88R20080 JAM-F
By: Jetton, Harris of Anderson, DeAyala, H.B. No. 2071
Cortez, et al.
Substitute the following for H.B. No. 2071:
By: Lozano C.S.H.B. No. 2071
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 (d) to read as follows:
(d) A corporation or a sponsor may finance, own, or operate
a multifamily residential development only if:
(1) the corporation or sponsor complies with all
applicable provisions of this chapter; and
(2) the development is located:
(A) inside the area of operation of the sponsor,
if the sponsor is a housing authority; or
(B) if the sponsor is not a housing authority,
inside the boundaries of the sponsor, without regard to whether the
sponsor is authorized to own property or provide services outside
the boundaries of the sponsor.
SECTION 2. The heading to Section 303.042, Local Government
Code, is amended to read as follows:
Sec. 303.042. TAXATION; EXEMPTION.
SECTION 3. Subchapter B, Chapter 303, Local Government
Code, is amended by adding Section 303.0421, and a heading is added
to that section to read as follows:
Sec. 303.0421. MULTIFAMILY RESIDENTIAL DEVELOPMENTS OWNED
BY PUBLIC FACILITY CORPORATIONS.
SECTION 4. Section 303.0421, Local Government Code, as
added by this Act, is amended by adding Subsections (a), (c), and
(d) to read as follows:
(a) This section applies to a multifamily residential
development that is owned by a corporation created under this
chapter, except that this section does not apply to a multifamily
residential development that:
(1) has at least 20 percent of its residential units
reserved for public housing units;
(2) participates in the Rental Assistance
Demonstration program administered by the United States Department
of Housing and Urban Development;
(3) receives financial assistance administered under
Chapter 1372, Government Code, or receives financial assistance
from another type of tax-exempt bond; or
(4) receives financial assistance administered under
Subchapter DD, Chapter 2306, Government Code.
(c) A multifamily residential development that is owned by a
corporation created under this chapter by a housing authority and
to which Subsection (a) applies must hold a public hearing, at a
meeting of the authority's governing body, to approve the
development.
(d) Notwithstanding Subsection (b), an occupied multifamily
residential development that is acquired by a corporation and to
which Subsection (a) applies is eligible for an exemption under
Section 303.042(c) for:
(1) the one-year period following the date of the
acquisition, regardless of whether the development complies with
the requirements of Subsection (b); and
(2) a year following the year described by Subdivision
(1) only if the development comes into compliance with the
requirements of Subsection (b) not later than the first anniversary
of the date of the acquisition.
SECTION 5. Sections 303.042(d), (e), and (f), Local
Government Code, are transferred to Section 303.0421, Local
Government Code, as added by this Act, redesignated as Sections
303.0421(b), (e), and (f), Local Government Code, and amended to
read as follows:
(b) Notwithstanding Section 303.042(c) and subject to
Subsections (c) and (d) of this section, an [(d) An] exemption under
Section 303.042(c) [this section] for a multifamily residential
development to which Subsection (a) applies is available [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 requirements under Section 303.0425 are met
[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 not more [less] than 80 percent of the area
median [family] income, adjusted for family size;
(3) the corporation delivers to the presiding officer
of the governing body of each taxing unit in which the development
is to be located written notice of the development, at least 30 days
before the date:
(A) the corporation takes action to approve a new
multifamily residential development or the acquisition of an
occupied multifamily residential development; and
(B) of any public hearing required to be held
under this section; and
(4) for an occupied multifamily residential
development that is acquired by a corporation and not otherwise
subject to a land use restriction agreement under Section 2306.185,
Government Code:
(A) not less than:
(i) 15 percent of the total gross cost of
the existing development, as shown in the settlement statement, is
expended on rehabilitating, renovating, reconstructing, or
repairing the development, with initial expenditures and
construction activities:
(a) beginning not later than the first
anniversary of the date of the acquisition; and
(b) finishing not later than the third
anniversary of the date of the acquisition; and
(ii) 20 percent of the units are reserved
for occupancy as lower income housing units, as defined under
Section 303.0425; or
(B) at least 50 percent of the units are reserved
for occupancy as lower income housing units, as defined under
Section 303.0425.
(e) For the purposes of Subsection (a) [(d)], a "public
housing unit" is a residential [dwelling] unit for which the
landlord 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.
(f) Notwithstanding Sections 303.042(a) and (b)
[Subsections (a) and (b)], during the period [of time] that a
corporation owns a particular public facility that is a multifamily
residential development:
(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 6. Subchapter B, Chapter 303, Local Government
Code, is amended by adding Section 303.0425 to read as follows:
Sec. 303.0425. ADDITIONAL REQUIREMENTS FOR BENEFICIAL TAX
TREATMENT RELATING TO CERTAIN PUBLIC FACILITIES. (a) In this
section:
(1) "Developer" means a private entity that constructs
a development, including the rehabilitation, renovation,
reconstruction, or repair of 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, as defined by the United States Department of Housing and
Urban Development.
(4) "Moderate income 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, as defined by the United States Department of Housing and
Urban Development.
(5) "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 that is a multifamily residential development.
(b) Not less than 10 percent of the residential units in a
development must be reserved as lower income housing units unless:
(1) a majority of the members of the board of the
corporation are elected officials; or
(2) the development is approved by the governing body
of the municipality in which the development is located or, if the
development is not located in a municipality, the county in which
the development is located.
(c) The percentage of lower and moderate income housing
units reserved in each category of units in the development, based
on the number of bedrooms per unit, must be the same as the
percentage of each category of housing units reserved in the
development as a whole.
