<num value="10">TITLE 10</num><heading>COMMUNITY DEVELOPMENT</heading><part identifier="/us/state/tx/tac/t10/p1"><num value="1">PART 1</num><heading>TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS</heading><chapter identifier="/us/state/tx/tac/t10/p1/c1"><num value="1">CHAPTER 1</num><heading>ADMINISTRATION</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c1/scA"><num value="A">SUBCHAPTER A</num><heading>GENERAL POLICIES AND PROCEDURES</heading><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.1"><num value="1.1">§1.1</num><heading>Reasonable Accommodation Requests to the Department</heading><content>(a) Purpose. The purpose of this section is to establish the procedures by which a Requestor may ask that a Reasonable Accommodation is made to the Department. For rules governing the handling of reasonable accommodation requests and responsibilities of entities receiving funds or resources from the Department see Subchapter B, §1.204 of this Chapter, relating to Reasonable Accommodations. This rule is statutorily authorized by Tex. Gov't Code, 2306.066(e), which requires the Executive Director to prepare a written plan to provide persons with disabilities an opportunity to participate in the Department's programs, and in accordance with the Fair Housing Act, and other federal and state civil rights laws.(b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.(1) Board--The Governing Board of the Texas Department of Housing and Community Affairs.(2) Director or Program Manager--Department staff member supervising the division or area of a division containing the program for which a Reasonable Accommodation is being requested.(3) Disability--A physical or mental impairment that substantially limits one or more major life activities; or having a record of such an impairment; or being regarded as having such an impairment. Included in this meaning is the term handicap as defined in the Fair Housing Act, or the term disability as defined in the Americans with Disabilities Act.(4) Fair Housing Act--Fair Housing Act of 1968, also known as Title VIII of the Civil Rights Act of 1968.(5) Reasonable Accommodation--An accommodation and/or modification that is an alteration, change, exception, or adjustment to a program, policy, service, building, or dwelling unit, that will allow a qualified person with a Disability to:(A) Participate fully in a program;(B) Take advantage of a service;(C) Live in a dwelling; or(D) Use and enjoy a dwelling.(6) Requestor--Includes applicants, members of the public, clients of Department programs, program participants, or their representatives.(7) Section 504--Section 504 of the Rehabilitation Act of 1973, as amended.(c) Procedures.(1) The Requestor of the Reasonable Accommodation shall submit a request to the Division Manager or Director or their designee. A request does not have to be in writing. A request can be made in a face-to-face conversation with a Division Manager or Director or their designee, or using any other method of communication. A request is any communication in which an individual clearly asks or states that they need the Department to provide or to change something because of a Disability.(2) The request, whether oral or written, must contain, at minimum:(A) The Department program or procedure for which an accommodation is being requested;(B) Household information to include name, address, phone number and email address, if available;(C) Description of the Reasonable Accommodation being requested; and(D) Reason the Reasonable Accommodation is necessary.(E) In the case of oral requests, the Division Manager or Director will create a written summary of the request.(3) The Division Director may coordinate with the Department's Fair Housing subject matter experts as needed. The supervising Director may ask for additional information from the Requestor. Staff should address Reasonable Accommodations requests promptly. If making the requested Reasonable Accommodation would require the Department to incur an expense, the Division Director will first confirm that the Reasonable Accommodation expense will not cause the Division to exceed their approved budget or, if additional measures beyond those within budget are required, that they are promptly considered and a compliant decision made. Upon having the applicable information, the Division Director or Manager and Fair Housing subject matter experts, as needed, will determine:(A) If the proposed Reasonable Accommodation is covered under Section 504 and/or the Fair Housing Act, or any other federal or state law; and(B) Whether to approve the request, or recommend to the Executive Director an alternative Reasonable Accommodation or denial. Any approval that would require Board action will first be presented to the Executive Director.(4) If not approved as requested or if the approval requires Board action, the request and recommendation will then be sent to the Executive Director or their designee, resulting in one of the following steps:(A) The Executive Director adopts an alternative Reasonable Accommodation to the Requestor;(B) The Executive Director concurs that Board action is necessary and presents the request and recommendation at an ensuing Board meeting. The Executive Director can choose to include a recommendation for or against the request; or(C) The Executive Director denies the request. In the case of a denial, the Requestor can ask that their request be placed on the agenda for the next available Board meeting for a final Board determination.</content><note type="source"><p>Source Note: The provisions of this §1.1 adopted to be effective May 8, 2022, 47 TexReg 2509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.2"><num value="1.2">§1.2</num><heading>Department Complaint Process</heading><content>(a) Purpose. The purpose of this section is to establish the procedures by which complaints are filed with the Department and how the Department handles those complaints under Department jurisdiction in compliance with Tex. Gov't Code §2306.066, Tex. Gov't Code, Chapter 2105, Subchapter C, and 24 CFR §91.115(h),as applicable.(b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.(1) Complainant--A Person filing a Complaint.(2) Complaint--A complaint submitted to the Department in writing (via mailed letter, fax, email, or submitted online through the Department website) from a person that believes the Department has the authority to resolve the issue.(3) Complaint Coordinator--Department employee designated by the Executive Director or their designee to monitor the Public Complaint System and coordinate activities related to complaints.(4) Complaint Liaison--the Department employee(s) designated by each division or program to handle each division or program's complaint-related issues.(5) Department--The Texas Department of Housing and Community Affairs.(6) Person--Any individual, other than an employee of the Department, and any partnership, corporation, association, governmental subdivision, or public or private organization of any character.(7) Public Complaint System--Department-created system used to track complaints received by the Department.(c) Applicability. Except as specifically adopted in whole or in part by rule or contractual provision this rule is not applicable to:(1) consumer complaints relating to manufactured housing which are alternatively addressed by §80.73 of this title relating to Manufactured Housing Procedures for Handling Consumer Complaints; and(2) Complaints filed in association with temporary Department programs for which a separate Complaint process has been established.(d) Procedures.(1) Complaint Submission. A Person who has a Complaint may submit such Complaint in writing to the Department, which will be directed to a Complaint Coordinator. If an accommodation because of a disability is needed in relation to the process of filing of a Complaint, the Person interested in filing the Complaint should refer to 10 TAC §1.1, Reasonable Accommodation Requests to the Department; if assistance is needed for non-English speaking persons, the Person interested in filing the Complaint should access the Department's Language Assistance webpage (https://www.tdhca.state.tx.us/lap.htm).(2) Upon receipt of a Complaint:(A) A Complaint Coordinator will enter the complaint in the Public Complaint System.(B) A Complaint Coordinator will review the Complaint and as needed, forward the Complaint to the appropriate program or division Complaint Liaison(s).(C) Notwithstanding any other provisions of this subsection, in the case of Complaints received by the Department in which no method of contacting the Complainant was provided, the Complaint Coordinator will close the Complaint in the Public Complaint System and provide a copy of the Complaint to the applicable program or division for informational purposes only.(D) A Complaint Coordinator may also identify whether a Complaint received involves a potential Reasonable Accommodation request involving a Department recipient or property; in such cases the Complaint will be handled as provided for in §1.204 of this chapter relating to Reasonable Accommodations.(E) Complaints that have potential Fair Housing Act violations may, at the Department's discretion, be also referred to the Texas Workforce Commission's Civil Rights Division.(F) The Department will notify the Complainant of the status of the Complaint at least quarterly until there is a disposition of the Complaint, which is the final determination; there is no further process available, except as otherwise provided in state or federal law.(3) A Complaint Liaison will research and evaluate the issues identified in the Complaint, and then resolve and close the Complaint. The Complaint Liaison will enter in the Public Complaint System summaries of each contact made with the Complainant and any actions taken leading to complaint resolution.(4) The Complaint Coordinator may submit periodic summary reports or analysis to the Executive Director or designee.(5) The Department will provide to the Person filing the Complaint, and to each Person who is a subject of the Complaint (to the extent contact information is available), a link to this rule, which serves as the Department's policy and procedures relating to complaint investigation and resolution.(6) The Department will either notify the Complainant of the resolution of the Complaint within 15 business days after the date the Complaint was received by the Department, or notify the Complainant, within such period, of the date the Complainant can expect a response to the Complaint.(7) Additional Complaints submitted by the same Complainant describing an issue which has previously been closed, had a final resolution, and for which there is no substantively new information presented, will be considered resolved by the Department. A letter to this effect will be sent to the Complainant by the Department. In such cases, a new Complaint will not be opened in the system.(8) An information file about each Complaint will be maintained. The file must include:(A) the Complaint number;(B) the name of the Complainant;(C) the date the Complaint was received by the Department;(D) the subject matter of the Complaint;(E) the name of each Person contacted in relation to the Complaint, if applicable;(F) a summary of the results of the review of the Complaint;(G) the date the Complaint was closed; and(H) an explanation of the final resolution of the Complaint including the reason the file was closed.(9) A Complaint may be withdrawn by the Complainant at any time.(10) A Complainant may request and receive from the Department copies of any documentation or records collected by the Department with regard to the Complaint, subject to the Texas Public Information Act.(11) Adherence to these procedures is not required by the Department if another procedure is required by law, or if the following of a procedure above would jeopardize an audit or Government investigation.</content><note type="source"><p>Source Note: The provisions of this §1.2 adopted to be effective May 8, 2022, 47 TexReg 2510.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.3"><num value="1.3">§1.3</num><heading>Sick Leave Pool and Family Leave Pool</heading><content>(a) A sick leave pool is established to help alleviate hardship caused to an employee and employee's immediate family if a catastrophic illness or injury forces the employee to exhaust all accrued paid leave time earned by that employee and to lose compensation from the state.(b) A family leave pool is established to help alleviate hardship caused to an employee and employee's immediate family if they are caring for a seriously ill family member or the employee, including pandemic-related illnesses or complications caused by a pandemic or are bonding with and caring for children during a child's first year following birth, adoption, or foster placement which forces the employee to exhaust all accrued paid leave time earned by that employee and to lose compensation from the state.(c) The Department's Human Resources Director is designated as the pool administrator to both pools.(d) The pool administrator will recommend a policy, operating procedures, and forms for the administration of this section to the Executive Director for inclusion in the Department's Personnel Policies and Procedures Manual.(e) Operation of both pools shall be consistent with Tex. Gov't Code, Chapter 661, as amended.</content><note type="source"><p>Source Note: The provisions of this §1.3 adopted to be effective August 20, 2017, 42 TexReg 3964; amended to be effective August 1, 2021, 46 TexReg 4449; amended to be effective January 2, 2022, 46 TexReg 8999.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.4"><num value="1.4">§1.4</num><heading>Protest Procedures for Contractors</heading><content>(a) Purpose. The purpose of this rule provides for the Department's compliance with 34 TAC Chapter 20, Subchapter F, Division 3, the rules of the Texas Comptroller of Public Accounts addressing procurement, which require state agencies to adopt protest procedures consistent with the Comptroller's procedures.(b) Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.(1) Board--The Governing Board of the Department.(2) Department--The Texas Department of Housing and Community Affairs.(3) Interested Parties-- All vendors who have submitted bids or proposals for the contract involved. A list of interested parties is available upon request from the Department.(4) Protest--A written objection submitted to the Department by any actual or prospective bidder, offeror, or contractor who is aggrieved in connection with the solicitation, evaluation, or award of a procurement contract by the Department.(c) These procedures are for Department procurements only. Any actual or prospective bidder, offeror, or contractor who is aggrieved in connection with a solicitation, evaluation, or award may formally protest to the Department's Purchasing Officer.(d) To be considered timely, the Protest must be filed in accordance with the requirements of 34 TAC §20.535(b).(e) To be considered complete, the Protest must be in writing, signed by an authorized representative, notarized, and contain:(1) a specific identification of the statutory or regulatory provision(s) that the Person submitting the Protest alleges to have been violated;(2) a specific description of each act made by the Department that the Person submitting the Protest alleges to have been violated specified in the statutory or regulatory provision(s) identified in paragraph (1) of this Subsection;(3) a precise statement of the relevant facts including:(A) sufficient documentation to establish that the Protest has been timely filed;(B) a description of the adverse impact to the Department or the state; and(C) a description of the resulting adverse impact to the protesting vendor;(4) a statement of the argument and authorities that the Person submitting the Protest offers in support of the Protest;(5) an explanation of the subsequent action the Person submitting the Protest is requesting; and(6) except for a Protest that concerns the solicitation documents or actions associated with the publication of solicitation documents, a statement confirming that copies of the Protest have been mailed or delivered to other identifiable Interested Parties.(f) The Purchasing Officer shall have the initial authority to settle and resolve the Dispute concerning the solicitation or award of a contract. The Purchasing Officer may dismiss the Protest if it is not timely filed or does not meet the requirements of this section. The Purchasing Officer may solicit written responses to the Protest from other Interested Parties.(g) If the Protest is not resolved by mutual agreement, the Purchasing Officer will provide a written recommendation to the Department's Executive Director.(h) The Executive Director shall issue a final written determination on the Protest within 15 calendar days after receipt of the Purchasing Officer's recommendation in accordance with the requirements of 34 TAC §20.537(c).(i) In the alternative, the Executive Director may, in his or her discretion, refer the matter to the Department's Governing Board for their consideration at a regularly scheduled meeting. The decision of the Board shall be final.(j) A protesting party may appeal the determination of the Executive Director under Subsection (g) of this section to the Department's Governing Board. An appeal of the Executive Director's determination must be in writing and received by the Purchasing Officer not later than 10 calendar days after the date the Executive Director sent written notice of their determination. The scope of the appeal shall be limited to review of the Executive Director's determination. The protesting party must mail or deliver to all other interested parties a copy of the appeal, which must contain a certified statement that such copies have been provided.(1) The appeal will be presented for consideration at the next regularly scheduled meeting of the Governing Board. The decision of the Governing Board shall be final.(2) An appeal that is not filed timely shall not be considered unless good cause for delay is shown in writing relating to issues that are significant to agency procurement practices or procedures, or the Department's General Counsel makes such a determination.(k) All documents collected by the Department as part of a solicitation, evaluation, and/or award of a contract shall be retained with the procurement file according to Department's Records Retention Schedule.(l) The Department reserves all of its rights under 34 TAC §20.536. The Department may award a solicitation or award without delay, in spite of a timely filed Protest, to protect the best interests of the state.</content><note type="source"><p>Source Note: The provisions of this §1.4 adopted to be effective September 27, 2018, 43 TexReg 6249.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.5"><num value="1.5">§1.5</num><heading>Waiver Applicability in the Case of State or Federally Declared Disasters</heading><content>(a) When the federal government has provided the Department a waiver, suspension, or contract amendment of a federal programmatic regulation, federal statute, or contract term in response to a state or federally declared disaster, and the requirement waived, suspended, or amended had been codified in this title, the Executive Director or designee may waive, suspend, or modify the rule within this title, if:(1) the Executive Director or designee has determined that not doing so may negatively affect the health, safety, or welfare of program recipients;(2) such waiver, suspension, or modification to the rule within this title is clearly related to the federally provided waiver, suspension, or modification; and(3) such waiver or suspension would not have negatively affected the selection of an award of Department resources.(b) When the state government has provided the Department a waiver or suspension of a state statute in response to a state or federally declared disaster, and the requirement waived or suspended had been codified in this title, the Executive Director or designee may waive, suspend, or modify the rule within this title, if:(1) the Executive Director or designee has determined that not doing so may negatively affect the health, safety, or welfare of program recipients;(2) such waiver, suspension, or modification to the rule within this title must be clearly related to the state provided waiver or suspension;(3) such waiver or suspension would not have negatively affected the selection of an award of Department resources; and(4) the Executive Director or designee has determined that doing so is not inconsistent with any applicable federal statute, regulations or contract requirements.</content><note type="source"><p>Source Note: The provisions of this §1.5 adopted to be effective April 3, 2022, 47 TexReg 1619.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.6"><num value="1.6">§1.6</num><heading>Historically Underutilized Businesses</heading><content>It is the policy of the Department to encourage the use of Historically Underutilized Businesses ("HUB") in the Department's procurement processes. The purpose of the HUB program is to promote full and equal business opportunities for all businesses in an effort to remedy disparity in state procurement and contracting in accordance with the HUB goals specified in the 2009 State of Texas Disparity Study. As required by Tex. Gov't Code §2161.003, the Department adopts the Texas Comptroller of Public Accounts ("Comptroller") HUB Program rules at 34 TAC §§20.281 - 20.298 (relating to Historically Underutilized Business Program, and as may be amended by the Comptroller so far as the amendments are implementing Tex. Gov't Code §2161.003), which describe the minimum steps and requirements to be undertaken by the Comptroller and state agencies to fulfill the state's HUB policy, and attain aspirational goals identified in the Texas Disparity Study.</content><note type="source"><p>Source Note: The provisions of this §1.6 adopted to be effective September 27, 2018, 43 TexReg 6251.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.7"><num value="1.7">§1.7</num><heading>Appeals Process</heading><content>(a) Purpose. The purpose of this rule is to provide the procedural steps by which an appeal can be filed relating to Department decisions as authorized by Tex. Gov't Code §2306.0321 and §2306.0504 which together require an appeals process be adopted by rule for the handling of appeals relating to Department decisions and debarment. Appeals relating to competitive low income housing tax credits, or when multifamily loans are contemporaneously layered with competitive low income housing tax credits, and the associated underwriting, are governed by a separate appeals process provided at §11.902 of this title (relating to Appeals Process) (§2306.0321; §2306.6715).(b) Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. If not defined in this section, capitalized terms used in this section have the meaning in the rules that govern the applicable program under which the appeal is being filed.(1) Affiliated Party--An individual, corporation, partnership, joint venture, limited liability company, trust, estate, association, cooperative or other organization or entity of any nature whatsoever that directly, or indirectly through one or more intermediaries, has Control of, is Controlled by, or is under common Control with any other Person. All entities that share a Principal are Affiliates.(2) Appeal--An Appealing Party's notice to the Department to challenge a decision or decisions made by staff and/or the Executive Director regarding an Application, Commitment, Contract, Loan Agreement, Debarment, Underwriting Report, or LURA as governed by this section.(3) Appeal File--The written record of an Appeal that contains the applicant's Appeal; the correspondence, if any, between Department staff (or the Executive Director) and the Appealing Party; and the final Appeal decision response provided to the Appealing Party.(4) Appealing Party--The Administrator, Affiliated Party, Applicant, Person, or Responsible Party under subchapter D, §2.102 of this title (relating to Enforcement Definitions) who files, intends to file, or has filed on their behalf, an Appeal before the Department.(c) Persons Eligible to Appeal. An Appeal may be filed by any Administrator, Applicant, Person, or Responsible Party as provided for in subchapter D, §2.102 of this title, or Affiliated Party of the Administrator, Applicant, Person or Responsible Party who has filed an Application for funds or reservation with the Department, or has received funds or a reservation from the Department to administer.(d) Grounds to Appeal Staff Decision. Appeals may be filed using this process on the following grounds:(1) Relating to applying for funds or requesting to be approved for reservation authority an Appealing Party may appeal if there is:(A) Disagreement with the determination of staff regarding the sufficiency or appropriateness of documents submitted to satisfy evidence of a given threshold or scoring criteria, including the calculation of any scoring based items;(B) Disagreement with the termination of an application;(C) Disagreement with the denial of an award or reservation request;(D) Disagreement with the amount of the award recommended by the Department, unless that amount is the amount requested by the Applicant;(E) Disagreement with one or more conditions placed on the award or reservation; or(F) Concern that the documents submitted were not processed by Department staff in accordance with the Application and program rules in effect.(2) Relating to issues that arise after the award or reservation determination by the Board, an Appealing Party may appeal if there is disagreement with a denial by the Department of a Contract, payment, Commitment, Loan Agreement, or LURA amendment that was requested in writing.(3) When grounds for appeal are not evidenced or stated in conformance with this Section, the Board or the Executive Director may determine in their discretion that there is good cause for an Appeal because due process interests are sufficiently implicated.(4) Relating to debarment, a Responsible Party may appeal a determination of debarment, as further provided for in §2.401(k) of this title (relating to General).(5) Affiliated Party Appeals. An Affiliated Party has the ability to appeal only those decisions that directly impact the Affiliated Party, not the underlying agreements. An Affiliated Party may appeal a finding of failure to adequately perform under an Administrator's Contract, resulting in a "Debarment" or a similar action, as further described in chapter 2, subchapter D of this title, Debarment from Participation in Programs Administered by the Department.(e) Process for Filing an Appeal of Staff Decision to the Executive Director.(1) An Appealing Party must file a written Appeal of a staff decision with the Executive Director not later than the seventh calendar day after notice has been provided to the Appealing Party. For purposes of this section, the date of notice will be considered the date of an Application-specific written communication from the Department to the Applicant; in cases in which no Application-specific written communication is provided, the date of notice will be the date that logs are published on the Department's website when such logs are identified as such in the application including but not limited to a Request for Proposals or Notice of Funding Opportunity, or in the rules for the applicable program as a public notification mechanism.(2) The written appeal must include specific information relating to the disposition of the Application or written request for change to the Contract, Commitment, Loan Agreement, and/or LURA. The Appealing Party must specifically identify the grounds for the Appeal based on the disposition of underlying documents.(3) Upon receipt of an Appeal, Department staff shall prepare an Appeal File for the Executive Director. The Executive Director shall respond in writing to the Appealing Party not later than the fourteenth calendar day after the date of receipt of the Appeal. The Executive Director may take one of the following actions:(A) Concur with the Appeal and make the appropriate adjustments to the staff's decision;(B) Disagree with the Appeal, in concurrence with staff's original determination, and provide the basis for rejecting the Appeal to the Appealing Party; or(C) In the case of appeals in exigent circumstances (such as conflict with a statutory deadline) or with the consent of the appellant, for appeals received five calendar days or less of the next scheduled Board meeting, the Executive Director may decline to make a decision and have the appeal deferred to the Board per the process outlined in subsection (f)(2) of this section, for final action.(f) Process for Filing an Appeal of the Executive Director's Decision to the Board.(1) If the Appealing Party is not satisfied with the Executive Director's response to the Appeal provided in subsection (e)(3) of this section, they may appeal in writing directly to the Board within seven calendar days after the date of the Executive Director's response.(2) In order to be placed on the agenda of the next scheduled meeting of the Department's Board, the Appeal must be received by the Department at least fourteen days prior to the next scheduled Board meeting. Appeals requested under this section received after the fourteenth calendar day prior to the Board meeting will generally be scheduled at the next subsequent Board meeting. However, the Department reserves the right to place the Appeal on a Board meeting agenda if an Appeal that is timely filed under paragraph (1) of this subsection is received fewer than fourteen calendar days prior to the next scheduled Board meeting. The Executive Director shall prepare Appeal materials for the Board's review based on the information provided.(3) If the Appealing Party receives additional information after the Executive Director has denied the Appeal, but prior to the posting of the Appeal for Board consideration, the new information must be provided to the Executive Director for further consideration or the Board will not consider any information submitted by the Applicant after the written Appeal. New information will cause the deadlines in this subsection to begin again. The Board will review the Appeal de novo and may consider any information properly considered by the Department in making its prior decision(s).(4) Public Comment on an Appeal Presented to the Board. The Board will hear public comment on the Appeal under its Public Comment Procedures in §1.10 of this subchapter (relating to Public Comment Procedures). While public comment will be heard, persons making public comment are not parties to the Appeal, and no rights accrue to them under this section or any other Appeal process. Nothing in this section provides a right to Appeal any decision made on an Application, Commitment, Contract, Loan Commitment, or LURA if the Appealing Party does not have grounds to appeal as described in subsection (d) of this section.(5) In the case of possible actions by the Board regarding Appeals, the Board may:(A) Concur with the Appealing Party and grant the Appeal; or(B) Disagree with the Appealing Party, in concurrence with the Executive Director's original determination, and provide the basis for rejecting the Appeal.(C) In instances in which the Appeal, if granted by the Board would have resulted in an award to the Applicant, the Application shall be evaluated for an award as it relates to the availability of funds, and staff will recommend an action to the Board in the meeting at which the Appeal is heard, or a subsequent meeting. If no funds are available in the current year's funding cycle, then the Appealing Party may be awarded funds from a pool of deobligated funds or other source, if available.(D) In the case of actions regarding all other Appeals, the Board shall direct staff on what specific remedy is to be provided, allowable under current laws and rules.(g) Board Decision. Appeals not submitted in accordance with this section will not be considered, unless the Executive Director or Board, in the exercise of its discretion, determines there is good cause to consider the appeal. The decision of the Board is final.(h) Limited Scope. The appeals process provided in this rule is of general application. Any statutory or specific rule with a different appeal process, including the limitations expressed in subsection (a) of this section, will be governed by the more specific statute or rule. Except as provided for in §2.401 of this title, this section does not apply to matters involving a Contested Case Proceeding under §1.13 of this subchapter (relating to Contested Case Hearing Procedure).</content><note type="source"><p>Source Note: The provisions of this §1.7 adopted to be effective February 26, 2024, 49 TexReg 1045.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.8"><num value="1.8">§1.8</num><heading>Camping Plan Requirements and Process for Political Subdivisions</heading><content>(a) Purpose. Subchapter PP of Chapter 2306, Texas Government Code, Property Designated by Political Subdivision for Camping by Homeless Individuals, was enacted in September 2021. §2306.1122 of the Texas Government Code, provides that a Political Subdivision may not designate a property to be used by homeless individuals to Camp unless the Department has approved a Plan as further described by Subchapter PP. This rule provides the Department's policies for such Plans, including the process for Plan submission, Plan requirements, the review process, and the criteria by which a Plan will be reviewed by the Department.(b) Applicability.(1) This rule applies only to the designation and use of a property designated for camping by homeless individuals that first begins that use on or after September 1, 2021, except that the rule and requirements of Subchapter PP, Chapter 2306, Texas Government Code, do not apply to a Proposed Property to be located on/in a Public Park. Public Parks are ineligible to be used as a Camp by homeless individuals per Subchapter PP, Chapter 2306, Texas Government Code.(2) The designation and use of a Proposed Property described by Subchapter PP, Chapter 2306, Government Code that first began before September 1, 2021, is governed by the law in effect when the designation and use first began, and the former law is continued in effect for that purpose.(3) A Political Subdivision that designated a property to be used by homeless individuals to Camp before September 1, 2021, may apply on or after that date for approval of a Plan pursuant to this section.(4) A Political Subdivision that authorizes camping under the authority of §48.05(d)(1), (3) or (4), Texas Penal Code, are not required to submit a Plan for those instances.(c) Definitions.(1) Camp--Has the meaning assigned by Section 48.05 of the Texas Penal Code.(2) Department--The Texas Department of Housing and Community Affairs.(3) Plan--Specifically an application drafted by a Political Subdivision, submitted to the Department by the Political Subdivision, with the intention of meeting the requirements provided for in subsection (e) of this section (relating to Threshold Plan Requirements).(4) Plan Determination Notice--The notification provided by the Department to the Political Subdivision stating a Plan's Approval or Denial.(5) Political Subdivision--A local government as defined in Chapter 2306, Texas Government Code.(6) Proposed New Campers--Homeless individuals that the Political Subdivision intends to allow to Camp at the Proposed Property for which a Plan is submitted.(7) Proposed Property--That property proposed for use for Proposed New Campers and submitted in the Plan, owned, controlled, leased, or managed by the Political Subdivision.(8) Public Park--Any parcel of land dedicated and used as parkland, or land owned by a political subdivision that is used for a park or recreational purpose that is under the control of the political subdivision, which is designated by the political subdivision.(d) Plan Process.(1) Submission.(A) Plans may be submitted at any time. Plan resubmissions may also be submitted at any time.(B) All Plans must be submitted electronically to campingplans@tdhca.texas.gov. (C) At least one designated email address must be provided by the Political Subdivision; all communications from the Department to the Political Subdivision regarding the Plan will be sent to that email address. No communication will be sent by traditional postal delivery methods. Up to two email contacts may be provided.(2) Review Process.(A) Upon receipt, Department staff will send a confirmation email receipt to the designated email address and initiate review of the Plan. The Plan will be reviewed first to determine that all information specified in subsection (e) of this section (relating to Threshold Plan Requirements) have been included and that sufficient information has been provided by which to evaluate the Plan against the Plan Criteria provided for in subsection (f) of this section (relating to Plan Criteria).(B) If a Plan as submitted does not sufficiently meet the requirements of §2306.1123, Texas Government Code, and subsection (e) of this section, or does not provide sufficient explanation by which to assess the Plan Criteria provided for in subsection (f) of this section, staff will issue the Political Subdivision a notice of deficiency. The Political Subdivision will have five calendar days to fully respond to all items requested in the deficiency notice.(i) For a Political Subdivision that satisfies all requested deficiencies by the end of the five calendar day period, the review will proceed.(ii) For a Political Subdivision that does not satisfy all requested deficiencies by the end of the five calendar day period, no further review will occur. A Plan Determination Notice will be issued notifying the Political Subdivision that its Plan has been denied and stating the reason for the denial. The Political Subdivision may resubmit a Plan at any time after receiving a Plan Determination Notice.(C) Plan Determination Notice.(i) Upon completion of the review by staff, the Political Subdivision will be notified that its Plan has been Approved or Denied in a Plan Determination Notice.(ii) Not later than the 30th day after the date the Department receives a plan or resubmitted Plan, the Department will make a final determination regarding approval of the Plan and send a Plan Determination Notice to the Political Subdivision. For a Political Subdivision that had a deficiency notice issued, and that satisfied all requested deficiencies by the end of the five calendar day period, the Department will strive to still issue a final determination notice by the 30th day from the date the Plan was originally received, however the date of issuance of the Plan Determination Notice may extend past the 30th day by the number of days taken by the Political Subdivision to resolve any deficiencies.(iii) A Political Subdivision may appeal the decision in the Plan Determination Notice using the appeal process outlined in §1.7 of this chapter (relating to Appeals Process).(D) Reasonable Accommodations may be requested from the Department as reflected in §1.1 of this subchapter (relating to Reasonable Accommodation Requests to the Department).