Texas 2025 - 89th Regular

Texas Senate Bill SB2766 Compare Versions

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1	1	By: Cook S.B. No. 2766
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6	6	A BILL TO BE ENTITLED
7	7	AN ACT
8	8	relating to public housing authorities.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 392.002(9), (10), (11), and (12) Local
11	11	Government Code, is amended to read as follows:
12	12	(9) "Persons of low income" means individuals or
13	13	families earning less than 60 percent of the area median income,
14	14	adjusted for family size, as defined by the United States
15	15	Department of Housing and Urban Development [families or persons
16	16	who lack the amount of income that an authority considers necessary
17	17	to live, without financial assistance, in decent, safe, and
18	18	sanitary housing without overcrowding].
19	19	(10) "Persons of moderate income " means individuals
20	20	or families earning less than 80 percent of the area median income,
21	21	adjusted for family size, as defined by the United States
22	22	Department of Housing and Urban Development.
23	23	(11) "Rent" means any recurring fee or charge a tenant
24	24	is required to pay as a condition of occupancy, including but not
25	25	limited to, a fee or charge for the use of a common area or facility
26	26	reasonably associated with a multifamily residential rental
27	27	property.
28	28	(12) "Rent reduction" means the difference between:
29	29	(i) the total rent charged during the tax year for
30	30	the income-restricted units in the multifamily residential
31	31	development; and
32	32	(ii) the maximum total rent that could be charged
33	33	during the tax year for the same units in the absence of any rent or
34	34	income restrictions on such units.
35	35	SECTION 2. Section 392.005, Local Government Code, is
36	36	amended by adding Subsection (d), (e), and (f) and amended Sections
37	37	392.005(b), (c), and (c-1) to read as follows:
38	38	(b) If a municipality, county, or political subdivision
39	39	furnishes improvements, services, or facilities for a housing
40	40	project, an authority may, in lieu of paying taxes or special
41	41	assessments, agree to reimburse in payments to the municipality,
42	42	county, or political subdivision an amount not greater than the
43	43	estimated cost to the municipality, county, or political
44	44	subdivision for the improvements, services, or facilities,
45	45	provided that the governing body of each taxing unit in which the
46	46	housing project is to be located approves the payments.
47	47	(c) An exemption under this section for a multifamily
48	48	residential development which is owned by a housing development
49	49	corporation or a similar entity created by a housing authority,
50	50	other than a public facility corporation created by a housing
51	51	authority under Chapter 303, and which does not have at least 20
52	52	percent of its residential units reserved for public housing units,
53	53	applies only if:
54	54	(1) the authority holds a public hearing, at a regular
55	55	meeting of the authority's governing body, to approve the
56	56	development; and
57	57	(2) the development is approved by the governing body
58	58	of each taxing unit in which the development is located; and
59	59	(3) [(2)] at least:
60	60	(A) 10 [50] percent of the units in the
61	61	multifamily residential development are reserved for occupancy by
62	62	individuals and families earning less than 60 [80] percent of the
63	63	area median income, adjusted for family size; and
64	64	(B) 40 percent of the units in the multifamily
65	65	residential development are reserved for occupancy by individuals
66	66	and families earning less than 80 percent of the area median income,
67	67	adjusted for family size;
68	68	(4) the authority delivers to the presiding officer of
69	69	the governing body of each taxing unit in which the development is
70	70	to be located written notice of the development, at least 30 days
71	71	before the date:
72	72	(A) the authority takes action to approve a new
73	73	multifamily residential development or the acquisition of an
74	74	occupied multifamily residential development; and
75	75	(B) of any public hearing required to be held
76	76	under this section;
77	77	(5) the development is approved by the governing body
78	78	of each taxing unit in which the development is located;
79	79	(6) for an occupied multifamily residential
80	80	development that is acquired by a authority that was occupied at the
81	81	time of acquisition or was occupied at any time within the two-year
82	82	period preceding the date of the acquisition:
83	83	(A) not less than 15 percent of the total gross
84	84	cost of acquiring the existing development, as shown in the
85	85	settlement statement related to the acquisition, is expended on
86	86	rehabilitating, renovating, reconstructing, or repairing the
87	87	development, with initial expenditures and construction
88	88	activities:
89	89	(i) beginning not later than the first
90	90	anniversary of the date of the acquisition; and
91	91	(ii) finishing not later than the third
92	92	anniversary of the date of the acquisition; or
93	93	(B) at least 25 percent of the units are reserved for
