Texas 2025 - 89th Regular

Texas House Bill HB3534 Compare Versions

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1	1	By: Gates H.B. No. 3534
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6	6	A BILL TO BE ENTITLED
7	7	AN ACT
8	8	relating to multifamily residential developments financed, owned,
9	9	or operated by public facility corporations.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 303.0421(b), Local Government Code, is
12	12	amended to read as follows:
13	13	(b) Notwithstanding Section 303.042(c) and subject to
14	14	Subsections (c) and (d) of this section, an exemption under Section
15	15	303.042(c) for a multifamily residential development to which
16	16	Subsection (a) applies is available only if:
17	17	(1) the requirements under Sections [Section]
18	18	303.0425, 303.0426 and 303.0427 are met;
19	19	(2) at least:
20	20	(A) 10 percent of the units in the multifamily
21	21	residential development are reserved for occupancy as lower income
22	22	housing units, as defined under Section 303.0425; and
23	23	(B) 40 percent of the units in the multifamily
24	24	residential development are reserved for occupancy as moderate
25	25	income housing units, as defined under Section 303.0425;
26	26	(3) the corporation delivers to the presiding officer
27	27	of the governing body of each taxing unit in which the development
28	28	is to be located written notice of the development, at least 30 days
29	29	before the date:
30	30	(A) the corporation takes action to approve a new
31	31	multifamily residential development or the acquisition of an
32	32	occupied multifamily residential development; and
33	33	(B) of any public hearing required to be held
34	34	under this section;
35	35	(4) if a majority of the members of the board are not
36	36	elected officials, the development is approved by the governing
37	37	body of the municipality in which the development is located or, if
38	38	the development is not located in a municipality, the county in
39	39	which the development is located;
40	40	(5) for an occupied multifamily residential
41	41	development that is acquired by a corporation and not otherwise
42	42	subject to a land use restriction agreement under Section 2306.185,
43	43	Government Code:
44	44	(A) not less than 15 percent of the total gross
45	45	cost of the existing development, as shown in the settlement
46	46	statement, is expended on rehabilitating, renovating,
47	47	reconstructing, or repairing the development, with initial
48	48	expenditures and construction activities:
49	49	(i) beginning not later than the first
50	50	anniversary of the date of the acquisition; and
51	51	(ii) finishing not later than the third
52	52	anniversary of the date of the acquisition; or
53	53	(B) at least 25 percent of the units are reserved
54	54	for occupancy as lower income housing units, as defined under
55	55	Section 303.0425, and the development is approved by the governing
56	56	body of the municipality in which the development is located or, if
57	57	the development is not located in a municipality, the county in
58	58	which the development is located; and
59	59	(6) not less than 30 days before final approval of the
60	60	development:
61	61	(A) the corporation or corporation's sponsor
62	62	conducts, or obtains from a professional entity that has experience
63	63	underwriting affordable multifamily residential developments and
64	64	does not have a financial interest in the applicable development,
65	65	developer, or public facility user, an underwriting assessment of
66	66	the proposed development that allows the corporation to make a good
67	67	faith determination that:
68	68	(i) for an occupied multifamily residential
69	69	development acquired by a corporation, the total annual amount of
70	70	rent reduction on the income-restricted units provided at the
71	71	development will be not less than 60 percent of the estimated amount
72	72	of the annual ad valorem taxes that would be imposed on the property
73	73	without an exemption under Section 303.042(c) for the second,
74	74	third, and fourth years after the date of acquisition by the
75	75	corporation; and
76	76	(ii) for a newly constructed multifamily
77	77	residential development, the development would not be feasible
78	78	without the participation of the corporation; and
79	79	(B) the corporation publishes on its Internet
80	80	website a copy of the underwriting assessment described by
81	81	Paragraph (A).
82	82	SECTION 2. Section 303.0426, Local Government Code, is
83	83	amended by adding Subsection (a-1) and (e-1) and amending Sections
84	84	303.0426(b), (c), (d), (e), (f), and (g) to read as follows:
85	85	(a-1) This section does not apply to a multifamily
86	86	residential development that:
87	87	(1) has at least 20 percent of its residential
88	88	units reserved for public housing units;
89	89	(2) participates in the Rental Housing
90	90	Assistance Demonstration program administered by the United States
91	91	Department of Housing and Urban Development;
92	92	(3) receives financial assistance administered
93	93	under Subchapter 2306, Government Code.
94	94	(b) A public facility user of any [a] multifamily
95	95	residential development claiming an exemption under Section
96	96	303.042(c) [and to which Section 303.0421 applies] must annually
97	97	submit to the department and the chief appraiser of the appraisal
98	98	district in which the development is located an audit report for a
99	99	compliance audit, prepared at the expense of the public facility
100	100	user and conducted by an independent auditor or compliance expert
101	101	with an established history of providing similar audits on housing
102	102	compliance matters, to:
103	103	(1) determine whether the public facility user and
104	104	development is in compliance with Sections 303.0421 and 303.0425,
105	105	if applicable; and
106	106	(2) identify the difference in the rent charged for
107	107	income-restricted residential units and the estimated maximum
108	108	market rents that could be charged for those units without the rent
109	109	or income restrictions.
110	110	(c) Not later than the 60th day after the date of receipt of
111	111	the audit conducted under Subsection (b), the department shall
112	112	examine the audit report and publish a report summarizing the
113	113	findings of the audit. The report must:
114	114	(1) be made available on the department's Internet
115	115	website;
116	116	(2) be issued to a public facility user that has an
117	117	interest in a development that is the subject of an audit, the
118	118	comptroller, the applicable corporation, the governing body of the
119	119	corporation's sponsor, and, if the corporation's sponsor is a
120	120	housing authority, the elected officials who appointed the housing
121	121	authority's governing board; and
122	122	(3) describe in detail the nature of any failure to
123	123	comply with the requirements in Sections 303.0421 and 303.0425, if
124	124	applicable.
125	125	(d) If an audit report submitted under Subsection (b)
126	126	indicates noncompliance with Sections 303.0421(b)(2),
127	127	303.0421(b)(5), or 303.0425:
128	128	(1) a public facility user[:] [(1)]must be given[:
129	129	(A)] written notice from the department or appropriate appraisal
130	130	district that:
131	131	(A) [(i)]is provided not later than the 60th
132	132	[45th] day after the date a report has been submitted under
133	133	Subsection (b);
134	134	(B) [(ii)]specifies the reasons for
135	135	noncompliance;
136	136	(C) [(iii)]for noncompliance with Section
137	137	303.0425:
138	138	(i) contains at least one option for a
139	139	corrective action to resolve the noncompliance; and
140	140	(ii) [(iv)] informs the public facility
141	141	user that failure to resolve the noncompliance will result in the
142	142	loss of an exemption under Section 303.042(c); and
143	143	(2) If the audit report indicates noncompliance for
144	144	noncompliance with Section 303.0425, a public facility user must
145	145	also be given:
146	146	(A)[(B)] 60 days after the date notice is received
147	147	under [this] subdivision (1), to resolve the matter that is the
148	148	subject of the notice; and
149	149	(B)[(C)] if a matter that is the subject of a
150	150	notice provided under [this]subdivision (1) is not resolved to the
151	151	satisfaction of the department and the appropriate appraisal
152	152	district during the period provided by Paragraph (A) [(B)], a
153	153	second notice that informs the public facility user of the loss of
154	154	the exemption under Section 303.042(c) due to noncompliance with
155	155	Section [Sections 303.0421 and] 303.0425.[; and (2) is considered
156	156	to be incompliance with Sections 303.0421 and 303.0425 if notice
157	157	under Subdivision (1)(A) is not provided as specified by
158	158	Subparagraph (i) of that paragraph.]
