79R11374 QS-F
By: Talton, Wong, Edwards, Dawson, Bailey, H.B. No. 1167
et al.
Substitute the following for H.B. No. 1167:
By: Menendez C.S.H.B. No. 1167
A BILL TO BE ENTITLED
AN ACT
relating to 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 housing [public]
services for Texans of modest income [their residents]; and
(B) overcoming financial, social, and
environmental problems as they relate to community housing needs;
(2) assist Texans in achieving an improved quality of
life through the development of better communities by providing the
financing necessary for housing for [provide for the housing needs
of] individuals and families of modest income while acknowledging
the importance of preserving the existing character of established
neighborhoods [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
assisting [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 housing programs [affecting local
government];
(5) inform state officials and the public of the
housing needs of the state [local government];
(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) serve as a source of information to the public
regarding state [all] affordable housing resources available to
local communities [and community support services in the state].
SECTION 2. Section 2306.002, Government Code, is amended to
read as follows:
Sec. 2306.002. POLICY; RULES. (a) The legislature finds
that:
(1) every resident of this state should have a decent,
safe, and affordable living environment;
(2) government at all levels should be involved in
assisting individuals and families of low income in obtaining a
decent, safe, and affordable living environment; [and]
(3) the development and diversification of the
economy, the elimination of unemployment or underemployment, and
the development or expansion of commerce in this state should be
encouraged;
(4) there exists within all regions of this state a
shortage of sanitary and safe residential housing at sale or rental
prices that individuals and families of low income and families of
moderate income can afford;
(5) the shortage described by Subdivision (4) has
contributed to and will contribute to the creation and persistence
of substandard living conditions that are inimical to the health,
welfare, and prosperity of the communities of all regions of this
state and the residents of those communities; and
(6) the minimization of administrative costs and
requirements and the simplification of the financing system will
maximize the available resources for affordable housing.
(b) The highest priority of the department is to provide
assistance to enable individuals and families of low and very low
income to [who are not assisted by private enterprise or other
governmental programs so that they may] obtain affordable housing
or other services and programs offered by the department.
(c) In accordance with its purposes and goals under this
chapter, the department may not approve, adopt, or otherwise
publish a rule that:
(1) establishes standards or parameters that in any
manner exceed or deviate from any applicable federal program
requirements with regard to state administration of a federal
housing program; or
(2) imposes, or has the effect of imposing, on local
governments or program applicants direct compliance requirements
or costs that are not expressly required by federal or state law.
(d) Subject to Subsection (c), the department may adopt
rules necessary to fulfill the purposes of the department.
SECTION 3. Section 2306.004, Government Code, is amended by
amending Subdivisions (4) and (14) and adding Subdivisions (6-a),
(12-a), (12-b), (12-c), (12-d), (23-a), (23-b), (28-a), (28-b), and
(35) to read as follows:
(4) "Department" means the Texas Department of Housing
and Community Affairs or any successor agency.
(6-a) "Economic submarket" means a group of borrowers
who have common home mortgage loan market eligibility
characteristics, including income level, credit history or credit
score, and employment characteristics, that are similar to Standard
and Poor's credit underwriting criteria.
(12-a) "Forgivable loan" means a loan that a housing
sponsor is not required to repay if certain conditions are met that
the housing sponsor and the lender agreed on at the time of loan
origination.
(12-b) "Geographic submarket" means a geographic
region in the state, including a county, census tract, or
municipality, that shares similar levels of access to home mortgage
credit from the private home mortgage lending industry, as
determined by the department based on home mortgage lending data
published by federal and state banking regulatory agencies.
(12-c) "Grant" means an award of financial assistance
that is in the form of money from the department to a housing
sponsor for a specific purpose and that is not required to be
repaid. For purposes of this chapter, a grant does not include a
forgivable loan or other loan or an allocation of low income housing
tax credits.
(12-d) "Historically underserved urban area" means an
urban area described by Section 2306.1116.
(14) "Housing sponsor" means[:
[(A)] an individual, [including an individual or
family of low and very low income or family of moderate income,]
joint venture, partnership, limited partnership, trust, firm,
corporation, limited liability company, other form of business
organization, or cooperative that is approved by the department as
qualified to own, construct, acquire, rehabilitate, operate,
manage, or maintain a housing development, subject to the
regulatory powers of the department and other terms and conditions
in this chapter[; or
[(B) in an economically depressed or blighted
area, or in a federally assisted new community located within a
home-rule municipality, the term may include an individual or
family whose income exceeds the moderate income level if at least 90
percent of the total mortgage amount available under a mortgage
revenue bond issue is designated for individuals and families of
low income or families of moderate income].
(23-a) "Neighborhood association" means an
organization that is composed of persons living near one another
within the organization's defined boundaries for the neighborhood
and that has a primary purpose of working to maintain or improve the
general welfare of the neighborhood. A neighborhood association
includes a homeowners' association, a tenants' association,
including a residents' council, or a property owners' association.
A neighborhood association does not include:
(A) a broader based community organization;
(B) an organization composed of only board
members of the organization;
(C) a chamber of commerce;
(D) a community development corporation;
(E) a school-related organization;
(F) the Lions, Rotary, and Kiwanis Clubs and
similar civic organizations;
(G) Habitat for Humanity;
(H) Boys and Girls Clubs;
(I) charities;
(J) public housing authorities; or
(K) any governmental entity.
(23-b) "Person with a disability" means:
(A) a person who has a physical, mental, or
emotional impairment that:
(i) is expected to be of long, continued,
and indefinite duration;
(ii) substantially impedes the person's
ability to live independently; and
(iii) is of such a nature that the
disability could be improved by more suitable housing conditions;
(B) a person who has a developmental disability,
as defined by the Developmental Disabilities Assistance and Bill of
Rights Act of 2000 (42 U.S.C. Section 15001 et seq.); or
(C) a person with disabilities, as defined by 24
C.F.R. Section 5.403.
(28-a) "Rural area" means an area that is located:
(A) outside the boundaries of a primary
metropolitan statistical area or a metropolitan statistical area;
(B) within the boundaries of a primary
metropolitan statistical area or a metropolitan statistical area,
if the statistical area has a population of 25,000 or less and does
not share a boundary with an urban area; or
(C) in an area that is eligible for funding by the
Texas Rural Development Office of the United States Department of
Agriculture.
(28-b) "Rural development" means a development or
proposed development that is located in a rural area.
(35) "Urban area" means the area that is located
within the boundaries of a primary metropolitan statistical area or
a metropolitan statistical area other than an area described by
Subdivision (28-a)(B) or (C).
SECTION 4. Section 2306.008(b), Government Code, is amended
to read as follows:
(b) The department shall support the preservation of
affordable housing under this chapter [section] by:
(1) making low interest financing and grants available
to private for-profit and nonprofit buyers who seek to acquire,
preserve, and rehabilitate affordable housing; and
(2) prioritizing available funding and financing
resources for affordable housing preservation activities.
SECTION 5. 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, 2009 [2011].
SECTION 6. Sections 2306.027 and 2306.028, Government Code,
are amended to read as follows:
Sec. 2306.027. ELIGIBILITY. (a) The governor shall
appoint to the board public members who have a demonstrated
interest in issues related to housing and community support
services. A person appointed to the board must be a registered
voter in the state and may not hold another public office. The
governor shall endeavor to appoint to the board at least one person
with experience as a member or leader of a neighborhood
association.
(b) Appointments to the board shall be made without regard
to the race, color, disability, sex, religion, age, or national
origin of the appointees and shall be made in a manner that produces
representation on the board of the different geographical regions
of this state. The governor shall endeavor to appoint
[Appointments] to the board persons who [must broadly] reflect the
geographic, economic, cultural, and social diversity of the state,
including ethnic minorities, persons with disabilities, and women.
(c) A person may not be a member of the board if the person
or the person's spouse:
(1) is employed by or participates in the management
of a business entity or other organization regulated by or
receiving money from the department;
(2) owns or controls, directly or indirectly, any
[more than a 10 percent] interest in a business entity or other
organization regulated by or receiving money from the department;
or
(3) uses or receives any [a substantial] amount of
tangible goods, services, or money from the department other than
compensation or reimbursement authorized by law for board
membership, attendance, or expenses.
(d) Each board member shall publicly disclose, and
periodically update, any ownership or other interest or involvement
with a multifamily development or low income housing tax credit
development, regardless of whether the development is located in
this state or in another state.
Sec. 2306.028. TRAINING. (a) A person who is appointed to
and qualifies for office as a member of the board may not vote,
deliberate, or be counted as a member in attendance at a meeting of
the board until the person completes a department training program
and an industry training program, if one is available at no cost to
the department, that each comply [complies] with this section.
(b) The department training program must provide the person
with information regarding:
(1) the legislation that created the department and
the board;
(2) the programs operated by the department;
(3) the role and functions of the department and the
board, including the role and functions of the department and the
board with respect to the administration of the appeals and
alternative dispute resolution processes under this chapter;
(4) the rules of the department, with an emphasis on
the rules that relate to disciplinary and investigatory authority;
(5) the current budget for the department;
(6) the results of the most recent formal audit of the
department;
(7) the requirements of:
(A) the open meetings law, Chapter 551;
(B) the public information law, Chapter 552;
(C) the administrative procedure law, Chapter
2001; and
(D) other laws relating to public officials,
including conflict-of-interest laws;
(8) the requirements of:
(A) state and federal fair housing laws,
including Chapter 301, Property Code, Title VIII of the Civil
Rights Act of 1968 (42 U.S.C. Section 3601 et seq.), and the Fair
Housing Amendments Act of 1988 (42 U.S.C. Section 3601 et seq.);
(B) the Civil Rights Act of 1964 (42 U.S.C.
Section 2000a et seq.);
(C) the Americans with Disabilities Act of 1990
(42 U.S.C. Section 12101 et seq.); and
(D) the Rehabilitation Act of 1973 (29 U.S.C.
Section 701 et seq.); and
(9) any applicable ethics policies adopted by the
department or the Texas Ethics Commission.
(b-1) The industry training program must be presented by an
organization that regularly conducts seminars or training in the
field of banking, real estate, housing development, or housing
construction and must provide information regarding the single
family and multifamily bond programs and the federal housing
programs administered by the department. If the department is
unable to provide an industry training program to a specific person
at no cost to the department, the industry training program
requirement is deferred for that person only until a program is
available at no cost to the department.
(c) A person appointed to the board is entitled to
reimbursement, as provided by the General Appropriations Act, for
the travel expenses incurred in attending a [the] training program
regardless of whether the attendance at the program occurs before
or after the person qualifies for office.
SECTION 7. Sections 2306.032(b) and (d), Government Code,
are amended to read as follows:
(b) The board shall keep complete minutes of board meetings.
The accounts, minutes, and other records, including meeting
transcripts and transcript tapes, shall be maintained in their
entirety by the department. The board shall maintain printed and
electronic copies of the verbatim transcription of previous board
meetings and make those copies available to the public on request.
(d) The materials described by Subsection (c), if relevant
to an award decision, must be made available to the public as
required by Subsection (c) not later than the seventh day before the
date of the meeting. Any other materials described by Subsection
(c) must be made available to the public as required by Subsection
(c) not later than the third day before the date of the meeting. The
board may not consider at the meeting any material that is not made
available to the public by the date required by this subsection.
SECTION 8. Section 2306.0321(a), Government Code, is
amended to read as follows:
(a) The board shall adopt rules outlining a formal process
for appealing in a timely and meaningful manner board and
department decisions, including, in accordance with Section
2306.082, the use of an alternative dispute resolution process.
SECTION 9. Section 2306.036(b), Government Code, is amended
to read as follows:
(b) The [After the election of a governor who did not
approve the director's employment under Subsection (a), that]
governor may remove the director and require the board to employ a
new director in accordance with Subsection (a). [The governor must
act under this subsection before the 90th day after the date the
governor takes office.]
SECTION 10. Section 2306.039(b), Government Code, is
amended to read as follows:
(b) Chapters 551 and 552 do [This section does] not apply to
the personal or business financial information, including social
security numbers, taxpayer identification numbers, or bank account
numbers, submitted by an individual or family for a loan, grant, or
other housing assistance under a program administered by the
department or the Texas State Affordable Housing Corporation or
from bonds issued by the department, except that the department and
the corporation are permitted to disclose information about any
applicant in a form that does not reveal the identity of the
individual or family for purposes of determining eligibility for
programs and in preparing reports required under this chapter.
SECTION 11. Section 2306.070, Government Code, is amended
to read as follows:
Sec. 2306.070. BUDGET. (a) In preparing the department's
legislative appropriations request, the department shall also
prepare:
(1) a report detailing the fees received, on a cash
basis, for each activity administered by the department during each
of the three preceding years;
(2) an operating budget for the housing finance
division; and
(3) an explanation of any projected increase or
decrease of three percent or more in fees estimated for the
operating budget as compared to the fees received in the most recent
budget year.
(b) The department shall submit the report, operating
budget, and explanation to the Legislative Budget Board, the Senate
Finance Committee, and the House Appropriations Committee.
