89R2681 JAM-F
By: Gates H.B. No. 1595
A BILL TO BE ENTITLED
AN ACT
relating to public housing authorities; authorizing a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 392, Local Government
Code, is amended by amending Section 392.005 and adding Sections
392.0051 and 392.0052 to read as follows:
Sec. 392.005. TAX EXEMPTION. (a) The property of an
authority is public property used for essential public and
governmental purposes. Subject to Section 392.0051, the [The]
authority and the authority's property are exempt from all taxes
and special assessments of a municipality, a county, another
political subdivision, or the state.
(b) If a municipality, county, or political subdivision
furnishes improvements, services, or facilities for a housing
project, an authority may, in lieu of paying taxes or special
assessments, agree to reimburse in payments to the municipality,
county, or political subdivision an amount not greater than the
estimated cost to the municipality, county, or political
subdivision for the improvements, services, or facilities.
Sec. 392.0051. CONDITIONS FOR BENEFICIAL PROPERTY-BASED
TAX AND SPECIAL ASSESSMENT TREATMENT RELATING TO CERTAIN
MULTIFAMILY RESIDENTIAL DEVELOPMENTS. (a) In this section:
(1) "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).
(2) "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.
(3) "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.
(4) "Property-based exemption" means an exemption
from the taxes and special assessments imposed with respect to
property owned by an authority.
(5) "Public housing unit" means a residential unit for
which the landlord receives a public housing operating subsidy.
The term does not include a unit for which payments are made to the
landlord under the housing choice voucher program.
(6) "Rent" means any recurring fee or charge a tenant
is required to pay as a condition of occupancy, including a fee or
charge for the use of a common area or facility reasonably
associated with residential rental property.
(b) This section applies to [(c) An exemption under this
section for] a multifamily residential development which is owned
by an authority, a housing development corporation or a similar
entity created by a housing authority, and [other than] a public
facility corporation created by a housing authority under Chapter
303, except that this section does not apply to a multifamily
residential development that [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 income, adjusted for family size.
[(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
applies only if:
[(1) at least 50 percent of units in the multifamily
residential development are reserved for occupancy by individuals
and families earning not more than 80 percent of the area median
income, adjusted for family size; and
[(2) the development:
[(A)] has at least 20 percent of its residential
units reserved for public housing units;
(2) [(B)] participates in the Rental Assistance
Demonstration program administered by the United States Department
of Housing and Urban Development; or
(3) [(C) receives financial assistance administered
under Chapter 1372, Government Code, or receives financial
assistance from another type of tax-exempt bond; or
[(D)] receives financial assistance administered
under Subchapter DD, Chapter 2306, Government Code.
(c) Subject to Subsection (g) of this section, a
property-based exemption under Section 392.005(a) for a
multifamily residential development to which Subsection (b)
applies is available only if the development satisfies the other
requirements of this chapter and if:
(1) any applicable audit report requirements provided
by Section 392.0052 are satisfied, other than those imposed on a
multifamily residential development under the circumstances
described by Subsection (g);
(2) the authority submits to the Texas Department of
Housing and Community Affairs and to the county tax
assessor-collector for the applicable appraisal district in which
the exemption is sought a one-time exemption application on a form
promulgated by the comptroller;
(3) a portion of the units in the multifamily
residential development are reserved as follows:
(A) at least:
(i) 10 percent of the units are reserved for
occupancy as lower income housing units, as defined under Section
303.0425; and
(ii) 40 percent of the units are reserved
for occupancy as moderate income housing units, as defined under
Section 303.0425; or
(B) at least 20 percent of the units are reserved
for occupancy by:
(i) recipients of assistance administered
through a project-based rental assistance program; or
(ii) individuals or families earning not
more than 30 percent of the area median income, adjusted for family
size, as defined by the United States Department of Housing and
Urban Development;
(4) the authority 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 authority 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 Section 303.0421(c);
(5) a majority of the members of the board are not
elected representatives of the governing body of the political
subdivision or subdivisions that established the authority, 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, except that the approval described by this subdivision is
not required for a multifamily residential development that
reserves a portion of units as described by Subdivision (3)(B);
(6) for a multifamily residential development that is
acquired by an authority, the development is occupied or was
occupied within the two-year period preceding the date of the
acquisition and is not otherwise subject to a land use restriction
agreement under Section 2306.185, Government Code, and:
(A) not less than 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:
(i) beginning not later than the first
anniversary of the date of the acquisition; and
(ii) finishing not later than the third
anniversary of the date of the acquisition; or
(B) at least 25 percent of the units are reserved
for occupancy as lower income housing units;
(7) not less than 30 days before the date of final
approval of the development:
(A) the authority conducts, or obtains from a
professional entity that has experience underwriting affordable
