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S.B. No. 264
AN ACT
relating to the continuation and functions of the Texas Department
of Housing and Community Affairs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2306.001, Government Code, is amended to
read as follows:
Sec. 2306.001. PURPOSES. The purposes of the department
are to:
(1) assist local governments in:
(A) providing essential public services for
their residents; and
(B) overcoming financial, social, and
environmental problems;
(2) provide for the housing needs of individuals and
families of low, very low, and extremely low income and families of
moderate income;
(3) contribute to the preservation, development, and
redevelopment of neighborhoods and communities, including
cooperation in the preservation of government-assisted housing
occupied by individuals and families of very low and extremely low
income;
(4) assist the governor and the legislature in
coordinating federal and state programs affecting local
government;
(5) inform state officials and the public of the needs
of local government; [and]
(6) serve as the lead agency for:
(A) addressing at the state level the problem of
homelessness in this state;
(B) coordinating interagency efforts to address
homelessness; and
(C) addressing at the state level and
coordinating interagency efforts to address any problem associated
with homelessness, including hunger; and[.]
(7) [(6)] serve as a source of information to the
public regarding all affordable housing resources and community
support services in the state.
SECTION 2. Subsection (b), Section 2306.021, Government
Code, is amended to read as follows:
(b) The department is composed of:
(1) the community affairs division;
(2) the housing finance division;
(3) the manufactured housing division; and
(4) [the community development division; and
[(5)] any other division created by the director as
permitted by [under] Section 2306.0521.
SECTION 3. Section 2306.022, Government Code, is amended to
read as follows:
Sec. 2306.022. APPLICATION OF SUNSET ACT. The Texas
Department of Housing and Community Affairs is subject to Chapter
325 (Texas Sunset Act). Unless continued in existence as provided
by that chapter, the department is abolished and this chapter
expires September 1, 2011 [2003].
SECTION 4. 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 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) the development's proximity to other low income
housing developments;
(7) the availability of adequate public facilities and
services;
(8) the anticipated impact on local school districts;
(9) zoning and other land use considerations; and
(10) any other topics that the board by rule
determines to be appropriate.
SECTION 5. Subsection (c), Section 2306.0721, Government
Code, is amended to read as follows:
(c) The plan must include:
(1) an estimate and analysis of the housing needs of
the following populations in each uniform state service region:
(A) individuals and families of moderate, low,
very low, and extremely low income;
(B) individuals with special needs; and
(C) homeless individuals;
(2) a proposal to use all available housing resources
to address the housing needs of the populations described by
Subdivision (1) by establishing funding levels for all
housing-related programs;
(3) an estimate of the number of federally assisted
housing units available for individuals and families of low and
very low income and individuals with special needs in each uniform
state service region;
(4) a description of state programs that govern the
use of all available housing resources;
(5) a resource allocation plan that targets all
available housing resources to individuals and families of low and
very low income and individuals with special needs in each uniform
state service region;
(6) a description of the department's efforts to
monitor and analyze the unused or underused federal resources of
other state agencies for housing-related services and services for
homeless individuals and the department's recommendations to
ensure the full use by the state of all available federal resources
for those services in each uniform state service region;
(7) strategies to provide housing for individuals and
families with special needs in each uniform state service region;
(8) a description of the department's efforts to
encourage in each uniform state service region the construction of
housing units that incorporate energy efficient construction and
appliances;
(9) an estimate and analysis of the housing supply in
each uniform state service region;
(10) an inventory of all publicly and, where possible,
privately funded housing resources, including public housing
authorities, housing finance corporations, community housing
development organizations, and community action agencies;
(11) strategies for meeting rural housing needs;
(12) a biennial action plan for colonias that:
(A) addresses current policy goals for colonia
programs, strategies to meet the policy goals, and the projected
outcomes with respect to the policy goals; and
(B) includes information on the demand for
contract-for-deed conversions, services from self-help centers,
consumer education, and other colonia resident services in counties
some part of which is within 150 miles of the international border
of this state;
(13) a summary of public comments received at a
hearing under this chapter or from another source that concern the
demand for colonia resident services described by Subdivision (12);
and
(14) any other housing-related information that the
state is required to include in the one-year action plan of the
consolidated plan submitted annually to the United States
Department of Housing and Urban Development.
