By: Bettencourt S.B. No. 591
(Murphy)
A BILL TO BE ENTITLED
AN ACT
relating to certain public facilities used to provide affordable
housing.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 303.021, Local Government Code, is
amended by adding Subsection (c) to read as follows:
(c) A corporation or a sponsor may finance, own, or operate
a multifamily residential development if the corporation or sponsor
complies with all applicable provisions of this chapter.
SECTION 2. Section 303.042, Local Government Code, is
amended by amending Subsections (d) and (f) and adding Subsections
(d-1) and (d-2) to read as follows:
(d) This subsection applies only to a multifamily
residential development that is owned by a corporation created
under this chapter by a housing authority and that does not have at
least 20 percent of its units reserved for public housing units,
participate in the Rental Assistance Demonstration program
administered by the United States Department of Housing and Urban
Development, or receive financial assistance administered under
Chapter 1372, Government Code, or Subchapter DD, Chapter 2306,
Government Code. Notwithstanding Subsections (a) and (b), an [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 housing 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;
(3) the requirements under Sections 303.0425 and
303.0426 are met; and
(4) for an occupied multifamily residential
development that is acquired by a corporation:
(A) the governing body of each municipality or
county for which the sponsor of the corporation was created
approves a resolution of "no objection" for the development; and
(B) a sum of not less than 50 percent of the total
gross cost of the existing project in its entirety is expended on
rehabilitating, renovating, reconstructing, or repairing the
project.
(d-1) This subsection applies only to a multifamily
residential development that is owned by a corporation created
under this chapter by a sponsor other than a housing authority and
that does not have at least 20 percent of its units reserved for
public housing units, participate in the Rental Assistance
Demonstration program administered by the United States Department
of Housing and Urban Development, or receive financial assistance
administered under Chapter 1372, Government Code, or Subchapter DD,
Chapter 2306, Government Code. Notwithstanding Subsections (a) and
(b), an exemption under this section for a multifamily residential
development applies only if:
(1) 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 income;
and
(2) the requirements under Section 303.0426 are met.
(d-2) This subsection applies to a multifamily residential
development that is owned by a corporation created by any sponsor
under this chapter. Notwithstanding Subsections (a), (b), (d), and
(d-1), an exemption under this section for an occupied multifamily
residential development that is acquired by the corporation applies
only if the development comes into compliance with the requirements
of Subsection (d) or (d-1), 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:
(1) [,] 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 an authority under
Section 379B.011(b); and
(2) the materials used by a person granted a
possessory interest described by Subdivision (1) to improve the
real property of the public facility shall be exempt from all sales
and use taxes because the materials are for the benefit of the
corporation.
SECTION 3. Subchapter B, Chapter 303, Local Government
Code, is amended by adding Sections 303.0425 and 303.0426 to read as
follows:
Sec. 303.0425. ADDITIONAL REQUIREMENTS FOR BENEFICIAL TAX
TREATMENT RELATING TO CERTAIN PUBLIC FACILITIES OWNED BY
CORPORATIONS CREATED BY HOUSING AUTHORITIES. (a) In this section:
(1) "Developer" means a private entity that constructs
a development.
(2) "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).
(3) "Lower income housing unit" means a residential
unit reserved for occupancy by an individual or family earning not
more than 60 percent of the area median income, adjusted for family
size.
(4) "Public facility user" means a public-private
partnership entity or a developer or other private entity that has
an ownership interest or a leasehold or other possessory interest
in a public facility used to provide multifamily housing.
(b) The requirements prescribed by this section do not apply
to a multifamily residential development that is:
(1) owned by a corporation that was not created by a
housing authority; or
(2) owned by a corporation created by a housing
authority and:
(A) in which at least 20 percent of the units are
reserved for public housing units;
(B) that participates in the Rental Assistance
Demonstration program administered by the United States Department
of Housing and Urban Development; or
(C) that receives financial assistance
administered under Chapter 1372, Government Code, or Subchapter DD,
Chapter 2306, Government Code.
(c) A corporation must use an open, transparent, and
competitive process for selecting a developer for the purpose of
constructing a housing development.
(d) At least 10 percent of the units in the development must
be reserved as lower income housing units. 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).
(e) The percentage of lower income 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 lower income housing units reserved in the housing
development as a whole.
(f) The monthly rent charged for a lower income housing unit
may not exceed:
(1) 30 percent of 60 percent of the 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 used by the
housing authority that administers the voucher for the unit.
(g) In calculating the income of an individual or family for
a lower income housing unit, the public facility user must consider
the income of every individual who will be living in the unit.
Sec. 303.0426. ADDITIONAL REQUIREMENTS FOR BENEFICIAL TAX
TREATMENT RELATING TO CERTAIN PUBLIC FACILITIES OWNED BY
CORPORATIONS CREATED BY ANY SPONSOR. (a) In this section, "housing
choice voucher program," "lower income housing unit," and "public
facility user" have the meanings assigned by Section 303.0425.
(b) The requirements prescribed by this section do not apply
to a multifamily residential development owned by a corporation:
(1) in which at least 20 percent of the units are
reserved for public housing units;
(2) that participates in the Rental Assistance
Demonstration program administered by the United States Department
of Housing and Urban Development; or
(3) that receives financial assistance administered
under Chapter 1372, Government Code, or Subchapter DD, Chapter
2306, Government Code.
(c) A public facility user may not:
(1) refuse to rent a residential 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 a unit.
(d) A corporation that owns or leases to a public facility
user a public facility used as a multifamily residential
development shall publish on its Internet website information about
the development's:
(1) compliance with the requirements of this section;
and
(2) policies regarding tenant participation in the
housing choice voucher program.
(e) A public facility user shall:
(1) affirmatively market available residential 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.
(f) Not later than April 1 of each year, a public facility
user of a multifamily residential development must:
(1) submit to the chief appraiser of the appraisal
district in which the development is located an audit report for a
compliance audit conducted by an independent auditor or compliance
expert 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 residential units,
reported by bedroom size;
(E) the total number of lower income housing
units, reported by bedroom size, level of income restriction, and
rent;
(F) the total number of residential units,
reported by bedroom size, level of income restriction, and rent,
that are not lower income housing units but that are reserved for
occupancy by an individual or family earning less than 80 percent of
the area median income;
(G) the number of residential units rented by
individuals and families who participate in the housing choice
voucher program, reported by bedroom size;
(H) the race, ethnicity, and age of all
occupants, if available; and
(I) if not previously submitted in a report to
the comptroller, or if amended since the previous submission:
(i) a copy of the ground lease; and
(ii) a copy of the partnership agreement
for the public facility.
(g) The reports submitted under Subsection (f) are public
information and subject to disclosure under Chapter 552, Government
Code, except that information containing tenant names, unit
numbers, or other identifying information may be redacted. The
comptroller shall post a copy of the report received under
Subsection (f)(2) on its Internet website.
(h) Each lease agreement for a unit in a multifamily
residential development subject to this section 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 choose to not renew the lease
if 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) to not renew the lease, the landlord must serve a
written notice of proposed nonrenewal on the tenant at least 30 days
before the effective date of nonrenewal; and
(4) any written notice of a proposed nonrenewal that
is required to be provided under Subdivision (3) must specify the
date of the proposed nonrenewal.
(i) A tenant may not waive the protections provided by
Subsection (h).
(j) 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.
(k) 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-2)
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 4. Section 392.005(c), Local Government Code, is
amended 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, other than 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:
(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.
SECTION 5. (a) Section 303.042(d), Local Government Code,
as amended by this Act, applies only to a multifamily residential
development that is approved by a housing authority on or after the
effective date of this Act. A multifamily residential development
that is approved by a housing authority before the effective date of
this Act is governed by the law in effect on the date the
development was approved by the housing authority, and the former
law is continued in effect for that purpose.
(b) Section 303.042(d-1), Local Government Code, as added
by this Act, applies only to a multifamily residential development
that is approved by a public facility corporation on or after the
effective date of this Act. A multifamily residential development
that is approved by a public facility corporation before the
effective date of this Act is governed by the law in effect on the
date the development was approved by the public facility
corporation, and the former law is continued in effect for that
purpose.
(c) Section 303.042(d-2), Local Government Code, as added
by this Act, applies only to a multifamily residential development
that is acquired by a public facility corporation on or after the
effective date of this Act. A multifamily residential development
that is acquired by a public facility corporation before the
effective date of this Act is governed by the law in effect on the
date the development was acquired by the public facility
corporation, and the former law is continued in effect for that
purpose.
SECTION 6. This Act takes effect September 1, 2021.