multifamily residential developments and does not have a financial
interest in the applicable development, developer, or authority, an
underwriting assessment of the proposed development that allows the
authority to make a good faith determination that, for an occupied
multifamily residential development acquired by an authority or for
a newly constructed multifamily residential development owned by an
authority, the total annual amount of rent reduction on the
income-restricted residential units provided at the development
will be not less than 60 percent of the estimated amount of the
annual ad valorem taxes that would be imposed on the property
without an exemption from those taxes under Section 392.005(a) for
the second, third, and fourth years after the date of acquisition by
the authority or the date the certificate of occupancy is issued for
the development, as applicable; and
(B) the authority publishes on its Internet
website a copy of the underwriting assessment described by
Paragraph (A);
(8) the percentage of lower and moderate income
housing units reserved in each category of income-restricted
residential units in the development, based on the number of
bedrooms per unit, is the same as the percentage of each category of
income-restricted residential units reserved in the development as
a whole;
(9) the monthly rent charged per unit does not exceed:
(A) 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
(B) 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;
(10) the authority that owns the development does not:
(A) refuse to rent a residential unit to an
individual or family because the individual or family participates
in the housing choice voucher program; or
(B) 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;
(11) the authority publishes on its Internet website
information about the development's:
(A) compliance with the conditions prescribed by
this section; and
(B) policies regarding tenant participation in
the housing choice voucher program;
(12) the authority that owns the development:
(A) affirmatively markets available residential
units directly to individuals and families participating in the
housing choice voucher program; and
(B) notifies local housing authorities of the
development's acceptance of tenants in the housing choice voucher
program; and
(13) each lease agreement for a residential unit in
the development provides that:
(A) 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;
(B) the landlord may only choose to not renew the
lease if the tenant:
(i) committed one or more substantial
violations of the lease;
(ii) failed to provide required information
on the income, composition, or eligibility of the tenant's
household; or
(iii) committed repeated minor violations
of the lease that disrupt the livability of the property, adversely
affect the health and safety of any person or the right to quiet
enjoyment of the leased premises and related development
facilities, interfere with the management of the development, or
have an adverse financial effect on the development, including the
failure of the tenant to pay rent in a timely manner; and
(C) 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.
(d) In calculating the income of an individual or family for
a lower or moderate income housing unit, the authority 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.
(e) An authority may require an individual or family
participating in the housing choice voucher program to pay the
difference between the monthly rent for the applicable unit and the
amount of the monthly voucher if the amount of the voucher is less
than the rent.
(f) A tenant may not waive the protections provided by
Subsection (c)(13). An authority may adopt tenant protections that
are more protective of tenants than the tenant protections provided
by Subsection (c)(13).
(g) Notwithstanding Subsection (c), a multifamily
residential development that is acquired by an authority, that is
occupied or was occupied within the two-year period preceding the
date of the acquisition, and that is not otherwise subject to a land
use restriction agreement under Section 2306.185, Government Code,
is eligible for a property-based exemption under Section 392.005(a)
for:
(1) the one-year period following the date of the
acquisition, regardless of whether the development complies with
the conditions prescribed by Subsection (c); and
(2) a year following the year described by Subdivision
(1) only if the development comes into compliance with the
conditions prescribed by Subsection (c) not later than the first
anniversary of the date of the acquisition.
Sec. 392.0052. AUDIT REQUIREMENTS FOR CERTAIN MULTIFAMILY
RESIDENTIAL DEVELOPMENTS. (a) In this section:
(1) "Department" means the Texas Department of Housing
and Community Affairs.
(2) "Property-based exemption" has the meaning
assigned by Section 392.0051.
(b) An authority that claims a property-based exemption for
a multifamily residential development under Section 392.005(a)
must annually submit to the department and 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
authority and conducted by an independent auditor or compliance
expert with an established history of providing similar audits on
housing compliance matters, to:
(1) determine whether the authority is in compliance
with the conditions imposed for the exemption by Section 392.0051;
and
(2) identify the difference in the rent charged for
income-restricted residential units and the estimated maximum
market rents that could be charged for those units without the rent
or income restrictions.
(c) Not later than the 60th day after the date of receipt of
the audit conducted under Subsection (b), the department shall
examine the audit report and publish a report summarizing the
findings of the audit. The report must:
(1) be made available on the department's Internet
website;
(2) be issued to an authority that has an interest in a
development that is the subject of an audit, the comptroller, and
the governing body of the political subdivision or subdivisions
that established the authority; and
(3) describe in detail the nature of any failure to
comply with the conditions imposed for the property-based exemption
by Section 392.0051.