SECTION 12. Section 2306.072(c), Government Code, is
amended to read as follows:
(c) The report must include:
(1) a complete operating and financial statement of
the department;
(2) a comprehensive statement of the activities of the
department during the preceding year to address the needs
identified in the state low income housing plan prepared as
required by Section 2306.0721[, including:
[(A) a statistical and narrative analysis of the
department's performance in addressing the housing needs of
individuals and families of low and very low income;
[(B) the ethnic and racial composition of
individuals and families applying for and receiving assistance from
each housing-related program operated by the department; and
[(C) the department's progress in meeting the
goals established in the previous housing plan;
[(3) an explanation of the efforts made by the
department to ensure the participation of individuals of low income
and their community-based institutions in department programs that
affect them;
[(4) a statement of the evidence that the department
has made an affirmative effort to ensure the involvement of
individuals of low income and their community-based institutions in
the allocation of funds and the planning process;
[(5) a statistical analysis, delineated according to
each ethnic and racial group served by the department, that
indicates the progress made by the department in implementing the
state low income housing plan in each of the uniform state service
regions;
[(6) an analysis, based on information provided by the
fair housing sponsor reports required under Section 2306.0724 and
other available data, of fair housing opportunities in each housing
development that receives financial assistance from the department
that includes the following information for each housing
development that contains 20 or more living units:
[(A) the street address and municipality or
county in which the property is located;
[(B) the telephone number of the property
management or leasing agent;
[(C) the total number of units, reported by
bedroom size;
[(D) the total number of units, reported by
bedroom size, designed for individuals who are physically
challenged or who have special needs and the number of these
individuals served annually;
[(E) the rent for each type of rental unit,
reported by bedroom size;
[(F) the race or ethnic makeup of each project;
[(G) the number of units occupied by individuals
receiving government-supported housing assistance and the type of
assistance received;
[(H) the number of units occupied by individuals
and families of extremely low income, very low income, low income,
moderate income, and other levels of income;
[(I) a statement as to whether the department has
been notified of a violation of the fair housing law that has been
filed with the United States Department of Housing and Urban
Development, the Commission on Human Rights, or the United States
Department of Justice; and
[(J) a statement as to whether the development
has any instances of material noncompliance with bond indentures or
deed restrictions discovered through the normal monitoring
activities and procedures that include meeting occupancy
requirements or rent restrictions imposed by deed restriction or
financing agreements]; and
(3) [(7)] a report on the geographic distribution of
low income housing tax credits, the amount of unused low income
housing tax credits, and the amount of low income housing tax
credits received from the federal pool of unused funds from other
states[; and
[(8) a statistical analysis, based on information
provided by the fair housing sponsor reports required by Section
2306.0724 and other available data, of average rents reported by
county].
SECTION 13. Section 2306.0721(c), 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 amount of funds and low income
housing tax credits allocated to the urban and rural areas of each
uniform state service region in the preceding year for each federal
or state housing or community service program [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 the [rural] housing needs
of rural and historically underserved urban areas;
(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);
(14) the formula for allocating housing resources
described by Section 2306.111 and the allocation targets
established under the formula; and
(15) [(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 14. Section 2306.0722, Government Code, is amended
to read as follows:
Sec. 2306.0722. PREPARATION OF PLAN AND REPORT. (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, 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, residents, and
members about the prioritization and allocation of the department's
resources in regard to housing.
(b) In preparing the annual report under Section 2306.072
and the state low income housing plan under Section 2306.0721, the
director shall:
(1) coordinate local, state, and federal housing
resources, including tax exempt housing bond financing and low
income housing tax credits;
(2) set priorities for the available housing resources
to assist [help] the neediest individuals consistent with the
requirements of this chapter;
(3) evaluate the success of publicly financed
[supported] housing programs;
(4) survey and identify the unmet housing needs of
individuals the department is required to assist;
(5) ensure that housing programs benefit an individual
without regard to the individual's race, ethnicity, sex, or
national origin;
(6) develop housing opportunities for individuals and
families of low and very low income and individuals with special
housing needs;
(7) develop housing programs through an open, fair,
and public process;
(8) set priorities for assistance in a manner that is
appropriate and consistent with the housing needs of the
populations described by Section 2306.0721(c)(1);
(9) incorporate recommendations that are consistent
with the consolidated plan submitted annually by the state to the
United States Department of Housing and Urban Development;
(10) identify the organizations and individuals
consulted by the department in preparing the annual report and
state low income housing plan and summarize and incorporate
comments and suggestions provided under Subsection (a) as the board
determines to be appropriate;
(11) develop a plan to respond to changes in federal
funding and programs for the provision of affordable housing;
(12) use the following standardized categories to
describe the income of program applicants and beneficiaries:
(A) 0 to 30 percent of area median income
adjusted for family size;
(B) more than 30 to 60 percent of area median
income adjusted for family size;
(C) more than 60 to 80 percent of area median
income adjusted for family size;
(D) more than 80 to 115 percent of area median
income adjusted for family size; or
(E) more than 115 percent of area median income
adjusted for family size;
(13) use the most recent census data combined with
existing data from local housing and community service providers in
the state, including public housing authorities, housing finance
corporations, community housing development organizations, and
community action agencies; and
(14) provide the needs assessment information
compiled for the report and plan to the Texas State Affordable
Housing Corporation.
SECTION 15. Sections 2306.081(a) and (b), Government Code,
are amended to read as follows:
(a) The department, through the division with
responsibility for compliance matters, shall periodically monitor
each project for compliance with all applicable requirements [the
entire construction phase associated with any project] under this
chapter. The monitoring level for each project must be based on the
amount of financial risk directly related to the applicable
lienhold interest of the department in [associated with] the
project or the minimum level of any federally required compliance
review, unless the department determines based on good cause that
there is a reasonable justification for a higher level of
monitoring for the project. Except for the affordable housing
disposition properties monitored under the memorandum of
understanding between the department and the Federal Deposit
Insurance Corporation, the cost of compliance monitoring for each
project for 2006 may not exceed $25 per monitored unit. For years
after 2006, the annual compliance fee may be increased to more than
$25 per monitored unit only as necessary to adjust for inflation as
determined by the consumer price index published by the United
States Department of Labor.
(b) Unless the department determines based on good cause
that there is a reasonable justification for a higher level of
monitoring for the project, during [After completion of] a
project's construction phase, the department shall monitor the
construction [periodically review the performance] of the project
only through the periodic review of the construction inspection
reports submitted by the project architect. The department shall
accept the certificate of substantial completion from the project
architect as confirmation of the project's [to confirm the accuracy
of the department's initial] compliance [evaluation] during the
construction phase.
SECTION 16. Section 2306.082, Government Code, is amended
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 timely 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. The department's procedures must require that any
adverse decision, other than a decision relating to an allocation
of low income housing tax credits under Subchapter DD, be binding on
the department.
(c) The department shall designate a trained person to:
(1) coordinate the implementation of the procedures
[policy adopted] under Subsection (a);
(2) serve as a resource for any training needed to
implement those [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 17. Section 2306.093, Government Code, is amended
to read as follows:
Sec. 2306.093. HOUSING ASSISTANCE GOAL. In administering
the programs under this subchapter, the department [By action of
the board the community affairs division] shall have a goal to apply
a minimum of 25 percent of the community affairs division's total
housing-related funds toward housing assistance for individuals
and families of very low income.
SECTION 18. Section 2306.111, Government Code, is amended
by amending Subsections (b), (d), (e), and (f) and adding
Subsections (c-3) and (d-2)-(d-7) to read as follows:
(b) The department [housing finance division] shall adopt a
goal to apply an aggregate minimum of 25 percent of the housing
finance division's total housing funds toward housing assistance
for individuals and families of extremely low and very low income if
it is possible to obtain from other governmental sources the rental
assistance operating subsidies that are necessary to meet that
goal.
(c-3) The department by rule shall set aside five percent of
the funds available under Subsection (c) for the benefit of persons
with a disability who live in non-participating rural areas that do
not qualify to receive funds under the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. Section 12701 et seq.) directly
from the United States Department of Housing and Urban Development.
Subject to Subsection (c-2), the department shall annually use $10
million of the funds available under Subsection (c) for multifamily
housing development construction or rehabilitation in an
application cycle that is open to all applicants eligible under
Subsection (c-1). If the department does not receive a sufficient
number of financially feasible applications for housing for persons
with a disability or for multifamily housing development
construction or rehabilitation during the first 120 days of the
application cycle, the funds shall be made available for other
purposes authorized under the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. Section 12701 et seq.).
(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 areas, historically underserved urban [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 areas, historically underserved urban [urban/exurban]
areas, if applicable, 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. For
purposes of the formula, in determining the availability of housing
resources with respect to the department's multifamily housing
development construction or rehabilitation programs, the
department shall consider the dollar amount of multifamily tax
exempt bonds, HOME funds used for multifamily housing development
construction or rehabilitation, and financing provided by or
through any governmental entity for construction or rehabilitation
of multifamily housing developments that are restricted to
individuals and families who earn 60 percent or less of the area
median income as adjusted for family size. The department may not
consider financing involved in the transfer of ownership of an
existing development. 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 areas, historically
underserved urban [urban/exurban] areas, if applicable, and rural
areas in other uniform state service regions based on identified
need and financial feasibility.
(d-2) Notwithstanding Subsection (d), if the department
determines that there is less than $5 million in housing trust funds
available in a calendar year to allocate according to Sections
2306.201-2306.206, the department may allocate the housing trust
funds among the uniform state service regions without dividing the
funds between urban and rural areas. For each uniform state service
region, the department must make the first award of funds under this
subsection to the applicant with the highest scoring rural
application.
(d-3) In administering the federal low income housing tax
credit program under Subchapter DD, the department shall further
subdivide the urban allocation in any uniform state service region
containing a historically underserved urban area based on the ratio
in population between the total number of historically underserved
urban areas within an urban area and the population of the urban
area as a whole.
(d-4) Before the application of the regional allocation
formula for calendar years 2006 and 2007, the department shall
allocate an additional $2 million per year to uniform state service
region nine, an additional $1 million per year to uniform state
service region 13, and an additional $750,000 per year to uniform
state service region 11 to alleviate the underfunding for those
uniform state service regions in prior years.
(d-5) The department may use forward commitments of housing
tax credits in 2005 or 2006 to satisfy the provisions of Subsection
(d-4).
(d-6) In allocating federal low income housing tax credit
commitments under Subchapter DD to developments within a uniform
state service region, the department shall allocate five percent of
the total amount of housing tax credits for developments in that
region to developments in that region that are financed through the
Texas Rural Development Office of the United States Department of
Agriculture and that:
(1) do not exceed 48 units if the development requires
new construction; or
(2) are any size if rehabilitation is involved.
(d-7) Any funds allocated to developments that satisfy the
requirements of Subsections (d-3)-(d-6) and that involve
rehabilitation must come from the funds set aside for at-risk
developments under Section 2306.6714.
(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 areas, historically underserved urban
[urban/exurban] areas, if applicable, 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 areas, historically underserved
urban [urban/exurban] areas, if applicable, 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).
SECTION 19. Section 2306.111(c), Government Code, as
amended by Chapters 1367 and 1448, Acts of the 77th Legislature,
Regular Session, 2001, is reenacted and amended to read as follows:
(c) Except as provided by Subsection (c-3), in [In]
administering federal housing funds provided to the state under the
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.
Section 12701 et seq.), the department shall expend 100 [at least
95] percent of these funds for:
(1) the benefit of non-participating small cities and
rural areas that do not qualify to receive funds under the
Cranston-Gonzalez National Affordable Housing Act directly from
the United States Department of Housing and Urban Development; or
(2) the preservation of existing affordable housing
that receives financing from the United States Department of
Agriculture. [All funds not set aside under this subsection shall
be used for the benefit of persons with disabilities who live in
areas other than small cities and rural areas.]
SECTION 20. Section 2306.1111, Government Code, is amended
by amending Subsection (a) and adding Subsections (a-1) and (a-2)
to read as follows:
(a) Notwithstanding any other state law and to the extent
consistent with federal law, the department shall establish a
uniform application and funding cycle for all single-family and
multifamily housing programs administered by the department under
this chapter, excluding any program described by Chapter 1372 and
including a uniform application and funding cycle for housing
sponsors of multifamily housing developments applying for:
(1) housing funds provided to the state under the
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.
Section 12701 et seq.);
(2) housing trust funds administered by the department
under Sections 2306.201-2306.206; and
(3) commitments issued under the federal low income
housing tax credit program administered by the department under
Subchapter DD.
(a-1) The application acceptance periods for the programs
described by Subsections (a)(1)-(3) must run concurrently.
(a-2) If the department does not receive during the uniform
application and funding cycle under Subsection (a) a sufficient
number of financially feasible applications for housing funds
provided to the state under the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. Section 12701 et seq.) or housing
trust funds administered by the department under Sections
2306.201-2306.206, the department may consider additional
applications. During the first 120 days of an application and
funding cycle for housing funds provided to the state under the
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.
