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A BILL TO BE ENTITLED
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AN ACT
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relating to the administration of the low income housing tax credit |
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program. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2306.6702(a)(10), Government Code, is |
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amended to read as follows: |
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(10) "Qualified allocation plan" means a plan adopted |
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by the board under this subchapter that: |
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(A) provides sets of [the] threshold[, scoring,
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and underwriting] criteria [based on housing priorities of the
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department] that are [appropriate to local conditions;
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[(B)] consistent with this chapter [Section
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2306.6710(e), gives preference in housing tax credit allocations to
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developments that, as compared to the other developments:
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[(i) when practicable and feasible based on
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documented, committed, and available third-party funding sources,
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serve the lowest income tenants per housing tax credit; and
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[(ii) produce for the longest economically
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feasible period the greatest number of high quality units committed
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to remaining affordable to any tenants who are income-eligible
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under the low income housing tax credit program]; and |
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(B) [(C)] provides a procedure for the |
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department, the department's agent, or another private contractor |
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of the department to use in monitoring compliance with the |
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qualified allocation plan and this subchapter. |
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SECTION 2. Section 2306.67022, Government Code, is amended |
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to read as follows: |
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Sec. 2306.67022. QUALIFIED ALLOCATION PLAN; THRESHOLD |
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CRITERIA; MANUAL. (a) The board annually shall adopt a qualified |
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allocation plan, including sets of threshold criteria described by |
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Subsection (b), and a corresponding manual to provide information |
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regarding the administration of and eligibility for the low income |
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housing tax credit program. |
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(b) The qualified allocation plan adopted by the board under |
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Subsection (a) must include separate sets of threshold criteria for |
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each of the following types of developments: |
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(1) at-risk developments; |
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(2) developments in which a qualified nonprofit |
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organization owns an interest in the development and materially |
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participates in the operation of the development; |
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(3) developments receiving federal financial |
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assistance through the Texas Rural Development Office of the United |
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States Department of Agriculture; and |
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(4) all other developments not described by |
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Subdivision (1), (2), or (3). |
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(c) For a development located in a county with a median |
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income that is higher than the statewide median income, each set of |
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threshold criteria adopted under Subsection (a) must require the |
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development to reserve: |
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(1) 80 percent or more of the units for households that |
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have median incomes that are equal to or less than 50 percent of the |
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area median income adjusted for family size; or |
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(2) 10 percent or more of the units for households that |
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have median incomes that are equal to or less than 30 percent of the |
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area median income adjusted for family size. |
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(d) For a development located in a county with a median |
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income that is equal to or less than the statewide median income, a |
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set of threshold criteria adopted under Subsection (a) may not |
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impose on an applicant requirements related to the income level of |
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tenants in the proposed development other than those requirements |
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necessary under 26 U.S.C. Section 42. |
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SECTION 3. Section 2306.6703, Government Code, is amended |
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by adding Subsection (c) to read as follows: |
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(c) An application is ineligible for consideration under |
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the low income housing tax credit program if the application is |
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filed before the fifth anniversary of the most recent date, if any, |
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that the applicant, including a principal of the applicant, a |
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developer affiliated with the applicant, or another related party, |
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has been removed from a loan document or a limited partnership |
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agreement by a lender, equity provider, or limited partner due to |
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failure to perform obligations under the loan document or limited |
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partnership agreement, as applicable. |
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SECTION 4. Subchapter DD, Chapter 2306, Government Code, is |
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amended by adding Section 2306.67031 to read as follows: |
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Sec. 2306.67031. CERTAIN APPLICATIONS AND COMBINATIONS OF |
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APPLICATIONS PROHIBITED. (a) An applicant, including a principal |
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of the applicant, a developer affiliated with the applicant, or |
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another related party, whether acting alone or in concert with |
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another, may not, in a single application round, submit multiple |
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applications in which the combined amount of housing tax credits |
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requested exceeds twice the amount of credits allowed under Section |
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2306.6711(b). |
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(b) Each of the applications is ineligible for |
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consideration under the low income housing tax credit program |
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unless before the application filing deadline one or more of the |
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prohibited applications are withdrawn to conform to the |
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requirements of Subsection (a). |
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SECTION 5. Section 2306.6704, Government Code, is amended |
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by amending Subsections (c) and (d) and adding Subsection (e) to |
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read as follows: |
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(c) The department shall reject and return to the applicant |
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any application assessed by the department under this section that |
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fails to satisfy the applicable set of threshold criteria required |
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by the board in the qualified allocation plan. |
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(d) If feasible under Section 2306.67041, an application |
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under this section may [must] be submitted electronically. |
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(e) The department shall specify the date for filing an |
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application under this section. The last date for submitting an |
