HB 21

H.B. No. 21
  AN ACT
  relating to housing finance corporations; authorizing a fee.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 394.004, Local Government Code, is
  amended to read as follows:
         Sec. 394.004.  APPLICATION OF CHAPTER TO CERTAIN RESIDENTIAL
  DEVELOPMENTS.  This chapter applies only to a residential
  development at least 90 percent of which is for use by or is
  intended to be occupied by households [persons] of low and moderate
  income whose adjusted gross income [, together with the adjusted
  gross income of all persons who intend to reside with those persons
  in one dwelling unit,] did not for the preceding tax year exceed the
  maximum amount constituting moderate income as defined under the
  housing finance corporation's rules, resolutions relating to the
  issuance of bonds, or financing documents relating to the issuance
  of bonds.
         SECTION 2.  Subchapter A, Chapter 394, Local Government
  Code, is amended by adding Section 394.0045 to read as follows:
         Sec. 394.0045.  APPLICABILITY OF OPEN MEETINGS AND OPEN
  RECORDS LAWS.  (a)  Chapter 551, Government Code, applies to actions
  and proceedings under this chapter.
         (b)  Chapter 552, Government Code, applies to all records of
  a housing finance corporation.
         SECTION 3.  The heading to Section 394.031, Local Government
  Code, is amended to read as follows:
         Sec. 394.031.  EXERCISE OF POWERS; AREA OF OPERATION.
         SECTION 4.  Section 394.031, Local Government Code, is
  amended by adding Subsections (c), (d), and (e) to read as follows:
         (c)  Subject to Subsection (d), the area in which a housing
  finance corporation may own real property for residential
  development or engage in residential development is limited to:
               (1)  for a housing finance corporation sponsored by a
  municipality under Section 394.011, the boundaries of the
  municipality that sponsored the corporation; 
               (2)  for a housing finance corporation sponsored by a
  county under Section 394.011, the boundaries of the county that
  sponsored the corporation; or
               (3)  for a housing finance corporation sponsored by
  more than one local government under Section 394.012:
                     (A)  the boundaries of each municipal sponsor of
  the corporation; and 
                     (B)  the boundaries of each county sponsor of the
  corporation.
         (d)  A housing finance corporation may own real property for
  residential development or engage in residential development
  outside an area described by Subsection (c) only if a resolution or
  order, as applicable, approving that ownership or development in
  the outside area is adopted by the governing bodies of:
               (1)  each municipality that contains any part of the
  outside area in which the corporation proposes to own real property
  for residential development or engage in residential development;
               (2)  for a residential development or home located in
  the unincorporated area of a county, each county that contains any
  part of the outside area in which the corporation proposes to own
  real property for residential development or engage in residential
  development; and
               (3)  any housing finance corporation sponsored by a
  municipality or county described by Subdivision (1) or (2), as
  applicable.
         (e)  This section does not prohibit or limit a housing
  finance corporation from owning real property outside an area
  described by Subsection (c) or (d) if the property is not owned for
  purposes of residential development.
         SECTION 5.  Section 394.032(e), Local Government Code, is
  amended to read as follows:
         (e)  A housing finance corporation may delegate to the Texas
  Department of Housing and Community Affairs the authority to act on
  its behalf in the financing, refinancing, acquisition, leasing,
  ownership, improvement, and disposal of home mortgages or
  residential developments, [within and outside the jurisdiction of
  the housing finance corporation,] including its authority to issue
  bonds for those purposes.
         SECTION 6.  Section 394.037, Local Government Code, is
  amended by adding Subsection (a-1) to read as follows:
         (a-1)  A housing finance corporation may issue bonds under
  this chapter for a purpose described by Subsection (a) only to
  finance or support a residential development or home that is
  located or will be constructed:
               (1)  within the boundaries of a local government in
  which a housing finance corporation is permitted to own real
  property for residential development or engage in residential
  development under Section 394.031(c); or
               (2)  outside the boundaries of a local government
  described by Subdivision (1) if a resolution or order, as
  applicable, approving the issuance of bonds is adopted by the
  governing body of: 
                     (A)  each municipality that contains any part of
  the residential development or home; and
                     (B)  for a residential development or home located
  in the unincorporated area of a county, each county that contains
  any part of the residential development or home.
         SECTION 7.  Section 394.039, Local Government Code, is
  amended to read as follows:
         Sec. 394.039.  SPECIFIC POWERS RELATING TO FINANCIAL AND
  PROPERTY TRANSACTIONS.  Subject to Sections 394.031(c), (d), and
  (e), a [A] housing finance corporation may:
               (1)  lend money for its corporate purposes, invest and
  reinvest its funds, and take and hold real or personal property as
  security for the payment of the loaned or invested funds;
               (2)  mortgage, pledge, or grant security interests in
  any residential development, home mortgage, note, or other property
  in favor of the holders of bonds issued for those items;
               (3)  purchase, receive, lease, or otherwise acquire,
  own, hold, improve, use, or deal in and with real or personal
  property or interests in that property, [wherever the property is
  located,] as required by the purposes of the corporation or as
  donated to the corporation; and
               (4)  sell, convey, mortgage, pledge, lease, exchange,
  transfer, and otherwise dispose of all or part of its property and
  assets.
         SECTION 8.  Section 394.9025, Local Government Code, is
  amended to read as follows:
         Sec. 394.9025.  MULTIFAMILY RESIDENTIAL DEVELOPMENT.  (a)  
  Following a public hearing by the governing body of the applicable
  local government, a housing finance corporation may, subject to the
  geographic limitations of Section 394.037(a-1), issue bonds to
  finance a multifamily residential development to be owned by the
  housing finance corporation 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 family
  income; or
               (2)  the units in the multifamily residential
  development are reserved in the manner provided by Section
  394.9026(c)(1).
         (b)  Following a public hearing by the governing body of the
  applicable local government, a housing finance corporation may,
  subject to the geographic limitations of Section 394.037(a-1),
  issue bonds to finance a multifamily residential development to be
  owned by the housing finance corporation in accordance with Section
  394.004 if the housing finance corporation receives approval of the
  governing body of the local government.
         SECTION 9.  Subchapter Z, Chapter 394, Local Government
  Code, is amended by adding Sections 394.9026 and 394.9027 to read as
  follows:
         Sec. 394.9026.  ADDITIONAL CONDITIONS FOR BENEFICIAL AD
  VALOREM TAX TREATMENT RELATING TO CERTAIN MULTIFAMILY RESIDENTIAL
  DEVELOPMENTS.  (a)  In this section:
               (1)  "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).
               (2)  "Housing finance corporation user" means:
                     (A)  a housing finance corporation; or
                     (B)  for a multifamily residential development
  that is not owned directly by a housing finance corporation, a
  public-private partnership entity or a developer or other person or
  entity that has an ownership interest or a leasehold or other
  possessory interest in multifamily residential development
  financed or supported by a housing finance corporation.
               (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, as defined by the United States Department of Housing and
  Urban Development.
               (4)  "Maximum market rent" means, with respect to a
  particular income-restricted unit, the average annual rent charged
  for all non-income-restricted units in the development having the
  same or substantially similar floor plan as the income-restricted
  unit.
               (5)  "Middle income housing unit" means a residential
  unit reserved for occupancy by an individual or family earning not
  more than 100 percent of the area median income, adjusted for family
  size, as defined by the United States Department of Housing and
  Urban Development.
               (6)  "Moderate income 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, as defined by the United States Department of Housing and
  Urban Development.
               (7)  "Multifamily residential development" means any
  residential development consisting of four or more residential
  units intended for occupancy as rentals, regardless of whether the
  units are attached or detached.
               (8)  "Rent" means any recurring fee or charge a tenant
  is required to pay as a condition of occupancy, including a fee or
  charge for the use of a common area or facility reasonably
  associated with residential rental property.  The term does not
  include fees and charges for services or amenities that are
  optional for a tenant, such as pet fees and fees for storage or
  covered parking.
               (9)  "Rent reduction" means the projected difference
  between the rent charged for an income-restricted unit and the
  maximum market rent that could be charged for that same unit without
  the income restrictions.
               (10)  "Very low income housing unit" means a
  residential unit reserved for occupancy by an individual or family
  earning not more than 50 percent of the area median income, adjusted
  for family size, as defined by the United States Department of
  Housing and Urban Development.
         (b)  This section does not apply to a multifamily residential
  development that is the recipient of a low income housing tax credit
  allocated under Subchapter DD, Chapter 2306, Government Code.
         (c)  Subject to Subsection (g), an ad valorem tax exemption
  under Section 394.905 for a multifamily residential development
  owned by a housing finance corporation is available only if the
  other requirements of this chapter are satisfied and if:
               (1)  at least:
                     (A)  10 percent of the units in the development
  are reserved for occupancy as lower income housing units and at
  least 40 percent of the units in the development are reserved for
  occupancy as moderate income housing units; or
                     (B)  10 percent of the units in the development
  are reserved for occupancy as very low income housing units and at
  least 40 percent of the units in the development are reserved for
  occupancy as middle income housing units;
               (2)  the rent reduction at the development in the
  preceding tax year was:
                     (A)  not less than 50 percent of the amount of the
  estimated ad valorem taxes that would have been imposed on the
  applicable property in the same preceding tax year if the property
  did not receive an exemption from those taxes under Section
  394.905, beginning with:
                           (i)  for a multifamily residential
  development that is acquired by the corporation, the first tax year
  after the tax year that the corporation acquires the development;
  and
                           (ii)  for a newly constructed multifamily
  residential development not described by Subparagraph (i), the
  first tax year after the tax year in which construction first begins
  on the development; or
                     (B)  less than 50 percent of the amount of the
  estimated ad valorem taxes described by Paragraph (A) beginning
  with the tax year specified by that paragraph, but the housing
  finance corporation user paid to each taxing unit authorized to
  impose ad valorem taxes on the applicable property for the
  applicable tax year an amount equal to that taxing unit's pro rata
  share of the rent reduction shortfall that exists based on the
  difference between the minimum rent reduction amount described by
  Paragraph (A) and the amount of actual rent reduction at the
  development in the preceding tax year;
               (3)  the income-restricted residential units in the
  development have the same unit finishes and equipment and access to
  community amenities and programs as residential units that are not
  income-restricted;
               (4)  the percentage of very low, lower, moderate, and
  middle income housing units reserved in each category of
  income-restricted residential units in the development, based on
  the number of bedrooms per unit, is the same as the percentage of
  each category of income-restricted residential units reserved in
  the development as a whole;
               (5)  the monthly rent charged per unit does not exceed:
                     (A)  for a very low income housing unit, 30
  percent of 50 percent of the area median income, adjusted for family
  size, as defined by the United States Department of Housing and
  Urban Development;
                     (B)  for a lower income housing unit, 30 percent
  of 60 percent of the area median income, adjusted for family size,
  as defined by the United States Department of Housing and Urban
  Development;
                     (C)  for a moderate income housing unit, 30
  percent of 80 percent of the area median income, adjusted for family
  size, as defined by the United States Department of Housing and
  Urban Development; or
                     (D)  for a middle income housing unit, 30 percent
  of 100 percent of the area median income, adjusted for family size,
  as defined by the United States Department of Housing and Urban
  Development;
               (6)  the housing finance corporation user and the
  development do not:
                     (A)  refuse to rent a residential unit in the
  development to an individual or family because the individual or
  family participates in the housing choice voucher program; or
                     (B)  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;
               (7)  the housing finance corporation user causes to be
  published on the Internet website of the development information
  about the development's policies regarding tenant participation in
  the housing choice voucher program;
               (8)  the housing finance corporation user for the
  development:
                     (A)  affirmatively markets available residential
  units directly to individuals and families participating in the
  housing choice voucher program; and
                     (B)  notifies local housing authorities of the
  development's acceptance of tenants in the housing choice voucher
  program; and 
               (9)  each lease agreement for an income-restricted
  residential unit in the development provides that:
                     (A)  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;
                     (B)  the landlord may only choose to not renew the
  lease if the tenant:
                           (i)  committed one or more substantial
  violations of the lease;
                           (ii)  failed to provide required information
  on the income, composition, or eligibility of the tenant's
  household; or
                           (iii)  committed repeated minor violations
  of the lease that disrupt the livability of the property, adversely
  affect the health and safety of any person or the right to quiet
  enjoyment of the leased premises and related development
  facilities, interfere with the management of the development, or
  have an adverse financial effect on the development, including the
  failure of the tenant to pay rent in a timely manner; and
                     (C)  to not renew the lease, the landlord must
  serve a written notice of proposed nonrenewal on the tenant not
  later than the 30th day before the effective date of nonrenewal.