159	159	(e) An exemption under Section 303.042(c) does not apply to
160	160	a multifamily residential development owned by a public facility
161	161	corporation for a tax year in which:
162	162	(1) the department determines that the public facility
163	163	user for the development is not in compliance with the audit report
164	164	requirements of Subsection (b); or
165	165	(2) based on the audit conducted under Subsection (b),
166	166	the department complies with the applicable notice requirements in
167	167	Subsection (d) and:
168	168	(i) the department determines that public
169	169	facility user or development is not in compliance with the
170	170	requirements of Section 303.0425 and the matter is not resolved to
171	171	the satisfaction of the department within 60 days after the date
172	172	notice is received under Subsection (d); or
173	173	(ii) the department determines that the
174	174	development is not in compliance with the requirements of Sections
175	175	303.0421(b)(2) or 303.0421(b)(5). [a multifamily residential
176	176	development that is owned by a public facility corporation created
177	177	under this chapter is determined by the department based on an audit
178	178	conducted under Subsection (b) to not be in compliance with the
179	179	requirements of Section 303.0421 or 303.0425.]
180	180	(e-1) Notwithstanding Subsection (e), a public facility
181	181	user and development is considered to be in compliance with:
182	182	(1) Section 303.0425 to the extent the applicable
183	183	notice required under Subsections (d)(1) and (d)(2) is not
184	184	provided; and
185	185	(2) Sections 303.0421 (b)(2) and (b)(5) to the extent
186	186	the applicable notice required under Subsection (d)(1) is not
187	187	provided.
188	188	(f) Notwithstanding Subsection (g), the [The] initial audit
189	189	report required by Subsection (b) is due not later than June 1 of
190	190	the year following the first anniversary of:
191	191	(1) the date of acquisition for an occupied
192	192	multifamily residential development that is acquired by a
193	193	corporation; or
194	194	(2) the date a new multifamily residential development
195	195	first becomes occupied by one or more tenants.
196	196	(g) An audit report required by this section is [Subsequent
197	197	audit reports following the issuance of the initial audit report
198	198	under Subsection (f) are] due not later than June 1 of each year.
199	199	SECTION 3. Subchapter B, Chapter 303, Local Government
200	200	Code, is amended by adding Section 303.0427 to read as follows:
201	201	Sec. 303.0427. ADDITIONAL REQUIREMENT FOR BENEFICIAL TAX
202	202	TREATMENT APPLICABLE TO CERTAIN MULTIFAMILY RESIDENTIAL
203	203	DEVELOPMENTS. (a) In this section, "public facility user" has the
204	204	meaning assigned by Section 303.0425.
205	205	(b) A multifamily residential development owned by a public
206	206	facility corporation to which Section 303.0426 applies is
207	207	ineligible for an exemption under Section 303.042(c) unless the
208	208	corporation, the corporation's sponsor, or public facility user for
209	209	the development submits to the Texas Department of Housing and
210	210	Community Affairs and to the chief appraiser for each appraisal
211	211	district in which the exemption is sought a one-time exemption
212	212	application on a form promulgated by the comptroller.
213	213	SECTION 4. (a) Section 303.0421(b), as amended by this Act,
214	214	applies to all multifamily residential developments, regardless of
215	215	the date they were acquired or approved by a public facility
216	216	corporation or sponsor of the public facility corporation.
217	217	(b) Notwithstanding Section 10(d)(1), Chapter 1169 (H.B.
218	218	2071), Acts of the 88th Legislature, Regular Session, 2023, Section
219	219	303.0426, Local Government Code, as amended by this Act, applies to
220	220	all multifamily residential developments claiming an exemption
221	221	under Section 303.042(c), Local Government Code, regardless of when
222	222	the developments were approved or acquired and regardless of
223	223	whether Sections 303.0421 and 303.0425, Local Government Code,
224	224	apply to those developments.
225	225	(b) Section 303.0427, Local Government Code, as added by
226	226	this Act, applies to all multifamily residential developments
227	227	claiming an exemption under Section 303.042(c), Local Government
228	228	Code, regardless of when the developments were approved or acquired
229	229	and regardless of whether Sections 303.0421 and 303.0425, Local
230	230	Government Code, apply to those developments.
231	231	SECTION 6. This Act takes effect immediately if it receives
232	232	a vote of two-thirds of all the members elected to each house, as
233	233	provided by Section 39, Article III, Texas Constitution. If this
234	234	Act does not receive the vote necessary for immediate effect, this
235	235	Act takes effect September 1, 2025.