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.