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