(e) Threshold Plan Requirements. A Plan submitted for approval to the Department must include all of the items described in paragraphs (1) - (8) of this subsection for the property for which the Plan is being submitted:(1) pertinent contact information for the Political Subdivision as specified by the Department in its Plan template;(2) the physical address or if there is no physical address the legal description of the property;(3) the estimated number of Proposed New Campers to be located at the Proposed Property;(4) a description with respect to the property of the five evaluative factors that addresses all of the requirements described in subparagraphs (A) - (E) of this paragraph:(A) Local Health Care. Provide:(i) A description of the availability of local health care for Proposed New Campers, including access to Medicaid services and mental health services;(ii) A description of the specific providers of the local health care and mental health services available to Proposed New Campers. Local health/mental health care service providers do not include hospitals or other emergency medical assistance, but contemplate access to ongoing and routine health and mental health care. Providers of such services can include, but are not limited to: local health clinics, local mental health authorities, mobile clinics that have the location in their service area, and county indigent healthcare programs;(iii) A description or copy of a communication from the Texas Department of Health and Human Services specific to the Political Subdivision and specific to the population of homeless individuals must be provided to establish the availability of access to Medicaid services;(iv) A map or clear written description of the geographic proximity (in miles) of each of those providers to the Proposed Property; (v) The cost of such care and services, whether those costs will be borne by the Proposed New Campers or an alternative source, and if an alternative source, then what that source is; and(vi) A description of any limitations on eligibility that each or any of the providers may have in place that could preclude Proposed New Campers from receiving such care and services from the specific providers.(B) Indigent Services. Provide:(i) A description of the availability of indigent services for Proposed New Campers. For purposes of this factor, indigent services are any services that assist individuals or households in poverty with their access to basic human needs and supports. Indigent service providers include, but are not limited to: community action agencies, area agencies on aging, mobile indigent service providers that have the location in their service area; and local nonprofit or faith-based organizations providing such indigent services;(ii) A description of the specific providers of the services and what services they provide;(iii) A map or clear written description of the geographic proximity (in miles) of each of those providers to the Proposed Property; and(iv) A description of any limitations on eligibility that each or any the providers may have in place that could preclude Proposed New Campers from receiving such services from the specific providers.(C) Public Transportation. Provide:(i) A description of the availability of reasonably affordable public transportation for Proposed New Campers. Reasonably affordable for the purposes of this Section means the rate for public transportation for the majority of users of that public transportation; if for instance the standard bus fare in an area is $2 per ride, then that rate is considered the reasonable affordable rate for the Proposed Property; Proposed New Campers should not have to pay a rate higher than that standard fare;(ii) A description of the specific providers of the public transportation services and their prices;(iii) A description of the closest proximity of the property to a specified entrance to a public transportation stop or station, with a sidewalk or an alternative pathway identified by the Political Subdivision for pedestrians, including a map of the closest stop and public transportation route shown in relation to the Proposed Property;(iv) A description of the route schedule of the closest proximate public transportation route; and(v) If public transportation is available upon demand at the property location, identification of any limitations on eligibility that each or any of the providers may have in place that could preclude Proposed New Campers from receiving such transportation services from that specific on-demand provider.(D) Law Enforcement Resources. Provide:(i) A description of the local law enforcement resources in the area;(ii) The description should include a brief explanation of which local law enforcement patrol beat covers the Proposed Property;(iii) A description of local law enforcement resources and local coverage in several other census tracts or law enforcement beats/areas with similar demographics to that of the beat/area of the Proposed Property to provide a comparative picture;(iv) a description of any added resources for the area or proposed specifically for the property, and how proximate those resources are; and(v) any explanation of reduced (or lower than typical of similar demographic areas) local law enforcement coverage in the area.(E) Coordination with Local Mental Health Authority. Provide:(i) a description of the steps the Political Subdivision has taken to coordinate with the Local Mental Health Authority to provide services for any Proposed New Campers; and(ii) a description must include documentation of meetings or conversations, dates when they occurred, any coordination steps resulting from the conversations, and whether any ongoing coordination is intended for the Proposed Property.(5) The Political Subdivision must provide evidence that establishes that the property is not a Public Park. Evidence must include documentation addressing the definition of a Public Park as defined in subsection (c)(8) of this section.(6) Plans should be limited in length. Plans in excess of 15 pages of text, not including documentation and attachments, will not be reviewed.(7) The Political Subdivision must include documentation that the site will include basic human sanitation services including toilets, sinks, and showers. Such facilities may be temporary fixtures such as portable or mobile toilets, sinks and showers.(8) Any Plan that is a resubmission of a denied Plan, submitted again for the same Proposed Property, must include a short summary at the front of the Plan explaining what has been changed in the resubmitted Plan from the original denied Plan.(f) Plan Criteria.(1) Approval. In no case will a Plan be approved if the Department has determined that the Proposed Property referenced in a Plan is a Public Park as defined in subsection (c)(6) of this section. Plans for other properties will be approved if the five factors are satisfied as described in subparagraphs (A) - (E) of this paragraph:(A) Local health care, including access to Medicaid services (or other comparable health services) and mental health services, are within one mile of the Proposed Property, are accessible via public transportation, can be provided on-site by qualified providers, or transportation is provided (which includes mobile clinics that have the location in their service area), and the Political Jurisdiction commits to a goal that such services are available at little, low or no cost for at least 50% Proposed New Campers (some limited exceptions from providers as may be described in accordance with subsection (d)(5)(A)(v) of this section will not preclude approval for this factor);(B) There are indigent services providers that have locations within one mile of the Proposed Property, are accessible via public transportation, can provide services on-site, or transportation is provided (which includes mobile indigent service providers that have the location in their service area), and the Political Subdivision commits to a goal that such services are available for at least 50% of Proposed New Campers are expected to be eligible;(C) The property is within 1/2 mile or less from a public transportation stop or station that has scheduled service at least several times per day for at least six days per week, or there is on demand public transportation available, and the Political Subdivision commits to a goal that at least 50% of the Proposed New Campers are eligible for that on-demand public transportation;(D) The local law enforcement resources for the patrol zone or precinct that includes the Proposed Property are not materially less than those available in other zones or precincts of the local law enforcement entity, unless the Political Subdivision provides a specific plan for security in and around the property that the Political Subdivision has determined is appropriate for law enforcement services in that area; and(E) The Political Subdivision has had at least one meeting to discuss initial steps and coordination with the Local Mental Health Authority, specific to this particular Proposed Property and the volume/service needs of Proposed New Campers.(2) A Plan that meets at least four of the five factors in paragraph (1) of this subsection, may be approved if significant and sufficient mitigation is provided that delivers similarly comprehensive resources as required, to justify how the remaining factor not met will still be sufficiently addressed through some other means.(3) Denial. An Application that does not meet all of the requirements in paragraph (1) of this subsection, or that does not meet the requirements of paragraph (2) of this subsection will be issued a Plan Determination Notice within 30 days of Plan application (which may be extended by the amount of calendar days the Political Subdivision took to respond to deficiencies) reflecting denial.(g) Information Sharing. When the Department receives a complaint under §1.2 of this subchapter (relating to Department Complaint System to the Department) or information that a Political Subdivision is allowing camping by homeless individuals on a property that is not the subject of a Plan approved under this section, the Department will refer such information to the Office of the Attorney General, for possible action under Chapter 364, Local Government Code, or other law.</content><note type="source"><p>Source Note: The provisions of this §1.8 adopted to be effective September 25, 2025, 50 TexReg 6206.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.9"><num value="1.9">§1.9</num><heading>Household Recipient Privacy Policy for Federal Funds or Assistance</heading><content>(a) Capitalized words used herein have the meaning assigned in the specific Chapters and Rules of this Part that govern the program to which a Household or Family level recipient or beneficiary has applied, or as assigned by federal or state law.(b) This policy applies for any federally funded Program or resource administered by the Department, either assisted directly by the Department or indirectly through a Vendor, Subrecipient or Owner, where the Department must adopt a privacy policy regarding privacy of individually identifiable information.(c) Except as covered under an intergovernmental data-sharing agreement, or as necessary to administer the business and administrative functions of the Program, no individual shall have their name, address, race, gender, disability, or contact information (as provided in an application for assistance to the Department) released to a third-party unless a federal oversight agency has explicitly stipulated that the information must be made available or as otherwise authorized by the individual.(d) This privacy policy is supplemented by any more restrictive privacy or protection directives required by a federal oversight agency, or other federal or state law.</content><note type="source"><p>Source Note: The provisions of this §1.9 adopted to be effective November 27, 2024, 49 TexReg 9493.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.10"><num value="1.10">§1.10</num><heading>Public Comment Procedures</heading><content>(a) Purpose. The purpose of this section is to establish procedures for hearing public comment at Governing Board meetings open to the public held by the Texas Department of Housing and Community Affairs in accordance with §2306.032(f) and §2306.066(d) of the Tex. Gov't Code.(b) Procedures for taking public comment.(1) At each meeting open to the public the Governing Board (Board) shall provide opportunity for members of the public to make:(A) General public comment after the Board has taken action on all posted agenda items on which it intends to take action, general public comment on matters of relevance to the Department's business, or requests that the Board place specific items on future agendas for consideration. It is the prerogative of the Board Chair to place reasonable limits on public comment. Handouts of printed materials are permitted only as provided for in paragraph (6) of this subsection; and(B) Specific public comment on each posted agenda item after the presentation made by Department staff and motions made by the Board. For purposes of this rule, the Board may consider the staff's presentation to be staff's written presentation in the Board's meeting book posted on the Department's website, or additional printed materials only as provided for in paragraph (6) of this subsection.(2) The opportunity for general public comment under paragraph (1)(A) of this subsection may not be used to advocate for or against any specific action relating to any posted item or for or against any pending application. The opportunity for any such testimony is to be limited to the appointed time when action on such matter is requested to be formally considered as a posted agenda item as described in paragraph (1)(B) of this subsection.(3) At the time general or specific public comment is taken, speakers should be prepared to come promptly to the podium or other place designated for speakers. They may, if they wish, agree among themselves on an order in which they will speak, or this may be directed by the Board Chair. If a large number of speakers wish to testify, the Chair may, in his or her reasonable discretion, establish appropriate limits on the total amount of time to be devoted to testimony on any given item or items. As each individual speaker begins his or her testimony, they must state on the record their name and on whose behalf they are speaking, and sign in on a sheet provided by staff to indicate the correct spelling of their name and on whose behalf they are speaking.(4) Individuals present at the meeting, who wish to register their position for or against a posted agenda item, but do not wish to speak, may do so by submitting a comment registration form with the secretary of the meeting, or another person designated by the Board Chair. The comment registration form must state the commenter's name, whom they represent, the action item to which their comment relates, their position, and must be signed by the commenter. At the end of the public comment on the item the Board Chair will have registered positions for and against read into the record. It is the Board Chair's discretion to determine if similar comments submitted are aggregated and reported as a total number providing their position, as opposed to reading all names into the record.(5) Additional limits on public comment.(A) The Board Chair, in her/his sole discretion, may additionally limit the number and length of presentations of public comment, both general and specific, at any time during a meeting based on a consideration of:(i) the number of persons wishing to give public comment;(ii) the number of agenda items to be heard;(iii) the time available for the meeting; and(iv) the risk of losing a quorum of Board members.(B) If the Board Chair limits presentations, she or he will not limit them in a manner that inappropriately favors a particular point of view.(C) The Board Chair may, in her or his reasonable discretion, grant deference to elected officials and other persons who have traveled great distances. Deference to elected officials may include, but is not limited to reading letters from elected officials to the Board into the record.(6) Presenting printed materials. An individual providing testimony to the Board may provide printed materials only if they are provided as outlined in subparagraphs (A) - (C) of this paragraph:(A) In order to ensure that members of the Board and the public are given an opportunity to review any such materials, they must be provided to the Department staff not less than five business days prior to the meeting at which they are to be. This is to enable staff to post them on the Department's website not later than the third day before the date of the meeting, as provided for in Tex. Gov't Code §2306.032(c). They must be made available in Adobe Acrobat (pdf) electronic format;(B) Department staff will post such materials to the Department's website no later than the third day before the meeting at which they are to be used;(C) In exceptional circumstances the Board Chair may, in her/his sole discretion, and only after giving Board members an opportunity to object, allow materials to be provided at a meeting in hard copy format provided:(i) they are delivered to staff prior to the start of the meeting so that staff may log in the materials and the Board Chair may review for acceptance under this subsection. Materials may not be handed directly by the public to a Board member on the dais;(ii) they are not so voluminous as to cause inordinate delay while members of the Board and public review them;(iii) they are provided in hard copy format to all members of the public in attendance;(iv) they are also provided to staff in Adobe Acrobat (pdf) format for inclusion in the electronic records of Board materials available to the public via the Department's website; and(v) if the materials involve large size photos, maps, charts, or other information to be displayed for the Board, an identical copy must be displayed to the public attendees.(D) Persons seeking allowance of written materials under paragraph (6)(C) of this subsection should be aware that their proffered materials may be disallowed, and they should always be prepared to proceed with a verbal presentation within the time constraints for public speaking at Board meetings.(E) If materials submitted relate to a competitive Application under any Department program, including Chapters 11 and 13 of this title (relating to Qualified Allocation Plan (QAP) and Multifamily Direct Loan Rule, respectively), such materials provided under either subparagraphs (A) or (C) of this paragraph may be prohibited from presentation to the Board under applicable rules or statute.(c) To the extent that subsection (b) of this section, or the Board Chair, place limitations on the amount of time that a member of the public may address the Board, a member of the public who addresses the Board through an interpreter will be given at least twice the amount of time as a member of the public who does not require the assistance of an interpreter in order to ensure that non-English speakers receive the same opportunity to address the Board.</content><note type="source"><p>Source Note: The provisions of this §1.10 adopted to be effective August 17, 2023, 48 TexReg 4390.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.11"><num value="1.11">§1.11</num><heading>Definition of Service-Enriched Housing</heading><content>(a) Purpose. It is the purpose of this section to define service-enriched housing for the Housing and Health Services Coordination Council.(b) Definition. For the purpose of directing the work of the Housing and Health Services Coordination Council and its work products, including the biennial plan, Service-Enriched Housing is defined as community integrated, affordable, accessible rental housing that provides residents with the opportunity to receive on-site and/or off-site health-related and other services and supports that foster independence in living and decision-making for individuals including those with disabilities, people who are elderly, persons who are experiencing or have experienced homelessness, veterans, youth exiting foster care and Violence Against Women Act covered populations.