2013 Texas Legislative Session Wrap Up

Here’s our wrap up of the major low-income housing issues in the 83rd regular session of the Texas legislature.

TDHCA Sunset:
After Gov. Perry vetoed the TDHCA Sunset bill in 2011, the legislature passed a “stop-gap” two-year extension of the agency.  This session, HB 3361, the bill extending the Texas Department of Housing and Community Affairs for 12 years, passed after differences between the House and Senate bills were resolved in conference.

The disagreement between the chambers primarily revolved around the scoring of letters from Legislators when determining where to fund affordable housing in the state using federal low income housing tax credits.  Experience with the program has shown these letters are a channel for NIMBYism and have negative fair housing impact on the program, and the Sunset Commission and the Senate suggested they should no longer be scored.  The House disagreed, proposing instead an increase in the importance of such letters in the scoring process.

The final compromise lowered the points for letters from State Representatives and eliminated letters from State Senators, but maintained the letters in the scoring system.

The final bill also includes a new “local support” application threshold requirement in the Private Activity Bond (i.e. 4% tax credit credit) program.  This threshold requirement will likely facilitate local NIMBY challenges to developments under that program.

National Mortgage Settlement Fund
Texas received $135 million dollars as part of a multistate settlement with five national banks following those banks’ premature and unauthorized foreclosures on single-family residential mortgages.  Despite language in the settlement directing the settlement’s use “To the extent practicable” to remediate the wrongs of the banks’ actions, this money was classified an undedicated windfall by the state.  Over sixty Texas organizations endorsed the statement “We support using funds from the national mortgage settlement for housing and housing-related activities,” but no legislation was passed to dedicating these funds to remediating the wrongs from whence they came.

Fair Housing / Low Income Housing Tax Credit Rules
The rules of the Low Income Housing Tax Credit program were affected by several bills (in addition to the sunset bill discussed above).
Bills Passed:
HB 429 (Guillen) Tweaks definition of rural by deleting one definition of rural for TDHCA programs, and grandfathering the existing 515 projects so they can continue to apply under the USDA set-aside for tax credits regardless of location.

HB 1888 (Anchia | Alvarado) Expands at-risk set-aside to include public housing authority properties.

SB 659 (West) Allows debarment under tax credit program.

SB 193 (West) Tweaking audit requirements for low income housing tax exemption.

None of the bills passed are likely to have a substantial impact on the program’s overall operations.

Bills Considered but not passed:
HB 3757 (Farrar) Would have changed the QAP definition of “high opportunity area” to include areas in walking distance to a transit center or rail transit. Not passed.

HB 3775-9 (Isaac) Would have made various changes to tax credit and private activity bond rules, some with negative fair housing implications. Not passed, but its proposed new local threshold support requirement in the Private Activity Bond program was amended to the Sunset bill discussed above.

HB 2802 (Johnson) Would have extended 1 mile rule (no new affordable development within one mile of existing development) into perpetuity. Not passed.

HB 2654 (Riddle) Would have prevented HOME funds in the disability set-aside from being used for affordable rental. Withdrawn by Rep. Riddle and not passed.

Tenants Rights
Several adopted bills impact the rights of tenants.

SB 630 (Carona) Establishes the tenant’s right to a copy of the lease.  A bill on this topic was vetoed last session and was adjusted this time around to address the governor’s concerns. Passed.

HB 1772 (Turner, C. | Anchia | Turner, S.) Requires written notice to be provided to tenants and to the municipality in which the apartment complex is located of a pending disconnection in gas or electric utility service. Passed.

HB 1086 (Rodriguez, E. | Bohac) Allows for utility disconnect rather than eviction so long as proper notice is given to the tenant, interruption would not be detrimental to the health of the tenant, and/or repayment options are available. Passed.

Homeless Services
$5 million per year ($10 million /biennium) was included in the budget for the Homeless Housing and Services Program. (HHSP).  Through HHSP, the state provides funding to the eight largest cities in support of services to homeless individuals and families including services such as case management and housing placement and retention.

Disaster Recovery
SB 1120 (West) Limiting a residential tenant’s lease obligation after the loss of the leased premises resulting from a natural disaster. Passed.

HB 835 (Eiland) Passed via amendment onto to HB 585.  Caps per-year increase of property taxes if home is improved due to repairs under a federal natural disaster assistance program.

System Benefit Fund
The System Benefit Fund, the state program created to help the low-income Texans with their deregulated energy bills, will be wound down in the next three years and then cease to exist.

Colonias
HB 611 (Guillen) This bill, an effort to roll back the model subdivision rules preventing the creation of new colonias, did not pass after a House floor fight on the issue.

HB 2091 (Canales | Walle | Lucio III) a bill with positive changes to Contract for Deed laws, did not pass.

SB 1551 (Lucio) a bill to study current development issues in Lower Rio Grande Valley, did not pass.

Manufactured Homes
Several bills were filed impacting consumers of manufactured homes.

HB 944 (Riddle) Increasing the number of unlicensed sales per year form 1 to 3.  Passed. (Passed language was an improvement from the filed language, which allowed five unlicensed sales.)

HB 2210 (Naishtat) Would have increased consumer disclosure upon sale of manufactured homes.  This bill did not pass.  This bill was filed in reaction to a high-profile series of manufactured housing sales fraud case in La Feria, the “Park Girl” cases.

Two modular housing bills, HB 578 (Guillen), limiting warranties on modular homes, and HB 2955 (Guillen) moving modular home regulation from DLR to TDHCA, also did not pass.

TSAHC:
SB 286 (Bonnen) Consolidating the loan programs at the Texas State Affordable Housing Corporation; passed.  This bill addressed the expiration of one of the TSAHC loan programs.

Misc:
Other issues:
HB 1191 (Burkett) Making information about housing for persons with mental illness available via 211. Passed.
SB 109 (West) Adding veterans, farmworkers, youth who are aging out of foster care; and elderly individuals to state low income housing plan. Passed.
SB 247 (Carona) relating to the transfer of property tax liens (i.e. Property Tax Loans), adding disclosures. Passed.
Amy Young Barrier Removal Program–Extra funds referenced in Article XI but not adopted in final budget.