89R2688 JAM-D
By: Parker S.B. No. 1492
A BILL TO BE ENTITLED
AN ACT
relating to housing finance corporations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter E, Chapter 341, Finance Code, is
amended by adding Section 341.407 to read as follows:
Sec. 341.407. LOANS TO HOUSING FINANCE CORPORATION. An
authorized lender, credit union, or other person involved in a
transaction subject to this title may not make a loan to a housing
finance corporation unless the corporation presents proof of
compliance with Section 394.031(c) or (d), Local Government Code,
as applicable.
SECTION 2. The heading to Section 394.031, Local Government
Code, is amended to read as follows:
Sec. 394.031. EXERCISE OF POWERS; AREA OF OPERATION.
SECTION 3. Section 394.031, Local Government Code, is
amended by adding Subsections (c) and (d) to read as follows:
(c) Subject to Subsection (d), the area in which a housing
finance corporation may exercise its powers is limited to:
(1) for a housing finance corporation sponsored by a
municipality under Section 394.011, the jurisdictional boundaries
of the municipality that sponsored the corporation;
(2) for a housing finance corporation sponsored by a
county under Section 394.011, the unincorporated areas of the
county that sponsored the corporation; or
(3) for a housing finance corporation sponsored by
more than one local government under Section 394.012:
(A) the jurisdictional boundaries of each
municipal sponsor of the corporation; and
(B) the unincorporated areas of each county
sponsor of the corporation.
(d) A housing finance corporation may exercise its powers
outside an area described by Subsection (c) only if a resolution or
order, as applicable, approving that exercise of power in the
outside area is adopted by the governing body of each sponsoring
local government and by the governing bodies of:
(1) each municipality that contains any part of the
outside area in which the corporation proposes to operate; and
(2) if proposing to operate in the unincorporated area
of a county, each county that contains any part of the outside area
in which the corporation proposes to operate.
SECTION 4. Sections 394.032(a) and (e), Local Government
Code, are amended to read as follows:
(a) Subject to the limitations of Sections 394.031(c) and
(d), a [A] housing finance corporation may:
(1) make contracts and other instruments as necessary
or convenient to the exercise of powers under this chapter;
(2) incur liabilities;
(3) borrow money at rates determined by the
corporation;
(4) issue notes, bonds, and other obligations; and
(5) secure any of its obligations by the mortgage or
pledge of all or part of the corporation's property, franchises,
and income.
(e) A housing finance corporation may delegate to the Texas
Department of Housing and Community Affairs the authority to act on
its behalf in the financing, refinancing, acquisition, leasing,
ownership, improvement, and disposal of home mortgages or
residential developments, within [and outside] the jurisdiction of
the housing finance corporation, including its authority to issue
bonds for those purposes.
SECTION 5. Section 394.039, Local Government Code, is
amended to read as follows:
Sec. 394.039. SPECIFIC POWERS RELATING TO FINANCIAL AND
PROPERTY TRANSACTIONS. A housing finance corporation may:
(1) lend money for its corporate purposes, invest and
reinvest its funds, and take and hold real or personal property as
security for the payment of the loaned or invested funds;
(2) mortgage, pledge, or grant security interests in
any residential development, home mortgage, note, or other property
in favor of the holders of bonds issued for those items;
(3) purchase, receive, lease, or otherwise acquire,
own, hold, improve, use, or deal in and with real or personal
property or interests in that property, [wherever the property is
located,] as required by the purposes of the corporation or as
donated to the corporation; and
(4) sell, convey, mortgage, pledge, lease, exchange,
transfer, and otherwise dispose of all or part of its property and
assets.
SECTION 6. Section 394.9025(b), Local Government Code, is
amended to read as follows:
(b) Following a public hearing by the governing body of the
applicable local government, a housing finance corporation may
issue bonds to finance a multifamily residential development to be
owned by the housing finance corporation in accordance with the
requirements of this chapter [Section 394.004] if the housing
finance corporation receives approval of the governing body of that
[the] local government.
SECTION 7. Subchapter Z, Chapter 394, Local Government
Code, is amended by adding Section 394.9026 to read as follows:
Sec. 394.9026. AUDIT REQUIREMENTS FOR MULTIFAMILY
RESIDENTIAL DEVELOPMENTS OWNED BY HOUSING FINANCE CORPORATIONS.
(a) In this section, "department" means the Texas Department of
Housing and Community Affairs.
(b) A housing finance corporation that owns a multifamily
residential development and claims an exemption for the development
under Section 394.905(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 housing finance corporation 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 housing finance
corporation is in compliance with the conditions imposed for the
exemption by this chapter.
(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 the housing finance corporation that
owns the development that is the subject of an audit, the
comptroller, and the governing body of the housing finance
corporation's sponsoring local government or governments; and
(3) describe in detail the nature of any failure to
comply with the conditions imposed for the exemption by this
chapter.
(d) If an audit report submitted under Subsection (b)
indicates noncompliance with the conditions imposed by this
chapter, a housing finance corporation:
(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 housing finance
corporation that failure to resolve the noncompliance will result
in the loss of the exemption under Section 394.905(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
housing finance corporation of the loss of the exemption due to
noncompliance with the conditions imposed by this chapter; and
(2) is considered to be in compliance with those
conditions if notice under Subdivision (1)(A) is not provided as
specified by Subparagraph (i) of that paragraph.
(e) An exemption under Section 394.905(a) does not apply for
a tax year in which the department determines that, based on an
audit conducted under Subsection (b), a multifamily residential
development that is owned by a housing finance corporation created
under this chapter is not in compliance with the conditions imposed
for that exemption by this chapter.
(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 a housing
finance corporation; or
(2) the date a newly built multifamily residential
development 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 housing finance corporation. 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 shall adopt forms and reporting
standards for the auditing process.
(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.
SECTION 8. Section 394.903, Local Government Code, is
amended to read as follows:
Sec. 394.903. TRANSFER [LOCATION] OF [RESIDENTIAL
DEVELOPMENT;] RESIDENTIAL DEVELOPMENT SITES. A [(a) A
residential development covered by this chapter must be located
within the local government.
[(b) The] local government may transfer any residential
development site to a housing finance corporation by sale or lease.
The governing body of the local government may authorize the
transfer by resolution without submitting the issue to the voters
and without regard to the requirements, restrictions, limitations,
or other provisions contained in any other general, special, or
local law. The site location is subject to the requirements of this
chapter [may be located wholly or partly inside or outside the local
government].
SECTION 9. Section 394.905, Local Government Code, is
amended to read as follows:
Sec. 394.905. EXEMPTION FROM TAXES AND FEES [TAXATION].
(a) Notwithstanding any other law, the [The] housing finance
corporation, all property owned by it, the income from the
property, all bonds issued by it, the income from the bonds, and the
transfer of the bonds are exempt, as public property used for public
purposes, from license fees, recording fees, and all other taxes
imposed by this state or any political subdivision of this state
only if the property is located in an area in which the housing
finance corporation is authorized to exercise its powers as
described by Section 394.031(c) or the exemption is approved by
each applicable governing body described by Section 394.031(d).
(b) The corporation is exempt from the franchise tax imposed
by Chapter 171, Tax Code, only if the corporation is exempted by
that chapter.
SECTION 10. (a) Sections 394.031(c) and (d), Local
Government Code, as added by this Act, apply only to the exercise of
power by a housing finance corporation made on or after the
effective date of this Act. An exercise of power made before the
effective date of this Act is governed by the law in effect on the
date the power was exercised, and the former law is continued in
effect for that purpose.
(b) Subject to Subsection (c) of this section, Section
394.905(a), Local Government Code, as added by this Act, applies
only to a tax or fee imposed for a tax year or calendar year,
respectively, that begins on or after the effective date of this
Act.
(c) Section 394.905(a), Local Government Code, as added by
this Act, applies only to a tax or fee to be imposed on a housing
finance corporation with respect to an occupied residential
development that is acquired by the corporation on or after the
effective date of this Act or with respect to a newly built
residential development for which a certificate of occupancy is
issued on or after the effective date of this Act.
(d) Notwithstanding Section 394.9026(f), Local Government
Code, as added by this Act, the initial audit report required to be
submitted under Section 394.9026(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 394.9026(f), Local
Government Code, as added by this Act; or
(2) June 1, 2026.
SECTION 11. 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.