By: Menendez, Chisum H.B. No. 3874

Substitute the following for H.B. No. 3874:

By: Swinford C.S.H.B. No. 3874

A BILL TO BE ENTITLED

AN ACT

relating to the issuance of private activity bonds.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 1372.002, Government Code, is amended by amending Subsection (a) and adding Subsections (c) and (d) to read as follows:

(a) For purposes of this chapter, a project is:

(1) an eligible facility or facilities that are [is] proposed to be financed, in whole or in part, by an issue of qualified residential rental project bonds; [or]

(2) in connection with an issue of qualified mortgage bonds or qualified student loan bonds, the providing of financial assistance to qualified mortgagors or students located in all or any part of the jurisdiction of the issuer; or

(3) an eligible facility that is proposed to be financed, in whole or in part, by an issue of bonds other than bonds described by Subdivision (1) or (2).

(c) For purposes of Subsection (a)(1), an application under this chapter may include either the rehabilitation or new construction, or both the rehabilitation and new construction, of qualified residential rental facilities located at multiple sites and with respect to which 51 percent or more of the residential units are located:

(1) in a county with a population of less than 75,000; or

(2) in a county where the area median income is less than the area median income for the state, provided that the units are located in that portion of the county that is not included in a metropolitan statistical area containing one or more projects that are proposed to be financed, in whole or in part, by an issuance of bonds.

(d) For purposes of Subsection (c), in an application for a reservation, the number of sites may be reduced as needed without affecting their status as a project for purposes of the application, provided that the final application for a reservation contains at least two sites.

SECTION 2. Section 1372.006(a), Government Code, is amended to read as follows:

(a) An application for a reservation under Subchapter B or a carryforward designation under Subchapter C must be accompanied by a nonrefundable fee in the amount of $500, except that for issuers of qualified residential rental project bonds the application must be accompanied by:

(1) a nonrefundable fee of $1,000 payable to the board [$5,000, of which the board shall retain $1,000] to offset the costs of the private activity bond allocation program and the administration of that program; and

(2) a nonrefundable fee of [which the board shall transfer] $4,000 payable [through an interagency agreement] to the Texas Department of Housing and Community Affairs to be used for marketing, research, or educational awareness programs concerning low-income housing in this state [for use in the affordable housing research and information program as provided by Section 2306.259].

SECTION 3. Section 1372.022, Government Code, is amended to read as follows:

Sec. 1372.022. AVAILABILITY OF STATE CEILING TO ISSUERS. (a) If the state ceiling is computed on the basis of $75 per capita or a greater amount, before August 1 [15] of each year:

(1) 28.0 percent of the state ceiling is available exclusively for reservations by issuers of qualified mortgage bonds;

(2) 8 percent of the state ceiling is available exclusively for reservations by issuers of state-voted issues;

(3) 2.0 percent of the state ceiling is available exclusively for reservations by issuers of qualified small issue bonds and enterprise zone facility bonds;

(4) 22.0 percent of the state ceiling is available exclusively for reservations by issuers of qualified residential rental project bonds;

(5) 10.5 percent of the state ceiling is available exclusively for reservations by issuers of qualified student loan bonds authorized by Section 53.47, Education Code, that are nonprofit corporations able to issue a qualified scholarship funding bond as defined by Section 150(d)(2), Internal Revenue Code (26 U.S.C. Section 150(d)(2)); and

(6) 29.5 percent of the state ceiling is available exclusively for reservations by any other issuer of bonds that require an allocation.

(b) On and after August 1 [15] but before September 1, that portion of the state ceiling available for reservations, except as provided by Subsection (c), becomes available exclusively for [all applications for] reservations by issuers of qualified residential rental project bonds in the order determined by the board by lot, subject to Section 1372.0321. On and after September 1, that portion of the state ceiling available for reservations becomes available to any issuer for any bonds that require an allocation, subject to the provisions of this subchapter.

(c) Any reservations granted to qualified residential rental project bond issuers under Subsection (b) on or after August 1 and before September 1 must be made in addition to any other specific set-aside otherwise indicated in this chapter.

SECTION 4. Section 1372.023, Government Code, is amended to read as follows:

Sec. 1372.023. DEDICATION OF PORTIONS OF STATE CEILING TO TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS. (a) Until August 1 [15], of that portion of the state ceiling that is available exclusively for reservations by issuers of qualified mortgage bonds, one-third is available exclusively to the Texas Department of Housing and Community Affairs for the purpose of issuing qualified mortgage bonds.

