79R5583 T
By: Talton H.B. No. 1167
A BILL TO BE ENTITLED
AN ACT
relating to the provision of housing in Texas and the continuation
and functions of the Texas Department of Housing and Community
Affairs and to other matters relating to housing or community
development.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
PART 1. General Provisions
SECTION 1.01. Section 2306.001, Texas Government Code, is
amended to read as follows:
Sec. 2306.001. PURPOSES. The purposes of the department
are to:
(1) assist [local governments] in:
(A) providing essential [public] housing
services for Texans of modest incomes [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 individuals and families of
modest means while acknowledging the importance of preserving the
existing character of established neighborhoods. [provide for the
housing needs of individuals and families of low, very low , and
extremely low income and families of moderate income];
(3) contribute to the preservation, development, and
redevelopment of neighborhoods and communities, including
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 [local government] the state;
(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 [and community
support services in the state] available to local communities.
SECTION 1.02. Section 2306.002, Texas Government Code, is
amended to read as follows:
Sec. 2306.002. POLICY. (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; and
(4) that there exists within all regions of this state
a shortage of sanitary and safe residential housing at prices or
rentals which persons and families of low income and families of
moderate income can afford;
(5) that this shortage has contributed to and will
contribute to the creation and persistence of substandard living
conditions that is inimical to the health, welfare, and prosperity
of the residents and communities of all regions of this state; and
(6) that 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 in order that [to] individuals and families of low and
very low income [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) Pursuant to its goals under Chapter 2306, Texas
Government Code, the department shall not approve, promulgate, nor
otherwise publish any rule that:
(1) establishes standards or parameters that exceed,
or deviate in any manner, any federal program requirements with
regard to state administration of any federal housing program; or
(2) imposes, or has the effect of imposing, direct
compliance requirements or costs on local governments, or program
applicants, that are not expressly required by federal law, federal
regulations or state statute.
SECTION 1.03. Section 2306.004, Texas Government Code, is
amended to read as follows:
Sec. 2306.004. DEFINITIONS. In this chapter:
(1) "Board" means the governing board of the
department.
(2) "Bond" means an evidence of indebtedness or other
obligation, regardless of the source of payment, issued by the
department under Subchapter P, including a bond, note, or bond or
revenue anticipation note, regardless of whether the obligation is
general or special, negotiable or nonnegotiable, in bearer or
registered form, in certified or book-entry form, in temporary or
permanent form, or with or without interest coupons.
(3) "Contract for Deed" means a seller-financed
contract for the conveyance of real property under which:
(A) legal title does not pass to the purchaser
until the consideration of the contract is fully paid to the seller;
and
(B) the seller's remedy for nonpayment is
recision or forfeiture or acceleration of any remaining payments
rather than judicial or nonjudicial foreclosure.
(4) "Department" means the Texas Department of Housing
and Community Affairs or any successor agency.
(5) "Director" means the executive director of the
department.
(6) "Economically depressed or blighted area" means an
area:
(A) that is a qualified census tract as defined
by Section 143(j), Internal Revenue Code of 1986 (26 U.S.C. Section
143(j)) or has been determined by the housing finance division to be
an area of chronic economic distress under Section 143, Internal
Revenue Code of 1986 (26 U.S.C. Section 143);
(B) established in a municipality that has a
substantial number of substandard, slum, deteriorated, or
deteriorating structures and that suffers from a high relative rate
of unemployment; or
(C) that has been designated as a reinvestment
zone under Chapter 311, Tax Code.
(7) "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.
(8) "Elderly individual" means an individual 60 years
of age or older or of an age specified by the applicable federal
program.
(9) "Family of moderate income" means a family:
(A) that is determined by the board to require
assistance, taking into account:
(i) the amount of the total income
available for housing needs of the individuals and families;
(ii) the size of the family;
(iii) the cost and condition of available
housing facilities;
(iv) the ability of the individuals and
families to compete successfully in the private housing market and
to pay the amounts required by private enterprise for sanitary,
decent, and safe housing; and
(v) standards established for various
federal programs determining eligibility based on income; and
(B) that does not qualify as a family of low
income.
(10) (9) "Federal government" means the United States
of America and includes any corporate or other instrumentality of
the United States of America, including the Resolution Trust
Corporation.
(11) (10) "Federal mortgage" means a mortgage loan for
residential housing:
(A) that is made by the federal government; or
(B) for which a commitment to make has been given
by the federal government.
(12) (11) "Federally assisted new communities" means
federally assisted areas that receive or will receive assistance in
the form of loan guarantees under Title X of the National Housing
Act (12 U.S.C. Section 1701 et seq.), and a portion of that
federally assisted area has received grants under Section 107(a)(1)
of the Housing and Community Development Act of 1974, as amended (42
U.S.C. Section 5301 et seq.).
(13) (12) "Federally insured mortgage" means a
mortgage loan for residential housing that:
(A) is insured or guaranteed by the federal
government; or
(B) the federal government has committed to
insure or guarantee.
(14) "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.
(15) "Historically underserved urban area" are the
communities that are located in either (a), (b), ( c ), or (d)
below:
(a) In State Uniform Service Region 3, a
community located in Collin, Dallas, Denton, Ellis, Hood, Hunt,
Kaufman, Johnson, Parker, Rockwall, or Tarrant counties that (1) is
not located within the city limits of Arlington, Texas, Dallas,
Texas, or Fort Worth, Texas, and (2) does not meet the definition of
a rural area; or
(b) In State Uniform Service Region 6, a
community located in Chambers, Fort Bend, Harris, Liberty,
Montgomery or Waller counties that (1) is not located within the
city limits of Houston, Texas, and (2) does not meet the definition
of a rural area; or
(c) In State Uniform Service Region 7, a
community located in Bastrop, Caldwell, Hays, Travis or Williamson
counties that (1) is not located within the city limits of Austin,
Texas, and (2) does not meet the definition of a rural area; or
(d) In State Uniform Service Region 9, a
community located in Atascosa, Bexar, Comal, Guadalupe or Wilson
counties that (1) is not located within the city limits of San
Antonio, Texas, and (2) does not meet the definition of a rural
area.
(e) The counties identified by subsections (a)
through (d) of this section shall be adjusted to exactly conform
with the definition or identification of metropolitan statistical
areas, as periodically revised by the appropriate federal agency,
for State Uniform Service Regions 3, 6, 7 and 9, respectively.
(16) (13) "Housing development" means property or
work or a project, building, structure, facility, or undertaking,
whether existing, new construction, remodeling, improvement, or
rehabilitation, that meets or is designed to meet minimum property
standards required by the department and that is financed under the
provisions of this chapter for the primary purpose of providing
sanitary, decent, and safe dwelling accommodations for rent, lease,
use, or purchase by individuals and families of low and very low
income and families of moderate income in need of housing. The term
includes:
(A) buildings, structures, land, equipment,
facilities, or other real or personal properties that are
necessary, convenient, or desirable appurtenances, including
streets, water, sewers, utilities, parks, site preparation,
landscaping, stores, offices, and other nonhousing facilities,
such as administrative, community, and recreational facilities the
department determines to be necessary, convenient, or desirable
appurtenances; and
(B) single and multifamily dwellings [in rural
and urban areas].
(17) (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, or 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.
(18) (15) "Individuals and families of low income"
means individuals and families earning not more than 80 percent of
the area median income or applicable federal poverty line, as
determined under Section 2306.123 or Section 2306.1231.
(19) (16) "Individuals and families of very low
income" means individuals and families earning not more than 60
percent of the area median income or applicable federal poverty
line, as determined under Section 2306.123 or Section 2306.1231.
(20) (17) "Individuals and families of extremely low
income" means individuals and families earning not more than 30
percent of the area median income or applicable federal poverty
line, as determined under Section 2306.123 or Section 2306.1231.
(21) (18) "Land development" means:
(A) acquiring land for residential housing
construction; and
(B) making, installing, or constructing
nonresidential improvements that the department determines are
necessary or desirable for a housing development to be financed by
the department, including:
(i) waterlines and water supply
installations;
(ii) sewer lines and sewage disposal
installations;
(iii) steam, gas, and electric lines and
installations; and
(iv) roads, streets, curbs, gutters, and
sidewalks, whether on or off the site.
(22) (19) "Local government" means a county,
municipality, special district, or any other political subdivision
of the state, a public, nonprofit housing finance corporation
created under Chapter 394, Local Government Code, or a combination
of those entities.
(23) (20) "Mortgage" means an obligation, including a
mortgage, mortgage deed, bond, note, deed of trust, or other
instrument, that is a lien:
(A) on real property; or
(B) on a leasehold under a lease having a
remaining term that, at the time the lien is acquired, does not
expire until after the maturity date of the obligation secured by
the lien.
(24) (21) "Mortgage lender" means a bank, trust
company, savings bank, mortgage company, mortgage banker, credit
union, national banking association, savings and loan association,
life insurance company, or other financial institution authorized
to transact business in this state and approved as a mortgage lender
by the department.
(25) (22) "Mortgage loan" means an obligation secured
by a mortgage.
(26) (23) "Municipality" includes only a municipality
in this state.
(27) "Person with disability" means a person that
meets the criteria of either (a) or (b) below and (c) of the
following:
(a) The person has an inability to engage in any
substantial gainful activity, but with the use of auxiliary
apparatus can otherwise participate in gainful activity, by reason
of any medically determinable physical or mental impairment, where
the disability:
(i) Has lasted or can be expected to last
for a continuous period of not less than 12 months, or which can be
expected to result in death, and;
(ii) substantially impedes his or her
ability to live independently; and
(iii) is of such a nature that the
disability could be improved by more suitable housing conditions.
(b) The person has a severe, chronic disability
which:
(i) is attributable to a mental or physical
impairment or combination of mental or physical impairment; and
(ii) was manifested before age 22; and
(iii) is likely to continue indefinitely;
and
(iv) results in substantial functional
limitations in three or more of the following areas of major life
activity:
(a) self-care;
(b) receptive and expressive
language;
(c) learning;
(d) mobility;
(e) self-direction;
(f) capacity for independent living;
(g) economic self-sufficiency.
(c) "Person with disability" does not include the
current condition of addiction to alcohol, a drug, an illegal
substance, or a federally controlled substance.
(28) "Neighborhood Association" means an organization
of persons living near one another within the organization's
defined boundaries and that has a primary purpose of working to
maintain or improve the general welfare of the neighborhood.
Neighborhood associations include homeowners associations and
property owners associations. Neighborhood associations do not
include broader based community organizations; organizations that
have no members other than board members; chambers of commerce;
community development corporations; school related organizations;
Lions, Rotary, Kiwanis, and similar organizations; Habitat for
Humanity; Boys and Girls Clubs; charities; public housing
authorities; or any governmental entity.
(29) (24) "Public agency" means the department or any
agency, board, authority, department, commission, political
subdivision, municipal corporation, district, public corporation,
body politic, or instrumentality of this state, including a county,
municipality, housing authority, state-supported institution of
higher education, school district, junior college, other district
or authority, or other type of governmental entity of this state.
(30) (25) "Real estate owned contractor" means a
person required to meet the obligations of a contract with the
department for managing and marketing foreclosed property.
(31) (26) "Real property" means land, including
improvements and fixtures on the land, property of any nature
appurtenant to the land or used in connection with the land, and a
legal or equitable estate, interest, or right in land, including
leasehold interests, terms for years, and a judgment, mortgage, or
other lien.
(32) (27) "Reserve fund" means any reserve fund
established by the department.
(33) (28) "Residential housing" means a specific work
or improvement undertaken primarily to provide dwelling
accommodations, including the acquisition, construction,
reconstruction, remodeling, improvement, or rehabilitation of land
and buildings and improvements to the buildings for residential
housing and other incidental or appurtenant nonhousing facilities.
(34) "Rural area" means an area that is located:
(A) outside the boundaries of a primary
metropolitan statistical area or a metropolitan statistical area;
or
(B) within the boundaries of a primary
metropolitan statistical area or a metropolitan statistical area,
if the statistical area has a population of 20,000 or less and does
not share a boundary with an urban area; or
(C) in an area that is eligible for funding by the
Rural Housing Service of the United States Department of
Agriculture.
(35) "Rural development" means a development or
proposed development that is contained within a Rural area as
defined in this section.
(36) (29) "Servicer" means a person required to meet
contractual obligations with the housing finance division or with a
mortgage lender relating to a loan financed under Subchapter J,
including:
(A) purchasing mortgage certificates backed by
mortgage loans;
(B) collecting principal and interest from the
borrower;
(C) sending principal and interest payments to
the division;
(D) preparing periodic reports;
(E) notifying the primary mortgage and pool
insurers of delinquent and foreclosed loans; and
(F) filing insurance claims on foreclosed
property.
(37) (30) "State low income housing plan" means the
comprehensive and integrated plan for the state assessment of
housing needs and allocation of housing resources.
(38) "Subprime loan" means a loan that is originated
by a lender designated as a subprime lender on the subprime lender
list maintained by the United States Department of Housing and
Urban Development or identified as a lender primarily engaged in
subprime lending under Section 2306.143.
(39) "Urban area" means the area or communities within
the boundaries of a primary metropolitan statistical area or a
metropolitan statistical area.
(37) "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.
(38) "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.
(39) "Rural county" means a county that is outside the
boundaries of a primary metropolitan statistical area or a
metropolitan statistical area.
(40) "Subprime loan" means a loan that is originated
by a lender designated as a subprime lender on the subprime lender
list maintained by the United States Department of Housing and
Urban Development or identified as a lender primarily engaged in
subprime lending under Section 2306.143.
SECTION 1.04. Section 2306.008, Texas Government Code, is
amended to read as follows:
Sec. 2306.008. Preservation of Affordable Housing. (a)
The department shall support in the manner described by Subsection
(b) the preservation of affordable housing for individuals with
special needs, as defined by Section 2306.511, and individuals and
families of low income at any location considered necessary by the
department.
(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 1.05 Section 2306.022, Texas Government Code, is
amended 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[11].
SECTION 1.06 Sections 2306.027, 2306.028, 2306.032, and
2306.0321, Texas 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 at least one member of the Board
a person with experience with neighborhood associations or
homeowners' associations.
(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 members
[Appointments] to the board that [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, [more
than a 10 percent] any interest in a business entity or other
organization regulated by or receiving money from the department;
or
(3) uses or receives [a substantial] any 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) As a condition of eligibility each board member shall
publicly disclose, and periodically update, any ownership interest
or involvement with any multifamily development or low income
housing tax credit development located either within or without the
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 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
board, including the role and functions of the department and board
in the administration of the appeals and alternative dispute
resolution process as described in this act;
(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.
(c) 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 provide the person with information regarding the
single family and multifamily bond program and the federal housing
programs administered by the department. In the event that the
department is unable to obtain an industry training at no cost to
the department, then the industry training requirement shall be
deferred until such time as such industry training is available at
no cost to the department.
(d) A person appointed to the board is entitled to
reimbursement, as provided by the General Appropriations Act, for
the travel expenses incurred in attending the training program[s]
regardless of whether the attendance at the program[s] occurs
before or after the person qualifies for office.
Sec. 2306.032. BOARD MEETINGS. (a) The board may hold
meetings when called by the presiding officer, the director, or
three of the members.
(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.
(c) All materials in the possession of the department that
are relevant to a matter proposed for discussion at a board meeting
must be posted on the department's website, including the verbatim
transcript from the previous board meeting, made available in
hard-copy format at the department, filed with the secretary of
state for publication by reference in the Texas Register, and
disseminated by any other means required by this chapter or by
Chapter 551.
(d) The materials described by Subsection (c), if pertinent
to an awards 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.
(e) The agenda for a board meeting must state each project
the staff is recommending for assistance by the department.
(f) For each item on the board's agenda at the meeting, the
board shall provide for public comment after the presentation made
by department staff and the motions made by the board on that topic.
(g) The board shall adopt rules that give the public a
reasonable amount of time for testimony at meetings.
Sec. 2306.0321. APPEAL OF BOARD AND DEPARTMENT DECISIONS.
(a) In accordance with Section 2306.082, Texas Government Code,
[T] the board shall adopt rules outlining a formal process for
appealing board and department decisions utilizing the alternative
dispute resolution process in a timely and meaningful manner.
(b) The rules must specify the requirements for appealing a
board or department decision, including:
(1) the persons eligible to appeal;
(2) the grounds for an appeal;
(3) the process for filing an appeal, including the
information that must be submitted with an appeal;
(4) a reasonable period in which an appeal must be
filed, heard, and decided;
(5) the process by which an appeal is heard and a
decision is made;
(6) the possible outcomes of an appeal; and
(7) the process by which notification of a decision
and the basis for a timely decision is given.
(c) In the event that a decision of the board or department
regarding a low income housing tax credit application is reversed
by either an appeal or alternative dispute resolution, and such
decision that was reversed prevented the applicant from receiving
an allocation of low income housing tax credits, the department
shall rectify its incorrect decision by awarding the applicant a
forward commitment of tax credits.
SECTION 1.07. Section 2306.036, Texas Government Code, is
amended to read as follows:
Sec. 2306.036. Employment of Director. (a) With the
approval of the governor, the board shall employ a director to serve
at the pleasure of the board.
(b) [After the election of a governor who did not approve
the director's employment under Subsection (a), that] The 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 1.08. Section 2306.039, Texas Government Code, is
amended to read as follows:
Sec. 2306.039. Open Meetings and Open Records
(a) Except as provided by Subsection (b), the department and
the Texas State Affordable Housing Corporation are subject to
Chapters 551 and 552.
(b) Chapter 551 and 552 of the Texas Government Code This
section does not apply to the personal or business financial
information, including but not limited to, social security numbers,
taxpayer identification numbers, or bank account numbers,
submitted by any applicant [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 1.09. Section 2306.070, Texas Government Code, is
amended to read as follows:
Section 2306.070. Budget. In preparing the department's
legislative appropriations request, the department shall also
prepare an operating budget for the housing finance division. The
department shall submit the operating budget to the Legislative
Budget Board, the Senate Finance Committee, and the House
Appropriations Committee. As a supplement to the Budget Request,
the department shall submit a report detailing the fees received,
on a cash basis, for each activity administered by the department
for each of the three previous years and an explanation of any
projected increase or decrease in fees estimated for the budget
that exceeds by three percent the fees received in the most recent
budget year.
SECTION 1.10. Sections 2306.072, 2306.0721, and 2306.0722,
Texas Government Code, are amended to read:
Sec. 2306.072. ANNUAL LOW INCOME HOUSING REPORT. (a) Not
later than December 18 of each year, the director shall prepare and
submit to the board an annual report of the department's housing
activities for the preceding year.
(b) Not later than the 30th day after the date the board
receives the report, the board shall submit the report to the
governor, lieutenant governor, speaker of the house of
representatives, and members of any legislative oversight
committee.
(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;
(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.
(d) Repealed by Acts 2003, 78th Leg., ch. 330, Sec. 31(1).
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.66(a), eff. Sept. 1,
1995; Acts 1997, 75th Leg., ch. 980, Sec. 13, eff. Sept. 1, 1997;
Acts 2001, 77th Leg., ch. 226, Sec. 1, eff. Sept. 1, 2001; Acts
2001, 77th Leg., ch. 1367, Sec. 4.01, eff. Sept. 1, 2001; Acts
2003, 78th Leg., ch. 330, Sec. 31(1), eff. Sept. 1, 2003.
Sec. 2306.0721. LOW INCOME HOUSING PLAN. (a) Not later
than December 18 of each year, the director shall prepare and submit
to the board an integrated state low income housing plan for the
next year.
(b) Not later than the 30th day after the date the board
receives the plan, the board shall submit the plan to the governor,
lieutenant governor, and the speaker of the house of
representatives.
(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) the formula for allocating housing resources
described in Section 2306.111 of this Chapter and the allocation
targets established under the formula for allocating housing
resources;
(6) (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;
(7) (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;
(8) (7) strategies to provide housing for individuals
and families with special needs in each uniform state service
region;
(9) (8) a description of the amount of funds and
housing tax credits allocated to the urban and rural areas of each
uniform state service region in the preceding year for each federal
and state housing or community service program. a description of
the department's efforts to encourage in each uniform state service
region the construction of housing units that incorporate energy
efficient construction and appliances;
(10) (9) an estimate and analysis of the housing
supply in each uniform state service region;
(11) (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;
(12) (11) strategies for meeting rural and
historically underserved urban areas housing needs;
(13) (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;
(14) (13) a summary of public comments received at a
hearing under this chapter or from another source that concern the
demand for colonia resident services described by Subdivision (12);
and
(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.
(d) The priorities and policies in another plan adopted by
the department must be consistent to the extent practical with the
priorities and policies established in the state low income housing
plan.
(e) To the extent consistent with federal law, the
preparation and publication of the state low income housing plan
shall be consistent with the filing and publication deadlines
required of the department for the consolidated plan.
(f) The director may subdivide the uniform state service
regions as necessary for purposes of the state low income housing
plan.
(g) The department shall include the plan developed by the
Texas State Affordable Housing Corporation under Section 2306.566
in the department's resource allocation plan under Subsection
(c)(5).
(h) The department shall consider and incorporate the
specific results of the programs of the Texas State Affordable
Housing Corporation in the department's estimate and analysis of
the housing supply in each uniform state service region under
Subsection (c)(9).
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 1.11. Section 2306.081, Texas Government Code, is
amended to read as follows:
Sec. 2306.081. PROJECT COMPLIANCE; DATABASE. (a) The
department, through the division with responsibility for
compliance matters, shall periodically monitor 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 associated with the project or the minimum level of any
federally required compliance review.
[(b) After completion of a project's construction phase,
the department shall periodically review the performance of the
project to confirm the accuracy of the department's initial
compliance evaluation during the construction phase.
(c) The department shall use the division responsible for
credit underwriting matters and the division responsible for
compliance matters to determine the amount of risk associated with
each project.]
(b) [(d)] The department shall create an easily accessible
database that contains all project compliance information
developed under this chapter, including project compliance
information provided to the department by the Texas State
Affordable Housing Corporation.
(c) [(e)] The department shall allow the Texas State
Affordable Housing Corporation timely access to the information in
the database.
SECTION 1.12. Section 2306.082, Texas 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, with the exception that the process
shall be binding, 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.
(c) The department shall designate a trained person to:
(1) coordinate the implementation of the policy
adopted under Subsection (a);
(2) serve as a resource for any training needed to
implement the procedures for negotiated rulemaking or alternative
dispute resolution; and
(3) collect data concerning the effectiveness of those
procedures, as implemented by the department.
SECTION 1.13. Amend Section 2306.093, Texas Government Code
to read as follows:
Sec. 2306.093. HOUSING ASSISTANCE GOAL. In administering
the programs described in Sections 2306.094 and 2306.097 of this
Chapter, the department [By action of the board the community
affairs division] shall have a goal to apply a minimum of 25 percent
of the division's total housing-related funds toward housing
assistance for individuals and families of very low income.
SECTION 1.14 Amend Section 2306.111, Texas Government Code,
to read as follows:
Sec. 2306.111. HOUSING FUNDS. (a) The department, through
the housing finance division, shall administer all federal housing
funds provided to the state under the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. Section 12704 et seq.) or any
other affordable housing program.
(b) In administering federal housing funds provided to the
state under the Cranston-Gonzalez National Affordable Housing Act
(42 U.S.C. Section 12704 et seq.), the department shall be required
to have an application acceptance period for multifamily housing
sponsors that runs concurrently with the application period for the
federal housing tax credit program and the housing trust fund
program. [The housing finance division shall adopt a goal to apply
an aggregate minimum of 25 percent of the division's total housing
funds toward housing assistance for individuals and families of
extremely low and very low income.]
(c) 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 [at
least 95] 100 percent of these funds for the benefit of:
(1) 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. By rule, the department shall set-aside 5% of the
funds available under this subsection for the benefit of persons
with disabilities who live in 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. The department shall annually
expend $10 million of the funds available under this subsection for
multifamily production or rehabilitation in an application cycle
that is open to all eligible applicants under Section 2306.111(b-1)
and (b-2). If the department does not receive sufficient feasible
applications for housing for persons with disabilities or
multifamily production or rehabilitation within the first four
months of the application cycle, then the funds shall be available
for other purposes authorized under the Cranston-Gonzalez National
Affordable Act. [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.]
(c) 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 [at
least 95] 100 percent of these funds for the benefit of
non-participating 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.
[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.]
(c-1) The following entities are eligible to apply for
set-aside funds under Subsection (c):
(1) nonprofit providers of affordable housing,
including community housing development organizations; and
(2) for-profit providers of affordable housing.
(c-2) In allocating set-aside funds under Subsection (c),
the department shall [may] not give preference to nonprofit
providers of affordable housing, except as required by federal law.
(d) The department shall allocate housing funds provided to
the state under the Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. Section 12701 et seq.), housing trust funds
administered by the department under Sections 2306.201-2306.206,
and commitments issued under the federal low income housing tax
credit program administered by the department under Subchapter DD
to all [urban/exurban areas] urban and rural areas, consistent with
Section 2306.004, Texas Government Code, of each uniform state
service region based on a formula developed by the department that
is based on the need for housing assistance and the availability of
housing resources in those [urban/exurban areas] urban 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. In determining the availability of housing resources for
its multifamily production programs, the department shall consider
the dollar amount of: (1) multifamily tax exempt bonds, (2) HOME
funds utilized for multifamily production or rehabilitation, and
(3) financing provided by or through a governmental entity for
multifamily production or rehabilitation, but excluding 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/exurban areas] urban and rural areas in other
uniform state service regions based on identified need and
financial feasibility. If the department determines that there is
less than $5 million in available housing trust funds in a calendar
year to allocate pursuant to Section 2306.201-2306.206 of this
Chapter, then the department shall be authorized to allocate the
housing trust funds based on the 13 state uniform service regions
without suballocating the funds between urban and rural areas;
provided, however, that the department will make the first award in
each region to the highest scoring rural application.
(d-1) Funds or credits are not required to be allocated
according to the regional allocation formula under Subsection (d)
if:
(1) the funds or credits are reserved for
contract-for-deed conversions or for set-asides mandated by state
or federal law; and
(2) each contract-for-deed allocation or set-aside
allocation equals not more than 10 percent of the total allocation
of funds or credits for the applicable program.
(d-2) In administering the federal low income housing tax
credit program, the department shall further subdivide the urban
allocation in any State Uniform Service Region where there is
located a historically underserved urban area, as defined in
Section 2306.004, based on the population ratio that the total of
the historically underserved urban areas bears to the population of
the urban area.
(d-3) Prior to the application of the regional allocation
formula, and notwithstanding this section 2306.111, for calendar
years 2006 and 2007, the department shall allocate an additional $2
million per year to Uniform State Service Region 9, 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 these Regions in prior years. The
department may utilize forward commitments in 2005 or 2006 to
satisfy the provisions of this subsection.
(d-4) In allocating federal housing low income housing tax
credit commitments under Subchapter DD of this chapter, the
department shall utilize 5% of each region's allocation to
developments which are financed through the Rural Housing Service
of the United States Department of Agriculture and that do not
exceed 48 units if new construction or of any size if rehabilitation
is involved. Any funds allocated to developments that satisfy this
subsection and that involve rehabilitation shall reduce the funds
set-aside for At-Risk developments.
(e) The department shall include in its annual low income
housing plan under Section 2306.0721:
(1) the formula developed by the department under
Subsection (d); and
(2) the allocation targets established under the
formula for the [urban/exurban areas] urban, historically
underserved urban 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/exurban areas] urban, historically
underserved urban 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).
[(g) For all urban/exurban areas and rural areas of each
uniform state service region, the department shall establish
funding priorities to ensure that:
(1) funds are awarded to project applicants who are
best able to meet recognized needs for affordable housing, as
determined by department rule;
(2) when practicable and when authorized under Section
42, Internal Revenue Code of 1986 (26 U.S.C. Section 42), the least
restrictive funding sources are used to serve the lowest income
residents; and
(3) funds are awarded based on a project applicant's
ability, when consistent with Section 42, Internal Revenue Code of
1986 (26 U.S.C. Section 42), practicable, and economically
feasible, to:
(A) provide the greatest number of quality
residential units;
(B) serve persons with the lowest percent area
median family income;
(C) extend the duration of the project to serve a
continuing public need;
(D) use other local funding sources to minimize
the amount of state subsidy needed to complete the project; and
(E) provide integrated, affordable housing for
individuals and families with different levels of income.]
(g) [(h)] The department by rule shall adopt a policy
providing for the reallocation of financial assistance
administered by the department, including financial assistance
related to bonds issued by the department, if the department's
obligation with respect to that assistance is prematurely
terminated.
(h) [(i)] The director shall designate an employee of the
department to act as the information officer and as a liaison with
the public regarding each application seeking an allocation of
housing funds described by this section.
(i) The department shall adopt a goal to apply an aggregate
minimum of 25 percent of the division's total housing funds toward
housing assistance for individuals and families of extremely low
and very low income, unless it is not possible to obtain operating
subsidies necessary to meet such goal.
SECTION 1.15. Section 2306.1111, Texas Government Code, is
amended to read as follows:
Sec. 2306.1111. UNIFORM APPLICATION AND FUNDING CYCLE. (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.
The department shall have a uniform application cycle for
multifamily applications for funding under the 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 Section
2306.201-2306.206, and commitments issued under the federal low
income housing tax credit program administered by the department
under Subchapter DD. In the event that the department does not
receive sufficient feasible applications during the uniform
application period for multifamily 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 Section 2306.201-2306.206,
then the department may consider additional applications. During
the first four months of any application period for multifamily
housing funding 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 Section 2306.201-2306.206,
the department shall not consider any applications requesting a
grant of funds.
(b) Wherever possible, the department shall use uniform
threshold requirements for single-family and multifamily housing
program applications, including uniform threshold requirements
relating to market studies and environmental reports.
SECTION 1.16. Amend Section 2306.1113, Texas Government
Code, to read as follows:
Sec. 2306.1113. EX PARTE COMMUNICATIONS. (a) During the
period beginning on the date a project application is filed and
ending on the date the board makes a final decision with respect to
any approval of that application, a member of the board may not
communicate regarding a project application, except with regard to
an application that has been included into the alternative dispute
resolution process described by Section 2306.082 of this chapter,
with the following persons:
(1) the applicant or a related party, as defined by
state law, including board rules, and federal law; and
(2) any person who is:
(A) active in the construction, rehabilitation,
ownership, or control of the proposed project, including:
(i) a general partner or contractor; and
(ii) a principal or affiliate of a general
partner or contractor; or
(B) employed as a lobbyist by the applicant or a
related party.
(a-1) Subject to Subsection (a-2), during the period
beginning on the date a project application is filed and ending on
the date the board makes a final decision with respect to any
approval of that application, an employee of the department may
communicate about the application with the following persons:
(1) the applicant or a related party, as defined by
state law, including board rules, and federal law; and
(2) any person who is:
(A) active in the construction, rehabilitation,
ownership, or control of the proposed project, including:
(i) a general partner or contractor; and
(ii) a principal or affiliate of a general
partner or contractor; or
(B) employed as a lobbyist by the applicant or a
related party.
(a-2) A communication under Subsection (a-1) may be oral or
in any written form, including electronic communication through the
Internet, and must satisfy the following conditions:
(1) the communication must be restricted to technical
or administrative matters directly affecting the application;
(2) the communication must occur or be received on the
premises of the department during established business hours; and
(3) a record of the communication must be maintained
and included with the application for purposes of board review and
must contain the following information:
(A) the date, time, and means of communication;
(B) the names and position titles of the persons
involved in the communication and, if applicable, the person's
relationship to the applicant;
(C) the subject matter of the communication; and
(D) a summary of any action taken as a result of
the communication.
(b) Notwithstanding Subsection (a) or (a-1), a board member
or department employee may communicate without restriction with a
person listed in Subsection (a) or (a-1) at any board meeting or
public hearing held with respect to the application.
(c) The department shall not adopt any rules that expand the
scope of Section 2306.1113(a) to any person other than a board
member or that would otherwise restrict communications with any
person within the department.
SECTION 1.17. Amend Section 2306.1114, Texas Government
Code, to read as follows:
Sec. 2306.1114. NOTICE OF RECEIPT OF APPLICATION OR
PROPOSED APPLICATION. (a) Not later than the 14th day after the
date an application or a proposed application for housing funds
described by Section 2306.111 has been filed, the department shall
directly provide written notice of the filing of the application or
proposed application to the following persons:
(1) the United States representative who represents
the community containing the development described in the
application;
(2) members of the legislature who represent the
community containing the development described in the application;
(3) the presiding officer of the governing body of the
political subdivision containing the development described in the
application;
(4) any member of the governing body of a political
subdivision who represents the area containing the development
described in the application;
(5) the superintendent and the presiding officer of
the board of trustees of the school district containing the
development described in the application; and
(6) any neighborhood [organizations] associations on
record with the [state or county] department in which the
development described in the application is to be located and whose
boundaries contain the proposed development site.
(b) The notice provided under Subsection (a) must include
the following information:
(1) the relevant dates affecting the application,
including:
(A) the date on which the application was filed;
(B) the date or dates on which any hearings on the
application will be held; and
(C) the date by which a decision on the
application will be made;
(2) a summary of relevant facts associated with the
development;
(3) a summary of any public benefits provided as a
result of the development, including rent subsidies and tenant
services; and
(4) the name and contact information of the employee
of the department designated by the director to act as the
information officer and liaison with the public regarding the
application.
SECTION 1.18. Section 2306.127, Texas 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 federal
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 1.19. Section 2306.147, Texas Government Code, is
amended to read as follows:
Sec. 2306.147. FEES AND PENALTIES. (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 fees imposed on the housing tax credit program administered by
the department under Subchapter DD shall not exceed the costs of
administering such program.
(b) The department shall waive grant application fees for
nonprofit organizations that offer expanded services such as child
care, nutrition programs, job training assistance, health
services, or human services.
SECTION 1.20. Amend Section 2306.148, Texas Government
Code, to read as follows:
Sec. 2306.148. UNDERWRITING STANDARDS. The board shall
have the specific duty and power to adopt underwriting standards
for loans made or financed by the housing finance division under its
single family and multifamily bond programs.
SECTION 1.21. Amend Section 2306.150, Texas Government
Code, 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 1.22. Amend Section 2306.171, Texas Government
Code, 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 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 that
benefit from the housing finance division's programs by attempting
to match the division's financing assistance 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 1.23. Amend Section 2306.174, Texas Government
Code, 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 of up to 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 1.24. Amend Section 2306.183 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 1.25. Amend Section 2306.185 to read as follows:
Sec. 2306.185. LONG-TERM AFFORDABILITY AND SAFETY OF
MULTIFAMILY RENTAL HOUSING DEVELOPMENTS. (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 according to the maximum allowable 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
maintains the affordability of the multifamily housing development
for the targeted income levels appropriate for the type of housing
program for the greater of:
(1) the minimum affordability period under the
respective federal or state program providing the financing; 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 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 to recover reasonable attorney's
fees if the party seeking enforcement of the restriction is
successful or the property owner if the enforcement action is
unsuccessful.
(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 cost of the development; or
(4) a grant
(f) An owner of the housing development who intends to sell,
lease, prepay the loan insured by the United States Department of
Housing and Urban Development, opt out of a housing assistance
payments contract under Section 8, United States Housing Act of
1937 (42 U.S.C. Section 1437f), or otherwise dispose of the
development shall agree to provide notice to the department at
least 12 months before the date of any attempt to dispose of the
development, prepay the loan, or opt out of the Section 8 contract
to enable the department to attempt to locate a buyer who will
conform to the development restrictions provided by this section.
(g) Repealed by Acts 2003, 78th Leg., Ch. 330, Sec. 31(1).
(f)(h) The department shall monitor a development owner's
compliance with this section.
SECTION 1.26. Amend Section 2306.186, Texas Government
Code, to read as follows:
Sec. 2306.186. MANDATORY DEPOSITS TO FUND NECESSARY
REPAIRS. (a) In this section:
(1) "Bank trustee" means a bank authorized to do
business in this state., with the power to act as trustee.
(2) "Department assistance" means any state or federal
assistance administered by or through the department, including low
income housing tax credits.
(2)(3) "First lien lender" means a lender whose lien
has first priority.
(3)(4) "Reserve account" means an individual account:
(A) created to fund any necessary repairs for a
multifamily rental housing development; and
(B) maintained by a first lien lender or bank
trustee.
(b) If the department is the first lien lender with respect
to the multifamily rental housing development, each owner who
receives a mortgage loan from the department assistance for a
multifamily rental housing development that contains 100 25 or more
rental units shall deposit annually into a reserve account:
(1) for the year 2004:
(A) not less than $150 per unit per year for units
one to five years old; and
(B) not less than $200 per unit per year for units
six or more years old; and
(2) for each year following the year 2004, the amounts
per unit per year as described by Subdivision (1).
(c) A land use restriction agreement or restrictive
covenant between the owner and the department must require the
owner to begin making annual deposits to the reserve account on the
date that occupancy of the multifamily rental housing development
stabilizes or the date that permanent financing for the development
is completely in place, whichever occurs later, and shall continue
making deposits until the earliest of the following dates:
(1) the date of any involuntary change in ownership of
the development;
(2) the date on which the owner suffers a total
casualty loss with respect to the development or the date on which
the development becomes functionally obsolete, if the development
cannot be or is not restored;
(3) the date on which the development is demolished;
(4) the date on which the development ceases to be used
as multifamily rental property; or
(5) the end of the affordability period specified by
the land use restriction agreement or restrictive covenant.
(d) The department shall be prohibited from imposing any
requirements regarding the preparation of a property condition
assessment or the creation, maintenance or funding of a reserve
account on any multifamily rental housing development if the
department is not the first lien lender of multifamily rental
housing development. With respect to multifamily rental
developments, if the establishment of a reserve fund for repairs
has not been required by the first lien lender, the development
owner shall set aside the repair reserve amount as a reserve for
capital improvements. The reserve must be established for each
unit in the development, regardless of the amount of rent charged
for the unit.
(e) Beginning with the 11th year after the awarding of any
mortgage loan financial assistance for the development by the
department that results in the department being the first lien
lender, the owner of a multifamily rental housing development shall
contract for a third-party physical needs assessment at appropriate
intervals that are consistent with lender requirements with respect
to the development to determine compliance with local health,
safety, and building codes.If the first lien lender does not
require a third-party physical needs assessment orIf if the
department is the first lien lender, the owner shall contract with a
third party to conduct a physical needs assessment at least once
during each five-year period beginning with the 11th year after the
awarding of any mortgage loan that results in the department being
the first lien lender 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. The provisions of this section
2306.186(e) 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. To the extent that the department has
previously imposed the requirements on any property that is
required to maintain a reserve account under any other provisions
of federal or state law, the department shall prepare an amendment
to the land use restriction agreement or restrictive covenant
removing such requirement.
(f) The department may complete necessary repairs if the
owner fails to complete the repairs as required by Subsection (e).
Payment for those repairs must be made directly by the owner of the
development or through a reserve account established for the
development under this section.
(g) If notified of the development owner's failure to comply
with a local health, safety, or building code, the department may
enter on the property and complete any repairs necessary to correct
a violation of that code, as identified in the applicable violation
report, and may pay for those repairs through a reserve account
established for the development under this section.
(h) The duties of the owner of a multifamily rental housing
development under this section cease on the date of a voluntary
change in ownership of the development, but the subsequent owner of
the development is subject to the deposit, inspection, and
notification requirements of Subsections (b), (c), (d), and (e).
(i) The first lien lender shall maintain the reserve
account. In the event there is no longer a first lien lender, then
Subsections (b) and (d) no longer apply.
(j) The department shall adopt rules that:
(1) establish requirements and standards regarding:
(A) for first lien lenders and banks trustees:
(i) maintenance of reserve accounts and
reasonable costs of that maintenance;
(ii) asset management;
(iii) transfer of money in reserve accounts
to the department to fund necessary repairs; and
(iv) oversight of reserve accounts and the
provision of financial data and other information to the
department; and
(B) for owners, inspections of the multifamily
rental housing developments and identification of necessary
repairs, including requirements and standards regarding
construction, rehabilitation, and occupancy that may enable
quicker identification of those repairs;
(2) identify circumstances in which money in the
reserve accounts may:
(A) be used for expenses other than necessary
repairs, including property taxes or insurance; and
(B) fall below mandatory deposit levels without
resulting in department action;
(3) define the scope of department oversight of
reserve accounts and the repair process;
(4) provide the consequences of any failure to make a
required deposit, including a definition of good cause, if any, for
a failure to make a required deposit;
(5) specify or create processes and standards to be
used by the department to obtain repairs for developments;
(6) define for purposes of Subsection (c) the date on
which occupancy of a development is considered to have stabilized
and the date on which permanent financing is considered to be
completely in place; and
(7) provide for appointment of a bank trustee as
necessary under this section.
(k) The department shall assess an administrative penalty
on development owners who fail to contract for the third-party
physical needs assessment and make the identified repairs as
required by this section. The department may assess the
administrative penalty in the same manner as an administrative
penalty assessed under Section 2306.6023. The penalty is computed
by multiplying $200 by the number of dwelling units in the
development and must be paid to the department. The office of the
attorney general shall assist the department in the collection of
the penalty and the enforcement of this subsection.
(f) (l) None of the requirements of this section pertaining
to reserve accounts or property condition assessments This section
does not apply to a development for which an owner is required to
maintain a reserve account under any other provision of federal or
state law.
SECTION 1.27. Amend Sections 2306.202, and 2306.203, Texas
Government Code, 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. In order to enhance the self-sufficiency of the
housing trust fund, the department shall structure its award system
to encourage loans over grants by having two application periods,
to be organized as follows:
(1) an initial loan application cycle that shall be
open concurrently with housing tax credit application filing
period; and
(2) an application period for grants shall only be
held in the event that there are any available funding not utilized
for loans [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 applicationrequest for a proposal process developed
and approved by the board;
(3) that the criteria used to rank proposals [will]
shall only include the following in descending order of priority:
(A) the extent to which individuals and families
of low and very low income are served by the development;leveraging
of federal resources;
(B) cost-effectiveness of a proposed development
as determined by the amount of funding per person, based upon a
calculation of 1.5 persons per bedroom, with the greater points
being awarded for the lowest amount of funding per person served;
and
(C) leveraging of federal resources with greater
points being awarded for a greater percentage of total housing
development cost being provided by federal funds [extent to which
individuals and families of very low income are served by the
development];
(D) leveraging of private funding sources with
greater points awarded for larger amount of private funds per
person served, based upon a calculation of 1.5 persons per bedroom;
(E) support for the development from the State
Representative and State Senator for the districts where the
development is to be located;
(F) priority to developments that are requesting
a loan of housing trust funds rather than a grant; and
(G) other criteria established by department
that are not inconsistent with the priorities established above
(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 the
department's funding is a grant, for at least 30 20 years.
