By Madla S.B. No. 1267 77R3515 KEL-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to a program to meet the need for affordable housing in 1-3 this state. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Chapter 2306, Government Code, is amended by 1-6 adding Subchapter GG to read as follows: 1-7 SUBCHAPTER GG. TEXAS AFFORDABLE HOUSING PARTNERSHIP PROGRAM 1-8 Sec. 2306.801. DEFINITIONS. (a) In this subchapter: 1-9 (1) "Affordable housing advisory committee" means the 1-10 committee appointed by the commissioners court of a county or the 1-11 governing body of an eligible municipality for the purpose of 1-12 recommending specific initiatives to encourage or facilitate 1-13 affordable housing. 1-14 (2) "Award" means a loan, grant, or subsidy funded 1-15 wholly or partially by a local housing assistance trust fund. 1-16 (3) "Eligible municipality" means: 1-17 (A) a municipality that is eligible for federal 1-18 community development block grant entitlement funds as an 1-19 entitlement community under that program; or 1-20 (B) a nonentitlement municipality that is 1-21 receiving a local housing distribution under an interlocal 1-22 agreement described by this subchapter. 1-23 (4) "Eligible person" or "eligible household" means 1-24 one or more individuals or a family determined by a county or 2-1 eligible municipality to be of very low income, low income, or 2-2 moderate income according to the income limits published annually 2-3 by the United States Department of Housing and Urban Development, 2-4 adjusted for family size and based on the annual gross income of 2-5 the household. 2-6 (5) "Eligible sponsor" means a person or private or 2-7 public for-profit or nonprofit entity that applies for an award 2-8 under a local housing assistance plan to provide housing for 2-9 eligible persons. 2-10 (6) "Grant" means an award that: 2-11 (A) is made from a local housing assistance 2-12 trust fund to an eligible sponsor or eligible person to: 2-13 (i) assist in the construction, 2-14 rehabilitation, or financing of eligible housing; or 2-15 (ii) assist with the costs of meeting 2-16 tenant or ownership qualifications; and 2-17 (B) does not require repayment if the conditions 2-18 of the award are met. 2-19 (7) "Loan" means an award that: 2-20 (A) is made from a local housing assistance 2-21 trust fund to an eligible sponsor or eligible person to assist in 2-22 financing the acquisition, construction, or rehabilitation of 2-23 housing; and 2-24 (B) requires repayment or, if the conditions of 2-25 the award are met, allows for forgiveness of repayment. 2-26 (8) "Local housing assistance plan" means a 2-27 description of local housing assistance programs and local housing 3-1 incentive programs adopted by a commissioners court or a governing 3-2 body of an eligible municipality with an explanation of the way in 3-3 which the programs meet the requirements of this subchapter. 3-4 (9) "Local housing assistance program" means a housing 3-5 construction, rehabilitation, repair, or finance program 3-6 implemented by a county or eligible municipality with a local 3-7 housing distribution or other funds deposited into a local housing 3-8 assistance trust fund. 3-9 (10) "Local housing incentive program" means a local 3-10 regulatory scheme or incentive program that: 3-11 (A) is designed to encourage or facilitate 3-12 affordable housing production, including an ongoing process for 3-13 pre-adoption review of local policies, ordinances, regulations, and 3-14 plan provisions that increase housing costs; and 3-15 (B) includes a schedule for implementing the 3-16 incentive program. 3-17 (11) "Local housing partnership" means the 3-18 implementation of the local housing assistance plan in a manner 3-19 that involves the applicable county or eligible municipal lending 3-20 institutions, housing builders and developers, real estate 3-21 professionals, advocates for low-income persons, and providers of 3-22 professional services related to affordable housing. 3-23 (12) "Plan amendment" means any addition to or 3-24 deletion of a local housing assistance program or local housing 3-25 incentive program that is consistent with program requirements and 3-26 is reviewed by the department. 3-27 (13) "Population" means the latest official state 4-1 estimate of population certified by the Texas State Data Center 4-2 before the beginning of the state fiscal year. 4-3 (14) "Program" means the Texas Affordable Housing 4-4 Partnership Program established under this subchapter. 4-5 (15) "Program income" means: 4-6 (A) proceeds derived from interest earned on or 4-7 investment of a local housing distribution and other funds 4-8 deposited into a local housing assistance trust fund; 4-9 (B) proceeds from loan payments; 4-10 (C) recycled funds; and 4-11 (D) all other income derived from use of funds 4-12 deposited in a local housing assistance trust fund. 4-13 (b) Deferred participation by an eligible municipality in 4-14 the federal community development block grant program does not 4-15 affect the eligibility of the municipality to participate in the 4-16 program established under this subchapter. 4-17 Sec. 2306.802. PROGRAM PURPOSES. The purposes of the 4-18 program are to: 4-19 (1) provide funds to counties and eligible 4-20 municipalities as an incentive for the creation of local housing 4-21 partnerships; 4-22 (2) expand production and preservation of affordable 4-23 housing; 4-24 (3) further any component of a local government 4-25 comprehensive plan relating to affordable housing; 4-26 (4) increase housing-related employment; and 4-27 (5) encourage local governments to combine available 5-1 resources by encouraging active partnerships between government 5-2 lenders, builders and developers, real estate professionals, 5-3 advocates for very low, low, and medium income persons, and 5-4 community groups to produce affordable housing and provide related 5-5 services. 5-6 Sec. 2306.803. PROGRAM ADMINISTRATION. (a) The program is 5-7 under the direction of the commissioners court of a county or the 5-8 governing body of an eligible municipality, as applicable. 5-9 (b) The commissioners court or the governing body of an 5-10 eligible municipality may appoint by resolution a local affordable 5-11 housing advisory committee to recommend monetary and nonmonetary 5-12 incentives for affordable housing. The resolution must provide for 5-13 the appointment and terms of nine advisory committee members 5-14 consisting of the following: 5-15 (1) one member who is actively engaged in the 5-16 residential home building industry in connection with affordable 5-17 housing; 5-18 (2) one member who is actively engaged in the banking 5-19 or mortgage banking industry in connection with affordable housing; 5-20 (3) one member who is a representative of building 5-21 contractors and subcontractors actively engaged in home building in 5-22 connection with affordable housing; 5-23 (4) one member who is actively engaged as an advocate 5-24 for low-income persons in connection with affordable housing; 5-25 (5) one member who is actively engaged as a for-profit 5-26 provider of affordable housing; 5-27 (6) one member who is actively engaged as a nonprofit 6-1 provider of affordable housing; 6-2 (7) one member who is actively engaged as a real 6-3 estate professional in connection with affordable housing; 6-4 (8) one member who actively serves on the local 6-5 planning agency; and 6-6 (9) one member who resides within the jurisdiction of 6-7 the commissioners court or governing body making the appointments. 6-8 (c) All meetings conducted for purposes of county or 6-9 municipal participation in the program are public, and all records 6-10 maintained in connection with the program are public information. 6-11 (d) A commissioners court, the governing body of an eligible 6-12 municipality, or, if applicable, an affordable housing advisory 6-13 committee shall: 6-14 (1) review the established policies and procedures, 6-15 ordinances, real property development regulations, and adopted 6-16 local government comprehensive plan; and 6-17 (2) recommend specific initiatives to encourage or 6-18 facilitate affordable housing while protecting the ability of the 6-19 property to appreciate in value. 6-20 (e) Recommendations under Subsection (d)(2) may include: 6-21 (1) modification or repeal of existing policies, 6-22 procedures, ordinances, regulations, or plan provisions; 6-23 (2) creation of exceptions applicable to affordable 6-24 housing; and 6-25 (3) adoption of new policies, procedures, ordinances, 6-26 regulations, or plan provisions. 6-27 (f) To receive program funds, a commissioners court, the 7-1 governing body of an eligible municipality, or, if applicable, an 7-2 affordable housing advisory committee must submit to the department 7-3 a plan describing local housing assistance programs. 7-4 (g) Not later than the first anniversary of the date of 7-5 adoption of the local housing assistance plan, the commissioners 7-6 court or governing body of an eligible municipality must amend its 7-7 plan to incorporate its local housing incentive programs. An 7-8 affordable housing advisory committee may make recommendations to 7-9 the commissioners court or governing body of an eligible 7-10 municipality relating to the housing programs enumerated in the 7-11 plan. 7-12 (h) Not later than the first anniversary of the date of 7-13 adoption of the local housing assistance plan, the commissioners 7-14 court or governing body must amend its real property development 7-15 regulations or establish local policies and procedures as necessary 7-16 to implement its local housing incentive programs. The 7-17 commissioners court or governing body of an eligible municipality 7-18 may receive recommendations from an affordable housing advisory 7-19 committee to accomplish the required amendment. 