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A BILL TO BE ENTITLED
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AN ACT
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relating to certain public facilities used to provide affordable |
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housing. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 303.021, Local Government Code, is |
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amended by adding Subsection (d) to read as follows: |
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(d) A corporation or a sponsor may finance, own, or operate |
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a multifamily residential development only if: |
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(1) the corporation or sponsor complies with all |
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applicable provisions of this chapter; and |
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(2) the development is located: |
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(A) inside the area of operation of the sponsor, |
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if the sponsor is a housing authority; or |
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(B) if the sponsor is not a housing authority, |
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inside the boundaries of the sponsor, without regard to whether the |
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sponsor is authorized to own property or provide services outside |
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the boundaries of the sponsor. |
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SECTION 2. The heading to Section 303.042, Local Government |
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Code, is amended to read as follows: |
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Sec. 303.042. TAXATION; EXEMPTION. |
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SECTION 3. Subchapter B, Chapter 303, Local Government |
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Code, is amended by adding Section 303.0421, and a heading is added |
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to that section to read as follows: |
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Sec. 303.0421. MULTIFAMILY RESIDENTIAL DEVELOPMENTS OWNED |
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BY PUBLIC FACILITY CORPORATIONS. |
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SECTION 4. Section 303.0421, Local Government Code, as |
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added by this Act, is amended by adding Subsections (a), (c), and |
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(d) to read as follows: |
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(a) This section applies to a multifamily residential |
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development that is owned by a corporation created under this |
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chapter, except that this section does not apply to a multifamily |
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residential development that: |
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(1) has at least 20 percent of its residential units |
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reserved for public housing units; |
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(2) participates in the Rental Assistance |
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Demonstration program administered by the United States Department |
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of Housing and Urban Development; |
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(3) receives financial assistance administered under |
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Chapter 1372, Government Code, or receives financial assistance |
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from another type of tax-exempt bond; or |
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(4) receives financial assistance administered under |
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Subchapter DD, Chapter 2306, Government Code. |
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(c) A multifamily residential development that is owned by a |
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corporation created under this chapter by a housing authority and |
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to which Subsection (a) applies must hold a public hearing, at a |
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meeting of the authority's governing body, to approve the |
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development. |
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(d) Notwithstanding Subsection (b), an occupied multifamily |
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residential development that is acquired by a corporation and to |
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which Subsection (a) applies is eligible for an exemption under |
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Section 303.042(c) for: |
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(1) the one-year period following the date of the |
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acquisition, regardless of whether the development complies with |
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the requirements of Subsection (b); and |
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(2) a year following the year described by Subdivision |
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(1) only if the development comes into compliance with the |
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requirements of Subsection (b) not later than the first anniversary |
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of the date of the acquisition. |
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SECTION 5. Sections 303.042(d), (e), and (f), Local |
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Government Code, are transferred to Section 303.0421, Local |
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Government Code, as added by this Act, redesignated as Sections |
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303.0421(b), (e), and (f), Local Government Code, and amended to |
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read as follows: |
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(b) Notwithstanding Section 303.042(c) and subject to |
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Subsections (c) and (d) of this section, an [(d) An] exemption under |
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Section 303.042(c) [this section] for a multifamily residential |
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development to which Subsection (a) applies is available [which is |
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owned by a public facility corporation created by a housing |
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authority under this chapter and which does not have at least 20 |
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percent of its units reserved for public housing units, applies] |
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only if: |
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(1) the requirements under Section 303.0425 are met |
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[housing authority holds a public hearing, at a regular meeting of |
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the authority's governing body, to approve the development]; [and] |
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(2) at least 50 percent of the units in the multifamily |
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residential development are reserved for occupancy by individuals |
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and families earning not more [less] than 80 percent of the area |
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median [family] income, adjusted for family size; |
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(3) the corporation delivers to the presiding officer |
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of the governing body of each taxing unit in which the development |
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is to be located written notice of the development, at least 30 days |
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before the date: |
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(A) the corporation takes action to approve a new |
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multifamily residential development or the acquisition of an |
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occupied multifamily residential development; and |
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(B) of any public hearing required to be held |
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under this section; and |
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(4) for an occupied multifamily residential |
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development that is acquired by a corporation and not otherwise |
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subject to a land use restriction agreement under Section 2306.185, |
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Government Code: |
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(A) not less than: |
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(i) 15 percent of the total gross cost of |
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the existing development, as shown in the settlement statement, is |
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expended on rehabilitating, renovating, reconstructing, or |