94	94	occupancy as lower income housing units, as defined under Section
95	95	392.002(9), and at least 25 percent of the units in the development
96	96	are reserved for occupancy as moderate income housing units, as
97	97	defined under Section 392.002(10) the development is approved by
98	98	the governing body of the municipality in which the development is
99	99	located or, if the development is not located in a municipality, the
100	100	county in which the development is located; and
101	101	(7) not less than 30 days before final approval of the
102	102	development:
103	103	(A) the authority or authority's sponsor
104	104	conducts, or obtains from a professional entity that has experience
105	105	underwriting affordable multifamily residential developments and
106	106	does not have a financial interest in the applicable development,
107	107	developer, or public facility user, an underwriting assessment of
108	108	the proposed development that allows the authority to make a good
109	109	faith determination that:
110	110	(i) for an occupied multifamily residential
111	111	development acquired by a authority, the total annual amount of
112	112	rent reduction on the income-restricted units provided at the
113	113	development will be not less than 60 percent of the estimated amount
114	114	of the annual ad valorem taxes that would be imposed on the property
115	115	without an exemption under Section 392.005(c) for the second,
116	116	third, and fourth years after the date of acquisition by the
117	117	corporation; and
118	118	(ii) for a newly constructed multifamily
119	119	residential development, the total annual amount of rent reduction
120	120	on the income-restricted units provided at the development will be
121	121	not less than 60 percent of the estimated amount of the annual ad
122	122	valorem taxes that would be imposed on the property without an
123	123	exemption under Section 392.005(c) for the second, third, and
124	124	fourth years after the date of acquisition by the authority; and
125	125	(B) the authority publishes on its Internet
126	126	website a copy of the underwriting assessment described by
127	127	Paragraph (A).
128	128	(d) A multifamily residential development that is owned by a
129	129	public facility corporation created under this chapter by a housing
130	130	authority and to which Subsection (a) applies must hold a public
131	131	hearing, at a meeting of the authority's governing body, to approve
132	132	the development.
133	133	(e) Notwithstanding Subsection (b), an occupied multifamily
134	134	residential development that is acquired by a authority and to
135	135	which Subsection (c) applies is eligible for an exemption under
136	136	Section 303.042(c) for:
137	137	(1) the one-year period following the date of the
138	138	acquisition, regardless of whether the development complies with
139	139	the requirements of Subsection (b); and
140	140	(2) a year following the year described by Subdivision
141	141	(1) only if the development comes into compliance with the
142	142	requirements of Subsection (b) not later than the first anniversary
143	143	of the date of the acquisition.
144	144	(f) For the purposes of Subsection (a), a "public housing
145	145	unit" is a residential unit for which the landlord receives a public
146	146	housing operating subsidy. It does not include a unit for which
147	147	payments are made to the landlord under the Section 8, United States
148	148	Housing Act of 1937 (42 U.S.C. Section 1437f).
149	149	(c-1) An exemption under this section for a multifamily
150	150	residential development which is owned by a public facility
151	151	corporation created by a housing authority under Chapter 303
152	152	applies only if:
153	153	(1) the development is approved by the governing body
154	154	of each taxing unit in which the development is located;
155	155	(2) at least:
156	156	(A)10 [50] percent of the units in the
157	157	multifamily residential development are reserved for occupancy by
158	158	individuals and families earning less [not more] than 60 [80]
159	159	percent of the area median income, adjusted for family size; and
160	160	(B) 40 percent of the units in the multifamily
161	161	residential development are reserved for occupancy by persons of
162	162	low income
163	163	(3) [(2)] the development:
164	164	(A) has at least 20 percent of its residential
165	165	units reserved for public housing units;
166	166	(B) participates in the Rental Assistance
167	167	Demonstration program administered by the United States Department
168	168	of Housing and Urban Development;
169	169	(C) receives financial assistance administered
170	170	under Chapter 1372, Government Code, or receives financial
171	171	assistance from another type of tax-exempt bond; or
172	172	(D) receives financial assistance administered
173	173	under Subchapter DD, Chapter 2306, Government Code.
174	174	SECTION 3.Subchapter A, Chapter 392, Local Government Code,
175	175	is amended by adding Section 392.0051, and a heading is added to
176	176	that section to read as follows: Sec. 392.0051. ADDITIONAL
177	177	REQUIREMENTS FOR BENEFICIAL TAX TREATMENT RELATING TO CERTAIN
178	178	PUBLIC HOUSING AUTHORITIES.
179	179	Sec. 392.0051. ADDITIONAL REQUIREMENTS FOR BENEFICIAL TAX
180	180	TREATMENT RELATING TO CERTAIN PUBLIC HOUSING AUTHORITIES. (a) In
181	181	this section:
182	182	(1) "Developer" means a private entity that constructs
183	183	a development, including the rehabilitation, renovation,
184	184	reconstruction, or repair of a development.
185	185	(2) "Housing choice voucher program" means the housing
186	186	choice voucher program under Section 8, United States Housing Act
187	187	of 1937 (42 U.S.C. Section 1437f).
188	188	(3) "Lower income housing unit" means a residential
189	189	unit reserved for occupancy by an individual or family earning not
190	190	more than 60 percent of the area median income, adjusted for family
191	191	size, as defined by the United States Department of Housing and
192	192	Urban Development.
193	193	(4) "Moderate income housing unit" means a residential
194	194	unit reserved for occupancy by an individual or family earning not
195	195	more than 80 percent of the area median income, adjusted for family
196	196	size, as defined by the United States Department of Housing and
197	197	Urban Development.
198	198	(b) The percentage of lower and moderate income housing
199	199	units reserved in each category of units in the development, based
200	200	on the number of bedrooms per unit, must be the same as the
201	201	percentage of each category of housing units reserved in the
202	202	development as a whole.
203	203	(c) The monthly rent charged per unit may not exceed:
204	204	(1) for a lower income housing unit, 30 percent of 60
205	205	percent of the area median income, adjusted for family size, as
206	206	defined by the United States Department of Housing and Urban
207	207	Development; or
208	208	(2) for a moderate income housing unit, 30 percent of
209	209	80 percent of the area median income, adjusted for family size, as
210	210	defined by the United States Department of Housing and Urban
211	211	Development.
212	212	(d) In calculating the income of an individual or family for
213	213	a lower or moderate income housing unit, the authority must use the
214	214	definition of annual income described in 24 C.F.R. Section 5.609,
215	215	as implemented by the United States Department of Housing and Urban
216	216	Development. If the income of a tenant exceeds an applicable limit
217	217	at the time of the renewal of a lease agreement for a residential
218	218	unit, the provisions of Section 42(g)(2)(D), Internal Revenue Code
219	219	of 1986, apply in determining whether the unit may still qualify as
220	220	a lower or moderate income housing unit.
221	221	(e) The authority may not:
222	222	(1) refuse to rent a residential unit to an individual
223	223	or family because the individual or family participates in the
224	224	housing choice voucher program; or
225	225	(2) use a financial or minimum income standard that
226	226	requires an individual or family participating in the housing
227	227	choice voucher program to have a monthly income of more than 250
228	228	percent of the individual's or family's share of the total monthly
229	229	rent payable for a unit.
230	230	(f) An authority may require an individual or family
231	231	participating in the housing choice voucher program to pay the
232	232	difference between the monthly rent for the applicable unit and the
233	233	amount of the monthly voucher if the amount of the voucher is less
234	234	than the rent.
235	235	(g) An authority that owns or leases to a public facility
236	236	user a public facility used as a multifamily residential
237	237	development shall publish on its Internet website information about
238	238	the development's:
239	239	(1) compliance with the requirements of this section;
240	240	and
241	241	(2) policies regarding tenant participation in the
242	242	housing choice voucher program.
243	243	(h) The public facility user shall:
244	244	(1) affirmatively market available residential units
245	245	directly to individuals and families participating in the housing
246	246	choice voucher program; and
247	247	(2) notify local housing authorities of the
248	248	multifamily residential development's acceptance of tenants in the
249	249	housing choice voucher program.
250	250	(i) Each lease agreement for a residential unit in a
251	251	multifamily residential development subject to this section must
252	252	provide that:
253	253	(1) the landlord may not retaliate against the tenant
254	254	or the tenant's guests by taking an action because the tenant
255	255	established, attempted to establish, or participated in a tenant
256	256	organization;
257	257	(2) the landlord may only choose to not renew the lease
258	258	if the tenant:
259	259	(A) is in material noncompliance with the lease,
260	260	including nonpayment of rent;
261	261	(B) committed one or more substantial violations
262	262	of the lease;
263	263	(C) failed to provide required information on the
264	264	income, composition, or eligibility of the tenant's household; or
265	265	(D) committed repeated minor violations of the
266	266	lease that:
267	267	(i) disrupt the livability of the property;
268	268	(ii) adversely affect the health and safety
269	269	of any person or the right to quiet enjoyment of the leased premises
270	270	and related development facilities;
271	271	(iii) interfere with the management of the
272	272	development; or
273	273	(iv) have an adverse financial effect on
274	274	the development, including the failure of the tenant to pay rent in
275	275	a timely manner; and
276	276	(3) to not renew the lease, the landlord must serve a
277	277	written notice of proposed nonrenewal on the tenant not later than
278	278	the 30th day before the effective date of nonrenewal.
279	279	(j) A tenant may not waive the protections provided by
280	280	Subsection (i).
281	281	(k) Requirements under this subchapter relating to the
282	282	reservation of income-restricted residential units or income
283	283	restrictions applicable to tenants of a multifamily residential
284	284	development subject to this subchapter must be documented in a land
285	285	use restriction agreement or a similar restrictive instrument that:
286	286	(1) ensures that the applicable restrictions are in
287	287	effect for not less than 10 years; and
288	288	(2) is recorded in the real property records of the
289	289	county in which the development is located.
290	290	(l) An agreement or instrument recorded under Subsection
291	291	(k) may be terminated if the development that is the subject of the
292	292	agreement or instrument:
293	293	(1) is the subject of a foreclosure sale; or
294	294	(2) becomes ineligible for an exemption under Section
295	295	303.042(c) for a reason other than the failure to comply with
296	296	restrictions recorded in the agreement or instrument.
297	297	SECTION 4. Sections 392.042(a), Local Government Code, are
298	298	amended to read as follows:
299	299	(a) In this section:
300	300	(1) [,] "Housing [housing] project" includes, in
301	301	addition to the works or undertakings described by [Subdivision (6)
302	302	of] Section 392.002(6) [392.002]:
303	303	(A) [(1)] a work or undertaking implemented for a
304	304	reason described by [Subdivision (6) of] Section 392.002(6)
305	305	[392.002] that is financed in any way by public funds or tax-exempt
306	306	revenue bonds; or
307	307	(B) [(2)] a building over which the housing
308	308	authority has jurisdiction and of which a part is reserved for
309	309	occupancy by persons who receive income or rental supplements from
310	310	a governmental entity.
311	311	SECTION 6. Subchapter D, Chapter 392, Local Government
312	312	Code, is amended by adding Section 392.0625 to read as follows:
313	313	Sec. 392.0625. AUDIT REQUIREMENTS. (a) In this section:
314	314	(1) "Department" means the Texas Department of Housing
315	315	and Community Affairs.
316	316	(2) "Property-based exemption" means an exemption
317	317	from the taxes and fees imposed with respect to property owned by a
318	318	authority or with respect to income from that property.
319	319	(b) An authority that claims a property-based exemption for
320	320	a multifamily residential development under Section 392.005 must
321	321	annually submit to the department and the chief appraiser of the
322	322	appraisal district in which the development is located an audit
323	323	report for a compliance audit, prepared at the expense of the
324	324	authority conducted by an independent auditor or compliance expert
325	325	with an established history of providing similar audits on housing
326	326	compliance matters, to:
327	327	(1) determine whether the authority is in compliance
328	328	with the conditions imposed for the exemption by Sections 392.005
329	329	and 392.0051(d); and
330	330	(2) identify the difference in the rent charged for
331	331	income-restricted residential units and the estimated maximum
332	332	market rents that could be charged for those units without the rent
333	333	or income restrictions.
334	334	(c) Not later than the 60th day after the date of receipt of
335	335	the audit conducted under Subsection (b), the department shall
336	336	examine the audit report and publish a report summarizing the
337	337	findings of the audit. The report must:
338	338	(1) be made available on the department's Internet
339	339	website;
340	340	(2) be issued to a authority that has an interest in a
341	341	development that is the subject of an audit, the comptroller, and
342	342	the governing body of the authority 's sponsoring local government
343	343	or governments; and
344	344	(3) describe in detail the nature of any failure to
345	345	comply with the conditions imposed for the property-based exemption
346	346	by Section 392.005(a) or 392.0051.