         (d)  In calculating the income of an individual or family for
  a very low, lower, moderate, or middle income housing unit, the
  housing finance corporation user must use the definition of annual
  income described in 24 C.F.R. Section 5.609, as implemented by the
  United States Department of Housing and Urban Development.  If the
  income of a tenant exceeds an applicable limit at the time of the
  renewal of a lease agreement for a residential unit, the provisions
  of Section 42(g)(2)(D), Internal Revenue Code of 1986, apply in
  determining whether the unit may still qualify as a very low, lower,
  moderate, or middle income housing unit.
         (e)  A housing finance corporation user may require an
  individual or family participating in the housing choice voucher
  program to pay the difference between the monthly rent for the
  applicable unit and the amount of the monthly voucher if the amount
  of the voucher is less than the rent.
         (f)  A tenant may not waive the protections provided by
  Subsection (c)(9).  A housing finance corporation user may adopt
  tenant protections that are more protective of tenants than the
  tenant protections provided by Subsection (c)(9).
         (g)  A multifamily residential development that is acquired
  by a housing finance corporation and is occupied on the date of the
  acquisition is eligible for an ad valorem exemption under Section
  394.905 for the two tax years following the date of the acquisition,
  regardless of whether the development complies with the conditions
  prescribed by Subsections (c)(1), (3), (4), and (5), if the
  development comes into compliance with Subsections (c)(1), (3),
  (4), and (5) not later than the end of the second tax year after the
  date of the acquisition.
         Sec. 394.9027.  AUDIT REQUIREMENTS FOR CERTAIN MULTIFAMILY
  RESIDENTIAL DEVELOPMENTS.  (a)  In this section:
               (1)  "Department" means the Texas Department of Housing
  and Community Affairs.
               (2)  "Housing finance corporation user" has the meaning
  assigned by Section 394.9026.
         (b)  A housing finance corporation or housing finance
  corporation user that claims an ad valorem tax exemption for a
  multifamily residential development under Section 394.905 must
  annually submit to the department an audit report for a compliance
  audit, prepared at the expense of the housing finance corporation
  user and conducted by an independent auditor or compliance expert
  with an established history of providing similar audits on housing
  compliance matters, that:
               (1)  states whether the corporation is in compliance
  with the requirements imposed for the exemption by Section
  394.9026; and
               (2)  identifies the difference in the rent charged for
  income-restricted residential units and the estimated maximum
  market rents that could be charged for those units without the
  income restrictions.
         (c)  Not later than the 60th day after the date of receipt of
  the audit conducted under Subsection (b), the department shall
  examine the audit report and publish a report summarizing the
  findings of the audit.  The report must:
               (1)  be made available on the department's Internet
  website;
               (2)  be issued to the housing finance corporation that
  owns or is associated with the development that is the subject of an
  audit, the housing finance corporation user of the development, the
  comptroller, and the governing body of the sponsoring local
  government or governments of the housing finance corporation; and
               (3)  describe in detail the nature of any failure to
  comply with the requirements of Section 394.9026.
         (d)  If an audit report submitted under Subsection (b)
  indicates noncompliance with Section 394.9026, a housing finance
  corporation user, the associated housing finance corporation, and
  the chief appraiser of the appraisal district in which the
  development is located must be given written notice from the
  department that is provided not later than the 120th day after the
  date a report has been submitted under Subsection (b) and specifies
  the reasons for noncompliance.  For a finding of noncompliance with
  any provision of Section 394.9026(c), a housing finance corporation
  user and the associated housing finance corporation must be given:
               (1)  additional written notice that:
                     (A)  otherwise complies with the notice
  requirements of this section;
                     (B)  contains at least one option for a corrective
  action to resolve the noncompliance; and
                     (C)  informs the housing finance corporation user
  and associated housing finance corporation that failure to resolve
  the noncompliance within the period provided by Subdivision (2)
  will result in the loss of the ad valorem tax exemption under
  Section 394.905;
               (2)  a period of 180 days after the date notice is
  received under Subdivision (1) to resolve the matter that is the
  subject of the notice; and
               (3)  if a matter that is the subject of a notice
  provided under this subdivision is not resolved to the satisfaction
  of the department during the period provided by Subdivision (2), a
  second notice that informs the housing finance corporation of the
  loss of the ad valorem tax exemption for the development due to
  noncompliance with Section 394.9026.
