S.B. No. 867 amends the Local Government Code to improve the operations and regulations of housing finance corporations in Texas, particularly regarding multifamily residential developments. The bill mandates that residential projects must be at least 90 percent occupied or designated for low and moderate-income individuals, with specific income limits set by the housing finance corporation. 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 restricts housing finance corporations to issuing bonds only for developments within the local government's boundaries that formed them and establishes conditions for ad valorem tax treatment, requiring a percentage of units to be reserved for lower-income housing.

The legislation also includes new requirements for compliance audits, mandating that housing finance corporations submit annual reports to the Texas Department of Housing and Community Affairs to demonstrate adherence to tax exemption criteria. It clarifies tenant rights, including stipulations that tenants cannot waive certain protections and may be required to pay the difference between their housing voucher and rent if necessary. The bill repeals Section 394.005 and sets forth the applicability of new provisions, which will only affect bonds and taxes for tax years beginning after the Act's effective date. The Texas Department is tasked with adopting rules to implement these changes by January 1, 2026, with the Act taking effect immediately upon a two-thirds vote or on September 1, 2025, if such a vote is not achieved.

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)