87R2511 SMT-D     By: Rosenthal H.B. No. 1286       A BILL TO BE ENTITLED   AN ACT   relating to requirements for beneficial tax treatment related to a   leasehold or other possessory interest in a public facility used to   provide affordable housing.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 303.042(f), Local Government Code, is   amended to read as follows:          (f)  Notwithstanding Subsections (a) and (b), during the   period of time that a corporation owns a particular public   facility, a leasehold or other possessory interest in the real   property of the public facility granted by the corporation shall   be treated in the same manner as a leasehold or other possessory   interest in real property granted by an authority under Section   379B.011(b) if the requirements under Section 303.0425 are met.          SECTION 2.  Subchapter B, Chapter 303, Local Government   Code, is amended by adding Section 303.0425 to read as follows:          Sec. 303.0425.  REQUIREMENTS FOR BENEFICIAL TAX TREATMENT   RELATING TO CERTAIN PUBLIC FACILITIES. (a) In this section:                (1)  "Affordable housing unit" means a residential unit   reserved for occupancy by an individual or family earning not more   than 80 percent of the area median income, adjusted for family size.                 (2)  "Department" means the Texas Department of Housing   and Community Affairs.                (3)  "Developer" means a private entity that constructs   or rehabilitates a development.                (4)  "Housing choice voucher program" means the housing   choice voucher program under Section 8, United States Housing Act   of 1937 (42 U.S.C. Section 1437f).                (5)  "Housing development" means a development   constructed or rehabilitated to provide multifamily housing that   includes affordable housing units.                 (6)  "Public facility user" means a developer or other   private entity that has a leasehold or other possessory interest in   a public facility used to provide multifamily housing.          (b)  Section 303.042(f) applies to a leasehold or other   possessory interest in a public facility only if the sponsor, the   corporation, the public facility user, and the housing development   meet the requirements of this section, as applicable. The   requirements prescribed by this section apply only to the   application of taxes related to a leasehold or other possessory   interest in a public facility under Section 303.042(f) and do not   restrict the authority of a corporation to lease a public facility   to a private entity under terms other than the terms described by   this section.          (c)  A sponsor shall identify goals for public facilities   used for housing developments and establish selection criteria   based on the goals to be used by corporations for scoring proposals   from developers of housing developments. A corporation must issue a   request for proposals from developers before the corporation enters   into a lease agreement for a public facility with a developer for   the purpose of constructing or rehabilitating a housing   development.          (d)  If a developer substantially rehabilitates an existing   multifamily residential property that is a public facility leased   by the developer, the original construction of the property must   have been completed at least 10 years before the date the developer   begins rehabilitation of the property.           (e)  A public facility user must reserve:                (1)  at least 50 percent of the total units in a housing   development as affordable housing units;                (2)  at least 50 percent of the affordable housing   units in the development for occupancy by individuals or families   earning not more than 60 percent of area median income, adjusted for   family size; and                (3)  at least 20 percent of the affordable housing   units in the development for individuals or families participating   in the housing choice voucher program if the development is   located:                      (A)  in the attendance zone of an elementary   school that has passed accountability standards adopted by the   Texas Education Agency for the most recent school year available;                      (B)  in the attendance zone of a high school with a   graduation rate of at least 85 percent; and                      (C)  in a census tract in which:                            (i)  fewer than 10 percent of the households   have a household income equal to or less than the federal poverty   line; and                            (ii)  the median income for households is   equal to or greater than 80 percent of area median income.           (f)  The percentage of affordable housing units reserved in   each category of units in the housing development, based on the   number of bedrooms and bathrooms per unit, must be the same as the   percentage of affordable housing units reserved in the housing   development as a whole.          (g)  The monthly rent charged by a public facility user for   an affordable housing unit may not exceed:                 (1)  30 percent of 80 percent of area median income,   minus an allowance for utility costs, if the individual or family   renting the unit earns more than 60 percent but not more than 80   percent of the area median income, adjusted for family size; and                (2)  30 percent of 60 percent of area median income,   minus an allowance for utility costs, if the individual or family   renting the unit earns not more than 60 percent of the area median   income, adjusted for family size.          (h)  In calculating the income of an individual or family for   an affordable housing unit, the public facility user must consider   the income of every individual who will be living in the unit.          (i)  A public facility user may not:                (1)  refuse to rent an affordable housing unit to an   individual or family because the individual or family participates   in the housing choice voucher program; or                (2)  use a financial or minimum income standard that   requires an individual or family participating in the housing   choice voucher program to have a monthly income of more than 250   percent of the individual's or family's share of the total monthly   rent payable for an affordable housing unit.           (j)  A housing authority that sponsors a corporation that   leases a public facility used as a housing development to a public   facility user shall:                (1)  publish information about the affordable housing   units in the housing development on its Internet website, if the   authority maintains a website; and                 (2)  provide information about the affordable housing   units directly to individuals and families participating in the   authority's housing choice voucher program.          (k)  Not later than February 1 of each year, a public   facility user of a housing development must submit to the chief   appraiser of the appraisal district in which the housing   development is located an audit report for a compliance audit   conducted by an independent auditor to determine whether the public   facility user is in compliance with:                (1)  all contracts and other agreements between the   public facility user and the sponsor or corporation relating to the   housing development; and                 (2)  all applicable state and local laws, including the   requirements of this section.          (l)  The sponsor of a corporation that leases a public   facility used as a housing development to a public facility user   shall submit an annual report to the department and to the   comptroller. The report must include:                (1)  a copy of all contracts and other agreements   between the public facility user and the sponsor or corporation   relating to the housing development; and                (2)  statistics describing the demographics of the   residents of the housing development, including incomes and family   sizes.           (m)  The department and the comptroller shall each post a   copy of a report received under Subsection (l) on its respective   Internet website.           (n)  The governing board of the department shall adopt rules   and forms necessary to implement Subsection (l).          SECTION 3.  Section 303.0425, Local Government Code, as   added by this Act, applies only to a leasehold or other possessory   interest in a public facility granted by a public facility   corporation to a public facility user, as defined by that section,   on or after the effective date of this Act.          SECTION 4.  As soon as practicable after the effective date   of this Act, the governing board of the Texas Department of Housing   and Community Affairs shall adopt rules as necessary to implement   Section 303.0425(l), Local Government Code, as added by this Act.          SECTION 5.  This Act takes effect September 1, 2021.