Bill Text: TX HB21 | 2025-2026 | 89th Legislature | Enrolled

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Bill Title: Relating to housing finance corporations; authorizing a fee.

Sponsorship: Moderate Partisan Bill (Republican 84-24)

Status: (Passed) 2025-05-28 - Effective immediately [HB21 Detail]

Download: Texas-2025-HB21-Enrolled.html

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H.B. No. 21

AN ACT
relating to housing finance corporations; authorizing a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 394.004, Local Government Code, is
amended to read as follows:
Sec. 394.004. APPLICATION OF CHAPTER TO CERTAIN RESIDENTIAL
DEVELOPMENTS. This chapter applies only to a residential
development at least 90 percent of which is for use by or is
intended to be occupied by households [persons] of low and moderate
income whose adjusted gross income [, together with the adjusted
gross income of all persons who intend to reside with those persons
in one dwelling unit,] did not for the preceding tax year exceed the
maximum amount constituting moderate income as defined under the
housing finance corporation's rules, resolutions relating to the
issuance of bonds, or financing documents relating to the issuance
of bonds.
SECTION 2. Subchapter A, Chapter 394, Local Government
Code, is amended by adding Section 394.0045 to read as follows:
Sec. 394.0045. APPLICABILITY OF OPEN MEETINGS AND OPEN
RECORDS LAWS. (a) Chapter 551, Government Code, applies to actions
and proceedings under this chapter.
(b) Chapter 552, Government Code, applies to all records of
a housing finance corporation.
SECTION 3. 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 4. Section 394.031, Local Government Code, is
amended by adding Subsections (c), (d), and (e) to read as follows:
(c) Subject to Subsection (d), the area in which a housing
finance corporation may own real property for residential
development or engage in residential development is limited to:
(1) for a housing finance corporation sponsored by a
municipality under Section 394.011, the boundaries of the
municipality that sponsored the corporation;
(2) for a housing finance corporation sponsored by a
county under Section 394.011, the boundaries 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 boundaries of each municipal sponsor of
the corporation; and
(B) the boundaries of each county sponsor of the
corporation.
(d) A housing finance corporation may own real property for
residential development or engage in residential development
outside an area described by Subsection (c) only if a resolution or
order, as applicable, approving that ownership or development in
the outside area is adopted by the governing bodies of:
(1) each municipality that contains any part of the
outside area in which the corporation proposes to own real property
for residential development or engage in residential development;
(2) for a residential development or home located in
the unincorporated area of a county, each county that contains any
part of the outside area in which the corporation proposes to own
real property for residential development or engage in residential
development; and
(3) any housing finance corporation sponsored by a
municipality or county described by Subdivision (1) or (2), as
applicable.
(e) This section does not prohibit or limit a housing
finance corporation from owning real property outside an area
described by Subsection (c) or (d) if the property is not owned for
purposes of residential development.
SECTION 5. Section 394.032(e), Local Government Code, is
amended to read as follows:
(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 6. Section 394.037, Local Government Code, is
amended by adding Subsection (a-1) to read as follows:
(a-1) A housing finance corporation may issue bonds under
this chapter for a purpose described by Subsection (a) only to
finance or support a residential development or home that is
located or will be constructed:
(1) within the boundaries of a local government in
which a housing finance corporation is permitted to own real
property for residential development or engage in residential
development under Section 394.031(c); or
(2) outside the boundaries of a local government
described by Subdivision (1) if a resolution or order, as
applicable, approving the issuance of bonds is adopted by the
governing body of:
(A) each municipality that contains any part of
the residential development or home; and
(B) for a residential development or home located
in the unincorporated area of a county, each county that contains
any part of the residential development or home.
SECTION 7. Section 394.039, Local Government Code, is
amended to read as follows:
Sec. 394.039. SPECIFIC POWERS RELATING TO FINANCIAL AND
PROPERTY TRANSACTIONS. Subject to Sections 394.031(c), (d), and
(e), a [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 8. Section 394.9025, Local Government Code, is
amended to read as follows:
Sec. 394.9025. MULTIFAMILY RESIDENTIAL DEVELOPMENT. (a)
Following a public hearing by the governing body of the applicable
local government, a housing finance corporation may, subject to the
geographic limitations of Section 394.037(a-1), issue bonds to
finance a multifamily residential development to be owned by the
housing finance corporation if:
(1) at least 50 percent of the units in the multifamily
residential development are reserved for occupancy by individuals
and families earning less than 80 percent of the area median family
income; or
(2) the units in the multifamily residential
development are reserved in the manner provided by Section
394.9026(c)(1).
