By: Menéndez S.B. No. 1989
(Anderson of Dallas)
A BILL TO BE ENTITLED
AN ACT
relating to underwriting standards for evaluating applications for
low income housing tax credits.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2306.148, Government Code, is amended to
read as follows:
Sec. 2306.148. UNDERWRITING STANDARDS. (a) The board
shall have the specific duty and power to adopt underwriting
standards for:
(1) loans made or financed by the housing finance
division; and
(2) housing tax credits allocated by the department.
(b) Underwriting standards adopted under Subsection (a)(2)
and used to determine the feasibility of a proposed development
must be consistent with criteria established under Section
2306.185.
SECTION 2. Section 2306.185, Government Code, is amended by
adding Subsections (d-1), (d-2), (d-3), and (d-4) and amending
Subsection (e) to read as follows:
(d-1) For developments receiving housing tax credits, the
department shall determine the feasibility of the development at
the time of cost certification using:
(1) actual net operating income, adjusted for
stabilization of rents and extraordinary lease-up expenses; and
(2) a maximum debt coverage ratio of 1.50 or higher as
adopted by department rule.
(d-2) A feasibility determination made under Subsection
(d-1) may not include a maximum operating expense-to-income ratio.
(d-3) In determining net operating income and making the
appropriate adjustments under Subsection (d-1)(1), the department
shall consider the permanent lender and equity partner
stabilization requirements documented in the loan and in the
partnership or entity agreements.
(d-4) The department may adopt rules providing for
exceptions to the maximum debt coverage ratio requirement of
Subsection (d-1)(2) with respect to specific types of projects.
(e) Subsections (c), [and] (d), (d-1), (d-2), (d-3), and
(d-4) 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 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 4. This Act takes effect September 1, 2015.