Section 12701 et seq.) or housing trust funds administered by the
department under Sections 2306.201-2306.206, the department may
not consider applications requesting a grant of funds.
SECTION 21. Subchapter F, Chapter 2306, Government Code, is
amended by adding Section 2306.1116 to read as follows:
Sec. 2306.1116. HISTORICALLY UNDERSERVED URBAN AREAS. (a)
A historically underserved urban area is a community that:
(1) in uniform state service region three:
(A) is located in Collin, Dallas, Denton, Ellis,
Hood, Hunt, Kaufman, Johnson, Parker, Rockwall, or Tarrant County;
(B) is not located within the municipal
boundaries of Arlington, Dallas, or Fort Worth; and
(C) does not meet the definition of a rural area;
(2) in uniform state service region six:
(A) is located in Chambers, Fort Bend, Harris,
Liberty, Montgomery, or Waller County;
(B) is not located within the municipal
boundaries of Houston; and
(C) does not meet the definition of a rural area;
(3) in uniform state service region seven:
(A) is located in Bastrop, Caldwell, Hays,
Travis, or Williamson County;
(B) is not located within the municipal
boundaries of Austin; and
(C) does not meet the definition of a rural area;
or
(4) in uniform state service region nine:
(A) is located in Atascosa, Bexar, Comal,
Guadalupe, or Wilson County;
(B) is not located within the municipal
boundaries of San Antonio; and
(C) does not meet the definition of a rural area.
(b) The identification of the counties described by
Subsection (a) shall be periodically adjusted as necessary to
conform with the definition or identification of metropolitan
statistical areas for uniform state service regions three, six,
seven, and nine.
SECTION 22. Section 2306.1113, Government Code, is amended
by amending Subsection (a) and adding Subsection (c) to read as
follows:
(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 may not engage in any communication regarding a project
application, other than an application that has been included in an
alternative dispute resolution process under Section 2306.082,
[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.
(c) The department may not adopt rules that:
(1) impose the prohibition described by Subsection (a)
on any person other than a board member; or
(2) otherwise restrict communications with any person
in the department, except as described by this section.
SECTION 23. Section 2306.1114(a), Government Code, is
amended to read as follows:
(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 by
regular mail 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 associations that, on December 1
of the year immediately preceding the year of the relevant
application deadline, are [organizations] on record with the
department or the political subdivision containing the proposed
site of the development described in the application, if the [state
or county in which the development described in the application is
to be located and whose] boundaries of the neighborhood association
encompass the same elementary school attendance zone, or a portion
of the same zone, as [contain] the proposed development site.
SECTION 24. Section 2306.127, Government Code, is amended
to read as follows:
Sec. 2306.127. PRIORITY FOR CERTAIN COMMUNITIES. In a
manner consistent with the regional allocation formula described
under Section 2306.111(d) for programs other than the low income
housing tax credit program administered under Subchapter DD, the
department shall give priority through its housing program scoring
criteria to communities that are located wholly or partly in:
(1) a federally designated urban enterprise
community;
(2) an urban enhanced enterprise community; or
(3) an economically distressed area or colonia.
SECTION 25. Section 2306.142(d), Government Code, is
amended to read as follows:
(d) The department or its designee shall analyze the
potential market demand, loan availability, and private sector home
mortgage lending rates available to extremely low, very low, low,
and moderate income borrowers in [the] rural areas [counties of the
state], in census tracts in which the median family income is less
than 80 percent of the median family income for the county in which
the census tract is located, and in the region of the state adjacent
to the international border of the state. The department or its
designee shall establish a process for serving those rural areas
[counties], census tracts, and regions through the single-family
mortgage revenue bond program in a manner proportionate to the
credit needs of those areas as determined through the department's
market study.
SECTION 26. Section 2306.147(a), Government Code, is
amended to read as follows:
(a) The board shall have the specific duty and power to
establish a schedule of fees and penalties relating to the
operation of the housing finance division and authorized by this
chapter, including application, processing, loan commitment,
origination, servicing, and administrative fees. The total amount
of fees imposed in connection with the low income housing tax credit
program administered by the department under Subchapter DD may not
exceed the department's total costs in administering the program.
SECTION 27. Section 2306.148, Government Code, is amended
to read as follows:
Sec. 2306.148. UNDERWRITING STANDARDS. The board shall
have the specific duty and power to adopt underwriting standards
based on industry norms and standards for loans made or financed by
the housing finance division under its single family and
multifamily bond programs.
SECTION 28. Section 2306.150, Government Code, is amended
to read as follows:
Sec. 2306.150. PROPERTY STANDARDS. The board shall have
the specific duty and power to adopt minimum property standards for
housing developments financed or acquired with bond proceeds under
this chapter.
SECTION 29. Section 2306.171, Government Code, is amended
to read as follows:
Sec. 2306.171. GENERAL DUTIES OF DEPARTMENT RELATING TO
PURPOSES OF HOUSING FINANCE DIVISION. The department shall:
(1) develop policies and programs designed to increase
the number of individuals and families of [extremely low,] very
low[,] and low income and families of moderate income who [that]
participate in the housing finance division's programs;
(2) work with municipalities, counties, public
agencies, housing sponsors, and nonprofit and for profit
corporations to provide:
(A) information on division programs; and
(B) technical assistance to municipalities,
counties, and nonprofit corporations;
(3) encourage private for profit and nonprofit
corporations and state organizations to match the division's funds
to assist in providing affordable housing to individuals and
families of low and very low income and families of moderate income;
(4) develop policies and procedures to increase the
number of individuals and families of extremely low income who
benefit from the housing finance division's programs by attempting
to match the financial assistance available through the division
with any rental assistance operating subsidies that may be
available from other governmental sources [provide matching funds
to municipalities, counties, public agencies, housing sponsors,
and nonprofit developers who qualify under the division's
programs]; and
(5) administer the state's allocation of federal funds
provided under the rental rehabilitation grant program authorized
by Section 17, Title I, of the United States Housing Act of 1937 (42
U.S.C. Section 1437o).
SECTION 30. Section 2306.174, Government Code, is amended
to read as follows:
Sec. 2306.174. ACQUISITION AND DISPOSITION OF PROPERTY.
The department may:
(1) acquire, own, rent, lease, accept, hold, or
dispose of any real, personal, or mixed property, or any interest in
property, including a right or easement, in performing its duties
and exercising its powers under this chapter, by purchase,
exchange, gift, assignment, transfer, foreclosure, sale, lease, or
otherwise;
(2) hold, manage, operate, or improve real, personal,
or mixed property, except that:
(A) the department is restricted in acquiring
property [under Section 2306.251] unless it is required to
foreclose on a delinquent loan and elects to acquire the property at
foreclosure;
(B) the department shall make a diligent effort
for a period not to exceed six months to sell a housing development
acquired through foreclosure to a purchaser who will be required to
pay ad valorem taxes on the housing development or, if such a
purchaser cannot be found, to another purchaser; and
(C) the department shall sell a housing
development acquired through foreclosure not later than the second
[third] anniversary of the date of acquisition unless the board
adopts a resolution stating that a purchaser cannot be found after
diligent search by the housing finance division, in which case the
department shall continue to try to find a purchaser and shall sell
the housing development when a purchaser is found; and
(3) lease or rent land or a dwelling, house,
accommodation, building, structure, or facility from a private
party to carry out the housing finance division's purposes.
SECTION 31. Section 2306.183, Government Code, is amended
to read as follows:
Sec. 2306.183. NEEDS OF QUALIFYING INDIVIDUALS AND FAMILIES
IN RURAL AREAS, HISTORICALLY UNDERSERVED URBAN AREAS, AND SMALL
MUNICIPALITIES. The department may adopt a target strategy to
ensure that the credit and housing needs of qualifying individuals
and families who reside in rural areas, historically underserved
urban areas, and small municipalities are equitably served by the
housing finance division.
SECTION 32. Sections 2306.185(a)-(e), Government Code, are
amended 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) maintains rents equal to or below the maximum
allowable amount for the specific housing program [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, if
applicable, with the requirements of Section 2306.186.
(b) In implementing Subsection (a)(1) [and in developing
underwriting standards and application scoring criteria for the
award of loans, grants, or tax credits to multifamily
developments], the department shall ensure that the economic
benefits of [longer affordability terms and] below market rate
rents are accurately assessed and considered.
(c) The department shall require that a recipient of funding
maintain [maintains] the affordability of the multifamily housing
development for the targeted income levels for the greater of:
(1) the minimum affordability period under the
respective federal or state program through which the financing is
provided; or
(2) [households of extremely low, very low, low, and
moderate incomes for the greater of a 30-year period from the date
the recipient takes legal possession of the housing or] the
remaining term of any [the] existing [federal] government
assistance. [In addition, the agreement between the department and
the recipient shall require the renewal of rental subsidies if
available and if the subsidies are sufficient to maintain the
economic viability of the multifamily development.]
(d) The development restrictions provided by Subsection (a)
and Section 2306.269 are enforceable by the department[, by tenants
of the development, or by private parties] against the initial
owner or any subsequent owner. The department shall require a land
use restriction agreement providing for enforcement of the
restrictions by the department[, a tenant, or a private party] that
includes the right of the prevailing party to recover reasonable
attorney's fees [if the party seeking enforcement of the
restriction is successful].
(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 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 that provides more
than 33 percent of the total development costs of the development;
or
(4) a grant.
SECTION 33. Sections 2306.186(a)(1) and (4), Government
Code, are amended to read as follows:
(1) "Bank [trustee]" means a bank authorized to do
business in this state[, with the power to act as trustee].
(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].
SECTION 34. Sections 2306.186(b), (c), (d), (e), (h), (i),
(j), and (l), Government Code, are amended to read as follows:
(b) If the department has provided mortgage loan funds and
is the first lien lender with respect to the multifamily rental
housing development, each owner who receives a mortgage loan from
the 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
(2) [(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) If the department is not the first lien lender with
respect to a multifamily rental housing development, the department
may not impose on the owner of that development any department
requirements relating to the preparation of a physical needs
assessment or the creation, maintenance, or funding of a reserve
account. [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 year in which the
department awards a mortgage loan [awarding of any financial
assistance] for the development that results in [by] the department
becoming the first lien lender with respect to the development, the
owner of a multifamily rental housing development shall contract
for a third-party physical needs assessment to determine the
conformity of the development to local health, safety, and building
codes [at appropriate intervals that are consistent with lender
requirements with respect to the development]. The [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 year in which the department awards a
mortgage loan for the development that results in the department
becoming the first lien lender with respect to the development
[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.
(h) The duties of the owner of a multifamily rental housing
development under this section cease on the earliest of the dates
described by Subsection (c) [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 banks [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.
(l) The provisions of this [This] section requiring reserve
accounts or physical needs assessments do [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. If the
department has previously imposed under this section a requirement
relating to a reserve account or a physical needs assessment on a
development that is required to maintain a reserve account under
any other provision of federal or state law, the department shall
prepare an amendment to the land use restriction agreement or
restrictive covenant removing the requirement.
SECTION 35. Sections 2306.202 and 2306.203, Government
Code, are amended to read as follows:
Sec. 2306.202. USE OF HOUSING TRUST FUND. (a) The
department, through the housing finance division, shall use the
housing trust fund to provide loans, grants, or other comparable
forms of assistance to local units of government, public housing
authorities, for-profit organizations, nonprofit organizations,
and income-eligible individuals, families, and households to
finance, acquire, rehabilitate, and develop decent, safe, and
sanitary housing. To enhance the self-sustaining nature of the
housing trust fund, the department shall structure its award
process to encourage applications for loans instead of grants by
scheduling two application periods as follows:
(1) a loan application period that is open
concurrently with the low income housing tax credit application
filing period provided by Subchapter DD; and
(2) a grant application period that is open only if
there is available money not already allocated for loans in the
application period described by Subdivision (1). [In each biennium
the first $2.6 million available through the housing trust fund for
loans, grants, or other comparable forms of assistance shall be set
aside and made available exclusively for local units of government,
public housing authorities, and nonprofit organizations. Any
additional funds may also be made available to for-profit
organizations so long as at least 45 percent of available funds in
excess of the first $2.6 million shall be made available to
nonprofit organizations for the purpose of acquiring,
rehabilitating, and developing decent, safe, and sanitary housing.
The remaining portion shall be competed for by nonprofit
organizations, for-profit organizations, and other eligible
entities. Notwithstanding any other section of this chapter, but
subject to the limitations in Section 2306.251(c), the department
may also use the fund to acquire property to endow the fund.]
(b) Use of the fund is limited to providing:
(1) assistance for individuals and families of low and
very low income;
(2) [technical] assistance to housing sponsors for the
purpose of [and capacity building to nonprofit organizations
engaged in] developing housing for individuals and families of low
and very low income; and
(3) security for repayment of revenue bonds issued to
finance housing for individuals and families of low and very low
income.
