86R9237 JAM-D
 
  By: Watson S.B. No. 864
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to a right of first refusal applicable to the 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.  Section 2306.6710, Government Code, is amended
  by adding Subsection (g) to read as follows:
         (g)  In scoring applications for purposes of housing tax
  credit allocations, the department shall award preference points to
  a development that agrees to provide to a qualified entity, in a
  land use restriction agreement in accordance with Section
  2306.6726, a right of first refusal to purchase the development at
  the minimum price provided in, and in accordance with the
  requirements of, Section 42(i)(7), Internal Revenue Code of 1986.
         SECTION 2.  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 development that is the basis of the
  application with energy saving devices that meet the standards
  established by the state energy conservation office [or provide to
  a qualified entity, in a land use restriction agreement in
  accordance with Section 2306.6726, a right of first refusal to
  purchase the development 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 3.  Section 2306.6726, Government Code, is amended
  by amending Subsections (a), (b), and (c) and adding Subsection
  (c-3) to read as follows:
         (a)  An owner of a development subject to a right of first
  refusal described by [under] Section 2306.6710(g) [2306.6725] who
  intends to sell the development at any time after the expiration of
  the compliance period shall notify the department and the tenants
  of the development of the owner's intent to sell and, if applicable,
  shall specifically identify to the department any qualified entity
  that is the owner's intended recipient of the right of first refusal
  in the land use restriction agreement.
         (b)  The owner of a development subject to a right of first
  refusal described by [under] Section 2306.6710(g) [2306.6725] may:
               (1)  during the first 120-day [60-day] period after
  notice is provided under Subsection (a-1), negotiate or enter into
  a purchase agreement only with a qualified entity that is:
                     (A)  a community housing development organization
  as defined by the federal HOME investment partnership program; or
                     (B)  controlled by an entity described by
  Paragraph (A);
               (2)  during the second 120-day [60-day] period after
  notice is provided under Subsection (a-1), negotiate or enter into
  a purchase agreement with a qualified entity that:
                     (A)  is described by Section 2306.6706;
                     (B)  is controlled by an entity described by
  Paragraph (A); or
                     (C)  is a tenant organization; and
               (3)  during the last 120-day [60-day] period after
  notice is provided under Subsection (a-1), negotiate or enter into
  a purchase agreement with any other qualified entity.
         (c)  Beginning on the 361st [181st] day after the date the
  department posts notice under Subsection (a-1), an owner of a
  development subject to a right of first refusal described by 
  [under] Section 2306.6710(g) [2306.6725] may sell to any purchaser
  a development to which the right of first refusal applies only if a
  qualified entity does not offer to purchase the development for the
  minimum price provided in, and in accordance with the requirements
  of, Section 42(i)(7), Internal Revenue Code of 1986 [a price that
  the department determines to be reasonable].
         (c-3)  A development subject to a right of first refusal
  described by Section 2306.6710(g) may only be offered for sale at
  the minimum price provided in, and in accordance with the
  requirements of, Section 42(i)(7), Internal Revenue Code of 1986.
         SECTION 4.  The change in law made by this Act applies only
  to an application for low income housing tax credits that is
  submitted to the Texas Department of Housing and Community Affairs
  during an application cycle that is based on the 2020 qualified
  allocation plan or a subsequent plan adopted by the governing board
  of the department. An application that is submitted during an
  application cycle that is based on an earlier qualified allocation
  plan is governed by the law in effect on the date the application
  cycle began, and the former law is continued in effect for that
  purpose.
         SECTION 5.  This Act takes effect September 1, 2019.