(b) Until August 1 [15], of that portion of the state ceiling that is available exclusively for reservations by issuers of qualified residential rental project bonds, one-fifth is available exclusively to the Texas Department of Housing and Community Affairs in the manner described by Section 1372.0231.

(c) Before August 1, the [The] Texas Department of Housing and Community Affairs may not reserve a portion of the state ceiling that is available exclusively for reservations by issuers of qualified residential rental project bonds other than the portion dedicated to the department under Subsection (b) and Section 1372.0231(a).

SECTION 5. Sections 1372.0231(a), (e), (f), and (i), Government Code, are amended to read as follows:

(a) Until August 1 [15], of that portion of the state ceiling that is available exclusively for reservations by issuers of qualified residential rental project bonds:

(1) 20 percent is available exclusively to the Texas Department of Housing and Community Affairs in the manner described by Subsection (b);

(2) 70 percent is available exclusively to housing finance corporations in the manner described by Subsections (c)-(f); and

(3) 10 percent is available exclusively to the Texas State Affordable Housing Corporation in the manner described by Subsection (b-1).

(e) Until March 1 [May 15] of each year, for each of the uniform state service regions containing [Austin,] Dallas[,] or Houston, the board shall reserve $15 million of the state ceiling set aside for the region under Subsection (d) for the areas in the region that are located outside of a metropolitan statistical area.

(f) In each area described by Subsection (d) [or (e)], the board shall grant reservations based on the priority levels of proposed projects as described by Section 1372.0321.

(i) Before June 1, the board shall apportion the amount of the state ceiling set aside under Subsection (a)(2) only among uniform state service regions with respect to which an issuer has submitted an application for a reservation of the state ceiling on or before February [March] 1.

SECTION 6. Section 1372.0231(b), Government Code, as amended by Section 4, Chapter 1329, Acts of the 78th Legislature, Regular Session, 2003, is amended to read as follows:

(b) With respect to the amount of the state ceiling set aside under Subsection (a)(1), after the board's review and approval, the board shall grant reservations at the direction of the Texas Department of Housing and Community Affairs in accordance with Section 1372.0321 and criteria established by rules of that department. Subsequent allocations the board makes on behalf of that department are subject to review and approval by the board in accordance with Section 1231.041. Subject to Sections 1372.0321(a) and (b), the board shall grant reservations:

(1) in a manner that ensures that:

(A) the set-aside amount is used for proposed projects that are located throughout the state; and

(B) not more than 50 percent of the set-aside amount is used for proposed projects that are located in qualified census tracts as defined by Section 143(j), Internal Revenue Code of 1986; and

(2) in the order determined by lot, but only for those reservations granted between August 1 [15] and November 30 of the program year.

SECTION 7. Section 1372.026(a), Government Code, is amended to read as follows:

(a) The maximum amount of the state ceiling that may be reserved before August 1 [15] by a housing finance corporation for the issuance of qualified mortgage bonds may not exceed the amount computed as follows:

(1) if the local population of the housing finance corporation is 300,000 or more, $22.5 million plus the product of the amount by which the local population exceeds 300,000 multiplied by $11.25;

(2) if the local population of the housing finance corporation is 200,000 or more but less than 300,000, $20 million plus the product of the amount by which the local population exceeds 200,000 multiplied by $22.5;

(3) if the local population of the housing finance corporation is 100,000 or more but less than 200,000, $15 million plus the product of the amount by which the local population exceeds 100,000 multiplied by $50; or

(4) if the local population of the housing finance corporation is less than 100,000, the product of the local population multiplied by $150.

SECTION 8. Section 1372.0321, Government Code, is amended by amending Subsections (a) and (b) and adding Subsections (c) and (d) to read as follows:

(a) In granting reservations to issuers of qualified residential rental project issues, the board shall give [first] priority as follows [to]:

(1) first priority to:

(A) any project that qualifies under Section 1372.002(c);

(B) any single site qualified residential rental project that is located in a county with a population of less than 75,000; or

(C) any project that is located in a county where the area median income is less than the area median income for the state and that is not located in a metropolitan statistical area or primary metropolitan statistical area;

(2) second priority to projects in which:

(A) 15 [50] percent or more of the [residential] units [in the project] are:

(i) under the restriction that the maximum allowable rents are an amount equal to 30 percent of 30 [50] percent of the area median family income minus an allowance for utility costs authorized under the federal low-income housing tax credit program; and

(ii) reserved for families or [and] individuals with incomes that do [earning] not exceed 30 [more than 50] percent of the area median income of the county; [and]

(B) 83 [the remaining 50] percent or more of the [residential] units [in the project] are:

(i) under the restriction that the maximum allowable rents are an amount equal to 30 percent of 60 percent of the area median family income minus an allowance for utility costs authorized under the federal low-income housing tax credit program; and

(ii) reserved for families or [and] individuals with incomes that do [earning] not exceed [more than] 60 percent of the area median income of the county; and

(C) two percent or less of the units are not rent or income restricted units;

(3) third priority to [(2)] projects in which:

(A) 49 [15] percent or more of the [residential] units [in the project] are:

(i) under the restriction that the maximum allowable rents are an amount equal to 30 percent of 50 [30] percent of the area median family income minus an allowance for utility costs authorized under the federal low-income housing tax credit program; and

(ii) reserved for families or [and] individuals with incomes that do [earning] not exceed 50 [more than 30] percent of the area median income; [and]

(B) 49 [the remaining 85] percent or more of the [residential] units [in the project] are:

(i) under the restriction that the maximum allowable rents are an amount equal to 30 percent of 60 percent of the area median family income minus an allowance for utility costs authorized under the federal low-income housing tax credit program; and

(ii) reserved for families or [and] individuals with incomes that do [earning] not exceed [more than] 60 percent of the area median income; and

(C) two percent or less of the units are not rent or income restricted units;

(4) fourth priority to [(3)] projects in which:

(A) the development is located in a census tract in which the area median income is higher than the area median income for the county in which the tract is located;

(B) 98 [in which 100] percent or more of the [residential] units [in the project] are:

(i) under the restriction that the maximum allowable rents are an amount equal to 30 percent of 60 percent of the area median family income minus an allowance for utility costs authorized under the federal low-income housing tax credit program; and

(ii) reserved for families or [and] individuals with incomes that do [earning] not exceed [more than] 60 percent of the area median income of the county; and

(C) two percent or less of the units are not rent or income restricted units [(B) which are located in a census tract in which the median income, based on the most recent information published by the United States Bureau of the Census, is higher than the median income for the county, metropolitan statistical area, or primary metropolitan statistical area in which the census tract is located as established by the United States Department of Housing and Urban Development]; [or]

(5) fifth priority to projects in which:

(A) 98 percent or more of the units are:

(i) under the restriction that the maximum allowable rents are an amount equal to 30 percent of 60 percent of the area median family income minus an allowance for utility costs authorized under the federal low-income housing tax credit program; and

(ii) reserved for families or individuals with incomes that do not exceed 60 percent of the area median income of the county; and

(B) two percent or less of the units are not rent or income restricted units; and

(6) sixth priority to any other qualified residential rental project [(4) on or after June 1, projects that are located in counties, metropolitan statistical areas, or primary metropolitan statistical areas with area median family incomes at or below the statewide median family income established by the United States Department of Housing and Urban Development].

(b) The board may not reserve a portion of the state ceiling for a first through fifth [or second] priority project described by this section unless the board receives evidence that an application has been filed with the Texas Department of Housing and Community Affairs for the low-income housing tax credit that is available for multifamily transactions that are at least 51 percent financed by tax-exempt private activity bonds.

(c) Applicants who qualify under Section 1372.0231(b-1) or (e) are not eligible for consideration as a first priority.

(d) For the purposes of Subsections (a)(1)-(5), the area median income must be based on the most recent information published by the United States Census Bureau.

SECTION 9. Section 1372.037(a), Government Code, is amended to read as follows:

(a) Except as provided by Subsection (b), before September 1 the board may not grant for any single project a reservation for that year that is greater than:

(1) $25 million, if the issuer is an issuer of qualified mortgage bonds, other than the Texas Department of Housing and Community Affairs;

(2) $50 million, if the issuer is an issuer of a state-voted issue, other than the Texas Higher Education Coordinating Board, or $75 million, if the issuer is the Texas Higher Education Coordinating Board;

(3) the amount to which the Internal Revenue Code limits issuers of qualified small issue bonds and enterprise zone facility bonds, if the issuer is an issuer of those bonds;

(4) the lesser of $20 [$15] million or 15 percent of the amount set aside for reservation by issuers of qualified residential rental project bonds with respect to a single site, if the issuer is an issuer of those bonds;

(5) the lesser of $25 million or 15 percent of the amount set aside for reservation by issuers of qualified residential rental project bonds with respect to multiple sites as described by Section 1372.002(c), if the issuer is an issuer of those bonds;

(6) the amount as prescribed in Sections 1372.033(d), (e), and (f), if the issuer is an issuer authorized by Section 53.47, Education Code, to issue qualified student loan bonds; or

(7) [(6)] $50 million, if the issuer is any other issuer of bonds that require an allocation.

SECTION 10. Section 1372.042, Government Code, is amended by amending Subsections (a-1) and (c) and adding Subsections (a-2) through (a-4) to read as follows:

(a-1) An issuer of qualified residential rental project bonds shall close on the bonds for which the reservation was granted for a single site application not later than the 150th day after the reservation date. If the [an] issuer to which this subsection applies [of qualified residential rental project bonds] fails to close on the bonds for which a reservation was granted, the issuer shall pay the full closing fee provided by Section 1372.006(b) if the application is not withdrawn before the 120th day after the reservation date.

(a-2) An issuer of qualified residential rental project bonds shall close on the bonds for which the reservation was granted for a project described by Section 1372.002(c) not later than the 180th day after the reservation date. If the issuer fails to close on the bonds for which a reservation was granted, the issuer shall pay the full closing fee provided by Section 1372.006(b) if the application is not withdrawn before the 150th day after the reservation date.

(a-3) Notwithstanding Subsections (a-1) and (a-2), an issuer of qualified residential rental project bonds may request the following three extensions, subject to the payment of the following fees by the issuer directly to the housing trust fund administered under Subchapter I:

(1) one extension of not more than 30 days for a fee of $20,000;

(2) after the expiration of an extension under Subdivision (1), a second extension of not more than 30 days for a fee of $40,000; and

(3) after the expiration of an extension under Subdivision (2), a third extension of not more than 30 days for a fee of $60,000.

(a-4) Each extension or extension fee described by Subsection (a-3) is independent from any other extension or fee described by that subsection and may not be aggregated with the other extensions and fees, as applicable, for purposes of making a single request for multiple 30-day extensions.

(c) Notwithstanding Subsections (a), (a-1), (a-2), (a-3), and (b) if the 120-day period, the 150-day period, [or] the 180-day period, or any extension period granted, as applicable, expires on or after December 24 of the year in which the reservation was granted, the issuer shall close on the bonds before December 24, except that if the applicable period expires after December 31 of that year, the issuer may notify the board in writing before December 24 of the issuer's election to carry forward the reservation and of the issuer's expected bond closing date. In compliance with the requirements of Section 146(f), Internal Revenue Code of 1986, the board shall file in a timely manner a carryforward election with respect to any bonds expected to close after December 31 to permit the bonds to close by the expected date, except that the board may not file the carryforward election after February 15 of the year following the year in which the reservation was granted. The grant of the reservation for the balance of the 120-day period, the 150-day period, or the 180-day period, as applicable, is automatically and immediately reinstated on the board's filing of a carryforward election with respect to the reservation.

SECTION 11. Section 1372.043, Government Code, is amended to read as follows:

Sec. 1372.043. CANCELLATION OF RESERVATION ON ISSUER'S FAILURE TO TIMELY CLOSE ON BONDS. (a) If an issuer of qualified residential rental project bonds does not close on the issuer's bonds as required by Section 1372.042:

(1) the reservation for the issue is canceled; and

(2) for the period beginning on the reservation date and ending on the last allowable date under that section, including any qualified extensions:

(A) the issuer may not submit an application for a reservation for the same project; and

(B) the issuer is eligible for a carryforward designation for the project only as provided by Subchapter C.

(b) If an issuer does not close on the issuer's bonds as required by Section 1372.042:

(1) the reservation for the issue is canceled; and

(2) for the period beginning on the reservation date and ending on the 150th day after the reservation date or on the 210th day after the reservation date if the issuer is an issuer of qualified mortgage bonds:

(A) no issuer may submit an application for a reservation for the same project; and

(B) the issuer is eligible for a carryforward designation for the project only as provided by Subchapter C.

SECTION 12. The following sections of the Government Code are repealed:

(1) Sections 1372.0321(a-1), as added by Section 28, Chapter 330, Acts of the 78th Legislature, Regular Session, 2003; and

(2) Sections 1372.0321(a-1) and (a-2), as added by Section 10, Chapter 1329, Acts of the 78th Legislature, Regular Session, 2003.

SECTION 13. The change in law made by this Act in amending Chapter 1372, Government Code, applies only to a reservation of state ceiling granted on or after January 1, 2008.

SECTION 14. This Act takes effect September 1, 2007.