From the 89th RECAP – Miscellaneous “Grab Bag”

HB 2960 - Relating to choice of law and venue for certain construction contracts.

The Fourteenth Court of Appeals in Houston, in the case In re MVP Terminalling, LLC, determined that the longstanding laws protecting against out of state choice of venue provisions in construction contracts could be waived.

This new law makes mandatory out of state venue provisions void in construction contracts and requires an action arising out of a construction contract to be brought only in the Texas county in which the property is located, unless the parties stipulate to another venue after the dispute arises.

SB 17 - Relating to the purchase or acquisition of an interest in real property by certain aliens or foreign entities; creating a criminal offense; providing a civil penalty.

This law prohibits the purchase of real property from specific governments, companies, or individuals domiciled from “designated countries.” Initial prohibited countries are China, Russia, Iran, and North Korea, with the ability of the governor to expand or change the list with consultation with DPS and Homeland Security

The Texas AG has investigative and enforcement authority, there is also a process for divesture and civil penalties.

HB 21 - Relating to housing finance corporations

The Texas Housing Finance Corporations Act provides for the formation of housing finance corporations (HFCs) by municipalities and counties for the purpose of providing decent, safe, and sanitary housing at affordable prices to residents of local governments.

HFC accomplish this by receiving special tax and fee exemptions from local jurisdictions, with the goal of “public-private-partnerships” to create more affordable housing units.

HFCs only apply to residential developments with at least 90 percent of the intended occupied households are low (earns less than 60% AMFI) and moderate income (earns less than 80% AMFI).

Under a current loophole, HFCs are currently operating outside the territorial jurisdiction of their sponsoring entities, allowing private developers to use HFCs as a tool to pull property off the tax rolls anywhere in the state without a corresponding public benefit to local taxpayers or renters.

This bill ensures that an HFC provides a public benefit to its community in the form of actual affordable housing in multifamily residential developments by establishing geographic limitations on an HFC's area of operation

The bill also subjects HFCs to audits by TDHCA

Of note, the bill defines “multifamily residential development” as – “(7) "Multifamily residential development" means any residential development consisting of four or more residential units intended for occupancy as rentals, regardless of whether the units are attached or detached.”

The bill does not change the current definition of "Residential development," which means “the acquisition, construction, reconstruction, rehabilitation, repair, alteration, improvement, or extension of any of the following items or any combination of the following items for the purpose of providing decent, safe, and sanitary housing and nonhousing facilities that are an integral part of or are functionally related to any affordable housing project, whether in one or multiple locations, including any facilities used for the purpose of delivering tenant services, as defined by Section 2306.254, Government Code:

(A) land, an interest in land, a building or other structure, facility, system, fixture, improvement, addition, appurtenance, or machinery or other equipment;

(B) real or personal property considered necessary in connection with an item described by Paragraph (A); or

(C) real or personal property or improvements functionally related and subordinate to an item described by Paragraph (A).