SB 2471

relating to a set-aside of low income housing tax credits for
at-risk housing developments and to the allocation of housing tax
credits to those developments and certain other developments.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Section 2306.111, Government Code, is amended by
amending Subsections (a), (d-1), (d-2), and (d-4) and adding
Subsection (a-1) to read as follows:
(a)  In this section, "at-risk" development has the meaning
(a-1)  The department, through the housing finance division,
shall administer all federal housing funds provided to the state
under the Cranston-Gonzalez National Affordable Housing Act (42
U.S.C. Section 12704 et seq.) or any other affordable housing
(d-1)  In allocating low income housing tax credit
commitments under Subchapter DD, the department shall, before
applying the regional allocation formula prescribed by Section
2306.1115, set aside for and allocate to at-risk developments[, as
defined by Section 2306.6702,] not less than the minimum amount of
housing tax credits required to be set aside and allocated under
Section 2306.6714(a) [2306.6714].  Funds or credits are not
required to be allocated according to the regional allocation
formula under Subsection (d) if:
(1)  the funds or credits are reserved for
contract-for-deed conversions or for set-asides mandated by state
or federal law and each contract-for-deed allocation or set-aside
allocation equals not more than 10 percent of the total allocation
of funds or credits for the applicable program;
(2)  the funds or credits are allocated by the
department primarily to serve persons with disabilities; or
(3)  the funds are housing trust funds administered by
the department under Sections 2306.201-2306.206 that are not
otherwise required to be set aside under state or federal law and do
not exceed $3 million for each programmed activity during each
(d-2)  In allocating low income housing tax credit
commitments under Subchapter DD, the department shall allocate five
percent of the housing tax credits in each application cycle to
developments that receive federal financial assistance through the
[Texas Rural Development Office of the] United States Department of
Agriculture.  Any funds allocated to developments under this
subsection that involve rehabilitation must come from  the portion
of funds that are set aside for and allocated to eligible at-risk
developments under Subsection (d-1) and Section 2306.6714(a)
[2306.6714] and any [additional] funds that remain after those
funds have been set aside and allocated [set aside for those
developments under Subsection (d-1)].  This subsection does not
apply to a development financed wholly or partly under Section 538
of the Housing Act of 1949 (42 U.S.C. Section 1490p-2) unless the
development involves the rehabilitation of an existing property
that has received and will continue to receive as part of the
financing of the development federal financial assistance provided
under Section 514, [Section] 515, 516, or 521 of the Housing Act of
1949 (42 U.S.C. Section 1484, [Section] 1485, 1486, or 1490a).
(d-4)  A proposed or existing development that, before
September 1, 2013, has been awarded or has received federal
financial assistance provided under Section 514, 515, [or] 516, or
521 of the Housing Act of 1949 (42 U.S.C. Section 1484, 1485, [or]
1486, or 1490a) may apply for low income housing tax credits
allocated under Subsection (d-2) or (d-3) for the uniform state
service region in which the development is located regardless of
whether the development is located in a rural area.
SECTION 2.  Section 2306.6702(a)(5), Government Code, is
(5)  "At-risk development" means:
(i)  has received the benefit of a subsidy in
the form of a below-market interest rate loan, interest rate
reduction, rental subsidy, Section 8 housing assistance payment,
rental supplement payment, rental assistance payment, or equity
incentive under the following federal laws, as applicable:
(a)  Sections 221(d)(3) and (5),
National Housing Act (12 U.S.C. Section 1715l);
(b)  Section 236, National Housing Act
(c)  Section 202, Housing Act of 1959
(d)  Section 101, Housing and Urban
Development Act of 1965 (12 U.S.C. Section 1701s);
Assistance Program for housing developments with HUD-Insured and
HUD-Held Mortgages administered by the United States Department of
Housing and Urban Development as specified by 24 C.F.R. Part 886,
(f)  the Section 8 Housing Assistance
Program for the Disposition of HUD-Owned Projects administered by
the United States Department of Housing and Urban Development as
specified by 24 C.F.R. Part 886, Subpart C;
(g)  Sections 514, 515, [and] 516, and
521 of the Housing Act of 1949 (42 U.S.C. Sections 1484, 1485, [and]
(h)  Section 42, Internal Revenue Code
(ii)  is subject to the following
(a)  the stipulation to maintain
affordability in the contract granting the subsidy is [nearing]
within three years of expiration, based on the anticipated
allocation date of housing tax credits, and, for an automatically
renewing contract, the stipulation in the contract will not be
(b)  the federally issued or held
[HUD-insured or HUD-held] mortgage on the development is eligible
for prepayment or is within three years of [nearing] the end of its
term, based on the anticipated allocation date of housing tax
(B)  a development that proposes to rehabilitate
or reconstruct housing units that:
(i)  receive assistance under Section 9,
United States Housing Act of 1937 (42 U.S.C. Section 1437g) and are
(a)  a public housing authority; or
(b)  a public facility corporation
created by a public housing authority under Chapter 303, Local
(ii)  received assistance under Section 9,
United States Housing Act of 1937 (42 U.S.C. Section 1437g) and:
(a)  are proposed to be disposed of or
demolished by a public housing authority or a public facility
corporation created by a public housing authority under Chapter
demolished by a public housing authority or a public facility
corporation created by a public housing authority under Chapter
303, Local Government Code, in the two-year period preceding the
application for housing tax credits; or
(iii)  receive assistance or will receive
assistance through the Rental Assistance Demonstration program
administered by the United States Department of Housing and Urban
Development as specified by the Consolidated and Further Continuing
Appropriations Act, 2012 (Pub. L. No. 112-55) and its subsequent
amendments, if the application for assistance through the Rental
Assistance Demonstration program is included in the applicable
public housing plan that was most recently approved by the United
States Department of Housing and Urban Development as specified by
SECTION 3.  Sections 2306.6714(a) and (b), Government Code,
are amended to read as follows:
(1)  set aside for eligible at-risk developments not
less than 15 percent of the housing tax credits available for
allocation in the calendar year; and
(2)  to the extent that a sufficient number of eligible
applicants exist, allocate to at-risk developments the maximum
amount of housing tax credits set aside for that purpose under
(b)  Housing [Any amount of housing] tax credits set aside
under this section that remain [remains] after the initial
allocation of housing tax credits are [is] available for allocation
to any eligible applicant that receives financial assistance from
the United States Department of Agriculture, as provided by the
qualified allocation plan, only if there are no remaining
applicants who are eligible for the housing tax credits set aside
and allocated under Subsection (a).
SECTION 4.  Sections 2306.111, 2306.6702, and 2306.6714,
Government Code, as amended by this Act, apply only to an
application for low income housing tax credits that is submitted to
the Texas Department of Housing and Community Affairs during an
application cycle that is based on the 2026 qualified allocation
plan or a subsequent plan adopted by the governing board of the
department.  An application that is submitted during an application
cycle that is based on an earlier qualified allocation plan is
governed by the law in effect on the date the application cycle
began, and the former law is continued in effect for that purpose.
SECTION 5.  This Act takes effect September 1, 2025.