By: Cole H.B. No. 4589
A BILL TO BE ENTITLED
AN ACT
relating to the operation and functions of the Texas Department of
Housing and Community Affairs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2306.004(3), Government Code, is amended
to read as follows:
(3) "Contract for Deed" means a seller-financed
contract for the conveyance of real property under which:
(A) legal title does not pass to the purchaser
until the consideration of the contract is fully paid to the seller;
and
(B) the seller's remedy for nonpayment is
recision or forfeiture or acceleration of any remaining payments
rather than judicial or nonjudicial foreclosure.
(3) "Contract for Deed" a seller-financed executory
contract for the conveyance of real property, as further defined in
chapter 5, subchapter D, Property Code, under which:
(A) upon recordation of the contract for deed in
the county in which the property is located, the contract for deed
shall be the same as a deed with a vendor's lien. The vendor's lien
is for the amount of the unpaid contract price, less any lawful
deductions, and may be enforced by foreclosure sale under Section
5.066, Property Code, or by judicial foreclosure. A general
warranty is implied unless otherwise limited by the recorded
executory contract, and the seller is not required to continue
insuring the property; and
(B) if the contract for deed has not been
recorded, the seller may enforce the remedy of rescission or of
forfeiture and acceleration as further outlined in Section 5.064
Property Code against the buyer in default under a contract for
deed; and
(C) for purposes of department loan programs,
satisfaction of this section raises the presumption that ownership
of a residential property under a contract for deed that has been
properly recorded as vested in the buyer.
SECTION 2. Section 2306.004(36), Government Code, is
amended to read as follows:
(36) "Urban area" means the area that is located
within the boundaries of a primary metropolitan statistical area or
a metropolitan statistical area other than an area described by
Subdivision (28-a)(B) or eligible for funding as described by
Subdivision (28-a)(C).
SECTION 3. Section 2306.057(b), Government Code, is amended
to read as follows:
Sec. 2306.057. COMPLIANCE ASSESSMENT REQUIRED FOR PROJECT
APPROVAL BY BOARD. (a) Before the board approves any project
application submitted under this chapter, the department, through
the division with responsibility for compliance matters, shall:
(1) assess:
(A) the compliance history in this state of the
applicant and any affiliate of the applicant with respect to all
applicable requirements; and
(B) the compliance issues associated with the
proposed project; and
(2) provide to the board a written report regarding
the results of the assessments described by Subdivision (1).
(b) The written report described by Subsection (a)(2) must
be included in the appropriate project file for board and
department review.may be a summary of any concerns or conditions
identified in the compliance assessment. Full project files shall
be made available to the board upon request.
(c) The board shall fully document and disclose any
instances in which the board approves a project application despite
any noncompliance associated with the project, applicant, or
affiliate.
(d) In assessing the compliance of the project, applicant,
or affiliate, the board shall consider any relevant compliance
information in the department's database created under Section
2306.081, including compliance information provided to the
department by the Texas State Affordable Housing Corporation.
SECTION 4. Section 2306.1112, Government Code, is amended
to read as follows:
Sec. 2306.1112. EXECUTIVE AWARD AND REVIEW ADVISORY
COMMITTEE. (a) The department shall establish an executive award
and review processadvisory committee to make recommendations to
the board regarding funding and allocation decisions.
(b) Prior to making recommendations to the Board, the
Director shall consult withThe advisory committee must include
representatives from the department's underwriting and compliance
functions and from the divisions responsible for administering
federal housing funds provided to the state under the
Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.
Section 12701 et seq.) and for administering low income housing tax
credits.
(c) The advisory committee is not subject to Chapter 2110.
(d) expired.
SECTION 5. Section 2306.1113, Government Code, is amended
by amending subchapter (a-2) to read as follows:
Sec. 2306.1113. EX PARTE COMMUNICATIONS. (a) During the
period beginning on the date project applications are filed in an
application cycle and ending on the date the board makes a final
decision with respect to the approval of any application in that
cycle, a member of the board may not communicate with the following
persons:
(1) an applicant or a related party, as defined by
state law, including board rules, and federal law; and
(2) any person who is:
(A) active in the construction, rehabilitation,
ownership, or control of a proposed project, including:
(i) a general partner or contractor; and
(ii) a principal or affiliate of a general
partner or contractor; or
(B) employed as a consultant, lobbyist, or
attorney by an applicant or a related party.
(a-1) Subject to Subsection (a-2), during the period
beginning on the date project applications are filed in an
application cycle and ending on the date the board makes a final
decision with respect to the approval of any application in that
cycle, an employee of the department may communicate about an
application with the following persons:
(1) the applicant or a related party, as defined by
state law, including board rules, and federal law; and
(2) any person who is:
(A) active in the construction, rehabilitation,
ownership, or control of the proposed project, including:
(i) a general partner or contractor; and
(ii) a principal or affiliate of a general
partner or contractor; or
(B) employed as a consultant, lobbyist, or
attorney by the applicant or a related party.
(a-2) A communication under Subsection (a-1) may be oral or
in any written form, including electronic communication through the
Internet, and must satisfy the following conditions:
(1) the communication must be restricted to technical
or administrative matters directly affecting the application; and
(2) the communication may must occur or be received on
the premises of the department during established business hours;
and
(32) a record of the communication must be maintained
and included with the application for purposes of board review and
must contain the following information:
(A) the date, time, and means of communication;
(B) the names and position titles of the persons
involved in the communication and, if applicable, the person's
relationship to the applicant;
(C) the subject matter of the communication; and
(D) a summary of any action taken as a result of
the communication.
