Bill Text: TX HB2071 | 2023-2024 | 88th Legislature | Comm Sub
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to certain public facilities, including public facilities used to provide affordable housing.
Spectrum: Slight Partisan Bill (Republican 17-6)
Status: (Passed) 2023-06-18 - Effective immediately [HB2071 Detail]
Download: Texas-2023-HB2071-Comm_Sub.html
Bill Title: Relating to certain public facilities, including public facilities used to provide affordable housing.
Spectrum: Slight Partisan Bill (Republican 17-6)
Status: (Passed) 2023-06-18 - Effective immediately [HB2071 Detail]
Download: Texas-2023-HB2071-Comm_Sub.html
88R20080 JAM-F | |||
By: Jetton, Harris of Anderson, DeAyala, | H.B. No. 2071 | ||
Cortez, et al. | |||
Substitute the following for H.B. No. 2071: | |||
By: Lozano | C.S.H.B. No. 2071 |
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relating to certain public facilities used to provide affordable | ||
housing. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 303.021, Local Government Code, is | ||
amended by adding Subsection (d) to read as follows: | ||
(d) A corporation or a sponsor may finance, own, or operate | ||
a multifamily residential development only if: | ||
(1) the corporation or sponsor complies with all | ||
applicable provisions of this chapter; and | ||
(2) the development is located: | ||
(A) inside the area of operation of the sponsor, | ||
if the sponsor is a housing authority; or | ||
(B) if the sponsor is not a housing authority, | ||
inside the boundaries of the sponsor, without regard to whether the | ||
sponsor is authorized to own property or provide services outside | ||
the boundaries of the sponsor. | ||
SECTION 2. The heading to Section 303.042, Local Government | ||
Code, is amended to read as follows: | ||
Sec. 303.042. TAXATION; EXEMPTION. | ||
SECTION 3. Subchapter B, Chapter 303, Local Government | ||
Code, is amended by adding Section 303.0421, and a heading is added | ||
to that section to read as follows: | ||
Sec. 303.0421. MULTIFAMILY RESIDENTIAL DEVELOPMENTS OWNED | ||
BY PUBLIC FACILITY CORPORATIONS. | ||
SECTION 4. Section 303.0421, Local Government Code, as | ||
added by this Act, is amended by adding Subsections (a), (c), and | ||
(d) to read as follows: | ||
(a) This section applies to a multifamily residential | ||
development that is owned by a corporation created under this | ||
chapter, except that this section does not apply to a multifamily | ||
residential development that: | ||
(1) has at least 20 percent of its residential units | ||
reserved for public housing units; | ||
(2) participates in the Rental Assistance | ||
Demonstration program administered by the United States Department | ||
of Housing and Urban Development; | ||
(3) receives financial assistance administered under | ||
Chapter 1372, Government Code, or receives financial assistance | ||
from another type of tax-exempt bond; or | ||
(4) receives financial assistance administered under | ||
Subchapter DD, Chapter 2306, Government Code. | ||
(c) A multifamily residential development that is owned by a | ||
corporation created under this chapter by a housing authority and | ||
to which Subsection (a) applies must hold a public hearing, at a | ||
meeting of the authority's governing body, to approve the | ||
development. | ||
(d) Notwithstanding Subsection (b), an occupied multifamily | ||
residential development that is acquired by a corporation and to | ||
which Subsection (a) applies is eligible for an exemption under | ||
Section 303.042(c) for: | ||
(1) the one-year period following the date of the | ||
acquisition, regardless of whether the development complies with | ||
the requirements of Subsection (b); and | ||
(2) a year following the year described by Subdivision | ||
(1) only if the development comes into compliance with the | ||
requirements of Subsection (b) not later than the first anniversary | ||
of the date of the acquisition. | ||
SECTION 5. Sections 303.042(d), (e), and (f), Local | ||
Government Code, are transferred to Section 303.0421, Local | ||
Government Code, as added by this Act, redesignated as Sections | ||
303.0421(b), (e), and (f), Local Government Code, and amended to | ||
read as follows: | ||
(b) Notwithstanding Section 303.042(c) and subject to | ||
Subsections (c) and (d) of this section, an [ |
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Section 303.042(c) [ |
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development to which Subsection (a) applies is available [ |
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only if: | ||
(1) the requirements under Section 303.0425 are met | ||
[ |
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(2) at least 50 percent of the units in the multifamily | ||
residential development are reserved for occupancy by individuals | ||
and families earning not more [ |
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median [ |