(d) If an audit report submitted under Subsection (b)
indicates noncompliance with Section 392.0051, an authority:
(1) must be given:
(A) written notice from the department or
appropriate appraisal district that:
(i) is provided not later than the 90th day
after the date a report has been submitted under Subsection (b);
(ii) specifies the reasons for
noncompliance;
(iii) contains at least one option for a
corrective action to resolve the noncompliance; and
(iv) informs the authority that failure to
resolve the noncompliance will result in the loss of the
property-based exemption under Section 392.005(a);
(B) a period of 60 days after the date notice is
received under this subdivision to resolve the matter that is the
subject of the notice; and
(C) if a matter that is the subject of a notice
provided under this subdivision is not resolved to the satisfaction
of the department and appropriate taxing authority during the
period provided by Paragraph (B), a second notice that informs the
authority of the loss of the property-based exemption due to
noncompliance with Section 392.0051; and
(2) is considered to be in compliance with Section
392.0051 if notice under Subdivision (1)(A) is not provided as
specified by Subparagraph (i) of that paragraph.
(e) Except as provided by Section 392.0051(g), a
property-based exemption under Section 392.005(a) does not apply
for a tax year in which the department determines that an authority
established under this chapter:
(1) has not submitted the audit report required by
this section; or
(2) based on an audit conducted under Subsection (b),
is not in compliance with the conditions imposed for the exemption
by Section 392.0051.
(f) The initial audit report required by Subsection (b) 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 an
authority; or
(2) the date a new multifamily residential development
owned by an authority first becomes occupied by one or more tenants.
(g) Subsequent audit reports following the issuance of the
initial audit report under Subsection (f) are due not later than
June 1 of each year.
(h) An independent auditor or compliance expert may not
prepare an audit under Subsection (b) for more than three
consecutive years for the same authority. After the third
consecutive audit, the independent auditor or compliance expert may
prepare an audit only after the second anniversary of the
preparation of the third consecutive audit.
(i) The department:
(1) shall adopt forms and reporting standards for the
auditing process;
(2) may charge a fee for the submission of an audit
report under this section in a reasonable amount necessary to cover
the expenses of administering this section; and
(3) may adopt rules necessary to implement this
section.
(j) An audit conducted under Subsection (b) is subject to
disclosure under Chapter 552, Government Code, except that
information containing tenant names, unit numbers, or other tenant
identifying information may be redacted.
[(d) For the purposes of Subsections (c) and (c-1), a
"public housing unit" is a residential 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 2. (a) Subject to Subsections (b), (c), and (d) of
this section, Section 392.005, Local Government Code, as amended by
this Act, and Section 392.0051, Local Government Code, as added by
this Act, apply only to a tax or special assessment imposed for a
tax year or calendar year, respectively, that begins on or after the
effective date of this Act.
(b) Subject to Subsections (c) and (d) of this section,
Section 392.005, Local Government Code, as amended by this Act, and
Section 392.0051, Local Government Code, as added by this Act,
apply only to a tax or special assessment to be imposed on a housing
authority with respect to an occupied multifamily residential
development that is acquired by the authority on or after the
effective date of this Act or with respect to a newly built
multifamily residential development for which a certificate of
occupancy is issued on or after the effective date of this Act.
(c) Section 392.0051(g), Local Government Code, as added by
this Act, applies only to an occupied multifamily residential
development that is acquired by a housing authority on or after the
effective date of this Act. An occupied multifamily residential
development that is acquired by a housing authority before the
effective date of this Act is governed by the law in effect on the
date the development was acquired by the housing authority, and the
former law is continued in effect for that purpose.
(d) Sections 392.0051(c)(10), (11), (12), and (13) and (f),
Local Government Code, as added by this Act, apply to a multifamily
residential development owned by a housing authority on or after
the effective date of this Act, regardless of the date the
development was acquired by the housing authority.
(e) Notwithstanding Section 392.0052(f), Local Government
Code, as added by this Act, the initial audit report required to be
submitted under Section 392.0052(b), Local Government Code, as
added by this Act, for an occupied multifamily residential
development that was acquired or for a newly built multifamily
residential development that first became occupied, as applicable,
before the effective date of this Act must be submitted by the later
of:
(1) the date established by Section 392.0052(f), Local
Government Code, as added by this Act; or
(2) June 1, 2026.
(f) Not later than January 1, 2026, the Texas Department of
Housing and Community Affairs shall adopt rules necessary to
implement Section 392.0052(i), Local Government Code, as added by
this Act.
SECTION 3. 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, 2025.