(b) Following a public hearing by the governing body of the
applicable local government, a housing finance corporation may,
subject to the geographic limitations of Section 394.037(a-1),
issue bonds to finance a multifamily residential development to be
owned by the housing finance corporation in accordance with Section
394.004 if the housing finance corporation receives approval of the
governing body of the local government.
SECTION 9. Subchapter Z, Chapter 394, Local Government
Code, is amended by adding Sections 394.9026 and 394.9027 to read as
follows:
Sec. 394.9026. ADDITIONAL CONDITIONS FOR BENEFICIAL AD
VALOREM TAX TREATMENT RELATING TO CERTAIN MULTIFAMILY RESIDENTIAL
DEVELOPMENTS. (a) In this section:
(1) "Housing choice voucher program" means the housing
choice voucher program under Section 8, United States Housing Act
of 1937 (42 U.S.C. Section 1437f).
(2) "Housing finance corporation user" means:
(A) a housing finance corporation; or
(B) for a multifamily residential development
that is not owned directly by a housing finance corporation, a
public-private partnership entity or a developer or other person or
entity that has an ownership interest or a leasehold or other
possessory interest in multifamily residential development
financed or supported by a housing finance corporation.
(3) "Lower income housing unit" means a residential
unit reserved for occupancy by an individual or family earning not
more than 60 percent of the area median income, adjusted for family
size, as defined by the United States Department of Housing and
Urban Development.
(4) "Maximum market rent" means, with respect to a
particular income-restricted unit, the average annual rent charged
for all non-income-restricted units in the development having the
same or substantially similar floor plan as the income-restricted
unit.
(5) "Middle income housing unit" means a residential
unit reserved for occupancy by an individual or family earning not
more than 100 percent of the area median income, adjusted for family
size, as defined by the United States Department of Housing and
Urban Development.
(6) "Moderate income housing unit" means a residential
unit reserved for occupancy by an individual or family earning not
more than 80 percent of the area median income, adjusted for family
size, as defined by the United States Department of Housing and
Urban Development.
(7) "Multifamily residential development" means any
residential development consisting of four or more residential
units intended for occupancy as rentals, regardless of whether the
units are attached or detached.
(8) "Rent" means any recurring fee or charge a tenant
is required to pay as a condition of occupancy, including a fee or
charge for the use of a common area or facility reasonably
associated with residential rental property. The term does not
include fees and charges for services or amenities that are
optional for a tenant, such as pet fees and fees for storage or
covered parking.
(9) "Rent reduction" means the projected difference
between the rent charged for an income-restricted unit and the
maximum market rent that could be charged for that same unit without
the income restrictions.
(10) "Very low income housing unit" means a
residential unit reserved for occupancy by an individual or family
earning not more than 50 percent of the area median income, adjusted
for family size, as defined by the United States Department of
Housing and Urban Development.
(b) This section does not apply to a multifamily residential
development that is the recipient of a low income housing tax credit
allocated under Subchapter DD, Chapter 2306, Government Code.
