By: Cole H.B. No. 4589       A BILL TO BE ENTITLED   AN ACT   relating to the operation and functions of the Texas Department of   Housing and Community Affairs.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 2306.004(3), Government Code, is amended   to read as follows:                (3)  "Contract for Deed" means a seller-financed   contract for the conveyance of real property under which:                      (A)  legal title does not pass to the purchaser   until the consideration of the contract is fully paid to the seller;   and                      (B)  the seller's remedy for nonpayment is   recision or forfeiture or acceleration of any remaining payments   rather than judicial or nonjudicial foreclosure.                (3)  "Contract for Deed" a seller-financed executory   contract for the conveyance of real property, as further defined in   chapter 5, subchapter D, Property Code, under which:                      (A)  upon recordation of the contract for deed in   the county in which the property is located, the contract for deed   shall be the same as a deed with a vendor's lien. The vendor's lien   is for the amount of the unpaid contract price, less any lawful   deductions, and may be enforced by foreclosure sale under Section   5.066, Property Code, or by judicial foreclosure. A general   warranty is implied unless otherwise limited by the recorded   executory contract, and the seller is not required to continue   insuring the property; and                      (B)  if the contract for deed has not been   recorded, the seller may enforce the remedy of rescission or of   forfeiture and acceleration as further outlined in Section 5.064   Property Code against the buyer in default under a contract for   deed; and                      (C)  for purposes of department loan programs,   satisfaction of this section raises the presumption that ownership   of a residential property under a contract for deed that has been   properly recorded as vested in the buyer.          SECTION 2.  Section 2306.004(36), Government Code, is   amended to read as follows:                (36)  "Urban area" means the area that is located   within the boundaries of a primary metropolitan statistical area or   a metropolitan statistical area other than an area described by   Subdivision (28-a)(B) or eligible for funding as described by   Subdivision (28-a)(C).          SECTION 3.  Section 2306.057(b), Government Code, is amended   to read as follows:          Sec. 2306.057.  COMPLIANCE ASSESSMENT REQUIRED FOR PROJECT   APPROVAL BY BOARD. (a) Before the board approves any project   application submitted under this chapter, the department, through   the division with responsibility for compliance matters, shall:                (1)  assess:                      (A)  the compliance history in this state of the   applicant and any affiliate of the applicant with respect to all   applicable requirements; and                      (B)  the compliance issues associated with the   proposed project; and                (2)  provide to the board a written report regarding   the results of the assessments described by Subdivision (1).          (b)  The written report described by Subsection (a)(2) must   be included in the appropriate project file for board and   department review.may be a summary of any concerns or conditions   identified in the compliance assessment.  Full project files shall   be made available to the board upon request.          (c)  The board shall fully document and disclose any   instances in which the board approves a project application despite   any noncompliance associated with the project, applicant, or   affiliate.          (d)  In assessing the compliance of the project, applicant,   or affiliate, the board shall consider any relevant compliance   information in the department's database created under Section   2306.081, including compliance information provided to the   department by the Texas State Affordable Housing Corporation.          SECTION 4.  Section 2306.1112, Government Code, is amended   to read as follows:          Sec. 2306.1112.  EXECUTIVE AWARD AND REVIEW ADVISORY   COMMITTEE. (a) The department shall establish an executive award   and review processadvisory committee to make recommendations to   the board regarding funding and allocation decisions.          (b)  Prior to making recommendations to the Board, the   Director shall consult withThe advisory committee must include   representatives from the department's underwriting and compliance   functions and from the divisions responsible for administering   federal housing funds provided to the state under the   Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.   Section 12701 et seq.) and for administering low income housing tax   credits.          (c)  The advisory committee is not subject to Chapter 2110.          (d)  expired.          SECTION 5.  Section 2306.1113, Government Code, is amended   by amending subchapter (a-2) to read as follows:          Sec. 2306.1113.  EX PARTE COMMUNICATIONS. (a) During the   period beginning on the date project applications are filed in an   application cycle and ending on the date the board makes a final   decision with respect to the approval of any application in that   cycle, a member of the board may not communicate with the following   persons:                (1)  an applicant or a related party, as defined by   state law, including board rules, and federal law; and                (2)  any person who is:                      (A)  active in the construction, rehabilitation,   ownership, or control of a proposed project, including:                            (i)  a general partner or contractor; and                            (ii)  a principal or affiliate of a general   partner or contractor; or                      (B)  employed as a consultant, lobbyist, or   attorney by an applicant or a related party.          (a-1)  Subject to Subsection (a-2), during the period   beginning on the date project applications are filed in an   application cycle and ending on the date the board makes a final   decision with respect to the approval of any application in that   cycle, an employee of the department may communicate about an   application with the following persons:                (1)  the applicant or a related party, as defined by   state law, including board rules, and federal law; and                (2)  any person who is:                      (A)  active in the construction, rehabilitation,   ownership, or control of the proposed project, including:                            (i)  a general partner or contractor; and                            (ii)  a principal or affiliate of a general   partner or contractor; or                      (B)  employed as a consultant, lobbyist, or   attorney by the applicant or a related party.          (a-2)  A communication under Subsection (a-1) may be oral or   in any written form, including electronic communication through the   Internet, and must satisfy the following conditions:                (1)  the communication must be restricted to technical   or administrative matters directly affecting the application; and                (2)  the communication may must occur or be received on   the premises of the department during established business hours;   and                (32)  a record of the communication must be maintained   and included with the application for purposes of board review and   must contain the following information:                      (A)  the date, time, and means of communication;                      (B)  the names and position titles of the persons   involved in the communication and, if applicable, the person's   relationship to the applicant;                      (C)  the subject matter of the communication; and                      (D)  a summary of any action taken as a result of   the communication.          SECTION 6.  Sections 2306.142 and 2306.143, Government Code,   are repealed.          SECTION 7.  Section 2306.0723, Government Code, is repealed.          SECTION 8.  Subchapter NN, Government Code, is repealed.          SECTION 9.  Section 2306.353, Government Code, is amended by   adding the following subchapters:          (d)  In this section, "credit agreement" and "obligation"   have the meanings assigned by Section 1371.001, Government Code.          (e)  Notwithstanding any other statute, the board may   exercise any of the rights or powers of the governing body of an   issuer under Chapter 1371, Government Code, and may enter into a   credit agreement under that chapter. An obligation issued under   this section is an obligation under Chapter 1371, Government Code,   but is not required to be rated as required by that chapter.          SECTION 10.  Section 2306.6712, Government Code, is amended   by amending subchapter (d) to read as follows:          Sec. 2306.6712.  AMENDMENT OF APPLICATION SUBSEQUENT TO   ALLOCATION BY BOARD. (a) If a proposed modification would   materially alter a development approved for an allocation of a   housing tax credit or other multifamily funding, the department   shall require the applicant to file a formal, written amendment to   the application on a form prescribed by the department.          (b)  The director shall require the department staff   assigned to underwrite applications to evaluate the amendment and   provide an analysis and written recommendation to the board. The   appropriate monitor under Section 2306.6719 shall also provide to   the board an analysis and written recommendation regarding the   amendment.          (c)  The board must vote on whether to approve the amendment.   The board by vote may reject an amendment and, if appropriate,   rescind the allocation of housing tax credits and reallocate the   credits to other applicants on the waiting list required by Section   2306.6711 if the board determines that the modification proposed in   the amendment:                (1)  would materially alter the development in a   negative manner; or                (2)  would have adversely affected the selection of the   application in the application round.          (d)  Material alteration of a development includes:                (1)  a significant modification of the site plan;                (2)  a modification of the number of units or bedroom   mix of units;                (3)  a substantive modification of the scope of tenant   services;                (4)  a reduction of threefive percent or more in the   square footage of the unitsnet rentable area or common areas;                (5)  a significant modification of the architectural   design of the development;                (6)  a modification of the residential density of the   development of at least fiveten percent; and                (7)  any other modification considered significant by   the boarddirector.          (e)  In evaluating the amendment under this subsection, the   department staff shall consider whether the need for the   modification proposed in the amendment was:                (1)  reasonably foreseeable by the applicant at the   time the application was submitted; or                (2)  preventable by the applicant.          (f)  For housing tax credit developments, Tthisthis section   shall be administered in a manner that is consistent with Section   42, Internal Revenue Code of 1986 (26 U.S.C. Section 42).          SECTION 11.  Section 2306.6713 is amended as follows:          Sec. 2306.6713.  HOUSING TAX CREDIT AND OWNERSHIP TRANSFERS   FOR MULTIFAMILY DEVELOPMENTS. (a) An applicant may not transfer an   allocation of housing tax credits or ownership of a development   supported with an allocation of housing tax credits or other   multifamily program funds from the department to any person other   than an affiliate unless the applicant obtains the director's   prior, written approval of the transfer.          (b)  The director may not unreasonably withhold approval of   the transfer.          (c)  An applicant seeking director approval of a transfer and   the proposed transferee must provide to the department a copy of any   applicable agreement between the parties to the transfer, including   any third-party agreement with the department.          (d)  On request, an applicant seeking director approval of a   transfer must provide to the department:                (1)  a list of the names of transferees and related   controlling parties; and                (2)  detailedan explanationinformation describing   the experience and financial capacity of transferees and related   parties.          (e)  When a transfer involves the sale of the development to   a new development owner, theThe development owner or proposed   transferee shall certify to the director that the tenants in the   development have been provided at least a 30-day written   notification of the proposed transfer. The director's approval of   the transfer may not occur prior to the end of the 30-day   notification period to the tenants.notified in writing of the   transfer before the 30th day preceding the date of submission of the   transfer request to the department.          (f)  Not later than the fifth working day after the dateOnce   the department receives all necessary information under this   section, the department shall conduct a qualifications review of a   transferee to determine:                (1)  the transferee's past compliance with all aspects   of the low income housing tax credit program or other multifamily   funding program, including land use restriction agreements; and                (2)  the sufficiency of the transferee's experience   with developments supported with housing tax credit allocations or   other multifamily funds from the department.          (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 12.  Not later than March 1, 2026, the Texas   Department of Housing and Community Affairs shall adopt the rules   necessary to implement Section 2306.6712, Chapter 2306, Government   Code, as amended by this Act.          SECTION 13.  The changes in law made by this Act relating to   the evaluation of applications for financial assistance   administered by the Texas Department of Housing and Community   Affairs apply only to an application submitted on or after the   effective date of this Act. An application submitted before the   effective date of this Act is governed by the law in effect when the   application was submitted, and the former law is continued in   effect for that purpose.          SECTION 14.  This Act takes effect September 1, 2025.