         (e)  The initial audit report required by Subsection (b) is
  due not later than June 1 of the tax year following:
               (1)  the date of acquisition for an existing
  multifamily residential development that is acquired by a housing
  finance corporation; or
               (2)  the date a newly constructed multifamily
  residential development first becomes occupied by one or more
  tenants.
         (f)  Subsequent audit reports following the issuance of the
  initial audit report under Subsection (e) are due not later than
  June 1 of each year.
         (g)  The department may extend the deadline for submitting
  any audit required under this section for good cause shown, as
  determined by the department.
         (h)  An independent auditor or compliance expert may not
  prepare an audit under Subsection (b) for more than three
  consecutive tax years for the same housing finance corporation.
  After the third consecutive audit, the independent auditor or
  compliance expert may prepare an audit only after the second
  anniversary of the preparation of the third consecutive audit.
         (i)  The department:
               (1)  shall adopt forms and reporting standards for the
  auditing process;
               (2)  may charge a fee for the submission of an audit
  report under this section in a reasonable amount necessary to cover
  the expenses of administering this section; and
               (3)  shall adopt rules necessary to implement this
  section and Section 394.9026.
         (j)  Rules adopted under Subsection (i)(3) must include
  administrative processes and a process by which a housing finance
  corporation user may appeal a finding of noncompliance made under
  this section or a loss of a tax exemption due to a finding of
  noncompliance with Section 394.9026 or any other provision of this
  chapter.
         (k)  An audit conducted under Subsection (b) is subject to
  disclosure under Chapter 552, Government Code, except that
  information containing tenant names, unit numbers, or other tenant
  identifying information may be redacted.
         (l)  This section does not apply to a multifamily residential
  development during any period that the development is the recipient
  of a low income housing tax credit allocated under Subchapter DD,
  Chapter 2306, Government Code.
         SECTION 10.  Section 394.903, Local Government Code, is
  amended to read as follows:
         Sec. 394.903.  TRANSFER [LOCATION] OF [RESIDENTIAL
  DEVELOPMENT;] RESIDENTIAL DEVELOPMENT SITES.  Subject to Sections
  394.031(c) and (d), a [(a)  A residential development covered by
  this chapter must be located within the local government.
         [(b)  The] local government may transfer any residential
  development site to a housing finance corporation by sale or lease.
  The governing body of the local government may authorize the
  transfer by resolution without submitting the issue to the voters
  and without regard to the requirements, restrictions, limitations,
  or other provisions contained in any other general, special, or
  local law.  [The site may be located wholly or partly inside or
  outside the local government.]
         SECTION 11.  Section 394.905, Local Government Code, is
  amended to read as follows:
         Sec. 394.905.  EXEMPTION FROM TAXES AND FEES [TAXATION].  
  (a)  Subject to compliance with the requirements of this chapter, a
  [The] housing finance corporation and[,] all property owned by the
  corporation [it], the income from that [the] property, all bonds
  issued by the corporation [it], the income from those [the] bonds,
  and the transfer of those [the] bonds are exempt, as public property
  used for public purposes, from license fees, recording fees, and
  all other taxes imposed by this state or any political subdivision
  of this state.
