Cole’s bill rewriting parts of the housing department’s law

The text as introduced · 2,130 words

By: Cole
H.B. No. 4589

A BILL TO BE ENTITLED

AN ACT

relating to the operation and functions of the Texas Department of

Housing and Community Affairs.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 2306.004(3), Government Code, is amended

to read as follows:

(3) "Contract for Deed" means a seller-financed

contract for the conveyance of real property under which:

(A) legal title does not pass to the purchaser

until the consideration of the contract is fully paid to the seller;

and

(B) the seller's remedy for nonpayment is

recision or forfeiture or acceleration of any remaining payments

rather than judicial or nonjudicial foreclosure.

(3) "Contract for Deed" a seller-financed executory

contract for the conveyance of real property, as further defined in

chapter 5, subchapter D, Property Code, under which:

(A) upon recordation of the contract for deed in

the county in which the property is located, the contract for deed

shall be the same as a deed with a vendor's lien. The vendor's lien

is for the amount of the unpaid contract price, less any lawful

deductions, and may be enforced by foreclosure sale under Section

5.066, Property Code, or by judicial foreclosure. A general

warranty is implied unless otherwise limited by the recorded

executory contract, and the seller is not required to continue

insuring the property; and

(B) if the contract for deed has not been

recorded, the seller may enforce the remedy of rescission or of

forfeiture and acceleration as further outlined in Section 5.064

Property Code against the buyer in default under a contract for

deed; and

(C) for purposes of department loan programs,

satisfaction of this section raises the presumption that ownership

of a residential property under a contract for deed that has been

properly recorded as vested in the buyer.

SECTION 2. Section 2306.004(36), Government Code, is

amended to read as follows:

(36) "Urban area" means the area that is located

within the boundaries of a primary metropolitan statistical area or

a metropolitan statistical area other than an area described by

Subdivision (28-a)(B) or eligible for funding as described by

Subdivision (28-a)(C) .

SECTION 3. Section 2306.057(b), Government Code, is amended

to read as follows:

Sec. 2306.057. COMPLIANCE ASSESSMENT REQUIRED FOR PROJECT

APPROVAL BY BOARD. (a) Before the board approves any project

application submitted under this chapter, the department, through

the division with responsibility for compliance matters, shall:

(1) assess:

(A) the compliance history in this state of the

applicant and any affiliate of the applicant with respect to all

applicable requirements; and

(B) the compliance issues associated with the

proposed project; and

(2) provide to the board a written report regarding

the results of the assessments described by Subdivision (1).

(b) The written report described by Subsection (a)(2) must

be included in the appropriate project file for board and

department review. may be a summary of any concerns or conditions

identified in the compliance assessment. Full project files shall

be made available to the board upon request.

(c) The board shall fully document and disclose any

instances in which the board approves a project application despite

any noncompliance associated with the project, applicant, or

affiliate.

(d) In assessing the compliance of the project, applicant,

or affiliate, the board shall consider any relevant compliance

information in the department's database created under Section

2306.081, including compliance information provided to the

department by the Texas State Affordable Housing Corporation.

SECTION 4. Section 2306.1112, Government Code, is amended

to read as follows:

Sec. 2306.1112. EXECUTIVE AWARD AND REVIEW ADVISORY

COMMITTEE. (a) The department shall establish an executive award

and review process advisory committee to make recommendations to

the board regarding funding and allocation decisions.

(b) Prior to making recommendations to the Board, the

Director shall consult with The advisory committee must include

representatives from the department's underwriting and compliance

functions and from the divisions responsible for administering

federal housing funds provided to the state under the

Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.

Section 12701 et seq.) and for administering low income housing tax

credits.

(c) The advisory committee is not subject to Chapter 2110.

(d) expired.

SECTION 5. Section 2306.1113, Government Code, is amended

by amending subchapter (a-2) to read as follows:

Sec. 2306.1113. EX PARTE COMMUNICATIONS. (a) During the

period beginning on the date project applications are filed in an

application cycle and ending on the date the board makes a final

decision with respect to the approval of any application in that

cycle, a member of the board may not communicate with the following

persons:

(1) an applicant or a related party, as defined by

state law, including board rules, and federal law; and

(2) any person who is:

(A) active in the construction, rehabilitation,

ownership, or control of a proposed project, including:

(i) a general partner or contractor; and

(ii) a principal or affiliate of a general

partner or contractor; or

(B) employed as a consultant, lobbyist, or

attorney by an applicant or a related party.

(a-1) Subject to Subsection (a-2), during the period

beginning on the date project applications are filed in an

application cycle and ending on the date the board makes a final

decision with respect to the approval of any application in that

cycle, an employee of the department may communicate about an

application with the following persons:

(1) the applicant or a related party, as defined by

state law, including board rules, and federal law; and

(2) any person who is:

(A) active in the construction, rehabilitation,

ownership, or control of the proposed project, including:

(i) a general partner or contractor; and

(ii) a principal or affiliate of a general

partner or contractor; or

(B) employed as a consultant, lobbyist, or

attorney by the applicant or a related party.

