By: Bernsen S.B. No. 929 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to a restriction on the financing of multifamily 1-3 residential developments by housing authorities and housing finance 1-4 corporations. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. Section 303.042, Local Government Code, is 1-7 amended to read as follows: 1-8 Sec. 303.042. TAXATION. (a) A public facility, including a 1-9 leasehold estate in a public facility, that is owned by a 1-10 corporation and that, except for the purposes and nonprofit nature 1-11 of the corporation, would be taxable to the corporation under Title 1-12 1, Tax Code, shall be assessed to the user of the public facility 1-13 to the same extent and subject to the same exemptions from taxation 1-14 as if the user owned the public facility. If there is more than 1-15 one user of the public facility, the public facility shall be 1-16 assessed to the users in proportion to the value of the rights of 1-17 each user to occupy, operate, manage, or use the public facility. 1-18 (b) The user of a public facility is considered the owner of 1-19 the facility for purposes of the application of: 1-20 (1) sales and use taxes in the construction, sale, 1-21 lease, or rental of the public facility; and 1-22 (2) other taxes imposed by this state or a political 1-23 subdivision of this state. 1-24 (c) A corporation is engaged exclusively in performance of 1-25 charitable functions and is exempt from taxation by this state or a 2-1 municipality or other political subdivision of this state. Bonds 2-2 issued by a corporation under this chapter, a transfer of the 2-3 bonds, interest on the bonds, and a profit from the sale or 2-4 exchange of the bonds are exempt from taxation by this state or a 2-5 municipality or other political subdivision of this state. 2-6 (d) An exemption under this section for a multifamily 2-7 residential development which is owned by a public facility 2-8 corporation created by a housing authority under this chapter and 2-9 which does not have at least 15 percent of its units reserved for 2-10 public housing units applies only if: 2-11 (1) the housing authority holds a public hearing, at a 2-12 regular meeting of the authority's governing body, to approve the 2-13 development; and 2-14 (2) at least 50 percent of the units in the 2-15 multifamily residential development are reserved for occupancy by 2-16 individuals and families earning less than 80 percent of the area 2-17 median family income. 2-18 (e) For the purposes of Subsection (d), a "public housing 2-19 unit" is a dwelling unit for which the landlord receives a public 2-20 housing operating subsidy. It does not include a unit for which 2-21 payments are made to the landlord under the federal Section 8 2-22 Housing Choice Voucher Program. 2-23 SECTION 2. Section 392.005, Local Government Code, is 2-24 amended to read as follows: 2-25 Sec. 392.005. TAX EXEMPTION. (a) The property of an 2-26 authority is public property used for essential public and 3-1 governmental purposes. The authority and the authority's property 3-2 are exempt from all taxes and special assessments of a 3-3 municipality, a county, another political subdivision, or the 3-4 state. 3-5 (b) If a municipality, county, or political subdivision 3-6 furnishes improvements, services, or facilities for a housing 3-7 project, an authority may, in lieu of paying taxes or special 3-8 assessments, agree to reimburse in payments to the municipality, 3-9 county, or political subdivision an amount not greater than the 3-10 estimated cost to the municipality, county, or political 3-11 subdivision for the improvements, services, or facilities. 3-12 (c) An exemption under this section for a multifamily 3-13 residential development which is owned by (i) a public facility 3-14 corporation created by a housing authority under Chapter 303, 3-15 (ii) a housing development corporation, or (iii) a similar entity 3-16 created by a housing authority and which does not have at least 15 3-17 percent of its units reserved for public housing units applies only 3-18 if: 3-19 (1) the authority holds a public hearing, at a regular 3-20 meeting of the authority's governing body, to approve the 3-21 development; and 3-22 (2) at least 50 percent of the units in the 3-23 multifamily residential development are reserved for occupancy by 3-24 individuals and families earning less than 80 percent of the area 3-25 median family income. 3-26 (d) For the purposes of Subsection (c), a "public housing 4-1 unit" is a dwelling unit for which the owner receives a public 4-2 housing operating subsidy. It does not include a unit for which 4-3 payments are made to the landlord under the federal Section 8 4-4 Housing Choice Voucher Program. 4-5 SECTION 3. Subchapter Z, Chapter 394, Local Government Code, 4-6 is amended by adding Section 394.9025 to read as follows: 4-7 Sec. 394.9025. MULTIFAMILY RESIDENTIAL DEVELOPMENT. 4-8 (a) Following a public hearing, a housing finance corporation may 4-9 issue bonds to finance a multifamily residential development to be 4-10 owned by the housing finance corporation if at least 50 percent of 4-11 the units in the multifamily residential development are reserved 4-12 for occupancy by individuals and families earning less than 80 4-13 percent of the area median family income. 4-14 (b) Following a public hearing by the governing body of the 4-15 local government, a housing finance corporation may issue bonds to 4-16 finance a multifamily residential development to be owned by the 4-17 housing finance corporation in accordance with Section 394.004 if 4-18 the housing finance corporation receives approval of the governing 4-19 body of the local government. 4-20 SECTION 4. (a) The change in law made by Subsection (d), 4-21 Section 303.042, Local Government Code, as added by this Act, 4-22 applies only to a multifamily residential development that is 4-23 developed as a result of an official decision by a housing 4-24 authority or an entity created by the housing authority to develop 4-25 the property that occurs on or after the effective date of this 4-26 Act. 5-1 (b) The change in law made by Subsection (c), Section 5-2 392.005, Local Government Code, as added by this Act, applies only 5-3 to a multifamily residential development that is developed as a 5-4 result of an official decision by a housing authority or an entity 5-5 created by the housing authority to develop the property that 5-6 occurs on or after the effective date of this Act. 5-7 (c) The change in law made by Section 394.9025, Local 5-8 Government Code, as added by this Act, applies only to a 5-9 multifamily residential development that is financed by bonds 5-10 issued under Chapter 394, Local Government Code, as a result of an 5-11 official decision to issue bonds that occurs on or after the 5-12 effective date of this Act. 5-13 SECTION 5. This Act takes effect August 31, 2002.