88R3102 JAM-F
By: Bettencourt S.B. No. 1278
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 if:
(1) the corporation or sponsor complies with all
applicable provisions of this chapter; and
(2) the development is located:
(A) in the area of operation of the sponsor, if
the sponsor is a housing authority; or
(B) in the jurisdictional boundaries of the
sponsor, if the sponsor is not a housing authority.
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 exemption under
Section 303.042(c) for an occupied multifamily residential
development that is acquired by a corporation and to which
Subsection (a) applies is available only if the development comes
into compliance with the requirements of Subsection (b), as
applicable, 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), 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; and
(3) 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) the mayor of any municipality or county judge
of any county for which the sponsor of the corporation was created,
as applicable, and the presiding officer of the board of trustees of
the school district in which the development is located are given
written notice not later than the 60th day before the date of the
acquisition of the property; and
(B) either:
(i) not less than 15 percent of the total
gross cost of the existing development in its entirety is expended
on rehabilitating, renovating, reconstructing, or repairing the
development, with initial expenditures and construction activities
beginning not later than the first anniversary of the date of the
acquisition and diligently continued until completed; or
(ii) 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.
(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 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 income housing units reserved in
each category of units in the 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 development as a
whole.
(d) 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.
(e) In calculating the income of an individual or family for
a lower income housing unit, the public facility user must consider
the income of each individual who will be living in the unit. If the
income of a tenant exceeds an applicable limit, 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 income
housing unit.
(f) 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.
(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) 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 the
multifamily residential development's acceptance of tenants in the
housing choice voucher program.
(i) A public facility user of a multifamily residential
development must:
(1) not later than April 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 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) 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 comptroller 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 residential units that
are not lower income housing units but that are reserved for
occupancy by an individual or family earning not more than 80
percent of the area median income, adjusted for family size,
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 reports submitted under Subsection (i) are public
information and 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 comptroller shall post a copy of the report received under
Subsection (i)(2) on its Internet website.
(k) 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.
(l) A tenant may not waive the protections provided by
Subsection (k).
(m) A public facility corporation must be given:
(1) written notice from the comptroller or appropriate
appraisal district of an instance of noncompliance with this
section; and
(2) 120 days after the day notice is received under
Subdivision (1) to cure the matter that is the subject of the
notice.
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) and (c) of this
section, Section 303.0421, Local Government Code, as added by this
Act, applies only to a tax imposed for a tax year beginning on or
after the effective date of this Act.
(b) Section 303.0421(c), Local Government Code, as added 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.
(c) 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.
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.