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A BILL TO BE ENTITLED
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AN ACT
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relating to restrictions on the use, transfer, and sale of housing |
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developments that have received certain financial assistance |
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administered by the Texas Department of Housing and Community |
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Affairs. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2306.185, Government Code, is amended by |
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adding Subsection (d-1) and amending Subsection (e) to read as |
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follows: |
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(d-1) The department shall adopt rules that provide for the |
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amendment of a land use restriction agreement, including rules that |
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give the owner of a development the right to amend any existing |
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restriction on the right of first refusal to conform with Section |
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2306.6726. Rules adopted under this subsection must require |
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reasonable notice to tenants, a public hearing, and board approval |
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for any material amendment to a land use restriction agreement. |
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(e) Subsections (c), [and] (d), and (d-1) and Section |
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2306.269 apply only to multifamily rental housing developments to |
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which the department is providing one or more of the following forms |
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of assistance: |
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(1) a loan or grant in an amount greater than 33 |
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percent of the market value of the development on the date the |
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recipient completed the construction of the development; |
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(2) a loan guarantee for a loan in an amount greater |
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than 33 percent of the market value of the development on the date |
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the recipient took legal title to the development; or |
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(3) a low income housing tax credit. |
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SECTION 2. Section 2306.6713, Government Code, is amended |
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by amending Subsection (a) and adding Subsection (g) to read as |
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follows: |
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(a) An applicant may not transfer an allocation of housing |
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tax credits and a development owner may not transfer [or] ownership |
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of a development supported with an allocation of housing tax |
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credits to any person other than an affiliate unless the applicant |
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obtains the director's prior, written approval of the transfer. |
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(g) The transfer of ownership of a development supported |
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with an allocation of housing tax credits under this section does |
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not subject the development to a right of first refusal under |
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Section 2306.6726 if the transfer is made to: |
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(1) a newly formed entity: |
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(A) that is under common control with the |
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development owner; and |
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(B) the primary purpose of the formation of which |
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is to facilitate the financing of the rehabilitation of the |
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development using assistance administered through a state |
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financing program; or |
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(2) a qualified entity, as defined by Section |
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2306.6726(d)(3). |
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SECTION 3. Section 2306.6720, Government Code, is amended |
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to read as follows: |
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Sec. 2306.6720. ENFORCEABILITY OF APPLICANT |
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REPRESENTATIONS. Each material representation made by an applicant |
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to secure a housing tax credit allocation is enforceable by the |
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department and the tenants of the development supported with the |
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allocation. Subject to modification and enforcement as provided by |
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this chapter, a land use restriction agreement that is recorded |
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with respect to a development is considered to state the |
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development owner's ongoing obligations with regard to the matters |
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addressed in the agreement. |
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SECTION 4. Section 2306.6725(b), Government Code, is |
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amended to read as follows: |
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(b) The department shall provide appropriate incentives as |
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determined through the qualified allocation plan to reward |
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applicants who agree to: |
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(1) equip the development [property] that is the basis |
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of the application with energy saving devices that meet the |
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standards established by the state energy conservation office or to |
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provide [to a qualified nonprofit organization or tenant
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organization] a right of first refusal to purchase the development |
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in the manner provided by Section 2306.6726 [property at the
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minimum price provided in, and in accordance with the requirements
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of, Section 42(i)(7), Internal Revenue Code of 1986 (26 U.S.C.
