Bill Text: TX HB3576 | 2015-2016 | 84th Legislature | Enrolled

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Bill Title: Relating to restrictions on the use, transfer, and sale of housing developments that have received certain financial assistance administered by the Texas Department of Housing and Community Affairs.

Sponsorship: Partisan Bill (Democrat 2)

Status: (Passed) 2015-06-17 - Effective on 9/1/15 [HB3576 Detail]

Download: Texas-2015-HB3576-Enrolled.html

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H.B. No. 3576

AN ACT
relating to restrictions on the use, transfer, and sale of housing
developments that have received certain financial assistance
administered by the Texas Department of Housing and Community
Affairs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2306.185, Government Code, is amended by
adding Subsection (d-1) and amending Subsection (e) to read as
follows:
(d-1) The department shall adopt rules that provide for the
amendment of a land use restriction agreement. Rules adopted under
this subsection must require reasonable notice to tenants, a public
hearing, and board approval for any material amendment to a land use
restriction agreement.
(e) Subsections (c), [and] (d), and (d-1) and Section
2306.269 apply only to multifamily rental housing developments to
which the department is providing one or more of the following forms
of assistance:
(1) a loan or grant in an amount greater than 33
percent of the market value of the development on the date the
recipient completed the construction of the development;
(2) a loan guarantee for a loan in an amount greater
than 33 percent of the market value of the development on the date
the recipient took legal title to the development; or
(3) a low income housing tax credit.
SECTION 2. Section 2306.6713, Government Code, is amended
by adding Subsection (g) to read as follows:
(g) The transfer of ownership of a development supported
with an allocation of housing tax credits under this section does
not subject the development to a right of first refusal under
Section 2306.6726 if the transfer is made to a newly formed entity:
(1) that is under common control with the development
owner; and
(2) the primary purpose of the formation of which is to
facilitate the financing of the rehabilitation of the development
using assistance administered through a state financing program.
SECTION 3. Section 2306.6720, Government Code, is amended
to read as follows:
Sec. 2306.6720. ENFORCEABILITY OF APPLICANT
REPRESENTATIONS. Each material representation made by an applicant
to secure a housing tax credit allocation is enforceable by the
department and the tenants of the development supported with the
allocation. Subject to modification and enforcement as provided by
this chapter, a land use restriction agreement that is recorded
with respect to a development is considered to state the
development owner's ongoing obligations with regard to the matters
addressed in the agreement.
SECTION 4. Section 2306.6725(b), Government Code, is
amended to read as follows:
(b) The department shall provide appropriate incentives as
determined through the qualified allocation plan to reward
applicants who agree to:
(1) equip the development [property] that is the basis
of the application with energy saving devices that meet the
standards established by the state energy conservation office or
[to] provide to a qualified entity, in a land use restriction
agreement in accordance with Section 2306.6726, [nonprofit
organization or tenant organization] a right of first refusal to
purchase the development [property] at the minimum price provided
in, and in accordance with the requirements of, Section 42(i)(7),
Internal Revenue Code of 1986 (26 U.S.C. Section 42(i)(7)); and
(2) locate the development in a census tract in which
there are no other existing developments supported by housing tax
credits.
SECTION 5. Section 2306.6726, Government Code, is amended
to read as follows:
Sec. 2306.6726. SALE OF CERTAIN LOW INCOME HOUSING TAX
CREDIT DEVELOPMENTS [PROPERTY]. (a) An owner of a development
subject to [Not later than two years before the expiration of the
compliance period, a recipient of a low income housing tax credit
who agreed to provide] a right of first refusal under Section
2306.6725 [and] who intends to sell the development at any time
after the expiration of the compliance period [property] shall
notify the department and the tenants of the development of the
owner's [recipient's] intent to sell and, if applicable, shall
specifically identify to the department any qualified entity that
is the owner's intended recipient of the right of first refusal in
the land use restriction agreement.
(a-1) As soon as practicable after receiving notice under
Subsection (a), the department [The recipient] shall:
(1) provide to any qualified entity specifically
identified under Subsection (a) notice regarding the owner's intent
to sell the development; and
(2) post on the department's Internet website the
notice described by Subdivision (1) [notify qualified nonprofit
organizations and tenant organizations of the opportunity to
purchase the property].
(b) The owner of a development subject to a right of first
refusal under Section 2306.6725 [recipient] may:
(1) during the first 60-day [six-month] period after
notice is provided under Subsection (a-1) [notifying the
department], negotiate or enter into a purchase agreement only with
a qualified entity [nonprofit organization] that is:
(A) [also] a community housing development
organization as defined by the federal HOME [home] investment
partnership program; or
(B) controlled by an entity described by
Paragraph (A);
(2) during the second 60-day [six-month] period after
notice is provided under Subsection (a-1) [notifying the
department], negotiate or enter into a purchase agreement with a
[any] qualified entity that:
(A) is described by Section 2306.6706;
(B) is controlled by an entity described by
Paragraph (A) [nonprofit organization or tenant organization]; or
(C) is a tenant organization; and
(3) during the last 60-day period after notice is
provided under Subsection (a-1) [year before the expiration of the
compliance period], negotiate or enter into a purchase agreement
with [the department or] any other qualified entity [nonprofit
organization or tenant organization approved by the department].
(c) Beginning on the 181st day after the date the department
posts notice under Subsection (a-1), an owner of a development
subject to a right of first refusal [Notwithstanding an agreement]
under Section 2306.6725[, a recipient of a low income housing tax
credit] may sell to any purchaser a development [property] to which
the right of first refusal [tax credit] applies [to any purchaser
after the expiration of the compliance period] if a qualified
entity [nonprofit organization or tenant organization] does not
offer to purchase the development for a price that the department
determines to be reasonable [property at the minimum price provided
by Section 42(i)(7), Internal Revenue Code of 1986 (26 U.S.C.
Section 42(i)(7)), and the department declines to purchase the
property].
(c-1) This section applies only to a right of first refusal
memorialized in a land use restriction agreement. This section
does not authorize a modification of any other agreement between an
owner of a development and a qualified entity.
(c-2) The department shall adopt rules and procedures to
give effect to the right of first refusal granted by any land use
restriction agreement.
(d) In this section:
(1) [,] "Compliance [compliance] period" has the
meaning assigned by Section 42(i)(1), Internal Revenue Code of 1986
(26 U.S.C. Section 42(i)(1)).
(2) "Qualified entity" means an entity described by,
or an entity controlled by an entity described by, Section
42(i)(7)(A), Internal Revenue Code of 1986 (26 U.S.C. Section
42(i)(7)(A)).
SECTION 6. Sections 2306.6713, 2306.6725, and 2306.6726,
Government Code, as amended by this Act, apply to the transfer or
sale of a development supported with an allocation of low income
housing tax credits issued before, on, or after the effective date
of this Act.
SECTION 7. This Act takes effect September 1, 2015.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3576 was passed by the House on May 8,
2015, by the following vote: Yeas 118, Nays 24, 2 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 3576 on May 28, 2015, by the following vote: Yeas 120, Nays 23,
2 present, not voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 3576 was passed by the Senate, with
amendments, on May 26, 2015, by the following vote: Yeas 26, Nays
5.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor