By Wise, Swinford, Counts, Hinojosa, Carter H.B. No. 3294
Substitute the following for H.B. No. 3294:
By Bailey C.S.H.B. No. 3294
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the provision of housing and related forms of
1-3 assistance to residents of colonias and residents of other
1-4 underserved regions of this state.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 2306.004, Government Code, is amended by
1-7 adding Subdivisions (31)-(34) to read as follows:
1-8 (31) "Economic submarket" means a group of borrowers
1-9 who have common home mortgage loan market eligibility
1-10 characteristics, including income level, credit history or credit
1-11 score, and employment characteristics, that are similar to Standard
1-12 and Poor's credit underwriting criteria.
1-13 (32) "Geographic submarket" means a geographic region
1-14 in the state, including a county, census tract, or municipality,
1-15 that shares similar levels of access to home mortgage credit from
1-16 the private home mortgage lending industry, as determined by the
1-17 department based on home mortgage lending data published by federal
1-18 and state banking regulatory agencies.
1-19 (33) "Rural county" means a county that is outside the
1-20 boundaries of a primary metropolitan statistical area or a
1-21 metropolitan statistical area.
1-22 (34) "Subprime loan" means a loan that is originated
1-23 by a lender designated as a subprime lender on the subprime lender
1-24 list maintained by the United States Department of Housing and
2-1 Urban Development or identified as a lender primarily engaged in
2-2 subprime lending under Section 2306.143.
2-3 SECTION 2. Section 2306.142, Government Code, is amended to
2-4 read as follows:
2-5 Sec. 2306.142. AUTHORIZATION OF BONDS. (a) Subject to the
2-6 requirements of this section [In its discretion], the board shall
2-7 authorize all bonds issued by the department.
2-8 (b) If the issuance is authorized by the board, the
2-9 department shall issue single-family mortgage revenue bonds to make
2-10 home mortgage credit available to economic and geographic
2-11 submarkets of borrowers who are not served or who are substantially
2-12 underserved by the conventional, Fannie Mae, Freddie Mac, or
2-13 Federal Housing Administration home mortgage lending industry or by
2-14 housing finance corporations organized under Chapter 394, Local
2-15 Government Code.
2-16 (c) The board by rule shall adopt a methodology for
2-17 determining through a market study the home mortgage credit needs
2-18 in underserved economic and geographic submarkets in the state. In
2-19 conducting the market study required by this subsection, the
2-20 department or its designee shall analyze for the underserved
2-21 economic and geographic submarkets, at a minimum, the following
2-22 factors:
2-23 (1) home ownership rates;
2-24 (2) loan volume;
2-25 (3) loan approval ratios;
2-26 (4) loan interest rates;
2-27 (5) loan terms;
3-1 (6) loan availability;
3-2 (7) type and number of dwelling units; and
3-3 (8) use of subprime mortgage loan products, comparing
3-4 the volume amount of subprime loans and interest rates to "A" paper
3-5 mortgage loans as defined by Standard and Poor's credit
3-6 underwriting criteria.
3-7 (d) The department or its designee shall analyze the
3-8 potential market demand, loan availability, and private sector home
3-9 mortgage lending rates available to extremely low, very low, low,
3-10 and moderate income borrowers in the rural counties of the state,
3-11 in census tracts in which the median family income is less than 80
3-12 percent of the median family income for the county in which the
3-13 census tract is located, and in the region of the state adjacent to
3-14 the international border of the state. The department or its
3-15 designee shall establish a process for serving those counties,
3-16 census tracts, and regions through the single-family mortgage
3-17 revenue bond program in a manner proportionate to the credit needs
3-18 of those areas as determined through the department's market study.
3-19 (e) Using the market study and the analysis required by this
3-20 section, the board shall evaluate the feasibility of a
3-21 single-family mortgage revenue bond program with loan marketing,
3-22 eligibility, underwriting, structuring, collection, and foreclosure
3-23 criteria and with loan services practices that are designed to meet
3-24 the credit needs of the underserved economic and geographic
3-25 submarkets of the state, including those submarkets served
3-26 disproportionately by subprime lenders.
3-27 (f) In evaluating a proposed bond program under this
4-1 section, the board shall consider, consistent with the reasonable
4-2 financial operation of the department, specific set-asides or
4-3 reservations of mortgage loans for underserved economic and
4-4 geographic submarkets in the state, including the reservation of
4-5 funds to serve borrowers who have "A-" to "B-" credit according to
4-6 Standard and Poor's credit underwriting criteria.
4-7 (g) The department may use any source of funds or subsidy
4-8 available to the department to provide credit enhancement, down
4-9 payment assistance, pre-homebuyer and post-homebuyer counseling,
4-10 interest rate reduction, and payment of incentive lender points to
4-11 accomplish the purposes of this section in a manner considered by
4-12 the board to be consistent with the reasonable financial operation
4-13 of the department.
4-14 (h) In allocating funds under Subsection (g), the
4-15 department's highest priority is to provide assistance to borrowers
4-16 in underserved economic and geographic submarkets in the state. If
4-17 the board determines that sufficient funds are available after
4-18 fully meeting the credit needs of borrowers in those submarkets,
4-19 the department may provide assistance to other borrowers.
4-20 (i) The board shall certify that each single-family mortgage
4-21 revenue bond issued by the department under this section is
4-22 structured in a manner that serves the credit needs of borrowers in
4-23 underserved economic and geographic submarkets in the state.
4-24 (j) After any board approval and certification of a
4-25 single-family mortgage revenue bond issuance, the department shall
4-26 submit the proposed bond issuance to the Bond Review Board for
4-27 review.
5-1 (k) In the state fiscal year beginning on September 1, 2001,
5-2 the department shall:
5-3 (1) adopt by rule a market study methodology as
5-4 required by Subsection (c);
5-5 (2) conduct the market study;
5-6 (3) propose for board review a single-family mortgage
5-7 revenue bond program, including loan feature details, a program for
5-8 borrower subsidies as provided by Subsections (g) and (h), and
5-9 origination and servicing infrastructure;
5-10 (4) identify reasonable capital markets financing;
5-11 (5) conduct a public hearing on the market study
5-12 results and the proposed bond program; and
5-13 (6) submit for review by the Bond Review Board the
5-14 market study results and, if approved and certified by the board,
5-15 the proposed bond program.
5-16 (l) In the state fiscal year beginning on September 1, 2002,
5-17 and in each subsequent state fiscal year, the department shall
5-18 allocate not less than 40 percent of the total single-family
5-19 mortgage revenue bond loan volume to meet the credit needs of
5-20 borrowers in underserved economic and geographic submarkets in the
5-21 state, subject to the identification of a satisfactory market
5-22 volume demand through the market study.
5-23 (m) On completion of the market study, if the board
5-24 determines in any year that bonds intended to be issued to achieve
5-25 the purposes of this section are unfeasible or would damage the
5-26 financial condition of the department, the board may formally
5-27 appeal to the Bond Review Board the requirements of Subsection (k)
6-1 or (l), as applicable. The Bond Review Board has sole authority to
6-2 modify or waive the required allocation levels.
6-3 (n) In addition to any other loan originators selected by
6-4 the department, the department shall authorize colonia self-help
6-5 centers and any other community-based, nonprofit institutions
6-6 considered appropriate by the board to originate loans on behalf of
6-7 the department. All non-financial institutions acting as loan
6-8 originators under this subsection must undergo adequate training,
6-9 as prescribed by the department, to participate in the bond
6-10 program. The department may require lenders to participate in
6-11 ongoing training and underwriting compliance audits to maintain
6-12 good standing to participate in the bond program. The department
6-13 may require that lenders meet appropriate eligibility standards as
6-14 prescribed by the department.
6-15 (o) The department shall structure all single-family
6-16 mortgage revenue bond issuances in a manner designed to recover the
6-17 full costs associated with conducting the activities required by
6-18 this section.
6-19 SECTION 3. Subchapter G, Chapter 2306, Government Code, is
6-20 amended by adding Section 2306.143 to read as follows:
6-21 Sec. 2306.143. ALTERNATIVE TO SUBPRIME LENDER LIST. (a) If
6-22 the United States Department of Housing and Urban Development
6-23 ceases to prepare or make public a subprime lender list, the market
6-24 study required by Section 2306.142 must annually survey the 100
6-25 largest refinancing lenders and the 100 largest home purchase loan
6-26 lenders in the state to identify lenders primarily engaged in
6-27 subprime lending.
7-1 (b) The lenders included in the survey must be identified on
7-2 the basis of home mortgage loan data reported by lenders under the
7-3 Home Mortgage Disclosure Act of 1975 (12 U.S.C. Section 2801 et
7-4 seq.) and the Community Reinvestment Act of 1977 (12 U.S.C. Section
7-5 2901 et seq.).
7-6 SECTION 4. Section 2306.583, Government Code, is amended to
7-7 read as follows:
7-8 Sec. 2306.583. SELF-HELP CENTERS: DESIGNATION. (a) The
7-9 department shall designate[:]
7-10 [(1)] a geographic area for the services provided by
7-11 each self-help center.
