SB2767 - Relating to public facility corporations.

      By: Cook S.B. No. 2767               A BILL TO BE ENTITLED   AN ACT   relating to public facility corporations.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 303.041, Local Government Code, is   amended by adding Subsection (e) to read as follows:           (e)     Notwithstanding Subsections (a)(3) and (d), a   corporation may not convey, assign, or transfer a tax exemption   granted under this subchapter to another entity unless   substantially all of the assets of the taxable entity are conveyed,   assigned, or transferred in the same transaction.          SECTION 2.  Section 303.0421, Local Government Code, is   amended by amending Subsection (b) and adding Subsections (g-1) and   (j) to read as follows:          (b)  Notwithstanding Section 303.042(c) and subject to   Subsections (c) and (d) of this section, an exemption under Section   303.042(c) for a multifamily residential development to which   Subsection (a) applies is available only if:                (1)  the requirements under Sections [ Section ]   303.0425 and 303.0426 are met;                (2)  at least:                      (A)  10 percent of the units in the multifamily   residential development are reserved for occupancy as lower income   housing units, as defined under Section 303.0425; and                      (B)  40 percent of the units in the multifamily   residential development are reserved for occupancy as moderate   income housing units, as defined under Section 303.0425;                (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;                (4)  [ if a majority of the members of the board are not   elected officials, ] the development is approved by the governing   body of each taxing unit [ 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 ];                (5)  for [ an occupied ] a 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 ] that was occupied at the time of acquisition or was   occupied at any time within the two-year period preceding the date   of the acquisition :                      (A)   at least 10 percent of the units in the   development are reserved for occupancy as lower income housing   units, as defined under Section 303.0425; at least 40 percent of the   units in the development are reserved for occupancy as moderate   income housing units, as defined under Section 303.0425; and  not   less than 15 percent of the total gross cost of acquiring the   [ existing ] development, as shown in the settlement statement   related to the acquisition , is expended on rehabilitating,   renovating, reconstructing, or repairing the development, with   initial expenditures and construction activities:                            (i)  beginning not later than the first   anniversary of the date of the acquisition; and                            (ii)  finishing not later than the third   anniversary of the date of the acquisition; or                      (B)  at least at least 25 percent of the units are   reserved for occupancy as lower income housing units, as defined   under Section 303.0425, [ and 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 ];, and at least 25   percent of the units in the development are reserved for occupancy   as moderate income housing units, as defined under Section 303.0425   [ 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; and ];                (6)   not less than 30 days before final approval of the   development:                       (A)   the corporation or corporation's sponsor   conducts, or obtains from a professional entity that has experience   underwriting affordable multifamily residential developments and   does not have a financial interest in the applicable development,   developer, or public facility user, an underwriting assessment of   the proposed development that [ allows the corporation to make a   good faith determination that ] is dated within six months of the   corporation 's approval of the development ;                 (7)     not less than 30 days before final approval of the   development, the corporation or corporation's sponsor makes a good   faith determination based on the underwriting assessment that                            [ (i)     for an occupied multifamily   residential development acquired by the corporation, ] the total   annual amount of rent reduction [ on the income-restricted units   provided ] at the development will be not less than 60 percent of the   estimated amount of the annual ad valorem taxes that would be   imposed on the property [ without an exemption under Section   303.042(c) for the second, third, and fourth years after the date of   acquisition by the corporation; and ] in the same tax year if the   property did not have the income restrictions and did not have an   exemption from those taxes under Section 303.042(c):                       (A)     for occupied developments acquired by the   corporation, for each of the third, fourth, and fifth tax years   after the date of acquisition; and                       (B)     for all other developments, for each of the   second, third, and fourth tax years after the development first   becomes occupied by one or more tenants while owned by the   corporation; and                            [ (ii) for a newly constructed multifamily   residential development, the development would not be feasible   without the participation of the corporation; and ]                (8) [ (B) ]  the corporation publishes on its Internet   website a copy of the underwriting assessment described by   Paragraph (A) Subdivision (6).           (g-1)     This subsection and Subsections (f) and (g) expire   December 31, 2027.           (j)     A corporation or a sponsor of a corporation may not   accept a payment from a public facility user or developer in   exchange for the corporation's or sponsor's participation in a   multifamily residential development unless the corporation or   sponsor obtains approval for the payment from each taxing unit in   which the development is to be located.          SECTION 3.  Sections 303.0421(h) and 303.0421(i), Local   Government Code, are repealed.          SECTION 4.  Chapter 303, Local Government Code, is amended   by adding Section 303.0422 to read as follows:           Sec.   303.0422.     RENT REDUCTION REQUIREMENTS FOR BENEFICIAL   TAX TREATMENT RELATING TO CERTAIN MULTIFAMILY RESIDENTIAL   DEVELOPMENTS.           (a)     This section does not apply to a multifamily development   that:                 (1)     has at least 20 percent of its residential units   reserved for public housing units;                 (2)     participates in the Rental Housing Assistance   Demonstration program administered by the United States Department   of Housing and Urban Development;and                 (3)     receives financial assistance administered under   Subchapter 2306, Government Code.           (b)     An exemption under Section 303.042(c) does not apply in   a tax year to a multifamily residential development if the   difference in the rent charged for the income-restricted   residential units in the development in the immediately prior tax   year and the estimated maximum market rents that could be charged   for those units without the rent or income restrictions in such tax   year, as reported in the audit under Section 303.0426, is less than   60 percent of the amount of the ad valorem taxes that would have   been imposed on the property in the same prior tax year if the   property did not have the income restrictions and did not have an   exemption from those taxes under Section 303.042(c):                 (1)     beginning with the first tax year after the tax   year in which the development first becomes occupied by one or more   residential tenants;                 (2)     notwithstanding Subdivision (1), for an existing   multifamily residential development that is acquired by the   corporation, beginning with the third tax year after the tax year   that the corporation acquires the development; and                 (3)     notwithstanding Subdivisions (1) and (2), for a   multifamily residential development owned by the corporation as of   September 1, 2025, beginning with the 2028 tax year.          SECTION 5.  Section  The heading to Section 303.0426, Local   Government Code, is amended to read as follows:          Sec. 303.0426.  AUDIT REQUIREMENTS APPLICABLE TO ALL [ FOR   CERTAIN ] MULTIFAMILY RESIDENTIAL DEVELOPMENTS.          SECTION 6.  Sections 303.0426(b), (c), (d), (e), (f), and   (g), Local Government Code, are amended to read as follows:          (b)  A public facility user of any [ a ] multifamily   residential development claiming an exemption under Section   303.042(c) [ and to which Section 303.0421 applies ] must annually   submit to the department and 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:                (1)  determine whether the public facility user and   development is in compliance with Sections 303.0421 , 303.0422, and   303.0425 , if applicable ; and                (2)  identify the difference in the rent charged for   income-restricted residential units and the estimated maximum   market rents that could be charged for those units without the rent   or income restrictions.     &#xA [Text truncated for display. 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