Sec. 2306.111.  HOUSING FUNDS.  (a)  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 program.
(b)  The housing finance division shall adopt a goal to apply an aggregate minimum of 25 percent of the division's total housing funds toward housing assistance for individuals and families of extremely low and very low income.
(c)  In administering federal housing funds provided to the state under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. Section 12701 et seq.), the department shall expend:
(1)  95 percent of these funds for the benefit of non-participating small cities and rural areas that do not qualify to receive funds under the Cranston-Gonzalez National Affordable Housing Act directly from the United States Department of Housing and Urban Development; and
(2)  five percent of these funds for the benefit of persons with disabilities who live in any area of this state.
(c-1)  The following entities are eligible to apply for set-aside funds under Subsection (c):
(1)  nonprofit providers of affordable housing, including community housing development organizations;  and
(2)  for-profit providers of affordable housing.
(c-2)  In allocating set-aside funds under Subsection (c), the department may not give preference to nonprofit providers of affordable housing, except as required by federal law.
(c-3)  In administering funds that are set aside for persons with disabilities under Subsection (c)(2) and allocated through the homebuyer assistance program, the department:
(1)  may not require a person to enter into a contract to purchase a home before applying for or reserving funds allocated through the program; and
(2)  by rule shall implement a preapproval process under which a person:
(A)  before funds allocated through the program are made available, may establish eligibility to receive those funds; and
(B)  has an adequate period of at least 90 days in which to locate a home for purchase using funds made available under the program. 
(d)  The department shall allocate housing funds provided to the state under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. Section 12701 et seq.), housing trust funds administered by the department under Sections 2306.201-2306.206, and commitments issued under the federal low income housing tax credit program administered by the department under Subchapter DD to all urban areas and rural areas of each uniform state service region based on a formula developed by the department under Section 2306.1115.  If the department determines under the formula that an insufficient number of eligible applications for assistance out of funds or credits allocable under this subsection are submitted to the department from a particular uniform state service region, the department shall use the unused funds or credits allocated to that region for all urban areas and rural areas in other uniform state service regions based on identified need and financial feasibility.
(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 at-risk developments, as defined by Section 2306.6702, not less than the minimum amount of housing tax credits required under Section 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 application cycle.
(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 funds set aside for at-risk developments under Section 2306.6714 and any additional funds 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 515 of the Housing Act of 1949 (42 U.S.C. Section 1485).
(d-3)  In allocating low income tax credit commitments under Subchapter DD, the department shall allocate to developments in rural areas 20 percent or more of the housing tax credits in the state in the application cycle, with $500,000 or more in housing tax credits being reserved for each uniform state service region under this subsection.  Any amount of housing tax credits set aside for developments in a rural area in a specific uniform state service region under this subsection that remains after the initial allocation of housing tax credits is available for allocation to developments in any other rural area first, and then is available to developments in urban areas of any uniform state service region.
(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 of the Housing Act of 1949 (42 U.S.C. Section 1484, 1485, or 1486) 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.
(e)  The department shall include in its annual low income housing plan under Section 2306.0721:
(1)  the formula developed by the department under Section 2306.1115; and
(2)  the allocation targets established under the formula for the urban areas and rural areas of each uniform state service region.
(f)  The department shall include in its annual low income housing report under Section 2306.072 the amounts of funds and credits allocated to the urban areas and rural areas of each uniform state service region in the preceding year for each federal and state program affected by the requirements of Subsection (d).
(g)  For all urban areas and rural areas of each uniform state service region, the department shall establish funding priorities to ensure that:
(1)  funds are awarded to project applicants who are best able to meet recognized needs for affordable housing, as determined by department rule;
(2)  when practicable and when authorized under Section 42, Internal Revenue Code of 1986 (26 U.S.C. Section 42), the least restrictive funding sources are used to serve the lowest income residents; and
(3)  funds are awarded based on a project applicant's ability, when consistent with Section 42, Internal Revenue Code of 1986 (26 U.S.C. Section 42), practicable, and economically feasible, to:
(A)  provide the greatest number of quality residential units;
(B)  serve persons with the lowest percent area median family income;
(C)  extend the duration of the project to serve a continuing public need;
(D)  use other local funding sources to minimize the amount of state subsidy needed to complete the project; and
(E)  provide integrated, affordable housing for individuals and families with different levels of income.
(h)  The department by rule shall adopt a policy providing for the reallocation of financial assistance administered by the department, including financial assistance related to bonds issued by the department, if the department's obligation with respect to that assistance is prematurely terminated.
(i)  The director shall designate an employee of the department to act as the information officer and as a liaison with the public regarding each application seeking an allocation of housing funds described by this section.
(j)  Notwithstanding any other law, money provided to this state under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. Section 12701 et seq.) as a one-time lump sum for a specified use:
(1)  is not subject to the allocation requirements under this section or the allocation formula developed by the department under Section 2306.1115; and
(2)  may be allocated for the benefit of any area of this state in the manner specified under federal law.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993.  Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.75(a), eff. Sept. 1, 1995;  Acts 1997, 75th Leg., ch. 980, Sec. 23, eff. Sept. 1, 1997;  Acts 1999, 76th Leg., ch. 421, Sec. 1, eff. Sept. 1, 2000;  Acts 2001, 77th Leg., ch. 1367, Sec. 1.17, eff. Sept. 1, 2001;  Acts 2001, 77th Leg., ch. 1367, Sec. 6.01, eff. Sept. 1, 2001;  Acts 2001, 77th Leg., ch. 1448, Sec. 1, eff. Sept. 1, 2001;  Acts 2003, 78th Leg., ch. 330, Sec. 8, 9, eff. Sept. 1, 2003.
Amended by: 
Acts 2007, 80th Leg., R.S., Ch. 1341 (S.B. 1908), Sec. 3, eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch. 1341 (S.B. 1908), Sec. 4, eff. September 1, 2007.
Acts 2011, 82nd Leg., 1st C.S., Ch. 4 (S.B. 1), Sec. 74.02, eff. September 28, 2011.
Acts 2013, 83rd Leg., R.S., Ch. 857 (H.B. 429), Sec. 2, eff. September 1, 2013.
Acts 2015, 84th Leg., R.S., Ch. 395 (H.B. 1428), Sec. 1, eff. September 1, 2015.
Acts 2023, 88th Leg., R.S., Ch. 880 (H.B. 4443), Sec. 1, eff. June 13, 2023.