15 percent of housing tax credits reserved for at-risk developments

The text as introduced · 1,420 words

89R11270 JAM-F

By: Menéndez
S.B. No. 2471

A BILL TO BE ENTITLED

AN ACT

relating to a set-aside of low income housing tax credits for

at-risk housing developments and to the allocation of housing tax

credits to those developments and certain other developments.

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

SECTION 1. Section 2306.111, Government Code, is amended by

amending Subsections (a), (d-1), (d-2), and (d-4) and adding

Subsection (a-1) to read as follows:

(a) In this section, "at-risk" development has the meaning

assigned by Section 2306.6702.

(a-1) The department, through the housing finance division,

shall administer all federal housing funds provided to the state

under the Cranston-Gonzalez National Affordable Housing Act (42

U.S.C. Section 12704 et seq.) or any other affordable housing

program.

(d-1) In allocating low income housing tax credit

commitments under Subchapter DD, the department shall, before

applying the regional allocation formula prescribed by Section

2306.1115, set aside for and allocate to at-risk developments[ , as

defined by Section 2306.6702, ] not less than the minimum amount of

housing tax credits required to be set aside and allocated under

Section 2306.6714(a) [ 2306.6714 ]. Funds or credits are not

required to be allocated according to the regional allocation

formula under Subsection (d) if:

(1) the funds or credits are reserved for

contract-for-deed conversions or for set-asides mandated by state

or federal law and each contract-for-deed allocation or set-aside

allocation equals not more than 10 percent of the total allocation

of funds or credits for the applicable program;

(2) the funds or credits are allocated by the

department primarily to serve persons with disabilities; or

(3) the funds are housing trust funds administered by

the department under Sections 2306.201-2306.206 that are not

otherwise required to be set aside under state or federal law and do

not exceed $3 million for each programmed activity during each

application cycle.

(d-2) In allocating low income housing tax credit

commitments under Subchapter DD, the department shall allocate five

percent of the housing tax credits in each application cycle to

developments that receive federal financial assistance through the

[ Texas Rural Development Office of the ] United States Department of

Agriculture. Any funds allocated to developments under this

subsection that involve rehabilitation must come from the portion

of funds that are set aside for and allocated to eligible at-risk

developments under Subsection (d-1) and Section 2306.6714(a)

[ 2306.6714 ] and any [ additional ] funds that remain after those

funds have been set aside and allocated [ set aside for those

developments under Subsection (d-1) ]. This subsection does not

apply to a development financed wholly or partly under Section 538

of the Housing Act of 1949 (42 U.S.C. Section 1490p-2) unless the

development involves the rehabilitation of an existing property

that has received and will continue to receive as part of the

financing of the development federal financial assistance provided

under Section 514, [ Section ] 515 , 516, or 521 of the Housing Act of

1949 (42 U.S.C. Section 1484, [ Section ] 1485 , 1486, or 1490a ).

(d-4) A proposed or existing development that, before

September 1, 2013, has been awarded or has received federal

financial assistance provided under Section 514, 515, [ or ] 516 , or

521 of the Housing Act of 1949 (42 U.S.C. Section 1484, 1485, [ or ]

1486 , or 1490a ) may apply for low income housing tax credits

allocated under Subsection (d-2) or (d-3) for the uniform state

service region in which the development is located regardless of

whether the development is located in a rural area.

SECTION 2. Section 2306.6702(a)(5), Government Code, is

amended to read as follows:

(5) "At-risk development" means:

(A) a development that:

(i) has received the benefit of a subsidy in

the form of a below-market interest rate loan, interest rate

reduction, rental subsidy, Section 8 housing assistance payment,

rental supplement payment, rental assistance payment, or equity

incentive under the following federal laws, as applicable:

(a) Sections 221(d)(3) and (5),

National Housing Act (12 U.S.C. Section 1715l);

(b) Section 236, National Housing Act

(12 U.S.C. Section 1715z-1);