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repairing the development, with initial expenditures and |
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construction activities: |
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(a) beginning not later than the first |
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anniversary of the date of the acquisition; and |
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(b) finishing not later than the third |
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anniversary of the date of the acquisition; and |
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(ii) 20 percent of the units are reserved |
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for occupancy as lower income housing units, as defined under |
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Section 303.0425; or |
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(B) at least 50 percent of the units are reserved |
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for occupancy as lower income housing units, as defined under |
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Section 303.0425. |
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(e) For the purposes of Subsection (a) [(d)], a "public |
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housing unit" is a residential [dwelling] unit for which the |
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landlord receives a public housing operating subsidy. It does not |
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include a unit for which payments are made to the landlord under the |
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federal Section 8 Housing Choice Voucher Program. |
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(f) Notwithstanding Sections 303.042(a) and (b) |
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[Subsections (a) and (b)], during the period [of time] that a |
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corporation owns a particular public facility that is a multifamily |
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residential development: |
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(1) [,] a leasehold or other possessory interest in |
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the real property of the public facility granted by the corporation |
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shall be treated in the same manner as a leasehold or other |
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possessory interest in real property granted by an authority under |
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Section 379B.011(b); and |
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(2) the materials used by a person granted a |
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possessory interest described by Subdivision (1) to improve the |
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real property of the public facility shall be exempt from all sales |
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and use taxes because the materials are for the benefit of the |
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corporation. |
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SECTION 6. Subchapter B, Chapter 303, Local Government |
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Code, is amended by adding Section 303.0425 to read as follows: |
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Sec. 303.0425. ADDITIONAL REQUIREMENTS FOR BENEFICIAL TAX |
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TREATMENT RELATING TO CERTAIN PUBLIC FACILITIES. (a) In this |
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section: |
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(1) "Developer" means a private entity that constructs |
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a development, including the rehabilitation, renovation, |
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reconstruction, or repair of a development. |
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(2) "Housing choice voucher program" means the housing |
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choice voucher program under Section 8, United States Housing Act |
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of 1937 (42 U.S.C. Section 1437f). |
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(3) "Lower income housing unit" means a residential |
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unit reserved for occupancy by an individual or family earning not |
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more than 60 percent of the area median income, adjusted for family |
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size, as defined by the United States Department of Housing and |
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Urban Development. |
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(4) "Moderate income housing unit" means a residential |
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unit reserved for occupancy by an individual or family earning not |
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more than 80 percent of the area median income, adjusted for family |
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size, as defined by the United States Department of Housing and |
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Urban Development. |
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(5) "Public facility user" means a public-private |
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partnership entity or a developer or other private entity that has |
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an ownership interest or a leasehold or other possessory interest |
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in a public facility that is a multifamily residential development. |
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(b) Not less than 10 percent of the residential units in a |
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development must be reserved as lower income housing units unless: |
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(1) a majority of the members of the board of the |
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corporation are elected officials; or |
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(2) the development is approved by the governing body |
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of the municipality in which the development is located or, if the |
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development is not located in a municipality, the county in which |
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the development is located. |
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(c) The percentage of lower and moderate income housing |
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units reserved in each category of units in the development, based |
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on the number of bedrooms per unit, must be the same as the |
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percentage of each category of housing units reserved in the |
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development as a whole. |
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(d) The monthly rent charged per unit may not exceed: |
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(1) for a lower income housing unit, 30 percent of 60 |
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percent of the area median income, adjusted for family size, as |
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defined by the United States Department of Housing and Urban |
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Development; or |
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(2) for a moderate income housing unit, 30 percent of |
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80 percent of the area median income, adjusted for family size, as |
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defined by the United States Department of Housing and Urban |
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Development. |
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(e) In calculating the income of an individual or family for |
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a lower or moderate income housing unit, the public facility user |
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must use the definition of annual income described in 24 C.F.R. |
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Section 5.609, as implemented by the United States Department of |
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Housing and Urban Development. If the income of a tenant exceeds an |
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applicable limit at the time of the renewal of a lease agreement for |
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a residential unit, the provisions of Section 42(g)(2)(D), Internal |
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Revenue Code of 1986, apply in determining whether the unit may |
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still qualify as a lower or moderate income housing unit. |
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(f) The public facility user may not: |
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(1) refuse to rent a residential unit to an individual |
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or family because the individual or family participates in the |
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housing choice voucher program, if the assistance received by the |
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individual or family through the program is equal to or greater than |
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the amount established as the maximum monthly rent for the |
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applicable unit under Subsection (d); or |
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(2) use a financial or minimum income standard that |
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requires an individual or family participating in the housing |
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choice voucher program to have a monthly income of more than 250 |
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percent of the individual's or family's share of the total monthly |
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rent payable for a unit. |
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(g) A corporation that owns or leases to a public facility |
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user a public facility used as a multifamily residential |
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development shall publish on its Internet website information about |
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the development's: |
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(1) compliance with the requirements of this section; |
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and |
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(2) policies regarding tenant participation in the |
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housing choice voucher program. |
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(h) The public facility user shall: |
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(1) affirmatively market available residential units |
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directly to individuals and families participating in the housing |
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choice voucher program; and |
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(2) notify local housing authorities of the |
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multifamily residential development's acceptance of tenants in the |
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housing choice voucher program. |
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(i) The public facility user must: |
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(1) not later than June 1 of each year, submit to the |
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chief appraiser of the appraisal district in which the development |
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is located an audit report for a compliance audit, prepared at the |
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expense of the public facility user and conducted by an independent |
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auditor or compliance expert with an established history of |
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providing similar audits on housing compliance matters, to |
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determine whether the public facility user is in compliance with |
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the requirements of this section; and |
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(2) before the initial occupancy of an unoccupied |
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development or not later than the 30th day after the date of |
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acquisition of an occupied development, submit to the Texas |
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Department of Housing and Community Affairs a report that includes, |
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for each development: |
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(A) the name of the development; |
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(B) the street address and municipality or county |
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in which the development is located; |
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(C) the name of the developer; |
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(D) the total number of residential units, |
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reported by number of bedrooms; |
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(E) the total number of lower income housing |
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units, reported by number of bedrooms, by level of income |
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restriction, and by initial rent; |
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(F) the total number of moderate income housing |
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units, reported by number of bedrooms, by level of income |
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restriction, and by initial rent; |
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(G) the number of residential units rented by |
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individuals and families who participate in the housing choice |
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voucher program, reported by number of bedrooms; |
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(H) a copy of the ground lease; and |
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(I) a copy of the partnership agreement or other |
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governing agreement executed by the corporation for the public |
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facility, if any. |
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(j) The initial audit report required to be submitted under |
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Subsection (i)(1) by a public facility user to the chief appraiser |
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of the appraisal district is due not later than June 1 of the year |
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following the first anniversary of: |
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(1) the date of acquisition for an occupied |
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multifamily residential development that is acquired by a |
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corporation; or |
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(2) the date a new multifamily residential development |
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first becomes occupied by one or more tenants. |
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(k) An exemption under Section 303.042(c) does not apply for |
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a tax year in which a multifamily residential development that is |
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owned by a public facility corporation created under this chapter |
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and that is required to submit an audit report under Subsection |
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(i)(1): |
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(1) does not submit the required audit report; or |
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(2) submits an audit report that does not establish |
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that the development is in compliance with the requirements of this |
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section. |
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(l) The reports submitted under Subsection (i) are subject |
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to disclosure under Chapter 552, Government Code, except that |
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information containing tenant names, unit numbers, or other tenant |
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identifying information may be redacted. The Texas Department of |
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Housing and Community Affairs shall post a copy of the report |
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received under Subsection (i)(2) on its Internet website. |
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(m) Each lease agreement for a residential unit in a |
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multifamily residential development subject to this section must |
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provide that: |
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(1) the landlord may not retaliate against the tenant |
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or the tenant's guests by taking an action because the tenant |
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established, attempted to establish, or participated in a tenant |
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organization; |
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(2) the landlord may only choose to not renew the lease |
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if the tenant: |
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(A) is in material noncompliance with the lease, |
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including nonpayment of rent after the required cure period; |
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(B) committed one or more substantial violations |
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of the lease; |
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(C) failed to provide required information on the |
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income, composition, or eligibility of the tenant's household; or |
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(D) committed repeated minor violations of the |
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lease that: |
