HBA-JEK H.B. 3449 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3449 By: Gallego Urban Affairs 3/26/2001 Introduced BACKGROUND AND PURPOSE The Texas Department of Housing and Community Affairs (TDHCA) works to ensure affordable housing for low-income families, promote community development and assistance, and regulate the state's manufactured housing industry. The 72nd Legislature created TDHCA in 1991 by merging the Texas Department of Community Affairs, the Texas Housing Agency, and the Department of Commerce's Community Development Block Grant Program. TDHCA allocates and awards funds to for-profit and nonprofit organizations, local governments, lenders, and developers to assist low income individuals and families in obtaining affordable housing. TDHCA also provides funding for services designed to fund neighborhood infrastructures, address poverty, repair and weatherize homes, and assist very low income individuals in paying their utility bills. TDHCA is subject to the Texas Sunset Act and will be abolished on September 1, 2001 unless continued by the legislature. In its review of TDHCA, the Sunset Advisory Commission found that while TDHCA is funding affordable housing and assisting many communities, problems exist in TDHCA's ability to allocate resources to meet the state's most pressing housing needs. House Bill 3449 continues TDHCA for a two-year probationary period and contains the Sunset Advisory Commission's recommendations to better position TDHCA to address the state's housing and community support services needs. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the governing board of the Texas Department of Housing and Community Affairs (TDHCA) in SECTION 5 (Section 2306.032, Government Code) and SECTION 6 (Section 2306.0321, Government Code), to TDHCA in SECTION 18 (Section 2306.1711, Government Code) and SECTION 21 (Section 2306.257, Government Code), to the Manufactured Housing Board in SECTION 26 (Sections 2306.6010, 2306.6020, and 2306.6023, Government Code) and SECTION 35 (Article 5221f, V.T.C.S.), and to the executive committee of the Office of Rural Community Affairs in SECTION 29 (Section 487.052, Government Code) of this bill. ANALYSIS House Bill 3449 amends the Government Code and Vernon's Texas Civil Statutes to continue the Texas Department of Housing and Community Affairs (TDHCA) until September 1, 2003 (SECTION 3, Sec. 2306.022), and to set forth standard Sunset Advisory Commission recommendations regarding appointments to the governing board of TDHCA (board), public representation on the board, conflicts of interest, board member training, board member removal, designation of a presiding officer of the board by the governor, standards of conduct, maintaining written complaints, and policy implementation by the board (SECTION 3, Secs. 2306.024, 2306.025, 2306.027, and 2306.028; SECTION 4, Secs. 2306.030 and 2306.033; SECTION 7, Sec. 2306.051; SECTION 9, Secs. 2306.061 and 2306.063; and SECTION 10, Sec. 2306.066). Governing Board H.B. 3449 restructures the board to include seven members with demonstrated interest in housing and community support services issues who broadly reflect the economic, cultural, and social diversity of the state (SECTION 3, Secs. 2306.024 and 2306.027). The bill streamlines the process by which the director of TDHCA is authorized to create divisions with the approval of the board to increase the organizational flexibility of TDHCA (SECTION 7, Sec. 2306.0521). Public Hearing and Input H.B. 3449 provides that all materials in TDHCA possession that are relevant to any matter proposed for discussion at a board meeting must be made available to the public at least seven days before the meeting. The bill requires TDHCA to develop and implement rules to give the public a reasonable amount of time for testimony at board meetings (SECTION 5, Sec. 2306.032). The bill also requires the board to develop and implement rules outlining a formal process to appeal board decisions (SECTION 6, Sec. 2306.0321). The bill requires TDHCA to consolidate its public hearings into a single public hearing process to provide for an annual public hearing on TDHCA programs in each uniform service region of the state (SECTION 11, Sec. 2306.0661 and SECTION 15, Sec. 2306.0723). H.B. 3449 requires TDHCA to provide for public input before adopting rules that outline formal rulemaking procedures for the low income housing tax credit program and the multifamily housing mortgage revenue bond program (SECTION 18, Sec. 2306.1711). Strategic Planning H.B. 3449 modifies the process by which TDHCA must develop a strategic plan to provide that it must assess and meet affordable housing and community support services needs for populations in each uniform state service region (SECTION 14, Secs. 2306.0721 and 2306.0722). The bill requires TDHCA to use the strategic plan to allocate funds to meet regional housing needs and community service priorities (SECTION 16, Sec. 2306.111). The bill requires TDHCA to create a uniform application and funding cycle for housing programs to support projects that meet established needs, and requires TDHCA to establish an executive award and review committee to make funding allocation decisions (SECTION 17, Sec. 2306.1111, 2306.1112). Multifamily Housing Finance H.B. 3449 bill sets forth criteria for the scoring of applications for low income housing tax credit. The bill requires TDHCA to cap the amount of low income housing tax credits per developer at $2.4 million in a three-year period, requires the board to approve low income housing tax credit projects that undergo substantial changes, and authorizes a qualified nonprofit organization to compete in any low income housing tax credit allocation pool (SECTION 27, Secs. 2306.672, 2306.675, 2306.6751, and 2306.6761). The bill removes the requirement that 50 percent of the funds from federal 501(c)(3) bonds be allocated for new construction (SECTION 22, Sec. 2306.358). Fair Housing H.B. 3449 authorizes TDHCA to provide assistance through a housing program only to an applicant who certifies the applicant's compliance with federal anti-discrimination laws. The bill requires TDHCA to adopt rules governing the certification process (SECTION 21, Sec. 2306.257). The bill requires TDHCA to adopt a policy to identify reasonable Section 8 admittance policies for low income housing tax credit properties and to establish monitoring and enforcement policies relating to the refusal of such properties to admit tenants with Section 8 vouchers (SECTION 7, Sec. 2306.6741). Housing Preservation H.B. 3449 requires TDHCA to develop and implement the affordable housing preservation program to preserve affordable housing in this state (SECTION 19, Sec. 2306.256). The bill requires TDHCA to establish incentives for longer or permanent affordability periods for multifamily housing as well as a minimum 10 percent set-aside from the multifamily allocation process for preservation projects (SECTION 18, Sec. 2306.185). Colonias H.B. 3449 requires TDHCA to establish a colonia initiatives advisory committee to review public comments regarding the needs of colonia residents, and requires TDHCA to prepare a biennial action plan addressing policy goals for colonia programs, strategies to meet the policy goals, and the projected outcomes with respect to those policy goals (SECTION 24, Secs. 2306.590 and 2306.591). Office of Rural Community Affairs H.B. 3449 creates the Office of Rural Community Affairs (office) to administer the state's allocation of federal funds from the community development block grant program (SECTION 29, Secs. 487.001, 487.021-487.030, and 487.051-487.054, and SECTION 30, Secs. 487.101-487.103). The bill sets forth standard Sunset Advisory Commission recommendations for the office regarding equal employment, conflicts of interest, executive committee member training, executive committee member removal, policy implementation by the executive committee, public testimony, the development of an equal employment policy, standards of conduct, and the maintaining of written complaints (SECTION 29, Secs. 487.022487.025 and 487.027-487.30). The bill authorizes the executive committee of the office to adopt rules as necessary to fulfill its duties (SECTION 29, Sec. 487.052). Manufactured Housing Board H.B. 3449 establishes the Manufactured Housing Board (housing board) as an independent entity within TDHCA that is administratively attached to TDHCA. The bill sets forth provisions for the composition, terms of membership, and reimbursement of members of the housing board as well as the sharing of housing board and TDHCA personnel, equipment, and facilities. The bill also sets forth standard Sunset Advisory Commission recommendations regarding policy implementation by the housing board, public representation on the housing board, the designation of a presiding officer of the housing board by the governor, conflicts of interest, the maintaining of written complaints, housing board member training, housing board member removal, standards of conduct, public testimony, equal employment, and the development of an equal employment policy. H.B. 3449 requires reasonable notice of all housing board meetings to be given as prescribed by housing board rule. The bill requires the legislature to separately appropriate money to the housing board within the appropriations to TDHCA, and authorizes the housing board to accept gifts and grants of money or property. The bill requires the division director of the housing board to provide to employees of TDHCA's manufactured housing division information and training regarding the state employee incentive program. The bill authorizes the housing board to adopt rules relating to the administrative sanctions that may be enforced against a person regulated by the manufactured housing division of TDHCA, rules to adopt a system under which manufactured housing licenses expire on various dates during the year, and other rules necessary to enforce housing board provisions. The bill sets forth provisions relating to the expiration and renewal of a manufactured housing license, and relating to provisional manufactured housing licenses (SECTION 26, Secs. 2306.6001-2306.6023, and SECTIONS 35-36, Art. 5221f, V.T.C.S.). Repealers H.B. 3449 repeals provisions regarding places on the TDHCA governing board; the separation of the duties of the housing finance from community affairs divisions and other divisions; and the TDHCA director's authority to assign functions and duties to the various offices and divisions, to provide for additional offices, and to reorganize TDHCA when necessary to improve efficiency or effectiveness (SECTION 43). EFFECTIVE DATE September 1, 2001.