Sec. 2306.203. RULES REGARDING ADMINISTRATION OF HOUSING
TRUST FUND. The board shall adopt rules to administer the housing
trust fund, including rules providing:
(1) that the division give priority to programs that
maximize federal resources;
(2) for a process to set priorities for use of the
fund, including the distribution of fund resources under a
competitive application [request for a proposal] process developed
and approved by the board;
(3) that the applications [criteria used to rank
proposals] be ranked based on a point system using only the
following criteria, in descending order of priority [will include
the]:
(A) the extent to which individuals and families
of low and very low income are served by the development [leveraging
of federal resources];
(B) the leveraging of non-governmental funding
sources, with points awarded in proportion to how much
non-governmental money is used per person served, based on a
calculation of 1.5 persons per bedroom [cost-effectiveness of a
proposed development]; [and]
(C) support for the development from the state
representative and state senator for the district in which the
development is to be located;
(D) whether the proposal is for a loan of housing
trust funds instead of a grant; and
(E) other criteria established by the department
that are not inconsistent with the priorities under this
subdivision [extent to which individuals and families of very low
income are served by the development];
(4) that funds may not be made available to a
development that permanently and involuntarily displaces
individuals and families of low income;
(5) that the board attempt to allocate funds to
achieve a broad geographical distribution with:
(A) special emphasis on equitably serving rural
and nonmetropolitan areas; and
(B) consideration of the number and percentage of
income-qualified families in different geographical areas; and
(6) that multifamily housing developed or
rehabilitated through the fund remain affordable to
income-qualified households for the term of the loan or, if a grant
has been awarded, for at least 30 [20] years.
SECTION 36. Section 2306.205(f), Government Code, is
amended to read as follows:
(f) In addition to the money transferred into the housing
trust fund under this section, and subject to Subsection (e), the
department shall transfer into the fund the amount of any
origination fee, asset oversight fee, and servicing fee [the
department or] the Texas State Affordable Housing Corporation
receives in relation to the administration of its 501(c)(3) bond
program established pursuant to Section 2306.358 that exceeds the
amount needed by [the department or] the Texas State Affordable
Housing Corporation to pay its operating and overhead costs and
fund reserves, including an insurance reserve or credit enhancement
reserve established by the board of the corporation in
administering the program. The corporation shall transfer to the
department the fee amounts described by this subsection to enable
the department to discharge its duties under this subsection.
SECTION 37. Section 2306.227, Government Code, is amended
to read as follows:
Sec. 2306.227. PREPAYMENT OF MORTGAGE LOANS. A mortgage
loan made under this chapter may be prepaid at any time before [to]
maturity [after the period of years and under the terms and
conditions determined by the board].
SECTION 38. Section 2306.229, Government Code, is amended
by adding Subsection (c) to read as follows:
(c) For each loan made for the development of multifamily
housing with funds provided to the state under the
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.
Section 12701 et seq.), the department shall obtain a mortgagee's
title policy in the amount of the loan. The department may not
designate a specific title insurance company to provide the
mortgagee title policy or require the borrower to provide the
policy from a specific title insurance company. The borrower shall
select the title insurance company to close the loan and to provide
the mortgagee title policy.
SECTION 39. Sections 2306.252(a), (b), and (c), Government
Code, are amended to read as follows:
(a) The board shall establish a housing resource center in
the housing finance division. The department shall fund the center
with money available under Section 1372.006(a).
(b) The housing resource [department, through the]
center[,] shall:
(1) provide educational material prepared in plain
language to the public [housing advocates, housing sponsors,
borrowers, and tenants]; and
(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) provide, in cooperation with the state energy
conservation office, the Texas 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].
(c) The housing resource center is intended to assist
individuals, local organizations, and local governments in
providing for the housing needs of individuals and families in
their communities by providing information available to the center
to housing contractors, for-profit and nonprofit housing sponsors,
community-based organizations, and local governments on:
(1) local housing needs;
(2) housing programs;
(3) available funding sources; and
(4) programs that affect the creation, improvement, or
preservation of housing affordable to individuals and families of
low and very low income.
SECTION 40. Section 2306.253(d), Government Code, is
amended to read as follows:
(d) To [In order to] implement this section, the department
may use money available to the department for housing purposes that
the department is not prohibited from spending on the homebuyer
education program, including:
(1) any [the amount of administrative or service] fees
the department charges persons to attend a homebuyer education
program [receives from the issuance or refunding of bonds that
exceeds the amount the department needs to pay its overhead costs in
administering its bond programs]; and
(2) money the department receives from other entities
by gift or grant under a contract.
SECTION 41. Sections 2306.254(b) and (d), Government Code,
are amended to read as follows:
(b) The department may encourage, but may not require,
[shall structure the requirements for] the provision of tenant
services in any multifamily housing development [so that tenant
services provided through housing programs are coordinated with
similar services provided through state workforce development and
welfare programs]. The department shall encourage [emphasize]
tenant services that are coordinated with similar services provided
through state workforce development and welfare programs and that
are provided by third parties at no cost to the residents or that
are eligible for [additional] federal matching funds through
workforce development or welfare-related programs.
(d) The coordinator shall meet in Austin at least quarterly
with representatives of the Texas Workforce Commission, the Texas
Department of Human Services, the Department of Protective and
Regulatory Services, and the Legislative Budget Board to:
(1) update coordination of tenant services with
workforce development and welfare-related programs; and
(2) discuss funding sources for tenant services
programs[; and
[(3) report on the status of tenant services programs,
including reporting on the number of clients and types of services
offered].
SECTION 42. Section 2306.257, Government Code, is amended
by amending Subsection (a) and adding Subsection (a-1) to read as
follows:
(a) The department may provide assistance through a housing
program under this chapter only to an applicant who certifies the
applicant's compliance with any applicable state and federal fair
housing laws[:
[(1) state and federal fair housing laws, including
Chapter 301, Property Code, Title VIII of the Civil Rights Act of
1968 (42 U.S.C. Section 3601 et seq.), and the Fair Housing
Amendments Act of 1988 (42 U.S.C. Section 3601 et seq.);
[(2) the Civil Rights Act of 1964 (42 U.S.C. Section
2000a et seq.);
[(3) the Americans with Disabilities Act of 1990 (42
U.S.C. Section 12101 et seq.); and
[(4) the Rehabilitation Act of 1973 (29 U.S.C. Section
701 et seq.)].
(a-1) The board shall adopt rules requiring the department
to obtain annually from housing program participants the
information necessary to enable the department to comply with state
and federal reporting requirements related to the laws described by
Subsection (a). Each item of information requested from the
participant by the department must include a citation to the
statutory authority authorizing the request of the information.
SECTION 43. Section 2306.268, Government Code, is amended
to read as follows:
Sec. 2306.268. RENTS AND CHARGES. The department shall
approve and may change from time to time a schedule of rents and
charges for a housing development operated by the department [under
Section 2306.251].
SECTION 44. Section 2306.269, Government Code, is amended
to read as follows:
Sec. 2306.269. TENANT [AND MANAGER] SELECTION. (a) The
department may [shall] set standards for tenant [and management]
selection by a housing sponsor.
(b) The department shall prohibit a multifamily rental
housing development funded or administered by the department,
including a development supported with a housing tax credit
allocation under Subchapter DD, from:
(1) excluding an individual or family from admission
to the development solely because the individual or family
participates in the housing choice voucher program under Section 8,
United States Housing Act of 1937 (42 U.S.C. Section 1437f); and
(2) using a financial or minimum income standard for
an individual or family participating in the voucher program
described by Subdivision (1) that requires the individual or family
to have a monthly income of more than three [2 1/2] times the
individual's or family's share of the total monthly rent payable to
the owner of the development.
SECTION 45. Sections 2306.271(b) and (d), Government Code,
are amended to read as follows:
(b) The housing finance division shall require a housing
sponsor to certify the actual housing development costs on
completion of the housing development. Any certification of costs
must be accompanied by an unqualified audit of the actual housing
development costs prepared by a certified public accountant in
accordance with generally accepted accounting principles and
generally accepted auditing standards[, subject to audit and
determination by the department].
(d) In this section, "housing development costs" means the
total of all reasonable and necessary costs incurred in financing,
creating, or purchasing a housing development, including a
single-family dwelling[, approved by the department as reasonable
and necessary]. The costs may include:
(1) the value of land and buildings on the land owned
by the sponsor or the cost of acquiring land and buildings on the
land, including payments for options, deposits, or contracts to
purchase properties on the proposed housing site;
(2) costs of site preparation, demolition, and
development;
(3) expenses relating to the issuance of bonds;
(4) fees paid or payable in connection with the
planning, execution, and financing of the housing development,
including fees to:
(A) architects;
(B) engineers;
(C) attorneys;
(D) accountants; or
(E) the housing finance division on the
department's behalf;
(5) costs of necessary studies, surveys, plans,
permits, insurance, interest, financing, tax and assessment costs,
and other operating and carrying costs during construction;
(6) costs of construction, rehabilitation,
reconstruction, fixtures, furnishings, equipment, machinery, and
apparatus related to the real property;
(7) costs of land improvements, including landscaping
and off-site improvements, whether or not the costs have been paid
in cash or in a form other than cash;
(8) necessary expenses for the initial occupancy of
the housing development;
(9) a reasonable profit and a [risk] fee for developer
services in addition to job overhead to the general contractor or
limited profit housing sponsor;
(10) an allowance [established by the department] for
working capital and contingency reserves and reserves for
anticipated operating deficits during the first two years of
occupancy; and
(11) the cost of other items, including tenant
relocation if tenant relocation costs are not otherwise provided
for, [that the department determines are reasonable and necessary
for the development of the housing development,] less net rents and
other net revenues received from the operation of the real and
personal property on the development site during construction.
SECTION 46. Sections 2306.313(a) and (b), Government Code,
are amended to read as follows:
(a) The department or[, with the department's approval,]
the housing sponsor of a housing development may terminate the
tenancy or interest of an individual or family whose gross income
exceeds the income level allowed for admission if retaining the
individual or family as occupants would violate the income
limitations for the applicable affordable housing program [by more
than 25 percent for six months or more].
(b) A tenancy or interest of an individual or family in a
housing development may not be terminated except on reasonable
notice [and opportunity to obtain suitable alternate housing under
the department's rules].
SECTION 47. Section 2306.6701, Government Code, is amended
to read as follows:
Sec. 2306.6701. PURPOSE. (a) The department shall
administer the low income housing tax credit program to:
(1) encourage the development and preservation of
appropriate types of rental housing for households that have
difficulty finding suitable, affordable rental housing in the
private marketplace;
(2) maximize the number of suitable, affordable
residential rental units added to the state's housing supply;
(3) maintain [prevent losses for any reason to] the
state's supply of suitable, affordable residential rental units by
enabling the rehabilitation of rental housing or by providing other
preventive financial support under this subchapter; [and]
(4) provide for and encourage the participation of
for-profit organizations in the acquisition, development, and
operation of affordable housing developments; and
(5) provide for and encourage the participation of
nonprofit organizations in the acquisition, development, and
operation of affordable housing developments [in urban and rural
communities].
(b) The department may not approve, adopt, or otherwise
publish a rule that:
(1) establishes standards or parameters that in any
manner exceed or deviate from the regulatory requirements of
Section 42, Internal Revenue Code of 1986; or
(2) imposes, or has the effect of imposing, on local
governments or on applicants direct compliance requirements or
costs that are not expressly required by state or federal law.
SECTION 48. Section 2306.6702(a), Government Code, is
amended by amending Subdivisions (4), (5), (10), and (15) and
adding Subdivision (4-a) to read as follows:
(4) "Application round" means the period beginning on
the date the department begins accepting applications and
continuing until all available housing tax credits are allocated[,
but not extending past the last day of the calendar year].
(4-a) "Area median gross household income" means the
area median gross household income as determined for all purposes
in accordance with the requirements of Section 42, Internal Revenue
Code of 1986.
(5) "At-risk development" means a development that:
(A) has received 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 for at least
10 percent of the units in the development, 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;
[(vii)] Sections 514, 515, and 516, Housing
Act of 1949 (42 U.S.C. Sections 1484, 1485, and 1486); [or]
(vi) [(viii)] Section 42, Internal Revenue
Code of 1986 (26 U.S.C. Section 42); or
(vii) project-based assistance authority
under Section 8, United States Housing Act of 1937 (42 U.S.C.
Section 1437f et seq.); and
(B) is subject to the following conditions:
(i) the stipulation to maintain
affordability in the contract granting the subsidy is within two
years of [nearing] expiration or has expired but has the ability to
be reinstated; 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 and[,] scoring[, and
underwriting] criteria based on housing priorities of the
department that are [appropriate to local conditions;
[(B)] consistent with this chapter [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 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
(B) [(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.
(15) "Threshold criteria" means the criteria used to
determine whether the development satisfies the minimum level of
acceptability for consideration established by Section 2306.67042
[in the department's qualified allocation plan].
