By: Madla S.B. No. 1341
(In the Senate - Filed March 10, 2005; March 21, 2005, read
first time and referred to Committee on Government Organization;
April 20, 2005, reported favorably by the following vote: Yeas 7,
Nays 0; April 20, 2005, sent to printer.)
A BILL TO BE ENTITLED
AN ACT
relating to the functions of the Texas Department of Housing and
Community Affairs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2306.032, Government Code, is amended by
amending Subsections (c) and (d) and adding Subsection (d-1) to
read as follows:
(c) All materials in the possession of the department that
are relevant to an award decision [a matter] proposed for
discussion at a board meeting must be posted on the department's
website, 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) Except as provided by Subsection (d-1), the [The]
materials described by Subsection (c) must be made available to the
public as required by Subsection (c) not later than the seventh day
before the date of the meeting. The board may not consider at the
meeting any material relating to an award decision that is not made
available to the public by the date required by this subsection.
(d-1) If as the result of a reasonably unforeseen situation
related to an award decision the department is unable to meet the
requirements of Subsection (d), any additional materials described
by Subsection (c) that are associated with the situation must be
made available at least 72 hours before the meeting.
SECTION 2. Subsection (a), Section 2306.033, Government
Code, is amended to read as follows:
(a) It is a ground for removal from the board that a member:
(1) does not have at the time of taking office the
qualifications required by Section 2306.027;
(2) does not maintain during service on the board the
qualifications required by Section 2306.027;
(3) is ineligible for membership under Section
2306.027(c), 2306.034, or 2306.035;
(4) cannot, because of illness or disability,
discharge the member's duties for a substantial part of the member's
term;
(5) is absent from more than half of the regularly
scheduled board meetings that the member is eligible to attend
during a calendar year without an excuse approved by a majority vote
of the board; [or]
(6) engages in misconduct or unethical [or criminal]
behavior; or
(7) is indicted for a criminal offense, punishable as
a felony, related to the member's official duties or otherwise
engages in criminal behavior.
SECTION 3. Section 2306.039, Government Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) Except as provided by Subsections [Subsection] (b) and
(c), the department and the Texas State Affordable Housing
Corporation are subject to Chapters 551 and 552.
(c) The board may meet in executive session with the
department's internal auditor, fraud prevention coordinator, or
ethics advisor to discuss issues related to fraud, waste, or abuse.
SECTION 4. Subsections (a), (b), (d), (d-1), (e), (f), and
(g), Section 2306.111, Government Code, are amended to read as
follows:
(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) The department [housing finance division] shall adopt a
goal to apply an aggregate minimum of 25 percent of the department's
[division's] total housing funds toward housing assistance for
individuals and families of extremely low and very low income.
(d) The department shall allocate housing funds provided to
the state under the Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. Section 12701 et seq.)[, housing trust funds
administered by the department under Sections 2306.201- 2306.206,]
and commitments issued under the federal low income housing tax
credit program administered by the department under Subchapter DD
to [all urban/exurban areas and rural areas of] each uniform state
service region based on a formula developed by the department.
Commitments issued under the federal low income housing tax credit
program must be allocated among all urban/exurban areas and rural
areas of each uniform state service region. The formula developed
by the department to determine the appropriate allocation of funds
or credits must be [that is] based on the need for housing
assistance and the availability of housing resources in each
uniform state service region and, for credits, in the [those]
urban/exurban areas and rural areas of those regions, provided that
the allocations are consistent with applicable federal and state
requirements and limitations. The department shall use the
information contained in its annual state low income housing plan
and shall use other appropriate data to develop the formula. If the
department determines under the formula that an insufficient number
of eligible applications for assistance out of funds or credits
allocable under this subsection are submitted to the department
from a particular uniform state service region, the department
shall use the unused funds or credits allocated to that region for
the [all urban/exurban areas and rural areas in] other uniform
state service regions based on identified need and financial
feasibility.
(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 15 [10] percent of the total
allocation of funds or credits for the applicable program.
(e) The department shall include in its annual low income
housing plan under Section 2306.0721:
(1) the formula developed by the department under
Subsection (d); and
(2) the allocation targets established under the
formula for [the urban/exurban areas and rural areas of] each
uniform state service region and, for credits, for the
urban/exurban areas and rural areas of those regions.
