By: Bettencourt  S.B. No. 591          (In the Senate - Filed February 5, 2021; March 11, 2021,   read first time and referred to Committee on Local Government;   April 1, 2021, reported adversely, with favorable Committee   Substitute by the following vote:  Yeas 9, Nays 0; April 1, 2021,   sent to printer.)Click here to see the committee vote     COMMITTEE SUBSTITUTE FOR S.B. No. 591 By:  Bettencourt     A BILL TO BE ENTITLED   AN ACT     relating to certain public facilities used to provide affordable   housing.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 303.021, Local Government Code, is   amended by adding Subsection (c) to read as follows:          (c)  A corporation or a sponsor may finance, own, or operate   a multifamily residential development if the corporation or sponsor   complies with all applicable provisions of this chapter.          SECTION 2.  Section 303.042, Local Government Code, is   amended by amending Subsections (d) and (f) and adding Subsections   (d-1) and (d-2) to read as follows:          (d)  This subsection applies only to a multifamily   residential development that is owned by a corporation created   under this chapter by a housing authority and that does not have at   least 20 percent of its units reserved for public housing units,   participate in the Rental Assistance Demonstration program   administered by the United States Department of Housing and Urban   Development, or receive financial assistance administered under   Chapter 1372, Government Code, or Subchapter DD, Chapter 2306,   Government Code. Notwithstanding Subsections (a) and (b), an [An]   exemption under this section for a multifamily residential   development [which is owned by a public facility corporation   created by a housing authority under this chapter and which does not   have at least 20 percent of its units reserved for public housing   units,] applies only if:                (1)  the housing authority holds a public hearing, at a   [regular] meeting of the authority's governing body, to approve the   development; [and]                (2)  at least 50 percent of the units in the multifamily   residential development are reserved for occupancy by individuals   and families earning less than 80 percent of the area median   [family] income;                (3)  the requirements under Sections 303.0425 and   303.0426 are met; and                (4)  for an occupied multifamily residential   development that is acquired by a corporation:                      (A)  the governing body of each municipality or   county for which the sponsor of the corporation was created   approves a resolution of "no objection" for the development; and                      (B)  a sum of not less than 50 percent of the total   gross cost of the existing project in its entirety is expended on   rehabilitating, renovating, reconstructing, or repairing the   project.          (d-1)  This subsection applies only to a multifamily   residential development that is owned by a corporation created   under this chapter by a sponsor other than a housing authority and   that does not have at least 20 percent of its units reserved for   public housing units, participate in the Rental Assistance   Demonstration program administered by the United States Department   of Housing and Urban Development, or receive financial assistance   administered under Chapter 1372, Government Code, or Subchapter DD,   Chapter 2306, Government Code. Notwithstanding Subsections (a) and   (b), an exemption under this section for a multifamily residential   development applies only if:                (1)  at least 50 percent of the units in the multifamily   residential development are reserved for occupancy by individuals   and families earning less than 80 percent of the area median income;   and                (2)  the requirements under Section 303.0426 are met.          (d-2)  This subsection applies to a multifamily residential   development that is owned by a corporation created by any sponsor   under this chapter. Notwithstanding Subsections (a), (b), (d), and   (d-1), an exemption under this section for an occupied multifamily   residential development that is acquired by the corporation applies   only if the development comes into compliance with the requirements   of Subsection (d) or (d-1), as applicable, not later than the first   anniversary of the date of the acquisition.           (f)  Notwithstanding Subsections (a) and (b), during   the  period [of time] that a corporation owns a particular public   facility that provides multifamily housing:                (1)  [,] 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); and                (2)  the materials used by a person granted a   possessory interest described by Subdivision (1) to improve the   real property of the public facility shall be exempt from all sales   and use taxes because the materials are for the benefit of the   corporation.          SECTION 3.  Subchapter B, Chapter 303, Local Government   Code, is amended by adding Sections 303.0425 and 303.0426 to read as   follows:          Sec. 303.0425.  ADDITIONAL REQUIREMENTS FOR BENEFICIAL TAX   TREATMENT RELATING TO CERTAIN PUBLIC FACILITIES OWNED BY   CORPORATIONS CREATED BY HOUSING AUTHORITIES. (a) In this section:                (1)  "Developer" means a private entity that constructs   a development.                (2)  "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).                (3)  "Lower income housing unit" means a residential   unit reserved for occupancy by an individual or family earning not   more than 60 percent of the area median income, adjusted for family   size.                (4)  "Public facility user" means a public-private   partnership entity or a developer or other private entity that has   an ownership interest or a leasehold or other possessory interest   in a public facility used to provide multifamily housing.          (b)  The requirements prescribed by this section do not apply   to a multifamily residential development that is:                (1)  owned by a corporation that was not created by a   housing authority; or                (2)  owned by a corporation created by a housing   authority and:                      (A)  in which at least 20 percent of the units are   reserved for public housing units;                      (B)  that participates in the Rental Assistance   Demonstration program administered by the United States Department   of Housing and Urban Development; or                      (C)  that receives financial assistance   administered under Chapter 1372, Government Code, or Subchapter DD,   Chapter 2306, Government Code.          (c)  A corporation must use an open, transparent, and   competitive process for selecting a developer for the purpose of   constructing a housing development.          (d)  At least 10 percent of the units in the development must   be reserved as lower income housing units. A unit may not be used to   satisfy the reservation required under this subsection if every   tenant in the unit is:                (1)  a part-time or full-time student at an institution   of higher education;                (2)  under the age of 24; and                (3)  ineligible for housing assistance under Section 8,   United States Housing Act of 1937 (42 U.S.C. Section 1437f).          (e)  The percentage of lower income 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 lower income housing units reserved in the housing   development as a whole.          (f)  The monthly rent charged for a lower income housing unit   may not exceed:                (1)  30 percent of 60 percent of the area median income,   adjusted for family size; or                (2)  if the unit is occupied by a participant in the   housing choice voucher program, the payment standard used by the   housing authority that administers the voucher for the unit.          (g)  In calculating the income of an individual or family for   a lower income housing unit, the public facility user must consider   the income of every individual who will be living in the unit.          Sec. 303.0426.  ADDITIONAL REQUIREMENTS FOR BENEFICIAL TAX   TREATMENT RELATING TO CERTAIN PUBLIC FACILITIES OWNED BY   CORPORATIONS CREATED BY ANY SPONSOR. (a) In this section, "housing   choice voucher program," "lower income housing unit," and "public   facility user" have the meanings assigned by Section 303.0425.          (b)  The requirements prescribed by this section do not apply   to a multifamily residential development owned by a corporation:                (1)  in which at least 20 percent of the units are   reserved for public housing units;                (2)  that participates in the Rental Assistance   Demonstration program administered by the United States Department   of Housing and Urban Development; or                (3)  that receives financial assistance administered   under Chapter 1372, Government Code, or Subchapter DD, Chapter   2306, Government Code.          (c)  A public facility user may not:                (1)  refuse to rent a residential 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 a unit.          (d)  A corporation that owns or leases to a public facility   user a public facility used as a multifamily residential   development shall publish on its Internet website information about   the development's:                (1)  compliance with the requirements of this section;   and                (2)  policies regarding tenant participation in the   housing choice voucher program.          (e)  A public facility user shall:                (1)  affirmatively market available residential units   directly to individuals and families participating in the housing   choice voucher program; and                (2)  notify local housing authorities of any available   units in the development.          (f)  Not later than April 1 of each year, a public facility   user of a multifamily residential development must:                (1)  submit to the chief appraiser of the appraisal   district in which the development is located an audit report for a   compliance audit conducted by an independent auditor or compliance   expert to determine whether the public facility user is in   compliance with the requirements of this section; and                (2)  submit to the comptroller a report that includes,   for each housing development:                      (A)  the name of the development;                      (B)  the street address and municipality or county   in which the development is located;                      (C)  the name of the developer;                      (D)  the total number of residential units,   reported by bedroom size;                      (E)  the total number of lower income housing   units, reported by bedroom size, level of income restriction, and   rent;                      (F)  the total number of residential units,   reported by bedroom size, level of income restriction, and rent,   that are not lower income housing units but that are reserved for   occupancy by an individual or family earning less than 80 percent of   the area median income;                      (G)  the number of residential units rented by   individuals and families who participate in the housing choice   voucher program, reported by bedroom size;                      (H)  the race, ethnicity, and age of all   occupants, if available; and                      (I)  if not previously submitted in a report to   the comptroller, or if amended since the previous submission:                            (i)  a copy of the ground lease; and                            (ii)  a copy of the partnership agreement   for the public facility.          (g)  The reports submitted under Subsection (f) are public   information and subject to disclosure under Chapter 552, Government   Code, except that information containing tenant names, unit   numbers, or other identifying information may be redacted. The   comptroller shall post a copy of the report received under   Subsection (f)(2) on its Internet website.          (h)  Each lease agreement for a unit in a multifamily   residential development subject to this section must provide that:                (1)  the landlord may not retaliate against the tenant   or the tenant's guests by taking an action because the tenant   established, attempted to establish, or participated in a tenant   organization;                (2)  the landlord may only choose to not renew the lease   if the tenant:                      (A)  is in material noncompliance with the lease,   including nonpayment of rent after the required cure period;                      (B)  committed one or more substantial violations   of the lease;                      (C)  failed to provide required information on the   income, composition, or eligibility of the tenant's household; or                      (D)  committed repeated minor violations of the   lease that:                            (i)  disrupt the livability of the property;                            (ii)  adversely affect the health and safety   of any person or the right to quiet enjoyment of the leased premises   and related project facilities;                            (iii)  interfere with the management of the   project; or                            (iv)  have an adverse financial effect on   the project, including the repeated failure of the tenant to pay   rent in a timely manner;                (3)  to not renew the lease, the landlord must serve a   written notice of proposed nonrenewal on the tenant at least 30 days   before the effective date of nonrenewal; and                (4)  any written notice of a proposed nonrenewal that   is required to be provided under Subdivision (3) must specify the   date of the proposed nonrenewal.          (i)  A tenant may not waive the protections provided by   Subsection (h).          (j)  A public facility corporation must be given:                (1)  written notice of an instance of noncompliance   with this section; and                (2)  90 days after the day notice is received under   Subdivision (1) to cure the matter that is the subject of the   notice.          (k)  Notwithstanding any other law, an occupied multifamily   residential development that is acquired by a public facility   corporation is eligible for an exemption under Section 303.042(d-2)   for the one-year period following the date of the acquisition   regardless of whether the development complies with the other   requirements of that section or with this section, as applicable.          SECTION 4.  Section 392.005(c), Local Government Code, is   amended to read as follows:          (c)  An exemption under this section for a multifamily   residential development which is owned by [(i) a public facility   corporation created by a housing authority under Chapter 303, (ii)]   a housing development corporation[,] or [(iii)] a similar entity   created by a housing authority, other than a public facility   corporation created by a housing authority under Chapter 303, and   which does not have at least 20 percent of its units reserved for   public housing units, applies only if:                (1)  the authority holds a public hearing, at a regular   meeting of the authority's governing body, to approve the   development; and                (2)  at least 50 percent of the units in the multifamily   residential development are reserved for occupancy by individuals   and families earning less than 80 percent of the area median family   income.          SECTION 5.  (a)  Section 303.042(d), Local Government Code,   as amended by this Act, applies only to a multifamily residential   development that is approved by a housing authority on or after the   effective date of this Act. A multifamily residential development   that is approved by a housing authority before the effective date of   this Act is governed by the law in effect on the date the   development was approved by the housing authority, and the former   law is continued in effect for that purpose.          (b)  Section 303.042(d-1), Local Government Code, as added   by this Act, applies only to a multifamily residential development   that is approved by a public facility corporation on or after the   effective date of this Act. A multifamily residential development   that is approved by a public facility corporation before the   effective date of this Act is governed by the law in effect on the   date the development was approved by the public facility   corporation, and the former law is continued in effect for that   purpose.          (c)  Section 303.042(d-2), Local Government Code, as added   by this Act, applies only to a multifamily residential development   that is acquired by a public facility corporation on or after the   effective date of this Act. A multifamily residential development   that is acquired by a public facility corporation before the   effective date of this Act is governed by the law in effect on the   date the development was acquired by the public facility   corporation, and the former law is continued in effect for that   purpose.          SECTION 6.  This Act takes effect September 1, 2021.     * * * * *