Texas 2025 - 89th Regular

Texas Senate Bill SB2767 Compare Versions

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1	1	By: Cook S.B. No. 2767
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6	6	A BILL TO BE ENTITLED
7	7	AN ACT
8	8	relating to public facility corporations.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 303.041, Local Government Code, is
11	11	amended by adding Subsection (e) to read as follows:
12	12	(e) Notwithstanding Subsections (a)(3) and (d), a
13	13	corporation may not convey, assign, or transfer a tax exemption
14	14	granted under this subchapter to another entity unless
15	15	substantially all of the assets of the taxable entity are conveyed,
16	16	assigned, or transferred in the same transaction.
17	17	SECTION 2. Section 303.0421, Local Government Code, is
18	18	amended by amending Subsection (b) and adding Subsections (g-1) and
19	19	(j) to read as follows:
20	20	(b) Notwithstanding Section 303.042(c) and subject to
21	21	Subsections (c) and (d) of this section, an exemption under Section
22	22	303.042(c) for a multifamily residential development to which
23	23	Subsection (a) applies is available only if:
24	24	(1) the requirements under Sections [Section]
25	25	303.0425 and 303.0426 are met;
26	26	(2) at least:
27	27	(A) 10 percent of the units in the multifamily
28	28	residential development are reserved for occupancy as lower income
29	29	housing units, as defined under Section 303.0425; and
30	30	(B) 40 percent of the units in the multifamily
31	31	residential development are reserved for occupancy as moderate
32	32	income housing units, as defined under Section 303.0425;
33	33	(3) the corporation delivers to the presiding officer
34	34	of the governing body of each taxing unit in which the development
35	35	is to be located written notice of the development, at least 30 days
36	36	before the date:
37	37	(A) the corporation takes action to approve a new
38	38	multifamily residential development or the acquisition of an
39	39	occupied multifamily residential development; and
40	40	(B) of any public hearing required to be held
41	41	under this section;
42	42	(4) [if a majority of the members of the board are not
43	43	elected officials,] the development is approved by the governing
44	44	body of each taxing unit [the municipality] in which the
45	45	development is located [or, if the development is not located in a
46	46	municipality, the county in which the development is located];
47	47	(5) for [an occupied] a multifamily residential
48	48	development that is acquired by a corporation [and not otherwise
49	49	subject to a land use restriction agreement under Section 2306.185,
50	50	Government Code] that was occupied at the time of acquisition or was
51	51	occupied at any time within the two-year period preceding the date
52	52	of the acquisition:
53	53	(A) at least 10 percent of the units in the
54	54	development are reserved for occupancy as lower income housing
55	55	units, as defined under Section 303.0425; at least 40 percent of the
56	56	units in the development are reserved for occupancy as moderate
57	57	income housing units, as defined under Section 303.0425; and not
58	58	less than 15 percent of the total gross cost of acquiring the
59	59	[existing] development, as shown in the settlement statement
60	60	related to the acquisition, is expended on rehabilitating,
61	61	renovating, reconstructing, or repairing the development, with
62	62	initial expenditures and construction activities:
63	63	(i) beginning not later than the first
64	64	anniversary of the date of the acquisition; and
65	65	(ii) finishing not later than the third
66	66	anniversary of the date of the acquisition; or
67	67	(B) at least at least 25 percent of the units are
68	68	reserved for occupancy as lower income housing units, as defined
69	69	under Section 303.0425, [and the development is approved by the
70	70	governing body of the municipality in which the development is
71	71	located or, if the development is not located in a municipality, the
72	72	county in which the development is located];, and at least 25
73	73	percent of the units in the development are reserved for occupancy
74	74	as moderate income housing units, as defined under Section 303.0425
75	75	[the development is approved by the governing body of the
76	76	municipality in which the development is located or, if the
77	77	development is not located in a municipality, the county in which
78	78	the development is located; and];
79	79	(6) not less than 30 days before final approval of the
80	80	development:
81	81	(A) the corporation or corporation's sponsor
82	82	conducts, or obtains from a professional entity that has experience
83	83	underwriting affordable multifamily residential developments and
84	84	does not have a financial interest in the applicable development,
85	85	developer, or public facility user, an underwriting assessment of
86	86	the proposed development that [allows the corporation to make a
87	87	good faith determination that] is dated within six months of the
88	88	corporation 's approval of the development;
89	89	(7) not less than 30 days before final approval of the
90	90	development, the corporation or corporation's sponsor makes a good
91	91	faith determination based on the underwriting assessment that
92	92	[(i) for an occupied multifamily
93	93	residential development acquired by the corporation,] the total
94	94	annual amount of rent reduction [on the income-restricted units
95	95	provided] at the development will be not less than 60 percent of the
96	96	estimated amount of the annual ad valorem taxes that would be
97	97	imposed on the property [without an exemption under Section
98	98	303.042(c) for the second, third, and fourth years after the date of
99	99	acquisition by the corporation; and] in the same tax year if the
100	100	property did not have the income restrictions and did not have an
101	101	exemption from those taxes under Section 303.042(c):
102	102	(A) for occupied developments acquired by the
103	103	corporation, for each of the third, fourth, and fifth tax years
104	104	after the date of acquisition; and
105	105	(B) for all other developments, for each of the
106	106	second, third, and fourth tax years after the development first
107	107	becomes occupied by one or more tenants while owned by the
108	108	corporation; and
109	109	[(ii) for a newly constructed multifamily
110	110	residential development, the development would not be feasible
111	111	without the participation of the corporation; and]
112	112	(8) [(B)] the corporation publishes on its Internet
113	113	website a copy of the underwriting assessment described by
114	114	Paragraph (A) Subdivision (6).
115	115	(g-1) This subsection and Subsections (f) and (g) expire
116	116	December 31, 2027.
117	117	(j) A corporation or a sponsor of a corporation may not
118	118	accept a payment from a public facility user or developer in
119	119	exchange for the corporation's or sponsor's participation in a
120	120	multifamily residential development unless the corporation or
121	121	sponsor obtains approval for the payment from each taxing unit in
122	122	which the development is to be located.
123	123	SECTION 3. Sections 303.0421(h) and 303.0421(i), Local
124	124	Government Code, are repealed.
125	125	SECTION 4. Chapter 303, Local Government Code, is amended
126	126	by adding Section 303.0422 to read as follows:
127	127	Sec. 303.0422. RENT REDUCTION REQUIREMENTS FOR BENEFICIAL
128	128	TAX TREATMENT RELATING TO CERTAIN MULTIFAMILY RESIDENTIAL
129	129	DEVELOPMENTS.
130	130	(a) This section does not apply to a multifamily development
131	131	that:
132	132	(1) has at least 20 percent of its residential units
133	133	reserved for public housing units;
134	134	(2) participates in the Rental Housing Assistance
135	135	Demonstration program administered by the United States Department
136	136	of Housing and Urban Development;and
137	137	(3) receives financial assistance administered under
138	138	Subchapter 2306, Government Code.
139	139	(b) An exemption under Section 303.042(c) does not apply in
140	140	a tax year to a multifamily residential development if the
141	141	difference in the rent charged for the income-restricted
142	142	residential units in the development in the immediately prior tax
143	143	year and the estimated maximum market rents that could be charged
144	144	for those units without the rent or income restrictions in such tax
145	145	year, as reported in the audit under Section 303.0426, is less than
146	146	60 percent of the amount of the ad valorem taxes that would have
147	147	been imposed on the property in the same prior tax year if the
148	148	property did not have the income restrictions and did not have an
149	149	exemption from those taxes under Section 303.042(c):
150	150	(1) beginning with the first tax year after the tax
151	151	year in which the development first becomes occupied by one or more
152	152	residential tenants;
153	153	(2) notwithstanding Subdivision (1), for an existing
154	154	multifamily residential development that is acquired by the
155	155	corporation, beginning with the third tax year after the tax year
156	156	that the corporation acquires the development; and
157	157	(3) notwithstanding Subdivisions (1) and (2), for a
158	158	multifamily residential development owned by the corporation as of
159	159	September 1, 2025, beginning with the 2028 tax year.
160	160	SECTION 5. Section The heading to Section 303.0426, Local
161	161	Government Code, is amended to read as follows:
162	162	Sec. 303.0426. AUDIT REQUIREMENTS APPLICABLE TO ALL [FOR
163	163	CERTAIN] MULTIFAMILY RESIDENTIAL DEVELOPMENTS.
164	164	SECTION 6. Sections 303.0426(b), (c), (d), (e), (f), and
165	165	(g), Local Government Code, are amended to read as follows:
166	166	(b) A public facility user of any [a] multifamily
167	167	residential development claiming an exemption under Section
168	168	303.042(c) [and to which Section 303.0421 applies] must annually
169	169	submit to the department and the chief appraiser of the appraisal
170	170	district in which the development is located an audit report for a
171	171	compliance audit, prepared at the expense of the public facility
172	172	user and conducted by an independent auditor or compliance expert
173	173	with an established history of providing similar audits on housing
174	174	compliance matters, to:
175	175	(1) determine whether the public facility user and
176	176	development is in compliance with Sections 303.0421, 303.0422, and
177	177	303.0425, if applicable; and
178	178	(2) identify the difference in the rent charged for
179	179	income-restricted residential units and the estimated maximum
180	180	market rents that could be charged for those units without the rent
181	181	or income restrictions.
182	182	(c) Not later than the 60th day after the date of receipt of
183	183	the audit conducted under Subsection (b), the department shall
184	184	examine the audit report and publish a report summarizing the
185	185	findings of the audit. The report must:
186	186	(1) be made available on the department's Internet
187	187	website;
188	188	(2) be issued to a public facility user that has an
189	189	interest in a development that is the subject of an audit, the
190	190	comptroller, the applicable corporation, the governing body of the
191	191	corporation's sponsor, and, if the corporation's sponsor is a
192	192	housing authority, the elected officials who appointed the housing
193	193	authority's governing board; and
194	194	(3) describe in detail the nature of any failure to
195	195	comply with the requirements in Sections 303.0421 , 303.0422 and
196	196	303.0425, if applicable.
197	197	(d) If an audit report submitted under Subsection (b)
198	198	indicates noncompliance with Sections 303.0421, 303.0422, and
199	199	303.0425 as described by Subsection (c)(3), a public facility user:
200	200	(1) must be given:
201	201	(A) written notice from the department or
202	202	appropriate appraisal district that:
203	203	(i) is provided not later than the 45th day
204	204	after the date a report has been submitted under Subsection (b);
205	205	(ii) specifies the reasons for
206	206	noncompliance;
207	207	(iii) specifies the reason for
208	208	noncompliance with Section 303.0425:
209	209	(a) contains at least one option for a corrective action to
210	210	resolve the noncompliance; and
211	211	(iv) informs the public facility user that
212	212	failure to resolve the noncompliance will result in the loss of an
213	213	exemption under Section 303.042(c); ); and
214	214	(2) If the audit report indicates noncompliance with
215	215	Section 303.0425, a public facility user must also be given:
216	216	(A)[(B)] 60 days after the date notice is
217	217	received under [this] subdivision (1), to resolve the matter that
218	218	is the subject of the notice; and
219	219	(B)[(C)] if a matter that is the subject of a
220	220	notice provided under [this]subdivision (1) is not resolved to the
221	221	satisfaction of the department and the appropriate appraisal
222	222	district during the period provided by Paragraph (A)[(B)], a second
223	223	notice that informs the public facility user of the loss of the
224	224	exemption under Section 303.042(c) due to noncompliance with
225	225	Section [Sections 303.0421 and] 303.0425.[; and (2) is considered
226	226	to be incompliance with Sections 303.0421 and 303.0425 if notice
227	227	under Subdivision (1)(A) is not provided as specified by
228	228	Subparagraph(i) of that paragraph.]
229	229	(e) An exemption under Section 303.042(c) does not apply to
230	230	a multifamily residential development owned by a public facility
231	231	corporation for a tax year in which:
232	232	(1) the department determines that the public facility
233	233	user for the development is not in compliance with the audit report
234	234	requirements of Subsection (b); or
235	235	(2) based on the audit conducted under Subsection (b),
236	236	the department complies with the applicable notice requirements in
237	237	Subsection (d) and:
238	238	(i) the department determines that public
239	239	facility user or development is not in compliance with the
240	240	requirements of Section 303.0425 and the matter is not resolved to
241	241	the satisfaction of the department within 60 days after the date
242	242	notice is received under Subsection (d); or
243	243	(ii) the department determines that the
244	244	development is not in compliance with the requirements of Sections
245	245	303.0421(b)(2) or 303.0421(b)(5). [a multifamily residential
246	246	development that is owned by a public facility corporation created
247	247	under this chapter is determined by the department based on an audit
248	248	conducted under Subsection (b) to not be in compliance with the
249	249	requirements of Section 303.0421 or 303.0425.]
250	250	(e-1) Notwithstanding Subsection (e), a public facility
251	251	user and development is considered to be in compliance with:
252	252	(1) Section 303.0425 to the extent the applicable
253	253	notice required under Subsections (d)(1) and (d)(2) is not
254	254	provided; and
255	255	(2) Sections 303.0421 (b)(2) and (b)(5) to the extent
256	256	the applicable notice required under Subsection (d)(1) is not
257	257	provided.
258	258	(f) Notwithstanding Subsection (g), the [The] initial audit
259	259	report required by Subsection (b) is due not later than June 1 of
260	260	the year following the first anniversary of:
261	261	(1) the date of acquisition for an occupied
262	262	multifamily residential development that is acquired by a
263	263	corporation; or
264	264	(2) the date a new multifamily residential development
265	265	first becomes occupied by one or more tenants.
266	266	(g) An audit report required by this section is [Subsequent
267	267	audit reports following the issuance of the initial audit report
268	268	under Subsection (f) are] due not later than June 1 of each year.
269	269	SECTION 7. Subchapter B, Chapter 303, Local Government
270	270	Code, is amended by adding Section 303.0427 to read as follows:
271	271	Sec. 303.0427. ADDITIONAL REQUIREMENT FOR BENEFICIAL TAX
272	272	TREATMENT APPLICABLE TO ALL MULTIFAMILY RESIDENTIAL DEVELOPMENTS.
273	273	(a) In this section, "public facility user" has the meaning
274	274	assigned by Section 303.0425.
275	275	(b) A multifamily residential development owned by a public
276	276	facility corporation to which Section 303.0426 applies is
277	277	ineligible for an exemption under Section 303.042(c) unless the
278	278	corporation, the corporation's sponsor, or public facility user for
279	279	the development submits to the Texas Department of Housing and
280	280	Community Affairs and to the chief appraiser for each appraisal
281	281	district in which the exemption is sought a one-time exemption
282	282	application on a form promulgated by the comptroller.
283	283	SECTION 8. Section 392.066, Local Government Code, is
284	284	amended by adding Subsection (f) to read as follows:
285	285	(f) An authority that creates a public facility corporation
286	286	under Chapter 303 must submit to the Texas Department of Housing and
287	287	Community Affairs for each year that the corporation remains in
288	288	operation a certification providing:
289	289	(1) the name of the corporation;
290	290	(2) the names of all the developments owned by an
291	291	authority;
292	292	(3) the names of all subsidiaries of an authority;
293	293	(4) the names of any private partners involved in the
294	294	development;
295	295	(5) the areas in which the corporation operates; and
296	296	(6) any other information required by the department.
297	297	SECTION 9. (a) This Act applies only to a tax imposed for a
298	298	tax year beginning after the effective date of this Act.
299	299	(b) Sections 303.003 and 303.0421, Local Government Code,
300	300	as amended by this Act, apply only to a multifamily residential
301	301	development that is approved on or after the effective date of this
302	302	Act by a public facility corporation or the sponsor of a public
303	303	facility corporation. A multifamily residential development that
304	304	was approved by a public facility corporation or the sponsor of a
305	305	public facility corporation before the effective date of this Act
306	306	is governed by the law in effect on the date the development was
307	307	approved by the corporation or sponsor, and the former law is
308	308	continued in effect for that purpose.
309	309	(c) Notwithstanding subsection (b), Subdivision (1) of
310	310	Subsection 303.0421(b), as amended by this Act, applies to all
311	311	multifamily residential developments, regardless of the date they
312	312	were acquired or approved by a public facility corporation or
313	313	sponsor of the public facility corporation.
314	314	(d) Section 303.0422, Local Government Code, as added by
315	315	this Act, applies to all multifamily residential developments,
316	316	regardless of the date they were acquired or approved by a public
317	317	facility corporation or sponsor of the public facility corporation.
318	318	(e) Notwithstanding Section 10(d)(1), Chapter 1169 (H.B.
319	319	2071), Acts of the 88th Legislature, Regular Session, 2023, Section
320	320	303.0426, Local Government Code, as amended by this Act, applies to
321	321	all multifamily residential developments claiming an exemption
322	322	under Section 303.042(c), Local Government Code, regardless of when
323	323	the developments were approved or acquired and regardless of
324	324	whether Sections 303.0421 and 303.0425, Local Government Code,
325	325	apply to those developments.
326	326	(f) Section 303.0427, Local Government Code, as added by
327	327	this Act, applies to all multifamily residential developments
328	328	claiming an exemption under Section 303.042(c), Local Government
329	329	Code, regardless of when the developments were approved or acquired
330	330	and regardless of whether Sections 303.0421 and 303.0425, Local
331	331	Government Code, apply to those developments.
332	332	(g) Section 303.041(e), Local Government Code, as added by
333	333	this Act, applies only to the conveyance, assignment, or transfer
334	334	of an exemption that occurs on or after the effective date of this
335	335	Act.
336	336	(h) Section 303.0421(b), Local Government Code, as amended
337	337	by this Act, Section 303.0421(j), Local Government Code, as added
338	338	by this Act, and Section 303.0425(b-1), Local Government Code, as
339	339	added by this Act, apply only to a multifamily residential
340	340	development that is approved on or after the effective date of this
341	341	Act by a public facility corporation or the sponsor of a public
342	342	facility corporation, in accordance with Chapter 303, Local
343	343	Government Code. A multifamily residential development that was
344	344	approved by a public facility corporation or the sponsor of a public
345	345	facility corporation before the effective date of this Act is
346	346	governed by the law in effect on the date the development was
347	347	approved by the corporation or sponsor, and the former law is
348	348	continued in effect for that purpose.
349	349	SECTION 10. This Act takes effect September 1, 2025.