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A BILL TO BE ENTITLED
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AN ACT
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relating to the system by which an application for a low income |
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housing tax credit is scored. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2306.6710, Government Code, is amended |
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by amending Subsections (b) and (f) and adding Subsections (b-1), |
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(g), and (h) to read as follows: |
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(b) If an application satisfies the threshold criteria, the |
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department shall score and rank the application using a point |
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system that: |
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(1) prioritizes in descending order criteria |
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regarding: |
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(A) financial feasibility of the development |
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based on the supporting financial data required in the application |
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that will include a project underwriting pro forma from the |
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permanent or construction lender; |
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(B) quantifiable community participation with |
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respect to the development, evaluated on the basis of a resolution |
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concerning the development that is voted on and adopted by the |
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following, as applicable: |
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(i) the governing body of a municipality in |
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which the proposed development site is to be located; |
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(ii) subject to Subparagraph (iii), the |
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commissioners court of a county in which the proposed development |
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site is to be located, if the proposed site is to be located in an |
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area of a county that is not part of a municipality; or |
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(iii) the commissioners court of a county |
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in which the proposed development site is to be located and the |
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governing body of the applicable municipality, if the proposed site |
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is to be located in the extraterritorial jurisdiction of a |
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municipality; |
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(C) the income levels of tenants of the |
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development; |
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(D) the size and quality of the units; |
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(E) the rent levels of the units; |
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(F) the level of community support for the |
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application, evaluated on the basis of a written statement from the |
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state representative who represents the district containing the |
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proposed development site; |
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(G) the cost of the development by square foot; |
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(H) [(G)] the services to be provided to tenants |
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of the development, including quality social services; |
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[(H)
whether, at the time the complete
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application is submitted or at any time within the two-year period
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preceding the date of submission, the proposed development site is
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located in an area declared to be a disaster under Section 418.014;] |
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(I) quantifiable community participation with |
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respect to the development, evaluated on the basis of written |
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statements from any neighborhood organizations on record with the |
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state or county in which the development is to be located and whose |
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boundaries contain the proposed development site; [and] |
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(J) demonstrated community and neighborhood |
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support other than that described by Paragraphs (B), (F), and (I); |
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(K) whether the proposed project is consistent |
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with sound underwriting practices and when economically feasible, |
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serves individuals and families of extremely low income by |
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leveraging private and state and federal resources, including |
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federal HOPE VI grants received through the United States |
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Department of Housing and Urban Development; |
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(L) whether the proposed project serves |
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traditionally underserved populations; |
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(M) demonstrated support from local political |
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subdivisions based on the subdivisions' commitment of development |
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funding; |
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(N) whether the proposed project rehabilitates |
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or performs an adaptive reuse of a certified historic structure, as |
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defined by Section 171.901(1), Tax Code, as part of the |
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development; |
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(O) whether the proposed project remains |
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affordable to qualified tenants for an extended, economically |
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feasible period; and |
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(P) whether the proposed project complies with |
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the accessibility standards that are required under Section 504, |
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Rehabilitation Act of 1973 (29 U.S.C. Section 794), and specified |
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under 24 C.F.R. Part 8, Subpart C [the level of community support
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for the application, evaluated on the basis of a written statement
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from the state representative who represents the district
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containing the proposed development site]; |
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(2) uses criteria imposing penalties on applicants or |
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affiliates who have requested extensions of department deadlines |
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relating to developments supported by housing tax credit |
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allocations made in the application round preceding the current |
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round or a developer or principal of the applicant that has been |
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removed by the lender, equity provider, or limited partners for its |
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failure to perform its obligations under the loan documents or |
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limited partnership agreement; [and] |
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(3) encourages applicants to provide free notary |
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public service to the residents of the developments for which the |
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allocation of housing tax credits is requested; and |
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(4) provides appropriate incentives to reward |
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applicants who agree to: |
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(A) equip the development that is the basis of |
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the application with energy saving devices that meet the standards |
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established by the state energy conservation office or provide to a |
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qualified entity, in a land use restriction agreement in accordance |
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with Section 2306.6726, a right of first refusal to purchase the |
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development at the minimum price provided in, and in accordance |
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with the requirements of, Section 42(i)(7), Internal Revenue Code |
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of 1986 (26 U.S.C. Section 42(i)(7)); and |
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(B) locate the development in: |
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(i) a census tract in which there are no |
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other existing developments supported by housing tax credits; or |
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(ii) an area that will serve residents of |
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the development without displacing established communities. |
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(b-1) For each scoring criterion, the department shall use a |
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range of points to evaluate the degree to which a proposed project |
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satisfies the criterion. The department may not award: |
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(1) a number of points for a scoring criterion that is |
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disproportionate to the degree to which a proposed project complies |
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with that criterion; or |
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(2) to a proposed project for the general population a |
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number of points for a scoring criterion that is different than the |
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number of points awarded for that criterion to a proposed project |
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reserved for elderly persons if the proposed project complies with |
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the criterion to the same degree. |
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(f) In evaluating the level of community support for an |
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application under Subsection (b)(1)(F) [(b)(1)(J)], the department |
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shall award: |
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(1) positive points for positive written statements |
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received; |
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(2) negative points for negative written statements |
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received; and |
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(3) zero points for neutral written statements |
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received. |
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(g) On awarding housing tax credit allocations, the board |
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shall document the reasons for each project's selection, including |
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an explanation of: |
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(1) all discretionary factors used in making its |
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determination; and |
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(2) the reasons for any decision that conflicts with |
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the recommendations of department staff under Section 2306.6731. |
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(h) For purposes of evaluating applications submitted under |
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this subchapter, the department may adopt only a scoring criterion |
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that is specified in this section. |
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SECTION 2. Sections 2306.6726(a), (b), and (c), Government |
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Code, are amended to read as follows: |
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(a) An owner of a development subject to a right of first |
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refusal under Section 2306.6710(b)(4) [2306.6725] who intends to |
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sell the development at any time after the expiration of the |
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compliance period shall notify the department and the tenants of |
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the development of the owner's intent to sell and, if applicable, |
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shall specifically identify to the department any qualified entity |
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that is the owner's intended recipient of the right of first refusal |
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in the land use restriction agreement. |
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(b) The owner of a development subject to a right of first |
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refusal under Section 2306.6710(b)(4) [2306.6725] may: |
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(1) during the first 60-day period after notice is |
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provided under Subsection (a-1), negotiate or enter into a purchase |
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agreement only with a qualified entity that is: |
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(A) a community housing development organization |
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as defined by the federal HOME investment 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 period after notice is |
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provided under Subsection (a-1), negotiate or enter into a purchase |
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agreement with a qualified entity that: |
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(A) is described by Section 2306.6706; |
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(B) is controlled by an entity described by |
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Paragraph (A); or |
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(C) is a 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), negotiate or enter into a purchase |
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agreement with any other qualified entity. |
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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 under Section 2306.6710(b)(4) |
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[2306.6725] may sell to any purchaser a development to which the |
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right of first refusal applies if a qualified entity does not offer |
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to purchase the development for a price that the department |
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determines to be reasonable. |
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SECTION 3. Section 2306.6725, Government Code, is repealed. |
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SECTION 4. 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 is based on the 2020 qualified |
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allocation plan or a subsequent plan adopted by the governing board |
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of the department under Section 2306.67022, Government Code. An |
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application that is submitted during an application cycle that is |
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based on an earlier qualified allocation plan is governed by the law |
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in effect on the date the application cycle began, and the former |
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law is continued in effect for that purpose. |
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SECTION 5. This Act takes effect September 1, 2019. |