SRC-SEW S.B. 929 77(R)   BILL ANALYSIS


Senate Research Center   S.B. 929
77R3242 QS-FBy: Bernsen
Intergovernmental Relations
4/9/2001
As Filed


DIGEST AND PURPOSE 

Housing finance corporations are non-profit entities created by local
governments to encourage the development of affordable housing.  Currently,
housing finance corporations are exempt from taxes for developing and
owning affordable housing.  However, current law does not contain
provisions that create a standard for the level of affordability, similar
to other programs, where in order to qualify, the development must provide
housing to a certain percentage of low- or very low-income residents.  As a
result, some housing finance corporations have developed "market rate"
housing that is tax-exempt, which in effect creates tax-subsidized
competition with private entities.  As proposed, S.B. 929 creates a
standard that states that at least half of the units in multifamily
developments funded through a housing finance corporation must be reserved
for persons earning less than 100 percent of the area median family income.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 394Z, Local Government Code, by adding Section
394.9025, as follows:   

Sec. 394.9025.  MULTIFAMILY RESIDENTIAL DEVELOPMENT.  Prohibits a housing
finance corporation from financing a multifamily residential development
unless at least 50 percent of the units in the residential development are
reserved for the lifetime of the residential development for occupancy by
individuals and families earning less than 100 percent of the area median
family income. 

SECTION 2.  Provides that the change in law made by Section 394.9025, Local
Government Code, as added by this Act, applies only to a multifamily
residential development that is financed by bonds issued under Chapter 394
(Housing Finance Corporations in Municipalities and Counties), Local
Government Code, as a result of an official decision to issue bonds that
occurs on or after the effective date of this act. 

SECTION 3.  Effective date:  August 31, 2002.