| 6 | 4 | | AN ACT |
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| 7 | 5 | | relating to underwriting standards for evaluating applications for |
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| 8 | 6 | | low income housing tax credits. |
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| 9 | 7 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 8 | | SECTION 1. Section 2306.148, Government Code, is amended to |
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| 11 | 9 | | read as follows: |
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| 12 | 10 | | Sec. 2306.148. UNDERWRITING STANDARDS. (a) The board |
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| 13 | 11 | | shall have the specific duty and power to adopt underwriting |
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| 14 | 12 | | standards for: |
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| 15 | 13 | | (1) loans made or financed by the housing finance |
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| 16 | 14 | | division; and |
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| 17 | 15 | | (2) housing tax credits allocated by the department. |
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| 18 | 16 | | (b) Underwriting standards adopted under Subsection (a)(2) |
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| 19 | 17 | | and used to determine the feasibility of a proposed development |
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| 20 | 18 | | must be consistent with criteria established under Section |
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| 21 | 19 | | 2306.185. |
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| 22 | 20 | | SECTION 2. Section 2306.185, Government Code, is amended by |
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| 23 | 21 | | adding Subsections (d-1), (d-2), (d-3), and (d-4) and amending |
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| 24 | 22 | | Subsection (e) to read as follows: |
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| 25 | 23 | | (d-1) For developments receiving housing tax credits, the |
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| 26 | 24 | | department shall determine the feasibility of the development at |
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| 27 | 25 | | the time of cost certification using: |
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| 28 | 26 | | (1) actual net operating income, adjusted for |
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| 29 | 27 | | stabilization of rents and extraordinary lease-up expenses; and |
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| 30 | 28 | | (2) a maximum debt coverage ratio of 1.50 or higher as |
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| 31 | 29 | | adopted by department rule. |
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| 32 | 30 | | (d-2) A feasibility determination made under Subsection |
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| 33 | 31 | | (d-1) may not include a maximum operating expense-to-income ratio. |
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| 34 | 32 | | (d-3) In determining net operating income and making the |
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| 35 | 33 | | appropriate adjustments under Subsection (d-1)(1), the department |
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| 36 | 34 | | shall consider the permanent lender and equity partner |
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| 37 | 35 | | stabilization requirements documented in the loan and in the |
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| 38 | 36 | | partnership or entity agreements. |
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| 39 | 37 | | (d-4) The department may adopt rules providing for |
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| 40 | 38 | | exceptions to the maximum debt coverage ratio requirement of |
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| 41 | 39 | | Subsection (d-1)(2) with respect to specific types of projects. |
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| 42 | 40 | | (e) Subsections (c), [and] (d), (d-1), (d-2), (d-3), and |
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| 43 | 41 | | (d-4) and Section 2306.269 apply only to multifamily rental housing |
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| 44 | 42 | | developments to which the department is providing one or more of the |
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| 45 | 43 | | following forms of assistance: |
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| 46 | 44 | | (1) a loan or grant in an amount greater than 33 |
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| 47 | 45 | | percent of the market value of the development on the date the |
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| 48 | 46 | | recipient completed the construction of the development; |
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| 49 | 47 | | (2) a loan guarantee for a loan in an amount greater |
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| 50 | 48 | | than 33 percent of the market value of the development on the date |
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| 51 | 49 | | the recipient took legal title to the development; or |
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| 52 | 50 | | (3) a low income housing tax credit. |
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| 53 | 51 | | SECTION 3. The change in law made by this Act applies only |
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| 54 | 52 | | to an application for low income housing tax credits that is |
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| 55 | 53 | | submitted to the Texas Department of Housing and Community Affairs |
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| 56 | 54 | | during an application cycle that begins on or after the effective |
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| 57 | 55 | | date of this Act. An application that is submitted during an |
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| 58 | 56 | | application cycle that began before the effective date of this Act |
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| 59 | 57 | | is governed by the law in effect at the time the application cycle |
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| 60 | 58 | | began, and the former law is continued in effect for that purpose. |
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| 61 | 59 | | SECTION 4. This Act takes effect September 1, 2015. |
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| 60 | + | ______________________________ ______________________________ |
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| 61 | + | President of the Senate Speaker of the House |
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| 62 | + | I hereby certify that S.B. No. 1989 passed the Senate on |
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| 63 | + | May 11, 2015, by the following vote: Yeas 30, Nays 1. |
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| 64 | + | ______________________________ |
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| 65 | + | Secretary of the Senate |
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| 66 | + | I hereby certify that S.B. No. 1989 passed the House on |
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| 67 | + | May 22, 2015, by the following vote: Yeas 140, Nays 0, |
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| 68 | + | two present not voting. |
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| 69 | + | ______________________________ |
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| 70 | + | Chief Clerk of the House |
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| 71 | + | Approved: |
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| 72 | + | ______________________________ |
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| 73 | + | Date |
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| 74 | + | ______________________________ |
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| 75 | + | Governor |
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