(c) Preferences and limitations for individual properties are governed by the tenant selection criteria found in Chapters 1, 10, 11, 12, and 13 of this Title and by specific requirements found in Land Use Restriction Agreements.</content><note type="source"><p>Source Note: The provisions of this §1.11 adopted to be effective December 2, 2018, 43 TexReg 7668; amended to be effective March 1, 2023, 48 TexReg 1034.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.12"><num value="1.12">§1.12</num><heading>Negotiated Rulemaking</heading><content>(a) Purpose. In accordance with Tex. Gov't Code §2306.082, the Department encourages the use of negotiated rulemaking procedures for the adoption of Department rules. Tex. Gov't Code Chapter 2008 describes the procedures for negotiated rulemaking including appointment of a convener; publishing notice of proposed negotiated rulemaking and requesting comments on the proposal; appointing a negotiated rulemaking committee; appointing an impartial third party facilitator; and proposing the resulting draft rule for public comment.(b) Request for Negotiated Rulemaking Process.(1) Any person or organization that would like for the Department to use negotiated rulemaking for the adoption of a Department rule may submit such a request to the Department's Board Secretary. The proposal must identify: the rule proposed for negotiated rulemaking, potential participants for the negotiated rulemaking committee, possible third party facilitators, and a suggested timeline for the process. The Department may also on its own propose to use negotiated rulemaking.(2) In determining whether a proposed negotiated rulemaking is appropriate in a particular situation, the Department and interested parties may consider any relevant factors, including:(A) The number of identifiable interests that would be significantly affected by the proposed rule;(B) The probability that those interests would be adequately represented in a negotiated rulemaking;(C) The probable willingness and authority of the representatives of affected interests to negotiate in good faith;(D) The probability that a negotiated rulemaking committee would reach a unanimous or a suitable general consensus on the proposed rule;(E) The probability that negotiated rulemaking will not unreasonably delay notice and eventual adoption of the proposed rule;(F) The adequacy of agency and public resources to participate in negotiated rulemaking; and(G) The probability that the negotiated rulemaking committee will provide a balanced representation among all interested and affected parties. (Tex. Gov't Code §2008.052(d)).(3) The Department generally will respond to the request within seven calendar days. If the negotiated rulemaking is not pursued, the Department will provide the party making the request with an explanation for the basis of the decision.(c) If the Department decides to proceed with a negotiated rulemaking, it shall follow the process outlined in Tex. Gov't Code Chapter 2008 and costs associated with the negotiated rulemaking process will be handled as specified in Tex. Gov't Code §2008.003.</content><note type="source"><p>Source Note: The provisions of this §1.12 adopted to be effective September 27, 2018, 43 TexReg 6259.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.13"><num value="1.13">§1.13</num><heading>Contested Case Hearing Procedures</heading><content>(a) Purpose. The purpose of this section is to provide procedures for contested case hearings. This section does not apply to matters such as appeals to the Board of staff decisions or waivers, and this section does not in itself create any right to a contested case hearing, but merely provides the process to be used for contested case hearings that are otherwise expressly provided for by law or rule.(b) SOAH Designation. The Governing Board (the Board) of the Texas Department of Housing and Community Affairs (the Department) designates the State Office of Administrative Hearings (SOAH) to hold all contested case hearings on the Board's behalf.(c) Initiation of Hearing.(1) Upon request from the Board or upon receipt of a pleading or other document that is intended to initiate a contested case proceeding, the Department shall determine if a contested case hearing is indicated under the relevant statutory provisions and rules. If so, staff will mark the file as a pending proceeding and refer the matter to SOAH for hearing generally within 45 calendar days, or such other lesser time as an applicable state or federal statute, rule, or regulation may require. The Department will notify the opposing party of any delay.(2) SOAH shall acquire jurisdiction over a case when the Department completes and files a Request to Docket Case form or other form acceptable to SOAH, together with the notice of report to the Board required under Tex. Gov't. Code §2306.043 or other pertinent documents giving rise to the case. Once SOAH acquires jurisdiction, all subsequent documents created, sent, or received in connection with the proceeding that SOAH requires to be filed with it are to be filed with SOAH, with appropriate service upon the opposing party in accordance with this section and the rules of SOAH.(3) Except upon a showing of good cause or as an applicable statute or federal regulation may require, all contested case hearings in which the Department is a party shall be held at the location so determined by SOAH.(4) Nothing in this subchapter shall in any way limit, alter, or abridge the ability of the Department to enter into mediation or alternative dispute resolution at any time prior to or after the holding of the administrative hearing but prior to the adoption by the Board of a final order.(d) Service of Notice of Hearing, Pleadings and Other Documents on Parties.(1) Service of a notice of hearing or of pleadings or other documents shall be made electronically using the EFileTexas system (found at efiletexas.gov). If EFileTexas is not available to a party, hand delivery, courier-receipted delivery, regular first class mail or certified mail to the party's last known address as shown on the Department's records, in accordance with §1.22 of this Title (relating to Providing Contact Information to the Department) shall be used.(2) Service of pleadings and other documents shall be made in any manner provided for in SOAH rules.(e) Proposal for Decision.(1) After the conclusion of a hearing, the Administrative Law Judge (ALJ) shall prepare and serve on the parties a proposal for decision that includes the ALJ's findings of fact and conclusions of law, as modified by the ALJ's addressing of any exceptions and replies to exceptions timely filed with the ALJ in accordance with Tex. Gov't. Code §2001.062 and SOAH rules. The Executive Director shall place the proposal for decision and a proposed final order on the Board's agenda for discussion and possible action at a subsequent meeting of the Board.(2) At a meeting of the Board where the proposed final order may be adopted, parties may provide testimony based on the record only, for changes to the proposal for decision or the proposed final order. No new evidence shall be submitted at the Board meeting. The Board may, on its own motion, remand to SOAH for any additional fact finding it determines is necessary, or, the Board may change a finding of fact or conclusion of law made by the ALJ, but only for reasons stated in Tex. Gov't. Code §2001.058(e). The Board may adopt a final order if it finds that the findings of fact and conclusions of law are supported by the evidence. Motions for rehearing may be filed and served in accordance with the Tex. Gov't. Code Chapter 2001 and the rules of SOAH.(f) Disposition of Contested Cases on a Default Basis.(1) In contested cases where the party not bearing the burden of proof at the hearing fails to appear, the ALJ may issue an order finding that adequate notice has been given, deeming factual allegations in the notice of hearing admitted, if appropriate, conditionally dismissing the case from the SOAH docket, and conditionally remanding the case to TDHCA for disposition on a default basis. Pursuant to SOAH rules, a party has 15 calendar days after the issuance of a conditional order of dismissal and remand to file with SOAH a motion to set aside the order of dismissal and remand. On the sixteenth day after issuance, if no motion to set aside has been timely filed or if such a motion to set aside is not granted within the time limits provided for in SOAH's rules, the conditional order of dismissal and remand becomes final.(2) When the order of dismissal and remand is final, the Executive Director shall prepare a proposed order for the Board's action containing findings of fact, as set forth in the notice of hearing, conclusions of law, and granting the relief requested by staff. The matter shall be placed on the Board's agenda for discussion and possible action at a subsequent meeting. Although public testimony is allowed, argument and evidence on the merits will not be considered at the Board meeting. Motions for rehearing shall be filed and served in accordance with Tex. Gov't. Code Chapter 2001 and the rules of SOAH.</content><note type="source"><p>Source Note: The provisions of this §1.13 adopted to be effective May 8, 2022, 47 TexReg 2512.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.15"><num value="1.15">§1.15</num><heading>Integrated Housing Rule</heading><content>(a) Purpose. It is the purpose of this section to provide a standard by which Developments funded by the Department offer an integrated housing opportunity for Households with Disabilities. This rule is authorized by Tex. Gov't Code, §2306.111(g) that promotes projects that provide integrated affordable housing.(b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.(1) Capitalized words used herein have the meaning assigned in the specific Chapters and Rules of this Part that govern the program associated with the funded or awarded Development, or assigned by federal or state law.(2) Households with Disabilities--A Household composed of one or more persons, at least one of whom is an individual who is determined to have a physical or mental impairment that substantially limits one or more major life activities; or having a record of such an impairment; or being regarded as having such an impairment. Included in this meaning is the term handicap as defined in the Fair Housing Act or disability as defined by other applicable federal or state law.(3) Integrated Housing--Living arrangements typical of the general population. Integration is achieved when Households with Disabilities have the option to choose housing units that are located among units that are not reserved or set aside for Households with Disabilities. Integrated Housing is distinctly different from assisted living facilities/arrangements.(4) Unit--Has the meaning in §11.1(d) of this title, or of Single Family Housing Unit in §20.3 of this title, or Dwelling Unit in §7.2 of this title, or as determined by the applicable funding source or funding announcement.(c) Applicability. This rule applies to:(1) All Multifamily Developments subject to Chapter 11 of this title, Chapter 12 of this title (relating to Multifamily Housing Revenue Bond Rules), and Chapter 13 of this title (relating to Multifamily Direct Loan Rule), with the exclusion of Transitional Housing Developments;(2) Single Family Developments subject to Chapter 23, Subchapter F, Single Family Development Program, of this title (relating to Single Family HOME Program), §7.3 of this title, or done with Neighborhood Stabilization Program funds, with the exclusion of Shelters, Transitional Housing, and Scattered-site developments, meaning one to four family dwellings located on sites that are on non-adjacent lots, with no more than four units on any one site; and(3) Only the restrictions or set asides placed on Units through a Contract, LURA, or financing source that limits occupancy to Persons with Disabilities. This rule does not prohibit a Development from having a higher percentage of actual occupants who are Persons with Disabilities.(4) Previously awarded Multifamily Developments that would no longer be compliant with this rule are not considered to be in violation of the percentages described in subsection (d)(2) or (3) of this section if the award is made prior to September 1, 2018, and the restrictions or set asides were already on the Development or adopted in the Application for the Development.(d) Integrated Housing Standard. Units exclusively set aside or containing a preference for Households with Disabilities must be dispersed throughout a Development.(1) A Development may not market or restrict occupancy solely to Households with Disabilities unless required by a federal funding source.(2) Developments with 50 or more Units shall not exclusively set aside more than 25% of the total Units in the Development for Households with Disabilities.(3) Developments with fewer than 50 Units shall not exclusively set aside more than 36% of the Units in the Development for Households with Disabilities.(e) Board Waiver. The Board may waive the requirements of this rule if the Board can affirm that the waiver of the rule is necessary to serve a population or subpopulation that would not be adequately served without the waiver, and that the Development, even with the waiver, does not substantially deviate from the principle of Integrated Housing.</content><note type="source"><p>Source Note: The provisions of this §1.15 adopted to be effective April 30, 2025, 50 TexReg 2585.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.16"><num value="1.16">§1.16</num><heading>Ethics and Disclosure Requirements for Outside Financial Advisors and Service Providers</heading><content>(a) Purpose. The purpose of this section is to establish standards of conduct applicable to financial advisors or service providers in accordance with Tex. Gov't Code Chapters 2263, 2270, and 2252.(b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.(1) Department--The Texas Department of Housing and Community Affairs, (the "Department").(2) Board--The Governing Board of the Department. (3) Financial advisor or service provider--A person or business entity who acts as a financial advisor, financial consultant, money or investment manager, or broker who:(A) may reasonably be expected to receive, directly or indirectly, more than $10,000 in compensation from the Department during a fiscal year; or(B) renders important investment or funds management advice to the Department or a member of the Board.(c) Anti-Boycott Verification. Financial advisors and service providers are required to comply with the requirements of Tex. Gov't Code Chapter 2270, which requires a representation by each financial advisor or service provider that their firm (including any wholly owned subsidiary, majority-owned subsidiary, parent company, or affiliate):(1) does not boycott Israel; and(2) will not boycott Israel during the term for which they provide services to the Department.(d) Iran, Sudan and Foreign Terrorist Organizations. Financial advisors and service providers are required to comply with the requirements of Tex. Gov't Code Chapter 2252, which requires a representation by each financial advisor or service provider that their firm (including any wholly owned subsidiary, majority-owned subsidiary, parent company, or affiliate) is not an entity listed by the Texas Comptroller of Public Accounts under Tex. Gov't Code §2252.153 or §2270.0201.(e) Exemption from Disclosure of Interested Parties. Financial advisors and service providers are required to comply with the requirements of Tex. Gov't Code Chapter 2252. Financial advisors and service providers that make a representation that their firm (including any wholly owned subsidiary, majority-owned subsidiary, parent company, or affiliate) is a publicly traded business entity are exempt from Tex. Gov't Code §2252.908.(f) Disclosures and Statement.(1) A financial advisor or service provider shall disclose in writing to the Executive Director of the Department and to the state auditor:(A) any relationship the financial advisor or service provider has with any party to a transaction with the Department, other than a relationship necessary to the investment or funds management services that the financial advisor or service provider performs for the Department, if a reasonable person could expect the relationship to diminish the financial advisor's or service provider's independence of judgment in the performance of the person's responsibilities to the Department; and(B) all direct or indirect pecuniary interests the financial advisor or service provider has in any party to a transaction with the Department, if the transaction is connected with any financial advice or service the financial advisor or service provider provides to the Department or to a member of the Board in connection with the management or investment of state funds.(2) The financial advisor or service provider shall disclose a relationship described by this subsection without regard to whether the relationship is a direct, indirect, personal, private, commercial, or business relationship.(3) A financial advisor or service provider shall file annually a statement with the Executive Director of the Department and with the state auditor. The statement must disclose each relationship and pecuniary interest described by this subsection, or if no relationship or pecuniary interest described by that subsection existed during the disclosure period, the statement must affirmatively state that fact. (4) The annual statement must be filed not later than April 15 in the following form. The statement must cover the reporting period of the previous calendar year. Attached Graphic(5) The financial advisor or service provider shall promptly file a new or amended statement with the Executive Director of the Department and with the state auditor whenever there is new information to report under this subsection. (6) A contract under which a financial advisor or service provider renders financial services or advice to the Department or a member of the Board is voidable by the Department if the financial advisor or service provider violates a standard of conduct adopted under this section.</content><note type="source"><p>Source Note: The provisions of this §1.16 adopted to be effective September 27, 2018, 43 TexReg 6266.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.17"><num value="1.17">§1.17</num><heading>Alternative Dispute Resolution</heading><content>(a) Purpose. In accordance with Tex. Gov't Code, §2306.082, and as authorized by Tex. Gov't Code, §2009.051(c), the Department encourages the use of appropriate Alternative Dispute Resolution ("ADR") procedures under Tex. Gov't Code, Chapter 2009 to assist in the fair and expeditious resolution of internal and external disputes under the Department's jurisdiction. These ADR procedures are intended to work in conjunction with the guidelines and rules of the State Office of Administrative Hearings found at Tex. Gov't Code, Chapter 2001; 1 TAC Part 7, Chapter 155; and with Chapter 154, Civil Practice and Remedies Code.(b) Definitions. For purposes of this rule, terms used herein shall have the following meaning:(1) Alternative Dispute Resolution ("ADR")--a procedure or combination of procedures described in Chapter 154, Civil Practice and Remedies Code.(2) Dispute Resolution Coordinator--One or more trained persons employed by the Department, who may not be in the Legal Division, designated by the Executive Director to coordinate and process requests for the ADR procedures.(3) Mediation--a dispute resolution procedure in which an impartial person, the mediator, facilitates communication between the parties to promote reconciliation, settlement, or understanding among them. The mediator may not impose his or her own judgment on the issues for that of the parties (§154.023(a) and (b), Texas Civil Practice and Remedies Code).