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(i) disrupt the livability of the property; |
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(ii) adversely affect the health and safety |
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of any person or the right to quiet enjoyment of the leased premises |
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and related development facilities; |
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(iii) interfere with the management of the |
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development; or |
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(iv) have an adverse financial effect on |
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the development, including the repeated failure of the tenant to |
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pay rent in a timely manner; and |
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(3) to not renew the lease, the landlord must serve a |
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written notice of proposed nonrenewal on the tenant not later than |
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the 30th day before the effective date of nonrenewal. |
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(n) A tenant may not waive the protections provided by |
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Subsection (m). |
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(o) A public facility user must be given: |
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(1) written notice from the Texas Department of |
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Housing and Community Affairs or appropriate appraisal district of |
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an instance of noncompliance with this section; and |
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(2) 60 days after the day notice is received under |
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Subdivision (1), to cure the matter that is the subject of the |
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notice. |
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(p) Requirements under this subchapter relating to the |
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reservation of income-restricted residential units or income |
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restrictions applicable to tenants of a multifamily residential |
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development subject to this subchapter must be documented in a land |
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use restriction agreement or a similar restrictive instrument that |
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is recorded in the real property records of the county in which the |
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development is located. |
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SECTION 7. Sections 392.005(c) and (d), Local Government |
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Code, are amended to read as follows: |
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(c) An exemption under this section for a multifamily |
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residential development which is owned by [(i) a public facility |
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corporation created by a housing authority under Chapter 303, (ii)] |
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a housing development corporation[,] or [(iii)] a similar entity |
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created by a housing authority, other than a public facility |
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corporation created by a housing authority under Chapter 303, and |
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which does not have at least 20 percent of its residential units |
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reserved for public housing units, applies only if: |
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(1) the authority holds a public hearing, at a regular |
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meeting of the authority's governing body, to approve the |
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development; and |
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(2) at least 50 percent of the units in the multifamily |
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residential development are reserved for occupancy by individuals |
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and families earning less than 80 percent of the area median |
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[family] income, adjusted for family size. |
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(d) For the purposes of Subsection (c), a "public housing |
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unit" is a residential [dwelling] unit for which the owner receives |
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a public housing operating subsidy. It does not include a unit for |
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which payments are made to the landlord under the federal Section 8 |
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Housing Choice Voucher Program. |
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SECTION 8. (a) Subject to Subsections (b), (c), and (d) of |
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this section, Sections 303.0421 and 303.0425, Local Government |
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Code, as added by this Act, apply only to a tax imposed for a tax |
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year beginning on or after the effective date of this Act. |
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(b) Subject to Subsections (c) and (d) of this section, |
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Sections 303.0421 and 303.0425, Local Government Code, as added by |
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this Act, apply only to a multifamily residential development that |
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is approved on or after the effective date of this Act by a public |
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facility corporation or the sponsor of a public facility |
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corporation, in accordance with Chapter 303, Local Government Code. |
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A multifamily residential development that was approved by a public |
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facility corporation or the sponsor of a public facility |
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corporation before the effective date of this Act is governed by the |
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law in effect on the date the development was approved by the |
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corporation or sponsor, and the former law is continued in effect |
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for that purpose. |
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(c) Subject to Subsection (d) of this section, Section |
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303.0421(d), Local Government Code, as added by this Act, applies |
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only to an occupied multifamily residential development that is |
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acquired by a public facility corporation on or after the effective |
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date of this Act. An occupied multifamily residential development |
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that is acquired by a public facility corporation before the |
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effective date of this Act is governed by the law in effect on the |
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date the development was acquired by the public facility |
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corporation, and the former law is continued in effect for that |
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purpose. |
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(d) Notwithstanding any other provision of this section: |
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(1) Sections 303.0425(g), (i), (j), (k), and (l), |
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Local Government Code, as added by this Act, apply to all |
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multifamily residential developments owned by a public facility |
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corporation; and |
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(2) the initial audit report required to be submitted |
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under Section 303.0425(i)(1), Local Government Code, as added by |
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this Act, by a public facility user of a multifamily residential |
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development that was approved or acquired by a public facility |
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corporation before the effective date of this Act must be submitted |
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by the later of: |
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(A) the date established by Section 303.0425(j), |
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Local Government Code, as added by this Act; or |
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(B) June 1, 2024. |
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SECTION 9. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2023. |