HBA-CMT S.B. 929 77(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 929 By: Bernsen Urban Affairs 5/8/2001 Engrossed BACKGROUND AND PURPOSE Currently, municipalities and counties are allowed to set up housing finance corporations which may issue bonds for the construction, ownership, and operation of housing. Most cities and counties that have exercised the power to create a housing finance corporation have imposed requirements that the housing created by the corporation be primarily limited to low-income housing, especially since the housing is financed with low-interest local government bonds and is exempt from property taxes. Some communities and real estate companies have used housing finance corporations to create housing for middle and upper income residents. These projects then compete with privately financed housing projects that do not receive the low-interest financing and no-property tax status of housing finance corporation owned projects. Senate Bill 929 requires that at least 50 percent of all units in a residence financed by a housing finance corporation to be leased to tenants making less than 80 percent of the area median income, for purposes of issuing bonds or receiving certain exemptions from taxation. 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. ANALYSIS Senate Bill 929 amends the Local Government Code to provide that an exemption from sales and use taxes and other taxes imposed by the state for a multifamily residential development which is owned by a public facility corporation created by a housing authority under the Public Facility Corporation Act and which does not have at least 15 percent of its units reserved for public housing units, applies only if the housing authority holds a public hearing to approve the development and at least 50 percent of the units in the development are reserved for occupancy by individuals and families earning less than 80 percent of the area median family income. The bill provides that an exemption from all taxes and special assessments for a multifamily residential development which is owned by a public facility corporation created by a housing authority under the Public Facility Corporation Act, a housing development corporation, or a similar entity created by a housing authority and that does not have at least 15 percent of its units reserved for public housing units, applies only if the housing authority holds a public hearing to approve the development and at least 50 percent of the units in the development are reserved for occupancy by individuals and families earning less than 80 percent of the area median family income. The bill provides that following a public hearing, a housing finance corporation is authorized to issue bonds to finance a multifamily residential development to be owned by the housing finance corporation if at least 50 percent of the units in the multifamily residential development are reserved for occupancy by individuals and families earning less than 80 percent of the area median family income. Following a public hearing by the governing body of the local government, a housing finance corporation is authorized to issue bonds to finance a multifamily residential development to be owned by the housing finance corporation if the housing finance corporation receives the approval of the governing body of the local government. EFFECTIVE DATE August 31, 2002.