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application under this section may not be earlier than February 1. |
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SECTION 6. Section 2306.67041(a), Government Code, is |
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amended to read as follows: |
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(a) The department and the Department of Information |
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Resources shall cooperate to evaluate the feasibility of an on-line |
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application system for the low income housing tax credit program to |
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provide the following functions: |
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(1) filing of preapplications and applications |
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on-line; |
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(2) posting of on-line preapplication or application |
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status and the application log detailing the status of, and |
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department's evaluations [and scores] pertaining to, those |
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applications; and |
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(3) posting of comments from applicants and the public |
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regarding a preapplication or application. |
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SECTION 7. Section 2306.6705, Government Code, is amended |
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to read as follows: |
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Sec. 2306.6705. GENERAL APPLICATION REQUIREMENTS. An |
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application must contain at a minimum the following written, |
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detailed information in a form prescribed by the board: |
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(1) a description of: |
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(A) the financing plan for the development, |
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including any nontraditional financing arrangements; |
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(B) the use of funds with respect to the |
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development; |
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(C) the funding sources for the development, |
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including: |
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(i) construction, permanent, and bridge |
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loans; and |
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(ii) rents, operating subsidies, and |
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replacement reserves; and |
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(D) the commitment status of the funding sources |
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for the development; |
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(2) if syndication costs are included in the eligible |
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basis, a justification of the syndication costs for each cost |
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category by an attorney or accountant specializing in tax matters; |
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(3) from a syndicator or a financial consultant of the |
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applicant, an estimate of the amount of equity dollars expected to |
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be raised for the development in conjunction with the amount of |
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housing tax credits requested for allocation to the applicant, |
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including: |
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(A) pay-in schedules; and |
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(B) syndicator consulting fees and other |
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syndication costs; |
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(4) if rental assistance, an operating subsidy, or an |
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annuity is proposed for the development, any related contract or |
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other agreement securing those funds and an identification of: |
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(A) the source and annual amount of the funds; |
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(B) the number of units receiving the funds; and |
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(C) the term and expiration date of the contract |
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or other agreement; |
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(5) if the development is located within the |
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boundaries of a political subdivision with a zoning ordinance, |
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evidence in the form of a letter from the chief executive officer of |
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the political subdivision or from another local official with |
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jurisdiction over zoning matters that states that: |
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(A) the development is permitted under the |
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provisions of the ordinance that apply to the location of the |
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development; or |
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(B) the applicant is in the process of seeking |
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the appropriate zoning and has signed and provided to the political |
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subdivision a release agreeing to hold the political subdivision |
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and all other parties harmless in the event that the appropriate |
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zoning is denied; |
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(6) if an occupied development is proposed for |
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rehabilitation: |
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(A) an explanation of the process used to notify |
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and consult with the tenants in preparing the application; |
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(B) a relocation plan outlining: |
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(i) relocation requirements; and |
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(ii) a budget with an identified funding |
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source; and |
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(C) if applicable, evidence that the relocation |
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plan has been submitted to the appropriate local agency; |
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(7) a certification of the applicant's compliance with |
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appropriate state and federal laws, as required by other state law |
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or by the board; |
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(8) any other information required by the board in the |
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qualified allocation plan; and |
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(9) evidence that the applicant has notified the |
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following entities with respect to the filing of the application: |
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(A) [any neighborhood organizations on record
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with the state or county in which the development is to be located
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and whose boundaries contain the proposed development site;
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[(B) the superintendent and the presiding
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officer of the board of trustees of the school district containing
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the development;
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[(C)] the presiding officer of the governing body |
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of any municipality containing the development [and all elected
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members of that body]; |
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(B) [(D)] the presiding officer of the governing |
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body of the county containing the development [and all elected
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members of that body]; and |
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(C) [(E)] the state senator and state |
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representative of the district containing the development. |
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SECTION 8. Subchapter DD, Chapter 2306, Government Code, is |
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amended by adding Section 2306.67071 to read as follows: |
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Sec. 2306.67071. ADDITIONAL APPLICATION REQUIREMENT: |
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SPECIFICATION OF TYPE OF DEVELOPMENT. An application must specify |
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the type of development provided by Section 2306.67022(b) that |
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describes the proposed development. |
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SECTION 9. Section 2306.6709(b), Government Code, is |
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amended to read as follows: |
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(b) The application log must contain at least the following |