(a-2) A communication under Subsection (a-1) may be oral or

in any written form, including electronic communication through the

Internet, and must satisfy the following conditions:

(1) the communication must be restricted to technical

or administrative matters directly affecting the application; and

(2) the communication may must occur or be received on

the premises of the department during established business hours;

and

( 3 2 ) a record of the communication must be maintained

and included with the application for purposes of board review and

must contain the following information:

(A) the date, time, and means of communication;

(B) the names and position titles of the persons

involved in the communication and, if applicable, the person's

relationship to the applicant;

(C) the subject matter of the communication; and

(D) a summary of any action taken as a result of

the communication.

SECTION 6. Sections 2306.142 and 2306.143, Government Code,

are repealed.

SECTION 7. Section 2306.0723, Government Code, is repealed.

SECTION 8. Subchapter NN, Government Code, is repealed.

SECTION 9. Section 2306.353, Government Code, is amended by

adding the following subchapters:

(d) In this section, "credit agreement" and "obligation"

have the meanings assigned by Section 1371.001, Government Code.

(e) Notwithstanding any other statute, the board may

exercise any of the rights or powers of the governing body of an

issuer under Chapter 1371, Government Code, and may enter into a

credit agreement under that chapter. An obligation issued under

this section is an obligation under Chapter 1371, Government Code,

but is not required to be rated as required by that chapter.

SECTION 10. Section 2306.6712, Government Code, is amended

by amending subchapter (d) to read as follows:

Sec. 2306.6712. AMENDMENT OF APPLICATION SUBSEQUENT TO

ALLOCATION BY BOARD. (a) If a proposed modification would

materially alter a development approved for an allocation of a

housing tax credit or other multifamily funding , the department

shall require the applicant to file a formal, written amendment to

the application on a form prescribed by the department.

(b) The director shall require the department staff

assigned to underwrite applications to evaluate the amendment and

provide an analysis and written recommendation to the board. The

appropriate monitor under Section 2306.6719 shall also provide to

the board an analysis and written recommendation regarding the

amendment.

(c) The board must vote on whether to approve the amendment.

The board by vote may reject an amendment and, if appropriate,

rescind the allocation of housing tax credits and reallocate the

credits to other applicants on the waiting list required by Section

2306.6711 if the board determines that the modification proposed in

the amendment:

(1) would materially alter the development in a

negative manner; or

(2) would have adversely affected the selection of the

application in the application round.

(d) Material alteration of a development includes:

(1) a significant modification of the site plan;

(2) a modification of the number of units or bedroom

mix of units;

(3) a substantive modification of the scope of tenant

services;

(4) a reduction of three five percent or more in the

square footage of the units net rentable area or common areas;

(5) a significant modification of the architectural

design of the development;

(6) a modification of the residential density of the

development of at least five ten percent; and

(7) any other modification considered significant by

the board director .

(e) In evaluating the amendment under this subsection, the

department staff shall consider whether the need for the

modification proposed in the amendment was:

(1) reasonably foreseeable by the applicant at the

time the application was submitted; or

(2) preventable by the applicant.

(f) For housing tax credit developments , Tthis this section

shall be administered in a manner that is consistent with Section

42, Internal Revenue Code of 1986 (26 U.S.C. Section 42).

SECTION 11. Section 2306.6713 is amended as follows:

Sec. 2306.6713. HOUSING TAX CREDIT AND OWNERSHIP TRANSFERS

FOR MULTIFAMILY DEVELOPMENTS . (a) An applicant may not transfer an

allocation of housing tax credits or ownership of a development

supported with an allocation of housing tax credits or other

multifamily program funds from the department to any person other

than an affiliate unless the applicant obtains the director's

prior, written approval of the transfer.

(b) The director may not unreasonably withhold approval of

the transfer.

(c) An applicant seeking director approval of a transfer and

the proposed transferee must provide to the department a copy of any

applicable agreement between the parties to the transfer , including

any third-party agreement with the department .

(d) On request, an applicant seeking director approval of a

transfer must provide to the department:

(1) a list of the names of transferees and related

controlling parties; and

(2) detailed an explanation information describing

the experience and financial capacity of transferees and related

parties .

(e) When a transfer involves the sale of the development to

a new development owner, the The development owner or proposed

transferee shall certify to the director that the tenants in the

development have been provided at least a 30-day written

notification of the proposed transfer. The director's approval of

the transfer may not occur prior to the end of the 30-day

notification period to the tenants. notified in writing of the

transfer before the 30th day preceding the date of submission of the

transfer request to the department.

(f) Not later than the fifth working day after the date Once

the department receives all necessary information under this

section, the department shall conduct a qualifications review of a

transferee to determine:

(1) the transferee's past compliance with all aspects

of the low income housing tax credit program or other multifamily

funding program, including land use restriction agreements; and

(2) the sufficiency of the transferee's experience

with developments supported with housing tax credit allocations or

other multifamily funds from the department .

(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 12. Not later than March 1, 2026, the Texas

Department of Housing and Community Affairs shall adopt the rules

necessary to implement Section 2306.6712, Chapter 2306, Government

Code, as amended by this Act.

SECTION 13. The changes in law made by this Act relating to

the evaluation of applications for financial assistance

administered by the Texas Department of Housing and Community

Affairs apply only to an application submitted on or after the

effective date of this Act. An application submitted before the

effective date of this Act is governed by the law in effect when the

application was submitted, and the former law is continued in

effect for that purpose.

SECTION 14. This Act takes effect September 1, 2025.