BILL ANALYSIS

Senate Research Center	S.B. 1944
89R10141 JAM-F	By: Eckhardt; West
	Local Government
	4/25/2025
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

In 2003, the 79th Legislature restricted the Texas Department of Housing and Community Affairs (TDHCA) from awarding a nine percent low-income housing tax credit (LIHTC) to a development within one linear mile of another development awarded by TDHCA in the same calendar year. In 2011, the 82nd Legislature expanded the restriction to two years and made it apply to any county over one million in population.

This provision, often called the "Two-Mile, One-Year Rule," was intended to prevent the concentration of affordable housing in low-income neighborhoods. However,  many affordable housing developers and advocates have stated the rule prevents them from developing affordable housing in high-opportunity areas, such as those near job centers, transit hubs, and economic zones. These locations are crucial for increasing access to employment, education, and essential services, particularly for low-income families. However, by limiting affordable housing development in these high-demand neighborhoods, the rule forces projects to be in less desirable or harder-to-access locations.

S.B. 1944 seeks to promote the spirit of the original legislation by preventing the concentration of affordable housing in low-income neighborhoods and promoting the development of affordable housing in high-opportunity areas. The bill allows a city to waive the two-mile, one-year rule for a high-opportunity development. A high-opportunity development is any development in an area that allows it to receive the full points under TDHCA's Opportunity Index (10 Tex. Admin. Code �11.9(c)(5)).

To qualify for this waiver, a development must be in an area that meets certain income and community asset requirements, including being located in a:

• Census tract with a poverty rate of less than 20 percent or the median poverty rate among tracts for the region, whichever is greater;
• Census tract where the median household income is in the top 50 percent of the region or is in the top 75 percent but is adjacent to a census tract in the top 50 percent; and
• An area with access to at least five community assets correlated with positive outcomes, including access to public transit, parks, full-service grocery stores, pharmacies, hospitals, public libraries, physicians, public schools, etc.

The committee substitute makes two substantive changes to the bill. First, it requires that a municipal governing body approve the waiver with a two-thirds majority. Second, it defines "high-opportunity development" with identical language to the income requirements found in the Administrative Code while still deferring to TDHCA rulemaking for the community asset-related criteria. This ensures that the income-related requirements cannot change without the legislature's approval while allowing TDHCA to retain discretion over the asset-related scoring.

As proposed, S.B. 1944 amends current law relating to the allocation of housing tax credits to developments within proximate geographical areas.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 2306.6711(f-1), Government Code, as follows:

(f-1) Authorizes the governing board of the Texas Department of Housing and Community Affairs (TDHCA) to allocate housing tax credits to more than one development in a single community:

(1) if, rather than only if:

(A) the community is located entirely in certain areas; and

(B) redesignates existing Subdivision (2) as Paragraph (B) and makes nonsubstantive changes; or

(2) if the community is located entirely in a municipality, a census tract with a poverty rate less than the greater of 20 percent or the median poverty rate among census tracts in the uniform service region, and an area that allows the development to receive the maximum possible points for the opportunity index established by TDHCA pursuant to 26 U.S.C. Section 42(m)(1)(C)(i); and the governing body of the municipality containing the development has by vote specifically authorized the allocation of housing tax credits for the development.

Makes nonsubstantive changes to this subsection.

SECTION 2. Provides that the change in law made by this Act applies only to an application for low income housing tax credits that is submitted to TDHCA during an application cycle that is based on the 2026 qualified allocation plan or a subsequent plan adopted by the governing board of the department. Provides that 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 3. Effective date: September 1, 2025.