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information: |
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(1) the names of the applicant and related parties; |
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(2) the physical location of the development, |
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including the relevant region of the state; |
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(3) the amount of housing tax credits requested for |
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allocation by the department to the applicant; |
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(4) any set-aside category under which the application |
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is filed; |
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(5) [the score of the application in each scoring
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category adopted by the department under the qualified allocation
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plan;
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[(6)] any decision made by the department or board |
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regarding the application, including [the department's decision
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regarding whether to underwrite the application and] the board's |
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decision regarding whether to allocate housing tax credits to the |
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development; |
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(6) [(7)] the names of persons making the decisions |
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described by Subdivision (5) [(6)], including the names of |
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department staff making those decisions [scoring and underwriting
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the application], to be recorded next to the description of the |
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applicable decision; |
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(7) [(8)] the amount of housing tax credits allocated |
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to the development; and |
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(8) [(9)] a dated record and summary of any contact |
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between the department staff, the board, and the applicant or any |
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related parties. |
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SECTION 10. The heading to Section 2306.6710, Government |
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Code, is amended to read as follows: |
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Sec. 2306.6710. EVALUATION [AND UNDERWRITING] OF |
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APPLICATIONS. |
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SECTION 11. Sections 2306.6710(a) and (b), Government Code, |
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are amended to read as follows: |
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(a) In evaluating an application, the department shall |
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determine whether the application satisfies the applicable set of |
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threshold criteria adopted [required] by the board in the qualified |
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allocation plan under Section 2306.67022(a). The department shall |
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reject and return to the applicant any application that fails to |
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satisfy the applicable set of threshold criteria. |
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(b) If an application satisfies the threshold criteria, the |
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application is eligible for the lottery selection procedure under |
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Section 2306.6711 [department shall score and rank the application
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using a point system that:
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[(1) prioritizes in descending order criteria
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regarding:
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[(A) financial feasibility of the development
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based on the supporting financial data required in the application
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that will include a project underwriting pro forma from the
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permanent or construction lender;
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[(B) quantifiable community participation with
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respect to the development, evaluated on the basis of written
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statements from any neighborhood organizations on record with the
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state or county in which the development is to be located and whose
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boundaries contain the proposed development site;
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[(C) the income levels of tenants of the
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development;
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[(D)the size and quality of the units;
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[(E) the commitment of development funding by
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local political subdivisions;
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[(F) the level of community support for the
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application, evaluated on the basis of written statements from
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state elected officials;
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[(G)the rent levels of the units;
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[(H) the cost of the development by square foot;
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and
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[(I) the services to be provided to tenants of
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the development; and
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[(2) uses criteria imposing penalties on applicants or
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affiliates who have requested extensions of department deadlines
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relating to developments supported by housing tax credit
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allocations made in the application round preceding the current
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round or a developer or principal of the applicant that has been
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removed by the lender, equity provider, or limited partners for its
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failure to perform its obligations under the loan documents or
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limited partnership agreement]. |
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SECTION 12. Section 2306.6711, Government Code, is amended |
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by amending Subsections (a), (b), and (c) and adding Subsections |
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(a-1), (a-2), (a-3), (a-4), (b-1), and (b-2) to read as follows: |
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(a) The department [director] shall select applications to |
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be allocated [provide the application scores to the board before
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the 30th day preceding the date the board begins to issue
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commitments for] housing tax credits through a lottery conducted at |
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a board meeting that is open to the public [in the allocation
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round]. |
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(a-1) The department by rule shall determine whether it is |
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appropriate to conduct the selection lottery described by |
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Subsection (a) for each type of development described by Section |
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2306.67022(b), for each uniform state service region, or for the |
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entire state. |
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(a-2) Regardless of the manner in which the selection |
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lottery is conducted, the department shall allocate housing tax |
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credits to developments as follows: |
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(1) all developments that satisfy the applicable set |
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of threshold criteria adopted under Section 2306.67022(a) and that |
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also satisfy one or more of the preferences described by 26 U.S.C. |
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Section 42(m)(1)(B)(ii); and |
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(2) after allocating tax credits under Subdivision |
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(1), developments that satisfy only the applicable set of threshold |
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criteria. |
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(a-3) If any housing tax credits remain after the department |
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allocates tax credits under Subsection (a-2), the department shall |
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conduct a second lottery in the same manner as the first lottery was |
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conducted. Through the second lottery, the department shall |
