80R7671 KCR-D

By: Estes S.B. No. 1334

A BILL TO BE ENTITLED

AN ACT

relating to the administration of certain housing programs by the Texas Department of Housing and Community Affairs.

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

SECTION 1. Section 2306.004, Government Code, is amended by adding Subdivisions (28-a), (28-b), and (35) to read as follows:

(28-a) "Rural area" means an area that is located:

(A) outside the boundaries of a primary metropolitan statistical area or a metropolitan statistical area;

(B) within the boundaries of a primary metropolitan statistical area or a metropolitan statistical area, if the statistical area has a population of 25,000 or less and does not share a boundary with an urban area; or

(C) in an area that is eligible for funding by the Texas Rural Development Office of the United States Department of Agriculture, other than an area that is located in a municipality with a population of 50,000 or more.

(28-b) "Rural development" means a development or proposed development that is located in a rural area, including rural developments described by Section 2306.67035(a) or (b).

(35) "Urban area" means the area that is located within the boundaries of a primary metropolitan statistical area or a metropolitan statistical area other than an area described by Subdivision (28-a)(B) or (C). The terms also includes a new construction development described by Section 2306.67035(b).

SECTION 2. Section 2306.111, Government Code, is amended by adding Subsections (c-3), (d-2), and (d-3) and amending Subsections (d), (e), (f), and (g) to read as follows:

(c-3) The department by rule shall set aside five percent of the funds available under Subsection (c) for the benefit of persons with a disability who live in non-participating small cities and rural areas that do not qualify to receive funds under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. Section 12701 et seq.) directly from the United States Department of Housing and Urban Development. Subject to Subsection (c-2), in each application cycle the department shall use from the funds available under Subsection (c) $10 million for multifamily housing development construction or rehabilitation proposed by applicants eligible under Subsection (c-1). If the department does not receive a sufficient number of financially feasible applications for housing for persons with a disability or for multifamily housing development construction or rehabilitation during the first 120 days of the application cycle, the funds shall be made available for other purposes authorized under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. Section 12701 et seq.).

(d) The department shall allocate housing funds provided to the state under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. Section 12701 et seq.), housing trust funds administered by the department under Sections 2306.201-2306.206, and commitments issued under the federal low income housing tax credit program administered by the department under Subchapter DD to all urban [urban/exurban] areas and rural areas of each uniform state service region based on a formula developed by the department that is based on population and the need for housing assistance [and the availability of housing resources] in those urban [urban/exurban] areas and rural areas. All[, provided that the] allocations must be [are] consistent with applicable federal and state requirements and limitations. The department shall use the latest annual population projections provided by the United States Census Bureau [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 urban [all urban/exurban] areas and rural areas in other uniform state service regions [based on identified need and financial feasibility].

(d-2) In allocating low income housing tax credit commitments under Subchapter DD, the department shall allocate five percent of the housing tax credits in the allocation cycle to developments that receive federal financial assistance through the Texas Rural Development Office of the United States Department of Agriculture. Any funds allocated to developments under this subsection that involve rehabilitation must come from the funds set aside for at-risk developments under Section 2306.6714. This subsection does not apply to a development financed wholly or partly under Section 538 of the Housing Act of 1949 (42 U.S.C. Section 1490p-2).

(d-3) In allocating low income tax credit commitments under Subchapter DD, the department shall allocate to developments in rural areas 25 percent or more of the housing tax credits in the allocation cycle, with $500,000 or more in housing tax credits being reserved for each uniform state service region under this subsection. Any amount of housing tax credits set aside for developments in rural areas under this subsection that remains after the initial allocation of housing tax credits is available for allocation to developments in urban areas of each uniform state service region.

(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 [urban/exurban] areas and rural areas of each uniform state service region.

(f) The department shall include in its annual low income housing report under Section 2306.072 the amounts of funds and credits allocated to the urban [urban/exurban] areas and rural areas of each uniform state service region in the preceding year for each federal and state program affected by the requirements of Subsection (d).

(g) For all urban [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.

SECTION 3. Section 2306.111(c), Government Code, as amended by Chapters 1367 and 1448, Acts of the 77th Legislature, Regular Session, 2001, is reenacted and amended to read as follows:

(c) Except as provided by Subsection (c-3), in [In] administering federal housing funds provided to the state under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. Section 12701 et seq.), the department shall expend 100 [at least 95] percent of these funds for:

(1) the benefit of non-participating small cities and rural areas that do not qualify to receive funds under the Cranston-Gonzalez National Affordable Housing Act directly from the United States Department of Housing and Urban Development; or

(2) the preservation of existing affordable housing that receives financing from the United States Department of Agriculture. [All funds not set aside under this subsection shall be used for the benefit of persons with disabilities who live in areas other than small cities and rural areas.]

SECTION 4. Section 2306.1111, Government Code, is amended by amending Subsection (a) and adding Subsections (a-1) and (a-2) to read as follows:

(a) Notwithstanding any other state law and to the extent consistent with federal law, the department shall establish a uniform application and funding cycle for all single-family and multifamily housing programs administered by the department under this chapter, excluding any program described by Chapter 1372 and including a uniform application and funding cycle for housing sponsors of multifamily housing developments applying for:

(1) housing trust funds administered by the department under Sections 2306.201-2306.206; and

(2) commitments issued under the federal low income housing tax credit program administered by the department under Subchapter DD.

(a-1) The application acceptance periods for the programs described by Subsections (a)(1) and (2) must run concurrently.

(a-2) If the department does not receive during the uniform application and funding cycle under Subsection (a) a sufficient number of financially feasible applications for housing trust funds administered by the department under Sections 2306.201-2306.206, the department may consider additional applications for those funds.

SECTION 5. Section 2306.142(d), Government Code, is amended to read as follows:

(d) The department or its designee shall analyze the potential market demand, loan availability, and private sector home mortgage lending rates available to extremely low, very low, low, and moderate income borrowers in [the] rural areas [counties of the state], in census tracts in which the median family income is less than 80 percent of the median family income for the county in which the census tract is located, and in the region of the state adjacent to the international border of the state. The department or its designee shall establish a process for serving those rural areas [counties], census tracts, and regions through the single-family mortgage revenue bond program in a manner proportionate to the credit needs of those areas as determined through the department's market study.

SECTION 6. Subchapter DD, Chapter 2306, Government Code, is amended by adding Section 2306.67035 to read as follows:

Sec. 2306.67035. SPECIAL PROVISIONS FOR RURAL AREAS. (a) An application for housing tax credits from funds available for rural areas must be limited to:

(1) the rehabilitation of a development of any size; or

(2) the development of a new construction development that contains not more than 80 units.

(b) A new construction development that contains 80 units or more and is located in a rural area is eligible and may apply for funds available for urban areas regardless of the development's rural location.

SECTION 7. Section 2306.6710, Government Code, is amended by amending Subsections (b) and (f) and adding Subsection (h) 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;

(F) [(G)] the rent levels of the units;

(G) [(H)] the cost of the development by square foot; and

(H) [(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.

(f) In evaluating the level of community support for an application under Subsection (b)(1)(E) [(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.

(h) For the purposes of Subsection (b)(1)(B), the department shall award to an applicant points as follows:

(1) the maximum number of points possible under that paragraph, if the development receives no written statements of opposition, regardless of whether the applicant receives any written statements of support; and

(2) for each written statement of opposition the applicant receives, a negative number of points that is equal in number to one-third the maximum number of points possible under that paragraph.

SECTION 8. Section 2306.6702(12), Government Code, is repealed.

SECTION 9. It is the intent of the legislature that the passage by the 80th Legislature, Regular Session, 2007, of another bill that amends Chapter 2306, Government Code, and the amendments made by this Act shall be harmonized, if possible, as provided by Section 311.025(b), Government Code, so that effect may be given to each. If the amendments made by this Act to Chapter 2306, Government Code, and the amendments made to Chapter 2306, Government Code, by any other bill are irreconcilable, it is the intent of the legislature that this Act prevail, regardless of the relative dates of enactment of this Act and the other bill or bills, but only to the extent that any differences are irreconcilable.

SECTION 10. The changes in law made by this Act relating to the evaluation of applications for financial assistance administered by the Texas Department of Housing and Community Affairs apply only to an application submitted on or after the effective date of this Act. An application submitted before the effective date of this Act is governed by the law in effect when the application was submitted, and the former law is continued in effect for that purpose.

SECTION 11. This Act takes effect September 1, 2007.