88R1049 JAM-D     By: González of Dallas H.B. No. 738       A BILL TO BE ENTITLED   AN ACT   relating to a right of first refusal applicable to the sale of   housing developments that have received certain financial   assistance administered by the Texas Department of Housing and   Community Affairs.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 2306.6710, Government Code, is amended   by adding Subsection (h) to read as follows:          (h)  In scoring applications for purposes of housing tax   credit allocations, the department shall award preference points to   a development that agrees to provide to a qualified entity, in a   land use restriction agreement in accordance with Section   2306.6726, a right of first refusal to purchase the development at   the minimum price provided in, and in accordance with the   requirements of, Section 42(i)(7), Internal Revenue Code of 1986.          SECTION 2.  Section 2306.6725(b), Government Code, is   amended to read as follows:          (b)  The department shall provide appropriate incentives as   determined through the qualified allocation plan to reward   applicants who agree to:                (1)  equip the development that is the basis of the   application with energy saving devices that meet the standards   established by the state energy conservation office [or provide to   a qualified entity, in a land use restriction agreement in   accordance with Section 2306.6726, a right of first refusal to   purchase the development at the minimum price provided in, and in   accordance with the requirements of, Section 42(i)(7), Internal   Revenue Code of 1986 (26 U.S.C. Section 42(i)(7))]; and                (2)  locate the development in a census tract in which   there are no other existing developments supported by housing tax   credits.          SECTION 3.  Section 2306.6726, Government Code, is amended   by amending Subsections (a), (b), and (c) and adding Subsection   (c-3) to read as follows:          (a)  An owner of a development subject to a right of first   refusal described by [under] Section 2306.6710(h) [2306.6725] who   intends to sell the development at any time after the expiration of   the compliance period shall notify the department and the tenants   of the development of the owner's intent to sell and, if applicable,   shall specifically identify to the department any qualified entity   that is the owner's intended recipient of the right of first refusal   in the land use restriction agreement.          (b)  The owner of a development subject to a right of first   refusal described by [under] Section 2306.6710(h) [2306.6725] may:                (1)  during the first 120-day [60-day] period after   notice is provided under Subsection (a-1), negotiate or enter into   a purchase agreement only with a qualified entity that is:                      (A)  a community housing development organization   as defined by the federal HOME investment partnership program;                      (B)  if the authority or the corporation owns the   fee title to the development owner's leasehold estate:                            (i)  a public housing authority; or                            (ii)  a public facility corporation created   by a public housing authority under Chapter 303, Local Government   Code; or                      (C)  controlled by an entity described by   Paragraph (A) or (B);                (2)  during the second 120-day [60-day] period after   notice is provided under Subsection (a-1), negotiate or enter into   a purchase agreement with a qualified entity that:                      (A)  is described by Section 2306.6706;                      (B)  is controlled by an entity described by   Paragraph (A); or                      (C)  is a tenant organization; and                (3)  during the last 120-day [60-day] period after   notice is provided under Subsection (a-1), negotiate or enter into   a purchase agreement with any other qualified entity.          (c)  Beginning on the 361st [181st] day after the date the   department posts notice under Subsection (a-1), an owner of a   development subject to a right of first refusal described by    [under] Section 2306.6710(h) [2306.6725] may sell to any purchaser   a development to which the right of first refusal applies only if a   qualified entity does not offer to purchase the development for the   minimum price provided in, and in accordance with the requirements   of, Section 42(i)(7), Internal Revenue Code of 1986 [a price that   the department determines to be reasonable].          (c-3)  A development subject to a right of first refusal   described by Section 2306.6710(h) may only be offered for sale at   the minimum price provided in, and in accordance with the   requirements of, Section 42(i)(7), Internal Revenue Code of 1986.          SECTION 4.  The change in law made by this Act applies 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 2024 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, 2023.