(c) Section 202, Housing Act of 1959

(12 U.S.C. Section 1701q);

(d) Section 101, Housing and Urban

Development Act of 1965 (12 U.S.C. Section 1701s);

(e) the Section 8 Additional

Assistance Program for housing developments with HUD-Insured and

HUD-Held Mortgages administered by the United States Department of

Housing and Urban Development as specified by 24 C.F.R. Part 886,

Subpart A;

(f) the Section 8 Housing Assistance

Program for the Disposition of HUD-Owned Projects administered by

the United States Department of Housing and Urban Development as

specified by 24 C.F.R. Part 886, Subpart C;

(g) Sections 514, 515, [ and ] 516, and

521 of the Housing Act of 1949 (42 U.S.C. Sections 1484, 1485, [ and ]

1486 , and 1490a ); or

(h) Section 42, Internal Revenue Code

of 1986; and

(ii) is subject to the following

conditions:

(a) the stipulation to maintain

affordability in the contract granting the subsidy is [ nearing ]

within three years of expiration , based on the anticipated

allocation date of housing tax credits, and, for an automatically

renewing contract, the stipulation in the contract will not be

renewed ; or

(b) the federally issued or held

[ HUD-insured or HUD-held ] mortgage on the development is eligible

for prepayment or is within three years of [ nearing ] the end of its

term , based on the anticipated allocation date of housing tax

credits ; or

(B) a development that proposes to rehabilitate

or reconstruct housing units that:

(i) receive assistance under Section 9,

United States Housing Act of 1937 (42 U.S.C. Section 1437g) and are

owned by:

(a) a public housing authority; or

(b) a public facility corporation

created by a public housing authority under Chapter 303, Local

Government Code;

(ii) received assistance under Section 9,

United States Housing Act of 1937 (42 U.S.C. Section 1437g) and:

(a) are proposed to be disposed of or

demolished by a public housing authority or a public facility

corporation created by a public housing authority under Chapter

303, Local Government Code; or

(b) have been disposed of or

demolished by a public housing authority or a public facility

corporation created by a public housing authority under Chapter

303, Local Government Code, in the two-year period preceding the

application for housing tax credits; or

(iii) receive assistance or will receive

assistance through the Rental Assistance Demonstration program

administered by the United States Department of Housing and Urban

Development as specified by the Consolidated and Further Continuing

Appropriations Act, 2012 (Pub. L. No. 112-55) and its subsequent

amendments, if the application for assistance through the Rental

Assistance Demonstration program is included in the applicable

public housing plan that was most recently approved by the United

States Department of Housing and Urban Development as specified by

24 C.F.R. Section 903.23.

SECTION 3. Sections 2306.6714(a) and (b), Government Code,

are amended to read as follows:

(a) The department shall :

(1) set aside for eligible at-risk developments not

less than 15 percent of the housing tax credits available for

allocation in the calendar year ; and

(2) to the extent that a sufficient number of eligible

applicants exist, allocate to at-risk developments the maximum

amount of housing tax credits set aside for that purpose under

Subdivision (1) .

(b) Housing [ Any amount of housing ] tax credits set aside

under this section that remain [ remains ] after the initial

allocation of housing tax credits are [ is ] available for allocation

to any eligible applicant that receives financial assistance from

the United States Department of Agriculture, as provided by the

qualified allocation plan , only if there are no remaining

applicants who are eligible for the housing tax credits set aside

and allocated under Subsection (a) .

SECTION 4. Sections 2306.111, 2306.6702, and 2306.6714,

Government Code, as amended by this Act, apply only to an

application for low income housing tax credits that is submitted to

the Texas Department of Housing and Community Affairs during an

application cycle that is based on the 2026 qualified allocation

plan or a subsequent plan adopted by the governing board of the

department. An application that is submitted during an application

cycle that is based on an earlier qualified allocation plan is

governed by the law in effect on the date the application cycle

began, and the former law is continued in effect for that purpose.

SECTION 5. This Act takes effect September 1, 2025.