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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. Rules adopted under |
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this subsection must require reasonable notice to tenants, a public |
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hearing, and board approval for any material amendment to a land use |
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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 adding Subsection (g) to read as follows: |
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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 a newly formed entity: |
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(1) that is under common control with the development |
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owner; and |
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(2) the primary purpose of the formation of which is to |
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facilitate the financing of the rehabilitation of the development |
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using assistance administered through a state financing program. |
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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 |
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[to] provide to a qualified entity, in a land use restriction |
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agreement in accordance with Section 2306.6726, [nonprofit
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organization or tenant organization] a right of first refusal to |
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purchase the development [property] at the minimum price provided |
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in, and in accordance with the requirements of, Section 42(i)(7), |
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Internal Revenue Code of 1986 (26 U.S.C. 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 and the tenants of the development of the |
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owner's [recipient's] intent to sell and, if applicable, shall |
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specifically identify to the department any qualified entity that |
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is the owner's intended recipient of the right of first refusal in |
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the land use restriction agreement. |
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(a-1) As soon as practicable after receiving notice under |
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Subsection (a), the department [The recipient] shall: |
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(1) provide to any qualified entity specifically |
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identified under Subsection (a) notice regarding the owner's intent |
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to sell the development; and |
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(2) post on the department's Internet website the |
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notice described by Subdivision (1) [notify qualified nonprofit
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organizations and tenant organizations of the opportunity to
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purchase the property]. |
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(b) The owner of a development subject to a right of first |
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refusal under Section 2306.6725 [recipient] may: |
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(1) during the first 60-day [six-month] period after |
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notice is provided under Subsection (a-1) [notifying the
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department], negotiate or enter into a purchase agreement only with |
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a qualified entity [nonprofit organization] that is: |
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(A) [also] a community housing development |
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organization as defined by the federal HOME [home] investment |
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partnership program; or |
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(B) controlled by an entity described by |
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Paragraph (A); |
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(2) during the second 60-day [six-month] period after |
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notice is provided under Subsection (a-1) [notifying the
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department], negotiate or enter into a purchase agreement with a |
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[any] qualified entity that: |
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(A) is described by Section 2306.6706 and has a |
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principal place of business in the uniform state service region in |
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which the development is located; or |
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(B) is controlled by an entity described by |
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Paragraph (A) [nonprofit organization or tenant organization]; and |
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(3) during the last 60-day period after notice is |
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provided under Subsection (a-1) [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 other qualified entity [nonprofit
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organization or tenant organization approved by the department]. |
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(c) Beginning on the 181st day after the date the department |
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posts notice under Subsection (a-1), an owner of a development |
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subject to a right of first refusal [Notwithstanding an agreement] |
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under Section 2306.6725[, a recipient of a low income housing tax
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credit] may sell to any purchaser a development [property] to which |
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the right of first refusal [tax credit] applies [to any purchaser
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after the 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 the department determines to be reasonable; or |
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(2) a qualified entity enters into a purchase |
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agreement for the development but does not complete the purchase on |
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or before the 270th day after the date the agreement is entered |
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into, unless the failure to complete the purchase is due to default |
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by the seller or a title problem [property at the minimum price
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provided by Section 42(i)(7), Internal Revenue Code of 1986 (26
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U.S.C. Section 42(i)(7)), and the department declines to purchase
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the property]. |
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(c-1) This section applies only to a right of first refusal |
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memorialized in a land use restriction agreement. This section |
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does not authorize a modification of any other agreement between an |
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owner of a development and a qualified entity. |
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(c-2) The department shall adopt rules and procedures to |
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give 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) "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. |
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