(d) The monthly rent charged per unit may not exceed:
(1) for a lower income housing unit, 30 percent of 60
percent of the area median income, adjusted for family size, as
defined by the United States Department of Housing and Urban
Development; or
(2) for a moderate income housing unit, 30 percent of
80 percent of the area median income, adjusted for family size, as
defined by the United States Department of Housing and Urban
Development.
(e) In calculating the income of an individual or family for
a lower or moderate income housing unit, the public facility user
must use the definition of annual income described in 24 C.F.R.
Section 5.609, as implemented by the United States Department of
Housing and Urban Development. If the income of a tenant exceeds an
applicable limit at the time of the renewal of a lease agreement for
a residential unit, the provisions of Section 42(g)(2)(D), Internal
Revenue Code of 1986, apply in determining whether the unit may
still qualify as a lower or moderate income housing unit.
(f) The 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, if the assistance received by the
individual or family through the program is equal to or greater than
the amount established as the maximum monthly rent for the
applicable unit under Subsection (d); 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.
(g) 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.
(h) The 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 the
multifamily residential development's acceptance of tenants in the
housing choice voucher program.
(i) The public facility user must:
(1) not later than June 1 of each year, submit to the
chief appraiser of the appraisal district in which the development
is located an audit report for a compliance audit, prepared at the
expense of the public facility user and conducted by an independent
auditor or compliance expert with an established history of
providing similar audits on housing compliance matters, to
determine whether the public facility user is in compliance with
the requirements of this section; and
(2) before the initial occupancy of an unoccupied
development or not later than the 30th day after the date of
acquisition of an occupied development, submit to the Texas
Department of Housing and Community Affairs a report that includes,
for each 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 number of bedrooms;
(E) the total number of lower income housing
units, reported by number of bedrooms, by level of income
restriction, and by initial rent;
(F) the total number of moderate income housing
units, reported by number of bedrooms, by level of income
restriction, and by initial rent;
(G) the number of residential units rented by
individuals and families who participate in the housing choice
voucher program, reported by number of bedrooms;
(H) a copy of the ground lease; and
(I) a copy of the partnership agreement or other
governing agreement executed by the corporation for the public
facility, if any.
(j) The initial audit report required to be submitted under
Subsection (i)(1) by a public facility user to the chief appraiser
of the appraisal district is due not later than June 1 of the year
following the first anniversary of:
(1) the date of acquisition for an occupied
multifamily residential development that is acquired by a
corporation; or
(2) the date a new multifamily residential development
first becomes occupied by one or more tenants.
(k) An exemption under Section 303.042(c) does not apply for
a tax year in which a multifamily residential development that is
owned by a public facility corporation created under this chapter
and that is required to submit an audit report under Subsection
(i)(1):
(1) does not submit the required audit report; or
(2) submits an audit report that does not establish
that the development is in compliance with the requirements of this
section.
(l) The reports submitted under Subsection (i) are subject
to disclosure under Chapter 552, Government Code, except that
information containing tenant names, unit numbers, or other tenant
identifying information may be redacted. The Texas Department of
Housing and Community Affairs shall post a copy of the report
received under Subsection (i)(2) on its Internet website.
(m) Each lease agreement for a residential 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 development facilities;
(iii) interfere with the management of the
development; or
(iv) have an adverse financial effect on
the development, including the repeated failure of the tenant to
pay rent in a timely manner; and
(3) to not renew the lease, the landlord must serve a
written notice of proposed nonrenewal on the tenant not later than
the 30th day before the effective date of nonrenewal.
(n) A tenant may not waive the protections provided by
Subsection (m).
(o) A public facility user must be given:
(1) written notice from the Texas Department of
Housing and Community Affairs or appropriate appraisal district of
an instance of noncompliance with this section; and
(2) 60 days after the day notice is received under
Subdivision (1), to cure the matter that is the subject of the
notice.
(p) Requirements under this subchapter relating to the
reservation of income-restricted residential units or income
restrictions applicable to tenants of a multifamily residential
development subject to this subchapter must be documented in a land
use restriction agreement or a similar restrictive instrument that
is recorded in the real property records of the county in which the
development is located.
SECTION 7. Sections 392.005(c) and (d), Local Government
Code, are 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 residential 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, adjusted for family size.
(d) For the purposes of Subsection (c), a "public housing
unit" is a residential [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 8. (a) Subject to Subsections (b), (c), and (d) of
this section, Sections 303.0421 and 303.0425, Local Government
Code, as added by this Act, apply only to a tax imposed for a tax
year beginning on or after the effective date of this Act.
(b) Subject to Subsections (c) and (d) of this section,
Sections 303.0421 and 303.0425, Local Government Code, as added by
this Act, apply only to a multifamily residential development that
is approved on or after the effective date of this Act by a public
facility corporation or the sponsor of a public facility
corporation, in accordance with Chapter 303, Local Government Code.
A multifamily residential development that was approved by a public
facility corporation or the sponsor of 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
corporation or sponsor, and the former law is continued in effect
for that purpose.
(c) Subject to Subsection (d) of this section, Section
303.0421(d), Local Government Code, as added by this Act, applies
only to an occupied multifamily residential development that is
acquired by a public facility corporation on or after the effective
date of this Act. An occupied 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.
(d) Notwithstanding any other provision of this section:
(1) Sections 303.0425(g), (i), (j), (k), and (l),
Local Government Code, as added by this Act, apply to all
multifamily residential developments owned by a public facility
corporation; and
(2) the initial audit report required to be submitted
under Section 303.0425(i)(1), Local Government Code, as added by
this Act, by a public facility user of a multifamily residential
development that was approved or acquired by a public facility
corporation before the effective date of this Act must be submitted
by the later of:
(A) the date established by Section 303.0425(j),
Local Government Code, as added by this Act; or
(B) June 1, 2024.
SECTION 9. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2023.