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A BILL TO BE ENTITLED
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AN ACT
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relating to underwriting standards for evaluating applications for |
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low income housing tax credits. |
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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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Sec. 2306.148. UNDERWRITING STANDARDS. (a) The board |
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shall have the specific duty and power to adopt underwriting |
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standards for: |
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(1) loans made or financed by the housing finance |
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division; and |
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(2) housing tax credits allocated by the department. |
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(b) Underwriting standards adopted under Subsection (a)(2) |
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and used to determine the feasibility of a proposed development |
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must be consistent with criteria established under Section |
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2306.185. |
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SECTION 2. Section 2306.185, Government Code, is amended by |
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adding Subsections (d-1), (d-2), (d-3), and (d-4) and amending |
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Subsection (e) to read as follows: |
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(d-1) For developments receiving housing tax credits, the |
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department shall determine the feasibility of the development at |
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the time of cost certification using: |
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(1) actual net operating income, adjusted for |
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stabilization of rents and extraordinary lease-up expenses; and |
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(2) a maximum debt coverage ratio of 1.50 or higher as |
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adopted by department rule. |
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(d-2) A feasibility determination made under Subsection |
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(d-1) may not include a maximum operating expense-to-income ratio. |
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(d-3) In determining net operating income and making the |
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appropriate adjustments under Subsection (d-1)(1), the department |
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shall consider the permanent lender and equity partner |
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stabilization requirements documented in the loan and in the |
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partnership or entity agreements. |
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(d-4) The department may adopt rules providing for |
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exceptions to the maximum debt coverage ratio requirement of |
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Subsection (d-1)(2) with respect to specific types of projects. |
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(e) Subsections (c), [and] (d), (d-1), (d-2), (d-3), and |
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(d-4) and Section 2306.269 apply only to multifamily rental housing |
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developments to which the department is providing one or more of the |
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following forms 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 3. The change in law made by this Act applies only |
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to an application for low income housing tax credits that is |
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submitted to the Texas Department of Housing and Community Affairs |
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during an application cycle that begins on or after the effective |
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date of this Act. An application that is submitted during an |
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application cycle that began before the effective date of this Act |
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is governed by the law in effect at the time the application cycle |
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began, and the former law is continued in effect for that purpose. |
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SECTION 4. This Act takes effect September 1, 2015. |
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