SECTION 6. Sections 2306.142 and 2306.143, Government Code,
are repealed.
SECTION 7. Section 2306.0723, Government Code, is repealed.
SECTION 8. Subchapter NN, Government Code, is repealed.
SECTION 9. Section 2306.353, Government Code, is amended by
adding the following subchapters:
(d) In this section, "credit agreement" and "obligation"
have the meanings assigned by Section 1371.001, Government Code.
(e) Notwithstanding any other statute, the board may
exercise any of the rights or powers of the governing body of an
issuer under Chapter 1371, Government Code, and may enter into a
credit agreement under that chapter. An obligation issued under
this section is an obligation under Chapter 1371, Government Code,
but is not required to be rated as required by that chapter.
SECTION 10. Section 2306.6712, Government Code, is amended
by amending subchapter (d) to read as follows:
Sec. 2306.6712. AMENDMENT OF APPLICATION SUBSEQUENT TO
ALLOCATION BY BOARD. (a) If a proposed modification would
materially alter a development approved for an allocation of a
housing tax credit or other multifamily funding, the department
shall require the applicant to file a formal, written amendment to
the application on a form prescribed by the department.
(b) The director shall require the department staff
assigned to underwrite applications to evaluate the amendment and
provide an analysis and written recommendation to the board. The
appropriate monitor under Section 2306.6719 shall also provide to
the board an analysis and written recommendation regarding the
amendment.
(c) The board must vote on whether to approve the amendment.
The board by vote may reject an amendment and, if appropriate,
rescind the allocation of housing tax credits and reallocate the
credits to other applicants on the waiting list required by Section
2306.6711 if the board determines that the modification proposed in
the amendment:
(1) would materially alter the development in a
negative manner; or
(2) would have adversely affected the selection of the
application in the application round.
(d) Material alteration of a development includes:
(1) a significant modification of the site plan;
(2) a modification of the number of units or bedroom
mix of units;
(3) a substantive modification of the scope of tenant
services;
(4) a reduction of threefive percent or more in the
square footage of the unitsnet rentable area or common areas;
(5) a significant modification of the architectural
design of the development;
(6) a modification of the residential density of the
development of at least fiveten percent; and
(7) any other modification considered significant by
the boarddirector.
(e) In evaluating the amendment under this subsection, the
department staff shall consider whether the need for the
modification proposed in the amendment was:
(1) reasonably foreseeable by the applicant at the
time the application was submitted; or
(2) preventable by the applicant.
(f) For housing tax credit developments, Tthisthis section
shall be administered in a manner that is consistent with Section
42, Internal Revenue Code of 1986 (26 U.S.C. Section 42).
SECTION 11. Section 2306.6713 is amended as follows:
Sec. 2306.6713. HOUSING TAX CREDIT AND OWNERSHIP TRANSFERS
FOR MULTIFAMILY DEVELOPMENTS. (a) An applicant may not transfer an
allocation of housing tax credits or ownership of a development
supported with an allocation of housing tax credits or other
multifamily program funds from the department to any person other
than an affiliate unless the applicant obtains the director's
prior, written approval of the transfer.
(b) The director may not unreasonably withhold approval of
the transfer.
(c) An applicant seeking director approval of a transfer and
the proposed transferee must provide to the department a copy of any
applicable agreement between the parties to the transfer, including
any third-party agreement with the department.
(d) On request, an applicant seeking director approval of a
transfer must provide to the department:
(1) a list of the names of transferees and related
controlling parties; and
(2) detailedan explanationinformation describing
the experience and financial capacity of transferees and related
parties.
(e) When a transfer involves the sale of the development to
a new development owner, theThe development owner or proposed
transferee shall certify to the director that the tenants in the
development have been provided at least a 30-day written
notification of the proposed transfer. The director's approval of
the transfer may not occur prior to the end of the 30-day
notification period to the tenants.notified in writing of the
transfer before the 30th day preceding the date of submission of the
transfer request to the department.
(f) Not later than the fifth working day after the dateOnce
the department receives all necessary information under this
section, the department shall conduct a qualifications review of a
transferee to determine:
(1) the transferee's past compliance with all aspects
of the low income housing tax credit program or other multifamily
funding program, including land use restriction agreements; and
(2) the sufficiency of the transferee's experience
with developments supported with housing tax credit allocations or
other multifamily funds from the department.
(g) The transfer of ownership of a development supported
with an allocation of housing tax credits under this section does
not subject the development to a right of first refusal under
Section 2306.6726 if the transfer is made to a newly formed entity:
(1) that is under common control with the development
owner; and
(2) the primary purpose of the formation of which is to
facilitate the financing of the rehabilitation of the development
using assistance administered through a state financing program.
SECTION 12. Not later than March 1, 2026, the Texas
Department of Housing and Community Affairs shall adopt the rules
necessary to implement Section 2306.6712, Chapter 2306, Government
Code, as amended by this Act.
SECTION 13. The changes in law made by this Act relating to
the evaluation of applications for financial assistance
administered by the Texas Department of Housing and Community
Affairs apply only to an application submitted on or after the
effective date of this Act. An application submitted before the
effective date of this Act is governed by the law in effect when the
application was submitted, and the former law is continued in
effect for that purpose.
SECTION 14. This Act takes effect September 1, 2025.