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(3) the corporation delivers to the presiding officer | ||
of the governing body of each taxing unit in which the development | ||
is to be located written notice of the development, at least 30 days | ||
before the date: | ||
(A) the corporation takes action to approve a new | ||
multifamily residential development or the acquisition of an | ||
occupied multifamily residential development; and | ||
(B) of any public hearing required to be held | ||
under this section; and | ||
(4) for an occupied multifamily residential | ||
development that is acquired by a corporation and not otherwise | ||
subject to a land use restriction agreement under Section 2306.185, | ||
Government Code: | ||
(A) not less than: | ||
(i) 15 percent of the total gross cost of | ||
the existing development, as shown in the settlement statement, is | ||
expended on rehabilitating, renovating, reconstructing, or | ||
repairing the development, with initial expenditures and | ||
construction activities: | ||
(a) beginning not later than the first | ||
anniversary of the date of the acquisition; and | ||
(b) finishing not later than the third | ||
anniversary of the date of the acquisition; and | ||
(ii) 20 percent of the units are reserved | ||
for occupancy as lower income housing units, as defined under | ||
Section 303.0425; or | ||
(B) at least 50 percent of the units are reserved | ||
for occupancy as lower income housing units, as defined under | ||
Section 303.0425. | ||
(e) For the purposes of Subsection (a) [ |
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housing unit" is a residential [ |
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landlord receives a public housing operating subsidy. It does not | ||
include a unit for which payments are made to the landlord under the | ||
federal Section 8 Housing Choice Voucher Program. | ||
(f) Notwithstanding Sections 303.042(a) and (b) | ||
[ |
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corporation owns a particular public facility that is a multifamily | ||
residential development: | ||
(1) [ |
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the real property of the public facility granted by the corporation | ||
shall be treated in the same manner as a leasehold or other | ||
possessory interest in real property granted by an authority under | ||
Section 379B.011(b); and | ||
(2) the materials used by a person granted a | ||
possessory interest described by Subdivision (1) to improve the | ||
real property of the public facility shall be exempt from all sales | ||
and use taxes because the materials are for the benefit of the | ||
corporation. | ||
SECTION 6. Subchapter B, Chapter 303, Local Government | ||
Code, is amended by adding Section 303.0425 to read as follows: | ||
Sec. 303.0425. ADDITIONAL REQUIREMENTS FOR BENEFICIAL TAX | ||
TREATMENT RELATING TO CERTAIN PUBLIC FACILITIES. (a) In this | ||
section: | ||
(1) "Developer" means a private entity that constructs | ||
a development, including the rehabilitation, renovation, | ||
reconstruction, or repair of a development. | ||
(2) "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). | ||
(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) "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. | ||
(5) "Public facility user" means a public-private | ||
partnership entity or a developer or other private entity that has | ||
an ownership interest or a leasehold or other possessory interest | ||
in a public facility that is a multifamily residential development. | ||
(b) Not less than 10 percent of the residential units in a | ||
development must be reserved as lower income housing units unless: | ||
(1) a majority of the members of the board of the | ||
corporation are elected officials; or | ||
(2) the development is approved by the governing body | ||
of the municipality in which the development is located or, if the | ||
development is not located in a municipality, the county in which | ||
the development is located. | ||
(c) The percentage of lower and moderate income housing | ||
units reserved in each category of units in the development, based | ||
on the number of bedrooms per unit, must be the same as the | ||
percentage of each category of housing units reserved in the | ||
development as a whole. | ||
(d) The monthly rent charged per unit may not exceed: | ||
(1) 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; or | ||
(2) 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. | ||
(e) In calculating the income of an individual or family for | ||
a lower or moderate income housing unit, the public facility 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 lower or moderate income housing unit. | ||
(f) The public facility user may not: | ||
(1) refuse to rent a residential unit to an individual | ||
or family because the individual or family participates in the | ||
housing choice voucher program, if the assistance received by the | ||
individual or family through the program is equal to or greater than | ||
the amount established as the maximum monthly rent for the | ||
applicable unit under Subsection (d); or | ||
(2) 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. | ||
(g) A corporation that owns or leases to a public facility | ||
user a public facility used as a multifamily residential | ||
development shall publish on its Internet website information about | ||
the development's: | ||
(1) compliance with the requirements of this section; | ||
and | ||
(2) policies regarding tenant participation in the | ||
housing choice voucher program. | ||
(h) The public facility user shall: | ||
(1) affirmatively market available residential units | ||
directly to individuals and families participating in the housing | ||
choice voucher program; and | ||
(2) notify local housing authorities of the | ||
multifamily residential development's acceptance of tenants in the | ||
housing choice voucher program. | ||
(i) The public facility user must: | ||
(1) not later than June 1 of each year, submit to the | ||
chief appraiser of the appraisal district in which the development | ||
is located an audit report for a compliance audit, prepared at the | ||
expense of the public facility user and conducted by an independent | ||
auditor or compliance expert with an established history of | ||
providing similar audits on housing compliance matters, to | ||
determine whether the public facility user is in compliance with | ||
the requirements of this section; and | ||
(2) before the initial occupancy of an unoccupied | ||
development or not later than the 30th day after the date of | ||
acquisition of an occupied development, submit to the Texas | ||
Department of Housing and Community Affairs a report that includes, | ||
for each development: | ||
(A) the name of the development; | ||
(B) the street address and municipality or county | ||
in which the development is located; | ||
(C) the name of the developer; | ||
(D) the total number of residential units, | ||
reported by number of bedrooms; | ||
(E) the total number of lower income housing | ||
units, reported by number of bedrooms, by level of income | ||
restriction, and by initial rent; | ||
(F) the total number of moderate income housing | ||
units, reported by number of bedrooms, by level of income | ||
restriction, and by initial rent; | ||
(G) the number of residential units rented by | ||
individuals and families who participate in the housing choice | ||
voucher program, reported by number of bedrooms; | ||
(H) a copy of the ground lease; and | ||
(I) a copy of the partnership agreement or other | ||
governing agreement executed by the corporation for the public | ||
facility, if any. | ||
(j) The initial audit report required to be submitted under | ||
Subsection (i)(1) by a public facility user to the chief appraiser | ||
of the appraisal district is due not later than June 1 of the year | ||
following the first anniversary of: | ||
(1) the date of acquisition for an occupied | ||
multifamily residential development that is acquired by a | ||
corporation; or | ||
(2) the date a new multifamily residential development | ||
first becomes occupied by one or more tenants. | ||
(k) An exemption under Section 303.042(c) does not apply for | ||
a tax year in which a multifamily residential development that is | ||
owned by a public facility corporation created under this chapter | ||
and that is required to submit an audit report under Subsection | ||
(i)(1): | ||
(1) does not submit the required audit report; or | ||
(2) submits an audit report that does not establish | ||
that the development is in compliance with the requirements of this | ||
section. | ||
(l) The reports submitted under Subsection (i) are subject | ||
to disclosure under Chapter 552, Government Code, except that | ||
information containing tenant names, unit numbers, or other tenant | ||
identifying information may be redacted. The Texas Department of | ||
Housing and Community Affairs shall post a copy of the report | ||
received under Subsection (i)(2) on its Internet website. | ||
(m) Each lease agreement for a residential unit in a | ||
multifamily residential development subject to this section must | ||
provide that: | ||
(1) 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; | ||
(2) the landlord may only choose to not renew the lease | ||
if the tenant: | ||
(A) is in material noncompliance with the lease, | ||
including nonpayment of rent after the required cure period; | ||
(B) committed one or more substantial violations | ||
of the lease; | ||
(C) failed to provide required information on the | ||
income, composition, or eligibility of the tenant's household; or | ||
(D) committed repeated minor violations of the | ||
lease that: | ||
(i) disrupt the livability of the property; | ||
(ii) adversely affect the health and safety | ||
