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By: Mercer H.B. No. 1632
Substitute the following for H.B. No. 1632:
By: Talton C.S.H.B. No. 1632
A BILL TO BE ENTITLED
AN ACT
relating to the administration of the low income housing tax credit
program by the Texas Department of Housing and Community Affairs
and to other departmental functions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2306.0661, Government Code, is amended
by adding Subsection (f) to read as follows:
(f) The board shall adopt rules governing the topics that
may be considered at a public hearing. The rules must require the
department to consider the following topics in relation to a
proposed housing development:
(1) the developer's market study;
(2) the location;
(3) the compliance history of the developer;
(4) the financial feasibility;
(5) the appropriateness of the development's size and
configuration in relation to the housing needs of the community in
which the development is located;
(6) zoning and other land use considerations; and
(7) any other topics that the board by rule determines
to be appropriate.
SECTION 2. Subchapter D, Chapter 2306, Government Code, is
amended by adding Section 2306.082 to read as follows:
Sec. 2306.082. NEGOTIATED RULEMAKING; ALTERNATIVE DISPUTE
RESOLUTION. (a) The department shall develop and implement a
policy to encourage the use of:
(1) negotiated rulemaking procedures under Chapter
2008 for the adoption of department rules; and
(2) appropriate alternative dispute resolution
procedures under Chapter 2009 to assist in the resolution of
internal and external disputes under the department's
jurisdiction.
(b) The department's procedures relating to alternative
dispute resolution must conform, to the extent possible, to any
model guidelines issued by the State Office of Administrative
Hearings for the use of alternative dispute resolution by state
agencies.
(c) The department shall designate a trained person to:
(1) coordinate the implementation of the policy
adopted under Subsection (a);
(2) serve as a resource for any training needed to
implement the procedures for negotiated rulemaking or alternative
dispute resolution; and
(3) collect data concerning the effectiveness of those
procedures, as implemented by the department.
SECTION 3. Section 2306.111, Government Code, is amended by
adding Subsections (c-1) and (c-2) to read as follows:
(c-1) The following entities are eligible to apply for
set-aside funds under Subsection (c):
(1) nonprofit providers of affordable housing,
including community housing development organizations; and
(2) for-profit providers of affordable housing.
(c-2) In allocating set-aside funds under Subsection (c),
the department may not give preference to nonprofit providers of
affordable housing, except as required by federal law.
SECTION 4. Sections 2306.111(d)-(g), Government Code, are
amended to read as follows:
(d) The department shall allocate housing funds provided to
the state under the Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. Section 12701 et seq.), housing trust funds
administered by the department under Sections 2306.201-2306.206,
and commitments issued under the federal low income housing tax
credit program administered by the department under Subchapter DD
to all urban, exurban, and rural areas of each uniform state service
region based on a formula developed by the department that is based
on the need for housing assistance and the availability of housing
resources in those urban, exurban, and rural areas, provided that
the allocations are consistent with applicable federal and state
requirements and limitations. The department shall use the
information contained in its annual state low income housing plan
and shall use other appropriate data to develop the formula. If the
department determines under the formula that an insufficient number
of eligible applications for assistance out of funds or credits
allocable under this subsection are submitted to the department
from a particular uniform state service region, the department
shall use the unused funds or credits allocated to that region for
all urban, exurban, and rural areas in other uniform state service
regions based on identified need and financial feasibility.
(e) The department shall include in its annual low income
housing plan under Section 2306.0721:
(1) the formula developed by the department under
Subsection (d); and
(2) the allocation targets established under the
formula for the urban, exurban, and rural areas of each uniform
state service region.
(f) The department shall include in its annual low income
housing report under Section 2306.072 the amounts of funds and
credits allocated to the urban, exurban, and rural areas of each
uniform state service region in the preceding year for each federal
and state program affected by the requirements of Subsection (d).
(g) For all urban, exurban, and rural areas of each uniform
state service region, the department shall establish funding
priorities to ensure that:
(1) funds are awarded to project applicants who are
best able to meet recognized needs for affordable housing, as
determined by [the] department rule;
(2) when practicable and when authorized under Section
42, Internal Revenue Code of 1986 (26 U.S.C. Section 42), the least
restrictive funding sources are used to serve the lowest income
residents; and
(3) funds are awarded based on a project applicant's
ability, when consistent with Section 42, Internal Revenue Code of
1986 (26 U.S.C. Section 42), practicable, and economically
feasible, to:
(A) provide the greatest number of quality
residential units;
(B) serve persons with the lowest percent area
median family income;
(C) extend the duration of the project to serve a
continuing public need;
(D) use other local funding sources to minimize
the amount of state subsidy needed to complete the project; and
(E) provide integrated, affordable housing for
individuals and families with different levels of income.
SECTION 5. Section 2306.1113, Government Code, is amended
to read as follows:
Sec. 2306.1113. EX PARTE COMMUNICATIONS. (a) During the
period beginning on the date a project application is filed and
ending on the date the board makes a final decision with respect to
any approval of that application, a member of the board [or a member
of the advisory committee established under Section 2306.1112] may
not communicate with the following persons:
(1) the applicant or a related party, as defined by
state law, including board rules, and federal law; and
(2) any person who is:
(A) active in the construction, rehabilitation,
ownership, or control of the proposed project, including:
(i) a general partner or contractor; and
(ii) a principal or affiliate of a general
partner or contractor; or
(B) employed as a lobbyist by the applicant or a
related party.
(a-1) Subject to Subsection (a-2), during the period
beginning on the date a project application is filed and ending on
the date the board makes a final decision with respect to any
approval of that application, an employee of the department may
communicate about the application with the following persons:
(1) the applicant or a related party, as defined by
state law, including board rules, and federal law; and
(2) any person who is:
(A) active in the construction, rehabilitation,
ownership, or control of the proposed project, including:
(i) a general partner or contractor; and
(ii) a principal or affiliate of a general
partner or contractor; or
(B) employed as a lobbyist by the applicant or a
related party.
(a-2) A communication under Subsection (a-1) may be oral or
in any written form, including electronic communication through the
Internet, and must satisfy the following conditions:
(1) the communication must be restricted to technical
or administrative matters directly affecting the application;
(2) the communication must occur or be received on the
premises of the department during established business hours; and
(3) a record of the communication must be maintained
and included with the application for purposes of board review and
must contain the following information:
(A) the date, time, and means of communication;
(B) the names and position titles of the persons
involved in the communication and, if applicable, the person's
relationship to the applicant;
(C) the subject matter of the communication; and
(D) a summary of any action taken as a result of
the communication.
(b) Notwithstanding Subsection (a) or (a-1), a board member
or department employee [advisory committee member] may communicate
without restriction with a person listed in Subsection (a) or (a-1)
[described by that subsection] at any board meeting or public
hearing held with respect to the application.
SECTION 6. Section 2306.6702(a)(10), Government Code, is
amended to read as follows:
(10) "Qualified allocation plan" means a plan adopted
by the board under this subchapter that:
(A) provides the threshold, scoring, and
underwriting criteria based on housing priorities of the department
that are appropriate to local conditions;
(B) consistent with Section 2306.6710(e), gives
preference in housing tax credit allocations to developments that,
as compared to the other developments:
(i) when practicable and feasible based on
documented, committed, and available third-party funding sources,
serve the lowest income tenants per housing tax credit; and
(ii) produce [are affordable to qualified
tenants] for the longest economically feasible period the greatest
number of high quality units committed to remaining affordable to
any tenants who are income-eligible under the low income housing
tax credit program; and
(C) provides a procedure for the department, the
department's agent, or another private contractor of the department
to use in monitoring compliance with the qualified allocation plan
and this subchapter.
SECTION 7. Section 2306.6704, Government Code, is amended
by adding Subsection (b-1) to read as follows:
(b-1) The preapplication process must require the applicant
to provide the department with evidence that the applicant has
notified the following entities with respect to the filing of the
application:
(1) any neighborhood associations incorporated under
the laws of this state and containing the development;
(2) the presiding officer of the board of trustees of
the school district containing the development;
(3) the presiding officer of the governing body of any
municipality containing the development and all elected members of
that body;
(4) the presiding officer of the governing body of the
county containing the development and all elected members of that
body; and
(5) the state senator and state representative of the
district containing the development.
SECTION 8. Section 2306.6705, Government Code, is amended
to read as follows:
Sec. 2306.6705. GENERAL APPLICATION REQUIREMENTS. An
application must contain at a minimum the following written,
detailed information in a form prescribed by the board:
(1) a description of:
(A) the financing plan for the development,
including any nontraditional financing arrangements;
(B) the use of funds with respect to the
development;
(C) the funding sources for the development,
including:
(i) construction, permanent, and bridge
loans; and
(ii) rents, operating subsidies, and
replacement reserves; and
(D) the commitment status of the funding sources
for the development;
(2) if syndication costs are included in the eligible
basis, a justification of the syndication costs for each cost
category by an attorney or accountant specializing in tax matters;
(3) from a syndicator or a financial consultant of the
applicant, an estimate of the amount of equity dollars expected to
be raised for the development in conjunction with the amount of
housing tax credits requested for allocation to the applicant,
including:
(A) pay-in schedules; and
(B) syndicator consulting fees and other
syndication costs;
(4) if rental assistance, an operating subsidy, or an
annuity is proposed for the development, any related contract or
other agreement securing those funds and an identification of:
(A) the source and annual amount of the funds;
(B) the number of units receiving the funds; and
(C) the term and expiration date of the contract
or other agreement;
(5) if the development is located within the
boundaries of a political subdivision with a zoning ordinance,
evidence in the form of a letter from the chief executive officer of
the political subdivision or from another local official with
jurisdiction over zoning matters that states that:
(A) the development is permitted under the
provisions of the ordinance that apply to the location of the
development; or
(B) the applicant is in the process of seeking
the appropriate zoning and has signed and provided to the political
subdivision a release agreeing to hold the political subdivision
and all other parties harmless in the event that the appropriate
zoning is denied;
(6) if an occupied development is proposed for
rehabilitation:
(A) an explanation of the process used to notify
and consult with the tenants in preparing the application;
(B) a relocation plan outlining:
(i) relocation requirements; and
(ii) a budget with an identified funding
source; and
(C) if applicable, evidence that the relocation
plan has been submitted to the appropriate local agency;
(7) a certification of the applicant's compliance with
appropriate state and federal laws, as required by other state law
or by the board; [and]
(8) any other information required by the board in the
qualified allocation plan; and
(9) evidence that the applicant has notified the
following entities with respect to the filing of the application:
(A) any neighborhood associations incorporated
under the laws of this state and containing the development;
(B) the presiding officer of the board of
trustees of the school district containing the development;
(C) the presiding officer of the governing body
of any municipality containing the development and all elected
members of that body;
(D) the presiding officer of the governing body
of the county containing the development and all elected members of
that body; and
(E) the state senator and state representative of
the district containing the development.
SECTION 9. Sections 2306.6710(b), (d), and (e), Government
Code, are amended to read as follows:
(b) If an application satisfies the threshold criteria, the
department shall score and rank the application using a point
system that:
(1) prioritizes in descending order criteria [based on
criteria that are adapted to regional market conditions and adopted
by the department, including criteria:
[(1)] regarding:
(A) financial feasibility of [the income levels
of tenants of] the development;
(B) quantifiable community participation with
respect to the development, evaluated on the basis of written
statements from:
(i) any neighborhood associations
incorporated under the laws of this state and containing the
development; and
(ii) the board of trustees of the school
district containing the development [the rent levels of the units];
(C) the income levels of tenants of the
development [period of guaranteed affordability for low income
tenants];
(D) the size and quality of the units [cost by
square foot of the development];
(E) the commitment of development funding by
local political subdivisions [size, quality, and amenities of the
units];
(F) input from local and state elected officials
[the services to be provided to tenants of the development];
(G) the rent levels of the units [commitment of
development funding by local political subdivisions that enables
additional units for individuals and families of very low income];
[and]
(H) the cost of the development by square foot
[level of community support for the application, evaluated on the
basis of written statements of support from local and state elected
officials representing constituents in areas that include the
location of the development]; and
(I) the services to be provided to tenants of the
development; [and]
(2) uses criteria imposing penalties on applicants or
affiliates who have requested extensions of department deadlines
relating to developments supported by housing tax credit
allocations made in the application round preceding the current
round; and
(3) provides appropriate incentives as determined
through the qualified allocation plan to reward applicants who
agree to equip the property that is the basis of the application
with energy-saving devices that meet the standards established by
the state energy conservation office.
(d) The department shall underwrite the applications ranked
under Subsection (b) beginning with the applications with the
highest scores in each region described by Section 2306.111(d) and
in each set-aside category described in the qualified allocation
plan. Based on application rankings, the department shall continue
to underwrite applications until the department has processed
enough applications satisfying the department's underwriting
criteria to enable the allocation of all available housing tax
credits according to regional allocation goals and set-aside
categories. To enable the board to establish an applications
waiting list under Section 2306.6711, the department shall
underwrite as many additional applications as the board considers
necessary to ensure that all available housing tax credits are
allocated within the period required by law. The department shall
underwrite an application to determine the financial feasibility of
the development and an appropriate level of housing tax credits. In
determining an appropriate level of housing tax credits, the
department shall consider whether the cost of the development
remains within acceptable cost parameters as established by
historical final cost certifications of all previous housing tax
credit allocations.
(e) In [adopting criteria for] scoring [and underwriting]
applications for purposes of housing tax credit allocations, the
department shall award [attach], consistent with Section 42,
Internal Revenue Code of 1986 (26 U.S.C. Section 42), preference
points to a development that [the most weight to criteria that]
will:
(1) when practicable and feasible based on documented,
committed, and available third-party funding sources, serve
[result in an allocation of housing tax credits for developments
serving] the lowest income tenants per housing tax credit, if the
development is to be located outside a qualified census tract; and
(2) produce for the longest economically feasible
period the greatest number of high quality units committed to
remaining affordable to any [qualified] tenants who are
income-eligible under the low income housing tax credit program
[for extended periods].
SECTION 10. Section 2306.6711(b), Government Code, is
amended to read as follows:
(b) Not later than the deadline specified in the qualified
allocation plan, the board shall issue commitments for available
housing tax credits based on the application evaluation process
provided by Section 2306.6710. The board may not allocate to an
applicant housing tax credits in any unnecessary amount, as
determined by the department's underwriting policy and by federal
law, and in any event may not allocate to the applicant housing tax
credits in an amount greater than $2.0 [$1.6] million in a single
application round.
SECTION 11. Section 2306.6717(b), Government Code, is
amended to read as follows:
(b) The department shall make available on the department's
website [provide] information regarding the low income housing tax
credit program, including notice regarding public hearings,
[board] meetings, [and] the opening and closing dates for
applications, submitted applications, and applications approved
for underwriting and recommended to the board, and shall provide
that information to:
(1) locally affected community groups;
(2) local and state elected officials;
(3) local housing departments;
(4) any appropriate [(2)] newspapers of general or
limited circulation that serve the community in which the
development is to be located;
(5) [(3)] nonprofit and for-profit organizations;
(6) [(4)] on-site property managers of occupied
developments that are the subject of applications for posting in
prominent locations in those developments; and
(7) [(5)] any other interested persons and [,
including] community groups that [, who] request the information.
SECTION 12. Sections 2306.6725 and 2306.6732, Government
Code, are repealed.
SECTION 13. The changes in law made by this Act relating to
the awarding of financial assistance administered by the Texas
Department of Housing and Community Affairs apply only to an
application for that assistance submitted on or after the effective
date of this Act.
SECTION 14. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2003.