HB2675 - Relating to housing finance corporations.

  89R2688 JAM-D     By: Cook H.B. No. 2675       A BILL TO BE ENTITLED   AN ACT   relating to housing finance corporations.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subchapter E, Chapter 341, Finance Code, is   amended by adding Section 341.407 to read as follows:           Sec.   341.407.   LOANS TO HOUSING FINANCE CORPORATION.   An   authorized lender, credit union, or other person involved in a   transaction subject to this title may not make a loan to a housing   finance corporation unless the corporation presents proof of   compliance with Section 394.031(c) or (d), Local Government Code,   as applicable.          SECTION 2.  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 3.  Section 394.031, Local Government Code, is   amended by adding Subsections (c) and (d) to read as follows:           (c)     Subject to Subsection (d), the area in which a housing   finance corporation may exercise its powers is limited to:                 (1)     for a housing finance corporation sponsored by a   municipality under Section 394.011, the jurisdictional boundaries   of the municipality that sponsored the corporation;                   (2)     for a housing finance corporation sponsored by a   county under Section 394.011, the unincorporated areas 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 jurisdictional boundaries of each   municipal sponsor of the corporation; and                         (B)     the unincorporated areas of each county   sponsor of the corporation.           (d)     A housing finance corporation may exercise its powers   outside an area described by Subsection (c) only if a resolution or   order, as applicable, approving that exercise of power in the   outside area is adopted by the governing body of each sponsoring   local government and by the governing bodies of:                 (1)     each municipality that contains any part of the   outside area in which the corporation proposes to operate; and                 (2)     if proposing to operate in the unincorporated area   of a county, each county that contains any part of the outside area   in which the corporation proposes to operate.          SECTION 4.  Sections 394.032(a) and (e), Local Government   Code, are amended to read as follows:          (a)   Subject to the limitations of Sections 394.031(c) and   (d), a [ A ] housing finance corporation may:                (1)  make contracts and other instruments as necessary   or convenient to the exercise of powers under this chapter;                (2)  incur liabilities;                (3)  borrow money at rates determined by the   corporation;                (4)  issue notes, bonds, and other obligations; and                (5)  secure any of its obligations by the mortgage or   pledge of all or part of the corporation's property, franchises,   and income.          (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 5.  Section 394.039, Local Government Code, is   amended to read as follows:          Sec. 394.039.  SPECIFIC POWERS RELATING TO FINANCIAL AND   PROPERTY TRANSACTIONS. 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 6.  Section 394.9025(b), Local Government Code, is   amended to read as follows:          (b)  Following a public hearing by the governing body of the   applicable local government, a housing finance corporation may   issue bonds to finance a multifamily residential development to be   owned by the housing finance corporation in accordance with the   requirements of this chapter [ Section 394.004 ] if the housing   finance corporation receives approval of the governing body of that   [ the ] local government.          SECTION 7.  Subchapter Z, Chapter 394, Local Government   Code, is amended by adding Section 394.9026 to read as follows:           Sec.   394.9026.     AUDIT REQUIREMENTS FOR MULTIFAMILY   RESIDENTIAL DEVELOPMENTS OWNED BY HOUSING FINANCE CORPORATIONS.     (a)   In this section, "department" means the Texas Department of   Housing and Community Affairs.           (b)     A housing finance corporation that owns a multifamily   residential development and claims an exemption for the development   under Section 394.905(a) must annually submit to the department and   the chief appraiser of the appraisal district in which the   development is located an audit report for a compliance audit,   prepared at the expense of the housing finance corporation and   conducted by an independent auditor or compliance expert with an   established history of providing similar audits on housing   compliance matters, to determine whether the housing finance   corporation is in compliance with the conditions imposed for the   exemption by this chapter.           (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 the development that is the subject of an audit, the   comptroller, and the governing body of the housing finance   corporation's sponsoring local government or governments; and                 (3)     describe in detail the nature of any failure to   comply with the conditions imposed for the exemption by this   chapter.           (d)     If an audit report submitted under Subsection (b)   indicates noncompliance with the conditions imposed by this   chapter, a housing finance corporation:                 (1)  must be given:                       (A)     written notice from the department or   appropriate appraisal district that:                             (i)     is provided not later than the 90th day   after the date a report has been submitted under Subsection (b);                             (ii)     specifies the reasons for   noncompliance;                             (iii)     contains at least one option for a   corrective action to resolve the noncompliance; and                             (iv)     informs the housing finance   corporation that failure to resolve the noncompliance will result   in the loss of the exemption under Section 394.905(a);                       (B)     a period of 60 days after the date notice is   received under this subdivision to resolve the matter that is the   subject of the notice; and                       (C)     if a matter that is the subject of a notice   provided under this subdivision is not resolved to the satisfaction   of the department and appropriate taxing authority during the   period provided by Paragraph (B), a second notice that informs the   housing finance corporation of the loss of the exemption due to   noncompliance with the conditions imposed by this chapter; and                 (2)     is considered to be in compliance with those   conditions if notice under Subdivision (1)(A) is not provided as   specified by Subparagraph (i) of that paragraph.           (e)     An exemption under Section 394.905(a) does not apply for   a tax year in which the department determines that, based on an   audit conducted under Subsection (b), a multifamily residential   development that is owned by a housing finance corporation created   under this chapter is not in compliance with the conditions imposed   for that exemption by this chapter.           (f)     The initial audit report required by Subsection (b) is   due not later than June 1 of the year following the first   anniversary of:                 (1)     the date of acquisition for an occupied   multifamily residential development that is acquired by a housing   finance corporation; or                 (2)     the date a newly built multifamily residential   development first becomes occupied by one or more tenants.           (g)     Subsequent audit reports following the issuance of the   initial audit report under Subsection (f) are due not later than   June 1 of each year.           (h)     An independent auditor or compliance expert may not   prepare an audit under Subsection (b) for more than three   consecutive 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 shall adopt forms and reporting   standards for the auditing process.           (j)     An audit conducted under Subsection (b) is subject to   disclosure under Chapter 552, Government Code, except that   in [Text truncated for display. Full text available on Congress.gov.]