SECTION 6. Subsection (a), Section 2306.0722, Government
Code, is amended to read as follows:
(a) Before preparing the annual low income housing report
under Section 2306.072 and the state low income housing plan under
Section 2306.0721, the department shall meet with regional planning
commissions created under Chapter 391, Local Government Code,
representatives of groups with an interest in low income housing,
nonprofit housing organizations, managers, owners, and developers
of affordable housing, local government officials, [and] residents
of low income housing, and members of the Colonia Resident Advisory
Committee. The department shall obtain the comments and
suggestions of the representatives, officials, [and] residents,
and members about the prioritization and allocation of the
department's resources in regard to housing.
SECTION 7. 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 8. Section 2306.111, Government Code, is amended by
adding Subsections (c-1), (c-2), (d-1), and (i) 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.
(d-1) Funds or credits are not required to be allocated
according to the regional allocation formula under Subsection (d)
if:
(1) the funds or credits are reserved for
contract-for-deed conversions or for set-asides mandated by state
or federal law; and
(2) each contract-for-deed allocation or set-aside
allocation equals not more than 10 percent of the total allocation
of funds or credits for the applicable program.
(i) The director shall designate an employee of the
department to act as the information officer and as a liaison with
the public regarding each application seeking an allocation of
housing funds described by this section.
SECTION 9. Subsections (d) through (g), Section 2306.111,
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 areas 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 areas 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 areas 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 areas 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 areas 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 areas 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 10. 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 11. Subchapter F, Chapter 2306, Government Code, is
amended by adding Section 2306.1114 to read as follows:
Sec. 2306.1114. NOTICE OF RECEIPT OF APPLICATION OR
PROPOSED APPLICATION. (a) Not later than the 14th day after the
date an application or a proposed application for housing funds
described by Section 2306.111 has been filed, the department shall
provide written notice of the filing of the application or proposed
application to the following persons:
(1) the United States representative who represents
the community containing the development described in the
application;
(2) members of the legislature who represent the
community containing the development described in the application;
(3) the presiding officer of the governing body of the
political subdivision containing the development described in the
application;
(4) any member of the governing body of a political
subdivision who represents the area containing the development
described in the application;
(5) the superintendent and the presiding officer of
the board of trustees of the school district containing the
development described in the application; and
(6) any neighborhood organizations on record with the
state or county in which the development described in the
application is to be located and whose boundaries contain the
proposed development site.
(b) The notice provided under Subsection (a) must include
the following information:
(1) the relevant dates affecting the application,
including:
(A) the date on which the application was filed;
(B) the date or dates on which any hearings on the
application will be held; and
(C) the date by which a decision on the
application will be made;
(2) a summary of relevant facts associated with the
development;
(3) a summary of any public benefits provided as a
result of the development, including rent subsidies and tenant
services; and
(4) the name and contact information of the employee
of the department designated by the director to act as the
information officer and liaison with the public regarding the
application.
SECTION 12. Section 2306.185, Government Code, is amended
by amending Subsections (a) and (e) and adding Subsection (h) to
read as follows:
(a) The department shall adopt policies and procedures to
ensure that, for a multifamily rental housing development funded
through loans, grants, or tax credits under this chapter, the owner
of the development:
(1) keeps the rents affordable for low income tenants
for the longest period that is economically feasible; and
(2) provides regular maintenance to keep the
development sanitary, decent, and safe and otherwise complies with
the requirements of Section 2306.186.
(e) Subsections (c) and (d) and Section 2306.269 apply only
to multifamily rental housing developments to which the department
is providing one or more of the following forms of assistance:
(1) a loan or grant in an amount greater than 33
percent of the market value of the development on the date the
recipient completed the construction [took legal possession] of the
development;
(2) a loan guarantee for a loan in an amount greater
than 33 percent of the market value of the development on the date
the recipient took legal title to the development; or
(3) a low income housing tax credit.
(h) The department shall monitor a development owner's
compliance with this section.
SECTION 13. Subchapter H, Chapter 2306, Government Code, is
amended by adding Section 2306.186 to read as follows:
Sec. 2306.186. MANDATORY DEPOSITS TO FUND NECESSARY
REPAIRS. (a) In this section:
(1) "Bank trustee" means a bank authorized to do
business in this state, with the power to act as trustee.
(2) "Department assistance" means any state or federal
assistance administered by or through the department, including low
income housing tax credits.
(3) "First lien lender" means a lender whose lien has
first priority.
(4) "Reserve account" means an individual account:
(A) created to fund any necessary repairs for a
multifamily rental housing development; and
(B) maintained by a first lien lender or bank
trustee.
(b) If the department is the first lien lender with respect
to the development, each owner who receives department assistance
for a multifamily rental housing development that contains 25 or
more rental units shall deposit annually into a reserve account:
(1) for the year 2004:
(A) not less than $150 per unit per year for units
one to five years old; and
(B) not less than $200 per unit per year for units
six or more years old; and
(2) for each year following the year 2004, the amounts
per unit per year as described by Subdivision (1).
(c) A land use restriction agreement or restrictive
covenant between the owner and the department must require the
owner to begin making annual deposits to the reserve account on the
date that occupancy of the multifamily rental housing development
stabilizes or the date that permanent financing for the development
is completely in place, whichever occurs later, and shall continue
making deposits until the earliest of the following dates:
(1) the date of any involuntary change in ownership of
the development;
(2) the date on which the owner suffers a total
casualty loss with respect to the development or the date on which
the development becomes functionally obsolete, if the development
cannot be or is not restored;
(3) the date on which the development is demolished;
(4) the date on which the development ceases to be used
as multifamily rental property; or
(5) the end of the affordability period specified by
the land use restriction agreement or restrictive covenant.
(d) With respect to multifamily rental developments, if the
establishment of a reserve fund for repairs has not been required by
the first lien lender, the development owner shall set aside the
repair reserve amount as a reserve for capital improvements. The
reserve must be established for each unit in the development,
regardless of the amount of rent charged for the unit.
(e) Beginning with the 11th year after the awarding of any
financial assistance for the development by the department, the
owner of a multifamily rental housing development shall contract
for a third-party physical needs assessment at appropriate
intervals that are consistent with lender requirements with respect
to the development. If the first lien lender does not require a
third-party physical needs assessment or if the department is the
first lien lender, the owner shall contract with a third party to
conduct a physical needs assessment at least once during each
five-year period beginning with the 11th year after the awarding of
any financial assistance for the development by the department.
The owner of the development shall submit to the department copies
of the most recent third-party physical needs assessment conducted
on the development, any response by the owner to the assessment, any
repairs made in response to the assessment, and information on any
necessary changes to the required reserve based on the assessment.
(f) The department may complete necessary repairs if the
owner fails to complete the repairs as required by Subsection (e).
Payment for those repairs must be made directly by the owner of the
development or through a reserve account established for the
development under this section.
(g) If notified of the development owner's failure to comply
with a local health, safety, or building code, the department may
enter on the property and complete any repairs necessary to correct
a violation of that code, as identified in the applicable violation
report, and may pay for those repairs through a reserve account
established for the development under this section.
(h) The duties of the owner of a multifamily rental housing
development under this section cease on the date of a voluntary
change in ownership of the development, but the subsequent owner of
the development is subject to the deposit, inspection, and
notification requirements of Subsections (b), (c), (d), and (e).
(i) The first lien lender shall maintain the reserve
account. In the event there is no longer a first lien lender, then
Subsections (b) and (d) no longer apply.
(j) The department shall adopt rules that:
(1) establish requirements and standards regarding:
(A) for first lien lenders and bank trustees:
(i) maintenance of reserve accounts and
reasonable costs of that maintenance;
(ii) asset management;
(iii) transfer of money in reserve accounts
to the department to fund necessary repairs; and
(iv) oversight of reserve accounts and the
provision of financial data and other information to the
department; and
(B) for owners, inspections of the multifamily
rental housing developments and identification of necessary
repairs, including requirements and standards regarding
construction, rehabilitation, and occupancy that may enable
quicker identification of those repairs;
(2) identify circumstances in which money in the
reserve accounts may:
(A) be used for expenses other than necessary
repairs, including property taxes or insurance; and
(B) fall below mandatory deposit levels without
resulting in department action;
(3) define the scope of department oversight of
reserve accounts and the repair process;
(4) provide the consequences of any failure to make a
required deposit, including a definition of good cause, if any, for
a failure to make a required deposit;
(5) specify or create processes and standards to be
used by the department to obtain repairs for developments;
(6) define for purposes of Subsection (c) the date on
which occupancy of a development is considered to have stabilized
and the date on which permanent financing is considered to be
completely in place; and
(7) provide for appointment of a bank trustee as
necessary under this section.
(k) The department shall assess an administrative penalty
on development owners who fail to contract for the third-party
physical needs assessment and make the identified repairs as
required by this section. The department may assess the
administrative penalty in the same manner as an administrative
penalty assessed under Section 2306.6023. The penalty is computed
by multiplying $200 by the number of dwelling units in the
development and must be paid to the department. The office of the
attorney general shall assist the department in the collection of
the penalty and the enforcement of this subsection.
(l) This section does not apply to a development for which
an owner is required to maintain a reserve account under any other
provision of federal or state law.
SECTION 14. Subsection (b), Section 2306.252, Government
Code, is amended to read as follows:
(b) The department, through the center, shall:
(1) provide educational material prepared in plain
language to housing advocates, housing sponsors, borrowers, and
tenants;
(2) provide technical assistance to nonprofit housing
sponsors;
(3) assist in the development of housing policy,
including the annual state low income housing plan and report and
the consolidated plan; and
(4) [maintain communication with local governments
and act as an advocate for local governments at the state and
federal levels;
[(5) assist local governments with advisory and
technical services;
[(6) provide financial aid to local governments and
combinations of local governments for programs that are authorized
to receive assistance;
[(7) provide information about and referrals for state
and federal programs and services that affect local governments;
[(8) administer, conduct, or jointly sponsor
educational and training programs for local government officials;
[(9) conduct research on problems of general concern
to local governments;
[(10) collect, publish, and distribute information
useful to local governments, including information on:
[(A) local government finances and employment;
[(B) housing;
[(C) population characteristics; and
[(D) land-use patterns;
[(11) encourage cooperation among local governments
as appropriate;
[(12) advise and inform the governor and the
legislature about the affairs of local governments and recommend
necessary action;
[(13) assist the governor in coordinating federal and
state activities affecting local governments;
[(14) provide appropriate information regarding:
[(A) state responsibilities for programs created
under the federal Economic Opportunity Act of 1964 (42 U.S.C.
Section 2701 et seq.);
[(B) programs assigned to the department under
the Omnibus Budget Reconciliation Act of 1981 (Pub. L. No. 97-35);
and
[(C) other federal acts creating economic
opportunity programs assigned to the department;
[(15) develop a consumer education program to educate
consumers on executory contract transactions for the conveyance of
real property used or to be used as the consumer's residence;
[(16) adopt rules that are necessary and proper to
carry out programs and responsibilities assigned by the legislature
or the governor;
[(17)] provide, in cooperation with the state energy
conservation office, the Texas [Natural Resource Conservation]
Commission on Environmental Quality, and other governmental
entities, information on the use of sustainable and energy
efficient housing construction products and assist local
governments and nonprofits in identifying information on
sustainable and energy efficient housing construction and energy
efficient resources and techniques[; and
[(18) perform other duties relating to local
governments that are assigned by the legislature or the governor].