7-20 (i) To receive its share of local housing distributions, a 7-21 commissioners court or governing body of an eligible municipality 7-22 must adopt an order or ordinance containing the following 7-23 provisions: 7-24 (1) the creation of a local housing assistance trust 7-25 fund; 7-26 (2) the adoption by resolution of a local housing 7-27 assistance plan to be implemented through a local housing 8-1 partnership; 8-2 (3) the designation of the responsibility for the 8-3 administration of the local housing assistance plan; and 8-4 (4) if applicable, the appointment by resolution of an 8-5 affordable housing advisory committee. 8-6 (j) The order or ordinance may also provide for the 8-7 contracting of all or part of the administrative or other functions 8-8 of the program to a third party. 8-9 (k) The commissioners court or governing body of an eligible 8-10 municipality shall submit to the department one copy of its local 8-11 housing assistance plan. 8-12 (l) The transmittal of the local housing assistance plan 8-13 must include a copy of the order or ordinance, the resolution 8-14 adopting the plan, and any other information required by the 8-15 department that does not place an undue burden on the county or 8-16 eligible municipality. Not later than the 30th day after the date 8-17 of receipt of the plan, the department shall review the plan and 8-18 either certify the plan or identify inconsistencies with the 8-19 requirements of the program. The department shall assist the local 8-20 government in revising the plan if it initially proves to be 8-21 inconsistent with program requirements. 8-22 (m) The approval of local housing assistance plans shall be 8-23 expedited to ensure that the production of needed housing occurs as 8-24 quickly as possible. After being approved for funding, the 8-25 commissioners court or governing body of an eligible municipality 8-26 may amend by resolution its local housing assistance plan if the 8-27 plan as amended complies with program requirements. A local 9-1 government must submit its amended plan for review according to the 9-2 process established under this subchapter. 9-3 Sec. 2306.804. TEXAS AFFORDABLE HOUSING ASSISTANCE TRUST 9-4 FUND. (a) The Texas affordable housing assistance trust fund is a 9-5 state trust fund with the comptroller for the purpose of making 9-6 distributions under this subchapter. All money collected under 9-7 this subchapter shall be deposited to the credit of the state trust 9-8 fund. 9-9 (b) The comptroller annually shall distribute the money in 9-10 the state trust fund as follows: 9-11 (1) 80 percent to local housing assistance trust 9-12 funds, to be disbursed as follows: 9-13 (A) 75 percent or $15,000, whichever is greater, 9-14 shall be transferred to counties with a population that is less 9-15 than 150,001 or with an average median income of less than $44,000, 9-16 as determined annually by the secretary of the United States 9-17 Department of Housing and Urban Development; and 9-18 (B) the remaining amount of the money shall be 9-19 transferred to counties with a population that is greater than 9-20 150,001 or with an average median income of $44,000 or more, as 9-21 determined annually by the secretary of the United States 9-22 Department of Housing and Urban Development; and 9-23 (2) 20 percent to the housing trust fund established 9-24 under Section 2306.201 for use in accordance with the purposes of 9-25 that fund. 9-26 Sec. 2306.805. LOCAL HOUSING DISTRIBUTIONS. (a) The 9-27 comptroller shall make a local housing distribution from the Texas 10-1 affordable housing assistance trust fund to a local housing 10-2 assistance trust fund annually beginning the first day of the state 10-3 fiscal year following the date the program is approved. 10-4 (b) The portion for each county is computed by multiplying 10-5 the total funds for the group of counties described by Section 10-6 2306.804(b)(1)(A) or (B) by a fraction, the numerator of which is 10-7 the population of the county and the denominator of which is the 10-8 total population of the group of counties described by Section 10-9 2306.804(b)(1)(A) or (B). 10-10 (c) The portion for each eligible municipality is computed 10-11 by multiplying the total funds for a county by a fraction, the 10-12 numerator of which is the population of the eligible municipality 10-13 and the denominator of which is the population of the county. The 10-14 remaining revenues shall be distributed to the appropriate 10-15 commissioners court. 10-16 (d) A local housing distribution must be administered in 10-17 compliance with an interlocal agreement providing for a joint local 10-18 housing assistance plan. 10-19 (e) Distributions from a local government trust fund must be 10-20 made according to an interlocal agreement between a commissioners 10-21 court and the governing body of an eligible municipality. 10-22 (f) If a county or eligible municipality enters into an 10-23 interlocal agreement with a municipality that becomes eligible as a 10-24 result of entering into that interlocal agreement, the county or 10-25 eligible municipality that has agreed to transfer the control of 10-26 funds to a municipality that was not originally eligible must 10-27 ensure through its local housing assistance plan and through the 11-1 interlocal agreement that all program funds are used in a manner 11-2 consistent with the program. 11-3 (g) The funds that otherwise would be distributed under this 11-4 subchapter to a local government that does not meet the program's 11-5 requirements for receipt of the distributions must remain in the 11-6 Texas affordable housing assistance trust fund for a period of 18 11-7 months. If the local government does not achieve compliance with 11-8 the program within that 18-month period, the funds will be 11-9 distributed to the housing trust fund established under Section 11-10 2306.201 for use in accordance with the purposes of that fund. 11-11 (h) A county or eligible municipality may expend its portion 11-12 of local housing distributions only to implement a local housing 11-13 assistance plan. Except as otherwise provided by this subsection, 11-14 the county or eligible municipality may not expend its portion of 11-15 local housing distributions to provide rent subsidies, and funds 11-16 distributed under this subchapter may not be pledged to pay the 11-17 debt service on any bonds. This subsection does not prohibit the 11-18 use of funds for security and utility deposit assistance. 11-19 Sec. 2306.806. LOCAL HOUSING ASSISTANCE PLAN: PARTNERSHIPS. 11-20 (a) Each county or eligible municipality participating in the 11-21 program shall develop and implement a local housing assistance plan 11-22 created to make affordable residential units available to persons 11-23 of medium, low, and very low income and to persons who have special 11-24 housing needs, including homeless persons, the elderly, and migrant 11-25 farmworkers. 11-26 (b) The plan must seek to increase the availability of 11-27 affordable residential units by: 12-1 (1) combining local resources and cost-saving measures 12-2 into a local housing partnership; and 12-3 (2) using private and public funds to reduce housing 12-4 costs. 12-5 (c) A local housing assistance plan may allocate funds to: 12-6 (1) implement local housing assistance programs for 12-7 the provision of affordable housing; 12-8 (2) supplement funds available to the department to 12-9 provide enhanced funding of state housing programs in the county or 12-10 the eligible municipality; 12-11 (3) provide the local matching share of federal 12-12 affordable housing grants or programs; 12-13 (4) fund emergency repairs, including repairs 12-14 performed by existing service providers under weatherization 12-15 assistance programs; 12-16 (5) further an affordable housing component of a local 12-17 government comprehensive plan; 12-18 (6) fund program operation costs and overhead at the 12-19 local level in an amount not to exceed five percent of funds 12-20 distributed into the local government trust fund, or not to exceed 12-21 10 percent if the actual cost can be justified in an approved plan; 12-22 and 12-23 (7) fund single-family home buyer assistance programs 12-24 and finance, acquire, rehabilitate, and construct safe, decent, 12-25 affordable housing. 12-26 (d) Each county and each eligible municipality participating 12-27 in the program shall encourage the involvement of appropriate 13-1 public sector and private sector entities as partners in order to 13-2 combine resources to reduce housing costs for the targeted 13-3 population. The partnership process must involve: 13-4 (1) lending institutions; 13-5 (2) housing builders and developers; 13-6 (3) nonprofit and other community-based housing and 13-7 service organizations; 13-8 (4) providers of professional services relating to 13-9 affordable housing; 13-10 (5) advocates for low-income persons; 13-11 (6) real estate professionals; and 13-12 (7) other persons or entities that can assist in 13-13 providing housing or related support services. 13-14 (e) A county or eligible municipality participating in the 13-15 program shall: 13-16 (1) develop a qualification system and selection 13-17 criteria for applications for awards by eligible sponsors; 13-18 (2) adopt criteria for the selection of eligible 13-19 persons; and 13-20 (3) adopt a maximum award schedule or system of 13-21 amounts consistent with the intent and budget of its local housing 13-22 assistance plan. 13-23 (f) A county or eligible municipality shall advertise the 13-24 notice of funding availability in a newspaper of general 13-25 circulation and periodicals serving ethnic and diverse 13-26 neighborhoods not later than the 30th day before the date the 13-27 application period begins. If funding is not available because of 14-1 a waiting list, notice of funding availability is not required. 14-2 (g) A county or eligible municipality may not discriminate 14-3 on the basis of race, creed, religion, color, age, sex, marital 14-4 status, familial status, national origin, or disability in the 14-5 award application process for eligible housing. 14-6 (h) As a condition of receipt of an award under the program, 14-7 an eligible sponsor or eligible person must contractually agree to 14-8 comply with the affordable housing criteria applicable to the 14-9 affordable housing objective of the award. The criteria must 14-10 encourage single-family mortgages, down payment assistance, and 14-11 other forms of payment assistance. 14-12 (i) The department shall provide technical assistance to 14-13 counties and eligible municipalities regarding: 14-14 (1) the creation of partnerships; 14-15 (2) the design of local housing assistance programs; 14-16 (3) the implementation of local housing incentive 14-17 programs; and 14-18 (4) the provision of support services. 14-19 Sec. 2306.807. REPORT SUBMITTED TO DEPARTMENT. (a) The 14-20 department shall monitor the activities of counties and eligible 14-21 municipalities to determine compliance with program requirements 14-22 and shall collect data on the operation and achievements of housing 14-23 partnerships. 14-24 (b) A county or eligible municipality shall submit to the 14-25 department not later than April 30 of each year a report of its 14-26 affordable housing programs and related accomplishments through 14-27 December 31 of the preceding year. The report must be certified as 15-1 accurate and complete by the local government's chief elected 15-2 official or that official's designee. Transmittal of the report 15-3 certifies that the local housing incentive programs and, if 15-4 applicable, the local housing incentive plan have been implemented 15-5 or are in the process of being implemented in accordance with the 15-6 adopted schedule for implementation. 15-7 (c) The report must include: 15-8 (1) the number of households served by income 15-9 category, age, family size, and race; 15-10 (2) data regarding any special needs populations, 15-11 including farmworkers, homeless persons, and the elderly; 15-12 (3) the number of units and the average cost of 15-13 producing units under each local housing assistance program; 15-14 (4) the average sales price or value of a 15-15 single-family unit and the amount of rent charged for a rental unit 15-16 based on unit size; 15-17 (5) by income category, the number of mortgages made, 15-18 the average mortgage amount, and the rate of default; 15-19 (6) a description of the status of implementation of 15-20 each local housing incentive program and, if applicable, the local 15-21 housing incentive plan contained in the local government's adopted 15-22 schedule for implementation; 15-23 (7) a concise description of the support services that 15-24 are available to the residents of affordable housing provided by 15-25 local programs; 15-26 (8) sales price or value of housing produced under the 15-27 program and an account of what percentage was refinanced by a local 16-1 housing distribution, other public funds, and private resources; 16-2 and 16-3 (9) any other data or affordable housing 16-4 accomplishments considered significant by the reporting county or 16-5 eligible municipality. 16-6 (d) A county or eligible municipality shall make the report 16-7 available for public inspection and comment before certifying the 16-8 report and transmitting it to the department. 16-9 (e) If the department reviews the annual report and 16-10 determines that a county or eligible municipality has failed to 16-11 implement a local housing incentive program or, if applicable, a 16-12 local housing incentive plan, the department shall send a notice of 16-13 termination of the county's or eligible municipality's share of 16-14 local housing distributions by certified mail to the comptroller 16-15 and the affected county or eligible municipality. 16-16 SECTION 2. This Act takes effect September 1, 2001.