(f) For each program affected by the requirements of
Subsection (d), the [The] department shall include in its annual
low income housing report under Section 2306.072 the amounts of
funds and credits allocated to [the urban/exurban areas and rural
areas of] each uniform state service region in the preceding year
and, for credits, the amounts allocated to the urban/exurban areas
and rural areas of those regions in that 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 by which to award tax credits 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.
SECTION 5. Subsection (c), Section 2306.111, Government
Code, as amended by Chapters 1367 and 1448, Acts of the 77th
Legislature, Regular Session, 2001, is reenacted and amended to
read as follows:
(c) 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 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
non-participating areas. Funds not set aside under this subsection
may be used for integrated housing in which at least a portion of
the funded units serve persons with disabilities.
SECTION 6. Subsection (a), Section 2306.1114, Government
Code, is amended to read as follows:
(a) Not later than the 14th day after the date an
application or a proposed application for multifamily housing
development funds described by Section 2306.111 has been filed, the
department shall provide written notice of the filing of the
application or proposed application to the following persons:
(1) the United States representative who represents
the community containing the development described in the
application;
(2) members of the legislature who represent the
community containing the development described in the application;
(3) the presiding officer of the governing body of the
county and any municipality [political subdivision] containing the
development described in the application;
(4) any member of the governing body described by
Subdivision (3) [of a political subdivision] who represents the
area containing the development described in the application;
(5) the superintendent and the presiding officer of
the board of trustees of the school district containing the
development described in the application; and
(6) any neighborhood organizations on record with the
state or municipality [county] in which the development described
in the application is to be located and whose boundaries contain the
proposed development site.
SECTION 7. Subsection (a), Section 2306.185, Government
Code, is amended to read as follows:
(a) The department shall adopt policies and procedures to
ensure that, for a multifamily rental housing development funded
through loans, grants, or tax credits under this chapter, the owner
of the development:
(1) keeps the rents affordable for low income tenants
for the longest period that is economically feasible; and
(2) provides regular maintenance to keep the
development sanitary, decent, and safe [and otherwise complies with
the requirements of Section 2306.186].
SECTION 8. Subsection (a), Section 2306.186, Government
Code, is amended by adding Subdivision (5) to read as follows:
(5) "Multifamily rental housing development" means a
rental housing development that contains 25 or more rental units.
SECTION 9. Subsections (b) and (l), Section 2306.186,
Government Code, are amended to read as follows:
(b) If the department is the first lien lender with respect
to the development, each owner who receives department assistance
for a multifamily rental housing development [that contains 25 or
more rental units] shall deposit annually into a reserve account:
(1) for the year 2004:
(A) not less than $150 per unit per year for units
one to five years old; and
(B) not less than $200 per unit per year for units
six or more years old; and
(2) for each year following the year 2004, the amounts
per unit per year as described by Subdivision (1).
(l) Neither the physical needs assessment requirements nor
the reserve account requirements of this [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 10. Section 2306.256, Government Code, is
transferred from Subchapter K, Chapter 2306, Government Code, to
Subchapter HH, Chapter 2306, Government Code, and redesignated as
Section 2306.8015 to read as follows:
Sec. 2306.8015 [2306.256]. AFFORDABLE HOUSING
PRESERVATION PROGRAM. (a) The department shall develop and
implement a program to preserve affordable housing in this state.
(b) Through the program, the department shall:
(1) maintain data on housing projected to lose its
affordable status;
(2) develop policies necessary to ensure the
preservation of affordable housing in this state;
(3) advise other program areas with respect to the
policies; and
(4) assist those other program areas in implementing
the policies.
SECTION 11. Subsection (a), Section 2306.359, Government
Code, is amended to read as follows:
(a) In evaluating an application for an issuance of private
activity bonds, the department shall score and rank the application
using a point system based on criteria that are adopted by the
department, including criteria:
(1) regarding:
(A) the income levels of tenants of the
development, consistent with the funding priorities provided by
Section 1372.0321;
(B) the rent levels of the units;
(C) the level of community support for the
application;
(D) the period of guaranteed affordability for
low income tenants;
(E) the cost per unit of the development;
(F) the size, quality, and amenities of the
units;
(G) the services to be provided to tenants of the
development;
(H) from the county and, if applicable, the
municipality containing the development, the degree of commitment
of development funding [by local political subdivisions] that
enables additional units for individuals and families of very low
income; and
(I) other criteria as developed by the board; and
(2) imposing penalties on applicants who have
requested extensions of department deadlines relating to
developments supported by an issuance of private activity bonds
made in the application round preceding the current round.