SECTION 1.28. Amend Section 2306.205, Texas Government
Code, to read as follows:
Sec. 2306.205. Transfer of Money to Housing Trust Fund. (a)
Except as provided by Subsections (c), (d), and (e), not later than
January 10 of each year the housing finance division shall transfer
to the housing trust fund an amount, as determined by the audit
report prepared under Section 2306.204, equal to one-half of the
housing finance division's unencumbered fund balances in excess of
two percent of the division's total bonded indebtedness that is not
rated on its own merits in the highest long-term debt rating
category by one or more nationally recognized rating agencies.
(b) The department shall determine the unencumbered fund
balance under Subsection (a) according to the debt rating criteria
established for housing finance agencies by one or more nationally
recognized rating agencies.
(c) If, at the time an annual audit required by Section
2306.204 is concluded, the housing finance division's unencumbered
fund balances exceed four percent of its total bonded indebtedness
that is not rated on its own merits in the highest long-term debt
rating category, the department shall transfer not later than
January 10 of the next year all amounts in excess of that four
percent.
(d) If, at the time an annual audit required by Section
2306.204 is concluded, a nationally recognized rating agency has
recommended that the housing finance division maintain
unencumbered fund balances in excess of the amount permitted by
Subsection (a) to achieve or maintain a rating of at least Aa/A+ on
all or a portion of the bonded indebtedness of the housing finance
division that is issued under an open indenture or an open flow of
funds, the department shall transfer not later than January 10 of
the next year all amounts in excess of the amount required by the
rating agency to be held as unencumbered fund balances.
(e) If, at the time an annual audit required by Section
2306.204 is concluded, a nationally recognized rating agency has
recommended that the housing finance division increase the amount
of its unencumbered fund balances to achieve or maintain a
financially sound condition or to prevent a decrease in the
long-term debt rating maintained on all or a portion of the housing
finance division's bonded indebtedness, the housing finance
division may not make further annual transfers to the housing trust
fund until all requirements and conditions of the rating agency
have been met.
(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 in administering the program.
SECTION 1.29. Amend Section 2306.227, Texas Government
Code, to read as follows:
Sec. 2306.227. Prepayment of Mortgage Loans. A mortgage
loan made under this chapter may be prepaid at any time prior to
maturity [after the period of years and under the terms and
conditions determined by the board].
SECTION 1.30. Amend Section 2306.229, Texas Government
Code, by adding Subsection (c) to read as follows:
Sec. 2306.229. Documents Supporting Mortgage Loans. (a) A
mortgage loan shall be evidenced by a mortgage or deed of trust note
or bond and by a mortgage that creates a lien on the housing
development and on all real property that constitutes the site of or
that relates to the housing development.
(b) A note or bond and a mortgage or deed of trust:
(1) must contain provisions satisfactory to the
department;
(2) must be in a form satisfactory to the department;
and
(3) may contain exculpatory provisions relieving the
borrower or its principal from personal liability if the department
agrees.
(c) For all loans made for multifamily housing development
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; provided, however, that the department shall
not designate or require the Borrower to provide the mortgagee
title policy from any specific title insurance company. The
borrower of the funds providing the mortgagee title policy shall
select the title insurance company to close the loan and to provide
the mortgagee title policy.
SECTION 1.31. Amend Section 2306.252 to read as follows:
Sec. 2306.252. HOUSING RESOURCE CENTER. (a) The board
shall establish a housing resource center in the housing finance
division.
(b) The [department, through the] housing resource center,
shall:
(1) provide educational material prepared in plain
language to the public housing advocates, housing sponsors,
borrowers, and tenants;
(2) [provide technical assistance to nonprofit
housing sponsors;
[(3)] assist in the development of housing policy,
including the annual state low income housing plan and report and
the consolidated plan. [; and
[(4) 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.
(d) The center shall serve as a housing and community
services clearinghouse to provide information to the public, local
communities, housing providers, and other interested parties
regarding:
(1) the performance of each department program;
(2) the number of people served;
(3) the income of people served;
(4) the funding amounts distributed;
(5) allocation decisions;
(6) regional impact of department programs; and
(7) any other relevant information.
(e) The center shall compile the department's reports into
an integrated format and shall compile and maintain a list of all
affordable housing resources in the state, organized by community.
(f) The information required under Subsections (d) and (e)
must be readily available in:
(1) a hard-copy format; and
(2) a user-friendly format on the department's
website.
(g) The center shall provide information regarding the
department's housing and community affairs programs to the Texas
Information and Referral Network for inclusion in the statewide
information and referral network as required by Section 531.0312.
SECTION 1.32. Amend Section 2306.253 (d)(1), Texas
Government Code, to read as follows:
Sec. 2306.253. (d) 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 fees charged by the department for
organizations or individuals to attend any homebuyer education
programs [the amount of administrative or service fees the
department 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 1.33. Amend Section 2306.254, Texas Government
Code, to read as follows:
Sec. 2306.254. Tenant Services Program. (a) In this
section, "tenant services" means social services, including child
care, transportation, and basic adult education, that are provided
to individuals residing in low income housing under Title IV-A,
Social Security Act (42 U.S.C. Section 601 et seq.), and other
similar services.
(b) The department may encourage, but shall not require,
[shall structure the requirements for] the provision of tenant
services in any multifamily 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 provided at no cost by third parties or are
eligible for additional federal matching funds through workforce
development or welfare-related programs.
(c) The department shall designate a department employee as
the tenant services program coordinator. The coordinator shall
serve as a liaison to the Texas Workforce Commission, the Texas
Department of Human Services, the Department of Protective and
Regulatory Services, and the Legislative Budget Board on matters
relating to the coordination of tenant services 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.
(e) Not later than December 1 preceding a regular session of
the legislature, the department shall file with the appropriate
state agencies and legislative committees a report discussing the
results of the department's program under this section.
SECTION 1.34. Amend Section 2306.257, Texas Government
Code, to read as follows:
Sec. 2306.257. Applicant Compliance With State and Federal
Laws Prohibiting Discrimination: Certification and Monitoring (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.).
[(b) In conjunction with the state Commission on Human
Rights, the department shall adopt rules governing the
certification process described by this section, including rules
establishing:
[(1) procedures for certifying compliance;
[(2) methods for measuring continued compliance; and
[(3) different degrees of sanctions for noncompliance
and reasonable periods for correcting noncompliance.
[(c) Sanctions imposed under Subsection (b)(3) may:
[(1) include a public reprimand, termination of
assistance, and a bar on future eligibility for assistance through
a housing program under this chapter; and
[(2) be imposed in addition to any action taken by the
state Commission on Human Rights.
[(d) The department shall promptly notify the state
Commission on Human Rights if the department determines that a
program participant may have failed to comply with the laws listed
by Subsection (a)].
SECTION 1.35. Amend Section 2306.259, Texas Government
Code, to read as follows:
Sec. 2306.259. AFFORDABLE HOUSING RESEARCH AND INFORMATION
PROGRAM. With money available under Section 1372.006(a), the
department shall fund [establish an affordable] the housing
research center described in Section 2306.252 of this Chapter [and
information program in which the department shall contract for:
[(1) periodic market studies to determine the need for
housing families of extremely low, very low, and low
income in census tracts throughout the state;
[(2) research from qualified professionals to
determine the effect of affordable housing developments
on property values, social conditions, and quality of
life in surrounding neighborhoods; and
[(3) independent research in affordable housing
design and development approaches that enhance
community acceptance of affordable housing and improve
the quality of life for the residents of the housing;
and
[(4) public education and outreach efforts to assist
the public in understanding the nature and purpose of
affordable housing and the process for public
participation in the administration of affordable
housing programs].
SECTION 1.36. Amend Section 2306.269, Texas Government
Code, 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 2-1/2 times the individual's
or family's share of the total monthly rent payable to the owner of
the development].
SECTION 1.37. Amend Section 2306.271, Texas Government
Code, to read as follows:
Sec. 2306.271. COST CONTROLS. (a) The housing finance
division by rule shall specify the categories of costs allowable in
the construction, reconstruction, remodeling, improvement, or
rehabilitation of a housing development.
(b) The housing finance division shall require a housing
sponsor to certify the actual housing development costs on
completion of the housing development [, subject to audit and
determination by the department]. The certification of costs shall
be accompanied by an unqualified certified public accountant's
audit report on the actual housing development costs and prepared
in accordance with generally accepted accounting principles and
generally accepted auditing standards.
(c) The department may accept, instead of certification of
housing development costs under Subsection (b), other assurances of
the costs, in any form, that will enable the housing finance
division to determine with reasonable accuracy the amount of the
costs.
(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 [risk] a 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 1.38. Amend Section 2306.313, Texas Government
Code, to read as follows:
Sec. 2306.313. Termination of Tenancy. (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 household as an occupant
would violate the income limitations for the specific 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
[(c) At the time notice of termination is given, the housing
finance division shall provide information to the tenant on other
division programs for which the tenant qualifies and shall
encourage the tenant's participation in those programs].
SECTION 2.01. Amend Section 2306.6701, Texas Government
Code, to read as follows:
SUBCHAPTER DD. LOW INCOME HOUSING TAX CREDIT PROGRAM
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) Pursuant to its goals under this chapter, the department
shall not approve, promulgate, nor otherwise publish any rule that:
(1) establishes standards or parameters that exceed
the regulatory requirements of Section 42, Internal Revenue Code of
1986 (26 U.S.C. Section 42); or
(2) imposes, or has the effect of imposing, direct
compliance requirements or costs on local governments, or program
applicants, that are not required by federal law or state statute.
SECTION 2.02. Amend Section 2306.6702, Texas Government
Code, to read as follows:
Sec. 2306.6702. DEFINITIONS. (a) In this subchapter:
(1) "Applicant" means any person or affiliate of a
person who files an application with the department requesting a
housing tax credit allocation.
(2) "Application" means an application filed with the
department by an applicant and includes any exhibits or other
supporting materials.
(3) "Application log" means a form containing [at
least] the information required by Section 2306.6709.
(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].
(5) "Area Median Gross Household Income" or "AMGI"
means the area median gross household income, as determined for all
purposes under and in accordance with the requirements of the
Internal Revenue Code, §42 [ 26 U.S.C Section Section 42].
(5) (6) "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, 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); or
(ii) Section 236, National Housing Act (12
U.S.C. Section 1715z-1); or
(iii) Section 202, Housing Act of 1959 (12
U.S.C. Section 1701q); or
(iv) Section 101, Housing and Urban
Development Act of 1965 (12 U.S.C. Section 1701s); or
(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
(viii) (vi) Section 42, Internal Revenue
Code of 1986 (26 U.S.C. Section 42); or
(vii) any project-based assistance
authority pursuant to Section 8 of the United States Housing Act of
1937; and
(B) is subject to the following conditions:
(i) the stipulation to maintain
affordability in the contract granting the subsidy is [nearing]
within two years of 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.
(6) (7) "Development" means a proposed qualified low
income housing project, as defined by Section 42(g), Internal
Revenue Code of 1986 (26 U.S.C. Section 42(g)), that consists of one
or more buildings containing multiple units, that is financed under
a common plan, and that is owned by the same person for federal tax
purposes, including a project consisting of multiple buildings
that:
(A) are located on scattered sites; and
(B) contain only rent-restricted units.
(8) (7) "Development owner" means any person or
affiliate of a person who owns or proposes a development or expects
to acquire control of a development under a purchase contract
approved by the department.
(9) (8) "Housing tax credit" means a tax credit
allocated under the low income housing tax credit program.
(10) (9) "Land use restriction agreement" means an
agreement between the department, the development owner, and the
development owner's successors in interest that encumbers the
development with respect to the requirements of this subchapter and
the requirements of Section 42, Internal Revenue Code of 1986 (26
U.S.C. Section 42).
(11) (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 Sections 2306.67042 and
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) produces 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.
(12) (11) "Related party" means the following
individuals or entities:
(A) the brothers, sisters, spouse, ancestors,
and descendants of a person within the third degree of
consanguinity, as determined by Chapter 573;
(B) a person and a corporation, if the person
owns more than 50 percent of the outstanding stock of the
corporation;
(C) two or more corporations that are connected
through stock ownership with a common parent possessing more than
50 percent of:
(i) the total combined voting power of all
classes of stock of each of the corporations that can vote;
(ii) the total value of shares of all
classes of stock of each of the corporations; or
(iii) the total value of shares of all
classes of stock of at least one of the corporations, excluding, in
computing that voting power or value, stock owned directly by the
other corporation;
(D) a grantor and fiduciary of any trust;
(E) a fiduciary of one trust and a fiduciary of
another trust, if the same person is a grantor of both trusts;
(F) a fiduciary of a trust and a beneficiary of
the trust;
(G) a fiduciary of a trust and a corporation if
more than 50 percent of the outstanding stock of the corporation is
owned by or for:
(i) the trust; or
(ii) a person who is a grantor of the trust;
(H) a person or organization and an organization
that is tax-exempt under Section 501(a), Internal Revenue Code of
1986 (26 U.S.C. Section 501), and that is controlled by that person
or the person's family members or by that organization;
(I) a corporation and a partnership or joint
venture if the same persons own more than:
(i) 50 percent of the outstanding stock of
the corporation; and
(ii) 50 percent of the capital interest or
the profits' interest in the partnership or joint venture;
(J) an S corporation and another S corporation if
the same persons own more than 50 percent of the outstanding stock
of each corporation;
(K) an S corporation and a C corporation if the
same persons own more than 50 percent of the outstanding stock of
each corporation;
(L) a partnership and a person or organization
owning more than 50 percent of the capital interest or the profits'
interest in that partnership; or
(M) two partnerships, if the same person or
organization owns more than 50 percent of the capital interests or
profits' interests.