347	347	(d) If an audit report submitted under Subsection (b)
348	348	indicates noncompliance with Section 392.005(a) or 392.0051, an
349	349	authority:
350	350	(1) must be given:
351	351	(A) written notice from the department or
352	352	appropriate appraisal district that:
353	353	(i) is provided not later than the 90th day
354	354	after the date a report has been submitted under Subsection (b);
355	355	(ii) specifies the reasons for
356	356	noncompliance;
357	357	(iii) contains at least one option for a
358	358	corrective action to resolve the noncompliance; and
359	359	(iv) informs the authority that failure to
360	360	resolve the noncompliance will result in the loss of the
361	361	property-based exemption under Section 392.905;
362	362	(B) a period of 60 days after the date notice is
363	363	received under this subdivision to resolve the matter that is the
364	364	subject of the notice; and
365	365	(C) if a matter that is the subject of a notice
366	366	provided under this subdivision is not resolved to the satisfaction
367	367	of the department and appropriate taxing authority during the
368	368	period provided by Paragraph (B), a second notice that informs the
369	369	authority of the loss of the property-based exemption due to
370	370	noncompliance with Section 392.005 or 392.0051, as applicable; and
371	371	(2) is considered to be in compliance with Sections
372	372	392.005 or 392.0051 if notice under Subdivision (1)(A) is not
373	373	provided as specified by Subparagraph (i) of that paragraph.
374	374	(e) Except as provided by Section 392.0051, a
375	375	property-based exemption under Section 392.005(a) does not apply
376	376	for a tax year in which a multifamily residential development that
377	377	is owned by a authority created under this chapter is determined by
378	378	the department based on an audit conducted under Subsection (b) to
379	379	not be in compliance with the conditions imposed for that exemption
380	380	by Sections 392.005 or 392.0051.
381	381	(f) The initial audit report required by Subsection (b) is
382	382	due not later than June 1 of the year following the first
383	383	anniversary of:
384	384	(1) the date of acquisition for an occupied
385	385	multifamily residential development that is acquired by a
386	386	authority; or
387	387	(2) the date a new multifamily residential development
388	388	first becomes occupied by one or more tenants.
389	389	(g) Subsequent audit reports following the issuance of the
390	390	initial audit report under Subsection (f) are due not later than
391	391	June 1 of each year.
392	392	(h) An independent auditor or compliance expert may not
393	393	prepare an audit under Subsection (b) for more than three
394	394	consecutive years for the same authority. After the third
395	395	consecutive audit, the independent auditor or compliance expert may
396	396	prepare an audit only after the second anniversary of the
397	397	preparation of the third consecutive audit.
398	398	(i) The department:
399	399	(1) shall adopt forms and reporting standards for the
400	400	auditing process;
401	401	(2) may charge a fee for the submission of an audit
402	402	report under this section in a reasonable amount necessary to cover
403	403	the expenses of administering this section; and
404	404	(3) may adopt rules necessary to implement this
405	405	section.
406	406	(j) An audit conducted under Subsection (b) is subject to
407	407	disclosure under Chapter 552, Government Code, except that
408	408	information containing tenant names, unit numbers, or other tenant
409	409	identifying information may be redacted.
410	410	SECTION 7. Section 392.066, Local Government Code, is
411	411	amended by adding Subsection (f) to read as follows:
412	412	(f) An authority that creates a public facility corporation
413	413	under Chapter 303 must submit to the Texas Department of Housing and
414	414	Community Affairs for each year that the corporation remains in
415	415	operation a certification providing:
416	416	(1) the name of the corporation;
417	417	(2) the names of all the developments owned by an
418	418	authority;
419	419	(3) the names of all subsidiaries of an authority;
420	420	(4) the names of any private partners involved in the
421	421	development;
422	422	(5) the areas in which the corporation operates; and
423	423	(6) any other information required by the department.
424	424	SECTION 8. (a) Subject to Subsections (b) and (c) of this
425	425	section, Sections 392.005(c), (d),(e), and (f), Local Government
426	426	Code, as amended by this Act, apply only to a tax or special
427	427	assessment imposed for a tax year or calendar year, respectively,
428	428	beginning on or after the effective date of this Act.
429	429	(b) Sections 392.005(c), Local Government Code, as amended
430	430	by this Act, and Section 392.0051, Local Government Code, as added
431	431	by this Act, apply only to an occupied multifamily residential
432	432	development that is acquired by a housing authority on or after the
433	433	effective date of this Act or with respect to a newly built
434	434	multifamily residential development for which a certificate of
435	435	occupancy is issued on or after the effective date of this Act.
436	436	(c) Notwithstanding any other provision of this section,
437	437	Section 392.0625, Local Government Code, as added by this Act,
438	438	applies to all multifamily residential developments with respect to
439	439	which an exemption is sought or claimed under Section 392.005,
440	440	Local Government Code, as amended by this Act.
441	441	SECTION 9. This Act takes effect September 1, 2025.