83R9616 JAM-D
By: Johnson H.B. No. 2802
A BILL TO BE ENTITLED
AN ACT
relating to the allocation of low income housing tax credits by the
Texas Department of Housing and Community Affairs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2306.67021, Government Code, is amended
to read as follows:
Sec. 2306.67021. APPLICABILITY OF SUBCHAPTER. To the
extent permitted by federal law, this [Except as provided by
Section 2306.6703, this] subchapter applies [does not apply] to the
allocation of housing tax credits to developments financed through
the private activity bond program in the same way this subchapter
applies to the allocation of housing tax credits to developments
not financed through the private activity bond program.
SECTION 2. Section 2306.6703(a), Government Code, is
amended to read as follows:
(a) An application is ineligible for consideration under
the low income housing tax credit program if:
(1) at the time of application or at any time during
the two-year period preceding the date the application round
begins, the applicant or a related party is or has been:
(A) a member of the board; or
(B) the director, a deputy director, the director
of housing programs, the director of compliance, the director of
underwriting, or the low income housing tax credit program manager
employed by the department;
(2) the applicant proposes to replace in less than 15
years any private activity bond financing of the development
described by the application, unless:
(A) at least one-third of all the units in the
development are public housing units or Section 8 project-based
units and the applicant proposes to maintain for a period of 30
years or more 100 percent of the units supported by housing tax
credits as rent-restricted and exclusively for occupancy by
individuals and families earning not more than 50 percent of the
area median income, adjusted for family size;
(B) the applicable private activity bonds will be
redeemed only in an amount consistent with their proportionate
amortization; or
(C) if the redemption of the applicable private
activity bonds will occur in the first five years of the operation
of the development and complies with Section 42(h)(4), Internal
Revenue Code of 1986:
(i) on the date the certificate of
reservation is issued, the Bond Review Board determines that there
is not a waiting list for private activity bonds in the same
priority level established under Section 1372.0321 or, if
applicable, in the same uniform state service region, as referenced
in Section 1372.0231, that is served by the proposed development;
and
(ii) the applicable private activity bonds
will be redeemed according to underwriting criteria, if any,
established by the department;
(3) the applicant proposes to construct a new
development that is located one linear mile or less from a
development that:
(A) serves the same type of household as the new
development, regardless of whether the developments serve
families, elderly individuals, or another type of household;
(B) is subject to deed restrictions regarding the
income of residents [has received an allocation of housing tax
credits for new construction at any time during the three-year
period preceding the date the application round begins]; and
(C) participates in and has not been withdrawn or
terminated from the low income housing tax credit program; or
(4) the development is located in a municipality or,
if located outside a municipality, a county that has more than twice
the state average of units per capita supported by housing tax
credits or private activity bonds, unless the applicant:
(A) has obtained prior approval of the
development from the governing body of the appropriate municipality
or county containing the development; and
(B) has included in the application a written
statement of support from that governing body referencing this
section and authorizing an allocation of housing tax credits for
the development.
SECTION 3. Section 2306.6710, Government Code, is amended
by amending Subsections (b) and (e) and adding Subsections (g) and
(h) to read as follows:
(b) If an application satisfies the threshold criteria, the
department shall score and rank the application using a point
system that:
(1) prioritizes in descending order criteria
regarding:
(A) financial feasibility of the development
based on the supporting financial data required in the application
that will include a project underwriting pro forma from the
permanent or construction lender;
(B) quantifiable community participation with
respect to the development, evaluated on the basis of written
statements from any neighborhood organizations on record with the
state or county in which the development is to be located and whose
boundaries contain the proposed development site;
(C) the income levels of tenants of the
development;
(D) the size and quality of the units;
(E) the commitment of development funding by
local political subdivisions;
(F) the level of community support for the
application, evaluated on the basis of written statements from the
state representative or the state senator that represents the
district containing the proposed development site;
(G) the rent levels of the units;
(H) the cost of the development by square foot;
(I) the services to be provided to tenants of the
development; [and]
(J) whether, at the time the complete application
is submitted or at any time within the two-year period preceding the
date of submission, the proposed development site is located in an
area declared to be a disaster under Section 418.014; and
(K) the source of the revenue stream of the
development;
(2) uses criteria imposing penalties on applicants or
affiliates who have requested extensions of department deadlines
relating to developments supported by housing tax credit
allocations made in the application round preceding the current
round or a developer or principal of the applicant that has been
removed by the lender, equity provider, or limited partners for its
failure to perform its obligations under the loan documents or
limited partnership agreement; and
(3) encourages applicants to provide free notary
public service to the residents of the developments for which the
allocation of housing tax credits is requested.
(e) In scoring applications for purposes of housing tax
credit allocations, the department shall award, consistent with
Section 42, Internal Revenue Code of 1986 (26 U.S.C. Section 42),
preference points to a development that will:
(1) when practicable and feasible based on documented,
committed, and available third-party funding sources, serve the
lowest income tenants per housing tax credit, if the development is
to be located outside a qualified census tract; and
(2) subject to Subsection (h), produce for the longest
economically feasible period the greatest number of high quality
units committed to remaining affordable to any tenants who are
income-eligible under the low income housing tax credit program.
(g) In evaluating the source of the revenue stream for an
application under Subsection (b)(1)(K), the department shall award
positive points for a development that is not entirely dependent on
revenue derived from deed-restricted reduced rent.
(h) The department may not award preference points to a
development based on a deed restriction that is stricter than any
federal requirement under the program.
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 begins on or after the effective
date of this Act. An application that is submitted during an
application cycle that began before the effective date of this Act
is governed by the law in effect at the time the application cycle
began, and the former law is continued in effect for that purpose.
SECTION 5. This Act takes effect September 1, 2013.