By: Lucio S.B. No. 1934

A BILL TO BE ENTITLED

AN ACT

relating to the administration of the low income housing tax credit program.

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

SECTION 1. Section 2306.6702(a)(10), Government Code, is amended to read as follows:

(10) "Qualified allocation plan" means a plan adopted by the board under this subchapter that:

(A) provides the threshold, scoring, and underwriting criteria [based on housing priorities of the department] that are [appropriate to local conditions;

[(B)] consistent with this chapter [Section 2306.6710(e), gives preference in housing tax credit allocations to developments that, as compared to the other developments:

[(i) when practicable and feasible based on documented, committed, and available third-party funding sources, serve the lowest income tenants per housing tax credit; and

[(ii) 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]; and

(B) [(C)] provides a procedure for the department, the department's agent, or another private contractor of the department to use in monitoring compliance with the qualified allocation plan and this subchapter.

SECTION 2. Sections 2306.6710(a),(b) and (f), Government Code, are amended to read as follows:

Sec. 2306.6710. EVALUATION AND UNDERWRITING OF APPLICATIONS. (a) In evaluating an application, the department shall determine whether the application satisfies the threshold criteria required by the board in the qualified allocation plan. On the expiration of the application deficiency correction period allowed by the department, the [The] department shall reject and return to the applicant any application that fails to satisfy the threshold criteria.

(b) If an application satisfies the threshold criteria, the department shall score and rank the application using 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, or municipality in which the development is to be located and whose boundaries contain the proposed development site and any other written material related to community participation and considered appropriate by the department;

(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;] a resolution of support or opposition from:

(i) the governing body of the municipality in which the development is to be located; or

(ii) the commissioners court of the county in which the development is to be located if the development is to be located outside a municipality;

(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] resolutions received;

(2) negative points for negative [written statements] resolutions received; and

(3) zero points for neutral [statements] resolutions received.

SECTION 3. Section 2306.6711, Government Code, is amended by amending Subsection (b) and adding Subsections (b-1) to read as follows:

(b) Not later than the deadline specified in the qualified allocation plan, the board shall issue commitments for available housing tax credits based on the application evaluation process provided by Section 2306.6710. The board may not allocate to an applicant housing tax credits in any unnecessary amount, as determined by the department's underwriting policy and by federal law, and, except as provided by Subsection (b-1), [in any event] may not allocate to any one person [the applicant] housing tax credits in an amount greater than $2.4 [$2] million in a single application round. For purposes of this subsection, a housing tax credit allocated for a development that is financed with tax-exempt bonds may not be included in the $2.4 million limitation described by this subsection.

(b-1) The department may increase the possible allocation amount as necessary to adjust for inflation, as determined by the average over a calendar year of the Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average, published monthly by the United States Bureau of Labor Statistics, or its successor in function.

SECTION 4. 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 5. 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 6. This Act takes effect September 1, 2007.