HBA-NLM, RAR C.S.H.B. 842 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 842 By: Ehrhardt Financial Institutions 4/20/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Each year, Texas receives approximately $50 per capita in tax-exempt activity bond cap authority from the federal government. In 1999, Texas received $987,980,700 in bond cap authority. Currently, Texas allocates seven and one-half percent of the bond cap for affordable multifamily housing, providing approximately $74 million in financing. The multifamily use of the bond cap provides Texas with additional federal tax credits, yet there is some concern that the continuing demand for multifamily bond financing may exceed the amount of bond cap authority supplied. C.S.H.B. 842 increases the ceiling of available multifamily housing bonds from seven and one-half percent to 16.5 percent and makes exclusively available 10.5 percent, rather than 11 percent, of the state ceiling for reservations by issuers of qualified student loan bonds authorized by Section 53.47 (Bonds for the Purchase of Loan Notes), Education Code. In addition, this bill sets forth priorities for any reservations by issuers of qualified residential project issues, and prohibits the bond review board from reserving a portion of the state ceiling for a first or second priority project unless the board receives certain evidence that an application has been filed with the Texas Department of Housing and Community Affairs for the specified low-income housing tax credit. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 5190.9a, V.T.C.S., by amending Sections 2(b) and (e), as follows: (b) Provides that prior to August 15, rather than September 1, 25, rather than 31.5, percent of the state ceiling is available for reservations by issuers of qualified mortgage bonds; 11, rather than 13 percent, of the state ceiling is available exclusively for reservations by issuers of state-voted issues for the purpose of issuing a state-voted issue; 16.5, rather than seven and one-half, percent of the state ceiling is available exclusively for reservations by issuers of qualified residential rental project bond issues; and 10.5, rather than 11, percent of the state ceiling is available exclusively for reservations by issuers of qualified student loan bonds authorized by Section 53.47 (Bonds for the Purchase of Loan Notes), Education Code. (State ceiling means the amount of authority in the State of Texas to issue tax-exempt private activity bonds during the calendar year.) (e) Requires that portion of the state ceiling available for reservations between August 15 and 31 to become available for qualified residential rental project issues in the manner otherwise described by this section. SECTION 2. Amends Article 5190.9a, V.T.C.S., by adding Subsections (h) and (i), as follows: (h) Sets forth priorities for any reservations by issuers of qualified residential project issues. (i) Prohibits the bond review board (board) from reserving a portion of the state ceiling for a first or second priority project described by Subsection (h) of this section unless the board receives certain evidence that an application has been filed with the Texas Department of Housing and Community Affairs (department) for the specified low-income housing tax credit. SECTION 3. Amends Section 7(d), Article 5190.9a, V.T.C.S., as follows: (d) Requires the issuer to submit to the board, not later than the fifth business day after the day on which the bonds are closed, evidence from the department that an award of lowincome housing tax credits has been approved for the project. Makes a nonsubstantive change. SECTION 4. Effective date: January 1, 2000. SECTION 5. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 842 modifies the original in SECTION 1 (Article 5190.9a, V.T.C.S.) to provide that prior to August 15, rather than September 1, 25, rather than 31.5, percent of the state ceiling is available for reservations by issuers of qualified mortgage bonds; 16.5, rather than seven and one-half, percent of the state ceiling is available exclusively for reservations by issuers of qualified residential rental project bond issues (the original bill provided 25 percent of the state ceiling), and 10.5, rather than 11, percent is available to provide for reservations by issuers of certain qualified student loan bonds. The substitute deletes from the original the proposal to make 12, rather than 29.5, percent of the state ceiling available exclusively for reservations by all other issuers of bonds requiring an allocation. (State ceiling means the amount of authority in the State of Texas to issue tax-exempt private activity bonds during the calendar year.) C.S.H.B. 842 modifies the original in SECTION 1 (Article 5190.9a, V.T.C.S.) by amending Subsection (e) to require that portion of the state ceiling available for reservations from August 15 31 to become available for qualified residential rental project issues in the manner otherwise described by this section. C.S.H.B. 842 modifies the original by adding SECTION 2 (Article 5190.9a, V.T.C.S.), as follows: SECTION 2. Amends Article 5190.9a, V.T.C.S., by adding Subsections (h) and (i), as follows: (h) Sets forth priorities for any reservations by issuers of qualified residential project issues. (i) Prohibits the board from reserving a portion of the state ceiling for a first or second priority project described by Subsection (h) of this section unless the board receives certain evidence that an application has been filed with the Texas Department of Housing and Community Affairs for the specified low-income housing tax credit. C.S.H.B. 842 modifies the original by adding SECTION 3 (Article 5190.9a, V.T.C.S.), as follows: SECTION 3. Amends Section 7(d), Article 5190.9a, V.T.C.S., as follows: (d) Requires the issuer to submit to the board, not later than the fifth business day after the day on which the bonds are closed, evidence from the department that an award of lowincome housing tax credits has been approved for a first or second priority project. Makes a nonsubstantive change. C.S.H.B. 842 redesignates SECTIONS 2 and 3 (effective date, emergency clause) of the original to SECTIONS 4 and 5 of the substitute.