HBA-CMT H.B. 3363 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3363 By: Menendez Urban Affairs 4/2/2001 Introduced BACKGROUND AND PURPOSE Tax-exempt multifamily housing bonds are an important financing tool for the development of affordable housing. Currently, one of the three types of tax-exempt multifamily bonds is allocated at the state level. On a statewide basis, first priority is now given to projects in which all units are rent restricted to be affordable to families earning 50 percent or less of the area median family income (AMFI). Second priority is given to projects that are affordable to families earning 60 percent or less AMFI. Third priority is given to all other projects, including mixed-income projects. The intent was to target funds to serve low-income populations. However, projects in high median income areas can charge higher rents and still qualify as first or second priority projects. Conversely, rent restrictions in low median income areas may push rents too low to cover development and construction costs. House Bill 3363 authorizes projects in each service region of the state to compete within the region for bonds first, and if there is not sufficient demand for the bonds the funds will be returned to the statewide pool for allocation according to the established priority system. 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 House Bill 3363 amends the Government Code to provide that after January 1, one-quarter of the portion of the state ceiling that is available exclusively for reservations by issuers of qualified residential rental project bonds is available exclusively to the Texas Department of Housing and Community Affairs (TDHCA) for the purpose of issuing qualified residential rental project bonds throughout the uniform state service regions. The bill provides that after January 1, the remainder of the state ceiling available exclusively for use by issuers of qualified residential rental project bonds is required to be allocated throughout the uniform state service regions according to a formula based on the population of each uniform state service region, with priority given to reservations by issuers of qualified residential rental project bonds. On or after July 1, any unreserved portion of the remainder of the state ceiling is required to become available to any issuer of any qualified residential rental project bonds requiring an allocation. The bill sets forth required priorities of the Bond Review Board (board) in granting reservations to issuers of qualified residential rental project bonds. The bill prohibits the board from reserving a portion of the state ceiling for a first or second priority project unless the board receives evidence that an application has been filed with the TDHCA for the low-income housing tax credit that is available for multifamily transactions that are at least 51 percent financed by taxexempt private activity bonds. EFFECTIVE DATE September 1, 2001.