By: Menéndez S.B. No. 1989
A BILL TO BE ENTITLED
AN ACT
relating to underwriting standards for developments receiving an
allocation of low income housing tax credits administered by the
Texas Department of Housing and Community Affairs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2306.148, Government Code, is amended to
read as follows:
Section 2306.148. Underwriting Standards. The board shall
have the specific duty and power to adopt underwriting standards
for loans made or financed by the housing finance division and tax
credits allocated by the department. Underwriting standards
adopted under this section and used to determine feasibility of a
proposed development shall meet the criteria set forth in Section
2306.185 of this Chapter.
SECTION 2. Section 2306.185, Government Code, is amended by
adding subsection (d-1) and amending subsection (e) to read as
follows:
(d-1) For Housing Tax Credit Developments at cost
certification, the department shall:
(1) determine feasibility using the actual net
operating income as adjusted for stabilization of rents and
extraordinary lease-up expenses. The permanent lender and equity
partner stabilization requirements document in the loan and
partnership or entity agreements will be considered when
determining the appropriate adjustments and the net operating
income used by the department's underwriter.
(2) use a maximum debt coverage ratio of 1.50
(3) require that no year in the first 15 years of the
long term compliance reflect (i) negative cash flow or (ii) a
stabilized debt coverage ratio below 1.15;
(4) determinations of feasibility at time of cost
certification shall not include a maximum operating expense to
income ratio.
(e) Subsections (c), (d) and (d-1) and Section 2306.269
apply only to multifamily rental housing developments to which the
department is providing one or more of the following forms of
assistance:
(1) a loan or grant in an amount greater than 33
percent of the market value of the development on the date the
recipient completed the construction of the development;
(2) a loan guarantee for a loan in an amount greater
than 33 percent of the market value of the development on the date
the recipient took legal title to the development; or
(3) a low income housing tax credit.
SECTION 3. The changes in law made by this Act apply only to
an application for financial assistance 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 submitted during an application cycle that began before
the effective date of this Act 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 4. This Act takes effect September 1, 2015.