88th Legislative Session Recap: Big Wins for Affordable Housing

TAAHP PUSHES LEGISLATIVE PRIORITIES OVER THE FINISH LINE

By Whitney Parra-Gutiérrez, TAAHP Policy & Regulatory Manager

TAAHP approached the 88th Texas Legislative Session with vision and bold ideas about how to address housing affordability issues affecting our state. Throughout the 140 days of the session, TAAHP members prioritized items foundational to the Texas affordable housing industry with a focus on building relationships, advancing legislative priorities, supporting legislation that would advance TAAHP’s mission, and limiting legislation harmful to the industry. As a result of the efforts of so many on the TAAHP leadership team, members, lobbyists, and staff, the Texas legislature passed bills that will positively impact the industry, including establishing a new state housing tax credit funding resource, reforming public facility corporations, and streamlining the private activity bond program. While not all priorities made it over the finish line, TAAHP made great strides in advancing these essential policy solutions during the 88th Texas Legislative Session.

Planning Ahead: Preparing for the 88th Texas Legislative Session

TAAHP began working on strengthening its relationships with members of key housing committees at the end of the 87th Legislative Session. Early last year, the Texas House Committee on Urban Affairs and the Texas Senate Committee on Local Government were assigned housing-related interim charges—directives to committees to study special policy issues and make recommendations for future legislation. TAAHP was not only asked to contribute ideas for potential affordable housing interim charges but was also invited to serve as an expert witness for both committee hearings.

Leading up to the 88th Legislative session, TAAHP’s Government Affairs Committee worked to develop a legislative agenda addressing the most pressing issues facing the affordable housing industry in Texas. Four legislative priorities were formed, including reforming Public Facility Corporations, modernizing Section 2306, instituting a state housing tax credit, and streamlining Private Activity Bonds. Made up of over 42 members, TAAHP’s Government Affairs Committee and its four subcommittees, each of which focused on one bill, worked diligently to develop recommendations for what would ultimately be included in draft bills

TAAHP MEMBERS SHOW UP IN MASS TO EDUCATE AND INFORM LEGISLATORS

TAAHP hosted two complimentary luncheons and presentations at the Texas Capitol months before the session began. Over 30 participants representing Texas House and Senate legislators, the Governor’s office, and TDHCA attended the lunch and learn events. Presentations provided information about the affordable housing industry in Texas and various policy changes that can collectively help preserve and produce affordable housing.

Execution: Delivering the Message during the 88th Legislative Session

TAAHP’s Government Affairs Committee, its leadership, lobby team, and staff worked diligently to connect with as many legislators as possible throughout the session. Meetings occurred with all members from the House Urban Affairs Committee and Senate Local Government Committee, the Lt. Governor’s, Governor’s and the Speaker’s offices, and many other key members. Numerous one-on-one presentations were made to elected officials, specifically those in priority committees such as Local Government and Urban Affairs, with a goal to inform and educate legislators about the importance and impact of each priority measure.

Over 80 TAAHP members met with all 181 Texas legislators to deliver TAAHP's message and legislative priorities at the Texas Capitol on behalf of the industry for TAAHP’s Rally Day on March 21st. For the first time in TAAHP’s history, the organization was recognized with a resolution on both the House and Senate floors as Affordable Housing Day at the Capitol.

It is through these combined efforts that TAAHP was able to successfully educate legislators about Housing Tax Credits and position itself as a valuable resource in the affordable housing space.

More than any other session, TAAHP was sought out to provide input on housing bills and offer testimony and support. TAAHP members traveled from across the state to testify at committee hearings and drop cards in support for 15 bills. TAAHP also successfully opposed bills that would have made it more difficult to build affordable housing in the state, such as HB 2856 from Rep. Valoree Swanson that would have required state representative letters for 4% housing tax credit transactions. At one hearing, three TAAHP members were at the Capitol until 11:30 PM testifying in support of TAAHP supported bills. Without a doubt, TAAHP members have been the association's most valuable advocacy resource.

TAAHP leadership went above and beyond to build the organization’s reputation and collaborate with other organizations throughout the state, and these efforts proved to be worthwhile. TAAHP worked consistently with the Texas Apartment Association (TAA), Texans for Reasonable Solutions, Houston Region Business Coalition (HRBC), Texas Housing Group (includes six major TX metros), Texas Association of Builders (TAB), Texas Association of Local Housing Finance Agencies (TALHFA), Rural Rental Housing Association (RRHA), and Real Estate Council of Austin (RECA).

Results: Celebrating the Successes

TAAHP’s active involvement during this legislature, both in supporting and opposing bills, yielded positive results.

