S.B. No. 1989
 
 
 
 
AN ACT
  relating to underwriting standards for evaluating applications for
  low income housing tax credits.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 2306.148, Government Code, is amended to
  read as follows:
         Sec. 2306.148.  UNDERWRITING STANDARDS. (a)  The board
  shall have the specific duty and power to adopt underwriting
  standards for:
               (1)  loans made or financed by the housing finance
  division; and
               (2)  housing tax credits allocated by the department.
         (b)  Underwriting standards adopted under Subsection (a)(2)
  and used to determine the feasibility of a proposed development
  must be consistent with criteria established under Section
  2306.185.
         SECTION 2.  Section 2306.185, Government Code, is amended by
  adding Subsections (d-1), (d-2), (d-3), and (d-4) and amending
  Subsection (e) to read as follows:
         (d-1)  For developments receiving housing tax credits, the
  department shall determine the feasibility of the development at
  the time of cost certification using: 
               (1)  actual net operating income, adjusted for
  stabilization of rents and extraordinary lease-up expenses; and
               (2)  a maximum debt coverage ratio of 1.50 or higher as
  adopted by department rule.
         (d-2)  A feasibility determination made under Subsection
  (d-1) may not include a maximum operating expense-to-income ratio.
         (d-3)  In determining net operating income and making the
  appropriate adjustments under Subsection (d-1)(1), the department
  shall consider the permanent lender and equity partner
  stabilization requirements documented in the loan and in the
  partnership or entity agreements.
         (d-4)  The department may adopt rules providing for
  exceptions to the maximum debt coverage ratio requirement of
  Subsection (d-1)(2) with respect to specific types of projects.
         (e)  Subsections (c), [and] (d), (d-1), (d-2), (d-3), and
  (d-4) 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 3.  The change in law made by this Act applies 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 begins on or after the effective
  date of this Act. An application that is submitted during an
  application cycle that began before the effective date of this Act
  is governed by the law in effect at the time the application cycle
  began, and the former law is continued in effect for that purpose.
         SECTION 4.  This Act takes effect September 1, 2015.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 1989 passed the Senate on
  May 11, 2015, by the following vote:  Yeas 30, Nays 1.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 1989 passed the House on
  May 22, 2015, by the following vote:  Yeas 140, Nays 0,
  two present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor