S.B. No. 867 amends the Local Government Code to improve the operations and regulations of housing finance corporations in Texas, focusing on enhancing transparency and accountability. 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 that require housing finance corporations to adhere to open meetings and open records laws, ensuring greater public access to their actions and records. Additionally, the bill restricts housing finance corporations from issuing bonds for developments outside the local government's boundaries that formed the corporation.

The legislation also establishes conditions for ad valorem tax treatment for multifamily residential developments, requiring a percentage of units to be reserved for lower and moderate-income housing. It includes tenant protections against discrimination based on participation in housing choice voucher programs and outlines the conditions for lease non-renewals. The bill further clarifies tax exemption requirements and introduces new definitions related to housing finance corporations. It repeals Section 394.005 and sets deadlines for compliance audit reports, with the Texas Department of Housing and Community Affairs responsible for implementing the new rules by January 1, 2026. The Act will take 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)