SECTION 12. Section 2306.6015, Government Code, is amended
to read as follows:
Sec. 2306.6015. PERSONNEL. The division director may
employ and remove staff as necessary to perform the work of the
division and may prescribe the staff's [their] duties and
compensation. [Subject to applicable personnel policies and
regulations, the division director may remove any division
employee.]
SECTION 13. Subsections (b) and (b-1), Section 2306.6704,
Government Code, are amended to read as follows:
(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 on record with the
state or county in which the development is to be located and whose
boundaries contain the proposed development site;
(2) the superintendent and the presiding officer of
the board of trustees of the school district containing the
development;
(3) the presiding officer of the governing body of any
municipality containing the development and all elected members of
that body;
(4) the presiding officer of the governing body of the
county containing the development and all elected members of that
body; and
(5) the state senator and state representative of the
district containing the development.
SECTION 14. Section 2306.6705, Government Code, is amended
to read as follows:
Sec. 2306.6705. GENERAL APPLICATION REQUIREMENTS. An
application must contain at a minimum the following written,
detailed information in a form prescribed by the board:
(1) a description of:
(A) the financing plan for the development,
including any nontraditional financing arrangements;
(B) the use of funds with respect to the
development;
(C) the funding sources for the development,
including:
(i) construction, permanent, and bridge
loans; and
(ii) rents, operating subsidies, and
replacement reserves; and
(D) the commitment status of the funding sources
for the development;
(2) if syndication costs are included in the eligible
basis, a justification of the syndication costs for each cost
category by an attorney or accountant specializing in tax matters;
(3) from a syndicator or a financial consultant of the
applicant, an estimate of the amount of equity dollars expected to
be raised for the development in conjunction with the amount of
housing tax credits requested for allocation to the applicant,
including:
(A) pay-in schedules; and
(B) syndicator consulting fees and other
syndication costs;
(4) if rental assistance, an operating subsidy, or an
annuity is proposed for the development, any related contract or
other agreement securing those funds and an identification of:
(A) the source and annual amount of the funds;
(B) the number of units receiving the funds; and
(C) the term and expiration date of the contract
or other agreement;
(5) if the development is located within the
boundaries of a political subdivision with a zoning ordinance,
evidence in the form of a letter from the chief executive officer of
the political subdivision or from another local official with
jurisdiction over zoning matters that states that:
(A) the development is permitted under the
provisions of the ordinance that apply to the location of the
development; or
(B) the applicant is in the process of seeking
the appropriate zoning and has signed and provided to the political
subdivision a release agreeing to hold the political subdivision
and all other parties harmless in the event that the appropriate
zoning is denied;
(6) if an occupied development is proposed for
rehabilitation:
(A) an explanation of the process used to notify
and consult with the tenants in preparing the application;
(B) a relocation plan outlining:
(i) relocation requirements; and
(ii) a budget with an identified funding
source; and
(C) if applicable, evidence that the relocation
plan has been submitted to the appropriate local agency;
(7) a certification of the applicant's compliance with
appropriate state and federal laws, as required by other state law
or by the board;
(8) any other information required by the board in the
qualified allocation plan; and
(9) evidence that the applicant has notified the
following entities with respect to the filing of the application,
unless the applicant has already provided the notice required by
Section 2306.6704:
(A) any neighborhood organizations on record
with the state or county in which the development is to be located
and whose boundaries contain the proposed development site;
(B) the superintendent and the presiding officer
of the board of trustees of the school district containing the
development;
(C) the presiding officer of the governing body
of any municipality containing the development and all elected
members of that body;
(D) the presiding officer of the governing body
of the county containing the development and all elected members of
that body; and
(E) the state senator and state representative of
the district containing the development.
SECTION 15. Section 2306.6710, Government Code, is amended
by amending Subsections (b) and (e) and adding Subsections (h),
(i), and (j) to read as follows:
(b) If an application satisfies the threshold criteria, the
department shall score and rank the application using a point
system that:
(1) prioritizes in descending order criteria
regarding:
(A) financial feasibility of the development
based on the supporting financial data required in the application
that will include a project underwriting pro forma from the
permanent or construction lender;
(B) quantifiable community participation with
respect to the development, evaluated on the basis of written
statements from any neighborhood organizations on record with the
state or county in which the development is to be located and whose
boundaries contain the proposed development site;
(C) the income levels of tenants of the
development;
(D) the size and quality of the units;
(E) the commitment of development funding by
local political subdivisions;
(F) the level of community support for the
application, evaluated on the basis of written statements from
state elected officials;
(G) the rent levels of the units;
(H) the cost of the development by square foot;
and
(I) the services to be provided to tenants of the
development; [and]
(2) uses criteria imposing penalties on applicants or
affiliates who have requested extensions of department deadlines
relating to developments supported by housing tax credit
allocations made in the application round preceding the current
round or a developer or principal of the applicant that has been
removed by the lender, equity provider, or limited partners for its
failure to perform its obligations under the loan documents or
limited partnership agreement; and
(3) is 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:
(A) leverage funds based on documented,
committed, and available third-party private, state, or federal
resources, including federal HOPE VI grants received through the
United States Department of Housing and Urban Development, when
consistent with sound underwriting practices and when economically
feasible; and
(B) serve traditionally underserved areas.
(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.
(h) The department shall award an appropriate number of
points as an incentive for participation in the preapplication
process established under Section 2306.6704.
(i) As determined through the qualified allocation plan,
the department shall provide appropriate incentives 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); and
(2) locate the development in a census tract in which
there are no other existing developments supported by housing tax
credits.
(j) 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 16. Section 2306.6711, Government Code, is amended
by adding Subsection (g) to read as follows:
(g) 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.
SECTION 17. Subsection (a), Section 2306.805, Government
Code, is amended to read as follows:
(a) The department shall establish and administer a housing
preservation incentives program to provide incentives through
[loan guarantees,] loans[,] and grants to political subdivisions,
housing finance corporations, public housing authorities,
for-profit organizations, and nonprofit organizations for the
acquisition and rehabilitation of multifamily housing developments
assigned a Class A or Class B priority under Section 2306.803.
SECTION 18. Subchapter I, Chapter 487, Government Code, is
amended by adding Section 487.354 to read as follows:
Sec. 487.354. FUNDING OF COLONIA SELF-HELP CENTERS. The
office shall enter into a memorandum of understanding with the
Texas Department of Housing and Community Affairs to permit the
department to receive and administer the portion of the federal
community development block grant money specifically allocated
under the General Appropriations Act to fund the operation of
colonia self-help centers. The memorandum must require the office
to transfer to the department a portion of the office's total
administrative funds in the same ratio that the portion of
community development block grant money allocated for the self-help
centers bears to the total yearly allocation of community
development block grant money. The memorandum must require the
office to continue to fund the department's border field offices
through the community development block grant program and must
require the department to exercise oversight and supervision over
those field offices and staff.
SECTION 19. Subsection (d), Section 6.060, Water Code, is
amended to read as follows:
(d) The board shall meet annually with the board of the
Texas Department of Housing and Community Affairs, or the successor
agency that administers the portion of the federal community
development block grant nonentitlement program that addresses the
infrastructure needs of colonias, to assess the agencies' progress
in meeting the needs of colonia residents [and to receive an update
and recommendations from the Colonia Initiatives Advisory
Committee, as provided by Section 2306.590, Government Code]. For
purposes of this subsection, "colonia" has the meaning assigned by
Section 2306.581, Government Code.
SECTION 20. Sections 2306.079, 2306.080, 2306.2561,
2306.590, 2306.6725, Subsection (c), Section 2306.805, and Section
2306.806, Government Code, are repealed.
SECTION 21. The changes in law made by this Act relating to
the awarding of financial assistance administered by the Texas
Department of Housing and Community Affairs apply only to an
application for that assistance submitted on or after the effective
date of this Act.
SECTION 22. This Act takes effect September 1, 2005.
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