(4) Impartial third party--A person who meets the qualifications and conditions of Tex. Gov't Code §2009.053. An Impartial Third Party must possess the qualifications required under the Texas Civil Practice and Remedies Code §154.052 (a minimum of 40 classroom hours of training in dispute resolution techniques), is subject to the standards and duties prescribed by Texas Civil Practice and Remedies Code §154.053 and has the qualified immunity prescribed by Texas Civil Practice and Remedies Code §154.055 for volunteer third parties not receiving compensation in excess of expenses, if applicable. (Tex. Gov't Code §2009.053(d)).(c) Preliminary Considerations.(1) The Department encourages communication between Department staff and applicants to the Department programs, and other interested persons, to exchange information and informally resolve disputes.(2) The Department has appeal procedures found at 10 TAC §1.7, and at 10 TAC §10.902. ADR procedures supplement and do not limit any available procedure for the resolution of disputes (Tex. Gov't Code §2009.052(a)). Pursuing an ADR procedure does not suspend or delay application, appeal, or other deadlines. For example, if a tax credit applicant desires to appeal a Department decision using the procedures promulgated under §2306.6715 and also desires to pursue an ADR procedure, the applicant may independently pursue the two procedures. Each procedure will proceed independently of the other. However, ADR does not suspend any statutory deadlines or grant any additional authority to resolve issues beyond statute.(3) Consistent with Tex. Gov't Code §2306.082(e), the ADR procedure must be requested before the Department's Board makes a final decision on an issue.(4) Consistent with Tex. Gov't Code §2306.082(f), the ADR procedure may not be used to unnecessarily delay an appeal proceeding, or other deadline.(d) Appropriateness of ADR(1) Assessment of the Dispute. In determining whether an ADR procedure is appropriate, the parties to the dispute, including the Department, should consider the following factors:(A) whether direct discussions and negotiations between the parties have been unsuccessful and/or the parties believe there is a misunderstanding involving the facts or interpretations that could be improved with the assistance of an Impartial Third Party;(B) whether the use of ADR potentially could use fewer resources and take less time than other available procedures, and that there is a reasonable likelihood that the use of ADR will result in an agreement to resolve the dispute;(C) whether there is a reasonable likelihood that the use of ADR will result in an agreement to resolve the dispute, and there are potential remedies or solutions that are only available through ADR; and/or(D) whether the need for a final decision with precedential value is less important than other considerations. (Nothing herein should be construed as creating a presumption that a final decision establishes binding precedent in any given manner).(2) The parties may also consider additional factors found in the State Office of Administrative Hearings' ADR Model Guidelines for assessing whether a dispute is appropriate for mediation.(3) Independent of any proposal from interested parties outside the Department, the Department may propose using ADR procedures to interested parties to try to resolve a dispute.(e) ADR Process(1) Any applicant for Department programs or other interested person may request the use of an ADR procedure to attempt to resolve a dispute with the Department. The ADR request must be submitted in writing to the Department's Dispute Resolution Coordinator at the mailing address or email address listed on the Department's website. The request for ADR must state the nature of the dispute, the parties involved, any pertinent or impending deadlines, whether all parties agree to refer the dispute to ADR, proposed times and locations, and the preferred type of ADR procedure.(2) If an applicant or other interested person is uncertain whether to propose the possible use of ADR or is uncertain about any particular aspect of a possible proposal, they should contact the Department's Dispute Resolution Coordinator to discuss the matter.(3) The ADR Coordinator will notify the person requesting the ADR procedure that an ADR decision is not binding on the state and that the Department will mediate in good faith.(4) The ADR Coordinator will provide copies of the request received, and all other materials received, to any other parties to the dispute.(5) The Dispute Resolution Coordinator shall provide a copy of the ADR request to the Executive Director and General Counsel and other applicable internal parties.(6) The Dispute Resolution Coordinator will assess whether ADR would assist in fairly and expeditiously resolving the dispute and will notify all affected parties within seven calendar days of receiving an ADR request of one of the following determinations:(A) If the parties, including the Department, cannot agree on whether an ADR procedure should be used or on the particulars of the ADR procedure, the Dispute Resolution Coordinator will notify both parties that agreement to utilize ADR could not be reached;(B) If the Dispute Resolution Coordinator determines not to refer the dispute to ADR, the Dispute Resolution Coordinator shall state the reasons in writing; or(C) If the Dispute Resolution Coordinator decides to refer the dispute to ADR, the date for the selected ADR process will be included in the notice.(f) Selection of Mediator or Impartial Third Party.(1) The Department designates the State Office of Administrative Hearings ("SOAH") as the primary mediator for Department ADR requests as required by Tex. Gov't Code §2306.082(b).(2) If the Department and SOAH agree to utilize an Impartial Third Party other than one so designated through SOAH, an Impartial Third Party will be identified.(3) The selection of an Impartial Third Party is subject to the approval of the parties to the dispute. If the parties do not suggest potential third parties, the Dispute Resolution Coordinator will provide a list of potential third parties from which to choose. If all parties agree to use an Impartial Third Party who charges for ADR services, then the costs for the Impartial Third Party shall be apportioned equally among all parties, unless otherwise agreed by the parties.(g) Voluntary Agreement. All parties participating must have the authority to reach an agreement to make a final recommendation to resolve the dispute. The Executive Director will abide by an agreed upon solution to the dispute and either approve that agreement or offer that recommendation to the Board, if Board authorization is needed. The decision to reach agreement is voluntary. If the parties reach a resolution and execute a written agreement, the agreement is enforceable in the same manner as any other written agreement of the same nature with the State. A written agreement to which the Department is a signatory resulting from an ADR procedure must be approved by the appropriate authority.(h) A written agreement to which the Department is a signatory resulting from an ADR procedure is subject to Tex. Gov't Code Chapter 552 concerning open records.(i) Confidentiality of Records and Communications. The confidentiality of the communications, records, conduct, and demeanor of an impartial third party and parties in an ADR procedure are governed by Tex. Gov't Code §2009.054.(j) The Department may share the results of its ADR process with other governmental bodies, and with the Center for Public Policy Dispute Resolution at the University of Texas School of Law, which may collect and analyze the information and report its conclusions and useful information to governmental bodies and the legislature.</content><note type="source"><p>Source Note: The provisions of this §1.17 adopted to be effective September 27, 2018, 43 TexReg 6268.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.19"><num value="1.19">§1.19</num><heading>Reallocation of Financial Assistance</heading><content>(a) Purpose. As provided for by Tex. Gov't Code §2306.111(h), this rule provides the policy for the reallocation of financial assistance, including assistance related to bonds, administered by the Department if the Department's obligation with respect to that assistance is prematurely terminated.(b) It is the policy of the Department to take prudent measures to ensure that, when funds are provided to recipients for assistance, the funds are timely and lawfully utilized and that, if they cannot be timely and lawfully utilized by the initial recipient, there are mechanisms in place to reallocate those funds to other recipients in order to ensure their full utilization in assisting beneficiaries.(c) The reallocation of federal or state financial assistance administered by the Department may be required when:(1) an administrator, subrecipient, owner, or contractor returns contracted funds;(2) reserved funds are not fully utilized at completion of an activity;(3) balances on contracts remain unused;(4) funds in a contract or reservation are partially or fully recaptured or terminated;(5) funds in a contract that were used for an ineligible activity and have been repaid to the Department and the federal oversight agency is allowing the Department to still utilize the funds;(6) required benchmarks or expenditure deadlines have not been achieved within the time frames agreed;(7) there is program income; or(8) other circumstances arise that prompt an initial recipient to be unable to utilize contracted funds.(d) Reallocation of financial assistance for specific federal or state funding sources or programs administered by the Department is also governed by or provided for in:(1) federal regulations and requirements;(2) state rules relating to deobligation and reobligation adopted in other sections of this title;(3) funding plans authorized by the Board governing federal or state resources that may have been reviewed and approved by the federal funding agency;(4) Notices of Funding Availability (NOFAs) and Requests for Applications (RFAs); or(5) written agreements and contracts relating to the administration of such funds.(e) To the extent that programs or funding sources are governed by any of the items provided for in subsection (d) of this section, and the specific documents listed in subsection (d) of this section do not require further Board approval, no additional Board approval to follow the reallocation as provided for in those items is required. Reallocation of funding not governed by subsection (d) of this section will require Board approval.(f) To the extent that certain programs are required to regionally allocate their annual allocations of funds, funds having originally been regionally allocated and needing to be reallocated under this section do not require that regional allocation be performed again.(g) Funds made available under this section may be aggregated over a period of time prior to being reallocated.(h) Consistent with the requirements of Tex. Gov't Code §2306.111(h), if the Department's obligation of financial assistance related to bonds is terminated prior to issuance, the assistance will be reallocated among other activities permitted by that bond issuance and any indenture associated with those bonds, as approved by the Board.</content><note type="source"><p>Source Note: The provisions of this §1.19 adopted to be effective May 8, 2022, 47 TexReg 2514.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.21"><num value="1.21">§1.21</num><heading>Action by Department if Outstanding Balances Exist</heading><content>(a) Purpose. The purpose of this section is to inform Persons or entities requesting awards of new funds or resources, Form(s) 8609, application amendments, LURA amendments, new Contracts (with the exception of a Household Commitment Contract), Contract amendments, or loan modifications that, with the exceptions noted by this rule, if fees or loan payments (principal or interest) are past due, or Disallowed Costs have not been repaid, to the Department, the request may be denied, delayed, or the Subrecipient/Administrator/Developer/Owner's Contract(s) terminated. This rule does not apply to active contracts with vendors that have been procured by the Department.(b) Definitions.(1) Capitalized words used herein have the meaning assigned in the specific Chapters and Rules of this Part that govern the program associated with the request, or assigned by federal or state law.(2) Disallowed Costs: Expenses claimed by a Subrecipient/Administrator/Developer/Owner, paid by the Department, and subsequently determined by the Department to be ineligible and subject to repayment.(c) Except in the case of interim construction loans, if Disallowed Costs, fees, or loan payments are past due on the subject property requesting the action the Department will not: issue Form(s) 8609; amend applications or LURAs; or modify loan documents.(d) Except in the case of Contracts for CSBG non-discretionary funds, the Department will not make awards of new funds or resources, enter into new Contracts, or amend Contracts when Disallowed Costs, fees, or loan payments remain unpaid, or approve an entity's Ownership transfer into an existing property unless the entity or Affiliate (as applicable) has entered into, and is complying with, an agreed-upon repayment plan that is approved by the Department's Executive Director or Enforcement Committee.(e) Once the Department notifies a Person or entity that they are responsible for the payment of Disallowed Costs, required fee or payment that is past due, if no corrective action is taken within seven days of notification, the Executive Director may deny the requested action for failure to comply with this rule.(f) Exception for a Work Out Development. If fees (not including application or amendment fees) or payments affiliated with a work out Development are past due, then the past due amounts affiliated with a work out Development may be excepted from this rule, so long as the work out is actively underway by Department staff. In which case, in the Department's sole discretion, LURA or any other kinds of amendments may be considered for the subject Development or Contract.(g) In accordance with Subchapter C of this Chapter (relating to Previous Participation Review of Department Awards), if a Person or entity applies for funding or an award from the Department, any fees, Disallowed Costs, or payment of principal or interest to the Department that is past due beyond any grace period provided for in the applicable loan documents and any past due fees (not just those related to the subject of the request) will be reported to the Executive Director for review.</content><note type="source"><p>Source Note: The provisions of this §1.21 adopted to be effective August 15, 2024, 49 TexReg 5940.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.22"><num value="1.22">§1.22</num><heading>Providing Contact Information to the Department</heading><content>(a) Any person or entities doing business with the Department shall notify the Department, of any change in contact information, including names, addresses, telephone numbers, email addresses and fax numbers. In addition, the notification shall include all Department contract numbers, project numbers or property names of any type. The notification shall be made as described in paragraphs (1) and (2) of this subsection:(1) by email sent to the director or manager of the applicable program; or(2) sent via the CMTS Attachment System.(b) Only in cases in which email or access to the CMTS Attachment System is not available may the notification be sent by mail to Texas Department of Housing and Community Affairs, Contact Information Update, P.O. Box 13941, Austin, Texas 78711-3941.(c) All persons or entities doing business with the Department are responsible for keeping their contact information current pursuant to subsection (a) of this section and as required by other Department rules. The Department is entitled to rely solely on the most recent contact information on file with the Department at the time any notice or other communication is sent.(d) The notification requirements of this section are in addition to any other change of contact information notification requirements specific to certain divisions, funding sources or programs of the Department.</content><note type="source"><p>Source Note: The provisions of this §1.22 adopted to be effective May 8, 2022, 47 TexReg 2515.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.23"><num value="1.23">§1.23</num><heading>State of Texas Low Income Housing Plan and Annual Report (SLIHP)</heading><content>The Texas Department of Housing and Community Affairs (TDHCA or the Department) adopts by reference the 2025 State of Texas Low Income Housing Plan and Annual Report (SLIHP). The full text of the 2025 SLIHP may be viewed at the Department's website: www.tdhca.texas.gov. The public may also receive a copy of the 2025 SLIHP by contacting the Department's Housing Resource Center at (512) 475-3976.</content><note type="source"><p>Source Note: The provisions of this §1.23 adopted to be effective March 26, 2025, 50 TexReg 2065.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scA/s1.24"><num value="1.24">§1.24</num><heading>Information Security and Privacy Requirements</heading><content>(a) Purpose. The purpose of this rule is to provide the mechanism by which the Department will ensure the security and privacy of Protected Information belonging to persons who do business with the Department and those they serve.(b) Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.(1) Affiliate--Shall have the meaning assigned by the specific program or programs described in this title.(2) Computing Device--Any computer, laptop, server, smart phone, or any other data processing device that is used to connect to the Department's network.(3) Contractor--A third party, including, but not limited to, outside auditors and legal counsel, funding agencies, Vendors or Subrecipients, including any and of its Representatives that may gain access to Protected Information on account of a contract with the Department.(4) Criminal History Records Information--For the purposes of Tex. Gov't Code Chapter 411, Subchapter F, information collected about a person by a Criminal Justice Agency that consists of identifiable descriptions and notations of arrests, detentions, indictments, information, and other formal criminal charges and their dispositions. The term does not include:(A) Identification information, including fingerprint records, to the extent that the identification information does not indicate involvement of the person in the criminal justice system; or(B) Driving record information under Subchapter C, Chapter 521 Transportation Code.(5) Department--The Texas Department of Housing and Community Affairs.(6) Financial Statements of a Tax Credit Applicant--For purposes of Tex. Gov't Code §2306.6717(d)(Public Information and Hearings), a formal statement of the financial activities of a Low Income Housing Tax Credit Applicant, submitted to the Department as part of a Low Income Housing Tax Credit Application, including but not limited to, the balance sheet, income statement, cash flow statement or changes in equity.(7) Information Resources--The procedures, equipment, and software that are employed, designed, built, operated, and maintained to collect, record, process, store, retrieve, display, and transmit information, and associated personnel including consultants and contractors.(8) Information Security and Privacy Agreement (ISPA)--An agreement between the Department and a Contractor implementing information security and privacy requirements of the Department.(9) Non-Public Personal Information--For purposes of the Graham-Leach-Bliley Act (15 USC §§6801-6809 and 6821-6827), and implementing regulations, personally identifiable financial information provided to the Department or any of its Contractors, resulting from any transaction with, or any service performed for a client or consumer, or otherwise obtained by the Department or its Contractors, unless the information is otherwise publically available.(10) Personal Identifying Information--For purposes of Tex. Bus. & Com. Code Chapter 521 (Unauthorized Use of Identifying Information), and any implementing regulations, information that alone or in conjunction with other information identifies an individual, including an individual's name, Social Security number, date of birth, or government-issued identification number, mother's maiden name, unique biometric data including fingerprint, voice print, retina or iris image, unique electronic identification number, address, or routing code, and telecommunication access devices as defined by Tex. Penal Code §32.51.(11) Personal or Business Financial Information--For purposes of Tex. Gov't Code §2306.039 (Open Meetings and Open Records), any personal or business financial information including, but not limited to, Social Security numbers, tax payer identification numbers, or bank account numbers submitted to the Department to receive a loan, grant, or other housing assistance by a housing sponsor, individual or family.(12) Protected Health Information--For purposes of Tex. Health & Safety Code Chap. 181 (adopting definitions in 45 CFR §160.103), any information that relates to the past, present, or future physical or mental health or condition of an individual; the provision of health care to an individual; or the past, present, or future payment for the provision of health care to an individual, and that identifies the individual, or can be used to identify the individual.(13) Protected Information--Protected Health Information, Personal Identifying Information, Sensitive Personal Information, Personal or Business Financial Information, Non-Public Personal Information, Financial Statement of a Tax Credit Applicant, WAP Applications and Participation Information, Criminal History Records Information, and Victims of Violence Information.(14) Representative--Any officer, employee, contractor, subcontractor, member, director, advisor, partner, or agent of Vendor/Subrecipient, or any person serving in such a role, however titled or designated.(15) Sensitive Personal Information--For purposes of Tex. Bus. & Com. Code Chapter 521 (Unauthorized Use of Identifying Information), an individual's first name or first initial and last name in combination with any one or more of the following items if the name and items are not encrypted:(A) Social Security number;(B) Driver's license or government-issued identification number;(C) Account or credit/debit card number in combination with any required security code, access code, or password that would permit access; or(D) Information that identifies or reveals an individual and the physical or mental health or condition of the individual, the provision of health care to the individual, or payment for the provision of health care to the individual.(E) The term does not include publicly available information that is lawfully made publicly available.(16) Subrecipient--An organization with whom the Department contracts, and entrusts to administer federal or state programs or funds, including but not limited to, units of local government, non-profit and for-profit corporations, administrators, community action agencies, collaborative applications, sub-grantees, developers, owners, land banks, participating mortgage lenders, and non-profit owner-builder housing providers. This also includes an Affiliate of a Subrecipient.(17) Vendor--A person or organization that supplies goods or services, properly procured under relevant laws, to the Department.(18) Victims of Violence Information--Any information submitted to a covered housing provider, including the Department and its Contractors pursuant to 24 CFR §5.2007, including the fact that an individual is a victim of domestic violence, dating violence, sexual assault, or stalking. Also included pursuant to Tex. Gov't Code §552.138 is information regarding the location or physical layout, an employee, volunteer, former or current client, or the provision of services to a former or current client, a private donor, or a member of a board of directors or board of trustees of a family violence shelter center, victims of trafficking shelter center, or sexual assault program.(19) WAP Applications and Participation Information--For purposes of Weatherization Program Notice 10-08, U.S. Department of Energy, issued February 1, 2010, regarding the Department of Energy Weatherization Assistance Program (WAP), any specifically identifying information related to an individual's eligibility application for WAP or the individual's participation in WAP, such as name, address, or income information.(c) Applicability and Implementation.(1) This rule applies to Contractors as defined in subsection (b)(3) of this section. This rule is not applicable to third parties that contract with the Department but have no access to Department Protected Information.(2) Contractors with Department contracts that are active on the effective date of this rule shall have 180 calendar days from the effective date of this rule to enter into an ISPA with the Department. Contractors that execute new Department contracts or contract renewals on or after the effective date of this rule shall enter into an ISPA with the Department no later than the date of contract execution, if an ISPA with the Department is not already in place. The ISPA shall be in a form provided by the Department on its website. A Contractor must download, execute and return the contract according to instructions on the website and as directed by the Program Services Division of the Department. A Contractor need only execute one ISPA, even if they participate with the Department in multiple programs or activities.(3) The ISPA shall be effective with respect to all current and future contracts that Contractor has or will have with the Department for as long as the Contractor has access to Protected Information. Contractors receiving awards or contracts after the effective date of this rule must have an executed ISP Agreement on file with the Department's Program Services Division or enter into an ISP Agreement before work can begin on the new award or contract.(4) Contractor and Department may agree to eliminate or reduce access to, or the generation of, any class of Protected Information related to Contractor's obligations to the Department, provided it does not impair Contractor's ability to fulfill its obligations to the Department.(5) Contractor shall accept responsibility for all Representatives and ensure the safeguarding of Protected Information in accordance with applicable federal and state laws, and the terms and conditions set forth in the ISPA.(6) The Department may, in its sole discretion, require Contractor to amend an ISPA in order to conform to state and/or federal law.(d) ISPA Security Measures. The ISPA shall include, among other requirements:(1) Security measures for devices that connect to the Department network, and(2) Security measures for maintenance of Department information external to the Department network, including, but not limited to:(A) Maintaining an inventory of all information technology (IT) assets;(B) Implementing and maintaining a risk management program;(C) Ensuring information is recoverable in accordance with risk management decisions;(D) Adhering to monitoring techniques for detecting, reporting, and investigating security incidents;(E) Providing IT security training to employees;(F) Conducting criminal background checks on employees with access to department information;(G) Separating development and production environments;(H) Following a software change control process;(I) Maintaining and following an IT security policy that has been approved by the department; and(J) Implementing other requirements reasonably necessary to ensure the security and privacy of Protected Information in the Contractor's possession or control.(e) Breach. In the event of an actual or suspected breach involving Department Private Information stored by the Contractor, Contractor shall promptly notify the Department no later than twenty-four hours after discovery of the incident. The Contractor will coordinate and cooperate fully with the Department in making all breach notifications and taking all actions required by law to effect the required notifications.(f) Texas Public Information Act. If Contractor receives a request pursuant to the Texas Public Information Act for Information maintained by Contractor on account of a contract with TDHCA, Contractor shall notify the Department within three calendar days of the receipt of the request by forwarding the request to open.records@tdhca.state.tx.us(g) Department Review. Contractor and Representatives shall permit Department to conduct periodic IT general controls audits, Internet security scans, and internal network vulnerability assessments, and contract monitoring audits at reasonable times, and upon reasonable notice. Such reviews may be conducted by the Department, the Texas State Auditor's Office, the Texas Department of Information Resources, an applicable federal oversight agency, or any third parties under contract with one of these agencies.</content><note type="source"><p>Source Note: The provisions of this §1.24 adopted to be effective May 4, 2023, 48 TexReg 2180.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c1/scB"><num value="B">SUBCHAPTER B</num><heading>ACCESSIBILITY AND REASONABLE ACCOMMODATIONS</heading><section identifier="/us/state/tx/tac/t10/p1/c1/scB/s1.201"><num value="1.201">§1.201</num><heading>Purpose</heading><content>(a) The purpose of this subchapter is to establish a framework for informing compliance with the requirements of Tex. Gov't Code §§2306.6722, 2306.6725, and 2306.6730, and the requirements of the Americans with Disabilities Act, Section 504 of the 1973 Rehabilitation Act (Section 504) and the Fair Housing Act for Recipients of awards from the Texas Department of Housing and Community Affairs (the Department) including but not limited to:(1) Community Services Block Grant;(2) Low Income Home Energy Assistance Program (LIHEAP) (including the two programs utilizing this funding source: the LIHEAP Weatherization Assistance Program and the Comprehensive Energy Assistance Program);(3) Emergency Solutions Grant (ESG);(4) Texas Housing Trust Fund;(5) Low Income Housing Tax Credit, including Exchange;(6) Multifamily Bond Programs (Bond);(7) National Housing Trust Fund (NHTF);(8) Neighborhood Stabilization Program (NSP);(9) HOME;(10) TCAP;(11) TCAP- Returned Funds (TCAP-RF);(12) Section 8;(13) Department of Energy Weatherization Assistance Program;(14) Homeless Housing and Services Program (HHSP);(15) Ending Homelessness Fund (EH);(16) Community Development Block Grant (CDBG);(17) Community Development Block Grant - CARES Act (CDBG-CV);(18) 811 Project Rental Assistance (811 PRA);(19) Emergency Rental Assistance (ERA);(20) Department of Energy Weatherization Program (DOE WAP); and(21) HOME American Rescue Plan (HOME-ARP).(b) Unless otherwise indicated in the applicable notice of funding availability or required by contract, this subchapter does not apply to contracts for the procurement of goods or services by the Department.</content><note type="source"><p>Source Note: The provisions of this §1.201 adopted to be effective March 30, 2023, 48 TexReg 1625.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scB/s1.202"><num value="1.202">§1.202</num><heading>Definitions</heading><content>Capitalized words in this subchapter have the meaning assigned in the specific chapter and rules of the title that govern the program associated with the matter or assigned by federal or state law. In addition, the following terms are used for the purposes of this subchapter:(1) 2010 ADA Standards--The term 2010 ADA Standards refers to the 2010 ADA Standards for Accessible Design implementing Title II of the Americans with Disabilities Act of 1990, including the ADA Amendments of 2008, found at 28 CFR Part 35. This term includes both the Title II (28 CFR §35.151) and 2004 ADAAG (36 CFR Part 1991). If there is a conflict between 2004 ADAAG and Title II the requirements of Title II prevail.(2) Accessible Route--A continuous unobstructed path connecting accessible elements and spaces in a facility or building that complies with the space and reach requirements of the applicable accessibility standard.(3) Alteration--Any physical change in a facility or its permanent fixtures or equipment. It includes, but is not limited to, remodeling, renovation, rehabilitation, reconstruction, changes or rearrangements in structural parts and extraordinary repairs. It does not include normal maintenance or repairs, reroofing, interior decoration, or changes to mechanical systems.(4) Disability--A physical or mental impairment that substantially limits one or more major life activities; or having a record of such an impairment; or being regarded as having such an impairment. Nothing in this definition requires that a dwelling be made available to an individual whose tenancy would constitute a direct threat to the health or safety of other individuals or whose tenancy would result in substantial physical damage to the property of others. Included in this meaning is the term handicap as defined in the Fair Housing Act, and the term disability as defined in the Americans with Disabilities Act.(5) Multifamily Housing Development--A project that includes five or more dwelling units. A project may consist of five single family homes, a single building with five or more units, or five or more units in multiple buildings each with one or more units. A project includes the whole of one or more residential structures and appurtenant structures, equipment, roads, walks, and parking lots which are covered by a single contract or application, or which are treated as a whole for processing purposes, whether or not located on a common site.(6) Reasonable Accommodation--An accommodation and/or modification that is an alteration, change, exception, or adjustment to a program, policy, service, building, or dwelling unit, that will allow a qualified person with a Disability to:(A) Participate fully in a program;(B) Take advantage of a service;(C) Live in a dwelling; or(D) Use and enjoy a dwelling.(7) Recipient--Includes a Subrecipient or Administrator and means any State or its political subdivision, any instrumentality of a State or its political subdivision, any public or private agency, institution, organization, or other entity, or any person to whom assistance or an award is extended for any program or activity directly or through another Recipient, including any successor, assignee, or transferee of a Recipient, but excluding the ultimate beneficiary of the assistance. Recipients include private entities in partnership with Recipients to own or operate a program or service. This term includes Development Owner.</content><note type="source"><p>Source Note: The provisions of this §1.202 adopted to be effective March 30, 2023, 48 TexReg 1625.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scB/s1.203"><num value="1.203">§1.203</num><heading>General Requirements and Effect of Non Compliance</heading><content>(a) No individual with a Disability shall, by reason of their Disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any Department awarded program or activity.(b) There are additional requirements for compliance with Section 504 of the 1973 Rehabilitation Act; Title VI of the Civil Rights Act of 1964; the Fair Housing Act; the Americans with Disabilities Act; and other civil rights laws, regulations and Executive Orders by Recipients of Department program or activities. This subchapter addresses only the requirements relating to physical accessibility, and reasonable accommodations under Section 504, the American with Disabilities Act, and the Fair Housing Act. Other disability-related requirements include, but are not limited to:(1) Operating housing that is not segregated based upon disability or type of disability, unless authorized by federal statute or executive order;(2) Providing auxiliary aids and services necessary for effective communication with persons with disabilities; and(3) Operating programs in the most integrated setting appropriate to the needs of qualified individuals with disabilities.(c) Compliance with accessibility requirements, as applicable, including compliance with the Fair Housing Act, the Americans with Disabilities Act, and Section 504 of the Rehabilitation Act of 1973, other civil rights laws, regulations and Executive Orders; and Chapters 2105 and 2306 of the Tex. Gov't Code is the sole responsibility of the Recipient. By providing guidance and monitoring for compliance, the Department in no way assumes any liability whatsoever for any action or failure to act by the Recipient.(d) Failure to comply with the provisions of this subchapter may result in the assessment of administrative penalties and/or debarment, as further outlined in this title.</content><note type="source"><p>Source Note: The provisions of this §1.203 adopted to be effective March 30, 2023, 48 TexReg 1625.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scB/s1.204"><num value="1.204">§1.204</num><heading>Reasonable Accommodations</heading><content>(a) Applicability. This policy relates to a request for Reasonable Accommodations made by an applicant or participant of a Department program to a Recipient, or made by an applicant or occupant to a property funded by the Department to the property. The policy regarding a request for Reasonable Accommodation by the Department is found at 10 TAC §1.1 of this chapter.(b) General Considerations in Handling of Reasonable Accommodations. An applicant, participant, or occupant who has a disability may request an accommodation and, depending on the program funding the property or activity and whether the accommodation requested is a reasonable accommodation, their request must be timely addressed.(1) When the Department monitors a property or activity for how reasonable accommodation requests have been handled, it will consider such things as whether the person working on behalf of the program or property which the Department is monitoring:(A) Timely received the request and recorded it;(B) Took into consideration how action on the request would impact the person making the request; and(C) Engaged in communication with the requestor to understand the nature of their request and whether there was a reasonable way to make an accommodation.(2) If the person responsible for responding to a request for an accommodation needs assistance or clarification as to how the requirement may apply to their program or property they should contact the Compliance Division immediately to discuss the matter. The Compliance Division cannot provide legal advice or direct the person to respond in any specific manner, but they can, in some instances, point to appropriate federal guidance or other resources such as the Texas Workforce Commission Civil Rights Division. A person who contacts the Compliance Division or anyone else for such reasons should document such contact in their files because the process of obtaining guidance may impact the timeliness of their response.(3) Unless there is a clear documented need for a lengthier process or there is a controlling federal statute or regulation specifying a different deadline, when a person requests an accommodation they should be given a response as soon as possible but not later than 14 calendar days.(c) To show that a requested Reasonable Accommodation may be necessary, there must be an identifiable relationship between the requested accommodation and the individual's Disability.