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