SECTION 49. Section 2306.6703, Government Code, as amended
by Chapters 330 and 1106, Acts of the 78th Legislature, Regular
Session, 2003, is reenacted and 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 a member of the department
committee that selects applications for approval;
(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 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; [or]
(3) the applicant proposes to develop [construct] a
new construction 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) obtains [has obtained prior] approval of the
development from the governing body of the appropriate municipality
or county containing the development; and
(B) provides, not later than the 30th day before
the date the board first meets to consider applications for an
allocation of housing tax credits, [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; or
(5) the applicant or an affiliate of the applicant has
a familial or financial relationship with a board member or an
employee of the department.
(b) Subsections [Subsection] (a)(3) and (4) do [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
(E) funds provided under Section 515, Housing Act
of 1949 (42 U.S.C. Section 1485);
(2) that is located in a county with a population of
less than one million;
[(2) that is located outside of a metropolitan
statistical area;] or
(3) that a local government where the project is to be
located has by vote specifically allowed the development
[construction] of a new construction development located within one
linear mile or less from a development under Subsection (a).
(c) The department by rule may identify additional factors
that make an application ineligible for consideration, including
additional actions or relationships of a housing sponsor,
developer, or other person in the development process or of any
person that has at least a 10 percent interest in or is otherwise in
control of the housing sponsor, developer, or other person in the
process.
SECTION 50. Subchapter DD, Chapter 2306, Government Code,
is amended by adding Section 2306.67035 to read as follows:
Sec. 2306.67035. SPECIAL REQUIREMENTS FOR RURAL AND
HISTORICALLY UNDERSERVED URBAN AREAS. (a) An application for
housing tax credits from funds available for rural areas must be
limited to:
(1) the rehabilitation of a development of any size;
or
(2) the development of a new construction development
that contains not more than 76 units.
(b) A new construction development that contains more than
76 units and is located in a rural area is eligible only for funds
available for urban areas, including funds available for
historically underserved urban areas, regardless of the
development's location.
SECTION 51. Section 2306.6704, Government Code, is amended
by amending Subsections (b-1), (c), and (d) and adding Subsection
(e) 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 that, on December 1
of the year immediately preceding the year of the application
deadline, are [organizations] on record with the department or the
municipality or county containing the proposed development site, if
the [state or county in which the development is to be located and
whose] boundaries of the neighborhood association encompass the
same elementary school attendance zone, or a portion of the same
zone, as [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;
(3) [(4)] the presiding officer of the governing body
of the county containing the development and all elected members of
that body; and
(4) [(5)] the state senator and state representative
of the district containing the development.
(c) The department shall reject and return to the applicant
any application assessed by the department under this section that
fails to satisfy the threshold criteria specified by Section
2306.67042 [required by the board in the qualified allocation
plan].
(d) If feasible under Section 2306.67041, an application
under this section may [must] be submitted electronically.
(e) The department shall specify the date for filing an
application under this section. The last date for submitting an
application under this section may not be earlier than February 1.
SECTION 52. Subchapter DD, Chapter 2306, Government Code,
is amended by adding Section 2306.67042 to read as follows:
Sec. 2306.67042. THRESHOLD CRITERIA. (a) To be eligible
for scoring under Section 2306.6710, an application for an
allocation of housing tax credits must satisfy only the threshold
criteria provided by this chapter.
(b) The application developed by the department must be
completed and submitted in a timely manner.
(c) The application must include:
(1) information regarding the location of the proposed
development, including a legal description of the proposed site and
county or, if applicable, municipal lot maps of the proposed site
and a current title policy or title commitment for the development;
(2) documentation of all of the public notifications
required by this subchapter;
(3) a financial statement provided by the applicant
and any person that has at least a 10 percent ownership interest in
the development owner, the developer, or the entity that will
guarantee any obligation of the development owner;
(4) information demonstrating that the applicant has
the experience and the financial capacity to ensure project
completion;
(5) documentation that confirms the applicant's
eligibility for all set-asides under which the applicant is seeking
funding;
(6) a certification that the development will:
(A) adhere to the requirements of the Property
Code relating to residential tenancies, including the requirements
relating to security devices;
(B) comply with the appropriate accessibility
standards required under Section 504, Rehabilitation Act of 1973
(29 U.S.C. Section 794), and specified under 24 C.F.R. Part 8,
Subpart C, to the same extent required for developments receiving
federal financial assistance and the appropriate accessibility
requirements adopted by the Texas Department of Licensing and
Regulation under its Texas Accessibility Standards; and
(C) adhere to local building codes or, if no
local building codes are in place, the most recent version of the
International Building Code;
(7) a certification that the applicant has no final
unresolved findings of state or federal fair housing law
violations; and
(8) a certification of the basic amenities that will
be made available for the benefit of all tenants, such as:
(A) full perimeter fencing;
(B) a designated playground and equipment;
(C) a community laundry room or laundry hook-ups
in units;
(D) a furnished community room;
(E) recreation facilities; or
(F) at least one public telephone available to
tenants 24 hours a day.
(d) To establish the experience necessary to ensure project
completion under Subsection (c)(4), the development owner, the
owner's controlling person, or the developer must provide
documentation satisfactory to the department verifying the
completion of at least 100 residential units, or 36 residential
units if the applicant is applying for an allocation of housing tax
credits for a development located in a rural area, and the
meaningful participation of the owner, controlling person, or
developer in the development.
(e) The development must provide the following amenities in
each unit without charge to the tenant:
(1) for all new construction units, three
communication networks as follows:
(A) one network for telephone service installed
using CAT5e or better wiring;
(B) a second network for data installed using
CAT5e or better wiring; and
(C) a third network for television service
installed using coaxial cable;
(2) mini-blinds or window coverings for all windows;
(3) except for developments receiving financing from
the Texas Rural Development Office of the United States Department
of Agriculture or development involving the rehabilitation of
existing buildings, a dishwasher and disposal;
(4) a refrigerator;
(5) an oven and range;
(6) exhaust and vent fans in bathrooms; and
(7) ceiling fans in living areas and bedrooms.
(f) If fees in addition to rent are charged for an amenity
reserved for an individual tenant's use, the amenity may not be
included in the application.
(g) A development with more than 36 units must provide at
least four of the amenities listed under Subsection (c)(8). A
development with not more than 36 units or a development that
receives funding under Section 515, Housing Act of 1949 (42 U.S.C.
Section 1485), must provide at least two of the amenities listed
under Subsection (c)(8).
(h) The developer must:
(1) install a public notification sign at the proposed
development site before the date the application is submitted; or
(2) through regular mail provide a notice that
contains the information required to be included on a public
notification sign to:
(A) all addresses for which zoning notification
would be required by the municipality; or
(B) for developments located in communities that
do not have zoning, communities that do not require zoning
notification, or communities located outside of a municipality, all
addresses located within 1,000 feet of any part of the proposed
development site.
(i) The department shall adopt rules detailing:
(1) the information required to be included on a
public notification sign; and
(2) the type of proof required by the department that
the sign has been installed or notice has been mailed.
(j) The application must include the architectural drawings
identified by Subsection (k) or (l), as applicable. Full-size
design or construction documents are not required, but the drawings
must have an accurate and legible scale and show the dimensions of
the development.
(k) An application for a development involving new
construction or the rehabilitation of existing buildings with units
not configured in the unit pattern proposed in the application must
provide:
(1) a site plan;
(2) floor plans for each type of residential building
and each type of common area building; and
(3) floor plans and elevations for each type of
residential building and each type of common area building that
clearly depict the height of each floor.
(l) An application for a development involving the
rehabilitation of existing buildings for which the unit
configurations are not being altered must provide:
(1) a site plan; and
(2) floor plans for each type of residential building
and each type of common area building.
(m) To satisfy the requirements of Subsections (k) and (l),
an application must include a boundary survey of the proposed
development site and of the property to be purchased. If property
is to be purchased beyond the proposed site of the development, the
survey must clearly distinguish between the boundaries of the
larger site and the site of the development. The survey must also
clearly delineate the floodplain boundary lines and all easements
applicable to the proposed development site. The survey may be of
any date.
(n) The application must include a description of the
development's development costs and corresponding credit request
and syndication information, including, as applicable:
(1) the information required by Section 2306.6705;
(2) a copy of a census map clearly showing that the
development is located within a qualified census tract as
determined by the secretary of housing and urban development;
(3) a schedule of any off-site costs; and
(4) if proposed site work costs include unusual or
extraordinary items or exceed $7,500 per unit, a detailed cost
breakdown prepared by an architect or engineer.
(o) The application must include evidence of readiness to
proceed, including the following:
(1) evidence of site control in the name of the
development owner; and
(2) evidence of financing sufficient to fund the
proposed total housing development cost less money requested from
the department and any other sources documented in the application,
including, as applicable:
(A) bona fide financing in place as evidenced by
a valid and binding loan agreement and a deed of trust in the name of
the development owner that:
(i) identifies the mortgagor as the
applicant or, if the applicant is a partnership, identifies the
mortgagor as the entities that constitute the general partner; or
(ii) expressly allows the transfer to the
development owner;
(B) a bona fide commitment or term sheet for the
interim and permanent loans issued by a lending institution or
mortgage company that is actively and regularly engaged in the
business of lending money that:
(i) is addressed to the development owner
or, if the owner is a partnership, to the entities that constitute
the general partner; and
(ii) has been executed by the lender; or
(C) any federal, state, or local gap financing,
whether of soft or hard debt.
(p) The evidence provided under Subsection (o)(2) must
include, at a minimum, evidence from the lending agency that an
application for funding has been made and a term sheet that clearly
describes the amount and terms of the funding and the date by which
the funding determination will be made and any commitment issued.
Evidence of an application for funding from another department
program is not required.
(q) The term of a loan under Subsection (o)(2) must be for a
minimum of 15 years with at least a 30-year amortization. The
commitment for financing must state an expiration date and all the
terms and conditions applicable to the financing, including the
mechanism for determining the interest rate, if applicable, the
anticipated interest rate, and any required guarantors. A
commitment may be conditional on the completion of specified due
diligence by the lender and on the allocation of housing tax
credits.
(r) The application must include a description of the
development's proposed ownership structure and the applicant's
previous experience as follows:
(1) a chart that clearly:
(A) illustrates the complete organizational
structure of the development owner, providing the names and
ownership percentages of all persons having an ownership interest
in the development owner; and
(B) discloses:
(i) any person that will serve as the
developer of the development;
(ii) any person that will guarantee any
obligation of the development owner; and
(iii) any person that has at least a 10
percent ownership interest in the development owner, the developer,
or the person that will guarantee any obligation of the development
owner; and
(2) evidence that each entity shown on the
organizational chart under Subdivision (1) has provided a copy of
the completed and executed previous participation and background
certification form to the department.
(s) The application must include a description of the
development's projected income and operating expenses as follows:
(1) a 15-year pro forma estimate of operating income
and expenses and supporting documentation used to generate
projections;
(2) if rental assistance, an operating subsidy, or an
interest rate reduction payment is proposed for the development, a
description of the source and type of assistance, the number of
units receiving the assistance, and the term and expiration date of
the contract or other agreement; and
(3) documentation of the source of the utility
allowance estimate used in completing the rent schedule.
(t) An application for a housing tax credit allocation from
the nonprofit set-aside must include the documents described by
Section 2306.6706. An application involving a nonprofit general
partner must include the documents described by that section
regardless of whether the application seeks a housing tax credit
allocation from the nonprofit set-aside.
(u) An applicant applying under the nonprofit set-aside
must provide the following information with respect to the
nonprofit organization:
(1) a copy of the page from the articles of
incorporation or bylaws indicating that one of the exempt purposes
of the nonprofit organization is to provide low income housing;
(2) a copy of the page from the articles of
incorporation or bylaws indicating that the nonprofit organization
prohibits a member of its board of directors, other than a chief
staff member serving concurrently as a member of the board, from
receiving material compensation for service on the board; and
(3) a copy of the nonprofit organization's most recent
audited financial statement.
(v) To be eligible for a housing tax credit allocation from
the nonprofit set-aside, an applicant must meet the requirements of
Section 2306.6706(b).
(w) Subsection (u)(2) does not prohibit an attorney from
serving as a board member while receiving compensation for legal
service, provided that the attorney is not compensated merely for
board membership.
(x) An applicant affiliated with the seller of the
development must provide the following documentation:
(1) an appraisal of the property that is not more than
12 months old on the date the appraisal is submitted to the
department;
(2) a valuation report from the county tax appraisal
district;
(3) clear identification of the seller and details of
any relationship between the seller and the applicant; and
(4) documentation of the original acquisition or
development cost and any other verifiable or justifiable costs of
owning, improving, or holding the property that support the
proposed acquisition price.
(y) An applicant applying for housing tax credits in
connection with the acquisition of an existing housing development
must provide, in addition to the documentation required under
Subsection (x), information to establish that the development is
eligible for an allocation of those credits. For an occupied
development undergoing rehabilitation, an applicant must provide,
if available:
(1) historic monthly operating statements for 12
consecutive months ending not more than four years before the date
the information is provided; or
(2) the two most recent consecutive annual operating
statements.
(z) The appraisal under Subsection (x)(1) must be submitted
not later than the 30th day after the date the application is
submitted to the department. The appraisal must separately state
the as-is, preacquisition, or transfer value of the property and
the improvements where applicable.
(aa) The following documents must be submitted not later
than the 30th day after the date the application is submitted to the
department:
(1) except as provided by Subsection (bb), a Phase I
Environmental Site Assessment on the subject property, dated not
more than 12 months before the date the application is submitted to
the department; and
(2) except as provided by Subsection (cc), a
comprehensive market analysis prepared at the applicant's expense
by a disinterested qualified market analyst in accordance with
Section 2306.67055.
(bb) If a Phase I Environmental Site Assessment on the
development is dated more than 12 months before the date the
application is submitted to the department, the applicant must
supply the department with an updated letter or updated report
dated at least three months before the date the application is
submitted from the organization that prepared the initial
assessment confirming that the site has been reinspected and
reaffirming the conclusions of the initial report or identifying
the changes since the initial report. Developments that receive
any funding from the United States Department of Agriculture or the
United States Department of Housing and Urban Development are not
required to submit a Phase I Environmental Site Assessment.
(cc) A market analysis is not required for applications that
involve the rehabilitation of an existing property that receives
funding from the United States Department of Agriculture.
SECTION 53. Section 2306.6705, Government Code, is amended
to read as follows:
Sec. 2306.6705. GENERAL APPLICATION REQUIREMENTS. The
department may not require that an application contain information
in addition to that required by this chapter. 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 or[,] 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:
(A) how the rehabilitation process will affect
any existing tenants [(i) relocation requirements]; and
(B) [(ii)] a budget for any permanent or
temporary relocation of tenants, 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 that, on
December 1 of the year immediately preceding the year of the
application deadline, are [organizations] on record with the
department or the municipality or county containing the proposed
development site, if the [state or county in which the development
is to be located and whose] boundaries of the neighborhood
association encompass the same elementary school attendance zone,
or a portion of the same zone, as [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 54. Subchapter DD, Chapter 2306, Government Code,
is amended by adding Section 2306.67053 to read as follows:
Sec. 2306.67053. LIMITATION ON REQUIREMENTS UNDER THIS
SUBCHAPTER. In setting requirements under this subchapter, the
board and the department may not adopt rules or otherwise mandate
the unit mix or bedroom arrangement of any development not reserved
exclusively for occupancy by elderly individuals.
SECTION 55. Section 2306.6706(b), Government Code, is
amended to read as follows:
(b) To be eligible for a housing tax credit allocation from
the nonprofit set-aside, a nonprofit organization must:
(1) control a majority of the development;
(2) materially participate in the development and
operation of the development throughout the compliance period [if
the organization's application is filed on behalf of a limited
partnership, be the managing general partner]; and
(3) otherwise meet the requirements of Section
42(h)(5), Internal Revenue Code of 1986 (26 U.S.C. Section
42(h)(5)).
SECTION 56. Section 2306.6709(b), Government Code, is
amended to read as follows:
(b) The application log must contain at least the following
information:
(1) the names of the applicant and related parties;
(2) the physical location of the development,
including the relevant region of the state;
(3) the amount of housing tax credits requested by
[for allocation by the department to] the applicant;
(4) any set-aside category under which the application
is filed;
(5) in strict compliance with Section 2306.6710 of
this chapter and Section 42(m)(1)(B), Internal Revenue Code of
1986, the score of the application in each scoring category
contained in [adopted by the department under] the qualified
allocation plan;
(6) any decision made by the department or board
regarding the application, including the [department's decision
regarding whether to underwrite the application and the] board's
decision regarding whether to allocate housing tax credits to the
development;
(7) the names of persons making the decisions
described by Subdivision (6), including the names of department
staff scoring [and underwriting] the application, to be recorded
next to the description of the applicable decision;
(8) the amount of housing tax credits allocated to the
development; and
(9) a dated record and summary of any contact between
the department staff, the board, and the applicant or any related
parties.
SECTION 57. Section 2306.6710, Government Code, is amended
to read as follows:
Sec. 2306.6710. EVALUATION [AND UNDERWRITING] OF
APPLICATIONS. (a) In evaluating an application, the department
shall determine whether the application satisfies the threshold
criteria required by Section 2306.67042 [the board in the qualified
allocation plan]. The department shall reject and return to the
applicant any application that fails to satisfy those [the]
threshold criteria.
(b) If an application satisfies the threshold criteria, the
department shall score and rank the application using the [a] point
system described by this section [that:
[(1) prioritizes in descending order criteria
regarding:
[(A) financial feasibility 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;
[(C) the income levels of tenants of the
development;
[(D) the size and quality of the units;
[(E) the commitment of development funding by
local political subdivisions;
[(F) the level of community support for the
application, evaluated on the basis of written statements from
state elected officials;
[(G) the rent levels of the units;
[(H) the cost of the development by square foot;
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].
(c) The department shall award 50 points if the development
is determined to be financially feasible based on a project
underwriting pro forma from the permanent or construction lender
that discloses reasonably expected sources and uses of funds during
the development process and planned operating income and expenses
during the initial 15 years of operation as a development [publish
in the qualified allocation plan details of the scoring system used
by the department to score applications]. For a development that
receives financing from the Texas Rural Development Office of the
United States Department of Agriculture, the report entitled
"Sources and Uses Comprehensive Evaluation for Multifamily Housing
Loans" or any other evidence or similar report considered
acceptable by the department meets the requirements of the
underwriting pro forma.
(d) If the deferral of 50 percent or more of the developer's
fee for an urban development, or 60 percent or more for a rural
development, is required to make the development financially
feasible under Subsection (c), the department shall deduct 10
points.
(e) The department shall award points based on written
statements of support or opposition from neighborhood associations
that, on December 1 of the year immediately preceding the year of
the application deadline, are on record with the department or the
municipality or county containing the proposed development site, if
the boundaries of the neighborhood association encompass the same
elementary school attendance zone, or a portion of the same zone, as
the proposed development site. If there are no neighborhood
associations on record with the department, if no letters either in
support or opposition are received, or if the application involves
the rehabilitation of an at-risk development, the department shall
award the application 40 points. If 80 percent or more of the
letters from neighborhood associations support the development,
the department shall award the application 40 points. If at least
50 percent but less than 80 percent of the letters from neighborhood
associations support the development, the department shall award
the application 30 points. If a majority of the letters from
neighborhood associations oppose the development, the department
shall award zero points.
(f) An application may receive points under either
Subsection (g) or (i), but not under both subsections.
(g) The department shall award 30 points if:
(1) the development is located outside of a qualified
census tract;
(2) there is a documented, committed, and available
third–party funding source to provide project-based rental
assistance to at least 50 percent of the tenants; and
(3) the applicant confirms, in the manner prescribed
by department rule, that 50 percent or more of the total units in
the development will be restricted to being rented to households
with incomes equal to or below 30 percent of the greater of local
area median income, as adjusted for household size, or the
statewide median income, as adjusted for household size.
(h) The documented, committed, and available third-party
funding source under Subsection (g) may only be:
(1) project-based Section 8 assistance;
(2) a United States Department of Agriculture
five-year rental assistance contract;
(3) a United States Department of Housing and Urban
Development contract for project-based Section 8 operating
assistance; or
(4) a similar federal or state project-based rental
assistance program, with a term of at least five years.
(i) For an application to qualify for points under this
subsection, the rents for the rent-restricted units in the
development must not be higher than the allowable housing tax
credit rents at the rent-restricted area median gross household
income level. For Section 8 residents, or other rental assistance
tenants, the tenant-paid rent plus the utility allowance must be
compared to the rent limit to determine compliance. The
development owner on making selections must set aside units at the
rent-restricted levels of area median gross household income and
must maintain the percentage of those units continuously over the
compliance and extended-use period as specified in a land use
restriction agreement. Applications may qualify for points under
only one of the categories listed in this subsection. The
department shall award points as follows:
(1) 25 points, if 10 percent or more of the total
number of the rent-restricted units at or below 60 percent of the
area median gross household income are designated for tenants at or
below 30 percent of the area median gross household income;
(2) 20 points, if 40 percent or more of the total
number of the rent-restricted units at or below 60 percent of the
area median gross household income are designated for tenants at or
below 50 percent of the area median gross household income;
(3) 17 points, if 35 percent or more of the total
number of the rent-restricted units at or below 60 percent of the
area median gross household income are designated for tenants at or
below 50 percent of the area median gross household income;
(4) 14 points, if 30 percent or more of the total
number of the rent-restricted units at or below 60 percent of the
area median gross household income are designated for tenants at or
below 50 percent of the area median gross household income;
(5) 11 points, if 25 percent or more of the total
number of the rent-restricted units at or below 60 percent of the
area median gross household income are designated for tenants at or
below 50 percent of the area median gross household income;
(6) eight points, if 20 percent or more of the total
number of the rent-restricted units at or below 60 percent of the
area median gross household income are designated for tenants at or
below 50 percent of the area median gross household income;
(7) five points, if 15 percent or more of the total
number of the rent-restricted units at or below 60 percent of the
area median gross household income are designated for tenants at or
below 50 percent of the area median gross household income; or
(8) two points, if 10 percent or more of the total
number of the rent-restricted units at or below 60 percent of the
area median gross household income are designated for tenants at or
below 50 percent of the area median gross household income.
(j) Only an application for a development that meets the
requirements of Subsection (k) may receive points under Subsection
(l), except that an application involving the rehabilitation of
existing buildings or an application for a development receiving
funding from the United States Department of Agriculture is not
required to meet the requirements of Subsection (k) to receive
points under Subsection (l).
(k) The square feet of all of the units in the development,
for each type of unit, must be at minimum:
(1) 500 square feet for efficiency units;
(2) 550 square feet for one-bedroom units reserved
exclusively for occupancy by elderly individuals and 650 square
feet for all other one-bedroom units;
(3) 750 square feet for two-bedroom units reserved
exclusively for occupancy by elderly individuals and 900 square
feet for all other two-bedroom units;
(4) 1,000 square feet for three-bedroom units; or
(5) 1,200 square feet for four-bedroom units.
(l) The department by rule shall develop a list from which
the applicant may indicate to the department specific unit and
development amenity and quality features to be offered with respect
to the development and for which the department may award points to
the application. The total points awarded for unit and development
amenity and quality features may not exceed 25 points. The
department by rule shall award double the point value for unit and
development amenity and quality features with respect to
applications involving rehabilitation of existing buildings or
proposing single-room occupancy developments.
(m) If the development has received a commitment for 10
percent or more of the total development cost from a political
subdivision that is not a related party of the applicant, the
department shall award the application 20 points. A commitment of
financing described by this subsection may include financing
through federal community development block grant or loan funds,
HOME funds, funds from a local housing trust, local affordable
housing funds, or other quantifiable contributions by the political
subdivision. For rural developments, HOME and housing trust funds
allocated by the department qualify the application for points
under this subsection. The applicant must submit with the
application a copy of the commitment of funds or a copy of the
application filed with the funding entity and a letter from the
funding entity indicating that the application was received. The
applicant must provide a commitment of funds not later than the 60th
day before the date of the board recommendation of housing tax
credit allocations to receive points under this subsection.
(n) The department shall award points based on written
statements of support or opposition from state elected officials
representing constituents in areas that include the location of the
development. The department shall score letters from state
representatives or state senators received by the department not
later than the 30th day before the date the board first meets to
consider applications for an allocation of housing tax credits.
The department shall award an amount of points not to exceed 14
points as follows:
(1) a letter of support from a state representative or
a state senator, 10 points for a single letter of support or 14
points for two letters of support;
(2) a letter of opposition from either a state
representative or a state senator, 10 total points deducted;
(3) a letter of opposition from both a state
representative and a state senator, 25 total points deducted; or
(4) if both the state representative and the state
senator are contacted but no letters either in support or
opposition are received, seven total points.
(o) Excluding any units reserved for a manager, if the units
in the development are restricted so that the rent plus the
allowance for utilities is equal to or below the maximum housing tax
credit rent, the department shall award the application points as
follows:
(1) if more than 95 percent of the units are
restricted, 12 points;
(2) if more than 90 percent but not more than 95
percent of the units in the development are restricted, 10 points;
(3) if more than 85 percent but not more than 90
percent of the units in the development are restricted, nine
points;
(4) if more than 80 percent but not more than 85
percent of the units in the development are restricted, eight
points; and
(5) if 80 percent or less of the units in the
development are restricted, seven points.
(p) If the applicant will pay ad valorem taxes on the
development for a minimum of 15 years by making an annual payment
that is equal to at least 50 percent of the total ad valorem taxes
due in a tax year on that development, the department shall award
the application eight points.
(q) The department shall award the application a total of
five points under this subsection if the development is located
within one of the following geographical areas:
(1) a geographical area that is:
(A) an economically distressed area, as defined
by Section 17.921, Water Code;
(B) a colonia, as defined by Section 2306.581; or
(C) a difficult development area, as
specifically designated by the secretary of housing and urban
development;
(2) a designated state or federal empowerment or
enterprise zone, urban enterprise community, or urban enhanced
enterprise community;
(3) a municipality-sponsored area or zone where a
municipality or county has, through a local government initiative,
specifically encouraged or channeled growth, neighborhood
preservation, or redevelopment;
(4) a county that has received an award, or that
contains a municipality that has received an award, within the past
three years, from the Texas Department of Agriculture's rural
municipal finance program, Texas capital fund real estate
development program, or Texas capital fund infrastructure
development program; or
(5) a qualified census tract, as defined by Section
42, Internal Revenue Code of 1986, the development of which
contributes to a concerted community revitalization plan.
(r) The department shall award an application five points
if the development is located in a census tract in which there are
no other existing developments supported by housing tax credits.
(s) The department shall award points to an application for
a development that provides supportive services to tenants as
follows:
(1) if the applicant coordinates tenant services with
services provided through state workforce development and welfare
programs as evidenced by execution of a Tenant Supportive Services
Certification, one point; and
(2) if the applicant certifies that the development
will provide special supportive services appropriate for the
proposed tenants at no cost to the tenants either on-site or
off-site with transportation provided by the development, one
point.
(t) Service options under Subsection (s) include:
(1) child care;
(2) counseling services;
(3) GED preparation;
(4) English as a second language classes;
(5) credit counseling;
(6) financial planning assistance or courses;
(7) scholastic tutoring;
(8) social events and activities;
(9) a senior meal program;
(10) a home-delivered meal program; or
(11) any other program described under Title IV-A,
Social Security Act (42 U.S.C. Section 601 et seq.), that:
(A) enables children to be cared for in their
homes or the homes of relatives;
(B) ends the dependence of needy families on
government benefits by promoting job preparation;
(C) prevents or reduces the incidence of
out-of-wedlock pregnancies; or
(D) encourages the formation and maintenance of
two-parent families.
(u) The department shall award two points to an application
that involves the preservation of existing low income housing.
(v) The department shall award two points to an application
for a development funded by federal HOPE VI funding or by public
housing authority capital grant funds.
(w) The department shall award one point to an application
for a development in which 100 percent of the units will be reserved
for occupancy by elderly individuals or homeless persons.
(x) The department shall award one point to an application
in which the applicant commits to notifying the local public
housing authority or the nearest agency that administers Section 8
certificates or vouchers for the area in which the development is
located that the applicant will consider as tenants for the
development individuals and households on the public housing
authority's waiting list for occupancy.
(y) The department shall award two points to an application
for a development in which 50 percent or more of the total units in
the development will have two or more bedrooms.
(z) The department shall award one point to an application
if, for the minimum purchase price provided by, and in accordance
with the requirements of, Section 42(i)(7), Internal Revenue Code
of 1986, the development owner agrees to provide a right of first
refusal to purchase the development on or after the date of
termination of the compliance period to:
(1) a qualified nonprofit organization;
(2) for a single family building, an individual
tenant; or
(3) for a multifamily housing development, a tenant
cooperative, a resident management corporation in the development,
or another association of tenants in the development.
(aa) The department shall award one point if the applicant
agrees to extend the affordable housing period beyond the minimum
required by Section 42, Internal Revenue Code of 1986, for an
additional five-year period.
(bb) The department shall award points to an application for
a mixed-income development comprised of both market rate units and
qualified housing tax credit units as follows:
(1) for a development in which not more than 85 percent
of the units are housing tax credit units, three points;
(2) for a development in which more than 85 percent but
not more than 90 percent of the units are housing tax credit units,
two points; or
(3) for a development in which more than 90 percent but
not more than 95 percent of the units are housing tax credit units,
one point.
(cc) The department shall award four points to an
application for a development that consists of not more than 36
units and is not part of, or contiguous to, a larger development.
(dd) The department shall award one point to an application
if the applicant or a representative of the applicant has attended a
fair housing seminar at least 5-1/5 hours in duration within the
preceding three years.
(ee) The department shall award one point to an application
if the development experience of the development owner, the owner's
controlling person, or the developer exceeds by 20 residential
units the minimum development experience required by Section
2306.67042(d).
(ff) The department shall award four points to an
application if the applicant submitted an application during the
preapplication process in conformity with department rules. An
application that involves funding from the Texas Rural Development
Office of the United States Department of Agriculture that also
involves the rehabilitation of an affordable housing development is
eligible for points under this subsection regardless of whether the
applicant submitted an application during the preapplication
process.
(gg) If two or more applications receive the same score
under this section and are eligible for an allocation of housing tax
credits, the department shall give preference to the development
that requests the least amount of housing tax credits per net
rentable area.
(hh) The department shall implement a system of evaluating
the financial aspects of housing tax credit developments that
recognizes that those developments do not need, and are not subject
to, the financial underwriting necessary for a mortgage loan
transaction when the department has a financial interest in the
loan. In evaluating housing tax credit developments, the
department shall ensure only that the low income housing tax credit
dollars allocated to a development do not exceed the amount
necessary for the financial feasibility of the development and its
viability throughout the first 15 years of operation.
(ii) The department shall evaluate [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 evaluate [underwrite] applications
until the department has processed enough applications satisfying
the department's evaluation [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 evaluate [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 evaluate [underwrite]
an application to determine the financial feasibility of the
development and an appropriate level of housing tax credits.
(jj) In determining the financial feasibility of a
development, the department shall consider only:
(1) the sources and uses of funds and the total
financing planned for the development;
(2) any proceeds or receipts expected to be generated
by reason of tax benefits;
(3) the percentage of the housing tax credit dollar
amount used for development costs other than the cost of
intermediaries; and
(4) the reasonableness of the developmental and
operational costs of the development.
(kk) 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 scoring applications for purposes of housing tax
credit allocations, the department shall award, consistent with
Section 42, Internal Revenue Code of 1986 (26 U.S.C. Section 42),
preference points to a development that will:
[(1) when practicable and feasible based on
documented, committed, and available third-party funding sources,
serve 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 tenants who are income-eligible under
the low income housing tax credit program.
[(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 58. Section 2306.6711, Government Code, is amended
by amending Subsections (b) and (f) and adding Subsection (g) 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 [department's underwriting policy]
and by federal law, and in any event may not allocate to any one
person [the applicant] housing tax credits in an amount greater
than $2 million in a single application round, except as provided by
this subsection. The $2 million limitation applies to a person
regardless of whether the person is involved in the development in
the capacity of the applicant or in the capacity of a related party.
A development financed with tax-exempt bonds is not subject to the
$2 million limitation, and the development does not count towards
the total limit on housing tax credits per person. The $2 million
limitation does not apply to:
(1) an entity that raises or provides equity for one or
more developments, solely with respect to its actions in raising or
providing equity for those developments;
(2) the provision by an entity of qualified commercial
financing as that term is defined under Section 49(a)(1)(D)(ii),
Internal Revenue Code of 1986; or
(3) a development consultant with respect to the
provision of consulting services, provided the development
consultant is not a related party to the applicant and otherwise
does not own an interest in the development and the consultant fee
received for those services does not exceed 10 percent of the fee to
be paid to the developer, or $150,000, whichever is less.
(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:
(1) are new construction and are or will be located
more than one linear mile apart; or
(2) are placed in service in different taxable years.
(g) Subsection (f)(2) [This subsection] applies only to
communities contained within counties with populations exceeding
one million.
SECTION 59. Sections 2306.6712(a)-(d), Government Code,
are amended to read as follows:
(a) If a proposed modification would materially and
adversely alter a development approved for an allocation of a
housing tax credit, the department shall require the applicant to
file a formal, written amendment to the application on a form
prescribed by the department.
(b) If the director determines that a proposed modification
may materially and adversely alter a development, the [The]
director shall require the department staff assigned to evaluate
[underwrite] applications as described by Section 2306.6710(ii) to
review [evaluate] the amendment and provide an analysis and written
recommendation to the board. The appropriate monitor under Section
2306.6719 shall also provide to the board an analysis and written
recommendation regarding the amendment. If the director determines
that a modification would not materially and adversely alter a
development, the director shall approve the modification without
board action.
(c) The board must vote on whether to approve an [the]
amendment proposing a modification that the director determines may
materially and adversely alter a development or whether to require
resolution of the matter through an alternative dispute resolution
process under Section 2306.082. The board by vote may reject an
amendment and, if appropriate, rescind the allocation of housing
tax credits and reallocate the credits to other applicants on the
waiting list required by Section 2306.6711 if the board determines
that the modification proposed in the amendment:
(1) would materially alter the development in a
negative manner; or
(2) would have adversely affected the selection of the
application in the application round.
(d) Material alteration of a development includes:
(1) a significant modification of the site plan;
(2) a modification of the number of units or bedroom
mix of units;
(3) a substantive modification of the scope of tenant
services;
(4) a change in the income levels of the tenants to be
served by the development [a reduction of three percent or more in
the square footage of the units or common areas];
(5) any modification in the attributes of the
development that would have affected the selection of the
application in the application round [a significant modification of
the architectural design of the development]; and
(6) [a modification of the residential density of the
development of at least five percent; and
[(7)] any other modification considered significant
by the board.
SECTION 60. Section 2306.6713(e), Government Code, is
amended to read as follows:
(e) The director may not refuse the transfer of a project
that received points in an application round for being developed by
a historically underutilized business to a development owner that
is not a historically underutilized business if the transfer occurs
at least three years after completion of the project [development
owner shall certify to the director that the tenants in the
development have been notified in writing of the transfer before
the 30th day preceding the date of submission of the transfer
request to the department].
SECTION 61. Section 2306.6715, Government Code, is amended
by amending Subsections (a), (c), (d), and (e) and adding
Subsections (d-1), (d-2), and (f) to read as follows:
(a) In a form prescribed by the department in the qualified
allocation plan, an applicant may appeal the following decisions
made by the department in the application evaluation process
provided by Section 2306.6710:
(1) an evaluation [a determination] regarding the
application's satisfaction of threshold [and underwriting]
criteria under Section 2306.67042 or scoring criteria under Section
2306.6710;
(2) the scoring of the application; and
(3) a recommendation as to the amount of housing tax
credits to be allocated to the application.
(c) An applicant must file a written appeal authorized by
this section with the department not later than the 10th [seventh]
day after the date the department publishes the results of the
application evaluation process provided by Section 2306.6710. In
the appeal, the applicant must specifically identify the
applicant's grounds for appeal, based on the original application
and additional documentation filed with the original application.
(d) The director shall respond in writing to the appeal not
later than the 14th day after the date of receipt of the appeal. If
the applicant is not satisfied with the director's response to the
appeal, the applicant may request alternative dispute resolution in
addition to making an appeal directly in writing to the board.
(d-1) An [, provided that an] appeal filed with the board
under Subsection (d) [this subsection] must be received by the
board before:
(1) the seventh day preceding the date of the board
meeting at which the relevant allocation decision is expected to be
made; or
(2) the third day preceding the date of the board
meeting described by Subdivision (1), if the director does not
respond to the appeal before the date described by Subdivision (1).
(d-2) The department may contract with the State Office of
Administrative Hearings to provide alternative dispute resolution
services, excluding binding arbitration. Alternative dispute
resolution must run concurrently with an appeal to the board.
(e) Board review of an appeal under Subsection (d) is based
on the original application and additional documentation filed with
the original application. The board may not review any information
not contained in or filed with the original application, unless
doing so is recommended as a result of the alternative dispute
resolution process. In making its decision regarding the appeal,
the board shall consider the result of any alternative dispute
resolution requested under Subsection (d) and any recommendations
made to the board as a result of that process. The decision of the
board regarding the appeal is a final administrative decision
subject to judicial review.
(f) If a decision of the board or department staff denying
an application for low income housing tax credits is reversed on
appeal, the department shall award the applicant an appropriate
forward commitment of tax credits for the next application round
that begins after the date of the reversal.
SECTION 62. Section 2306.6716(a), Government Code, is
amended to read as follows:
(a) A fee charged by the department for filing an
application or for receiving an allocation or a commitment of
housing tax credits may not be excessive and must reflect the
department's actual costs in processing the application, providing
copies of documents to persons connected with the application
process, and making appropriate information available to the public
through the department's website. The department shall treat the
total amount of all allocation or commitment fees as being earned
and available for use in the year in which the fees were received.
SECTION 63. Sections 2306.6717(a), (b), and (d), Government
Code, are amended to read as follows:
(a) Subject to Section 2306.67041, the department shall
make the following items available on the department's website:
(1) as soon as practicable, any proposed application
submitted through the preapplication process established by this
subchapter;
(2) before the 30th day preceding the date of the
relevant board allocation decision, except as provided by
Subdivision (3), the entire application, including all supporting
documents and exhibits, the application log, a scoring sheet
providing details of the application score, and any other document
relating to the processing of the application;
(3) not later than the third working day after the date
of the relevant determination, the results of each stage of the
application process, including the results of the application
scoring and evaluation [underwriting] phases and the allocation
phase;
(4) before the 15th day preceding the date of board
action on the amendment, notice of an amendment under Section
2306.6712 and the recommendation of the director and monitor
regarding the amendment; and
(5) an appeal filed with the department or board under
Section 2306.6715 or 2306.6721 and any other document relating to
the processing of the appeal.
(b) The department shall make available on the department's
website information regarding the low income housing tax credit
program, including notice regarding public hearings, meetings, the
opening and closing dates for applications, submitted
applications, and applications approved for evaluation
[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 newspapers of general or limited
circulation that serve the community in which the development is to
be located;
(5) nonprofit and for-profit organizations;
(6) on-site property managers of occupied
developments that are the subject of applications for posting in
prominent locations in those developments; and
(7) any other interested persons and community groups
that request the information.
(d) Notwithstanding any other provision of this section,
the department shall [may] treat the financial statements of any
applicant as confidential and may [elect] not [to] disclose those
statements to the public.
SECTION 64. Section 2306.6718(a), Government Code, is
amended to read as follows:
(a) The department, not the applicant, shall provide
written notice of the filing of an application to the following
elected officials:
(1) members of the legislature who represent the
community containing the development described in the application;
and
(2) the chief executive officer of the political
subdivision containing the development described in the
application.
SECTION 65. Section 2306.6719, Government Code, is amended
by amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) For a development that is not receiving federal
assistance such that a federal agency will be monitoring the
construction or rehabilitation of the development and will provide
the department with copies of its construction inspection or
operational inspection reports, the [The] department may contract
with an independent third party to monitor the [a] development
during its construction or rehabilitation and during its operation
for compliance with:
(1) any conditions imposed by the department in
connection with the allocation of housing tax credits to the
development; and
(2) appropriate state and federal laws, as required by
other state law or by the board.
(c) Except for the affordable housing disposition
properties monitored under the memorandum of understanding between
the department and the Federal Deposit Insurance Corporation, the
cost of compliance monitoring for each development for 2006 may not
exceed $25 per monitored unit. For years after 2006, the annual
compliance fee may be increased to more than $25 per monitored unit
only as necessary to adjust for inflation as determined by the
consumer price index published by the United States Department of
Labor.
SECTION 66. Section 2306.6720, Government Code, is amended
to read as follows:
Sec. 2306.6720. ENFORCEABILITY OF APPLICANT
REPRESENTATIONS. Each representation made by an applicant to
secure a housing tax credit allocation is enforceable by the
department [and the tenants of the development supported with the
allocation].
SECTION 67. Section 2306.6721, Government Code, is amended
by amending Subsection (d) and adding Subsection (e) to read as
follows:
(d) A person debarred by the department from participation
in the program is not eligible to participate in the program for a
minimum of five years from the date of disbarment.
(e) A person debarred by the department from participation
in the program may appeal the person's debarment:
(1) through the alternative dispute resolution
process under Section 2306.082; or
(2) directly to the board.
SECTION 68. Section 2306.6722, Government Code, is amended
to read as follows:
Sec. 2306.6722. DEVELOPMENT ACCESSIBILITY. Any
development supported with a housing tax credit allocation shall
comply with the accessibility standards that are detailed
[required] under Section 504, Rehabilitation Act of 1973 (29 U.S.C.
Section 794), and specified under 24 C.F.R. Part 8, Subpart C, to
the same extent required for developments receiving federal
financial assistance.
SECTION 69. Section 2306.6723(a), Government Code, is
amended to read as follows:
(a) The department shall jointly administer with the rural
development agency the allocations [any set-aside] for rural areas
to:
(1) ensure the maximum use and optimum geographic
distribution of housing tax credits in rural areas; and
(2) provide for information sharing, efficient
procedures, and fulfillment of development compliance requirements
in rural areas.
SECTION 70. Section 2306.6724, Government Code, is amended
by amending Subsections (a)-(d) and adding Subsection (c-1) to read
as follows:
(a) Not later than September 1 [September 30] of each year,
the department shall prepare and submit to the board for adoption
the qualified allocation plan required by federal law for use by the
department in setting criteria and priorities for the allocation of
tax credits under the low income housing tax credit program.
(b) The board shall adopt and submit to the governor the
qualified allocation plan not later than October 1 [November 15].
(c) The governor shall approve, reject, or modify and
approve the qualified allocation plan not later than November
[December] 1.
(c-1) If the governor rejects the qualified allocation plan
submitted under Subsection (b), the board immediately shall adopt
and submit to the governor a modified qualified allocation plan.
The governor shall approve or modify and approve the modified
qualified allocation plan not later than November 15.
(d) An applicant for a low income housing tax credit to be
issued a commitment during the initial allocation cycle in a
calendar year must submit an application to the department not
later than March 15 [1].
SECTION 71. Sections 2306.6725(a) and (c), Government Code,
are amended to read as follows:
(a) In allocating low income housing tax credits, the
department shall score each application using a point system that
is consistent with Section 42, Internal Revenue Code of 1986, and
Section 2306.6710 of this chapter [based on criteria adopted by the
department that are consistent with the department's housing goals,
including criteria addressing the ability of the proposed project
to:
[(1) provide quality social support services to
residents;
[(2) demonstrate community and neighborhood support
as defined by the qualified allocation plan;
[(3) consistent with sound underwriting practices and
when economically feasible, serve individuals and families of
extremely low income by leveraging private and state and federal
resources, including federal HOPE VI grants received through the
United States Department of Housing and Urban Development;
[(4) serve traditionally underserved areas;
[(5) remain affordable to qualified tenants for an
extended, economically feasible period; and
[(6) comply with the accessibility standards that are
required under Section 504, Rehabilitation Act of 1973 (29 U.S.C.
Section 794), and specified under 24 C.F.R. Part 8, Subpart C].
(c) On awarding tax credit allocations, the board shall
document the reasons for each project's selection, including an
explanation of:
(1) all discretionary factors used in making its
determination; and
(2) the reasons for any decision that conflicts with
the recommendations of department staff under Section 2306.6731 or
the scoring criteria under Section 2306.6710.
SECTION 72. Section 2306.6728(a), Government Code, is
amended to read as follows:
(a) The department by rule shall adopt a policy regarding
the admittance to low income housing tax credit properties of
income-eligible individuals and families receiving assistance
under Section 8, United States Housing Act of 1937 (42 U.S.C.
Section 1437f). The policy must provide for admittance to the
property for any individual or family whose Section 8 assistance is
sufficient to allow the individual or family to make the required
rental payment and who meets any other general criteria applicable
to all tenants.
SECTION 73. Section 2306.6729, Government Code, is amended
by adding Subsection (c) to read as follows:
(c) The department by rule shall implement a procedure to
integrate the allocation of housing tax credits to nonprofit
applicants with the allocation of housing tax credits to all other
eligible applicants. If merit-based selection of applicants does
not result in a sufficient allocation of housing tax credits to
nonprofit applicants to satisfy any federally mandated set-aside,
the department may select the next highest scoring nonprofit
applicant in place of a for-profit applicant to satisfy the
federally mandated set-aside.
SECTION 74. Section 2306.6731(a), Government Code, is
amended to read as follows:
(a) Department staff shall provide written, documented
recommendations to the board concerning [the financial or
programmatic viability of] each application for a low income
housing tax credit before the board makes a decision relating to the
allocation of tax credits. The board may not make without good
cause an allocation decision that conflicts with the
recommendations of department staff.
SECTION 75. Section 2306.6733, Government Code, is amended
by amending Subsection (a) and adding Subsection (a-1) to read as
follows:
(a) A former board member or a former director, deputy
director, director of housing programs, director of compliance,
director of underwriting, member of any department committee
involved in the selection of developments for an allocation of
housing tax credits, or low income housing tax credit program
manager employed by the department may not:
(1) for compensation, represent an applicant for an
allocation of low income housing tax credits or a related party
before the second anniversary of the date that the board member's,
director's, committee member's, or manager's service in office or
employment with the department ceases;
(2) represent any applicant or related party or
receive compensation for services rendered on behalf of any
applicant or related party regarding the consideration of a housing
tax credit application in which the former board member, director,
committee member, or manager participated during the period of
service in office or employment with the department, either through
personal involvement or because the matter was within the scope of
the board member's, director's, committee member's, or manager's
official responsibility; or
(3) for compensation, communicate directly with a
member of the legislative branch to influence legislation on behalf
of an applicant or related party before the second anniversary of
the date that the board member's, director's, committee member's, or
manager's service in office or employment with the department
ceases.
(a-1) If the administration of the low income housing tax
credit program is transferred to any other department or agency,
the prohibition under Subsection (a) applies to any person that
would have been prohibited from participating in a low income
housing tax credit application as if the housing tax credit program
had remained under the administration of the department.
SECTION 76. Subchapter DD, Chapter 2306, Government Code,
is amended by adding Section 2306.6735 to read as follows:
Sec. 2306.6735. RELATIONSHIP TO FEDERAL LAW. (a) This
subchapter is enacted to implement the low income housing tax
credit program established by Section 42, Internal Revenue Code of
1986.
(b) To the extent that any provision of this subchapter is
held to be inconsistent with federal law, the provision shall be
given effect in accordance with its terms to the greatest extent
possible and consistent with the federal law, and the inconsistency
of that provision has no effect on the remaining provisions of this
subchapter.
(c) If a federal law or regulation is changed without
providing for temporary waivers to allow compliance with state law
and, as a result of this change, there is insufficient time to
comply with a provision required by this subchapter, the department
may act so as to comply with federal law subject to the requirements
of Subsection (e).
(d) If a federal law or court order conflicts with this
subchapter, the federal law or court order prevails over this
subchapter.
(e) If the department determines that a provision of this
subchapter is inconsistent with Section 42, Internal Revenue Code
of 1986, or any federal regulations promulgated in compliance with
that section, the department shall notify the governor, the
lieutenant governor, the speaker of the house of representatives,
the presiding officer of the house and senate with oversight of the
department, and the attorney general. If the attorney general
concurs with the department determination that a provision of this
subchapter is inconsistent with federal law, the department shall
be authorized to implement the federal law.
SECTION 77. The heading to Section 2306.803, Government
Code, is amended to read as follows:
Sec. 2306.803. IDENTIFICATION OF CERTAIN AT-RISK
MULTIFAMILY HOUSING[: IDENTIFICATION, PRIORITIZATION, AND
PRESERVATION].
SECTION 78. Sections 2306.804(a) and (b), Government Code,
are amended to read as follows:
(a) To the extent possible, the department shall use
available resources for the preservation and rehabilitation of the
multifamily housing developments identified [and listed] under
Section 2306.803.
(b) To the extent consistent with Section 2306.6710
[possible], the department shall allocate low income housing tax
credits to applications involving the preservation of developments
assigned a Class A priority under Section 2306.803 and in both urban
and rural areas [communities] in approximate proportion to the
housing needs of each uniform state service region.
SECTION 79. Section 2306.805(a), Government Code, is
amended to read as follows:
(a) The department shall establish and administer a housing
preservation incentives program to provide incentives through loan
guarantees, loans, and grants to political subdivisions, housing
finance corporations, public housing authorities, for-profit
organizations, and nonprofit organizations for the acquisition and
rehabilitation of multifamily housing developments with [assigned]
a Class A or Class B priority under this subchapter [Section
2306.803].
SECTION 80. Section 1372.006(a), Government Code, is
amended to read as follows:
(a) An application for a reservation under Subchapter B or a
carryforward designation under Subchapter C must be accompanied by
a nonrefundable fee in the amount of $500, except that for issuers
of qualified residential rental project bonds the application must
be accompanied by a nonrefundable fee of $5,000, of which the board
shall retain $1,000 to offset the costs of the private activity bond
allocation program and the administration of that program and of
which the board shall transfer $4,000 through an interagency
agreement to the Texas Department of Housing and Community Affairs
to fund the housing resource center [for use in the affordable
housing research and information program] as provided by Section
2306.252 [2306.259].
SECTION 81. The following provisions of the Government Code
are repealed:
(1) Sections 2306.004(31)-(33), 2306.0724,
2306.077(d) and (e), 2306.078, 2306.079, 2306.081(c), 2306.1112,
2306.185(f), 2306.186(a)(2), 2306.186(f), 2306.251,
2306.257(b)-(d), 2306.259, 2306.270, 2306.313(c), 2306.314,
2306.6702(a)(12), 2306.6712(e), 2306.6723(c), 2306.6725(b) and
(d), 2306.6726, 2306.6727, 2306.6728(b) and (c), 2306.6730,
2306.6734, 2306.7581(a-1), 2306.803(b)-(d), 2306.804(c), and
2306.805(c)-(e);
(2) Subchapter II, Chapter 2306; and
(3) Subchapter JJ, Chapter 2306.
SECTION 82. The changes in law made by this Act relating to
the evaluation of applications for financial assistance
administered by the Texas Department of Housing and Community
Affairs apply only to an application submitted on or after the
effective date of this Act. An application submitted before the
effective date of this Act is governed by the law in effect when the
application was submitted, and the former law is continued in
effect for that purpose.
SECTION 83. This Act takes effect September 1, 2005, except
that Section 70 of this Act takes effect immediately if this Act
receives a vote of two-thirds of all 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,
Section 70 takes effect September 1, 2005.