SECTION 15. Subchapter P, Chapter 2306, Government Code, is
amended by adding Section 2306.359 to read as follows:
Sec. 2306.359. ISSUANCE OF PRIVATE ACTIVITY BONDS. (a) In
evaluating an application for an issuance of private activity
bonds, the department shall score and rank the application using a
point system based on criteria that are adopted by the department,
including criteria:
(1) regarding:
(A) the income levels of tenants of the
development, consistent with the funding priorities provided by
Section 1372.0321;
(B) the rent levels of the units;
(C) the level of community support for the
application;
(D) the period of guaranteed affordability for
low income tenants;
(E) the cost per unit of the development;
(F) the size, quality, and amenities of the
units;
(G) the services to be provided to tenants of the
development;
(H) the commitment of development funding by
local political subdivisions that enables additional units for
individuals and families of very low income; and
(I) other criteria as developed by the board; and
(2) imposing penalties on applicants who have
requested extensions of department deadlines relating to
developments supported by an issuance of private activity bonds
made in the application round preceding the current round.
(b) The department shall make available on its website
details of the scoring system used by the department to score
applications.
(c) The department shall underwrite the applications by
determining:
(1) that the general contractor's profit, overhead,
and general requirements are within the maximum limit published by
the department;
(2) that the developer fee for the proposed project
does not exceed the maximum amount allowed by the department; and
(3) if applicable, the amount of tax credits available
to the proposed development.
(d) In adopting criteria for underwriting applications
under this section, the department shall attach additional weight
to criteria that will determine the maximum amount that can be
awarded that will:
(1) result in an issuance of private activity bonds
for developments serving the lowest income tenants; and
(2) produce the greatest number of high-quality units
committed to remaining affordable to qualified tenants for extended
periods.
SECTION 16. Subsection (c), Section 2306.589, Government
Code, is amended to read as follows:
(c) The department may use money in the colonia set-aside
fund for specific activities that assist colonias, including:
(1) the operation and activities of the self-help
centers established under this subchapter;
(2) reimbursement of colonia resident advisory
committee members [and colonia initiatives advisory committee
members] for their reasonable expenses in the manner provided by
Chapter 2110 or the General Appropriations Act; and
(3) funding for the provision of water and sewer
service connections in accordance with Subsection (b).
SECTION 17. Subdivisions (5), (10), and (16), Subsection
(a), Section 2306.6702, Government Code, are amended to read as
follows:
(5) "At-risk development" means a development that:
(A) has received [receives] the benefit of a
subsidy in the form of a below-market interest rate loan, interest
rate reduction, rental subsidy, Section 8 housing assistance
payment, rental supplement payment, [or] rental assistance
payment, or equity incentive under the following federal laws, as
applicable:
(i) Sections 221(d)(3) and (5), National
Housing Act (12 U.S.C. Section 1715l);
(ii) Section 236, National Housing Act (12
U.S.C. Section 1715z-1);
(iii) Section 202, Housing Act of 1959 (12
U.S.C. Section 1701q);
(iv) Section 101, Housing and Urban
Development Act of 1965 (12 U.S.C. Section 1701s);
(v) the Section 8 Additional Assistance
Program for housing developments with HUD-Insured and HUD-Held
Mortgages administered by the United States Department of Housing
and Urban Development;
(vi) the Section 8 Housing Assistance
Program for the Disposition of HUD-Owned Projects administered by
the United States Department of Housing and Urban Development; [or]
(vii) Sections 514, 515, and 516, Housing
Act of 1949 (42 U.S.C. Sections 1484, 1485, and 1486); or
(viii) Section 42, Internal Revenue Code of
1986 (26 U.S.C. Section 42); and
(B) is subject to the following conditions:
(i) the stipulation to maintain
affordability in the contract granting the subsidy is nearing
expiration; or
(ii) the federally insured mortgage on the
development is eligible for prepayment or is nearing the end of its
term.
(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.
(16) "Unit" means any residential rental unit in a
development consisting of an accommodation, including a single room
used as an accommodation on a non-transient basis, that contains
[separate and] complete physical facilities and fixtures for
living, sleeping, eating, cooking, and sanitation.
