HBA-NLM S.B. 1287 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 1287 By: Lucio Urban Affairs 5/11/1999 Engrossed BACKGROUND AND PURPOSE Currently, housing loans are difficult to attain for low-income families. S.B. 1287 establishes an owner-builder loan program to provide for the development of affordable housing in this state. This bill requires the Texas Department of Housing and Community Affairs (department), through colonia self-help centers and nonprofit organizations identified by the department, to make loans for owner-builders to enable them to purchase or refinance real property on which to build new residential housing or improve existing residential housing. 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 2306.752, Government Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 2306, Government Code, by adding Subchapter FF, as follows: SUBCHAPTER FF. OWNER-BUILDER LOAN PROGRAM Sec. 2306.751. DEFINITION. Defines "owner-builder." Sec. 2306.752. OWNER-BUILDER LOAN PROGRAM. Requires the Texas Department of Housing and Community Affairs (department), in order to provide for the development of affordable housing in this state, through the colonia self-help centers established under Subchapter Z (Colonia Self-Help Centers) and nonprofit organizations identified by the department, to make loans for owner-builders to enable them to: _purchase or refinance real property on which to build new residential housing; _build new residential housing; or _improve existing residential housing. Authorizes the department to adopt rules necessary to accomplish the purposes of this subchapter. Sec. 2306.753. OWNER-BUILDER ELIGIBILITY. Requires the department, subject to this section, to establish eligibility requirements for an owner-builder to receive a loan under this subchapter. Provides that the eligibility requirements must provide that at least 50 percent of the loans made under this subchapter be made to owner-builders with an annual income of less than $17,500. Sets forth the eligibility requirements for an owner-builder to obtain a loan under this subchapter. Authorizes the department to select nonprofit owner-builder housing programs to certify the eligibility of owner-builders to receive a loan under this subchapter. Requires a nonprofit housing assistance organization selected by the department to use the eligibility requirements established by the department to certify the eligibility of an owner-builder for the program. Sec. 2306.754. AMOUNT OF LOAN; LOAN TERMS. (a) Authorizes the department to establish the minimum amount of a loan under this subchapter. Prohibits a loan from exceeding $25,000. (b) Provides that, if it is not possible for an owner-builder to purchase necessary real property and build adequate housing for $25,000, the owner-builder must obtain the amount necessary that exceeds $25,000 from one or more local governmental entities, nonprofit organizations, or private lenders. Prohibits the total amount of loans made by the department and other entities to an owner-builder under this subchapter from exceeding $60,000. (c) Sets forth the criteria for a loan made by the department under this subchapter. (d) Prohibits the department, if an owner-builder is purchasing real property under a contract for deed, from dispersing any portion of a loan made under this subchapter until the owner-builder fully completes the owner-builder's obligation under the contract and receives a deed to the property, or refinances the owner-builder's obligation under the contract and converts the obligation to a note secured by a deed of trust. Sec. 2306.755. NONPROFIT OWNER-BUILDER HOUSING PROGRAMS. Authorizes the department to certify nonprofit owner-builder housing programs to perform certain procedures. Sec. 2306.756. OWNER-BUILDER EDUCATION CLASSES. Requires a state-certified nonprofit owner-builder housing program to offer owner-builder education classes to potential owner-builders. Specifies that a class under this section must provide certain information. Authorizes a nonprofit owner-builder housing program to charge a potential owner-builder who enrolls in a class under this section a reasonable fee not to exceed $50 to offset the program's costs in providing the class. Sec. 2306.757. LOAN PRIORITY FOR WAIVER OF LOCAL GOVERNMENT FEES. Requires the department, in making loans under this subchapter, to give priority to loans to owner-builders who will reside in counties or municipalities that agree in writing to waive capital recovery fees, building permit fees, inspection fees, or other fees related to the building of the housing to be built with the loan proceeds. Sec. 2306.758. FUNDING. Requires the department to solicit gifts and grants to make loans under this subchapter. Authorizes the department to also make loans under this subchapter from specified sources. Sec. 2306.759. REPORTING DUTIES. Requires the department to prepare a report that evaluates the repayment history of owner-builders who receive loans under this subchapter, and to deliver a copy of the report to the governor, the lieutenant governor, and the speaker of the house of representatives not later than November 15, 2000. Sec. 2306.760. EXPIRATION. Specifies that this subchapter expires September 1, 2005. SECTION 2. Establishes that, except as provided by Section 3 of this Act, this Act takes effect January 1, 2000, but only if the constitutional amendment proposed by S.J.R. 34, 76th Legislature, Regular Session, 1999, is approved by the voters. Provides that this Act has no effect if the proposed amendment is not approved by the voters. SECTION 3. Establishes that this Act takes effect only if a specific appropriation for the implementation of this Act is provided in H.B. No. 1 (General Appropriations Act), Acts of the 76th Legislature, Regular Session, 1999. Provides that this Act has no effect if no specific appropriation is provided in H.B. No. 1, the General Appropriations Act. SECTION 4. Requires the office of the secretary of state to assist the department in administering the owner-builder loan program under Subchapter FF, Chapter 2306, Government Code, as added by this Act, until August 31, 2000. Requires the department to administer the owner-builder loan program beginning on September 1, 2000. SECTION 5. Emergency clause.