CHAPTER 2304. HOUSING REHABILITATION
GOVERNMENT CODE
TITLE 10. GENERAL GOVERNMENT
SUBTITLE G. ECONOMIC DEVELOPMENT PROGRAMS INVOLVING BOTH STATE
AND LOCAL GOVERNMENTS
CHAPTER 2304. HOUSING REHABILITATION
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2304.001. SHORT TITLE. This chapter may be cited as the
Texas Housing Rehabilitation Act.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.002. PURPOSES. (a) The purposes of this chapter are
to provide a means by which the deterioration of housing and the
decline of residential areas throughout the state can be arrested
and prevented.
(b) The purposes of this chapter are public purposes for which
money may be borrowed, loaned, and spent.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.003. DEFINITIONS. In this chapter:
(1) "Borrower" means a household whose application for a housing
rehabilitation loan is approved under this chapter by a local
government.
(2) "Department" means the Texas Department of Housing and
Community Affairs.
(3) "Fund" means the Texas housing rehabilitation loan fund.
(4) "Household" means one or more persons owning housing.
(5) "Housing" means a structure that is on a permanent
foundation and that consists of one to four family units used
only for residential purposes.
(6) "Housing rehabilitation" means the repair, renovation, or
other improvement of housing to make the housing decent, safe,
sanitary, and more habitable.
(7) "Housing rehabilitation loan" means a loan made under this
chapter.
(8) "Local agency" means a:
(A) nonprofit organization whose principal purpose is to improve
housing conditions; or
(B) local housing authority, urban renewal agency, or other
public entity.
(9) "Local government" means a county or municipality.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.004. GENERAL POWERS OF DEPARTMENT. (a) The
department has the powers necessary or appropriate to carry out
the purposes of this chapter.
(b) The department may:
(1) make an agreement with any other person in carrying out its
powers or duties under this chapter;
(2) spend funds appropriated to it by the legislature to pay for
staff, travel expenses, supplies or equipment, or contracts for
services necessary to carry out its powers or duties under this
chapter; or
(3) seek and accept funds from any source.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.005. AUTHORITY OF DEPARTMENT TO ADOPT MINIMUM HOUSING
CODE STANDARDS. The department shall adopt the minimum housing,
building, fire, and related code standards that apply in
designated areas for which a housing rehabilitation plan is
approved by the department and for which local government
standards are not in effect.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.006. LIMITATION ON CONSTRUCTION OF HOUSING OR
ACQUISITION OF PROPERTY BY DEPARTMENT. (a) The department may
not construct housing.
(b) The department may not acquire housing except to enforce a
lien under Subchapter D.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.007. PROHIBITION ON BORROWING, INCURRING OBLIGATIONS,
OR PLEDGING CREDIT. The department may not borrow money, incur
monetary obligations, or pledge in any manner the credit or
taxing power of the state or a political subdivision of the
state.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.008. ALLOCATION OF AVAILABLE LOAN FUNDS. If the
amount of housing rehabilitation loans anticipated to be made in
a fiscal year exceeds the estimated available funds for that
year, the department shall allocate the estimated available funds
for that year among the local governments that have filed housing
rehabilitation area plans with the department. In allocating the
available funds, the department shall take into account the
probable amount of housing rehabilitation loans to be made by
each local government.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.009. RELATIONSHIP OF DEPARTMENT AND LOCAL GOVERNMENTS.
(a) The department shall adopt standards and procedures for the
administration of this chapter by a local government or local
agency.
(b) The department may provide technical assistance to a local
government.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.010. DESIGNATION OF LOCAL AGENCY BY LOCAL GOVERNMENT.
The governing body of a local government may designate one or
more local agencies to exercise a power or duty of the local
government under this chapter. The governing body may withdraw
the delegated power or duty at any time.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.011. EDUCATION PROGRAM CONDUCTED BY LOCAL GOVERNMENT.
A local government engaged in housing rehabilitation under this
chapter shall conduct a general education program to inform
residents in designated areas of methods for maintaining their
housing and of the availability of housing rehabilitation loans.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
SUBCHAPTER B. HOUSING REHABILITATION LOAN FUND
Sec. 2304.021. FUND. (a) The Texas housing rehabilitation loan
fund is in the state treasury.
(b) The department may designate separate accounts in the fund
and the purposes of the accounts.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.022. DEPOSITS TO FUND. The following money shall be
credited to the fund:
(1) money appropriated by the legislature for housing
rehabilitation loans;
(2) money received from other sources for the purpose of making
housing rehabilitation loans;
(3) money received from borrowers as payments on their housing
rehabilitation loans;
(4) income from the transfer of interests in property acquired
in connection with housing rehabilitation loans; and
(5) interest earned on deposits and investments of the fund.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.023. PURPOSES OF FUND. The fund may be used only for:
(1) financing housing rehabilitation loans, including the
administrative charge imposed under Section 2304.068 by a local
government; and
(2) paying the expenses incurred by the department in connection
with the acquisition or disposition of real property under this
chapter.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.024. INVESTMENT AND DISBURSEMENT OF FUND. The
comptroller shall invest and disburse the money credited to the
fund on the written authorization of the executive director of
the department.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 8.72, eff.
Sept. 1, 1997.
SUBCHAPTER C. HOUSING REHABILITATION AREA PLAN
Sec. 2304.041. DESIGNATION OF AREA AND PREPARATION OF PLAN. (a)
A local government may allow households in a specific area
within its boundaries to apply for housing rehabilitation loans
by:
(1) designating the specific area; and
(2) preparing a housing rehabilitation plan for the designated
area.
(b) A local government may designate more than one area within
its boundaries.
(c) The designation of an area must be made in accordance with
the standards established by the department. The area plan must
be in the form prescribed by the department.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.042. CONTENTS OF AREA PLAN. A housing rehabilitation
area plan must contain relevant information about the area,
including:
(1) a description of the physical, social, and economic
characteristics of the area;
(2) a description of the housing conditions in the area;
(3) an assessment of the need for housing rehabilitation loans
in the area, including:
(A) the number and characteristics of households in the area;
and
(B) the average and total loan amounts needed;
(4) a description of the methods by which the local government
preparing the plan will determine whether the rehabilitation of
housing in the area is economically feasible;
(5) a description of the methods by which:
(A) rehabilitation work will be supervised; and
(B) compliance with departmental regulations governing
materials, fixtures, and rehabilitation contracts will be
ensured;
(6) a description of the methods and procedures that will be
used to enforce:
(A) local housing, building, fire, and related codes; or
(B) the standards adopted by the department under Section
2304.005, if codes of those types have not been enacted;
(7) an assessment of the need for additional public improvements
and public services in the area and a description of the specific
means by which the improvements and services will be provided;
and
(8) a description of the methods by which private investment to
improve conditions in the area will be encouraged.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.043. APPROVAL OF AREA PLAN. (a) A local government's
area plan must be approved by resolution or order of the
governing body of the local government and must be submitted to
the department for review.
(b) The department shall approve the plan if the area meets the
standards established by the department and if the plan contains
the required information.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.044. REJECTION OF AREA PLAN. (a) The department
shall return a housing rehabilitation area plan to the local
government submitting it if the area for which the plan is
prepared does not meet the department's standards or if the plan
does not contain the required information. The department shall
include with the returned plan a list of deficiencies.
(b) An area plan may be corrected and resubmitted for approval
by the department.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
SUBCHAPTER D. HOUSING REHABILITATION LOANS
Sec. 2304.061. PRIMARY USE FOR LOAN. A housing rehabilitation
loan must be used primarily to make housing comply with
applicable state, county, or municipal housing codes or
standards, including building, fire, health, housing maintenance,
or similar codes.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.062. DEPARTMENT LOAN RULES. (a) The department shall
adopt rules governing the making and servicing of a housing
rehabilitation loan and the foreclosure of a loan in default. The
rules must include:
(1) the requirement that a housing rehabilitation loan be
evidenced by a promissory note payable to the state and be
secured by a lien on real property in the state; and
(2) the standards under which a household in an area designated
by a local government may qualify for a housing rehabilitation
loan.