HB 1058: State Tax Credits Texas’ most significant achievement in affordable housing was the passage of HB 1058 by Representative Goldman establishing an annual $25 million State Housing Tax Credit that would mirror and supplement the federal HTC program that is continuously oversubscribed. TAAHP became engaged with this bill after failing for two consecutive legislative sessions. Rep. Goldman reintroduced HB 1058 for its third attempt this session and its successful passage will make Texas the 27th state with its own state tax credit program. This state housing tax credit is a long-term, permanent solution that will help to cover the funding gaps on developments and sustain affordable housing construction over the next 10 years. It brings private investment dollars into Texas communities in exchange for credits against state insurance premiums and corporate franchise taxes. It is the most significant financial commitment by the state of Texas towards addressing its housing affordability crisis.

HB 2071: Public Facility Corporations Authored by Rep. Jacey Jetton, HB 2071 was one of a dozen bills that sought to add guardrails to the state’s public facility corporation’s statute. Public Facility Corporations (PFC) are a critical tool for creating housing and economic development. This session, the goal was to protect the PFC tool from being eliminated, create a state structure that allows for local flexibility, and improve the program to better align the public benefits with private sector incentives. After months of negotiations with different stakeholders on how to save the program, HB 2071 received overwhelming bipartisan support in both chambers of the Texas legislature. The bill passed with votes of 142-5 in the House and 28-3 in the Senate, signaling widespread consensus among lawmakers that the concerns of the program needed to be addressed.

TAAHP members were heavily involved in the successful passage of HB 2071. Every committee hearing for the PFC bill had immense TAAHP representation. HB 2071 was the first PFC bill to be heard by the Urban Affairs Committee, where over 30 TAAHP members submitted letters of support and provided public testimony. In preparation for HB 2071 on the House Floor, TAAHP launched an advocacy email campaign where we asked members to email letters to their legislators encouraging them to support the bill. Over 50 letters were sent to 33 House members – our most effective advocacy campaign to date.

HB 1766: Private Activity Bonds Authored by Rep. Drew Darby, HB 1766 institutes a conditional 55 percent bond financing cap applicable in a year when demand for private activity bonds is too high. Currently, no limit exists for how much of the total cost of a development may be financed using these private activity bonds, which can lead to developers using the bonds to cover far more than the 50 percent of costs required to receive the tax credit, ultimately diluting the pool of available PAB funding. This bill would also give top priority to properties that closed a reservation of bonds within four years of the application but needed additional bonds to remain eligible to receive 4% housing tax credits and to properties that previously received an allocation but need additional PAB issuance to maintain compliance with the 50 percent financed-by test.

HB 4550: Section 2306 Improvements HB 4550 increases the developer cap from $3 million to $6 million, adjusts cost of square foot limitations to reflect inflation, and requires TDHCA to issue the final 8609 commitments within 120 days from the date when the department received the complete cost certification. This bill included two of three of TAAHP’s priorities – increasing the developer cap and addressing cost per square foot.

HB 14: Third Party Reviews Filed by Rep. Cody Harris, HB 14 streamlines the approval process for property development and building reviews, requiring cities and counties that fail to complete such projects in a timely manner to utilize third-party reviewers. Site plan reviews consume the most time in the permitting process, and long delays increase the development cost. Tackling this bureaucratic bottleneck can relieve backlog and pressure on staff.

HB 2127: Landlord/Tenant Regulations Endorsed by the Texas Apartment Association (TAA), HB 2127 ensures consistent and predictable landlord/tenant laws in Texas. Currently, local regulations create a patchwork of different rules across the state that are burdensome and confusing to landlords. The law explicitly blocks cities from regulating evictions or otherwise prohibiting, restricting, or delaying the eviction process.

Results: Learning from the Shortfalls

With more than 8,000 bills filed in the 88th Texas Legislative Session and only 15 percent successfully passing out of both chambers, no one ever expects to get all priorities addressed in a single legislative session and TAAHP's priorities are no different. While this session proved to be the most successful in TAAHP's history, there is still much work to do. Of TAAHP's 88th Legislative Session goals, the following measures did not make it to the Governor's desk this time around:

• Census Tract Rule modernization

• Limits to Resolution of No Objection requirements

• Some components of Private Activity Bond program improvements

The 88th Legislative Session proved, once again, to be a whirlwind process of give and take to navigate the rough waters of what is the Texas legislative process. Overall, TAAHP was successful in its efforts to improve the standing of affordable housing in the State. Now that the session is over, the process for preparing for the 89th legislative session is already underway.