(c) Subject to Subsection (g), an ad valorem tax exemption
under Section 394.905 for a multifamily residential development
owned by a housing finance corporation is available only if the
other requirements of this chapter are satisfied and if:
(1) at least:
(A) 10 percent of the units in the development
are reserved for occupancy as lower income housing units and at
least 40 percent of the units in the development are reserved for
occupancy as moderate income housing units; or
(B) 10 percent of the units in the development
are reserved for occupancy as very low income housing units and at
least 40 percent of the units in the development are reserved for
occupancy as middle income housing units;
(2) the rent reduction at the development in the
preceding tax year was:
(A) not less than 50 percent of the amount of the
estimated ad valorem taxes that would have been imposed on the
applicable property in the same preceding tax year if the property
did not receive an exemption from those taxes under Section
394.905, beginning with:
(i) for a multifamily residential
development that is acquired by the corporation, the first tax year
after the tax year that the corporation acquires the development;
and
(ii) for a newly constructed multifamily
residential development not described by Subparagraph (i), the
first tax year after the tax year in which construction first begins
on the development; or
(B) less than 50 percent of the amount of the
estimated ad valorem taxes described by Paragraph (A) beginning
with the tax year specified by that paragraph, but the housing
finance corporation user paid to each taxing unit authorized to
impose ad valorem taxes on the applicable property for the
applicable tax year an amount equal to that taxing unit's pro rata
share of the rent reduction shortfall that exists based on the
difference between the minimum rent reduction amount described by
Paragraph (A) and the amount of actual rent reduction at the
development in the preceding tax year;
(3) the income-restricted residential units in the
development have the same unit finishes and equipment and access to
community amenities and programs as residential units that are not
income-restricted;
(4) the percentage of very low, lower, moderate, and
middle income housing units reserved in each category of
income-restricted residential units in the development, based on
the number of bedrooms per unit, is the same as the percentage of
each category of income-restricted residential units reserved in
the development as a whole;
(5) the monthly rent charged per unit does not exceed:
(A) for a very low income housing unit, 30
percent of 50 percent of the area median income, adjusted for family
size, as defined by the United States Department of Housing and
Urban Development;
(B) for a lower income housing unit, 30 percent
of 60 percent of the area median income, adjusted for family size,
as defined by the United States Department of Housing and Urban
Development;
(C) for a moderate income housing unit, 30
percent of 80 percent of the area median income, adjusted for family
size, as defined by the United States Department of Housing and
Urban Development; or
(D) for a middle income housing unit, 30 percent
of 100 percent of the area median income, adjusted for family size,
as defined by the United States Department of Housing and Urban
Development;
(6) the housing finance corporation user and the
development do not:
(A) refuse to rent a residential unit in the
development to an individual or family because the individual or
family participates in the housing choice voucher program; or
(B) use a financial or minimum income standard
that requires an individual or family participating in the housing
choice voucher program to have a monthly income of more than 250
percent of the individual's or family's share of the total monthly
rent payable for a unit;
(7) the housing finance corporation user causes to be
published on the Internet website of the development information
about the development's policies regarding tenant participation in
the housing choice voucher program;
(8) the housing finance corporation user for the
development:
(A) affirmatively markets available residential
units directly to individuals and families participating in the
housing choice voucher program; and
(B) notifies local housing authorities of the
development's acceptance of tenants in the housing choice voucher
program; and
(9) each lease agreement for an income-restricted
residential unit in the development provides that:
(A) the landlord may not retaliate against the
tenant or the tenant's guests by taking an action because the tenant
established, attempted to establish, or participated in a tenant
organization;
(B) the landlord may only choose to not renew the
lease if the tenant:
(i) committed one or more substantial
violations of the lease;
(ii) failed to provide required information
on the income, composition, or eligibility of the tenant's
household; or
(iii) committed repeated minor violations
of the lease that disrupt the livability of the property, adversely
affect the health and safety of any person or the right to quiet
enjoyment of the leased premises and related development
facilities, interfere with the management of the development, or
have an adverse financial effect on the development, including the
failure of the tenant to pay rent in a timely manner; and
(C) to not renew the lease, the landlord must
serve a written notice of proposed nonrenewal on the tenant not
later than the 30th day before the effective date of nonrenewal.
(d) In calculating the income of an individual or family for
a very low, lower, moderate, or middle income housing unit, the
housing finance corporation user must use the definition of annual
income described in 24 C.F.R. Section 5.609, as implemented by the
United States Department of Housing and Urban Development. If the
income of a tenant exceeds an applicable limit at the time of the
renewal of a lease agreement for a residential unit, the provisions
of Section 42(g)(2)(D), Internal Revenue Code of 1986, apply in
determining whether the unit may still qualify as a very low, lower,
moderate, or middle income housing unit.
(e) A housing finance corporation user may require an
individual or family participating in the housing choice voucher
program to pay the difference between the monthly rent for the
applicable unit and the amount of the monthly voucher if the amount
of the voucher is less than the rent.
(f) A tenant may not waive the protections provided by
Subsection (c)(9). A housing finance corporation user may adopt
tenant protections that are more protective of tenants than the
tenant protections provided by Subsection (c)(9).
