C.S.S.B. 284 78(R) BILL ANALYSIS C.S.S.B. 284 By: Lucio Urban Affairs Committee Report (Substituted) BACKGROUND AND PURPOSE In 1995, the 74th Texas Legislature established the Texas State Affordable Housing Corporation (TSAHC) as a self-sustaining non-profit entity to facilitate the provision of affordable housing for low income Texans. Since April 2001, the Corporation has issued $487 million in tax-exempt mortgage revenue bonds to finance more than 7,700 multifamily affordable housing units. The bonds are payable solely from the rental income of the property, without any obligation on behalf of the State to repay the bonds. In addition, the Corporation offers grants for down payment and closing cost assistance to eligible Texas educators. TSAHC underwent a Sunset review in 2001. The 77th Legislature continued TSAHC for two years, rather than the standard 12 years, and required the Sunset Commission to evaluate TSAHC's new business focus. As proposed, S.B. 284 continues TSAHC until September 1, 2009, and requires TSAHC to adopt a minimum dollar-for-dollar public benefit requirement for recipients of 501(c)(3) bonds. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1.Amends Government Code, Section 2306.057 to add a requirement that the Texas Department of Housing and Community Affairs ("the Department") board consider relevant compliance information in the department's database created in Government Code, Section 2306.081, including information provided by the Texas State Affordable Housing Corporation ("the Corporation"). This Section corresponds to Sunset Commission Recommendation 2.6. SECTION 2.Amends Government Code, Section 2306.0721 to add a requirement that the Department include the Corporation's plan (created under the new Government Code, Section 2306.565, below) to meet the state's most pressing housing needs in the Department's resource allocation plan portion of the State Low Income Housing Plan ("SLIHP"). It also adds a requirement that the Department include the Corporation's projects in the estimate and analysis of the housing supply in each uniform state service region under the SLIHP. This Section corresponds to Sunset Commission Recommendation 2.5. SECTION 3.Amends Government Code, Section 2306.0722(b) to add a requirement that the Department to share the latest needs assessment information with the Corporation. This Section corresponds to Sunset Commission Recommendation 2.5. SECTION 4. Amends Government Code, Section 2306.081 to require the Department to include project compliance information provided by the Corporation in its project compliance database, and to allow the Corporation to access database information. This Section corresponds to Sunset Commission Recommendation 2.6. SECTION 5.Amends Government Code, Section 2306.5521 to extend the Corporation until September 1, 2009. Sunset provision; corresponds to Sunset Commission Recommendation 2.1. SECTION 6.Amends Government Code, Section 2306.554 to allow for Corporation board member reimbursement of travel expenses to the same extent provided by the General Appropriations Act for a member of a state board. Also requires that appointment to the Corporation's board of directors be made without regard to the appointee's race, color, disability, sex, religion, age, or national origin. This Section corresponds to Sunset Commission Across-the-Board Recommendation 3. SECTION 7.Amends Government Code, Subchapter Y, Chapter 2306, by adding Sections 2306.5541, 2306.5542, and 2306.5543. Section 2306.5541 establishes staggered six-year terms for Corporation board members, with the terms of one or two members expiring on February 1 of each odd-numbered year. This Section corresponds to Sunset Commission Recommendation 2.2. Section 2306.5542 specifies grounds for removal of Corporation board members. Provides that validity of a board action is not affected by the fact that it is taken when a ground for removal of a board member exists. In addition, it provides a procedure for notification of the governor and attorney general when a potential ground for removal exists. This Section corresponds to Sunset Commission Across-the-Board Recommendation 5. Section 2306.5543 requires a Corporation board member to complete a specified training program before taking office as a board member, and provides for reimbursement of travel expenses for such program. This Section corresponds to Sunset Commission Across-the-Board Recommendation 7. SECTION 8.Amends Government Code, Section 2306.5545, to add a conflict of interest provision. Provides that a person may not be a member of the Corporation's board of directors, nor serve as a Corporation executive, administrative or professional employee if they or their spouse are an officer, employee, or paid consultant of a Texas trade association in the field of banking, real estate, housing development , or housing construction. Defines the phrase "Texas trade association." This Section corresponds to Sunset Commission Across-the-Board Recommendation 2. SECTION 9.Amends Government Code, Subchapter Y, Chapter 2306, by adding Sections 2306.5546, 2306.5547, and 2306.5548. Section 2306.5546 