ATS, MPA H.B. 3339 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3339
By: Naishtat
Urban Affairs
3/21/1999
Introduced



BACKGROUND AND PURPOSE 

Currently, the state offers financing and low-interest loan programs for
working families.  However, there is a low percentage of homes in the
$30,000 to $50,000 price range.  Low-income families can receive government
assistance for home purchases, but due to the lack of low-cost homes, costs
exceed the sustainable amount of their income.  H.B. 3339 provides
incentives for builders to build homes in the $30,00 to $50,000 price
range. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Texas Department of Housing and
Community Affairs in SECTION 1 (Section 2306.709, Government Code) in this
bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 2306, Government Code, by adding Subchapter EE,
as follows: 

SUBCHAPTER EE.  BUILDER INCENTIVE PARTNERSHIP PROGRAM

Sec. 2306.701.  DEFINITIONS.  Defines "builder," "cooperative purchase
agreement," "corporation," "cost plus profit structure," and "program." 

Sec. 2306.702.  BUILDER INCENTIVE PARTNERSHIP PROGRAM.  (a) Requires the
Texas Department of Housing and Community Affairs (department) to develop
and maintain a builder incentive partnership program (program) to provide
for the development of affordable housing subdivisions in this state. 

(b) Requires the department to determine geographic areas that are in need
of affordable housing.  Requires the department to provide for affordable
housing development projects in those areas, by entering into a partnership
agreement (agreement) with an eligible builder or developer and housing
assistance agencies or other nonprofit entities that provide housing
assistance to low income homebuyers (low income agencies or entities).
Requires the department to work with the Texas State Affordable Housing
Corporation (corporation), the builder or developer, or low income agencies
or entities to obtain housing assistance for homebuyers who purchase homes
built under the program. 

Sec. 2306.703.  BUILDER PARTNERSHIP AGREEMENT.  (a) Enumerates the
provisions to which the department and a builder must agree under an
agreement for a specific project. Those mandatory provisions include a
guaranteed purchase agreement in which the department agrees to guarantee a
negotiated portion of the purchase price of a negotiated number of houses
to be built under the project, and the terms of a cooperative purchase
agreement between the department and a low income agency or entity.  Also
included in the mandatory provisions are the type, style, and number of
houses to be built under the partnership, the types of housing assistance
to be applied for eligible low income homebuyers who purchase homes built
under the program, and any other term that the department determines
appropriate. 
  
 (b) Requires the builder to market the homes built under the program to
individuals and families who qualify for housing assistance under
department programs in the same manner in which private housing
developments are marketed to the general public. 

(c) Prohibits the department from entering into an agreement for a specific
project with a builder unless the builder agrees to issue warranty deeds
for the homes purchased under this program. 

Sec. 2306.704.  COST PLUS PROFIT STRUCTURE.  (a) Authorizes the builder in
an agreement to require homebuyers to purchase a home under a cost plus
profit structure (profit structure). 

(b) Provides that the department and a builder who requires a profit
structure must agree to a reasonable profit for the builder for each type
of home built under the program. 

(c) Provides that the profit set under the profit structure for a home
built under the program is part of the purchase price of the home, for the
purposes of the agreement and housing finance assistance by the department
or the corporation. 

Sec. 2306.705.  COOPERATIVE PURCHASE AGREEMENT.  (a) Requires the
department to negotiate and conclude a cooperative purchase agreement with
a housing assistance agency (agency) or other nonprofit entity for each
project under the program. 

(b) Provides that under the cooperative purchase agreement an agency or
other nonprofit entity must agree, at the option of the builder, to
purchase homes built under the project at cost if the homes do not have a
qualified purchaser within 30 days of construction being completed. 

(c) Authorizes the department to provide alternative or additional
conditions under the cooperative purchase agreement as needed. 

Sec. 2306.706.  FUNDING.  Prohibits the department and the corporation from
spending state money to fund the guaranteed purchase agreement.  Requires
the department and the corporation to cooperate to identify appropriate
funding sources. 

Sec. 2306.707.  HOUSING STANDARDS.  Requires the department to establish
and maintain standards for the homes built under the program.  Enumerates
the required minimum standards, which include the minimum quality of
construction and amenities required, the average cots between $30,000 and
$50,000, a style and type of home that can accommodate additional
construction, but that is flexible enough to serve one family, and other
criteria that the department may provide. 

Sec. 2306.708.  HOMEBUYER PROGRAMS.  Requires the department and the
corporation to cooperate to identify private lenders to provide private
market-rate mortgages for low income homebuyers who purchase homes under
the program and housing assistance programs for low income homebuyers who
do not qualify for private market-rate mortgages. Requires the department
and the corporation to provide other necessary housing assistance for low
income homebuyers. 

Sec. 2306.709.  RULEMAKING AUTHORITY.  Authorizes the department to adopt
rules necessary to accomplish the purposes of this subchapter. 

SECTION 2.  Effective date: September 1, 1999.

SECTION 3.  Emergency clause.