[(12) "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 20,000 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.]
(13) "Rural development agency" means the state agency
designated by the legislature as primarily responsible for rural
area development in the state.
(14) "Set-aside" means a reservation of a portion of
the available housing tax credits to provide financial support for
specific types of housing or geographic locations or serve specific
types of applicants as permitted by the qualified allocation plan
on a priority basis.
(15) "Threshold criteria" means the criteria used to
determine whether the development satisfies the minimum level of
acceptability for consideration established in Section 2306.67042
of this Chapter [the department's qualified allocation plan].
(16) "Unit" means any residential rental unit in a
development consisting of an accommodation, including a single room
used as an accommodation on a non-transient basis, that contains
complete physical facilities and fixtures for living, sleeping,
eating, cooking, and sanitation.
(b) For purposes of Subsection (a) (12) [(11)], the
constructive ownership provisions of Section 267, Internal Revenue
Code of 1986 (26 U.S.C. Section 267), apply. The board may lower in
the qualified allocation plan the percentages described by
Subsection (a)(12) [(11)].
SECTION 2.03. Amend Section 2306.6703, Texas Government
Code, 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, or any persons required
to be disclosed under Section 2306.6707 of this chapter, 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 staff
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 Text of (a)(3) as amended by Acts 2003, 78th Leg., ch.
330, Sec. 18
(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.
Text of (a)(3) as amended by Acts 2003, 78th Leg., ch. 1106, Sec. 1
(3) the applicant proposes to construct a new
development that is located one linear mile or less from a
development that:
(A) serves the same type of household as the new
development;
(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.
(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, prior to allocation, [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.
(5) if the application or any affiliate of the
applicant has any business relationship with any board member or a
member of the department staff.
(b) Subsection (a)(3) and (a)(4) dodoes 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; or
(B) locally approved funds received from a public
improvement district or a tax increment financing district; or
(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 the Section 515 Rural
Rental Housing Program administered by the United States Department
of Agriculture (42 U.S.C. Section 1485); or
Text of (b)(2) as added by Acts 2003, 78th Leg., ch. 330, Sec. 18
(2) that is located in a county with a population of
less than one million; or
Text of (b)(2) as added by Acts 2003, 78th Leg., ch. 1106, Sec. 1
(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).
SECTION 2.04. Add new Section 2306.67035, Texas Government
Code, to read as follows:
Sec. 2306.67035. SPECIAL RURAL AND HISTORICALLY
UNDERSERVED URBAN AREAS REQUIREMENTS. (a) Notwithstanding any
other provision of this chapter, an application for housing tax
credits from the funds available for rural areas should be limited
to rehabilitation of any size development and new construction
developments of 76 units or less. A new construction development
in excess of 76 units that is located in a rural area shall only be
eligible for funding from the urban or historically underserved
urban area funding regardless of its location.
Section 2.05 Amend Section 2306.6704, Texas Government
Code, to read as follows:
Sec. 2306.6704. PREAPPLICATION PROCESS. (a) To prevent
unnecessary filing costs, the department by rule shall establish a
voluntary preapplication process to enable a preliminary
assessment of an application proposed for filing under this
subchapter.
(b) The department shall award in the application
evaluation process described by Section 2306.6710 an appropriate
number of points as an incentive for participation in the
preapplication process established under this section.
(b-1) The preapplication process must require the applicant
to provide the department with evidence that the applicant has
notified the following entities with respect to the filing of the
application:
(1) any neighborhood [organizations] associations on
record with the [state or county] department, as of the first of
December in the year immediately preceding the application
deadline, in which the development is to be located and whose
boundaries contain the proposed development site;
(2) the superintendent and the presiding officer of
the board of trustees of the school district containing the
development;
(3) the presiding officer of the governing body of any
municipality containing the development and all elected members of
that body;
(4) the presiding officer of the governing body of the
county containing the development and all elected members of that
body; and
(5) the state senator and state representative of the
district containing the development.
(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 in Section
2306.67042required 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 a
preapplication; provided, however, that the last date for
submitting a preapplication under this section shall not be earlier
than February 1.
SECTION 2.06. Add a new Section 2306.67042, Texas
Government Code, to read as follows:
Section 2306.67042 Threshold Criteria. (a) In order to be
eligible for scoring, the department shall only require that all
applications for an allocation of low income housing tax credits
satisfy the following threshold criteria:
(1) Completion and submission of the Application as
developed by the Department; and
(2) Completion and submission of information
regarding the location of the proposed development; and
(3) Documentation must be provided that confirms
eligibility for all Set-Asides under which the Application is
seeking funding; and
(4) Certifications:
(A) A certification of the basic amenities
selected for the Development. The amenities selected must be made
available for the benefit of all tenants. If fees in addition to
rent are charged for amenities reserved for an individual tenant's
use, then the amenity may not be included. Developments with more
than 36 units must provide at least four of the amenities provided
in clauses (i) through (vi) of this subparagraph. Developments
with 36 Units or less and/or Developments receiving funding from
under the Section 515 program administered by the United States
Department of Agriculture (42. U.S.C. Section 1485) must provide at
least two of the following amenities:
(i) full perimeter fencing;
(ii) designated playground and equipment;
(iii) community laundry room and/or laundry
hook-ups in Units ;
(iv) a furnished community room;
(v) recreation facilities;
(vi) public telephone(s) available to
tenants 24 hours a day;
(C) A certification that the Development will
adhere to the Texas Property Code relating to security devices and
other applicable requirements for residential tenancies.
(D) A certification that the Applicant is in
compliance with state and federal laws relating to fair housing.
(E) A certification that the Development will
comply with the accessibility standards that are required under
Section 2306.6722 of this Chapter; and
(5) All of the architectural drawings identified in
clauses (i) through (iv) of this subparagraph. While full size
design or construction documents are not required, the drawings
must have an accurate and legible scale and show the dimensions.
All Developments involving new construction, or conversion of
existing buildings not configured in the Unit pattern proposed in
the Application, must provide all of the items identified in
clauses (i) through (iii) of this subparagraph. For Developments
involving rehabilitation for which the Unit configurations are not
being altered, only the items identified in clauses (i) and (ii) of
this subparagraph are required:
(i) a site plan;
(ii) floor plans for each type of
residential building and each type of common area building;
(iii) floor plans and elevations for each
type of residential building and each common area building clearly
depicting the height of each floor; and
(B) City or County lot maps of the proposed
Development site; and
(6) A description of the Development's development
costs and corresponding credit request and syndication information
as described in subparagraphs (A) through (C) of this paragraph.
(A) The information required in Section
2306.6705 of this Chapter.
(B) For Developments located in a Qualified
Census Tract as determined by the Secretary of HUD, a copy of the
census map clearly showing that the proposed Development is located
within a qualified census tract
(C) A schedule of any offsite costs; and
(7) Evidence of readiness to proceed as evidenced by
at least one of the items under each of subparagraphs (A) through
(C) of this paragraph:
(A) Evidence of site control in the name of
Development Owner.
(B) Evidence of interim and permanent financing
sufficient to fund the proposed total housing development cost less
any other funds requested from the Department and any other sources
documented in the Application. Such evidence must be consistent
with the sources and uses of funds represented in the Application
and shall be provided in one or more of the following forms
described in clauses (i) through (iv) of this subparagraph:
(i) bona fide financing in place as
evidenced by a valid and binding loan agreement and a deed(s) of
trust in the name of the Development Owner which identifies the
mortgagor as the Applicant or entities which comprise the general
partner and/or expressly allows the transfer to the development
owner; or,
(ii) 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 which is addressed to the development
owner, or entities which comprise the Applicant and which has been
executed by the lender (the term of the loan must be for a minimum of
15 years with at least a 30 year amortization). The commitment 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, and the anticipated interest rate
and any required guarantors. Such a commitment may be conditional
upon the completion of specified due diligence by the lender and
upon the award of tax credits; or,
(iii) any federal, state or local gap
financing, whether of soft or hard debt, must be identified at the
time of Application. At a minimum, evidence from the lending agency
that an application for funding has been made and a term sheet which
clearly describes the amount and terms of the funding, and the date
by which the funding determination will be made and any commitment
issued, must be submitted. Evidence of application for funding
from another department program is not required.
(C) A legal description of the proposed site; and
(8) Evidence of all of the public notifications
required in this Chapter; and
(9) A description of the development's proposed
ownership structure and the Applicant's previous experience as
described in subparagraphs (A) through (B) of this paragraph.
(A) Chart which clearly illustrates the complete
organizational structure of the proposed development owner
providing the names and ownership percentages of all persons having
an ownership interest in the development owner.
(B) Evidence that each entity shown on an the
organizational chart described in subparagraph (A) of this
paragraph that has 10% or more ownership interest in the
development owner has provided a copy of the completed and executed
previous participation and background certification form to the
department; and
(10) A description of the development's projected
income and operating expenses as described in subparagraphs (A)
through (C) of this paragraph:
(A) A 15-year proforma estimate of operating
income and expenses and supporting documentation used to generate
projections.
(B) 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 funds, and the term and expiration
date of the contract or other agreement.
(C) Applicant must provide documentation from
the source of the utility allowance estimate used in completing the
rent schedule; and
(11) Applications involving nonprofit general
partners and qualified nonprofit developments.
(A) All applications involving a nonprofit
general partner or applying for the nonprofit set-aside must submit
all of the documents described in Section 2306.6706 of this
Chapter.
(B) Additionally, all applications applying
under the nonprofit set-aside must also provide the following
information with respect to the qualified nonprofit organization
as described in clauses (i) through (vi) of this subparagraph.
(i) 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;
(ii) 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;
(iii) a third party legal opinion stating:
(I) that the nonprofit organization
is not affiliated with or controlled by a for-profit organization
and the basis for that opinion, and
(II) that the nonprofit organization
is eligible, as further described, for a housing credit allocation
from the nonprofit set-aside and the basis for that opinion.
Eligibility is contingent upon the non-profit organization
controlling the Development, or if the organization's application
is filed on behalf of a limited partnership, or limited liability
company, being the managing general partner (or managing member);
and otherwise meet the requirements of the Section §42(h)(5) of the
Internal Revenue Code [(26 U.S.C. Section 42(h)(5)];
(iv) a copy of the nonprofit organization's
most recent audited financial statement; and
(12) Applicants applying for acquisition credits or
affiliated with the seller must provide all of the documentation
described in subparagraphs (A) through (C) of this paragraph.
Applicants applying for acquisition credits must also provide the
items described in subparagraph (D) of this paragraph; and
(A) an appraisal, not more than 12 months old as
of the date of submittal to the department. The appraisal may be
submitted within 30 days of the date the application is submitted to
the department. This appraisal of the property must separately
state the as-is, pre-acquisition or transfer value of the land and
the improvements where applicable;
(B) a valuation report from the county tax
appraisal district;
(C) clear identification of the selling Persons,
and details of any relationship between the seller and the
Applicant
(D) Information to establish that the
development is eligible for acquisition credits; and
(13) Financial statement of the applicant and any
controlling persons; and
(14) Information demonstrating that the project
development applicant has the experience and the financial capacity
to ensure project completion; and
(15) Supplemental Threshold Reports. Documents under
subparagraph (A) and (B) of this paragraph may be submitted within
30 days from the date of submittal to the department of the
application.
(A) A Phase I Environmental Site Assessment on
the subject property, dated not more than 12 months prior to the
date the application is submitted to the department. In the event
that a Phase I Environmental Site Assessment on the development is
dated more than 12 months prior to 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 prior to the date the application is submitted from the
organization which 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 involving funding from the Rural Housing
Service of the United States Department of Agriculture or the
United States Department of Housing and Urban Affairs are not be
required to submit a Phase I Environmental Site Assessment.
(B) A comprehensive market analysis prepared at
the Applicant's expense by a disinterested qualified market analyst
in accordance with Section 2306.67055 of this Chapter. For
applications involving the rehabilitation of an existing property
and that receive funding from the Rural Housing Service of the
United States Department of Agriculture, no market analysis shall
be required.
SECTION 2.07. Amend Section 2306.6705, Texas Government
Code, to read as follows:
Sec. 2306.6705. GENERAL APPLICATION REQUIREMENTS. An
application must contain at a minimum the following written,
detailed information in a form prescribed by the board:
(1) a description of:
(A) the financing plan for the development,
including any nontraditional financing arrangements;
(B) the use of funds with respect to the
development;
(C) the funding sources for the development,
including:
(i) construction, permanent, and bridge
loans; and
(ii) rents, operating subsidies, and
replacement reserves; and
(D) the commitment status of the funding sources
for the development;
(2) if syndication costs are included in the eligible
basis, a justification of the syndication costs for each cost
category by an attorney or accountant specializing in tax matters;
(3) from a syndicator or a financial consultant of the
applicant, an estimate of the amount of equity dollars expected to
be raised for the development in conjunction with the amount of
housing tax credits requested for allocation to the applicant,
including:
(A) pay-in schedules; and
(B) syndicator consulting fees and other
syndication costs;
(4) if rental assistance, 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;
(A)(B) a relocation plan outlining:
(i) how the rehabilitation process will
affect any existing tenants relocation requirements; and
(ii) a budget for any permanent or
temporary relocation of tenants, if any, 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;
(8) any other information required by the board in the
qualified allocation plan; and
(8) (9) evidence that the applicant has notified the
following entities with respect to the filing of the application:
(A) any neighborhood [organizations]
associations on record with the [state or county] department in
which the development is to be located and whose boundaries contain
the proposed development site;
(B) the superintendent and the presiding officer
of the board of trustees of the school district containing the
development;
(C) the presiding officer of the governing body
of any municipality containing the development and all elected
members of that body;
(D) the presiding officer of the governing body
of the county containing the development and all elected members of
that body; and
(E) the state senator and state representative of
the district containing the development.
(9) the department shall not require any additional
information other than in this chapter.
SECTION 2.08. Add new Section 2306.67053, Texas Government
Code, to read as follows:
Sec. 2306.67053. Application Requirement Prohibitions.
(a) In setting requirements under this subchapter, the board and
the department shall be prohibited from promulgating rules, or
otherwise mandating the unit mix or bedroom makeup of any non
elderly housing development.