of any person or the right to quiet enjoyment of the leased premises | ||
and related development facilities; | ||
(iii) interfere with the management of the | ||
development; or | ||
(iv) have an adverse financial effect on | ||
the development, including the repeated failure of the tenant to | ||
pay rent in a timely manner; and | ||
(3) 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. | ||
(n) A tenant may not waive the protections provided by | ||
Subsection (m). | ||
(o) A public facility user must be given: | ||
(1) written notice from the Texas Department of | ||
Housing and Community Affairs or appropriate appraisal district of | ||
an instance of noncompliance with this section; and | ||
(2) 60 days after the day notice is received under | ||
Subdivision (1), to cure the matter that is the subject of the | ||
notice. | ||
(p) Requirements under this subchapter relating to the | ||
reservation of income-restricted residential units or income | ||
restrictions applicable to tenants of a multifamily residential | ||
development subject to this subchapter must be documented in a land | ||
use restriction agreement or a similar restrictive instrument that | ||
is recorded in the real property records of the county in which the | ||
development is located. | ||
SECTION 7. Sections 392.005(c) and (d), Local Government | ||
Code, are amended to read as follows: | ||
(c) An exemption under this section for a multifamily | ||
residential development which is owned by [ |
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a housing development corporation[ |
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created by a housing authority, other than a public facility | ||
corporation created by a housing authority under Chapter 303, and | ||
which does not have at least 20 percent of its residential units | ||
reserved for public housing units, applies only if: | ||
(1) the authority holds a public hearing, at a regular | ||
meeting of the authority's governing body, to approve the | ||
development; and | ||
(2) 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 | ||
[ |
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(d) For the purposes of Subsection (c), a "public housing | ||
unit" is a residential [ |
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a public housing operating subsidy. It does not include a unit for | ||
which payments are made to the landlord under the federal Section 8 | ||
Housing Choice Voucher Program. | ||
SECTION 8. (a) Subject to Subsections (b), (c), and (d) of | ||
this section, Sections 303.0421 and 303.0425, Local Government | ||
Code, as added by this Act, apply only to a tax imposed for a tax | ||
year beginning on or after the effective date of this Act. | ||
(b) Subject to Subsections (c) and (d) of this section, | ||
Sections 303.0421 and 303.0425, Local Government Code, as added by | ||
this Act, apply only to a multifamily residential development that | ||
is approved on or after the effective date of this Act by a public | ||
facility corporation or the sponsor of a public facility | ||
corporation, in accordance with Chapter 303, Local Government Code. | ||
A multifamily residential development that was approved by a public | ||
facility corporation or the sponsor of a public facility | ||
corporation before the effective date of this Act is governed by the | ||
law in effect on the date the development was approved by the | ||
corporation or sponsor, and the former law is continued in effect | ||
for that purpose. | ||
(c) Subject to Subsection (d) of this section, Section | ||
303.0421(d), Local Government Code, as added by this Act, applies | ||
only to an occupied multifamily residential development that is | ||
acquired by a public facility corporation on or after the effective | ||
date of this Act. An occupied multifamily residential development | ||
that is acquired by a public facility corporation before the | ||
effective date of this Act is governed by the law in effect on the | ||
date the development was acquired by the public facility | ||
corporation, and the former law is continued in effect for that | ||
purpose. | ||
(d) Notwithstanding any other provision of this section: | ||
(1) Sections 303.0425(g), (i), (j), (k), and (l), | ||
Local Government Code, as added by this Act, apply to all | ||
multifamily residential developments owned by a public facility | ||
corporation; and | ||
(2) the initial audit report required to be submitted | ||
under Section 303.0425(i)(1), Local Government Code, as added by | ||
this Act, by a public facility user of a multifamily residential | ||
development that was approved or acquired by a public facility | ||
corporation before the effective date of this Act must be submitted | ||
by the later of: | ||
(A) the date established by Section 303.0425(j), | ||
Local Government Code, as added by this Act; or | ||
(B) June 1, 2024. | ||
SECTION 9. 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, 2023. |