohibition imposed by Sections 2306.028 or
2306.6011, Government Code, as applicable, until September 1, 2002. 

SECTION 1.48.  Provides that the change in law made by this Act in adding
Section 2306.6728, Government Code, applies only to a low income housing
tax credit property for which an application for an allocation of low
income housing tax credits is received by the Texas Department of Housing
and Community Affairs on or after August 10, 1993. 

ARTICLE 2

SECTION 2.01.  Amends Section 2306.004, Government Code, by adding
Subdivisions (31)-(34) to define "economic submarket," "geographic
submarket," "rural county," and "subprime loan." 

SECTION 2.02.  Amends Section 2306.142, Government Code, as follows:
 
Sec. 2306.142.  (a) Requires the governing board of the Texas Department of
Housing and Community Affairs (board), subject to the requirements of this
section (rather than in its discretion), to authorize all bonds issued by
the department. 

(b)  Requires the Texas Department of Housing and Community Affairs
(department), if the issuance is authorized by the board, to issue
single-family mortgage revenue bonds to make home mortgage credit available
for the purchase of newly constructed or previously owned single-family
homes to economic and geographic submarkets of borrowers who are not served
or who are substantially underserved by the conventional, Federal National
Morgage Association, Federal Home Loan Morgage Corporation, or Federal
Housing Administration home mortgage lending industry or by housing finance
corporations organized under Chapter 394 (Housing Finance Corporations in
Municipalities and Counties), Local Government Code. 

(c)  Requires the board by rule to adopt a methodology for determining
through a market study the home mortgage credit needs in underserved
economic and geographic submarkets in the state.  Requires the department
or its designee, in conducting the market study required by this
subsection, to analyze for the underserved economic and geographic
submarkets, at a minimum, certain specific factors. 
  
(d)  Requires the department or its designee to analyze the potential
market demand, loan availability, and private sector home mortgage lending
rates available to extremely low, very low, low, and moderate income
borrowers in the rural counties of the state, in certain census tracts and
regions of the state.   Requires the department or its designee to
establish a process for serving those counties, census tracts, and regions
through the single-family mortgage revenue bond program in a manner
proportionate to the credit needs of those areas as determined through the
department's market study. 

 (e)  Requires the board, using the market study and the analysis required
by this section, to evaluate the feasibility of a single-family mortgage
revenue bond program with loan marketing, eligibility, underwriting,
structuring, collection, and foreclosure criteria and with loan services
practices that are designed to meet the credit needs of the underserved
economic and geographic submarkets of the state, including those submarkets
served disproportionately by subprime lenders. 
 
(f)  Requires the board, in evaluating a proposed bond program under this
section, to consider, consistent with the reasonable financial operation of
the department, specific set-asides or reservations of mortgage loans for
underserved economic and geographic submarkets in the state, including the
reservation of funds to serve borrowers who have "A-" to "B-" credit
according to Standard and Poor's credit underwriting criteria. 
 
(g)  Authorizes the department to use any source of funds or subsidy
available to the department to provide credit enhancement, down payment
assistance, pre-homebuyer and post-homebuyer counseling, interest rate
reduction, and payment of incentive lender points to accomplish the
purposes of this section in a manner considered by the board to be
consistent with the reasonable financial operation of the department. 

(h)  Provides that, in allocating funds under Subsection (g), the
department's highest priority is to provide assistance to borrowers in
underserved economic and geographic submarkets in the state.  Authorizes
the department, if the board determines that sufficient funds are available
after fully meeting the credit needs of borrowers in those submarkets, to
provide assistance to other borrowers. 
 
(i)  Requires the board to certify that each single-family mortgage revenue
bond issued by the department under this section is structured in a manner
that serves the credit needs of borrowers in underserved economic and
geographic submarkets in the state. 
 
(j)  Requires the department, after any board approval and certification of
a single-family mortgage revenue bond issuance, to submit the proposed bond
issuance to the Bond Review Board for review. 
 
(k)  Requires the department, in the state fiscal year beginning on
September 1, 2001, to perform certain functions, including the adoption by
rule of a market study methodology as required by Subsection (c).   
  
(l)  Requires the department, in the state fiscal year beginning on
September 1, 2002, and in each subsequent state fiscal year, to allocate
not less than 40 percent of the total single-family mortgage revenue bond
loan volume to meet the credit needs of borrowers in underserved economic
and geographic submarkets in the state, subject to the identification of a
satisfactory market volume demand through the market study. 

(m)  Authorizes the board, on completion of the market study, if the board
determines in any year that bonds intended to be issued to achieve the
purposes of this section are unfeasible or would damage the financial
condition of the department, to formally appeal to the Bond Review Board
the requirements of Subsection (k) or (l), as applicable.  Provides that
the Bond Review Board has sole authority to modify or waive the required
allocation levels. 

(n)  Requires the department, in addition to any other loan originators
selected by the department, to authorize colonia self-help centers and any
other community-based, nonprofit institutions considered appropriate by the
board to originate loans on behalf of the department.  Requires all
non-financial institutions acting as loan originators under this subsection
to undergo adequate training, as prescribed by the department, to
participate in the bond program.  Authorizes the department to require
lenders to participate in ongoing training and underwriting compliance
audits to maintain good standing to participate in the bond program.
Authorizes the department to require that lenders meet appropriate
eligibility standards as prescribed by the department. 
 
(o)  Requires the department to structure all single-family mortgage
revenue bond issuances in a manner designed to recover the full costs
associated with conducting the activities required by this section. 

SECTION 2.03.  Amends Chapter 2306G, Government Code, by adding Section
2306.143, as follows: 

Sec. 2306.143.  ALTERNATIVE TO SUBPRIME LENDER LIST.  Sets forth guidelines
regarding a situation in which the United States Department of Housing and
Urban Development ceases to prepare or make public a subprime lender list. 

SECTION  2.04.  Amends Section 2306.583, Government Code, as follows:
 
Sec. 2306.583.  SELF-HELP CENTERS:  DESIGNATION. Makes conforming and
nonsubstantive changes.  Requires the Texas Department of Housing and
Community Affairs (department), in consultation with the colonia advisory
committee and the appropriate self-help center, to designate five colonias
in each service area to receive concentrated attention from that center.
Authorizes the department, in consultation with the colonia advisory
committee and the appropriate self-help center, to change the designation
of colonias made under this section. 

SECTION 2.05.  Amends Section 2306.586, Government Code, by adding
Subsection (e) to authorize a colonia resident, through a self-help center,
to apply for any direct loan or grant program operated by the department. 
 
SECTION 2.06.  Amends Section 2306.587, Government Code, as follows:
 
Sec. 2306.587.  New heading:  OPERATION OF SELF-HELP CENTER;   MONITORING.
Requires the department, to operate a self-help center, subject to the
availability of revenue for that purpose, to enter into a four-year
contract directly with a local nonprofit organization, including a local
community action agency that qualifies as an eligible entity under 42
U.S.C. Section 9902, or a local housing authority that has demonstrated the
ability to carry out the functions of a self-help center under this
subchapter.  Provides that the department is solely responsible for
contract oversight and for the monitoring of self-help centers under this
subchapter.  Makes a nonsubstantive change.   
 
SECTION 2.07.  Amends Section 2306.589(a), Government Code, to authorize
the department to contribute money to the fund from any available source of
revenue that the department considers appropriate to implement the purposes
of this subchapter, except under certain conditions.  
 
SECTION 2.08.  Amends Sections 2306.753(a) and (b), Government Code, to
delete text requiring an owner-builder to reside with at least two other
persons related to the owner-builder in the first degree by consanguinity
or affinity, as determined under Subchapter B, Chapter 573, in order to be
eligible for a loan under this subchapter.  Makes conforming changes.  
  
SECTION 2.09.  Amends Sections 2306.754(a) and (b), Government Code, to
prohibit a loan from exceeding $30,000, rather than $25,000.  Makes
conforming changes.   
 
SECTION 2.10.  Amends Section 2306.755, Government Code, to authorize the
department to certify nonprofit owner-builder housing programs operated by
a tax-exempt organization listed under Section 501(c)(3), Internal Revenue
Code of 1986, for certain purposes.  Requires the department by  rule to
adopt procedures for the certification of nonprofit owner-builder housing
programs under this section. 
 
SECTION 2.11.  Amends Section 2306.758, Government Code, by amending
Subsection (b) and adding Subsection (c), as follows: 

  (b)  Authorizes the department to also make loans under this subchapter
from 
the owner-builder revolving loan fund established under Section 2306.7581
(rather than amounts received by the department in repayment of loans made
under this subchapter). 

(c)  Prohibits the department, in a state fiscal year, from using more than
10 percent of the revenue available for purposes of this subchapter to
enhance the ability of tax-exempt organizations described by Section
2306.755(a) to implement the purposes of this chapter. 
 
SECTION 2.12.  Amends Chapter 2306FF, Government Code, by adding Section
2306.7581, as follows: 
 
Sec. 2306.7581.  OWNER-BUILDER REVOLVING LOAN FUND. Authorizes the
department to establish an owner-builder revolving loan fund in the
department for the sole purpose of funding loans under this subchapter and
sets forth guidelines regarding the fund.   
 
SECTION 2.13.  Amends Chapter 2306, Government Code, by adding Subchapter
GG, as follows: 

SUBCHAPTER GG.  COLONIA MODEL SUBDIVISION PROGRAM
 
 Sec. 2306.781.  DEFINITION.  Defines "program." 

Sec. 2306.782.  ESTABLISHMENT OF PROGRAM.  Requires the department to
establish the colonia model subdivision program to promote the development
of new, high-quality, residential subdivisions that provide: certain
alternatives and housing options. 
  
Sec. 2306.783.  COLONIA MODEL SUBDIVISION REVOLVING LOAN FUND. Requires the
department to establish a colonia model subdivision revolving loan fund in
the department.  Sets forth guidelines regarding the fund.  Sets forth
guidelines regarding loans under this subchapter.  Provides that certain
subsections of this section expire August 31, 2010. Requires the department
to deposit money received in repayment of loans under this subchapter to
the colonia model subdivision revolving loan fund. 

Sec. 2306.784.  SUBDIVISION COMPLIANCE.  Requires any subdivision created
with assistance from the colonia model subdivision revolving loan fund to
fully comply with all state and local laws, including any process
established under state or local law for subdividing real property. 
 
Sec. 2306.785.  PROGRAM LOANS. Authorizes the department to make loans
under the program only to certain entities.  Authorizes a loan made under
the program to be used only for certain purposes.  Prohibits a loan made by
the department under the program from bearing interest and from exceeding a
term of 36 months.  Authorizes the department to offer a borrower under the
program one loan renewal for each subdivision. 
 
Sec. 2306.786.  ADMINISTRATION OF PROGRAM; RULES. Requires the department,
in administering the program, by rule to adopt certain standards,
procedures, and guidelines. Requires the department to adopt rules for
certain purposes.   
  
 SECTION 2.14.  Amends Chapter 11B, Tax Code, by adding Section 11.184, as
follows: 
 
Sec. 11.184.  COLONIA MODEL SUBDIVISION PROGRAM. (a) Provides that an
organization is entitled to an exemption from taxation of unimproved real
property it owns under certain conditions.   
  
(b)  Prohibits property from being exempted under Subsection (a)  after the
fifth anniversary of the date the organization acquires the property. 
 
(c)  Provides that an organization entitled to an exemption under
Subsection (a)  is also entitled to certain other tax exemptions.  Sets
forth qualifications for such exemptions.  

(d)  Requires the chief appraiser, for the purposes of Subsection (e), to
determine the market value of property exempted under Subsection (a)  and
to record the market value in the appraisal records. 
 
(e)  Provides that, if the organization that owns improved or unimproved
real property that has been exempted under Subsection (a) sells the
property to a person other than a person described by Section
2306.786(b)(1), Government Code, a penalty is imposed on the property equal
to the amount of the taxes that would have been imposed on the property in
each tax year that the property was exempted from taxation under Subsection
(a), plus interest at an annual rate of 12 percent computed from the dates
on which the taxes would have become due. 
 
SECTION 2.15.  Requires, if the administration of the federal community
development block grant program is transferred to an agency other than the
Texas Department of Housing and Community Affairs, the new administering
agency to enter into a memorandum of understanding with the Texas
Department of Housing and Community Affairs to permit the housing
department to receive and administer the portion of community development
block grant money specifically allocated under the General Appropriations
Act to fund the operation of colonia self-help centers.  Sets forth
requirements for the memorandum. 
 
SECTION 2.16.  Repealer: Section 2306.760 (Expiration), Government Code.

ARTICLE 3

SECTION 3.01.  Amends Chapter 2306A, Government Code, by adding Section
2306.008, as follows: 

Sec. 2306.008.  PRESERVATION OF AFFORDABLE HOUSING. (a) Requires the Texas
Department of Housing and Community Affairs (department) to support in the
manner described by Subsection (b) the preservation of affordable housing
for individuals with special needs, as defined by Section 2306.511, and
individuals and families of low income at any location considered necessary
by the department. 
 
(b)  Requires the department to support the preservation of affordable
housing under this section by performing certain functions.     
 
SECTION 3.02.  Amends Chapter 2306H, Government Code, adding Section
2306.185, as follows: 
 
Sec. 2306.185.  LONG-TERM AFFORDABILITY AND SAFETY OF MULTIFAMILY RENTAL
HOUSING DEVELOPMENTS.  Sets forth guidelines regarding multifamily rental
housing developments.   

SECTION 3.03.  Amends Chapter 2306K, Government Code, by adding Section
2306.2561, as  follows: 

Sec. 2306.2561.  AFFORDABLE HOUSING PRESERVATION PROGRAM:  LOANS AND
GRANTS.  Requires the department, through the housing finance division, to
provide loans and grants to certain entities for purposes of rehabilitating
housing to preserve affordability of the housing.  Authorizes the
department to use any available revenue, including legislative
appropriations, to provide  loans and grants under this section. 

SECTION 3.04.  Amends Section 2306.269, Government Code, to require the
department to prohibit multifamily rental housing developments funded or
administered by the department, including a development supported with a
housing tax credit allocation under Subchapter DD, from performing certain
actions.   
  
SECTION 3.05.  Amends Chapter 2306, Government Code, by adding Subchapter
HH, as follows: 

SUBCHAPTER HH.  AFFORDABLE HOUSING PRESERVATION

 Sec. 2306.801.  DEFINITION.  Defines "federally subsidized."

Sec. 2306.802.  MULTIFAMILY HOUSING PRESERVATION CLASSES.  Requires the
department to establish two classes of priorities of developments to
preserve multifamily housing.  Sets forth guidelines for the classes. 
 
Sec. 2306.803.  AT-RISK MULTIFAMILY HOUSING: IDENTIFICATION,
PRIORITIZATION, AND PRESERVATION. Requires the department to determine the
name and location of and the number of units in each multifamily housing
development that is at risk of losing its low-income use restrictions and
subsidies and that meets the requirements of a class A priority described
by Section 2306.802.  Requires the department to maintain an accurate list
of those developments on the department's website.  Requires the department
to develop cost estimates for the preservation and rehabilitation of the
developments in priority class A.  Requires the department to contact
owners of developments assigned a class A priority under this section and
to attempt to negotiate with those owners to ensure continued affordability
for individuals and families of low income under the federal housing
assistance program for those developments. 
 
Sec. 2306.804.  USE OF HOUSING PRESERVATION RESOURCES.  Sets forth
guidelines regarding the department's use of housing reservation resources.

Sec. 2306.805.  HOUSING PRESERVATION INCENTIVES PROGRAM.  Sets forth
guidelines regarding a housing preservation incentives program 

SECTION 3.06.  (a) Amends Chapter 2306, Government Code, by adding Section
2306.806 to Subchapter HH, as added by this Act, as follows: 

Sec.  2306.806.  APPROVAL OF OFFICE OF RURAL COMMUNITY AFFAIRS. Requires
the department to obtain the approval of the executive director of the
Office of Rural Community Affairs to guarantee loans as described by
Section 2306.805(c). 

(b) Provides that this section takes effect only if H.B. No.  7, Acts of
the 77th Legislature, Regular Session, 2001, becomes law.  Provides that,
if that bill does not become law, this section has no effect. 
  
SECTION 3.07.  Amends Chapter 2306, Government Code, by adding Subchapter
II to read as follows: 
SUBCHAPTER II.  MULTIFAMILY HOUSING DEVELOPMENTS:
 PRESERVATION OF AFFORDABILITY
 
Sec. 2306.851.  APPLICATION.  Provides that this subchapter applies only to
certain persons.  Provides that this subchapter does not apply under
certain conditions.   
  
Sec. 2306.852.  PROPERTY OWNER RESTRICTION.  Prohibits a property owner to
whom this subchapter applies, except as provided by this subchapter, from
selling, leasing, or otherwise disposing of a multifamily housing
development described by Section 2306.851(a) or taking certain other
actions.  

Sec. 2306.853.  NOTICE OF INTENT.  Sets forth guidelines regarding
conditions under which a property owner of a multifamily housing
development is authorized to take an action, sell, lease, or otherwise
dispose of the development subject to the restriction under Section
2306.852.   
 
SECTION 3.08. (a) Requires The Texas Department of Housing and Community
Affairs to adopt the policies and procedures on the long-term affordability
and safety of multifamily rental housing developments under Section
2306.185, Government Code, as added by this Act, not later than November 1,
2001. 
 
(b)  Provides that the enforcement of the restrictions concerning
multifamily rental housing developments under Section 2306.185, Government
Code, as added by this Act, applies only to developments that receive
assistance from the Texas Department of Housing and Community Affairs on or
after January 1, 2002. 

(c)  Provides that the enforcement of restrictions concerning tenant and
manager selection under Section 2306.269, Government Code, as amended by
this Act, applies only to housing developments that receive assistance from
the Texas Department of Housing and Community Affairs on or after January
1, 2002. 
 
(d)  Requires the Texas Department of Housing and Community Affairs to
create an initial list of multifamily housing developments that are ranked
by priority as required by Section 2306.803, Government Code, as added by
this Act, not later than January 1, 2002. 
 
(e)  Requires the Texas Department of Housing and Community Affairs, if
community development block grant funds are transferred to another state
agency, to negotiate a memorandum of understanding to permit the
implementation of Section 2306.805(c), Government Code, as added by this
Act. 
 
(f)  Provides that the changes in law made by this article apply to a
multifamily housing development described by Section 2306.851, Government
Code, as added by this Act, that a property owner intends to sell, lease,
or otherwise dispose of on or after January 1, 2002. 

(g)  Prohibits the outstanding balance of Section 108 loan guarantees
issued as described by Section 2306.805(c), Government Code, as added by
this Act, from exceeding $10 million. Provides that this subsection expires
December 31, 2004. 
 
SECTION 3.09.  (a)  Provides that, except as provided by Subsection (b) of
this section, the change in law made by this Act in adding Section
2306.269(b), Government Code, applies only to a multifamily rental housing
development for which the funding or administration by the Texas Department
of Housing and Community Affairs begins on or after the effective date of
this Act. 
 
(b)  Provides that, if the multifamily rental housing development funded or
administered by the Texas Department of Housing and Community Affairs is a
low income housing tax credit property, the change in law made by this Act
in adding Section 2306.269(b), Government  Code, applies only if an
application for an allocation of low income housing tax credits for that
development is received by the department on or after August 10, 1993. 

ARTICLE 4

SECTION 4.01.  Amends Section 2306.072(c), Government Code, to require the
annual low income housing report to include certain items. 

SECTION 4.02.  Amends Chapter 2306D, Government Code, by adding Section
2306.0724, as follows: 

Sec. 2306.0724.  FAIR HOUSING SPONSOR REPORT. Requires the Texas Department
of Housing and Community Affairs (department) to require certain persons to
submit an annual fair housing sponsor report.  Sets forth guidelines
regarding the report, including the adoption of rules.  Provides that a
housing sponsor who fails to file a report in a timely manner is subject to
certain sanctions, as determined by the department. 
  
SECTION 4.03.  Amends Section 2306.077, Government Code, by adding
Subsections (d) and (e), as follows: 

(d)  Requires the department to provide for annual housing sponsor reports
required by Section 2306.0724 to be filed through the Internet. 
 
(e)  Requires the department to provide for reports regarding housing units
designed for persons with disabilities made under Section 2306.078 to be
filed through the Internet. 
 
SECTION 4.04.  Amends Chapter 2306D, Government Code, by adding Section
2306.078, as follows:   

Sec. 2306.078.  INFORMATION REGARDING HOUSING FOR PERSONS WITH
DISABILITIES. Requires the department to establish a system that requires
owners of state or federally assisted housing developments with 20 or more
housing units to report information regarding housing units designed for
persons with disabilities.  Sets forth guidelines regarding the system.
Requires the department to require each owner to maintain updated contact
information under Subsection (b)(7) and to solicit the owner's voluntary
provision of updated information under Subsections (b)(3) and (6). Requires
the department to make information provided under this section available to
the public in electronic and hard-copy formats at no cost. 

ARTICLE 5

SECTION 5.01.  Amends Chapter 2306D, Government Code, by adding Sections
2306.079 and 2306.080, as follows: 

Sec. 2306.079.  REGIONAL DEVELOPMENT COORDINATOR.  (a) Defines "regional
development coordinator" and "regional partner." 

(b)  Requires the Texas Department of Housing and Community Affairs
(department) to employ or contract with a regional development coordinator
for each uniform state service region of this state.  Sets forth the
primary responsibilities of a regional development coordinator.   
  
  (c)  Requires a regional development coordinator to perform certain
functions.  

(d)  Requires, in each uniform state service region, the regional planning
commission  and other regional partners to establish an advisory committee
consisting of representatives of two or more regional partners that are
required to perform certain functions. 
  
Sec. 2306.080.  DATABASE INFORMATION SPECIALIST.  Requires the executive
director of the department (director) to appoint a database information
specialist.  Sets forth the primary responsibility of the database
information specialist. 

ARTICLE 6

SECTION 6.01.  Amends Section 2306.111(c), Government Code, to require the
department, in administering federal housing funds provided to the state
under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.
Section 12701 et seq.), to expend at least 95 percent of (rather than give
the highest priority to utilizing) these funds for the benefit of
non-participating small cities and rural areas that do not qualify to
receive funds under the Cranston-Gonzalez National Affordable Housing Act
directly from the United States Department of Housing and Urban
Development.  Deletes text regarding an exception under section.   Requires
all funds not set aside under this subsection to be used for the benefit of
persons with disabilities who live in areas other than small cities and
rural areas. 

ARTICLE 7

SECTION 7.01.  Amends Section 2306.223, Government Code, to prohibit the
department, notwithstanding any other provision of this chapter, from
financing a housing development undertaken by a housing sponsor under this
chapter, unless the department first makes certain determinations.  

SECTION 7.02.  Provides that the change in law made by this Act to Section
2306.223, Government Code, applies only to an application for financing a
housing development that is submitted to the Texas Department of Housing
and Community Affairs on or after the effective date of this Act. 

ARTICLE 8

SECTION 8.01.  Amends Subchapter DD, Chapter 2306, Government Code, as
follows: 

SUBCHAPTER DD.  LOW INCOME HOUSING TAX CREDIT PROGRAM

Sec. 2306.6701.  PURPOSE.  Requires the Texas Department of Housing and
Community Affairs (department) to administer the low income housing tax
credit program for certain purposes. 
  
Sec. 2306.6702.  DEFINITIONS.  Defines "applicant," "application,"
"application log," "application round," "at-risk development,"
"development," "development owner," "housing tax credit," "land use
restriction agreement," "qualified allocation plan," "related party,"
"rural area," "rural development agency," "set-aside," "threshhold
criteria," and "unit."  Provides that the constructive ownership provisions
of the Internal Revenue Code apply. 
  
Sec. 2306.67021.  APPLICABILITY OF SUBCHAPTER.  Provides that, except as
provided by Section 2306.6703, this subchapter does not apply to the
allocation of housing tax credits to developments financed through the
private activity bond program. 
 
Sec. 2306.67022.  QUALIFIED ALLOCATION PLAN; MANUAL.  Requires the
governing board of the department (board) to annually adopt a qualified
allocation plan and a corresponding manual to provide information regarding
the administration of and eligibility for the low income housing tax credit
program. 

Sec. 2306.6703.  INELIGIBILITY FOR CONSIDERATION.  Provides that an
application is  ineligible for consideration under the low income housing
tax credit program under certain conditions. 
 
Sec. 2306.6704.  PREAPPLICATION PROCESS.  Requires the department, to
prevent unnecessary filing costs, by rule to establish a voluntary
preapplication process to enable a preliminary assessment of an application
proposed for filing under this subchapter.  Requires the department to
award in the application evaluation process described by Section 2306.6710
an appropriate number of points as an incentive for participation in the
preapplication process established under this section.  Requires the
department to reject and return to the applicant any application assessed
by the department under this section that fails to satisfy the threshold
criteria required by the board in the qualified allocation plan.  Requires
an application under this section, if feasible under Section 2306.67041, to
be submitted electronically. 
 
Sec. 2306.67041.  ON-LINE APPLICATION SYSTEM.  Requires the department and
the Department of Information Resources to cooperate to evaluate the
feasibility of an on-line application system for the low income housing tax
credit program to provide the certain functions.  Requires the department
to determine the process for allowing access to on-line preapplications and
applications, information related to those applications, and department
decisions relating to those applications.  Requires the department, in the
application cycle following the date any on-line application system becomes
operational, to require use of the system for submission of preapplications
and applications under this subchapter.  Requires the department to publish
a status report on the implementation of the on-line application on the
department's website not later than January 1, 2002.  Authorizes the
department, before the implementation of the on-line application system, to
implement the requirements of Section 2306.6717 in any manner the
department considers appropriate. 

Sec. 2306.6705.  GENERAL APPLICATION REQUIREMENTS.  Requires an application
to contain at a minimum certain information.  
   
Sec. 2306.6706.  ADDITIONAL APPLICATION REQUIREMENT:  NONPROFIT SET-ASIDE
ALLOCATION.  Requires an application for a housing tax credit allocation
from the nonprofit set-aside, as defined by Section 42(h)(5), Internal
Revenue Code of 1986 (26 U.S.C. Section 42(h)(5)), in addition to the
information required by Section 2306.6705, to contain certain written,
detailed information with respect to each development owner and each
general partner of a development owner.  Requires a nonprofit organization,
to be eligible for a housing tax credit allocation from the nonprofit
set-aside, to meet certain requirements. 

Sec. 2306.6707.  ADDITIONAL APPLICATION REQUIREMENT:  DISCLOSURE OF
INTERESTED PERSONS.  Requires the applicant to disclose in the application
the names of any persons, including affiliates of those persons and related
parties, providing developmental or operational services to the
development, including certain persons.  Require the application, for each
person described by this section, to disclose any company name, company
contact person, address, and telephone number. 
 
Sec. 2306.6708.  APPLICATION CHANGES OR SUPPLEMENTS.  Prohibits an
applicant, except as provided by this section, from changing or
supplementing an application in any manner after the filing deadline.
Provides that this section does not prohibit an applicant from performing
certain actions. 

Sec. 2306.6709.  APPLICATION LOG.  Requires the department, in a form
prescribed by the department, to maintain for each application an
application log that tracks the application from the date of its
submission.  Requires the application log to contain certain information: 
  
Sec. 2306.6710.  EVALUATION AND UNDERWRITING OF APPLICATIONS. (a)  Requires
the department, in evaluating an application, to determine whether the
application  satisfies the threshold criteria required by the board in the
qualified allocation plan.  Requires the department to reject and return to
the applicant any application that fails to satisfy the threshold criteria.

(b)  Requires the department, if an application satisfies the threshold
criteria, to score and rank the application using a point system based on
criteria that are adapted to regional market conditions and adopted by the
department, including certain criteria.   
  
(c)  Requires the department to publish in the qualified allocation plan
details of the scoring system used by the department to score applications. 
 
(d)  Sets forth guidelines regarding the underwriting of applications. 
 
(e)  Requires the department, in adopting criteria for scoring and
underwriting applications for purposes of housing tax credit allocations,
to attach, consistent with Section 42, Internal Revenue Code of 1986 (26
U.S.C. Section 42), the most weight to certain criteria.  

Sec. 2306.6711.  ALLOCATION OF HOUSING TAX CREDITS.  (a)  Requires the
director to provide the application scores to the board before the 30th day
preceding the date the board begins to issue commitments for housing tax
credits in the allocation round. 

(b)  Requires the board, not later than the deadline specified in the
qualified allocation plan, to issue commitments for available housing tax
credits based on the application evaluation process provided by Section
2306.6710.  Prohibits the board from allocating to an applicant housing tax
credits in any unnecessary amount, as determined by the department's
underwriting policy and by federal law, and in any event may not allocate
to the applicant housing tax credits in an amount greater than $1.6 million
in a single application round. 

(c)  Requires the board, concurrently with the initial issuance of
commitments for housing tax credits under Subsection (b), to establish a
waiting list of additional applications ranked by score in descending order
of priority based on set-aside categories and regional allocation goals. 

(d)  Requires the board to issue commitments for housing tax credits with
respect to applications on the waiting list as additional credits become
available. 

(e)  Requires the department, not later than the 120th day after the date
of the initial issuance of commitments for housing tax credits under
Subsection (b), to provide to an applicant who did not receive a commitment
under that subsection an opportunity to meet and discuss with the
department the application's deficiencies and scoring. 
 
Sec. 2306.6712.  AMENDMENT OF APPLICATION SUBSEQUENT TO ALLOCATION BY
BOARD.  (a)  Requires the department, if a proposed modification would
materially alter a development approved for an allocation of a housing tax
credit, to require the applicant to file a formal, written amendment to the
application on a form prescribed by the department. 

(b)  Requires the director to require the department staff assigned to
underwrite applications to evaluate the amendment and provide an analysis
and written recommendation to the board.  Requires the appropriate monitor
under Section 2306.6719 to also provide to the board an analysis and
written recommendation regarding the amendment. 

 (c)  Requires the board to vote on whether to approve the amendment.
Authorizes the board by vote to reject an amendment and, if appropriate,
rescind the allocation of housing tax credits and reallocate the credits to
other applicants on the waiting list required by Section 2306.6711 if the
board makes certain determinations.  
  
  (d)  Provides that material alteration of a development includes certain
items.   
  
(e)  Requires the department staff, in evaluating the amendment under this
subsection, the department to consider whether the need for the
modification proposed in the amendment was:  reasonably foreseeable by the
applicant at the time the application was submitted; or preventable by the
applicant. 

(f)  Requires this section to be administered in a manner that is
consistent with Section 42, Internal Revenue Code of 1986 (26 U.S.C.
Section 42). 

Sec. 2306.6713.  HOUSING TAX CREDIT AND OWNERSHIP TRANSFERS. (a)  Prohibits
an applicant from transferring an allocation of housing tax credits or
ownership of a development supported with an allocation of housing tax
credits to any person other than an affiliate unless the applicant obtains
the director's prior, written approval of the transfer. 

  (b)  Prohibits the director from unreasonably withholding approval of the
transfer. 

(c)  Requires an applicant seeking director approval of a transfer and the
proposed transferee to provide to the department a copy of any applicable
agreement between the parties to the transfer, including any third-party
agreement with the department. 

(d)  Requires, on request, an applicant seeking director approval of a
transfer to provide certain information to the department. 
  
(e)  Requires the development owner to certify to the director that the
tenants in the development have been notified in writing of the transfer
before the 30th day preceding the date of submission of the transfer
request to the department. 
 
(f)  Requires the department, not later than the fifth working day after
the date the department receives all necessary information under this
section, to conduct a qualifications review of a transferee to determine:
the transferee's past compliance with all aspects of the low income housing
tax credit program, including land use restriction agreements; and the
sufficiency of the transferee's experience with developments supported with
housing tax credit allocations. 
 
Sec. 2306.6714.  AT-RISK DEVELOPMENT SET-ASIDE.  Requires the department to
set aside for at-risk developments not less than 15 percent of the housing
tax credits available for allocation in the calendar year.  Provides that
any amount of housing tax credits set aside under this section that remains
after the initial allocation of housing tax credits is available for
allocation to any eligible applicant as provided by the qualified
allocation plan. 

Sec. 2306.6715.  APPEAL.  (a)  Authorizes an applicant, in a form
prescribed by the department in the qualified allocation plan, to appeal
certain decisions made by the department in the application evaluation
process provided by Section 2306.6710. 
  
(b)  Prohibits an applicant from appealing a decision made under Section
2306.6710 regarding an application filed by another applicant. 

(c)  Requires an applicant to file a written appeal authorized by this
section with the department not later than the seventh day after the date
the department publishes the  results of the application evaluation process
provided by Section 2306.6710.  Requires the applicant, in the appeal, to
specifically identify the applicant's grounds for appeal, based on the
original application and additional documentation filed with the original
application. 

(d)  Requires the director to respond in writing to the appeal not later
than the 14th day after the date of receipt of the appeal.  Authorizes the
applicant, if the applicant is not satisfied with the director's response
to the appeal, to appeal directly in writing to the board, provided that an
appeal filed with the board under this subsection must be received by the
board before a certain date. 
  
(e)  Provides that board review of an appeal under Subsection (d) is based
on the original application and additional documentation filed with the
original application. Prohibits the board from reviewing any information
not contained in or filed with the original application.  Provides that the
decision of the board regarding the appeal is final. 
 
Sec. 2306.6716.  FEES.  (a)  Prohibits a fee charged by the department for
filing an application from being excessive and requires such a fee to
reflect the department's actual costs in processing the application,
providing copies of documents to persons connected with the application
process, and making appropriate information available to the public through
the department's website. 

(b)  Requires the department to publish not later than July 1 of each year
a schedule of application fees that specifies the amount to be charged at
each stage of the application process. 
 