7-12 (b) In consultation with the colonia advisory committee and
7-13 the appropriate self-help center, the department shall designate[;
7-14 and]
7-15 [(2)] five colonias in each service area to receive
7-16 concentrated attention from that center.
7-17 (c) In consultation with the colonia advisory committee and
7-18 the appropriate self-help center, the [(b) The] department may
7-19 change the designation of colonias made under Subsection (b)
7-20 [(a)(2)].
7-21 SECTION 5. Section 2306.586, Government Code, is amended by
7-22 adding Subsection (e) to read as follows:
7-23 (e) Through a self-help center, a colonia resident may apply
7-24 for any direct loan or grant program operated by the department.
7-25 SECTION 6. Section 2306.587, Government Code, is amended to
7-26 read as follows:
7-27 Sec. 2306.587. OPERATION OF SELF-HELP CENTER; MONITORING.
8-1 (a) To operate a self-help center, the [The] department shall,
8-2 subject to the availability of revenue for that purpose, enter into
8-3 a four-year contract directly [for the operation of a self-help
8-4 center] with a local nonprofit organization, including a local
8-5 community action agency that qualifies as an eligible entity under
8-6 42 U.S.C. Section 9902, or a local housing authority that has
8-7 demonstrated the ability to carry out the functions of a self-help
8-8 center under this subchapter.
8-9 (b) The department is solely responsible for contract
8-10 oversight and for the monitoring of self-help centers under this
8-11 subchapter.
8-12 (c) The department and the self-help centers may apply for
8-13 and receive public or private gifts or grants to enable the centers
8-14 to achieve their purpose.
8-15 SECTION 7. Section 2306.589(a), Government Code, is amended
8-16 to read as follows:
8-17 (a) The department shall establish a fund in the department
8-18 designated as the colonia set-aside fund. The department may
8-19 contribute money to the fund from any available source of revenue
8-20 that the department considers appropriate to implement the purposes
8-21 of this subchapter.
8-22 SECTION 8. Sections 2306.753(a) and (b), Government Code, are
8-23 amended to read as follows:
8-24 (a) Subject to this section, the department shall establish
8-25 eligibility requirements for an owner-builder to receive a loan
8-26 under this subchapter. The eligibility requirements must establish
8-27 a priority for loans made under this subchapter to owner-builders
9-1 with an annual income, as determined under Subsection (b)(1)
9-2 [(b)(2)], of less than $17,500.
9-3 (b) To be eligible for a loan under this subchapter, an
9-4 owner-builder:
9-5 (1) [must reside with at least two other persons
9-6 related to the owner-builder in the first degree by consanguinity
9-7 or affinity, as determined under Subchapter B, Chapter 573;]
9-8 [(2)] may not have an annual income that exceeds 60
9-9 percent, as determined by the department, of the greater of the
9-10 state or local median family income, when combined with the income
9-11 of any person who resides with the owner-builder;
9-12 (2) [(3)] must have resided in this state for the
9-13 preceding six months;
9-14 (3) [(4)] must have successfully completed an
9-15 owner-builder education class under Section 2306.756; and
9-16 (4) [(5)] must agree to:
9-17 (A) provide at least 60 percent of the labor
9-18 necessary to build the proposed housing by working through a
9-19 state-certified owner-builder housing program; or
9-20 (B) provide an amount of labor equivalent to the
9-21 amount required under Paragraph (A) in connection with building
9-22 housing for others through a state-certified nonprofit
9-23 owner-builder housing program.
9-24 SECTION 9. Sections 2306.754(a) and (b), Government Code, are
9-25 amended to read as follows:
9-26 (a) The department may establish the minimum amount of a
9-27 loan under this subchapter, but a loan may not exceed $30,000
10-1 [$25,000].
10-2 (b) If it is not possible for an owner-builder to purchase
10-3 necessary real property and build adequate housing for $30,000
10-4 [$25,000], the owner-builder must obtain the amount necessary that
10-5 exceeds $30,000 [$25,000] from one or more local governmental
10-6 entities, nonprofit organizations, or private lenders. The total
10-7 amount of loans made by the department and other entities to an
10-8 owner-builder under this subchapter may not exceed $60,000.
10-9 SECTION 10. Section 2306.755, Government Code, is amended to
10-10 read as follows:
10-11 Sec. 2306.755. NONPROFIT OWNER-BUILDER HOUSING PROGRAMS. (a)
10-12 The department may certify nonprofit owner-builder housing programs
10-13 operated by a tax-exempt organization listed under Section
10-14 501(c)(3), Internal Revenue Code of 1986, to:
10-15 (1) qualify potential owner-builders for loans under
10-16 this subchapter;
10-17 (2) provide owner-builder education classes under
10-18 Section 2306.756;
10-19 (3) assist owner-builders in building housing; and
10-20 (4) originate or service [administer] loans made [by
10-21 the department] under this subchapter.