SECTION 2.09. Amend Section 2306.6706, Texas Government
Code, to read as follows:
Sec. 2306.6706. ADDITIONAL APPLICATION REQUIREMENT:
NONPROFIT SET-ASIDE ALLOCATION. (a) In addition to the
information required by Section 2306.6705, an application for a
housing tax credit allocation from the nonprofit set-aside, as
defined by Section 42(h)(5), Internal Revenue Code of 1986 (26
U.S.C. Section 42(h)(5)), must contain the following written,
detailed information with respect to each development owner and
each general partner of a development owner:
(1) Internal Revenue Service documentation of
designation as a Section 501(c)(3) or 501(c)(4) organization;
(2) evidence that one of the exempt purposes of the
nonprofit organization is to provide low income housing;
(3) a description of the nonprofit organization's
participation in the construction or rehabilitation of the
development and in the ongoing operations of the development;
(4) evidence 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;
(5) a third-party legal opinion stating that the
nonprofit organization is not affiliated with or controlled by a
for-profit organization and the basis for that opinion;
(6) a copy of the nonprofit organization's most recent
audited financial statement;
(7) a list of the names and home addresses of members
of the board of directors of the nonprofit organization;
(8) a third-party legal opinion stating that the
nonprofit organization is eligible under Subsection (b) for a
housing tax credit allocation from the nonprofit set-aside and the
basis for that opinion; and
(9) evidence that a majority of the members of the
nonprofit organization's board of directors principally reside:
(A) in this state, if the development is located
in a rural area; or
(B) not more than 90 miles from the development
in the community in which the development is located, if the
development is not located in a rural area.
(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) [if the organization's application is filed on
behalf of a limited partnership, be the managing general partner]
materially participate in the development and operation of the
development throughout the compliance period; 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 2.10. Amend Section 2306.6707, Texas Government
Code, to read as follows:
Sec. 2306.6707. ADDITIONAL APPLICATION REQUIREMENT:
DISCLOSURE OF INTERESTED PERSONS. (a) The applicant must disclose
in the application the names of any persons, including affiliates
of those persons and related parties, providing developmental or
operational services to the development, including:
(1) a development owner;
(2) an architect;
(3) an attorney;
(4) a tax professional;
(5) a property management company;
(6) a consultant;
(7) a market analyst;
(8) a tenant services provider;
(9) a syndicator;
(10) a real estate broker or agent or a person
receiving a fee in connection with services usually provided by a
real estate broker or agent;
(11) at the time the application is submitted, the
owners of the property on which the development is located;
(12) a developer; [and]
(13) a builder or general contractor; and
(14) any person described by Section 2306.6703(1) of
this chapter.
(b) For each person described by Subsection (a), the
application must disclose any company name, company contact person,
address, and telephone number.
SECTION 2.11. Amend Section 2306.6709, Texas Government
Code, to read as follows:
Sec. 2306.6709. APPLICATION LOG. (a) In a form prescribed
by the department, the department shall maintain for each
application an application log that tracks the application from the
date of its submission.
(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 for
allocation by [the department to] the applicant;
(4) any set-aside category under which the application
is filed;
(5) in strict accordance with Section 2306.6710 of
this chapter and Section 42(m)(B), Internal Revenue Code of 1986
(26 U.S.C. Section 42(m)(B), the score of the application in each
scoring category [adopted by the department under] contained within
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 2.12. Amend Section 2306.6710, Texas Government
Code, 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 the board in the qualified allocation plan.
The department shall reject and return to the applicant any
application that fails to satisfy the threshold criteria.
(b) If an application satisfies the threshold criteria, the
department shall score and rank the application using the following
a point system [that]:
(1) Development Financial Feasibility.
(A) Fifty points will be awarded if the project
is determined to be financially feasible based on the Applicant's
certification of reasonably expected sources and uses of funds
during the development process and of planned operating income and
expenses during the initial 15 years of operation as a housing
development. No partial points will be awarded.
(B) Although a development may be deemed
financially feasible under subparagraph (A) above, if the deferral
of 50% or more of the developer's fee for urban development (or 60%
or more for a rural developments) is required to make the project
feasible based upon the supporting financial data then there shall
be 10 points deducted from the Application.
(2) Quantifiable Community Participation from
Neighborhood Associations. Points will be awarded based on written
statements of support or opposition from neighborhood associations
on record with the department and whose boundaries contain the
proposed Development site. If there are no neighborhood
associations on record with the department, or if no letters either
in support or opposition are received, or if the application
involves the rehabilitation of an At-Risk development, the
development shall be awarded the maximum points allowable under
this scoring component. If 80% or more of letters from neighborhood
associations support the development, then the Applicant will be
awarded 40 points. If between 50% and 79.9% of the letters from
neighborhood associations support the development, then the
applicant will be awarded 30 points. If a majority of the letters
from neighborhood associations oppose the development, then the
Applicant will be awarded zero points.
(3) Income level of tenants. An Applicant may receive
points under either subparagraph (A) or (B), but not both.
(A) If the proposed development is located
outside of a qualified census tract and there is documented,
committed, and available third party funding source to provide
project based rental assistance to 50 percent of the tenants, and
the Applicant will agree that 50% or more of the total units in the
development will be restricted to being rented to households with
incomes equal to or below 30% of the greater of local area median
income, as adjusted for household size, or the statewide median
income, as adjusted for household size, then the Applicant shall be
awarded 30 points. The documented, committed and available third
party funding source to provide project based rental assistance
shall only be from project based Section 8, USDA 5 year rental
assistance contract, or HUD contract for project based Section 8
operating assistance, or similar long term ( at least 5
year)federal or state project based rental assistance programs.
(B). An Application may qualify for points under
only one of the below listed subsections (i) through (vii). To
qualify for these points, the rents for the rent-restricted Units
must not be higher than the allowable tax credit rents at the
rent-restricted area median gross income level, as defined by this
subchapter in Sec. 2306.6702. For Section 8 residents, or other
rental assistance tenants, the tenant paid rent plus the utility
allowance is compared to the rent limit to determine compliance.
The development owner, upon making selections will set aside units
at the rent-restricted levels of AMGI and will maintain the
percentage of such Units continuously over the compliance and
extended use period as specified in a land use restriction
agreement. Developments may qualify for points under only one
subparagraph in this section.
(i) If 10% of the total number of low income
units (including Units at 60% of AMGI) are designated for tenants at
or below 30% of the AMGI, then the Applicant shall be awarded 25
points.
(ii) If 40% of the total number of low
income units (including Units at 60% of AMGI) are designated for
tenants at or below 50% of the AMGI, then the Applicant shall be
awarded 20 points.
(iii) If 35% of the total number of low
income units (including Units at 60% of AMGI) are designated for
tenants at or below 50% of the AMGI, then the Applicant shall be
awarded 17 points.
(iv) If 30% of the total number of low
income units (including Units at 60% of AMGI) are designated for
tenants at or below 50% of the AMGI, then the Applicant shall be
awarded 14 points.
(v) If 25% of the total number of low income
units (including Units at 60% of AMGI) are designated for tenants at
or below 50% of the AMGI, then the Applicant shall be awarded 11
points.
(vi) If 20% of the total number of low
income units (including Units at 60% of AMGI) are designated for
tenants at or below 50% of the AMGI, then the Applicant shall be
awarded 8 points.
(vii) If 15% of the total number of low
income units (including Units at 60% of AMGI) are designated for
tenants at or below 50% of the AMGI, then the Applicant shall be
awarded 5 points.
(viii) If 10% of the total number of low
income units (including Units at 60% of AMGI) are designated for
tenants at or below 50% of the AMGI, then the Applicant shall be
awarded 2 points.
(4) Development Characteristics. Applications may
receive points under as many of the following subparagraphs as are
applicable; however to qualify for points under subsection , the
development must first meet the minimum requirements identified
under subparagraph (A) of this subsection, with the exception that
the minimum requirement does not apply to applications involving
rehabilitation, or developments receiving funding from Rural
Housing Service of the United States Department of Agriculture.
The maximum number of points to be awarded under this paragraph is
25 points.
(A) Unit Size. The square feet of all of the
units in the development, for each type of unit, must be at minimum:
(i) 500 square feet for an efficiency unit;
(ii) 650 square feet for a non-elderly one
bedroom unit; 550 square feet for an elderly one bedroom unit;
(iii) 900 square feet for a two bedroom
unit; 750 square feet for an elderly two bedroom unit;
(iv) 1,000 square feet for a three bedroom
unit; and
(v) 1,200 square feet for a four bedroom
unit.
(B) Unit Amenities and Quality. Applications in
which developments provide specific amenity and quality features in
every Unit at no extra charge to the tenant will be awarded points
based on the point structure provided in clauses (i) through
(xxxiv) of this subparagraph, not to exceed 25 points in total.
Applications involving rehabilitation or proposing single room
occupancy will double the points listed for each item, not to exceed
25 points in total.
(i) Computer line/phone jack available in
all bedrooms (only one phone line needed) (1 point)
(ii) Mini-blinds or window coverings for
all windows ( 1 point);
(iii) Dishwasher and disposal in all units
( 1 point)
(iv) Refrigerator with ice maker ( 2
points)
(v) Self-cleaning ovens ( 1 point)
(vi) Ceiling fans in living areas and
bedrooms ( 2 points)
(vii) Covered entries (1 point);
(viii) Nine foot ceilings (2 points);
(xi) Ceiling fixtures in all rooms (globe
with ceiling fan in all bedrooms) (1 point);
(xii) Laundry connections (2 point);
(xiii) Storage room or closet, of
approximately 9 square feet or greater, which does not include
bedroom, entryway or linen closets (1 point);
(xiv) Laundry equipment (washers and
dryers) in units (3 points);
(xv) Thirty year architectural shingle
roofing (1 point);
(xvi) Covered patios or covered balconies
(1 point);
(xvii) Covered parking of at least one
covered space per Unit (2 points);
(xviii) Parking garages of at least one
covered space per Unit (4 points);
(xix) Greater than 75 % masonry on exterior
( 2 points) or 100% masonry on exterior, which can include stucco
and cementious board products, excluding efis (3 points);
(xix) Energy Star or equivalently rated
Kitchen Appliances (2 points)
(xx) Full perimeter fencing (1 point) or
full perimeter fencing with controlled gate access (3 points)
(xxi) Designated playground and equipment (
2 points);
(xxii) Community laundry room ( 1 point);
(xxiii) A furnished community room ( 1
point)
(xxiv) Public telephone available to
tenants 24 hours a day ( 1 point)
(xxv) All units will adhere to the 2000
International Energy Conservation Code (IECC) for Energy savings
Devises as listed below. If all requirements met, then 3 points:
(a) For new construction, insulation
values of R-15 for exterior walls and R-30 for ceilings. For
rehabilitation projects, insulation values of R-30 for ceilings.;
(b) If newly installed, Energy Star or
equivalent rated air handler and condenser; or heating and cooling
systems with minimum SEER 12 A/C and AFUE 90% furnace if using gas;
or in dry climates an evaporative cooling system may replace the
Energy Star cooling system;
(c) If installed new, water heaters to
have an energy factor no less than .93 for electric or greater than
.62 for gas; and
(d) Maximum 2.5 gallon/per minute
showerheads and maximum 1.5 gallon/minute faucet aerators.
(xxvi) Radiant-barrier roofing technology
(3 points);
(xxvii) Gazebo/Arbor w/sitting area (1
point);
(xxviii) Accessible walking path (1 point);
(xxix) Community gardens (1 point)
(xxx) Barbecue grill and picnic table 1
point);
(xxxi) Covered pavilion ( 1 point)
(xxxii) Swimming pool ( 3 points)
(xxxiii) Furnished fitness center ( 2
points)
(xxxiv) Game/TV room ( 2 points);
(5) Commitment of development funding by local
political subdivision. If the proposed development has received a
commitment for equal to or greater than 10% of the total development
cost from a local political subdivision, which is not related to the
Applicant, then the Applicant shall receive 20 points. Such funds
can include Community Development Block Grant or loan funds, HOME
funds, a local housing trust, local Affordable Housing funds, or
other quantifiable financing contributions by the local political
subdivision. For rural projects, HOME and Housing Trust Funds
allocated by the Department shall qualify for these points.
Evidence to be submitted with the Application must include a copy of
the commitment of funds or a copy of the application 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 30 days prior to the Board recommendation of tax
credit allocations in order to receive points under this
subparagraph.
(6) Community Support from State Elected Officials.
Points will be awarded based on the 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 as long as the letter is received by the department prior
to any action by the board on the application. Points can be
awarded for letters of support or opposition as identified in
clauses (i) through (v) of this subparagraph, not to exceed a total
of 14 points.
(i) Letter of support from both State of
Texas Representative and Senator (7 points each, maximum of 14
points);
(ii) Letter of support from either State of
Texas Representative or Senator (7 points);
(iii) Letter of opposition from either
State of Texas Representative or Senator (-10 points).
(iv) Letter of opposition from both State
of Texas Representative and Senator (-25 points)
(v) If both State of Texas Representative
and Senator are contacted but no letters either in support or
opposition are received (10 points).
(7) Rent level of units. If greater than 95 percent of
the units in the development (excluding any units reserved for a
manager) are restricted to having rents plus the allowance for
utilities equal to or below the maximum tax credit rent, then the
development shall be awarded 12 points. If between 91 percent and
95 percent of the units in the development (excluding any units
reserved for a manager) are restricted to having rents plus the
allowance for utilities equal to or below the maximum tax credit
rent, then the development shall be awarded 10 points. If between
86 percent and 90 percent of the units in the development (excluding
any units reserved for a manager) are restricted to having rents
plus the allowance for utilities equal to or below the maximum tax
credit rent, then the development shall be awarded 9 points. If
between 81 percent and 85 percent of the units in the development
(excluding any units reserved for a manager) are restricted to
having rents plus the allowance for utilities equal to or below the
maximum tax credit rent, then the development shall be awarded 8
points. If 80% or fewer of the units in the development (excluding
any units reserved for a manager) are restricted to having rents
plus the allowance for utilities equal to or below the maximum tax
credit rent, then the development shall be awarded 7 points.
(8) Cost of the development per square foot. If the
total construction cost for the development does not exceed the
limitation specified in this section, the applicant shall qualify
for 9 points. For purposes of this subsection, total construction
cost shall include costs normally associated with the actual
construction of the development including on and off site work,
contingency, contractor profit, contractor overhead, and
contractor general requirements. The construction cost per net
rentable area shall be as follows: (1) $65 per square foot for
developments not otherwise described; (2) $75 per square for
developments dedicated as 100% for use by elderly households or
100% transitional housing for the homeless, unless located in
Aransas, Calhoun, Chambers, Jefferson, Kleberg, Nueces, San
Patricio, Brazoria, Cameron, Galveston, Kenedy, Matagorda, Refugio
or Willacy County in which event the amount shall be $77 per square
foot, (3) $67 per square foot for developments located in Aransas,
Calhoun, Chambers, Jefferson, Kleberg, Nueces, San Patricio,
Brazoria, Cameron, Galveston, Kenedy, Matagorda, Refugio or
Willacy County. The department shall annually adjust the dollar
limitations of this section to account for inflation.
(9) Ad valorem taxes. If the Applicant will pay ad
valorem taxes on the development for a minimum of 15 years, the
Applicant will be awarded 8 points.
(10) Development Location Characteristics. If the
subject Property is located within one of the geographical areas
described in subparagraphs (A) through (E) of this paragraph will
receive 5 points. An Application may only receive points under one
of the subparagraphs (A) through (E) of this paragraph. An
Application may receive an additional 5 points pursuant to
subparagraph (F) of this paragraph in addition to any points
awarded in subparagraphs (A) through (E).
(A) A geographical area which is:
(i) an Economically Distressed Area; or
(ii) a Colonia, or
(iii) a Difficult Development Area (DDA) as
specifically designated by the Secretary of HUD.
(B) A designated state or federal
empowerment/enterprise zone, urban enterprise community, or urban
enhanced enterprise community.
(C) A city-sponsored area or zone where a city or
county has, through a local government initiative, specifically
encouraged or channeled growth, neighborhood preservation or
redevelopment.
(D) The Development is located in a county that
has received an award as of November 15, 2003, within the past three
years, from the Texas Department of Agriculture's Rural Municipal
Finance Program or Real Estate Development and Infrastructure
Program. Cities which have received one of these awards are
categorized as awards to the county as a whole so Developments
located in a different city than the city awarded, but in the same
county, will still be eligible for these points.
(E) A qualified census tract, as defined in
Section 42(a)(5)(c) of the Internal Revenue Code [USC Title 26,
Sec. 42(d)(5)(C))] and the development of which contributes to a
concerted community revitalization plan.
(F) The Development is located in a census tract
in which there are no other existing developments supported by
housing tax credits.
(11) Development Provides Supportive Services to
Tenants. Points may be received under both subparagraphs (A) and
(B) of this paragraph.
(A) Applicants will receive a point for
coordinating their tenant services with those services provided
through state workforce development and welfare programs as
evidenced by execution of a Tenant Supportive Services
Certification (1 point).
(B) The Applicant must certify that the
development will provide special supportive services appropriate
for the proposed tenants No fees may be charged to the tenants for
any of the services. Services must be provided on-site or
transportation to off-site services must be provided (maximum of 1
point).
(i) Service options include child care;
counseling services; GED preparation; English as a second language
classes; credit counseling; financial planning assistance or
courses; scholastic tutoring; social events and activities; senior
meal program; home-delivered meal program; any other programs
described under Title IV-A of the Social Security Act (42 U.S.C. §§
601 et seq.) which enables children to be cared for in their homes
or the homes of relatives; ends the dependence of needy families on
government benefits by promoting job preparation; prevents and
reduces the incidence of out-of wedlock pregnancies; or encourages
the formation and maintenance of two-parent families.
(12) Preservation of existing low income housing. If
the application involves the preservation of existing low income
housing, the applications shall be awarded 2 points. A development
funded under the HOPE VI funding or funding from a Public Housing
Authority capital grant funds shall be eligible for 2 points
(13) Senior or homeless populations. The proposed
development will be 100% dedicated units for senior or homeless
populations. 1 point.
(14) Developer commits to notify Public Housing
Authority of availability of housing for PHA's waiting list. If the
Applicant commits to notify 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 individuals and households on the Public
Housing Authority's waiting list for occupancy, 1 point will be
awarded.
(15) Family Units. The development will have 50% of
more of the total units in the development have 2 or more bedrooms
(2 points).
(16) Agreement to sell to nonprofit or tenant
organization If the development owner agrees to provide a right of
first refusal to purchase the development upon or following the end
of the compliance period for the minimum purchase price provided
in, and in accordance with the requirements of, §42(i)(7) of the
Internal Revenue Code, (26 U.S.C. Section 42(I)(7) ) to a qualified
nonprofit organization, or either an individual tenant with respect
to a single family building, or a tenant cooperative, a resident
management corporation in the development or other association of
tenants in the development with respect to multifamily
developments, the applicant will be awarded one point.
(17) Extended Use. If the applicant agrees to extend
the affordable housing period beyond the minimum required by
Section 42 of the Internal Revenue Code for an additional five year
period shall be awarded 1 point.
(18) Mixed Income units The development is a
mixed-income development comprised of both market rate units and
qualified tax credit units. Points will be awarded to developments
with a tax credit unit based applicable fraction which is no greater
than:
(i) 85% (3 points); or,
(ii) 90% (2 points); or,
(ii) 95% (1 point).
(19) Small projects. The development consists of not
more than 36 units and is not part of, or contiguous to, a larger
development. (4 points).
(20) Fair Housing Seminar. The applicant or a
representative of the applicant has attended a fair housing seminar
(of at least five and 1/5 hours) within the preceding three years
shall receive 1 point.
(21) Accessible Units. If the development is designed
to have five percent of its units fully accessible for persons with
disability and at least 2 percent of its units designed for a person
with a visual or hearing impairment, then the development shall be
awarded 4 points
(22) Pre-Application Points. Applications which
submitted a pre-application in conformity with the rules of the
department shall receive 4 points. Applications involving funding
from the Rural Housing Service United States Department of
Agriculture that also involve the rehabilitation of an affordable
housing development shall qualify for the preapplication points
without submitting the preapplication.
(23) In the event that two or more applications have
the same score, the department shall use a tiebreaker and award the
allocation of tax credits to the development that requests the
least tax credits per net rentable area.
[(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] associations on
record with the [state or county] department 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 substantial penalties or
point reductions 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 publish in the qualified
allocation plan details of the scoring system used by the
department to score applications.
(d) The department shall implement a system of evaluating
the financial aspects of tax credit developments that recognizes
that such developments do not need, and shall not be subject to, the
financial underwriting necessary for a mortgage loan transaction
where the department has a financial interest in the loan. In
evaluating tax credit developments, the department shall only
ensure that the housing credit dollars allocated to a development
are not in excess of the amount necessary for the financial
feasibility of the development and its viability throughout the
first fifteen years of operation
(e) [(d)] The department shall [underwrite] evaluate the
applications ranked under Subsection [(b)] (a) beginning with the
applications with the highest scores in each region described by
Section 2306.111(d) and in each set-aside category described in the
qualified allocation plan. Based on application rankings, the
department shall continue to [underwrite] evaluate applications
until the department has processed enough applications satisfying
the department's [underwriting] evaluation criteria to enable the
allocation of all available housing tax credits according to
regional allocation goals and set-aside categories. To enable the
board to establish an applications waiting list under Section
2306.6711, the department shall [underwrite] evaluate as many
additional applications as the board considers necessary to ensure
that all available housing tax credits are allocated within the
period required by law. The department shall [underwrite] evaluate
an application to determine the financial feasibility of the
development and an appropriate level of housing tax credits.
(1) In evaluating the proposed development, the
department shall only consider:
(A) the sources and uses of funds and the total
financing planned for the project;
(B) any proceeds or receipts expected to be
generated by reason of tax benefits;
(C) the percentage of the housing credit dollar
amount used for project costs other than the cost of
intermediaries;
(D) the reasonableness of the developmental and
operational costs of the project.
(2) 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)] (A) the county in which the development is
to be located;
[(2)] (B) if certifications are unavailable
under Subdivision (1), the metropolitan statistical area in which
the development is to be located; or
[(3)] (C) if certifications are unavailable
under Subdivisions [(1)] (A) and [(2)] (B), 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 2.13. Amend Section 2306.6711, Texas Government
Code, to read as follows:
Sec. 2306.6711. ALLOCATION OF HOUSING TAX CREDITS. (a) The
director shall provide the application scores to the board before
the 30th day preceding the date the board begins to issue
commitments for housing tax credits in the allocation round.
(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] evaluated by the department['s underwriting policy]
in accordance with Subsection (c)(1) of this Section, and by
federal law, and in any event may not allocate to the applicant
housing tax credits in an amount greater than $2 million in a single
application round. The $2 million maximum amount to any one
applicant applies regardless of the capacity in which the applicant
or any affiliated or related person is involved.
(c) Concurrently with the initial issuance of commitments
for housing tax credits under Subsection (b), the board shall
establish a waiting list of additional applications ranked by score
in descending order of priority based on set-aside categories and
regional allocation goals.
(d) The board shall issue commitments for housing tax
credits with respect to applications on the waiting list as
additional credits become available.
(e) Not later than the 120th day after the date of the
initial issuance of commitments for housing tax credits under
Subsection (b), the department shall provide to an applicant who
did not receive a commitment under that subsection an opportunity
to meet and discuss with the department the application's
deficiencies and scoring.
(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:
(1) the new construction developments are or will be
located more than one linear mile apart; or
(2) the developments are placed in service in
different taxable years, in accordance with Section 42(f)(1),
Internal Revenue Code of 1986 (26 U.S.C. Section 42). This
subsection (f)(2) applies only to communities contained within
counties with populations exceeding one million.
SECTION 2.14 Amend Section 2306.6712, Texas Government
Code, to read as follows:
Sec. 2306.6712. AMENDMENT OF APPLICATION SUBSEQUENT TO
ALLOCATION BY BOARD. (a) If a proposed modification would
materially 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 the modification may
materially adversely alter the development, the director shall
require the department staff assigned to [underwrite] evaluate
applications to review evaluate the amendment and provide an
analysis and written recommendation to the board. If the director
determines that the modification would not materially adversely
affect the development, the director shall approve the modification
without board action. The appropriate monitor under Section
2306.6719 shall also provide to the board an analysis and written
recommendation regarding the amendment.
(c) The board must vote on whether to approve the amendment
or to send the matter to the Alternative Dispute Resolution process
as provided for in Section 2306.082 of this chapter. 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
(5) any modification in the attributes of the
development that would have affected the selection of the
application in the application round;
(4) a reduction of three percent or more in the square
footage of the units or common areas;
(5) a significant modification of the architectural
design of the development;
(6) a modification of the residential density of the
development of at least five percent; and
(6) (7) any other modification considered significant
by the board.
(e) In evaluating the amendment under this subsection, the
department staff shall consider whether the need for the
modification proposed in the amendment was:
(1) reasonably foreseeable by the applicant at the
time the application was submitted; or
(2) preventable by the applicant.
(f) This section shall be administered in a manner that is
consistent with Section 42, Internal Revenue Code of 1986 (26
U.S.C. Section 42).
SECTION 2.15. Amend Section 2306.6713, Texas Government
Code, to read as follows:
Sec. 2306.6713. HOUSING TAX CREDIT AND OWNERSHIP TRANSFERS.
(a) An applicant may not transfer an allocation of housing tax
credits or ownership of a development supported with an allocation
of housing tax credits to any person other than an affiliate unless
the applicant obtains the director's prior, written approval of the
transfer.
(b) The director may not unreasonably withhold approval of
the transfer.
(c) An applicant seeking director approval of a transfer and
the proposed transferee must provide to the department a copy of any
applicable agreement between the parties to the transfer, including
any third-party agreement with the department.
(d) On request, an applicant seeking director approval of a
transfer must provide to the department:
(1) a list of the names of transferees and related
parties; and
(2) detailed information describing the experience
and financial capacity of transferees and related parties.
(e) The 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.
(e) (f) Not later than the fifth working day after the date
the department receives all necessary information under this
section, the department shall conduct a qualifications review of a
transferee to determine:
(1) the transferee's past compliance with all aspects
of the low income housing tax credit program, including land use
restriction agreements; and
(2) the sufficiency of the transferee's experience
with developments supported with housing tax credit allocations.
SECTION 2.16. Amend Section 2306.6715, Texas Government
Code, to read as follows:
Sec. 2306.6715. APPEAL. (a) In a form prescribed by the
department in the qualified allocation plan, or also through the
Alternative Dispute Resolution process provided for by Section
2306.082 of this chapter, an applicant may appeal the following
decisions made by the department in the application evaluation
process provided by Section 2306.6710:
(1) an [determination] evaluation regarding the
application's satisfaction of threshold and underwriting criteria,
in accordance with Sections 2306.67042 or 2306.6710(c)(1) of this
chapter;
(2) the scoring of the application; and
(3) a recommendation as to the amount of housing tax
credits to be allocated to the application.
(b) An applicant may not appeal a decision made under
Section 2306.6710 regarding an application filed by another
applicant unless it can be demonstrated that the department
inconsistently evaluated similar applications.
(c) An applicant must file a written appeal authorized by
this section with the department not later than the [seventh] tenth
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 an Alternative Dispute Resolution
hearing, as provided for by Section 2306.082 of this chapter, in
addition to making an appeal directly in writing to the board,
provided that an appeal filed with the board under 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).
(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 the
Alternative Dispute Resolution process recommends this review to
the board. The decision of the board regarding the appeal is final.
SECTION 2.17. Amend Section 2306.6716, Texas Government
Code, to read as follows:
Sec. 2306.6716. FEES. (a) A fee charged by the department
for filing an application or for receiving an allocation or a
commitment of 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. For purposes of this section,
the department shall include the total amount of all commitment or
allocation fees as being earned and available for use in the year in
which received.
(b) The department shall publish each year an updated
schedule of application fees that specifies the amount to be
charged at each stage of the application process.
(c) In accordance with the fee schedule, the department
shall refund the balance of any fees collected for an application
that is withdrawn by the applicant or that is not fully processed by
the department. The department must provide the refund to the
applicant not later than the 30th day after the date the last
official action is taken with respect to the application.
(d) The department shall develop a sliding scale fee
schedule for applications that encourages increased participation
by community housing development organizations in the low income
housing tax credit program.
SECTION 2.18. Amend Section 2306.6717, Texas Government
Code, to read as follows:
Sec. 2306.6717. PUBLIC INFORMATION AND HEARINGS. (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 [underwriting] evaluation 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.
(c) The department shall hold at least three public hearings
in different regions of the state to receive public comments on
applications and on other issues relating to the low income housing
tax credit program.
(d) Notwithstanding any other provision of this section,
the department shallmay treat the financial statements of any
applicant as confidential and shall may elect not to disclose those
statements to the public.
SECTION 2.19. Amend Section 2306.6718, Texas Government
Code, to read as follows:
Sec. 2306.6718. ELECTED OFFICIALS. (a) The department
shall solely be responsible for providing [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.
(b) The department shall provide the elected officials with
an opportunity to comment on the application during the application
evaluation process provided by Section 2306.6710 and shall consider
those comments in evaluating applications under that section.
(c) A member of the legislature who represents the community
containing the development may hold a community meeting at which
the department shall provide appropriate representation.
(d) If the department receives written notice from the mayor
or county judge of an affected municipality or county opposing an
application, the department must contact the mayor or county judge
and offer to conduct a physical inspection of the development site
and consult with the mayor or county judge before the application is
scored.
SECTION 2.20. Amend Section 2306.6719, Texas Government
Code, to read as follows:
Sec. 2306.6719. MONITORING OF COMPLIANCE. (a) For
developments that do not involve other federal assistance where the
federal agency will be monitoring the construction or
rehabilitation of the development and that will provide the
department with copies of its construction inspection or
operational inspection reports, the department, may contract with
an independent third party to monitor 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.
(b) The department may assign department staff other than
housing tax credit division staff to perform the relevant
monitoring functions required by this section in the construction
or rehabilitation phase of a development.
SECTION 2.21. Amend Section 2306.6720, Texas Government
Code, 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 2.22. Amend Section 2306.6721, Texas Government
Code, to read as follows:
Sec. 2306.6721. DEBARMENT FROM PROGRAM PARTICIPATION. (a)
The board by rule shall adopt a policy providing for the debarment
of a person from participation in the low income housing tax credit
program as described by this section.
(b) The department may debar a person from participation in
the program on the basis of the person's past failure to comply with
any condition imposed by the department in connection with the
allocation of housing tax credits.
(c) The department shall debar a person from participation
in the program if the person:
(1) materially violates any condition imposed by the
department in connection with the allocation of housing tax
credits;
(2) is debarred from participation in federal housing
programs by the United States Department of Housing and Urban
Development; or
(3) is in material noncompliance with or has
repeatedly violated a land use restriction agreement regarding a
development supported with a housing tax credit allocation.
(d) A person debarred by the department from participation
in the program shall not be eligible for a minimum of 5 years from
the date of the debarment and may appeal the person's debarment
through the Alternative Dispute Resolution Process, as provided for
by Section 2306.082 of this chapter, and directly to the board.
SECTION 2.23. Amend Section 2306.7622, Texas Government
Code, to read as follows:
Sec. 2306.6722. DEVELOPMENT ACCESSIBILITY. (a) Any new
construction development or rehabilitation development that was
first occupied after March 13, 1991 supported with a housing tax
credit allocation shall comply with the accessibility standards
that are required under the Fair Housing Amendments Act of 1988 [42
U.S.C. 3600 et. seq], as implemented in 24 C.F.R. Part 100.
(b) Any rehabilitation development shall endeavor, to the
extent feasible, to satisfy the requirements of the Fair Housing
Amendments Act of 1988 [42 U.S.C. 3600 et seq.], as implemented in
24 C.F.R. Part 100.Section 504, Rehabilitation Act of 1973 (29
U.S.C. Section 794), and specified under 24 C.F.R. Part 8, Subpart
C.
SECTION 2.24. Amend Section 2306.6723, Texas Government
Code, to read as follows:
Sec. 2306.6723. COORDINATION WITH RURAL DEVELOPMENT
AGENCY. (a) The department shall jointly administer with the rural
development agency the allocations forset-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.
(b) The rural development agency shall assist in developing
all threshold, scoring, and underwriting criteria applied to
applications eligible for the rural area set-aside. The criteria
must be approved by that agency.
(c) To ensure that the rural area set-aside receives a
sufficient volume of eligible applications, the department shall
fund and, with the rural development agency, shall jointly
implement outreach, training, and rural area capacity building
efforts as directed by the rural development agency.
(c) (d) The department and the rural development agency
shall jointly adjust the regional allocation of housing tax credits
described by Section 2306.111 to offset the under-utilization and
over-utilization of multifamily private activity bonds and other
housing resources in the different regions of the state.
(d) (e) From application fees collected under this
subchapter, the department shall reimburse the rural development
agency for any costs incurred by the agency in carrying out the
functions required by this section.
SECTION 2.25. Amend Section 2306.6724, Texas Government
Code, to read as follows:
Sec. 2306.6724 DEADLINES FOR ALLOCATION OF LOW INCOME
HOUSING TAX CREDITS. (a) Not later than September 30August 1 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 September 1November15.
(c) The governor shall approve, reject, or modify and
approve the qualified allocation plan not later than December
October 1.
(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.
(e) The board shall review the recommendations of
department staff regarding applications and shall issue a list of
approved applications each year in accordance with the qualified
allocation plan not later than JuneMay 30.
(f) The board shall issue final commitments for allocations
of housing tax credits each year in accordance with the qualified
allocation plan not later than July 31June 30.
SECTION 2.26. Amend Section 2306.6725, Texas Government
Code, to read as follows:
Sec. 2306.6725. SCORING OF APPLICATIONS. (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 (26 U.S.C. Section 42),
and that is also consistent with 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.]
(b) The department shall provide appropriate incentives as
determined through the qualified allocation plan to reward
applicants who agree to:
(1) equip the property that is the basis of the
application with energy saving devices that meet the standards
established by the state energy conservation office [or to provide
to a qualified nonprofit organization or tenant organization a
right of first refusal to purchase the property at the minimum price
provided in, and in accordance with the requirements of, Section
42(i)(7), Internal Revenue Code of 1986 (26 U.S.C. Section
42(i)(7)); and
(2) locate the development in a census tract in which
there are no other existing developments supported by housing tax
credits.]
(b) (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 required by Section 2306.6710 of this Chapter.
(d) For each scoring criterion, the department shall use a
range of points to evaluate the degree to which a proposed project
satisfies the criterion. The department may not award a number of
points for a scoring criterion that is disproportionate to the
degree to which a proposed project complies with that criterion.
SECTION 2.27. Amend 2306.6728, Texas Government Code, to
read as follows:
Sec. 2306.6728. DEPARTMENT POLICY AND PROCEDURES REGARDING
RECIPIENTS OF CERTAIN FEDERAL HOUSING ASSISTANCE. (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) where
the Section 8 assistance to the family will be sufficient to allow
the family to make the required rental payment on the apartment.
(b) The policy must provide a reasonable minimum income
standard that is not otherwise prohibited by this chapter and that
is to be used by owners of low income housing tax credit properties
and must place reasonable limits on the use of any other factors
that impede the admittance of individuals and families described by
Subsection (a) to those properties, including credit histories,
security deposits, and employment histories.
(c) The department by rule shall establish procedures to
monitor low income housing tax credit properties that refuse to
admit individuals and families described by Subsection (a). The
department by rule shall establish enforcement mechanisms with
respect to those properties, including a range of sanctions to be
imposed against the owners of those properties.
SECTION 2.28. Amend Section 2306.6729, Texas Government
Code, to read as follows:
Sec. 2306.6729. QUALIFIED NONPROFIT ORGANIZATION. (a) A
qualified nonprofit organization may only compete in [any low
income housing tax credit allocation pool, including:
(1)] the nonprofit allocation pool[;
(2) the rural projects/prison communities allocation
pool; and
(3) the general projects allocation pool].
(b) A qualified nonprofit organization submitting an
application under this subchapter must have a controlling interest
in a project proposed to be financed with a low income housing tax
credit from the nonprofit allocation pool.
SECTION 2.29. Amend Section 2306.6731, Texas Government
Code, to read as follows:
Sec. 2306.6731. ALLOCATION DECISION; REEVALUATION. (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.
(b) Regardless of project stage, the board must reevaluate a
project that undergoes a substantial change between the time of
initial board approval of the project and the time of issuance of a
tax credit commitment for the project. The board may revoke any tax
credit commitment issued for a project that has been unfavorably
reevaluated by the board under this subsection.
SECTION 2.30. Amend Section 2306.6733, Texas Government
Code, to read as follows:
Sec. 2306.6733. REPRESENTATION BY FORMER BOARD MEMBER OR
OTHER PERSON. (a) A former board member or a former director,
deputy director, director of housing programs, director of
compliance, director of underwriting, member of any committee of
the department involved in the selection of developments for an
award of 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, 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, 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, or
manager's service in office or employment with the department
ceases.
(b) In the event that the administration of the federal
housing tax credit program is transferred to any other department
or agency, the prohibition of paragraph (a) shall apply to any
person that would have been prohibited from participating in a
housing tax credit application as if the housing tax credit program
had remained within the functions of the department.
(c) (b) A person commits an offense if the person violates
this section. An offense under this section is a Class A
misdemeanor.
SECTION 2.31. Add a new Section 2306.6735, Texas Government
Code, to read as follows:
Sec. 2306.6735. RELATIONSHIP TO FEDERAL LAW. (a)
Subchapter DD of this chapter is enacted to implement the low income
housing tax credit established by Section 42 of the Internal
Revenue Code (26 U.S.C. Sec 42) as it may be amended from time to
time.
(b) To the extent that any provisions of this chapter is
held to be inconsistent with, or repugnant to, 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
inconsistency shall have no effect on the remaining provisions of
this subchapter.
(c) If a federal law or regulation is changed without making
a provision for temporary waivers to allow compliance with state
law and, as a result of this change, there is insufficient time to
comply with any 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 statute or court order conflicts with this
subchapter, the federal law or court order prevails over this
subchapter.
(e) In the event the department determines that any
provision of this subchapter is inconsistent with Section 42 of the
Internal Revenue Code or any regulations promulgated thereunder,
the department shall notify the Governor, the Lieutenant Governor,
the Speaker of the House, 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 the
federal law or regulation, the department shall be authorized to
implement the federal law or regulation.
SECTION 2.32. Amend Section 2306.803, Texas Government
Code, to read as follows:
Sec. 2306.803. AT-RISK MULTIFAMILY HOUSING:
IDENTIFICATION, PRIORITIZATION, AND PRESERVATION. (a) The
department shall determine the name and location of and the number
of units in each multifamily housing development that is at risk of
losing its low income use restrictions and subsidies and that meets
the requirements of a Class A priority described by Section
2306.802.
(b) The department shall maintain an accurate list of those
developments on the department's website.
(c) The department shall develop cost estimates for the
preservation and rehabilitation of the developments in priority
Class A.
(d) The department shall contact owners of developments
assigned a Class A priority under this section and shall attempt to
negotiate with those owners to ensure continued affordability for
individuals and families of low income under the federal housing
assistance program for those developments.
SECTION 2.33. Amend Section 2306.804, Texas Government
Code, to read as follows:
Sec. 2306.804. USE OF HOUSING PRESERVATION RESOURCES. (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 of this
Chapter,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 communities in approximate proportion to
the housing needs of each uniform state service region.
(c) The department shall give priority to providing
financing or funding to a buyer who is supported or approved by an
association of residents of the multifamily housing development.
SECTION 3. The following provisions of the Texas Government
Code are repealed:
(1) Subsections (c)(2)(A) through (c)(2)(C), and
Subsections (c)(3) through (c)(6), and Subsection (c)(8),
2306.072;
(2) Section 2306.0724, as added by Chapter 1367, Acts
of the 77th Legislature, Regular Session, 2001;
(3) Subsections (d) and (e), Section 2306.077;
(4) Section 2306.078 and Section 2306.079, as added by
Chapter 1367, Acts of the 77th Legislature, Regular Session, 2001;
(5) Section 2306.1112, as added by Chapter 1367, Acts
of the 77th Legislature, Regular Session, 2001;
(6) Section 2305.251, as added by Ch. 268, Acts of the
73rd Legislature; amended by Ch. 76, Acts of the 74th Legislature;
and added by Ch. 980, Acts of the 75th Legislature;
(7) Section 2306.270, as added by Ch. 268, Acts of the
73rd Legislature and added by Ch. 980, Acts of the 75th Legislature;
(8) Section 2306.314, as added by Ch. 268, Acts of the
73rd Legislature;
(9) Sections 2306.6726 and 2306.6727, as added by Ch.
980, Acts of the 75th Legislature, and amended by Ch. 1367, Acts of
the 77th Legislature;
(10) Section 2306.6730, as added by Chapter 1367, Acts
of the 77th Legislature, Regular Session, 2001;
(11) Section 2306.6734, as added by Chapter 1367, Acts
of the 77th Legislature, Regular Session, 2001;
(12) Subsection (a-1), Section 2306.7581, as added by
Chapter 1367, Acts of the 77th Legislature, Regular Session, 2001;
(13) Sections 2306.805(c), 2306.805(d), 2306.805(e),
and 2306.806, as added by Chapter 1367, Acts of the 77th
Legislature, Regular Session, 2001;
(14) Subchapter II, Section 2306.851 through Section
2306.853, as added by Chapter 1367, Acts of the 77th Legislature,
Regular Session, 2001; and
(15) Subchapter JJ, Section 2306.881 through Section
2306.886, as added by Chapter 1367, Acts of the 77th Legislature,
Regular Session, 2001.
SECTION 4. IMMEDIATE EFFECTIVE DATE. SECTION 2.25 of this
Act takes effect immediately if it receives a vote of two-thirds of
all the members elected to each house, as provided by Section 39,
Article III, Texas Constitution. If this Act does not receive the
vote necessary for immediate effect, this Act takes effect
September 1, 2005.
SECTION 5. EFFECTIVE DATE. This Act takes effect September
1, 2005.