87R10936 JAM-F
By: Eckhardt S.B. No. 2030
A BILL TO BE ENTITLED
AN ACT
relating to requirements for beneficial tax treatment related to a
public facility used to provide affordable housing.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 303.042(d) and (f), Local Government
Code, are amended to read as follows:
(d) An exemption under this section for a multifamily
residential development which is owned by a public facility
corporation created [by a housing authority] under this chapter and
which does not have at least 20 percent of its units reserved for
public housing units, applies only if[:
[(1)] the corporation's sponsor [housing authority]
holds a public hearing, at a regular meeting of the sponsor's
[authority's] governing body, to approve the development[;] and:
(1) for a development that receives financial
assistance administered under Chapter 1372, Government Code, or
Subchapter DD, Chapter 2306, Government Code:
(A) [(2)] at least 50 percent of the units in the
multifamily residential development are reserved for occupancy by
individuals and families earning less than 80 percent of the area
median family income; or
(B) the requirements under Section 303.0425 are
met;
(2) for a development that does not receive financial
assistance administered under Chapter 1372, Government Code, or
Subchapter DD, Chapter 2306, Government Code, the requirements
under Section 303.0425 are met; or
(3) for an occupied multifamily residential
development that is acquired by the public facility corporation,
the development comes into compliance with the requirements of this
section or Section 303.0425, as applicable, not later than the
first anniversary of the date of the acquisition.
(f) Notwithstanding Subsections (a) and (b), during the
period [of time] that a corporation owns a particular public
facility that provides multifamily housing, a leasehold or other
possessory interest in the real property of the public facility
granted by the corporation shall be treated in the same manner as a
leasehold or other possessory interest in real property granted by
a housing [an] authority under Section 379B.011(b) only if the
requirements under Subsection (d) are met.
SECTION 2. Subchapter B, Chapter 303, Local Government
Code, is amended by adding Section 303.0425 to read as follows:
Sec. 303.0425. REQUIREMENTS FOR BENEFICIAL TAX TREATMENT
RELATING TO CERTAIN PUBLIC FACILITIES. (a) In this section:
(1) "Affordable housing unit" means a residential unit
reserved for occupancy by an individual or family earning not more
than 80 percent of the area median income, adjusted for family size.
(2) "Developer" means a private entity that constructs
a development.
(3) "Housing choice voucher program" means the housing
choice voucher program under Section 8, United States Housing Act
of 1937 (42 U.S.C. Section 1437f).
(4) "Housing development" means a development
providing multifamily housing that includes affordable housing
units.
(5) "Public facility user" means a developer or other
private entity that has a leasehold or other possessory interest in
a public facility used to provide multifamily housing.
(b) The requirements prescribed by this section:
(1) must be recorded as a deed restriction, the term of
which must be for a period of at least 10 years, the length of the
term of which must be stated in the instrument, and which may be
terminated only if:
(A) a foreclosure occurs with respect to the
housing development that is the subject of the deed restriction; or
(B) beneficial tax treatment is no longer
authorized under Section 303.042; and
(2) do not apply to a multifamily residential
development owned by a corporation:
(A) in which at least 20 percent of the units are
reserved for public housing units; or
(B) that receives financial assistance
administered under Chapter 1372, Government Code, or Subchapter DD,
Chapter 2306, Government Code, and in which at least 50 percent of
the units in the development are reserved for occupancy by
individuals and families earning less than 80 percent of the area
median family income.
(c) A sponsor shall identify goals for public facilities
used for housing developments and establish selection criteria
based on the goals to be used by corporations for scoring proposals
from developers to construct housing developments. A corporation
must use an open, transparent, and competitive process for
selecting a developer for the purpose of constructing a housing
development.
(d) Selection criteria established under Subsection (c) may
consider whether the development will:
(1) be located:
(A) in the attendance zone of an elementary
school that has passed accountability standards adopted by the
Texas Education Agency for the most recent school year available;
(B) in the attendance zone of a high school with a
graduation rate of at least 85 percent; and
(C) in a census tract in which:
(i) fewer than 10 percent of the households
have a household income equal to or less than the federal poverty
line; and
(ii) the median household income is equal
to or greater than 80 percent of area median income;
(2) serve residents most in need of affordable
housing, including families with children or elderly individuals
with disabilities; and
(3) provide affordable housing beyond the minimum
period of affordability required by this section to receive the tax
exemption described by Section 303.042.
(e) A public facility user must reserve at least 20 percent
of the affordable housing units in the development for occupancy by
individuals or families earning not more than 50 percent of area
median income, adjusted for family size. A unit may not be used to
satisfy the reservation required under this subsection if every
tenant in the unit is:
(1) a part-time or full-time student at an institution
of higher education;
(2) under the age of 24; and
(3) ineligible for housing assistance under Section 8,
United States Housing Act of 1937 (42 U.S.C. Section 1437f).
(f) The percentage of affordable housing units reserved in
each category of units in the housing development, based on the
number of bedrooms and bathrooms per unit, must be the same as the
percentage of affordable housing units reserved in the housing
development as a whole.
(g) The monthly rent charged by a public facility user for
an affordable housing unit may not exceed:
(1) 30 percent of 80 percent of area median income,
adjusted for family size; or
(2) if the unit is occupied by a participant in the
housing choice voucher program, the payment standard for that unit
used by the housing authority that administers the voucher for the
unit.
(h) In calculating the income of an individual or family for
an affordable housing unit, the public facility user must consider
the income of every individual who will be living in the unit.
(i) A public facility user may not:
(1) refuse to rent an affordable housing unit to an
individual or family because the individual or family participates
in the housing choice voucher program; or
(2) use a financial or minimum income standard that
requires an individual or family participating in the housing
choice voucher program to have a monthly income of more than 250
percent of the individual's or family's share of the total monthly
rent payable for an affordable housing unit.
(j) The sponsor of a corporation that leases a public
facility used as a housing development to a public facility user
shall publish on its Internet website information about:
(1) the affordable housing units in the housing
development; and
(2) the development's policies regarding tenant
participation in the housing choice voucher program.
(k) A public facility user shall:
(1) affirmatively market available units directly to
individuals and families participating in the housing choice
voucher program; and
(2) notify local housing authorities of any available
units in the development.
(l) Not later than April 1 of each year, a public facility
user of a housing development must:
(1) submit to the chief appraiser of the appraisal
district in which the housing development is located an audit
report for a compliance audit conducted by an independent auditor
to determine whether the public facility user is in compliance with
the requirements of this section; and
(2) submit to the comptroller a report that includes,
for each housing development:
(A) the name of the development;
(B) the street address and municipality or county
in which the development is located;
(C) the name of the developer;
(D) the total number of market rate units,
reported by bedroom size and rent;
(E) the total number of units with income
restrictions, reported by bedroom size, level of income
restriction, and rent;
(F) the total number of units, reported by
bedroom size, that are designed for individuals who are physically
challenged or who have special needs, and the number of those
individuals served annually by those units;
(G) the number of units rented by individuals and
families who participate in the housing choice voucher program, as
reported by bedroom size;
(H) the race, ethnicity, and age of all
occupants; and
(I) if it has not been previously submitted in a
report to the comptroller, or if it has been amended since the
previous submission:
(i) a copy of the ground lease; and
(ii) a copy of the partnership agreement
for the public facility.
(m) The reports submitted under Subsection (l) are public
information and subject to disclosure under Chapter 552, Government
Code. The comptroller shall post a copy of the report received
under Subsection (l)(1) on its Internet website.
(n) Each lease agreement for a unit in a housing development
must provide that:
(1) the landlord may not retaliate against the tenant
or the tenant's guests by taking an action because the tenant
established, attempted to establish, or participated in a tenant
organization;
(2) the landlord may only terminate or choose to not
renew the lease because the tenant:
(A) is in material noncompliance with the lease,
including nonpayment of rent after the required cure period;
(B) committed one or more substantial violations
of the lease;
(C) failed to provide required information on the
income, composition, or eligibility of the tenant's household; or
(D) committed repeated minor violations of the
lease that:
(i) disrupt the livability of the property;
(ii) adversely affect the health and safety
of any person or the right to quiet enjoyment of the leased premises
and related project facilities;
(iii) interfere with the management of the
project; or
(iv) have an adverse financial effect on
the project, including the repeated failure of the tenant to pay
rent in a timely manner;
(3) except in the case of termination for lease
violations based on criminal activity that pose a threat to the
safety of staff and other residents, to terminate or not renew the
lease the landlord must serve a written notice of proposed
termination on the tenant:
(A) at least 30 days before the effective date of
the termination or nonrenewal; and
(B) before issuing a notice to vacate under
Section 24.005, Property Code; and
(4) the notice of a proposed termination provided
under Subdivision (3) must:
(A) specify the date of the proposed termination;
(B) state the grounds for termination;
(C) advise the tenant of the tenant's right to
defend the action in court; and
(D) advise the tenant that the tenant has a
10-day period following the date of service of the notice to discuss
the proposed termination of the tenancy with the landlord and cure
the alleged lease violation if the lease violation is not based on
drug activity, violent criminal activity, or other serious criminal
activity.
(o) A tenant may not waive the protections provided by
Subsection (n).
(p) A public facility corporation must be given:
(1) written notice of an instance of noncompliance
with this section; and
(2) 90 days after the day notice is received under
Subdivision (1) to cure the matter that is the subject of the
notice.
(q) Notwithstanding any other law, an occupied multifamily
residential development that is acquired by a public facility
corporation is eligible for an exemption under Section
303.042(d)(3) for the one-year period following the date of the
acquisition regardless of whether the development complies with the
other requirements of that section or with this section, as
applicable.
SECTION 3. Section 392.005, Local Government Code, is
amended by amending Subsections (c) and (d) and adding Subsection
(c-1) to read as follows:
(c) An exemption under this section for a multifamily
residential development which is owned by [(i) a public facility
corporation created by a housing authority under Chapter 303, (ii)]
a housing development corporation[,] or [(iii)] a similar entity
created by a housing authority and which does not have at least 20
percent of its units reserved for public housing units, applies
only if:
(1) the authority holds a public hearing, at a regular
meeting of the authority's governing body, to approve the
development; and
(2) at least 50 percent of the units in the multifamily
residential development are reserved for occupancy by individuals
and families earning less than 80 percent of the area median family
income.
(c-1) An exemption under this section for a multifamily
residential development which is owned by a public facility
corporation created by a housing authority under Chapter 303 and
which does not have at least 20 percent of its units reserved for
public housing units, applies only if the authority holds a public
hearing, at a regular meeting of the authority's governing body, to
approve the development and:
(1) for a development that receives financial
assistance administered under Chapter 1372, Government Code, or
Subchapter DD, Chapter 2306, Government Code:
(A) at least 50 percent of the units in the
multifamily residential development are reserved for occupancy by
individuals and families earning less than 80 percent of the area
median family income; or
(B) the requirements under Section 303.0425 are
met;
(2) for a development that does not receive financial
assistance administered under Chapter 1372, Government Code, or
Subchapter DD, Chapter 2306, Government Code, the requirements
under Section 303.0425 are met; or
(3) for an occupied multifamily residential
development that is acquired by the public facility corporation,
the development comes into compliance with the requirements of this
section or Section 303.0425, as applicable, not later than the
first anniversary of the date of the acquisition.
(d) For the purposes of Subsections [Subsection] (c) and
(c-1), a "public housing unit" is a dwelling unit for which the
owner receives a public housing operating subsidy. It does not
include a unit for which payments are made to the landlord under the
federal Section 8 Housing Choice Voucher Program.
SECTION 4. The changes in law made by this Act apply only to
an ownership interest obtained by a public facility corporation or
a leasehold or other possessory interest in a public facility
granted by a public facility corporation to a public facility user,
as defined by Section 303.0425, Local Government Code, as added by
this Act, on or after the effective date of this Act.
SECTION 5. This Act takes effect September 1, 2021.