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A BILL TO BE ENTITLED
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AN ACT
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relating to underwriting standards for developments receiving an |
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allocation of low income housing tax credits administered by the |
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Texas Department of Housing and Community Affairs. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2306.148, Government Code, is amended to |
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read as follows: |
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Section 2306.148. Underwriting Standards. The board shall |
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have the specific duty and power to adopt underwriting standards |
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for loans made or financed by the housing finance division and tax |
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credits allocated by the department. Underwriting standards |
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adopted under this section and used to determine feasibility of a |
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proposed development shall meet the criteria set forth in Section |
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2306.185 of this Chapter. |
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SECTION 2. 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) For Housing Tax Credit Developments at cost |
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certification, the department shall: |
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(1) determine feasibility using the actual net |
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operating income as adjusted for stabilization of rents and |
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extraordinary lease-up expenses. The permanent lender and equity |
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partner stabilization requirements document in the loan and |
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partnership or entity agreements will be considered when |
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determining the appropriate adjustments and the net operating |
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income used by the department's underwriter. |
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(2) use a maximum debt coverage ratio of 1.50 |
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(3) require that no year in the first 15 years of the |
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long term compliance reflect (i) negative cash flow or (ii) a |
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stabilized debt coverage ratio below 1.15; |
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(4) determinations of feasibility at time of cost |
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certification shall not include a maximum operating expense to |
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income ratio. |
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(e) Subsections (c), (d) and (d-1) and Section 2306.269 |
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apply only to multifamily rental housing developments to which the |
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department is providing one or more of the following forms of |
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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 3. The changes in law made by this Act apply only to |
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an application for financial assistance submitted to the Texas |
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Department of housing and Community Affairs during an application |
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cycle that begins on or after the effective date of this Act. An |
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application submitted during an application cycle that began before |
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the effective date of this Act is governed by the law in effect on |
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the date the application cycle began, and the former law is |
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continued in effect for that purpose. |
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SECTION 4. This Act takes effect September 1, 2015. |