         (b)  A multifamily residential development owned by a
  housing finance corporation is eligible for an exemption from ad
  valorem taxes, and the materials used to improve the applicable
  property are eligible for an exemption from sales and use taxes,
  only if:
               (1)  the property is located in an area in which the
  housing finance corporation is authorized to own real property or
  engage in residential development under Section 394.031(c) or (d);
               (2)  the board of directors of the corporation has
  adopted a resolution approving the multifamily residential
  development;
               (3)  before approval of the board of directors under
  Subdivision (2), the housing finance corporation or a sponsoring
  local government of the corporation:
                     (A)  conducts, or obtains from a professional
  entity that has experience underwriting affordable residential
  developments and does not have a financial interest in the
  corporation or the applicable development, developer, or
  investors, an underwriting assessment of the proposed development
  that is dated not earlier than 180 days before the date of the board
  resolution;
                     (B)  based on the underwriting assessment, makes a
  good faith determination that the total amount of annual rent
  reduction applicable to the development, as defined by Section
  394.9026(a), will be not less than 50 percent of the amount of
  estimated ad valorem taxes that would be imposed on the property in
  the same tax year if the applicable property did not receive an
  exemption from those taxes under this section:
                           (i)  for a development that is acquired by
  the corporation, each of the third, fourth, and fifth tax years
  after the tax year that the corporation acquires the development;
  and
                           (ii)  for a newly constructed development
  not described by Subparagraph (i), each of the first, second, and
  third tax years after the tax year in which the development first
  achieves an occupancy rate of 90 percent; and
                     (C)  publishes on its Internet website a copy of
  the underwriting assessment required by this subsection; and
               (4)  the housing finance corporation submits to the
  Texas Department of Housing and Community Affairs and to the chief
  appraiser for each appraisal district in which the exemption is
  sought a one-time exemption application on a form promulgated by
  the comptroller.
         (c)  Notwithstanding Subsections (a) and (b), and subject to
  Section 394.9027, a multifamily residential development owned by a
  housing finance corporation or a housing finance corporation user
  is not entitled to an ad valorem tax exemption for any given tax
  year in which:
               (1)  the corporation or the housing finance corporation
  user is not in compliance with any provisions of Section
  394.9026(c) and:
                     (A)  the notice requirements in Section
  394.9027(d) have been fulfilled; and
                     (B)  the noncompliance is not resolved to the
  satisfaction of the department within the period provided by
  Section 394.9027(d)(2); or
               (2)  the corporation or the housing finance corporation
  user has not timely submitted the audit report required by Section
  394.9027.
         (d)  Subsection (a) does not apply to ad valorem taxes
  imposed on a multifamily residential development by:
               (1)  a conservation or reclamation district created
  under Section 52, Article III, or Section 59, Article XVI, Texas
  Constitution, that provides water, sewer, or drainage service to
  the development, unless the applicable corporation has entered into
  a written agreement with the district to make a payment to the
  district in lieu of taxation, in the amount specified in the
  agreement; or
               (2)  an emergency services district created under
  Chapter 775, Health and Safety Code, unless the applicable
  corporation has entered into a written agreement with the district
  to make a payment to the district in lieu of taxation, in the amount
  specified in the agreement.
         (e)  Subsections (b)(3), (b)(4), and (c) do not apply to a
  multifamily residential development that is:
               (1)  owned by a housing finance corporation; and
               (2)  the recipient of a low income housing tax credit
  allocated under Subchapter DD, Chapter 2306, Government Code.
         (f)  The corporation is exempt from the franchise tax imposed
  by Chapter 171, Tax Code, only if the corporation is exempted by
  that chapter.
         SECTION 12.  Section 394.005, Local Government Code, is
  repealed.
         SECTION 13.  (a)  Subject to Subsection (i) of this section,
  Sections 394.031(c) and (d), Local Government Code, as added by
  this Act, and Section 394.903, Local Government Code, as amended by
  this Act, apply only to the ownership of real property that is
  acquired by a housing finance corporation on or after the effective
  date of this Act.  The ownership of real property acquired by a
  housing finance corporation before the effective date of this Act,
  and the authority of a housing finance corporation to own that
  property or to engage in residential development with respect to
  that real property in an area outside the areas authorized by
  Sections 394.031(c) and (d), Local Government Code, as added by
  this Act, are governed by the law in effect on the date the property
  was acquired by the housing finance corporation, and the former law
  is continued in effect for that purpose.
         (b)  Section 394.037(a-1), Local Government Code, as added
  by this Act, and Section 394.9025, Local Government Code, as
  amended by this Act, apply only to bonds issued on or after the
  effective date of this Act.  Bonds issued before the effective date
  of this Act are governed by the law in effect on the date the bonds
  were issued, and the former law is continued in effect for that
  purpose.
         (c)  Section 394.9026, Local Government Code, as added by
  this Act, and Section 394.905, Local Government Code, as amended by
  this Act, apply only to a tax for a tax year that begins on or after
  the effective date of this Act.
         (d)  Subject to Subsections (e) and (f) of this section,
  Sections 394.9026 and 394.9027, Local Government Code, as added by
  this Act, apply to all multifamily residential developments
  claiming an exemption under Section 394.905, Local Government Code,
  regardless of when the developments were approved or acquired.
         (e)  A multifamily residential development that was acquired
  by a housing finance corporation before the effective date of this
  Act is not eligible for an exemption under Section 394.905, Local
  Government Code, as amended by this Act, unless the housing finance
  corporation that owns the development and any housing finance
  corporation user, as defined by Section 394.9026, Local Government
  Code, as added by this Act, associated with the development come
  into compliance:
               (1)  not later than January 1, 2026, with Sections
  394.9026(c)(6), (7), (8), and (9), Local Government Code, as added
  by this Act; and
               (2)  with Sections 394.9026(c)(1), (2), (3), (4), and
  (5), Local Government Code, as added by this Act, not later than the
  earlier of:
                     (A)  the end of the 10th tax year following the
  effective date of this Act; or
                     (B)  the end of the first tax year following a tax
  year in which:
                           (i)  existing mortgage indebtedness of the
  development is refinanced;
                           (ii)  title to the development is conveyed;
  or
                           (iii)  a sale, conveyance, transfer or
  assignment, or series of sales, conveyances, transfers or
  assignments, results in a change in a majority of the beneficial
  ownership interests of any housing finance corporation user
  associated with the development.
         (f)  Notwithstanding Section 394.9027(b) or (f), Local
  Government Code, as added by this Act, the initial audit report
  required to be submitted under Section 394.9027(b), Local
  Government Code, as added by this Act, for a multifamily
  residential development that was acquired by a housing finance
  corporation before the effective date of this Act must be submitted
  by the later of:
               (1)  the date established by Section 394.9027(e), Local
  Government Code, as added by this Act; or
               (2)  June 1, 2026.
         (g)  Subject to Subsections (e), (h), and (i) of this
  section, Section 394.905, Local Government Code, as amended by this
  Act, applies to all multifamily residential developments owned by a
  housing finance corporation, regardless of when the developments
  were approved or acquired.
         (h)  Sections 394.905(b)(1), (2), and (3) and (d), Local
  Government Code, as added by this Act, apply only to multifamily
  residential developments that are acquired by a housing finance
  corporation on or after the effective date of this Act.
         (i)  A residential development that is owned by a housing
  finance corporation on September 1, 2025, and is located outside an
  area in which the corporation is authorized to own real property or
  engage in residential development under Section 394.031(c), Local
  Government Code, as added by this Act, is not eligible for an ad
  valorem tax exemption under Section 394.905, Local Government Code,
  as amended by this Act, after January 1, 2027, unless the
  corporation obtains the appropriate resolutions or orders required
  under Section 394.031(d), Local Government Code, as added by this
  Act, before that date.
         (j)  Not later than January 1, 2026, the Texas Department of
  Housing and Community Affairs shall adopt rules necessary to
  implement Section 394.9027(i), Local Government Code, as added by
  this Act.
         SECTION 14.  This Act takes effect immediately if it
  receives a vote of two-thirds of all the members elected to each
  house, as provided by Section 39, Article III, Texas Constitution.
  If this Act does not receive the vote necessary for immediate
  effect, this Act takes effect September 1, 2025.
  ______________________________
  ______________________________
     President of the Senate
  Speaker of the House     
         I certify that H.B. No. 21 was passed by the House on May 10,
  2025, by the following vote:  Yeas 115, Nays 13, 3 present, not
  voting.
  ______________________________
  Chief Clerk of the House   
         I certify that H.B. No. 21 was passed by the Senate on May 14,
  2025, by the following vote:  Yeas 30, Nays 1.
  ______________________________
  Secretary of the Senate    
  APPROVED:  _____________________
                     Date          
            _____________________
                   Governor