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allocate any remaining housing tax credits in the allocation order |
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provided by Subsection (a-2). |
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(a-4) After the allocation of all housing tax credits under |
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Subsections (a-2) and (a-3), the department shall conduct a third |
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lottery in the same manner as the first two lotteries for the |
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purpose of establishing a waiting list under Subsection (c) that is |
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to be used in the event that applications selected in either of the |
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first two lotteries become ineligible or otherwise fail to qualify |
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for an allocation. |
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(b) Not later than the deadline specified in the qualified |
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allocation plan, the board shall issue commitments for available |
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housing tax credits based on the selection lotteries under |
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Subsections (a)-(a-4) [application evaluation process provided by
|
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Section 2306.6710]. The board may not allocate to an applicant |
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housing tax credits in any unnecessary amount, as determined by the |
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department [department's underwriting policy] and by federal law, |
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and, except as provided by Subsection (b-1), [in any event] may not |
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allocate to any one person, in the person's capacity as an applicant |
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or as a related party, [the applicant] housing tax credits in an |
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amount greater than $2.4 [$2] million in a single application |
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round. For purposes of this subsection, a housing tax credit |
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allocated for a development that is financed with tax-exempt bonds |
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may not be included in the $2.4 million limitation described by this |
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subsection. |
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(b-1) The department may increase the possible allocation |
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amount as necessary to adjust for inflation, as determined by the |
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average over a calendar year of the Consumer Price Index for All |
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Urban Consumers (CPI-U), U.S. City Average, published monthly by |
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the United States Bureau of Labor Statistics, or its successor in |
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function. |
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(b-2) The $2.4 million limitation described by Subsection |
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(b) and any applicable increase in that amount apply to a person |
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regardless of whether the person is involved in the development as |
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an applicant or as a related party. The $2.4 million limitation and |
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any applicable increase in that amount do not apply to: |
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(1) an entity that raises or provides equity for one or |
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more developments, in that entity's capacity as an equity raiser or |
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provider; |
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(2) an entity's provision of qualified commercial |
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financing as that term is defined under Section 49(a)(1)(D)(ii), |
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Internal Revenue Code of 1986; or |
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(3) a development consultant with respect to the |
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provision of consulting services, provided that: |
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(A) the consultant: |
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(i) is not a related party with respect to |
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the applicant; and |
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(ii) does not own an interest in the |
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development; and |
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(B) the consultant fee received for the services |
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provided does not exceed $150,000 or 10 percent of the developer |
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fee, whichever is greater. |
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(c) Concurrently with the initial issuance of commitments |
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for housing tax credits under Subsection (b), the board shall |
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establish a waiting list of additional applications ranked by the |
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results of the lottery conducted under Subsection (a-4) [score in
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descending order of priority based on set-aside categories and
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regional allocation goals]. |
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SECTION 13. Section 2306.6712(b), Government Code, is |
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amended to read as follows: |
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(b) The director shall require [the] department staff |
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[assigned to underwrite applications] to evaluate the amendment and |
|
provide an analysis and written recommendation to the board. The |
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appropriate monitor under Section 2306.6719 shall also provide to |
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the board an analysis and written recommendation regarding the |
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amendment. |
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SECTION 14. Section 2306.6715(a), Government Code, is |
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amended to read as follows: |
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(a) In a form prescribed by the department in the qualified |
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allocation plan, an applicant may appeal the following decisions |
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made by the department in the application evaluation process |
|
provided by Section 2306.6710: |
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(1) a determination regarding the application's |
|
satisfaction of the appropriate threshold [and underwriting] |
|
criteria; and |
|
(2) [the scoring of the application; and
|
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[(3)] a recommendation as to the amount of housing tax |
|
credits to be allocated to the application. |
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SECTION 15. Sections 2306.6717(a) and (b), Government Code, |
|
are amended to read as follows: |
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(a) Subject to Section 2306.67041, the department shall |
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make the following items available on the department's website: |
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(1) as soon as practicable, any proposed application |
|
submitted through the preapplication process established by this |
|
subchapter; |
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(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
|
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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
|
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scoring and underwriting phases and] the allocation phase; |
|
(4) before the 15th day preceding the date of board |
|
action on the amendment, notice of an amendment under Section |
|
2306.6712 and the recommendation of the director and monitor |
|
regarding the amendment; and |
|
(5) an appeal filed with the department or board under |
|
Section 2306.6715 or 2306.6721 and any other document relating to |
|
the processing of the appeal. |
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(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 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. |
|
SECTION 16. Section 2306.6718(d), Government Code, is |
|
amended to read as follows: |
|
(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 |
|
evaluated [scored]. |
|
SECTION 17. Section 2306.6723(b), Government Code, is |
|
amended to read as follows: |
|
(b) The rural development agency shall assist in developing |
|
sets of [all] threshold[, scoring, and underwriting] criteria |
|
applied to applications eligible for the rural area set-aside. The |
|
criteria must be approved by that agency. |
|
SECTION 18. The following provisions of the Government Code |
|
are repealed: |
|
(1) Section 2306.565(i); |
|
(2) Section 2306.6701; |
|
(3) Sections 2306.6702(5) and (12); |
|
(4) Sections 2306.6704(b) and (b-1); |
|
(5) Sections 2306.6710(c), (d), (e), (f), and (g); |
|
(6) Section 2306.6711(e); |
|
(7) Section 2306.6712(e); |
|
(8) Section 2306.6725; and |
|
(9) Section 2306.6726. |
|
SECTION 19. 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 20. The changes in law made by this Act relating to |
|
the evaluation of applications for the allocation of low income |
|
housing tax credits 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 21. This Act takes effect September 1, 2007. |