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Section 42(i)(7))]; and |
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(2) locate the development in a census tract in which |
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there are no other existing developments supported by housing tax |
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credits. |
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SECTION 5. Section 2306.6726, Government Code, is amended |
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to read as follows: |
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Sec. 2306.6726. SALE OF CERTAIN LOW INCOME HOUSING TAX |
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CREDIT DEVELOPMENTS [PROPERTY]. (a) An owner of a development |
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subject to [Not later than two years before the expiration of the
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compliance period, a recipient of a low income housing tax credit
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who agreed to provide] a right of first refusal under Section |
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2306.6725 [and] who intends to sell the development at any time |
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after the expiration of the compliance period [property] shall |
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notify the department of the owner's [recipient's] intent to sell |
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and, if applicable, shall specifically identify to the department |
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any qualified entity that is the owner's intended recipient of the |
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right of first refusal in the land use restriction agreement. |
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(a-1) After receiving notice under Subsection (a), the |
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department [The recipient] shall provide to any qualified entity |
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specifically identified under Subsection (a) notice regarding the |
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owner's intent to sell the development at not less than the minimum |
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purchase price. |
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(a-2) In the absence of a specifically identified, |
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qualified entity under Subsection (a-1), or if the specifically |
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identified, qualified entity no longer exists, notice that the |
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development is available for [notify qualified nonprofit
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organizations and tenant organizations of the opportunity to] |
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purchase by qualified entities at not less than the minimum |
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purchase price shall be: |
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(1) provided to the tenants of the development by the |
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owner of the development; and |
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(2) posted on the department's Internet website [the
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property]. |
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(a-3) Not later than the 180th day after the date notice is |
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provided or posted under Subsection (a-1) or (a-2), whichever date |
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is later, a qualified entity seeking to purchase a development |
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pursuant to the right of first refusal must submit to the department |
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the terms of the entity's offer along with evidence of its financial |
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plan to enable the purchase. |
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(a-4) The department shall review for reasonableness the |
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terms of an offer and financial plan submitted under Subsection |
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(a-3). |
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(b) Beginning on the 181st day after the date the owner |
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provides notice under Subsection (a-2) or the department posts |
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notice under that subsection, whichever date is later, an owner of a |
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development subject to a right of first refusal [The recipient may:
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[(1)
during the first six-month period after notifying
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the department, negotiate or enter into a purchase agreement only
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with a qualified nonprofit organization that is also a community
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housing development organization as defined by the federal home
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investment partnership program;
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[(2)
during the second six-month period after
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notifying the department, negotiate or enter into a purchase
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agreement with any qualified nonprofit organization or tenant
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organization; and
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[(3)
during the year before the expiration of the
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compliance period, negotiate or enter into a purchase agreement
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with the department or any qualified nonprofit organization or
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tenant organization approved by the department.
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[(c) Notwithstanding an agreement] under Section |
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2306.6725[, a recipient of a low income housing tax credit] may sell |
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to any purchaser a development [property] to which the right of |
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first refusal [tax credit] applies [to any purchaser after the
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expiration of the compliance period] if: |
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(1) a qualified entity [nonprofit organization or
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tenant organization] does not offer to purchase the development for |
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a price that is at least equivalent to [property at] the minimum |
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purchase price; or |
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(2) a qualified entity offers to purchase the |
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development for a price described by Subdivision (1) but does not |
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complete the purchase [provided by Section 42(i)(7), Internal
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Revenue Code of 1986 (26 U.S.C. Section 42(i)(7)), and the
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department declines to purchase the property]. |
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(c) The department shall adopt rules and procedures to give |
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effect to the right of first refusal granted by any land use |
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restriction agreement. |
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(d) In this section: |
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(1) [,] "Compliance [compliance] period" has the |
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meaning assigned by Section 42(i)(1), Internal Revenue Code of 1986 |
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(26 U.S.C. Section 42(i)(1)). |
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(2) "Minimum purchase price" has the meaning assigned |
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by Section 42(i)(7)(B), Internal Revenue Code of 1986 (26 U.S.C. |
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Section 42(i)(7)(B)). |
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(3) "Qualified entity" means an entity described by, |
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or an entity controlled by an entity described by, Section |
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42(i)(7)(A), Internal Revenue Code of 1986 (26 U.S.C. Section |
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42(i)(7)(A)). |
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SECTION 6. Sections 2306.6713, 2306.6725, and 2306.6726, |
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Government Code, as amended by this Act, apply to the transfer or |
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sale of a development supported with an allocation of low income |
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housing tax credits issued before, on, or after the effective date |
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of this Act. |
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SECTION 7. This Act takes effect September 1, 2015. |