(g) A multifamily residential development that is acquired
by a housing finance corporation and is occupied on the date of the
acquisition is eligible for an ad valorem exemption under Section
394.905 for the two tax years following the date of the acquisition,
regardless of whether the development complies with the conditions
prescribed by Subsections (c)(1), (3), (4), and (5), if the
development comes into compliance with Subsections (c)(1), (3),
(4), and (5) not later than the end of the second tax year after the
date of the acquisition.
Sec. 394.9027. AUDIT REQUIREMENTS FOR CERTAIN MULTIFAMILY
RESIDENTIAL DEVELOPMENTS. (a) In this section:
(1) "Department" means the Texas Department of Housing
and Community Affairs.
(2) "Housing finance corporation user" has the meaning
assigned by Section 394.9026.
(b) A housing finance corporation or housing finance
corporation user that claims an ad valorem tax exemption for a
multifamily residential development under Section 394.905 must
annually submit to the department an audit report for a compliance
audit, prepared at the expense of the housing finance corporation
user and conducted by an independent auditor or compliance expert
with an established history of providing similar audits on housing
compliance matters, that:
(1) states whether the corporation is in compliance
with the requirements imposed for the exemption by Section
394.9026; and
(2) identifies the difference in the rent charged for
income-restricted residential units and the estimated maximum
market rents that could be charged for those units without the
income restrictions.
(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 or is associated with the development that is the subject of an
audit, the housing finance corporation user of the development, the
comptroller, and the governing body of the sponsoring local
government or governments of the housing finance corporation; and
(3) describe in detail the nature of any failure to
comply with the requirements of Section 394.9026.
(d) If an audit report submitted under Subsection (b)
indicates noncompliance with Section 394.9026, a housing finance
corporation user, the associated housing finance corporation, and
the chief appraiser of the appraisal district in which the
development is located must be given written notice from the
department that is provided not later than the 120th day after the
date a report has been submitted under Subsection (b) and specifies
the reasons for noncompliance. For a finding of noncompliance with
any provision of Section 394.9026(c), a housing finance corporation
user and the associated housing finance corporation must be given:
(1) additional written notice that:
(A) otherwise complies with the notice
requirements of this section;
(B) contains at least one option for a corrective
action to resolve the noncompliance; and
(C) informs the housing finance corporation user
and associated housing finance corporation that failure to resolve
the noncompliance within the period provided by Subdivision (2)
will result in the loss of the ad valorem tax exemption under
Section 394.905;
(2) a period of 180 days after the date notice is
received under Subdivision (1) to resolve the matter that is the
subject of the notice; and
(3) if a matter that is the subject of a notice
provided under this subdivision is not resolved to the satisfaction
of the department during the period provided by Subdivision (2), a
second notice that informs the housing finance corporation of the
loss of the ad valorem tax exemption for the development due to
noncompliance with Section 394.9026.
(e) The initial audit report required by Subsection (b) is
due not later than June 1 of the tax year following:
(1) the date of acquisition for an existing
multifamily residential development that is acquired by a housing
finance corporation; or
(2) the date a newly constructed multifamily
residential development first becomes occupied by one or more
tenants.
(f) Subsequent audit reports following the issuance of the
initial audit report under Subsection (e) are due not later than
June 1 of each year.
(g) The department may extend the deadline for submitting
any audit required under this section for good cause shown, as
determined by the department.
(h) An independent auditor or compliance expert may not
prepare an audit under Subsection (b) for more than three
consecutive tax 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:
(1) shall adopt forms and reporting standards for the
auditing process;
(2) may charge a fee for the submission of an audit
report under this section in a reasonable amount necessary to cover
the expenses of administering this section; and
(3) shall adopt rules necessary to implement this
section and Section 394.9026.
(j) Rules adopted under Subsection (i)(3) must include
administrative processes and a process by which a housing finance
corporation user may appeal a finding of noncompliance made under
this section or a loss of a tax exemption due to a finding of
noncompliance with Section 394.9026 or any other provision of this
chapter.
(k) 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.
(l) This section does not apply to a multifamily residential
development during any period that the development is the recipient
of a low income housing tax credit allocated under Subchapter DD,
Chapter 2306, Government Code.