requires that information on standards of conduct be provided by the Corporation president or designee to members of the board and Corporation's employees. This Section corresponds to Sunset Commission Across-the-Board Recommendation 6. Section 2306.5547 requires the Corporation's board to develop and implement policies that clearly separate the functions of the board and Corporation staff. This Section corresponds to Sunset Commission Across-the-Board Recommendation 8. Section 2306.5548 requires the Corporation president or designee to develop and maintain an equal employment opportunity policy including, at a minimum, personnel policies and an analysis of the extent to which the Corporation's personnel is in accordance with state and federal law and a description of reasonable methods to achieve compliance. Provides that the statement must be updated annually and filed with the governor's office. This Section corresponds to Sunset Commission Across-the-Board Recommendation 11. SECTION 10.Amends Government Code, Subchapter Y, Chapter 2306, by adding Sections 2306.563, 2306.564, 2306.565, 2306.566, 2306.567, and 2306.568. Section 2306.563 requires the Corporation to implement a minimum dollar-fordollar public benefit requirement for recipients of 501(c)(3) bonds. This requires borrowers to invest at least one dollar in rent reduction, capital improvement projects, or social, educational, or economic development services benefitting income-eligible persons for every dollar of abated property tax revenue that they receive. These investments must be made in the county in which the property is located, and the Corporation and the organization may determine on a case-bycase basis specific projects to be invested in. Provides that Payments In Lieu Of Taxes (PILOTs) reduce dollar-for-dollar the public benefit requirement. Requires the Corporation to adopt guidelines for public benefit projects and services. This Section corresponds to Sunset Commission Recommendation 2.3. Section 2306.564 requires the Corporation to annually review 501(c)(3) bond issuance policies, including the public benefit requirement in Section 2306.563 above. Provides for publication and comment in the Texas Register of proposed revisions, as well as board approval of changes. This Section corresponds to Sunset Commission Recommendation 2.4. Section 2306.565 requires coordination between the Department and the Corporation in the development of the SLIHP. The Corporation is required to review needs assessment information provided by the Department, develop a plan to meet the state's most pressing housing needs, and provide this plan to the Department for incorporation into the SLIHP. This plan must specifically address rural and underserved areas, as well as not duplicate other organizations' efforts. This Section corresponds to Sunset Commission Recommendation 2.5. Section 2306.566 requires the Corporation to provide to the Department electronic copies of all compliance information it compiles, as well as consider any relevant compliance information in the Department's compliance database created under Section 2306.081 above. This Section corresponds to Sunset Commission Recommendation 2.6. Section 2306.567 requires the Corporation to maintain a file on any written complaint filed with it and specifies the content of the file. It requires the Corporation to provide parties to a complaint with a copy of the Corporation's complaint investigation and resolution policies and procedures. Additionally, it requires the Corporation to notify parties to a complaint quarterly until final disposition, the status of the investigation unless notice would jeopardize an undercover investigation. This Section corresponds to Sunset Commission Across-the-Board Recommendation 10. Section 2306.568 requires the Corporation's board to develop and implement a technology policy which ensures easy public access to Corporation information and services as well as interaction with the Corporation on the Internet. It requires the policy to be cost effective and developed through the corporation's planning processes. This Section corresponds to Sunset Commission Across-the-Board Recommendation 13. SECTION 11.Requires the governor to make five appointments to the Corporation's board of directors as soon as possible on or after September 1, 2003. One of these appointments will have a term expiring February 1, 2005; two appointments will have terms expiring February 1, 2007; and two appointment will have terms expiring February 1, 2009. Abolishes, at the time that three or more of the new directors qualifies for office, all of the offices of the board of directors of the Corporation serving on September 1, 2003. Gives the newly appointed directors until September 1, 2004 to comply with the training requirement added by Section 7 of the bill. SECTION 12.Specifies that Government Code, Section 2306.567, Record of Complaints, added by Section 10 of the bill, applies only to a complaint filed with the Corporation's board of directors after September 1, 2003. SECTION 13.Effective date. EFFECTIVE DATE: September 1, 2003. COMPARISON OF ORIGINAL TO SUBSTITUTE