(c)  Requires the department, in accordance with the fee schedule, to
refund the balance of any fees collected for an application that is
withdrawn by the applicant or that is not fully processed by the
department.  Requires the department to provide the refund to the applicant
not later than the 30th day after the date the last official action is
taken with respect to the application. 

(d)  Requires the department to develop a sliding scale fee schedule for
applications that encourages increased participation by community housing
development organizations in the low income housing tax credit program. 
 
Sec. 2306.6717.  PUBLIC INFORMATION AND HEARINGS.  (a)  Requires the
department, subject to Section 2306.67041, to make certain items available
on the department's website. 
 
(b)  Requires the department to provide information regarding the low
income housing tax credit program, including notice regarding public
hearings, board meetings, and the opening and closing dates for
applications, to certain entities.  
  
(c)  Requires the department to hold at least three public hearings in
different regions of the state to receive public comments on applications
and on other issues relating to the low income housing tax credit program. 

(d)  Authorizes the department, notwithstanding any other provision of this
section, to treat the financial statements of any applicant as confidential
and to elect not to disclose those statements to the public. 

Sec. 2306.6718.  ELECTED OFFICIALS.  (a)  Requires the department to
provide written notice of the filing of an application to certain elected
officials. 
   
(b)  Requires the department to provide the elected officials with an
opportunity to comment on the application during the application evaluation
process provided by Section 2306.6710 and to consider those comments in
evaluating applications under that section. 

(c)  Authorizes a member of the legislature who represents the community
containing the development to hold a community meeting at which the
department is required to provide appropriate representation. 

(d)  Requires the department, if the department receives written notice
from the mayor or county judge of an affected municipality or county
opposing an application, to contact the mayor or county judge and offer to
conduct a physical inspection of the development site and consult with the
mayor or county judge before the application is scored. 

Sec. 2306.6719.  MONITORING OF COMPLIANCE.  (a)  Authorizes the department
to contract with an independent third party to monitor a development during
its construction or rehabilitation and during its operation for compliance
with certain conditions and laws. 
  
(b)  Authorizes the department to assign department staff other than
housing tax credit division staff to perform the relevant monitoring
functions required by this section in the construction or rehabilitation
phase of a development. 

Sec. 2306.6720.  ENFORCEABILITY OF APPLICANT REPRESENTATIONS.  Provides
that each representation made by an applicant to secure a housing tax
credit allocation is enforceable by the department and the tenants of the
development supported with the allocation. 
 
Sec. 2306.6721.  DEBARMENT FROM PROGRAM PARTICIPATION.  (a)  Requires the
board by rule to adopt a policy providing for the debarment of a person
from participation in the low income housing tax credit program as
described by this section. 

(b)  Authorizes the department to debar a person from participation in the
program on the basis of the person's past failure to comply with any
condition imposed by the department in connection with the allocation of
housing tax credits. 

(c)  Requires the department to debar a person from participation in the
program if the person meets certain requirements. 

(d)  Authorizes a person debarred by the department from participation in
the program to appeal the person's debarment to the board. 

Sec. 2306.6722.  DEVELOPMENT ACCESSIBILITY.  Requires any development
supported with a housing tax credit allocation to comply with the
accessibility standards that are required under Section 504, Rehabilitation
Act of 1973 (29 U.S.C. Section 794), and specified under 24 C.F.R. Part 8,
Subpart C. 

Sec. 2306.6723.  COORDINATION WITH RURAL DEVELOPMENT AGENCY. (a)  Requires
the department to jointly administer with the rural development agency any
set-aside for rural areas for certain purposes. 
  
(b)  Requires the rural development agency to assist in developing all
threshold, scoring, and underwriting criteria applied to applications
eligible for the rural area set-aside. Requires the criteria to be approved
by that agency. 
 
(c)  Requires the department, to ensure that the rural area set-aside
receives a sufficient volume of eligible applications, to fund and, with
the rural development agency, to jointly implement outreach, training, and
rural area capacity building efforts as directed by the rural development
agency. 

(d)  Requires the department and the rural development agency to jointly
adjust the regional allocation of housing tax credits described by Section
2306.111 to offset the under-utilization and over-utilization of
multifamily private activity bonds and other housing resources in the
different regions of the state. 

(e)  Requires the department, from application fees collected under this
subchapter, the department to reimburse the rural development agency for
any costs incurred by the agency in carrying out the functions required by
this section. 

Sec. 2306.6724.  Redesignated from original Section 2306.671.  (a)
Requires the department, not later than September 30 (rather than November
15) of each year, to prepare and submit to the board for adoption the
qualified allocation plan required by federal law for use by the department
in setting criteria and priorities for the allocation of tax credits under
the low income housing tax credit program. 

(b)  Requires the board to adopt and submit to the governor the qualified
allocation plan not later than November 15 (rather than January 31). 

(c)  Requires the governor to approve, reject, or modify and approve the
qualified allocation plan not later than December 1 (rather than February
28). 

(d)  Requires an applicant for a low income housing tax credit to be issued
a commitment during the initial allocation cycle in a calendar year to
submit an application to the department not later than March 1 (rather than
May 15). 

(e)  Requires the board to review the recommendations of department staff
regarding applications and issue a list of approved applications (rather
than issue a commitment for allocation for the initial cycle of low income
housing tax credits) each year in accordance with the qualified allocation
plan not later than June 30 (rather than July 31). 

(f)  Requires the board to issue final commitments for allocations of
housing tax credits each year in accordance with the qualified allocation
plan not later than July 31. 

Sec. 2306.6725.  Redesignated from original Section 2306.672.  (a) Deletes
text providing that the goal of the low income housing tax credit program
is to provide permanent affordable housing.  Requires the department, in
allocating low income housing tax credits, to score each application using
a point system based on criteria adopted by the department that are
consistent with the department's housing goals, including certain criteria.
Deletes text requiring the department to publish in the qualified
allocation plan any discretionary factor that the department will consider
in scoring an application. 

(b)  Deletes text requiring the department to add bonus points.  Requires
the department to provide appropriate incentives as determined through the
qualified allocation plan to reward applicants who agree to equip the
property that is the basis of the application with energy saving devices
that meet the standards established by the state energy conservation office
or to provide to a qualified nonprofit organization or tenant organization
a right of first refusal to purchase the property at the minimum price
provided in, and in accordance with the requirements of, Section 42(i)(7),
Internal Revenue Code of 1986 (26 U.S.C. Section 42(i)(7)) 
 
(c)  Deletes text requiring the department to provide the scores of
applications on each criterion to the board and the governor and the
public.  Requires the board, on awarding tax credit allocations, to
document the reasons for each project's selection, including an explanation
of: all discretionary factors used in making its determination; and the
reasons for any decision that conflicts with the recommendations of
department staff under Section 2306.6731. 

(d)  Requires the department, for each scoring criterion, to use a range of
points to evaluate the degree to which a proposed project satisfies the
criterion.  Prohibits the department from awarding a number of points for a
scoring criterion that is disproportionate to the degree to which a
proposed project complies with that criterion. 

Sec. 2306.6726.  Redsignated from original Section 2306.673.  Makes
conforming changes.  

 Sec. 2306.6727.  Redesignated from original Section 2306.674.    

Sec. 2306.6730.  ACCESSIBILITY REQUIRED.  Requires a project to which a low
income housing tax credit is allocated under this subchapter to comply with
the accessibility standards that are required under Section 504,
Rehabilitation Act of 1973 (29 U.S.C. Section 794), as amended, and
specified under 24 C.F.R. Part 8, Subpart C. 
 
Sec. 2306.6731.  Redesignated from original 2306.675.  New heading:
ALLOCATION DECISION; REEVALUATION. (a)  Requires department staff to
provide written, documented recommendations to the board concerning the
financial or programmatic viability of each application for a low income
housing tax credit before the board makes a decision relating to the
allocation of tax credits.  Prohibits the board from making without good
cause an allocation decision that conflicts with the recommendations of
department staff. 

(b)  Deletes original Subsection (b).  Requires the board, regardless of
project stage, to reevaluate a project that undergoes a substantial change
between the time of initial board approval of the project and the time of
issuance of a tax credit commitment for the project.  Authorizes the board
to revoke any tax credit commitment issued for a project that has been
unfavorably reevaluated by the board under this subsection. 

 Deletes original Sections 2306.676 and 2306.677.    

Sec. 2306.6732.  Redesignated from original Section 2306.678.  New heading:
PUBLIC INFORMATION.  Requires the department to provide information
regarding the low income housing tax credit program, including notices of
public hearings, meetings, and opening and closing dates for applications
for a low income housing tax credit, to local housing departments, any
appropriate newspapers of general or limited circulation that serve the
community in which the proposed project is to be located, nonprofit
organizations, on-site property managers of occupied projects that are the
subject of tax credit applications for posting in prominent locations at
those projects, and any other interested persons and community groups[,]
who request the information.  Requires the department to also publish the
information on the department's website. 
 
Sec. 2306.6733.  REPRESENTATION BY FORMER BOARD MEMBER OR OTHER PERSON.
Prohibits a former board  member or a former director, deputy director,
director of housing programs, director of compliance, director of
underwriting, or low income housing tax credit program manager employed by
the department from performing certain actions. Provides that a person
commits an offense if the person violates this section.  Provides that an
offense under this section is a Class A misdemeanor. 

Sec. 2306.6734.  MINORITY-OWNED BUSINESSES.  (a)  Requires the department
to  require a person who receives an allocation of housing tax credits to
attempt to ensure that at least 30 percent of the construction and
management businesses with which the person contracts in connection with
the development are minority-owned businesses. 

(b)  Requires a person who receives an allocation of housing tax credits to
report to the department not less than once in each 90-day period following
the date of allocation regarding the percentage of businesses with which
the person has contracted that qualify as minority-owned businesses.
Deletes text requiring the department to hold at least three public
hearings in different regions of the state to receive public comments on
low income housing tax credit applications. 

  (c)  Defines "minority-owned business," and "minority group."
  
SECTION 8.02.  Provides that Section 2306.6730, Government Code, as added
by this Act, applies only to a project for which an application for a low
income housing tax credit is submitted on or after the effective date of
this Act. 

ARTICLE 9

SECTION 9.01.  Amends Chapter 2306, Government Code, by adding Subchapter
JJ, as follows: 

SUBCHAPTER JJ.  TEXAS AFFORDABLE HOUSING NEEDS ASSESSMENT

Sec. 2306.881.  DEFINITIONS.  Defines "border region" and "public senior
college or university."  

Sec. 2306.882.  TEXAS AFFORDABLE HOUSING NEEDS ASSESSMENT. (a)  Requires
the department, in conjunction with the office of the comptroller, to
assess the present and future affordable housing needs of the border region
and of the uniform state service regions of this state.   

(b) Requires the department to use certain factors in making the assessment
required by this subchapter. 
  
(c) Requires the assessment to provide a summary and conclusion regarding
the adequacy of existing housing and lending programs to meet the
affordable housing needs of each region. 

(d)  Requires the department, in making the assessment required by this
subchapter, to use the most current data available from the United States
Census Bureau, the United States Department of Housing and Urban
Development, and federal and state banking regulatory agencies. 

(e)  Requires the department, in making the assessment required by this
subchapter, to project the affordable housing needs of each region as of
the end of each five-year period occurring between September 1, 2001, and
September 1, 2021, and as of September 1, 2031.  Requires the projection of
affordable housing needs under this subsection to include a projection of
the costs and nature of the affordable housing that will be needed in the
future, including any special need for single-family or multifamily
housing. 

Sec. 2306.883.  FUNDING.  Authorizes the department to use any available
revenue, including legislative appropriations, to make the assessment
required by this subchapter. 

Sec. 2306.884.  CONTRACTUAL AUTHORITY.  Authorizes the department to
contract  with a research center, a public senior college or university, or
a component of a public senior college or university, including the Lyndon
B. Johnson School of Public Affairs, to make the assessment required by
this subchapter. 

Sec. 2306.885.  REPORT.  Requires the department, not later than the 180th
day after the date the relevant information is released by the United
States Census Bureau, to submit a report to the governor, the lieutenant
governor, and the legislature detailing the department's findings on the
present and future affordable housing needs of the regions of this state. 

Sec. 2306.886.  EXPIRATION DATE.  Provides that this subchapter expires
October 1, 2004. 

ARTICLE 10

SECTION 10.01.  Amends Section 1372.022, Government Code, by amending
Subsection (b) and adding Subsection (c), as follows: 

(b)  Sets forth guidelines regarding the allocation of certain percentages
of the state ceiling to certain entities if the state ceiling is computed
on the basis of $75 per capita or a greater amount, before August 15 of
each year.   
  
  (c)  Makes a nonsubstantive change.

SECTION 10.02.  Amends Chapter 1372B, Government Code, by adding Section
1372.0231, as follows: 

Sec. 1372.0231.  DEDICATION OF PORTION OF STATE CEILING AVAILABLE FOR
QUALIFIED RESIDENTIAL RENTAL PROJECT BONDS. (a) Sets forth guidelines for
the availability, until August 15, of that portion of the state ceiling
that is available exclusively for reservations by issuers of qualified
residential rental project bonds.   
  
(b)  Requires the Bond Review Board (board), with respect to the amount of
the state ceiling set aside under Subsection (a)(1), to grant reservations
in the order determined by the board by lot; and in a manner that ensures
that: the set-aside amount is used for proposed projects that are located
throughout the state; and not more than 50 percent of the set-aside amount
is used for proposed projects that are located in qualified census tracts
as defined by Section 143(j), Internal Revenue Code of 1986. 

(c) Requires the board, with respect to the amount of the state ceiling set
aside under Subsection (a)(2), to grant reservations in a manner that
ensures that no more than 50 percent of the set-aside amount is used for
proposed projects that are located in qualified census tracts as defined by
Section 143(j), Internal Revenue Code of 1986. 

(d)  Requires the board, before June 1, to apportion the amount of state
ceiling set aside under Subsection (a)(2) among the uniform state service
regions according to the percentage of the state's population that resides
in each of those regions. 
 
(e)  Requires the board, for the uniform state service regions containing
Austin, Dallas, and Houston, to additionally apportion the amount of the
state ceiling set aside for each of those regions under Subsection (d)
within the region according to certain percentages. 

(f)  Requires the board, in each area described by Subsection (d) or (e),
to grant reservations based on the priority levels of proposed projects as
described by Section 1372.032. 
  
(g)  Prohibits the board, on or after June 1, from granting available
reservations to housing finance corporations described by Subsection (a)
based on uniform state service regions or any segments of those regions. 

SECTION 10.03.  Amends Section 1372.026(a), Government Code, to prohibit
the maximum amount of the state ceiling that may be reserved before August
15 (rather than September 1) by a housing finance corporation for the
issuance of qualified mortgage bonds from exceeding a certain amount and
sets forth guidelines regarding the computation of that amount.     

SECTION 10.04.  Amends Chapter 1372B, Government Code, by adding Section
1372.0261, as follows: 

Sec. 1372.0261.  FAILURE OF HOUSING FINANCE CORPORATION TO USE AMOUNT OF
STATE CEILING ALLOCATED. (a) Defines "utilization percentage"  Sets forth
guidelines regarding a housing finance corporation's utilization percentage
for an allocation of the state ceiling.  Prohibits a housing corporation
from being penalized under this section under certain conditions.   
 
SECTION 10.05.  Amends Section 1372.031, Government Code, as follows:
  
 Sec. 1372.031.   Deletes a reference to Section 1372.022(a)(4).

SECTION 10.06.  Amends the heading to Section 1372.032, Government Code, to
read as follows: 
 
Sec. 1372.032.  PRIORITIES FOR RESERVATIONS AMONG ISSUERS OF QUALIFIED
MORTGAGE BONDS. 

SECTION 10.07. (a) Amends Chapter 1372B, Government Code, to conform to
Section 2, Chapter 131, Acts of the 76th Legislature, Regular Session,
1999, by adding Section 1372.0321 and further amends it as follows: 
 
Sec. 1372.0321.  PRIORITIES FOR RESERVATIONS AMONG ISSUERS OF QUALIFIED
RESIDENTIAL RENTAL PROJECT ISSUES. Requires the board, in granting
reservations to issuers of qualified residential rental project issues, to
give priority to certain projects.  Prohibits the board from reserving a
portion of the state ceiling for a first or second priority project
described by this section except under certain conditions.   

(b)  Repealer:  Section 2, Chapter 131, Acts of the 76th Legislature,
Regular Session, 1999. 

SECTION 10.08.  Amends Section 1372.033, Government Code, by adding
Subsections (c) and (d), as follows: 

(c)  Requires the board to grant a reservation to an issuer described by
Subsection (a) in a certain amount. 

(d)  Requires the board, notwithstanding Subsection (c)(1) or Section
1372.037(5), after each issuer described by Subsection (a) that applies for
a reservation has been offered a reservation in the maximum amount
available to the issuer, to grant in equal portions, as additional
reservations, any remaining amount of the state ceiling for qualified
student loan bonds to issuers that: received and accepted a reservation;
and do not refuse an additional reservation under this subsection. 
 
SECTION 10.09.  Amends Section 1372.042(c), Government Code, to delete text
requiing the issuer to close on the bonds before December 24.  Sets forth
guidelines regarding the closing of bonds.   
  
SECTION 10.10.  Amends Sections 1372.061 and 1372.062, Government Code, as
follows: 

Sec. 1372.061.  Requires the board to designate as carryforward a
reservation amount for which the board receives written notice from an
issuer of an election to carry forward the reservation under Section
1372.042(c) if the bonds relating to the reservation are not required to
close by December 31 of the year in which the reservation was granted. 
 
Sec. 1372.062.  PRIORITY CLASSIFICATIONS OF CARRYFORWARD DESIGNATIONS.
Makes nonsubstantive changes.  Requires the board, notwithstanding
Subsection (a), to designate in compliance with the requirements of Section
146(f), Internal Revenue Code of 1986, a carryforward relating to an
issuer's written election under Section 1372.042(c) according to the
category of bonds to which the reservation subject to the carryforward
relates. 
 
SECTION 10.11.  (a)  Provides that, in accordance with Subsection (c),
Section 311.031, Government Code, which gives effect to a substantive
amendment enacted by the same legislature that codifies the amended
statute, the text of Subsection (b), Section 1372.022, Government Code, as
set out in this Act, gives effect to changes made by Chapter 131, Acts of
the 76th Legislature, Regular Session, 1999. 
 
(b)  Provides that, to the extent of any conflict, the changes in law made
by this Act to Chapter 1372, Government Code, prevail over another Act of
the 77th Legislature, Regular Session, 2001, relating to nonsubstantive
additions to and corrections in enacted codes. 
 
SECTION 10.12.  Provides that Section 1372.0261, Government Code, as added
by this Act, applies only to a reservation of the state ceiling granted on
or after January 1, 2002. 

ARTICLE 11

SECTION 11.01.  Amends Section 15.001, Water Code, by adding Subdivision
(12) to define "nonborder colonia." 
  
SECTION 11.02.  Amends Section 15.008, Water Code, as follows:
 
Sec. 15.008.  Provides that Chapter 783, Government Code (rather than The
Uniform Grant and Contract Management Act of 1981 (Article 4413(32g),
V.T.C.S.)), does not apply to a contract under Subchapter F, H, or K or to
a contract relating to an economically distressed area or nonborder colonia
under Subchapter C. 

SECTION 11.03.  Amends Section 15.102(b), Water Code, to authorize the loan
fund to also be used by the board to provide grants or loans for projects
that include supplying water and wastewater services in economically
distressed areas or nonborder colonias as provided by legislative
appropriations, this chapter, and board rules, including projects involving
retail distribution of those services. 
 
SECTION 11.04.  Amends Section 15.105, Water Code, to require the board, in
passing on an application for financial assistance from the loan fund, to
consider but Provides that it is not limited to considering only, for
applications for grants or loans for economically distressed areas or
nonborder colonias, the regulatory efforts by the county in which the
project is located to control the construction of subdivisions that lack
basic utility services. 
 
SECTION 11.05.  Amends Section 775.001, Government Code, by adding
Subdivision (3) to define "nonborder colonia." 
  
 SECTION 11.06.  Amends Section 775.002(c), Government Code, to authorize
the colonia initiatives coordinator to work with the other agencies and
local officials involved in colonia projects in the state to coordinate
state outreach efforts to nonborder colonias and to political subdivisions
capable of providing water and wastewater services to nonborder colonias. 

ARTICLE 12
 
SECTION 12.01.  Effective date:  September 1, 2001.