SECTION 10. Section 394.903, Local Government Code, is
amended to read as follows:
Sec. 394.903. TRANSFER [LOCATION] OF [RESIDENTIAL
DEVELOPMENT;] RESIDENTIAL DEVELOPMENT SITES. Subject to Sections
394.031(c) and (d), 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 may be located wholly or partly inside or
outside the local government.]
SECTION 11. Section 394.905, Local Government Code, is
amended to read as follows:
Sec. 394.905. EXEMPTION FROM TAXES AND FEES [TAXATION].
(a) Subject to compliance with the requirements of this chapter, a
[The] housing finance corporation and[,] all property owned by the
corporation [it], the income from that [the] property, all bonds
issued by the corporation [it], the income from those [the] bonds,
and the transfer of those [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.
(b) A multifamily residential development owned by a
housing finance corporation is eligible for an exemption from ad
valorem taxes, and the materials used to improve the applicable
property are eligible for an exemption from sales and use taxes,
only if:
(1) the property is located in an area in which the
housing finance corporation is authorized to own real property or
engage in residential development under Section 394.031(c) or (d);
(2) the board of directors of the corporation has
adopted a resolution approving the multifamily residential
development;
(3) before approval of the board of directors under
Subdivision (2), the housing finance corporation or a sponsoring
local government of the corporation:
(A) conducts, or obtains from a professional
entity that has experience underwriting affordable residential
developments and does not have a financial interest in the
corporation or the applicable development, developer, or
investors, an underwriting assessment of the proposed development
that is dated not earlier than 180 days before the date of the board
resolution;
(B) based on the underwriting assessment, makes a
good faith determination that the total amount of annual rent
reduction applicable to the development, as defined by Section
394.9026(a), will be not less than 50 percent of the amount of
estimated ad valorem taxes that would be imposed on the property in
the same tax year if the applicable property did not receive an
exemption from those taxes under this section:
(i) for a development that is acquired by
the corporation, each of the third, fourth, and fifth tax years
after the tax year that the corporation acquires the development;
and
(ii) for a newly constructed development
not described by Subparagraph (i), each of the first, second, and
third tax years after the tax year in which the development first
achieves an occupancy rate of 90 percent; and
(C) publishes on its Internet website a copy of
the underwriting assessment required by this subsection; and
(4) the housing finance corporation submits to the
Texas Department of Housing and Community Affairs and to the chief
appraiser for each appraisal district in which the exemption is
sought a one-time exemption application on a form promulgated by
the comptroller.
(c) Notwithstanding Subsections (a) and (b), and subject to
Section 394.9027, a multifamily residential development owned by a
housing finance corporation or a housing finance corporation user
is not entitled to an ad valorem tax exemption for any given tax
year in which:
(1) the corporation or the housing finance corporation
user is not in compliance with any provisions of Section
394.9026(c) and:
(A) the notice requirements in Section
394.9027(d) have been fulfilled; and
(B) the noncompliance is not resolved to the
satisfaction of the department within the period provided by
Section 394.9027(d)(2); or
(2) the corporation or the housing finance corporation
user has not timely submitted the audit report required by Section
394.9027.
(d) Subsection (a) does not apply to ad valorem taxes
imposed on a multifamily residential development by:
(1) a conservation or reclamation district created
under Section 52, Article III, or Section 59, Article XVI, Texas
Constitution, that provides water, sewer, or drainage service to
the development, unless the applicable corporation has entered into
a written agreement with the district to make a payment to the
district in lieu of taxation, in the amount specified in the
agreement; or
(2) an emergency services district created under
Chapter 775, Health and Safety Code, unless the applicable
corporation has entered into a written agreement with the district
to make a payment to the district in lieu of taxation, in the amount
specified in the agreement.
(e) Subsections (b)(3), (b)(4), and (c) do not apply to a
multifamily residential development that is:
(1) owned by a housing finance corporation; and
(2) the recipient of a low income housing tax credit
allocated under Subchapter DD, Chapter 2306, Government Code.
(f) The corporation is exempt from the franchise tax imposed
by Chapter 171, Tax Code, only if the corporation is exempted by
that chapter.
SECTION 12. Section 394.005, Local Government Code, is
repealed.
