89R11270 JAM-F

By: Menéndez S.B. No. 2471

A BILL TO BE ENTITLED

AN ACT

relating to a set-aside of low income housing tax credits for at-risk housing developments and to the allocation of housing tax credits to those developments and certain other developments.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 2306.111, Government Code, is amended by amending Subsections (a), (d-1), (d-2), and (d-4) and adding Subsection (a-1) to read as follows:

(a) In this section, "at-risk" development has the meaning assigned by Section 2306.6702.

(a-1) The department, through the housing finance division, shall administer all federal housing funds provided to the state under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. Section 12704 et seq.) or any other affordable housing program.

(d-1) In allocating low income housing tax credit commitments under Subchapter DD, the department shall, before applying the regional allocation formula prescribed by Section 2306.1115, set aside for and allocate to at-risk developments[, as defined by Section 2306.6702,] not less than the minimum amount of housing tax credits required to be set aside and allocated under Section 2306.6714(a) [2306.6714]. Funds or credits are not required to be allocated according to the regional allocation formula under Subsection (d) if:

(1) the funds or credits are reserved for contract-for-deed conversions or for set-asides mandated by state or federal law and each contract-for-deed allocation or set-aside allocation equals not more than 10 percent of the total allocation of funds or credits for the applicable program;

(2) the funds or credits are allocated by the department primarily to serve persons with disabilities; or

(3) the funds are housing trust funds administered by the department under Sections 2306.201-2306.206 that are not otherwise required to be set aside under state or federal law and do not exceed $3 million for each programmed activity during each application cycle.

(d-2) In allocating low income housing tax credit commitments under Subchapter DD, the department shall allocate five percent of the housing tax credits in each application cycle to developments that receive federal financial assistance through the [Texas Rural Development Office of the] United States Department of Agriculture. Any funds allocated to developments under this subsection that involve rehabilitation must come from the portion of funds that are set aside for and allocated to eligible at-risk developments under Subsection (d-1) and Section 2306.6714(a) [2306.6714] and any [additional] funds that remain after those funds have been set aside and allocated [set aside for those developments under Subsection (d-1)]. This subsection does not apply to a development financed wholly or partly under Section 538 of the Housing Act of 1949 (42 U.S.C. Section 1490p-2) unless the development involves the rehabilitation of an existing property that has received and will continue to receive as part of the financing of the development federal financial assistance provided under Section 514, [Section] 515, 516, or 521 of the Housing Act of 1949 (42 U.S.C. Section 1484, [Section] 1485, 1486, or 1490a).

(d-4) A proposed or existing development that, before September 1, 2013, has been awarded or has received federal financial assistance provided under Section 514, 515, [or] 516, or 521 of the Housing Act of 1949 (42 U.S.C. Section 1484, 1485, [or] 1486, or 1490a) may apply for low income housing tax credits allocated under Subsection (d-2) or (d-3) for the uniform state service region in which the development is located regardless of whether the development is located in a rural area.

SECTION 2. Section 2306.6702(a)(5), Government Code, is amended to read as follows:

(5) "At-risk development" means:

(A) a development that:

(i) has received the benefit of a subsidy in the form of a below-market interest rate loan, interest rate reduction, rental subsidy, Section 8 housing assistance payment, rental supplement payment, rental assistance payment, or equity incentive under the following federal laws, as applicable:

(a) Sections 221(d)(3) and (5), National Housing Act (12 U.S.C. Section 1715l);

(b) Section 236, National Housing Act (12 U.S.C. Section 1715z-1);

(c) Section 202, Housing Act of 1959 (12 U.S.C. Section 1701q);

(d) Section 101, Housing and Urban Development Act of 1965 (12 U.S.C. Section 1701s);

(e) the Section 8 Additional Assistance Program for housing developments with HUD-Insured and HUD-Held Mortgages administered by the United States Department of Housing and Urban Development as specified by 24 C.F.R. Part 886, Subpart A;

(f) the Section 8 Housing Assistance Program for the Disposition of HUD-Owned Projects administered by the United States Department of Housing and Urban Development as specified by 24 C.F.R. Part 886, Subpart C;

(g) Sections 514, 515, [and] 516, and 521 of the Housing Act of 1949 (42 U.S.C. Sections 1484, 1485, [and] 1486, and 1490a); or

(h) Section 42, Internal Revenue Code of 1986; and

(ii) is subject to the following conditions:

(a) the stipulation to maintain affordability in the contract granting the subsidy is [nearing] within three years of expiration, based on the anticipated allocation date of housing tax credits, and, for an automatically renewing contract, the stipulation in the contract will not be renewed; or

(b) the federally issued or held [HUD-insured or HUD-held] mortgage on the development is eligible for prepayment or is within three years of [nearing] the end of its term, based on the anticipated allocation date of housing tax credits; or

(B) a development that proposes to rehabilitate or reconstruct housing units that:

(i) receive assistance under Section 9, United States Housing Act of 1937 (42 U.S.C. Section 1437g) and are owned by:

(a) a public housing authority; or

(b) a public facility corporation created by a public housing authority under Chapter 303, Local Government Code;

(ii) received assistance under Section 9, United States Housing Act of 1937 (42 U.S.C. Section 1437g) and:

(a) are proposed to be disposed of or demolished by a public housing authority or a public facility corporation created by a public housing authority under Chapter 303, Local Government Code; or

(b) have been disposed of or demolished by a public housing authority or a public facility corporation created by a public housing authority under Chapter 303, Local Government Code, in the two-year period preceding the application for housing tax credits; or

(iii) receive assistance or will receive assistance through the Rental Assistance Demonstration program administered by the United States Department of Housing and Urban Development as specified by the Consolidated and Further Continuing Appropriations Act, 2012 (Pub. L. No. 112-55) and its subsequent amendments, if the application for assistance through the Rental Assistance Demonstration program is included in the applicable public housing plan that was most recently approved by the United States Department of Housing and Urban Development as specified by 24 C.F.R. Section 903.23.

SECTION 3. Sections 2306.6714(a) and (b), Government Code, are amended to read as follows:

(a) The department shall:

(1) set aside for eligible at-risk developments not less than 15 percent of the housing tax credits available for allocation in the calendar year; and

(2) to the extent that a sufficient number of eligible applicants exist, allocate to at-risk developments the maximum amount of housing tax credits set aside for that purpose under Subdivision (1).

(b) Housing [Any amount of housing] tax credits set aside under this section that remain [remains] after the initial allocation of housing tax credits are [is] available for allocation to any eligible applicant that receives financial assistance from the United States Department of Agriculture, as provided by the qualified allocation plan, only if there are no remaining applicants who are eligible for the housing tax credits set aside and allocated under Subsection (a).

SECTION 4. Sections 2306.111, 2306.6702, and 2306.6714, Government Code, as amended by this Act, apply 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 2026 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, 2025.