SECTION 18. Section 2306.6703, Government Code, is amended
to read as follows:
Sec. 2306.6703. INELIGIBILITY FOR CONSIDERATION. (a) An
application is ineligible for consideration under the low income
housing tax credit program if:
(1) at the time of application or at any time during
the two-year period preceding the date the application round
begins, the applicant or a related party is or has been:
(A) a member of the board; or
(B) the director, a deputy director, the director
of housing programs, the director of compliance, the director of
underwriting, or the low income housing tax credit program manager
employed by the department; [or]
(2) the applicant proposes to replace in less than 15
years any private activity bond financing of the development
described by the application, unless:
(A) the applicant proposes to maintain for a
period of 30 years or more 100 percent of the development units
supported by [low income] housing tax credits as rent-restricted
and exclusively for occupancy by individuals and families earning
not more than 50 percent of the area median income, adjusted for
family size; and
(B) at least one-third of all the units in the
development are public housing units or Section 8 project-based
units;
(3) the applicant proposes to construct a new
development that is located one linear mile or less from a
development that:
(A) serves the same type of household as the new
development, regardless of whether the developments serve
families, elderly individuals, or another type of household;
(B) has received an allocation of housing tax
credits for new construction at any time during the three-year
period preceding the date the application round begins; and
(C) has not been withdrawn or terminated from the
low income housing tax credit program; or
(4) the development is located in a municipality or,
if located outside a municipality, a county that has more than twice
the state average of units per capita supported by housing tax
credits or private activity bonds, unless the applicant:
(A) has obtained prior approval of the
development from the governing body of the appropriate municipality
or county containing the development; and
(B) has included in the application a written
statement of support from that governing body referencing this
section and authorizing an allocation of housing tax credits for
the development.
(b) Subsection (a)(3) does not apply to a development:
(1) that is using:
(A) federal HOPE VI funds received through the
United States Department of Housing and Urban Development;
(B) locally approved funds received from a public
improvement district or a tax increment financing district;
(C) funds provided to the state under the
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.
Section 12701 et seq.); or
(D) funds provided to the state and participating
jurisdictions under the Housing and Community Development Act of
1974 (42 U.S.C. Section 5301 et seq.); or
(2) that is located in a county with a population of
less than one million.
SECTION 19. 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 organizations on record with the
state or county in which the development is to be located and whose
boundaries contain the proposed development site;
(2) the superintendent and 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 20. 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 organizations on record
with the state or county in which the development is to be located
and whose boundaries contain the proposed development site;
(B) the superintendent and 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 21. Subchapter DD, Chapter 2306, Government Code,
is amended by adding Section 2306.67055 to read as follows:
Sec. 2306.67055. MARKET ANALYSIS. (a) A market analysis
submitted in conjunction with an application for housing tax
credits must:
(1) be prepared by a market analyst approved by the
department; and
(2) include an assessment of other developments that
are supported by housing tax credits within the market area.
(b) The department, through the qualified allocation plan,
shall develop:
(1) a process for approving market analysts; and
(2) a methodology for determining the market area to
be examined in a market analysis.
SECTION 22. Section 2306.6710, Government Code, is amended
by amending Subsections (b), (d), and (e) and adding Subsections
(f) and (g) 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 based on the supporting financial
data required in the application that will include a project
underwriting pro forma from the permanent or construction lender;
(B) quantifiable community participation with
respect to the development, evaluated on the basis of written
statements from any neighborhood organizations on record with the
state or county in which the development is to be located and whose
boundaries contain the proposed development site [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) the level of community support for the
application, evaluated on the basis of written statements from
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 or a developer or principal of the applicant that has been
removed by the lender, equity provider, or limited partners for its
failure to perform its obligations under the loan documents or
limited partnership agreement.
(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 evaluate the cost of the development based on
acceptable cost parameters as adjusted for inflation and as
established by historical final cost certifications of all previous
housing tax credit allocations for:
(1) the county in which the development is to be
located;
(2) if certifications are unavailable under
Subdivision (1), the metropolitan statistical area in which the
development is to be located; or
(3) if certifications are unavailable under
Subdivisions (1) and (2), the uniform state service region in which
the development is to be located.
(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].
(f) In evaluating the level of community support for an
application under Subsection (b)(1)(F), the department shall
award:
(1) positive points for positive written statements
received;
(2) negative points for negative written statements
received; and
(3) zero points for neutral statements received.
(g) In awarding points under Subsection (f), the department
shall give equal weight to each written statement received.
SECTION 23. Section 2306.6711, Government Code, is amended
by amending Subsection (b) and adding Subsection (f) 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 [$1.6] million in a single
application round.
(f) The board may allocate housing tax credits to more than
one development in a single community, as defined by department
rule, in the same calendar year only if the developments are or will
be located more than one linear mile apart. This subsection applies
only to communities contained within counties with populations
exceeding one million.
SECTION 24. Subsection (b), Section 2306.6716, Government
Code, is amended to read as follows:
(b) The department shall publish [not later than July 1 of]
each year an updated [a] schedule of application fees that
specifies the amount to be charged at each stage of the application
process.
SECTION 25. Subsection (b), Section 2306.6717, 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 26. Subsection (b), Section 2306.6725, Government
Code, is amended to read as follows:
(b) The department shall provide appropriate incentives as
determined through the qualified allocation plan to reward
applicants who agree to:
(1) 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 or to provide
to a qualified nonprofit organization or tenant organization a
right of first refusal to purchase the property at the minimum price
provided in, and in accordance with the requirements of, Section
42(i)(7), Internal Revenue Code of 1986 (26 U.S.C. Section
42(i)(7)); and
(2) locate the development in a census tract in which
there are no other existing developments supported by housing tax
credits.
SECTION 27. Section 1372.0231, Government Code, is amended
by amending Subsection (b) and adding Subsection (h) to read as
follows:
(b) With respect to the amount of the state ceiling set
aside under Subsection (a)(1), the board shall grant reservations
at the direction of the Texas Department of Housing and Community
Affairs as provided by Section 2306.359 and[:
[(1) in the order determined by the board by lot; and
[(2)] in a manner that ensures that:
(1) [(A)] the set-aside amount is used for proposed
projects that are located throughout the state; and
(2) [(B)] not more than 50 percent of the set-aside
amount is used for proposed projects that are located in qualified
census tracts as defined by Section 143(j), Internal Revenue Code
of 1986.
(h) Allocations by the board at the direction of the Texas
Department of Housing and Community Affairs under Subsection (b)
are subject to review and approval by the board as provided by
Section 1231.041.
SECTION 28. Section 1372.0321, Government Code, as added by
Chapters 1367 and 1420, Acts of the 77th Legislature, Regular
Session, 2001, is reenacted and amended to read as follows:
Sec. 1372.0321. PRIORITIES FOR RESERVATIONS AMONG ISSUERS
OF QUALIFIED RESIDENTIAL RENTAL PROJECT ISSUES. (a) In granting
reservations to issuers of qualified residential rental project
issues, the board shall[:
[(1)] give first priority to:
(1) [(A)] projects in which:
(A) 50 [100] percent of the residential units in
the project [projects] are:
(i) under the restriction that the maximum
allowable rents are an amount equal to 30 percent of 50 percent of
the area median family income minus an allowance for utility costs
authorized under the federal low-income housing tax credit program;
and
(ii) reserved for families and individuals
earning not more than 50 percent of the area median income; and
(B) the remaining 50 percent of the residential
units in the project are:
(i) under the restriction that the maximum
allowable rents are an amount equal to 30 percent of 60 percent of
the area median family income minus an allowance for utility costs
authorized under the federal low-income housing tax credit program;
and
(ii) reserved for families and individuals
earning not more than 60 percent of the area median income;
(2) projects in which:
(A) 15 percent of the residential units in the
project are:
(i) under the restriction that the maximum
allowable rents are an amount equal to 30 percent of 30 percent of
the area median family income minus an allowance for utility costs
authorized under the federal low-income housing tax credit program;
and
(ii) reserved for families and individuals
earning not more than 30 percent of the area median income; and
(B) the remaining 85 percent of the residential
units in the project are:
(i) under the restriction that the maximum
allowable rents are an amount equal to 30 percent of 60 percent of
the area median family income minus an allowance for utility costs
authorized under the federal low-income housing tax credit program;
and
(ii) reserved for families and individuals
earning not more than 60 percent of the area median income;
(3) projects:
(A) in which 100 percent of the residential units
in the project are:
(i) under the restriction that the maximum
allowable rents are an amount equal to 30 percent of 60 percent of
the area median family income minus an allowance for utility costs
authorized under the federal low-income housing tax credit program;
and
(ii) reserved for families and individuals
earning not more than 60 percent of the area median income; and
(B) which are located in a census tract in which
the median income, based on the most recent information published
by the United States Bureau of the Census, is higher than the median
income for the county, metropolitan statistical area, or primary
metropolitan statistical area in which the census tract is located
as established by the United States Department of Housing and Urban
Development; or
(4) [(B)] on or after June 1, projects that are
located in counties, metropolitan statistical areas, or primary
metropolitan statistical areas with area median family incomes at
or below the statewide median family income established by the
United States Department of Housing and Urban Development.