SECTION 13. (a) Subject to Subsection (i) of this section,
Sections 394.031(c) and (d), Local Government Code, as added by
this Act, and Section 394.903, Local Government Code, as amended by
this Act, apply only to the ownership of real property that is
acquired by a housing finance corporation on or after the effective
date of this Act. The ownership of real property acquired by a
housing finance corporation before the effective date of this Act,
and the authority of a housing finance corporation to own that
property or to engage in residential development with respect to
that real property in an area outside the areas authorized by
Sections 394.031(c) and (d), Local Government Code, as added by
this Act, are governed by the law in effect on the date the property
was acquired by the housing finance corporation, and the former law
is continued in effect for that purpose.
(b) Section 394.037(a-1), Local Government Code, as added
by this Act, and Section 394.9025, Local Government Code, as
amended by this Act, apply only to bonds issued on or after the
effective date of this Act. Bonds issued before the effective date
of this Act are governed by the law in effect on the date the bonds
were issued, and the former law is continued in effect for that
purpose.
(c) Section 394.9026, Local Government Code, as added by
this Act, and Section 394.905, Local Government Code, as amended by
this Act, apply only to a tax for a tax year that begins on or after
the effective date of this Act.
(d) Subject to Subsections (e) and (f) of this section,
Sections 394.9026 and 394.9027, Local Government Code, as added by
this Act, apply to all multifamily residential developments
claiming an exemption under Section 394.905, Local Government Code,
regardless of when the developments were approved or acquired.
(e) A multifamily residential development that was acquired
by a housing finance corporation before the effective date of this
Act is not eligible for an exemption under Section 394.905, Local
Government Code, as amended by this Act, unless the housing finance
corporation that owns the development and any housing finance
corporation user, as defined by Section 394.9026, Local Government
Code, as added by this Act, associated with the development come
into compliance:
(1) not later than January 1, 2026, with Sections
394.9026(c)(6), (7), (8), and (9), Local Government Code, as added
by this Act; and
(2) with Sections 394.9026(c)(1), (2), (3), (4), and
(5), Local Government Code, as added by this Act, not later than the
earlier of:
(A) the end of the 10th tax year following the
effective date of this Act; or
(B) the end of the first tax year following a tax
year in which:
(i) existing mortgage indebtedness of the
development is refinanced;
(ii) title to the development is conveyed;
or
(iii) a sale, conveyance, transfer or
assignment, or series of sales, conveyances, transfers or
assignments, results in a change in a majority of the beneficial
ownership interests of any housing finance corporation user
associated with the development.
(f) Notwithstanding Section 394.9027(b) or (f), Local
Government Code, as added by this Act, the initial audit report
required to be submitted under Section 394.9027(b), Local
Government Code, as added by this Act, for a multifamily
residential development that was acquired by a housing finance
corporation before the effective date of this Act must be submitted
by the later of:
(1) the date established by Section 394.9027(e), Local
Government Code, as added by this Act; or
(2) June 1, 2026.
(g) Subject to Subsections (e), (h), and (i) of this
section, Section 394.905, Local Government Code, as amended by this
Act, applies to all multifamily residential developments owned by a
housing finance corporation, regardless of when the developments
were approved or acquired.
(h) Sections 394.905(b)(1), (2), and (3) and (d), Local
Government Code, as added by this Act, apply only to multifamily
residential developments that are acquired by a housing finance
corporation on or after the effective date of this Act.
(i) A residential development that is owned by a housing
finance corporation on September 1, 2025, and is located outside an
area in which the corporation is authorized to own real property or
engage in residential development under Section 394.031(c), Local
Government Code, as added by this Act, is not eligible for an ad
valorem tax exemption under Section 394.905, Local Government Code,
as amended by this Act, after January 1, 2027, unless the
corporation obtains the appropriate resolutions or orders required
under Section 394.031(d), Local Government Code, as added by this
Act, before that date.
(j) Not later than January 1, 2026, the Texas Department of
Housing and Community Affairs shall adopt rules necessary to
implement Section 394.9027(i), Local Government Code, as added by
this Act.
SECTION 14. 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.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 21 was passed by the House on May 10,
2025, by the following vote: Yeas 115, Nays 13, 3 present, not
voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 21 was passed by the Senate on May 14,
2025, by the following vote: Yeas 30, Nays 1.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor