S.B. No. 867 amends the Local Government Code to enhance the operations and regulations of housing finance corporations in Texas, focusing on improving housing accessibility and affordability. The bill mandates that residential developments must be at least 90 percent occupied or intended for low and moderate-income individuals, with income limits set by the housing finance corporation's rules. It introduces provisions for transparency by ensuring that the actions and records of these corporations are subject to open meetings and open records laws. Additionally, the bill allows housing finance corporations to issue bonds only within the boundaries of the local government that formed them and establishes conditions for ad valorem tax treatment for multifamily developments, requiring a percentage of units to be reserved for lower-income housing.

The bill also includes several amendments aimed at increasing oversight and accountability in the management of affordable housing. It requires housing finance corporations to submit annual compliance audit reports to the Texas Department of Housing and Community Affairs, detailing adherence to tax exemption requirements. The bill modifies criteria for qualifying for ad valorem tax exemptions, emphasizing compliance and financial viability assessments. It allows local governments to transfer residential development sites to housing finance corporations without voter approval, streamlining support for affordable housing initiatives. Furthermore, the bill repeals Section 394.005 of the Local Government Code and establishes that new regulations will apply only to bonds issued and tax years beginning after the Act's effective date, with the Texas Department of Housing and Community Affairs tasked with implementing necessary rules by January 1, 2026.

Statutes affected:
Introduced: Local Government Code 394.004, Local Government Code 394.031, Local Government Code 394.032, Local Government Code 394.037, Local Government Code 394.039, Local Government Code 394.9025, Local Government Code 394.903, Local Government Code 394.905, Local Government Code 394.005 (Local Government Code 394)
Senate Committee Report: Local Government Code 394.004, Local Government Code 394.032, Local Government Code 394.037, Local Government Code 394.011, Local Government Code 394.9025, Local Government Code 394.903, Local Government Code 394.905, Local Government Code 394.005 (Local Government Code 394)