84R11598 JAM-D

By: Alvarado H.B. No. 3576

A BILL TO BE ENTITLED

AN ACT

relating to restrictions on the use, transfer, and sale of housing developments that have received certain financial assistance administered by the Texas Department of Housing and Community Affairs.

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

SECTION 1. Sections 2306.185(c) and (d), Government Code, are amended to read as follows:

(c) Unless a shorter term is permitted under federal law, the [The] department shall require that a recipient of funding maintains the affordability of the multifamily housing development for households of extremely low, very low, low, and moderate incomes for the greater of a 30-year period from the date the recipient takes legal possession of the housing or the remaining term of the existing federal government assistance. In addition, the agreement between the department and the recipient shall require the renewal of rental subsidies if available and if the subsidies are sufficient to maintain the economic viability of the multifamily development.

(d) The development restrictions provided by Subsection (a)(1) [(a) and Section 2306.269] are enforceable by [the department, by] tenants of the development, and [, or by private parties against the initial owner or any subsequent owner. The department shall require a land use restriction agreement providing for enforcement of the restrictions by the department,] a tenant seeking enforcement of the restriction may [, or a private party that includes the right to] recover reasonable attorney's fees if the [party seeking] enforcement action [of the restriction] is successful.

SECTION 2. Section 2306.6713, Government Code, is amended by amending Subsection (a) and adding Subsection (g) to read as follows:

(a) An applicant may not transfer an allocation of housing tax credits and a development owner may not transfer [or] ownership of a development supported with an allocation of housing tax credits to any person other than an affiliate unless the applicant obtains the director's prior, written approval of the transfer.

(g) The transfer of ownership of a development supported with an allocation of housing tax credits to an affiliate of the development owner under this section does not subject the property to a right of first refusal under Section 2306.6726.

SECTION 3. Section 2306.6725(b), Government Code, is amended to read as follows:

(b) The department shall provide appropriate incentives as determined through the qualified allocation plan to reward applicants who agree to:

(1) equip the property that is the basis of the application with energy saving devices that meet the standards established by the state energy conservation office or to provide to a qualified nonprofit organization or tenant organization a right of first refusal to purchase the property in the manner provided by Section 2306.6726 [at the minimum price provided in, and in accordance with the requirements of, Section 42(i)(7), Internal Revenue Code of 1986 (26 U.S.C. Section 42(i)(7))]; and

(2) locate the development in a census tract in which there are no other existing developments supported by housing tax credits.

SECTION 4. Section 2306.6726, Government Code, is amended to read as follows:

Sec. 2306.6726. SALE OF CERTAIN LOW INCOME HOUSING TAX CREDIT PROPERTY. (a) An owner of a property subject to [Not later than two years before the expiration of the compliance period, a recipient of a low income housing tax credit who agreed to provide] a right of first refusal under Section 2306.6725 [and] who intends to sell the property at any time after the expiration of the compliance period shall notify the department of the owner's [recipient's] intent to sell.

(a-1) After receiving notice under Subsection (a), the department [The recipient] shall post on the department's Internet website a notice that the property is available for [notify qualified nonprofit organizations and tenant organizations of the opportunity to] purchase by qualified entities at not less than the minimum purchase price for a period of 90 days that begins on the date the notice is posted [the property].

(b) Beginning on the 91st day after the date the department posts notice under Subsection (a-1), an owner of a property subject to a right of first refusal [The recipient may:

[(1) during the first six-month period after notifying the department, negotiate or enter into a purchase agreement only with a qualified nonprofit organization that is also a community housing development organization as defined by the federal home investment partnership program;

[(2) during the second six-month period after notifying the department, negotiate or enter into a purchase agreement with any qualified nonprofit organization or tenant organization; and

[(3) during the year before the expiration of the compliance period, negotiate or enter into a purchase agreement with the department or any qualified nonprofit organization or tenant organization approved by the department.

[(c) Notwithstanding an agreement] under Section 2306.6725[, a recipient of a low income housing tax credit] may sell to any purchaser property to which the right of first refusal [tax credit] applies [to any purchaser after the expiration of the compliance period] if a qualified entity [nonprofit organization or tenant organization] does not offer to purchase the property for a price that is at least equivalent to [at] the minimum purchase price [provided by Section 42(i)(7), Internal Revenue Code of 1986 (26 U.S.C. Section 42(i)(7)), and the department declines to purchase the property].

(c) [(d)] In this section:

(1) [,] "Compliance [compliance] period" has the meaning assigned by Section 42(i)(1), Internal Revenue Code of 1986 (26 U.S.C. Section 42(i)(1)).

(2) "Minimum purchase price" has the meaning assigned by Section 42(i)(7)(B), Internal Revenue Code of 1986 (26 U.S.C. Section 42(i)(7)(B)).

(3) "Qualified entity" means an entity described by Section 42(i)(7)(A), Internal Revenue Code of 1986 (26 U.S.C. Section 42(i)(7)(A)).

SECTION 5. Section 2306.185, Government Code, as amended by this Act, applies only to an enforcement action commenced on or after the effective date of this Act, regardless of when the underlying violation occurred. An action commenced before the effective date of this Act is governed by the law in effect immediately before that date, and that law is continued in effect for that purpose.

SECTION 6. Sections 2306.6713, 2306.6725, and 2306.6726, Government Code, as amended by this Act, apply to the transfer or sale of a development supported with an allocation of low income housing tax credits issued before, on, or after the effective date of this Act.

SECTION 7. This Act takes effect September 1, 2015.