(a-1) In granting reservations to issuers of qualified
residential rental project issues, the board shall[;
[(2)] give second priority to projects in which 100
percent of the residential units in the project [projects] are:
(1) under the restriction that the maximum allowable
rents are an amount equal to 30 percent of 60 percent of the area
median family income minus an allowance for utility costs
authorized under the federal low-income housing tax credit program;
and
(2) reserved for families and individuals earning not
more than 60 percent of the area median income.
(a-2) In granting reservations to issuers of qualified
residential rental project issues, the board shall[; and
[(3)] give third priority to any other qualified
residential rental project.
(b) The board may not reserve a portion of the state ceiling
for a first or second priority project described by this section
[Subsection (a)] unless the board receives evidence that an
application has been filed with the Texas Department of Housing and
Community Affairs for the low-income housing tax credit that is
available for multifamily transactions that are at least 51 percent
financed by tax-exempt private activity bonds.
SECTION 29. (a) Except as otherwise provided by this
section, 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.
(b) The Texas Department of Housing and Community Affairs
shall adopt the rules required by Section 2306.186, Government
Code, as added by this Act, not later than December 1, 2003.
(c) The change in law made by Section 2306.186, Government
Code, as added by this Act, applies only to multifamily rental
housing developments that receive assistance from the Texas
Department of Housing and Community Affairs on or after January 1,
2004.
(d) The change in law made by this Act in amending Chapter
1372, Government Code, applies only to an application for an amount
of the state ceiling set aside for issuers of qualified residential
rental project bonds in a year beginning on or after January 1,
2004. An application for an amount of the state ceiling set aside
for issuers of qualified residential rental project bonds in 2003
is governed by the law in effect immediately before the effective
date of this Act, and the former law is continued in effect for that
purpose.
SECTION 30. (a) The Senate Committee on Intergovernmental
Relations and the House Urban Affairs Committee jointly shall
investigate whether subdividing uniform state service regions into
urban/exurban areas and rural areas would impact the provision of
state and federal financial assistance to meet the housing needs of
rural areas.
(b) Not later than January 1, 2005, the Senate Committee on
Intergovernmental Relations and the House Urban Affairs Committee
shall submit a report giving details of the investigation's
findings to the lieutenant governor and the speaker of the house of
representatives. The findings of the investigation must include:
(1) a proposed definition for exurban areas; and
(2) an assessment of the housing needs of exurban
areas and recommended solutions to address those needs.
SECTION 31. The following provisions of the Government Code
are repealed:
(1) Subsection (d), Section 2306.072, and Subsection
(g), Section 2306.185;
(2) Section 2306.590, as added by Chapter 1367, Acts
of the 77th Legislature, Regular Session, 2001; and
(3) Sections 2306.591 and 2306.6732.
SECTION 32. This Act takes effect September 1, 2003.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 264 passed the Senate on
April 1, 2003, by a viva-voce vote; May 30, 2003, Senate refused to
concur in House amendments and requested appointment of Conference
Committee; May 30, 2003, House granted request of the Senate;
June 1, 2003, Senate adopted Conference Committee Report by a
viva-voce vote.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 264 passed the House, with
amendments, on May 25, 2003, by a non-record vote; May 30, 2003,
House granted request of the Senate for appointment of Conference
Committee; June 1, 2003, House adopted Conference Committee Report
by a non-record vote.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor