89R11270 JAM-F     By: Menéndez S.B. No. 2471       A BILL TO BE ENTITLED   AN ACT   relating to a set-aside of low income housing tax credits for   at-risk housing developments and to the allocation of housing tax   credits to those developments and certain other developments.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 2306.111, Government Code, is amended by   amending Subsections (a), (d-1), (d-2), and (d-4) and adding   Subsection (a-1) to read as follows:          (a)  In this section, "at-risk" development has the meaning   assigned by Section 2306.6702.          (a-1)  The department, through the housing finance division,   shall administer all federal housing funds provided to the state   under the Cranston-Gonzalez National Affordable Housing Act (42   U.S.C. Section 12704 et seq.) or any other affordable housing   program.          (d-1)  In allocating low income housing tax credit   commitments under Subchapter DD, the department shall, before   applying the regional allocation formula prescribed by Section   2306.1115, set aside for and allocate to at-risk developments[, as   defined by Section 2306.6702,] not less than the minimum amount of   housing tax credits required to be set aside and allocated under   Section 2306.6714(a) [2306.6714].  Funds or credits are not   required to be allocated according to the regional allocation   formula under Subsection (d) if:                (1)  the funds or credits are reserved for   contract-for-deed conversions or for set-asides mandated by state   or federal law and each contract-for-deed allocation or set-aside   allocation equals not more than 10 percent of the total allocation   of funds or credits for the applicable program;                (2)  the funds or credits are allocated by the   department primarily to serve persons with disabilities; or                (3)  the funds are housing trust funds administered by   the department under Sections 2306.201-2306.206 that are not   otherwise required to be set aside under state or federal law and do   not exceed $3 million for each programmed activity during each   application cycle.          (d-2)  In allocating low income housing tax credit   commitments under Subchapter DD, the department shall allocate five   percent of the housing tax credits in each application cycle to   developments that receive federal financial assistance through the   [Texas Rural Development Office of the] United States Department of   Agriculture.  Any funds allocated to developments under this   subsection that involve rehabilitation must come from the portion   of funds that are set aside for and allocated to eligible at-risk   developments under Subsection (d-1) and Section 2306.6714(a)   [2306.6714] and any [additional] funds that remain after those   funds have been set aside and allocated [set aside for those   developments under Subsection (d-1)].  This subsection does not   apply to a development financed wholly or partly under Section 538   of the Housing Act of 1949 (42 U.S.C. Section 1490p-2) unless the   development involves the rehabilitation of an existing property   that has received and will continue to receive as part of the   financing of the development federal financial assistance provided   under Section 514, [Section] 515, 516, or 521 of the Housing Act of   1949 (42 U.S.C. Section 1484, [Section] 1485, 1486, or 1490a).          (d-4)  A proposed or existing development that, before   September 1, 2013, has been awarded or has received federal   financial assistance provided under Section 514, 515, [or] 516, or   521 of the Housing Act of 1949 (42 U.S.C. Section 1484, 1485, [or]   1486, or 1490a) may apply for low income housing tax credits   allocated under Subsection (d-2) or (d-3) for the uniform state   service region in which the development is located regardless of   whether the development is located in a rural area.          SECTION 2.  Section 2306.6702(a)(5), Government Code, is   amended to read as follows:                (5)  "At-risk development" means:                      (A)  a development that:                            (i)  has received the benefit of a subsidy in   the form of a below-market interest rate loan, interest rate   reduction, rental subsidy, Section 8 housing assistance payment,   rental supplement payment, rental assistance payment, or equity   incentive under the following federal laws, as applicable:                                  (a)  Sections 221(d)(3) and (5),   National Housing Act (12 U.S.C. Section 1715l);                                  (b)  Section 236, National Housing Act   (12 U.S.C. Section 1715z-1);                                  (c)  Section 202, Housing Act of 1959   (12 U.S.C. Section 1701q);                                  (d)  Section 101, Housing and Urban   Development Act of 1965 (12 U.S.C. Section 1701s);                                  (e)  the Section 8 Additional   Assistance Program for housing developments with HUD-Insured and   HUD-Held Mortgages administered by the United States Department of   Housing and Urban Development as specified by 24 C.F.R. Part 886,   Subpart A;                                  (f)  the Section 8 Housing Assistance   Program for the Disposition of HUD-Owned Projects administered by   the United States Department of Housing and Urban Development as   specified by 24 C.F.R. Part 886, Subpart C;                                  (g)  Sections 514, 515, [and] 516, and   521 of the Housing Act of 1949 (42 U.S.C. Sections 1484, 1485, [and]   1486, and 1490a); or                                  (h)  Section 42, Internal Revenue Code   of 1986; and                            (ii)  is subject to the following   conditions:                                  (a)  the stipulation to maintain   affordability in the contract granting the subsidy is [nearing]   within three years of expiration, based on the anticipated   allocation date of housing tax credits, and, for an automatically   renewing contract, the stipulation in the contract will not be   renewed; or                                  (b)  the federally issued or held   [HUD-insured or HUD-held] mortgage on the development is eligible   for prepayment or is within three years of [nearing] the end of its   term, based on the anticipated allocation date of housing tax   credits; or                      (B)  a development that proposes to rehabilitate   or reconstruct housing units that:                            (i)  receive assistance under Section 9,   United States Housing Act of 1937 (42 U.S.C. Section 1437g) and are   owned by:                                  (a)  a public housing authority; or                                  (b)  a public facility corporation   created by a public housing authority under Chapter 303, Local   Government Code;                            (ii)  received assistance under Section 9,   United States Housing Act of 1937 (42 U.S.C. Section 1437g) and:                                  (a)  are proposed to be disposed of or   demolished by a public housing authority or a public facility   corporation created by a public housing authority under Chapter   303, Local Government Code; or                                  (b)  have been disposed of or   demolished by a public housing authority or a public facility   corporation created by a public housing authority under Chapter   303, Local Government Code, in the two-year period preceding the   application for housing tax credits; or                            (iii)  receive assistance or will receive   assistance through the Rental Assistance Demonstration program   administered by the United States Department of Housing and Urban   Development as specified by the Consolidated and Further Continuing   Appropriations Act, 2012 (Pub. L. No. 112-55) and its subsequent   amendments, if the application for assistance through the Rental   Assistance Demonstration program is included in the applicable   public housing plan that was most recently approved by the United   States Department of Housing and Urban Development as specified by   24 C.F.R. Section 903.23.          SECTION 3.  Sections 2306.6714(a) and (b), Government Code,   are amended to read as follows:           (a)  The department shall:                (1)  set aside for eligible at-risk developments not   less than 15 percent of the housing tax credits available for   allocation in the calendar year; and                (2)  to the extent that a sufficient number of eligible   applicants exist, allocate to at-risk developments the maximum   amount of housing tax credits set aside for that purpose under   Subdivision (1).          (b)  Housing [Any amount of housing] tax credits set aside   under this section that remain [remains] after the initial   allocation of housing tax credits are [is] available for allocation   to any eligible applicant that receives financial assistance from   the United States Department of Agriculture, as provided by the   qualified allocation plan, only if there are no remaining   applicants who are eligible for the housing tax credits set aside   and allocated under Subsection (a).          SECTION 4.  Sections 2306.111, 2306.6702, and 2306.6714,   Government Code, as amended by this Act, apply 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 is based on the 2026 qualified allocation   plan or a subsequent plan adopted by the governing board of the   department.  An application that is submitted during an application   cycle that is based on an earlier qualified allocation plan is   governed by the law in effect on the date the application cycle   began, and the former law is continued in effect for that purpose.          SECTION 5.  This Act takes effect September 1, 2025.