10-22 (b) The department by rule shall adopt procedures for the
10-23 certification of nonprofit owner-builder housing programs under
10-24 this section.
10-25 SECTION 11. Section 2306.758, Government Code, is amended by
10-26 amending Subsection (b) and adding Subsection (c) to read as
10-27 follows:
11-1 (b) The department may also make loans under this subchapter
11-2 from:
11-3 (1) available funds in the housing trust fund
11-4 established under Section 2306.201;
11-5 (2) federal block grants that may be used for the
11-6 purposes of this subchapter; and
11-7 (3) the owner-builder revolving loan fund established
11-8 under Section 2306.7581 [amounts received by the department in
11-9 repayment of loans made under this subchapter].
11-10 (c) In a state fiscal year, the department may use not more
11-11 than 10 percent of the revenue available for purposes of this
11-12 subchapter to enhance the ability of tax-exempt organizations
11-13 described by Section 2306.755(a) to implement the purposes of this
11-14 chapter.
11-15 SECTION 12. Subchapter FF, Chapter 2306, Government Code, is
11-16 amended by adding Section 2306.7581 to read as follows:
11-17 Sec. 2306.7581. OWNER-BUILDER REVOLVING LOAN FUND. (a) The
11-18 department shall establish an owner-builder revolving loan fund in
11-19 the department for the sole purpose of funding loans under this
11-20 subchapter.
11-21 (a-1) Using any available source of revenue, the department
11-22 shall transfer to the fund at least $3 million each state fiscal
11-23 year. This subsection expires August 31, 2010.
11-24 (b) The department shall deposit money received in repayment
11-25 of a loan under this subchapter to the owner-builder revolving loan
11-26 fund.
11-27 SECTION 13. Chapter 2306, Government Code, is amended by
12-1 adding Subchapter GG to read as follows:
12-2 SUBCHAPTER GG. COLONIA MODEL SUBDIVISION PROGRAM
12-3 Sec. 2306.781. DEFINITION. In this subchapter, "program"
12-4 means the colonia model subdivision program established under this
12-5 subchapter.
12-6 Sec. 2306.782. ESTABLISHMENT OF PROGRAM. The department
12-7 shall establish the colonia model subdivision program to promote
12-8 the development of new, high-quality, residential subdivisions that
12-9 provide:
12-10 (1) alternatives to substandard colonias; and
12-11 (2) housing options affordable to individuals and
12-12 families of extremely low and very low income who would otherwise
12-13 move into substandard colonias.
12-14 Sec. 2306.783. COLONIA MODEL SUBDIVISION REVOLVING LOAN
12-15 FUND. (a) The department shall establish a colonia model
12-16 subdivision revolving loan fund in the department. Money in the
12-17 fund may be used only for purposes of the program.
12-18 (a-1) The department may transfer money into the fund using
12-19 any available source of revenue.
12-20 (a-2) On application, the department may provide a loan
12-21 under this subchapter through an eligible political subdivision
12-22 using money from the portion of community development block grant
12-23 that is set aside under federal law to provide financial assistance
12-24 to colonias. In a state fiscal year, the department may not
12-25 provide loans under this subchapter using more than $2 million from
12-26 the set-aside for colonias.
12-27 (a-3) Subsections (a-1) and (a-2) and this subsection expire
13-1 August 31, 2010.
13-2 (b) The department shall deposit money received in repayment
13-3 of loans under this subchapter to the colonia model subdivision
13-4 revolving loan fund.
13-5 Sec. 2306.784. SUBDIVISION COMPLIANCE. Any subdivision
13-6 created with assistance from the fund must fully comply with all
13-7 state and local laws, including any process established under state
13-8 or local law for subdividing real property.
13-9 Sec. 2306.785. PROGRAM LOANS. (a) The department may make
13-10 loans under the program only to:
13-11 (1) colonia self-help centers established under
13-12 Subchapter Z; and
13-13 (2) community housing development organizations
13-14 certified by the department.
13-15 (b) A loan made under the program may be used only for the
13-16 payment of:
13-17 (1) costs associated with the purchase of real
13-18 property;
13-19 (2) costs of surveying, platting, and subdividing or
13-20 resubdividing real property;
13-21 (3) fees, insurance costs, or recording costs
13-22 associated with the development of the subdivision;
13-23 (4) costs of providing proper infrastructure necessary
13-24 to support residential uses;
13-25 (5) real estate commissions and marketing fees; and
13-26 (6) any other costs as the department by rule
13-27 determines to be reasonable and prudent to advance the purposes of
14-1 this subchapter.
14-2 (c) A loan made by the department under the program may not
14-3 bear interest and may not exceed a term of 36 months.
14-4 (d) The department may offer a borrower under the program
14-5 one loan renewal for each subdivision.
14-6 Sec. 2306.786. ADMINISTRATION OF PROGRAM; RULES. (a) In
14-7 administering the program, the department by rule shall adopt:
14-8 (1) any subdivision standards in excess of local
14-9 standards the department considers necessary;
14-10 (2) loan application procedures;
14-11 (3) program guidelines; and
14-12 (4) contract award procedures.
14-13 (b) The department shall adopt rules to:
14-14 (1) ensure that a borrower under the program sells
14-15 real property under the program only to an individual borrower,
14-16 nonprofit housing developer, or for-profit housing developer for
14-17 the purposes of constructing residential dwelling units; and
14-18 (2) require a borrower under the program to convey
14-19 real property under the program at a cost that is affordable to:
14-20 (A) individuals and families of extremely low
14-21 income; or
14-22 (B) individuals and families of very low income.
14-23 SECTION 14. Subchapter B, Chapter 11, Tax Code, is amended by
14-24 adding Section 11.184 to read as follows:
14-25 Sec. 11.184. COLONIA MODEL SUBDIVISION PROGRAM. (a) An
14-26 organization is entitled to an exemption from taxation of
14-27 unimproved real property it owns if the organization:
15-1 (1) meets the requirements of a charitable
15-2 organization provided by Sections 11.18(e) and (f);
15-3 (2) purchased the property or is developing the
15-4 property with proceeds of a loan made by the Texas Department of
15-5 Housing and Community Affairs under the colonia model subdivision
15-6 program under Subchapter GG, Chapter 2306, Government Code; and
15-7 (3) owns the property for the purpose of developing a
15-8 model colonia subdivision.
15-9 (b) Property may not be exempted under Subsection (a) after
15-10 the fifth anniversary of the date the organization acquires the
15-11 property.
15-12 (c) An organization entitled to an exemption under
15-13 Subsection (a) is also entitled to an exemption from taxation of
15-14 any building or tangible personal property the organization owns
15-15 and uses in the administration of its acquisition, building,
15-16 repair, or sale of property. To qualify for an exemption under
15-17 this subsection, property must be used exclusively by the
15-18 charitable organization, except that another individual or
15-19 organization may use the property for activities incidental to the
15-20 charitable organization's use that benefit the beneficiaries of the
15-21 charitable organization.
15-22 (d) For the purposes of Subsection (e), the chief appraiser
15-23 shall determine the market value of property exempted under
15-24 Subsection (a) and shall record the market value in the appraisal
15-25 records.
15-26 (e) If the organization that owns improved or unimproved
15-27 real property that has been exempted under Subsection (a) sells the
16-1 property to a person other than a person described by Section
16-2 2306.786(b)(1), Government Code, a penalty is imposed on the
16-3 property equal to the amount of the taxes that would have been
16-4 imposed on the property in each tax year that the property was
16-5 exempted from taxation under Subsection (a), plus interest at an
16-6 annual rate of 12 percent computed from the dates on which the
16-7 taxes would have become due.
16-8 SECTION 15. If the administration of the federal community
16-9 development block grant program is transferred to an agency other
16-10 than the Texas Department of Housing and Community Affairs, the new
16-11 administering agency shall enter into a memorandum of understanding
16-12 with the Texas Department of Housing and Community Affairs to
16-13 permit the housing department to receive and administer the portion
16-14 of community development block grant money specifically allocated
16-15 under the General Appropriations Act to fund the operation of
16-16 self-help owner-builder housing programs. The memorandum must
16-17 require the new administering agency to transfer to the housing
16-18 department a portion of the agency's total administrative funds in
16-19 the same ratio that the portion of community development block
16-20 grant money allocated for owner-builder housing programs bears to
16-21 the total yearly allocation of community development block grant
16-22 money. The memorandum must require the new administering agency to
16-23 continue to fund the housing department's border field offices
16-24 through the community development block grant program and must
16-25 require the housing department to exercise oversight and
16-26 supervision over those field offices and staff.
16-27 SECTION 16. Section 2306.760, Government Code, is repealed.
17-1 SECTION 17. This Act takes effect September 1, 2001.