(b) In adopting the standards under Subsection (a)(2), the
department shall take into account:
(1) household gross income;
(2) household income available for housing needs;
(3) household size;
(4) the value and condition of the housing to be rehabilitated;
and
(5) the ability of households to compete successfully in the
private housing market and to pay for sanitary, decent, and safe
housing in that market.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.063. LOAN APPLICATION. A household may apply to the
local government in which the household's housing is located for
a housing rehabilitation loan if the housing is located in a
designated area for which an area plan has been approved by the
department.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.064. LOCAL GOVERNMENT APPROVAL OF LOAN. (a) A local
government may approve or disapprove a housing rehabilitation
loan application authorized by Section 2304.063. The approval or
disapproval must be given in accordance with the rules adopted by
the department under Section 2304.062.
(b) The local government shall notify the department of the
approval of a loan application and the amount of the approved
loan.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.065. DEPARTMENT APPROVAL. The department may not
approve a housing rehabilitation loan unless it finds that:
(1) the benefit to an area designated under Section 2304.041
will exceed the financial commitment of the department; and
(2) the approval of the loan will be of benefit to the state and
its taxpayers.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.066. DISBURSEMENT OF LOAN FUNDS. (a) The executive
director of the department shall authorize the comptroller to
disburse to a local government from the housing rehabilitation
loan fund the amount of a housing rehabilitation loan approved by
the local government under this chapter if the department
receives from the local government a notice of the local
government's approval of the loan.
(b) The executive director may not authorize the disbursement of
funds for a housing rehabilitation loan if:
(1) the department finds that the local government that approved
the loan is not making a good faith effort to substantially
comply with the applicable housing rehabilitation area plan or
the rules adopted by the department; or
(2) the remaining part of the fund allocated to the local
government under Section 2304.008 is insufficient to allow the
payment of the approved amount.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 8.73, eff.
Sept. 1, 1997.
Sec. 2304.067. LIMIT ON AMOUNT OF LOAN. The amount of a housing
rehabilitation loan may not exceed:
(1) the amount determined by subtracting the amount of all other
outstanding indebtedness secured by the property covered by the
loan from the market value of the rehabilitated property as
determined by the local government approving the loan; or
(2) the amount determined by adding the amount of the housing
rehabilitation contract made and approved under Subchapter E for
the property to the amount of the administrative charge imposed
under Section 2304.068 in connection with the loan.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.068. ADMINISTRATIVE CHARGE IMPOSED BY LOCAL
GOVERNMENT. (a) A local government may impose a charge to cover
its administrative expenses incurred in connection with a housing
rehabilitation loan made by the local government.
(b) The local government may deduct the charge from the amount
loaned.
(c) The charge may not exceed three percent of the amount of the
contract for housing rehabilitation the borrower makes with a
contractor.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.069. INTEREST RATE. (a) The department shall set the
minimum and maximum interest rates for housing rehabilitation
loans.
(b) A local government shall set the interest rate for a housing
rehabilitation loan it approves under this chapter. The rate must
be within the minimum and maximum rates set by the department.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.070. TERM OF LOAN. A local government shall set the
term of a housing rehabilitation loan it approves under this
chapter. The term may not exceed 20 years.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.071. INSTALLMENT PAYMENTS. A housing rehabilitation
loan must be repaid in installments.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.072. LOAN TO BE SECURED. A housing rehabilitation
loan must be secured as required by this chapter and the rules
adopted under this chapter.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.073. OTHER LOAN CONDITIONS. For a housing
rehabilitation loan a local government approves under this
chapter, the local government shall establish other necessary
conditions relating to the repayment of the loan according to
this chapter and the regulations of the department.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.074. ADJUSTMENTS IF BORROWER UNABLE TO REPAY LOAN. A
local government may allow for the deferment of payments or may
adjust the interest rate or term of a housing rehabilitation loan
approved by the local government if the borrower is unable to
make the required payments.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.075. DISPOSITION OR ENCUMBRANCE OF PROPERTY BY
BORROWER. The department may adopt regulations governing the
disposition or further encumbrance by the borrower of property
subject to a lien that secures a housing rehabilitation loan.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.076. CONDITIONS UNDER WHICH LOAN BECOMES IMMEDIATELY
DUE. (a) A borrower must agree that if the borrower voluntarily
destroys, moves from, or relinquishes ownership of the
rehabilitated housing on or before the first anniversary of the
date the rehabilitation is completed:
(1) the borrower's housing rehabilitation loan becomes
immediately due and payable; and
(2) an interest surcharge is added sufficient to make the total
interest paid equal an amount determined by the prevailing
interest rates for rehabilitation loans from private sources at
the time of the sale.
(b) The local government that approved the loan may waive the
interest surcharge if:
(1) the local government finds that the borrower must sell the
housing because of financial hardship or similar circumstances;
and
(2) the department consents to the waiver.
(c) A local government that approved a housing rehabilitation
loan may, with the consent of the department, take the following
action if the borrower dies or the borrower sells or gives away
property encumbered by the loan:
(1) declare all or part of any deferred payments due and
payable;
(2) declare the balance of the loan due and payable; or
(3) allow a buyer, donee, or other successor in title who
qualifies under Section 2304.062 to assume the loan.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.077. ACQUISITION OF PROPERTY TO PROTECT LOAN. The
department may acquire title to any project by foreclosure if
necessary to protect a housing rehabilitation loan made for the
project by the department and to pay the costs arising from the
foreclosure.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.078. ACQUISITION OF PROPERTY TO ENFORCE LIEN. To
enforce a lien under this chapter, the department may acquire
housing by:
(1) foreclosure of a mortgage;
(2) a sale under a deed of trust; or
(3) a voluntary conveyance from a borrower in full or partial
settlement of a housing rehabilitation loan.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.079. PUBLIC SALE OR AUCTION OF ACQUIRED PROPERTY. (a)
If the department acquires housing in the enforcement of a lien
under this chapter, it shall within six months after the
acquisition offer the housing for public sale or auction.
(b) The department must provide notice of the public sale or
auction by having a notice published in a newspaper of general
circulation in the county in which the property is located. The
notice must be published once a week for three consecutive weeks
before the date of the sale or auction and must contain:
(1) a description of the property;
(2) a description of the procedures for submitting competitive
bids for the property; and
(3) a statement of the time and location of the sale or auction.
(c) The department may reject any or all bids submitted for the
property.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.080. PRIVATE SALE. (a) If a sale of property cannot
be made by a public sale or auction as provided by Section
2304.079, the department may negotiate with a party for the
expeditious sale of the property. In the negotiations, the
department shall give priority to selling the property to a
purchaser who will be required to pay ad valorem taxes on the
property.
(b) If a sale to that kind of purchaser is not practicable, the
department shall attempt to sell the property to a purchaser who
is exempt from ad valorem taxes but who will make payments in
lieu of taxes on the property.
(c) If neither type of purchaser is available, the department
may sell the property to any purchaser.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.081. CONTRACT FOR SERVICING LOAN. A local government
may contract with any entity for the servicing of a housing
rehabilitation loan approved by the local government.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.082. AUDIT OF LOANS. The department shall audit the
local administration of housing rehabilitation loans to determine
if a good faith effort is being made to comply with the
applicable housing rehabilitation plan and the rules adopted by
the department.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
SUBCHAPTER E. HOUSING REHABILITATION CONTRACTS
Sec. 2304.101. STANDARDS FOR CONTRACTORS AND CONTRACTS. The
department shall adopt standards for:
(1) the selection of contractors to perform housing
rehabilitation under this chapter;
(2) housing rehabilitation contracts between borrowers and
contractors; and
(3) materials and fixtures used in performing housing
rehabilitation under this chapter.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.102. LOCAL GOVERNMENT APPROVAL AND SUPERVISION OF
CONTRACTS. (a) A borrower and a contractor may not contract for
housing rehabilitation that is to be financed by a housing
rehabilitation loan unless the local government responsible for
approving the loan approves the proposed contract in accordance
with the standards adopted by the department.
(b) The local government shall supervise all work performed
under the contract. The contractor is not entitled to payment
until the work has been approved by the local government, and the
borrower is not liable to the contractor for any work not
approved by the local government.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.103. ADVERTISING REQUIREMENT FOR CERTAIN CONTRACTS. A
contract for housing rehabilitation that involves the expenditure
of more than $3,000 and that is to be financed by loan funds
applied by the department may not be made unless advertised in
the same way as a contract under Chapter 252, Local Government
Code.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.
Sec. 2304.104. PERFORMANCE AND PAYMENT BONDS. The provisions of
Chapter 2253 relating to performance and payment bonds apply to a
construction contract governed by this subchapter.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1,
1993.