(d) Responses to Reasonable Accommodation requests must be provided within a reasonable amount of time, not to exceed 14 calendar days. The response must either be to grant the request, deny the request, offer alternatives to the request, or request additional information to clarify the Reasonable Accommodation request. Examples when it would not be reasonable to wait 14 calendar days to provide a response include but are not limited to: moving the due date for rent to coincide with the date the requestor receives their social security disability check; allowing a service animal in an emergency shelter in spite of a no pets policy; or assisting an applicant with a Disability that prevents them from writing legibly when they request help filling out an program or project application. Should additional information be required and an interactive process be necessary, this process must also be completed within a reasonable amount of time. An undue delay in responding to a Reasonable Accommodation request may be deemed by the Department to be a failure to provide a Reasonable Accommodation.(e) When a participant, applicant, or occupant requires an accessible unit, feature, space or element, or a policy modification, or other Reasonable Accommodation to accommodate a Disability, the Recipient must provide and pay for the requested accommodation, unless doing so would result in a fundamental alteration in the nature of the program or an undue financial and administrative burden. A fundamental alteration is an accommodation that is so significant that it alters the essential nature of the Recipient's operations. A Recipient that owns a tax credit or Multifamily Bond Development with no federal or state funds awarded before September 1, 2001, must allow but may not need to pay for the Reasonable Accommodation, except if the accommodation requested should have been made as part of the original design and construction requirements under the Fair Housing Act, or is a Reasonable Accommodation identified by the U.S. Department of Justice or the U.S. Department of Housing and Urban Development with a de minimis cost (e.g., assigned existing parking spot and no deposit for service/assistance animals).(f) A Recipient may not charge a fee, deposit, or place conditions on a participant, occupant, or applicant in exchange for making the accommodation.(g) A Reasonable Accommodation request of an individual with a Disability that amounts to an Alteration should be made to meet the needs of the individual with a Disability, rather than being limited to compliance with a particular accessible code specification. However, the Recipient must still follow accessible code specifications, as identified in its Contract or LURA.(1) Recipients are not required to make structural changes where other methods, which may not cost as much, are effective in making programs or activities readily accessible to and usable by persons with Disabilities.(2) In choosing among available methods for meeting the requirements of this section, the Recipient must give priority to those methods that offer programs and activities to qualified individuals with Disabilities in the most integrated setting appropriate.(3) Undue burden.(A) The determination of undue financial and administrative burden will be made by the Department on a case-by-case basis, involving various factors, such as the cost of the Reasonable Accommodation, the financial resources of the Development, the benefits the accommodation would provide to the requester, and the availability of alternative accommodations that would adequately meet the requester's Disability-related needs.(B) In considering whether an expense would constitute an undue burden the Department may, as applicable, consider the following items (though it may consider factors not on this list):(i) payment for Alteration from operating funds, residual receipts accounts, or reserve replacement accounts must be sought using appropriate approval procedures.(ii) the approved amount must generally be able to be replenished through property rental income within one year without a corresponding raise in rental rates.(iii) a projected inability to replenish an operating fund account or the reserve for replacement account within one year for funds spent in providing Alterations under this subsection is some evidence that the Alteration would be an undue financial and administrative burden.(C) If providing accessibility would result in an undue financial and administrative burden, the Recipient must still take other reasonable steps to achieve accessibility.(D) If a structural change would constitute an undue financial and administrative burden, and the tenant/requestor still wants that particular change to be made, the tenant/requestor must be allowed to make and pay for the accommodation.(4) Recipients are not required to install an elevator solely for the purpose of making units accessible as a Reasonable Accommodation.(5) Recipients do not have to make mechanical rooms and similar spaces accessible when, because of their intended use, they do not require accessibility by the public, by tenants, or by employees with physical disabilities.(6) Recipients are not required to make building alterations that have little likelihood of being accomplished without removing or altering a load-bearing structural member, as a Reasonable Accommodation.(h) If a Recipient refuses to provide a requested accommodation because it is either an undue financial and administrative burden or would result in a fundamental alteration to the nature of the program, the Recipient must make a reasonable attempt to engage in an interactive dialogue with the requester to determine if there is an alternative accommodation that would adequately address the requester's Disability-related needs. If an alternative accommodation would meet the individual's needs and is reasonable, the Recipient must provide it.(i) Examples of reasonable accommodations, while not exhaustive, include moving the due date for rent to coincide with the date the requestor receives their social security disability check; providing a designated accessible parking space from existing parking spaces; creating an accessible parking space to accommodate a wheelchair-equipped van; allowing a service or support animal or animals in spite of a no pets policy; modifying door knobs to levers; providing assistance in filling out a program application for the activity or unit; in the case of a service provider providing computer lab classes with laptops, providing a loan of the laptop computer with the training software; in the case of a weatherization provider serving a family with a child with asthma, seeing if an alternative sealant could be used when the sealant typically used may trigger an asthma attack; installing grab bars; providing an accessible entrance to a resident's current unit, unless it would be an undue financial and administrative hardship or a fundamental alteration of the program to do so; and providing a ramp in excess of usual specifications for such alternations to accommodate a scooter type wheelchair, unless it would be an undue financial and administrative hardship or a fundamental alteration of the program to do so.(j) Recipients must follow federal and state regulations regarding service/assistance animals. A housing provider may not require an applicant, participant, or occupant to pay a pet deposit if the animal is a service/assistance animal.</content><note type="source"><p>Source Note: The provisions of this §1.204 adopted to be effective March 30, 2023, 48 TexReg 1625.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scB/s1.205"><num value="1.205">§1.205</num><heading>Compliance with the Fair Housing Act</heading><content>(a) Generally, housing designed and constructed for first occupancy after March 13, 1991, must comply with the Fair Housing Act. This includes Units, common areas, and amenities added to existing buildings, or on land under common ownership and contiguous with housing otherwise exempt from the Fair Housing Act.(b) Compliance with the Fair Housing Act makes it unlawful to discriminate based on a person's disability, race, color, religion, sex, familial status, or national origin unless there is an exception in federal law.(c) The Department requires compliance with HUD's Fair Housing Act Design Manual, including the ability to claim exemptions or exceptions provided for therein.</content><note type="source"><p>Source Note: The provisions of this §1.205 adopted to be effective March 30, 2023, 48 TexReg 1625.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scB/s1.206"><num value="1.206">§1.206</num><heading>Applicability of the Construction Standards for Compliance with §504 of the Rehabilitation Act of 1973</heading><content>(a) The following types of Multifamily Housing Developments must comply with the construction standards of §504 of the Rehabilitation Act of 1973, as further defined through the Uniform Federal Accessibility Standards (UFAS):(1) New construction and reconstruction HOME and NSP Multifamily Housing Developments that began construction before March 12, 2012;(2) Rehabilitation HOME and NSP Multifamily Housing Developments that submitted a full application for funding before January 1, 2014; and(3) All Housing Tax Credit and Tax Exempt Bond Developments that were awarded after September 1, 2001, and submitted a full application before January 1, 2014.(b) The following types of Multifamily Housing Developments must comply with the construction requirements of 2010 ADA standards with the exceptions listed in "Nondiscrimination on the Basis of Disability in Federally Assisted Programs and Activities" 79 Federal Register 29671 and not otherwise modified in this subchapter:(1) New construction and reconstruction HOME and NSP Multifamily Housing Developments that began construction after March 12, 2012; and(2) All Multifamily Housing Developments that submit a full application for funding after January 1, 2014.(c) Recipients of CDBG, CDBG-CV, ESG, EH, HHSP, and HOME-ARP (for Non-Congregate Shelter) funds must comply with the 2010 ADA Standards with the exceptions listed in "Nondiscrimination on the Basis of Disability in Federally Assisted Programs and Activities" 79 Federal Register 29671 and not otherwise modified in this subchapter.(d) Effect on LURAs. These rules do not serve to amend contractual undertakings memorialized in a recorded LURA but may, by operation of law, place requirements on a property owner beyond those contained in the LURA.</content><note type="source"><p>Source Note: The provisions of this §1.206 adopted to be effective March 30, 2023, 48 TexReg 1625.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scB/s1.207"><num value="1.207">§1.207</num><heading>General Requirements for Multifamily Housing Developments</heading><content>(a) All Units that are accessible to persons with mobility impairments must be on an Accessible Route.(b) Recipients must give priority to methods that offer housing in the most integrated setting possible (i.e., a setting that enables qualified persons with Disabilities and persons without Disabilities to interact to the fullest extent possible). This means the distribution will provide individuals requiring accessible units with a choice of location, layout, and price that is substantially equivalent to the choice available to others. Distribution of accessible units may be further described in federal law, regulation, or governing Rules in this Title. To the maximum extent feasible and subject to reasonable health and safety requirements, accessible units must be:(1) Distributed throughout the Development and site; and(2) Made available in a sufficient range of sizes and amenities so that the choice of living arrangements of qualified persons with Disabilities is, as a whole, comparable to that of other persons eligible for housing assistance under the same program.(c) All Multifamily Housing Developments that submit full applications after January 1, 2014, must have a minimum of 5 percent of Units that are accessible to persons with mobility impairments, and a minimum of 2 percent of the Units must be accessible to persons with visual and hearing impairments. In addition, common areas and amenities must also be accessible as identified in the 2010 ADA standards with the exceptions listed in "Nondiscrimination on the Basis of Disability in Federally Assisted Programs and Activities" 79 Federal Register 29671.</content><note type="source"><p>Source Note: The provisions of this §1.207 adopted to be effective March 30, 2023, 48 TexReg 1625.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c1/scC"><num value="C">SUBCHAPTER C</num><heading>PREVIOUS PARTICIPATION REVIEW OF DEPARTMENT AWARDS</heading><section identifier="/us/state/tx/tac/t10/p1/c1/scC/s1.301"><num value="1.301">§1.301</num><heading>Definitions and Previous Participation Reviews for Multifamily Awards and Ownership Transfers</heading><content>(a) Purpose and Applicability. The purpose of this rule is to provide the procedures used by the Department to comply with Tex. Gov't Code §§2306.057, and 2306.6713 which require the Compliance Division to assess the compliance history of the Applicant and any Affiliate, the compliance issues associated with the proposed or existing Development, and provide such assessment to the Board. This rule also ensures Department compliance with 2 CFR §200.331(b) and (c) and Texas Grant Management Standards (TxGMS), where applicable.(b) Definitions. The following definitions apply only as used in this subchapter. Other capitalized terms used in this section have the meaning assigned in the specific chapters and rules of this title that govern the program associated with the request, or assigned by federal or state laws.(1) Actively Monitored Development--A Development that within the last three years has been monitored by the Department, either through a NSPIRE inspection or prior onsite monitoring inspection other than NSPIRE, an onsite or desk file monitoring review, an Affirmative Marketing Plan review, or a Written Policies and Procedures Review. NSPIRE inspections include inspections completed by Department staff, Department contractors and inspectors from the Real Estate Assessment Center through federal alignment efforts.(2) Affiliate--Persons are Affiliates of each other or are "affiliated" if they are under common Control by each other or by one or more third parties. "Control" is as defined in §11.1 of this title (relating to General items relating to Pre-Application, Definitions, Threshold Requirements and Competitive Scoring). For Applications for Multifamily Direct Grants/Loans and 811 PRA, or for Ownership Transfers of Multifamily Properties containing Multifamily Direct Grants/Loans or 811 PRA, for purposes of assurance that the Affiliate is not on the Federal Suspended or Debarred Listing, Affiliate is also defined as required by 2 CFR Part 180 and 2 CFR Part 2424.(3) Applicant--In addition to the definition of applicant in §11.1 of this title, in this subchapter, the term applicant includes Persons requesting approval to acquire a Department monitored Development.(4) Combined Portfolio--Actively Monitored Developments within the Control of Persons affiliated with the Application as identified by the Previous Participation Review and as limited by subsection (c) of this section.(5) Corrective Action Period--The timeframe during which an Owner may correct an Event of Noncompliance, as permitted in §10.602 or §10.803 of this title (relating to Notice to Owners and Corrective Action Periods and Compliance and Events of Noncompliance, respectively), including any permitted extension or deficiency period.(6) Events of Noncompliance--Any event for which an Actively Monitored Development may be found to be in noncompliance for monitoring purposes as further provided for in §10.803 of this title or in the table provided at §10.625 of this title (relating to Events of Noncompliance).(7) Monitoring Event--An onsite or desk monitoring review, an NSPIRE inspection, prior onsite monitoring inspection other than NSPIRE, the submission of the Annual Owner's Compliance Report, Final Construction Inspection, a Written Policies and Procedures Review, or any other instance when the Department's Compliance Division or other reviewing area provides written notice to an Owner or Contact Person requesting a response by a certain date. This would include, but not be limited to, responding to a tenant complaint.(8) National Standards for the Physical Inspection of Real Estate (NSPIRE)--As developed by the Real Estate Assessment Center of HUD.(9) Person--"Person" is as defined in 10 TAC Chapter 11 (relating Qualified Allocation Plan (QAP)). For Applications for Multifamily Direct Grants/Loans and 811 PRA, or for Ownership Transfers of Multifamily Properties containing Multifamily Direct Grants/Loans or 811 PRA, for purposes of assurance that the Applicant or Affiliate is not on the Federal Suspended or Debarred Listing, Person is also defined and includes Principal as required by 2 CFR Part 180 and 2 CFR Part 2424.(10) Single Audit--As used in this rule, the term relates specifically to an audit required by 2 CFR §200.501 or the Texas Single Audit Circular.(c) Items Not Considered. When conducting a previous participation review the items in paragraphs (1) - (10) of this subsection will not be taken into consideration:(1) Events of Noncompliance, Findings, Concerns, and Deficiencies (as described in 10 TAC §6.2, 10 TAC §7.2, 10 TAC §10.625, 10 TAC §10.803 and 10 TAC §20.3 or by Contract) that were corrected over three years from the date the Event is closed;(2) Events of Noncompliance with an "out of compliance date" prior to the Applicant's period of Control if the event(s) is currently corrected;(3) Events of Noncompliance with an "out of compliance date" prior to the Applicant's period of Control if the event(s) is currently uncorrected and the Applicant has had Control for less than one year, or if the Owner is still within the timeframe of a Department-approved corrective action from the Department's Enforcement Committee;(4) The Event of Noncompliance "Failure to provide Fair Housing Disclosure notice";(5) The Event of Noncompliance "Program Unit not leased to Low income Household" sometimes referred to as "Household Income above income limit upon initial Occupancy" for units at Developments participating in U.S. Department of Housing and Urban Development programs (or used as HOME Match) or U.S. Department of Agriculture, if the household resided in the unit prior to an allocation of Department resources and Federal Regulations prevent the Owner from correcting the issue, provided that the household is below the program's upper income limit and otherwise qualifies for the Unit;(6) The Event of Noncompliance "Casualty loss" if the restoration period has not expired;(7) Events of Noncompliance that the Applicant believes can never be corrected and the Department agrees in writing that such item should not be considered;(8) Events of Noncompliance corrected within their Corrective Action Period;(9) Events of failure to respond within the Corrective Action Period which have been fully corrected prior to January 1, 2019, will not be taken into consideration under subsection (e)(2)(C) and (3)(C) of this section;(10) Events of Noncompliance precluded from consideration by Tex. Gov't Code §2306.6719(e); and(11) Except for Applications for Multifamily Direct Grants/Loans and 811 PRA, or for Ownership Transfers of Multifamily Properties containing Multifamily Direct Grants/Loans or 811 PRA, Events of Noncompliance associated with a Development that has submitted documentation, using the appropriate Department form, that the responsibility for the Development's compliance has been delegated to another participant in the project (defined as a member of the Development Team), and the Applicant is not in Control of the Development with Events of Noncompliance for purposes of management and compliance. The term "Combined Portfolio" used in this section does not include those properties with such documentation. The Department may require additional information to support the Control Form including but not limited to partnership agreements or other legal documents.(d) Applicant Process. Persons affiliated with an Application or an Ownership Transfer request must complete the Department's Uniform Previous Participation Review Form and respond timely to staff inquiries regarding apparent errors or omissions, but for Applications no later than the Administrative Deficiency deadline. For an Ownership Transfer request, a recommendation will be delayed until the required forms or responsive information is provided.(e) Determination of Compliance Status. Through a review of the form, Department records, and the compliance history of the Affiliated multifamily Developments, staff will determine the applicable category for the Application or Ownership Transfer request using the criteria in paragraphs (1) - (3) of this subsection. Combined Portfolios will not be designated as a Category 3 if both Applicants are considered a Category 2 when evaluated separately. For example, if each Applicant is a Category 2 and their Combined Portfolio is a Category 3, the Application will be considered a Category 2.(1) Category 1. An Application will be considered a Category 1 if the Actively Monitored Developments in the Combined Portfolio have no issues that are currently uncorrected, all Monitoring Events were responded to during the Corrective Action Period, and the Application does not meet any of the criteria of Category 2 or 3.(2) Category 2. An Application will be considered a Category 2 if any one or more of the following criteria are met:(A) The number of uncorrected Events of Noncompliance plus the number of corrected Events of Noncompliance that were not corrected during the Corrective Action Period totals at least three but is less than 50% of the number of Actively Monitored Developments in the Combined Portfolio; or(B) There are uncorrected Events of Noncompliance but the number of Events of Noncompliance is 10% or less than the number of Actively Monitored Developments in the Combined Portfolio. Corrective action uploaded to the Department's Compliance Monitoring and Tracking System (CMTS) or submitted during the seven day period referenced in subsection (f) of this section will be reviewed and the Category determination may change as appropriate; or(C) Within the three years immediately preceding the date of Application, any Person subject to previous participation review failed to respond during the Corrective Action Period to a Monitoring Event; however, the number of times is less than 25% of the number of Actively Monitoring Developments in the Combined Portfolio; or(D) The Applicant is required to have a Single Audit and a relevant issue was identified in the Single Audit (e.g. Notes to the Financial Statements), or the required Single Audit is past due.(3) Category 3. An Application will be considered a Category 3 if any one or more of the following criteria are met:(A) The number of uncorrected Events of Noncompliance plus the number of corrected Events of Noncompliance that were not corrected during the Corrective Action Period total at least three and equal or exceed 50% of the number of Actively Monitored Developments in the Combined Portfolio;(B) The number of Events of Noncompliance that are currently uncorrected total 10% or more than the number of Actively Monitored Developments in the Combined Portfolio. Corrective action uploaded to CMTS or submitted during the seven day period referenced in subsection (f) of this section will be reviewed and the Category determination may change as appropriate;(C) Within the three years immediately preceding the date of Application, any Person subject to previous participation review failed to respond during the Corrective Action Period to a Monitoring Event and the number of times is equal to or greater than 25% of the number of Actively Monitored Developments in the Combined Portfolio;(D) Any Development Controlled by the Applicant has been the subject of an agreed final order entered by the Board and the terms have been violated;(E) Any Person subject to previous participation review failed to meet the terms and conditions of a prior condition of approval imposed by the Executive Director, the Governing Board, voluntary compliance agreement, or court order;(F) Payment of principal or interest on a loan due to the Department is past due beyond any grace period provided for in the applicable documents for any Development currently Controlled by the Applicant or that was Controlled by the Applicant at the time the payment was due and a repayment plan has not been executed with the Department, or an executed repayment plan has been violated;(G) The Department has requested and not been provided evidence that the Owner has maintained required insurance on any collateral for any loan held by the Department related to any Development Controlled by the Applicant;(H) The Department has requested and not been provided evidence that property taxes have been paid or satisfactory evidence of a tax exemption on any collateral for any loan held by the Department related to any Development Controlled by the Applicant;(I) Fees or other amounts owed to the Department by any Person subject to previous participation review are 30 days or more past due and a repayment plan has not been executed with the Department, or an executed repayment plan has been violated;(J) Despite past condition(s) agreed upon by any Person subject to previous participation review to improve their compliance operations, three or more new Events of Noncompliance have since been identified by the Department, and have not been resolved during the corrective action period;(K) Any Person subject to previous participation review has or had Control of a TDHCA funded Development that has gone through a foreclosure; or(L) Any Person subject to previous participation review or the proposed incoming owner is currently debarred by the Department or currently on the federal debarred and suspended listing.(f) Compliance Notification to Applicant. The Compliance Division will notify Applicants of their compliance status from the categories identified in paragraphs (1) to (4) of this subsection.(1) Previously approved. If the Executive Director or the Board previously approved the compliance history of an Applicant, with or without conditions (including approvals resulting from a Dispute under §1.303(g) of this subchapter such conditions have not been violated, and no new Events of Noncompliance have occurred since the last approval, the compliance history will be deemed acceptable without further review or discussion and recommended as approved or approved with the same prior conditions. For 4% Housing Tax Credit Applications (without other Department resources), where it has been determined by staff that the Determination Notice can be issued administratively, and for which the Board previously approved a set of conditions associated with a prior Application of the Applicant's, and those same conditions are to be applied to the new 4% Application by Program or Compliance, or if an Application only has underwriting conditions, then the new 4% Application does not need to be approved by the Executive Director and is not required to be presented to the Board.(2) Category 1. The compliance history of Category 1 applications will be deemed acceptable (for Compliance purposes only) without further review or discussion.(3) Category 2 and Category 3. Category 2 and 3 Applicants will be informed by the Compliance Division that the Application is a Category 2 or 3 and provided a seven calendar day period to provide written comment, submit any remaining evidence of corrective action for uncorrected events, propose one or more of the conditions listed in §1.303 of this subchapter, or propose other conditions for consideration before the Compliance Division makes its final submission to the Executive Director.(4) The Department will not make an award or approve an Ownership Transfer to any entity who has an Affiliate, Board member, or a Person identified in the Application that is currently on the Federal Debarred and Suspended Listing. An Applicant or entity requesting an Ownership Transfer will be notified of the debarred status and will be given the opportunity (subject to other Department rules) to remove and replace the Affiliate, Board member, or Person so that the transfer or award may proceed.(g) Compliance Recommendation to Executive Director for Awards.(1) After taking into consideration the information received during the seven-day period, Category 2 Applications will be recommended for approval or approval with conditions (for compliance purposes only). Any recommendation for an award with conditions will utilize the conditions identified in §1.303 of this subchapter. The Applicant will be notified if their award is recommended for approval with conditions.(2) After taking into consideration the information received during the seven-day period, Category 3 applications will be recommended for approval, approval with conditions (for compliance purposes only) or denial. Any recommendation for an award or ownership transfer with conditions will utilize the conditions identified in §1.303 of this subchapter. The Applicant will be notified if their award is recommended for denial or approval with conditions.(3) An Applicant that will be recommended for denial or awarded with conditions will be informed of their right to file a Dispute under §1.303 of this subchapter.(4) In the case of 4% Housing Tax Credit Applications where it has been determined by staff that the Determination Notice can be issued administratively, Category 2 and 3 applications being approved with conditions that are specifically listed in §1.303 of this subchapter and that have been previously approved by the Board for the Applicant, do not require approval of the Executive Director or the Board unless the Applicant is requesting to Dispute the Compliance Recommendation.(h) Compliance Recommendation for Ownership Transfers. After taking into consideration the information received during the seven-day period the results will be reported to the Executive Director with a recommendation of approval, approval with conditions, or denial. If the Executive Director determines that the request should be denied, or approved with conditions and the requesting entity disagrees, the matter may be appealed to the Board under §1.7 of this title (relating to Appeals).</content><note type="source"><p>Source Note: The provisions of this §1.301 adopted to be effective November 30, 2023, 48 TexReg 6888.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scC/s1.302"><num value="1.302">§1.302</num><heading>Previous Participation Reviews for Department Program Awards Not Covered by §1.301of this Subchapter</heading><content>(a) Purpose and applicability. This section applies to program awards not covered by §1.301 of this subchapter (relating to Previous Participation Reviews for Multifamily Awards and Ownership Transfers). With the exception of a household or project commitment contract, prior to awarding or allowing access to Department funds through a Contract or through a Reservation Agreement a previous participation review will be performed in conjunction with the presentation of award actions to the Department's Board.(b) Capitalized terms used in this subchapter herein have the meaning assigned in the specific chapters and rules of this title that govern the program associated with the request, or assigned by federal or state laws. For this section, the word Applicant means the entity that the Department's Board will consider for an award of funds or a Contract. As used in this section, the term Single Audit relates specifically to the audit required by 2 CFR §200.501 or the Texas Single Audit Act.(c) Upon Department request, Applicant will be required to submit:(1) A listing of the members of its board of directors, council, or other governing body as applicable or certification that the same relevant information has been submitted in accordance with §1.22 of this subchapter (relating to Providing Contact Information to the Department), and if applicable with §6.6 of this title (relating to Subrecipient Contact Information and Required Notifications);(2) A list of any multifamily Developments owned or Controlled by the Applicant that are monitored by the Department;(3) Identification of all Department programs that the Applicant has participated in within the last three years;(4) An Audit Certification Form for the Applicant or entities identified by the Applicant's Single Audit, or a certification that the form has been submitted to the Department in accordance with §1.403 of this chapter (relating to Single Audit Requirements). If a Single Audit is only required by the State Single Audit Act and not by a federal requirement, a copy of the State Single Audit must be submitted to the Department;(5) In addition to direct requests for information from the Applicant, information is considered to be requested for purposes of this section if the requirement to submit such information is made in a NOFA or Application for funding; and(6) Applicants will be provided a reasonable period of time, but not less than seven calendar days, to provide the requested information.(d) The Applicant's/Affiliate's financial obligations to the Department will be reviewed to determine if any of the following conditions exist:(1) The Applicant or Affiliate entities identified by the Applicant's Single Audit owes an outstanding balance in accordance with §1.21 of this chapter (relating to Action by Department if Outstanding Balances Exist), and a repayment plan has not been executed between the Subrecipient and the Department or the repayment plan has been violated;(2) The Department has requested and not been provided evidence that the Owner has maintained required insurance on any collateral for any loan held by the Department; or(3) The Department has requested and not been provided evidence that property taxes have been paid or satisfactory evidence of a tax exemption on any collateral for any loan held by the Department.(e) The Single Audit of an Applicant, or Affiliate entities identified by the Applicant's Single Audit, subject to a Single Audit, and not currently contracting for funds with the Department will be reviewed. In evaluating the Single Audit, the Department will consider both audit findings, and management responses in its review to identify concerns that may affect the organization's ability to administer the award. The Department will notify the Applicant of any Deficiencies, findings or other issues identified through the review of the Single Audit that requires additional information, clarification, or documentation, and will provide a deadline to respond.(f) The Compliance Division will make a recommendation of award, award with conditions, or denial based on:(1) The information provided by the Applicant;(2) Information contained in the most recent Single Audit;(3) Issues identified in subsection (d) of this section;(4) The Deficiencies, Findings and Concerns identified during any monitoring visits conducted within the last three years (whether or not the Findings were corrected during the Corrective Action Period); and(5) The Department's record of complaints concerning the Applicant.(g) Compliance Recommendation to the Executive Director.(1) If the Applicant has no history with Department programs, and Compliance staff has not identified any issues with the Single Audit or other required disclosures, the Application will be deemed acceptable (for Compliance purposes) without further review or discussion.(2) An Applicant with no history of monitoring Findings, Concerns, and/or Deficiencies or with a history of monitoring Findings, Concerns, and/or Deficiencies that have been awarded without conditions subsequent to those identified Findings, Concerns, and/or Deficiencies, will be deemed acceptable without further review or discussion for Compliance purposes, if there are no new monitoring Findings, Concerns, or Deficiencies or complaint history, and if the Compliance Division determines that the most recent Single Audit or other required disclosures indicate that there is no significant risk to the Department funds being considered for award.(3) The Compliance Division will notify the Applicant when an intended recommendation is an award with conditions or denial. Any recommendation for an award with conditions will utilize the conditions identified in §1.303 of this subchapter. The Applicant will be provided a seven calendar day period to provide written comment, submit any remaining evidence of corrective action for uncorrected events, propose one or more of the conditions listed in §1.303 of this subchapter, or propose other conditions for consideration by the Board.(4) After review of materials submitted by the Applicant during the seven day period, the Compliance Division will make a final recommendation regarding the award. If recommending denial or award with conditions, the Applicant will be notified of their right to file a dispute under §1.303 of this subchapter.(h) Consistent with §1.403 of Subchapter D of this chapter, (relating to Single Audit Requirements), the Department may not enter into a Contract or extend a Contract with any Applicant who is delinquent in the submission of their Single Audit unless an extension has been approved in writing by the cognizant federal agency except as required by law, and in the case of certain programs, funds may be reserved for the Applicant or the service area covered by the Applicant.(i) Except as required by law, the Department will not enter into a Contract with any Applicant or entity who has an Affiliate, Board member, or person identified in the Application that is currently debarred by the Department or is currently on the Federal Suspended or Debarred Listing. Applicants will be notified of the debarred status of an Affiliate, Board Member or Person and will be given an opportunity to remove and replace that Affiliate, Board Member or Person so that funding may proceed. However, individual Board Member's participation in other Department programs is not required to be disclosed, and will not be taken into consideration by the Executive Director.(j) Previous Participation reviews will not be conducted for Contract extensions. However, if the Applicant is delinquent in submission of its Single Audit, the Contract will not be extended except as required by law, unless the submission is made, and the Single Audit has been reviewed and found acceptable by the Department.(k) For CSBG funds required to be distributed to Eligible Entities by formula, the recommendation of the Compliance Division will only take into consideration subsection (i) of this section.(l) Previous Participation reviews will not be conducted for Contract Amendments that staff is authorized to approve, although federal and state requirements will still be affirmed, including but not limited to Single Audit, debarment and suspension, litigation disclosures, and §1.21 of this chapter (relating to Action by the Department if Outstanding Balances Exist).</content><note type="source"><p>Source Note: The provisions of this §1.302 adopted to be effective November 30, 2023, 48 TexReg 6888.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scC/s1.303"><num value="1.303">§1.303</num><heading>Executive Director Review</heading><content>(a) Authority and Purpose. The Executive Director will make recommendations to the Board regarding funding and allocation decisions related to Low Income Housing Tax Credits and federal housing funds provided to the state under the Cranston Gonzalez National Affordable Housing Act. The Department utilizes this process to consider funding and allocation recommendations to the Board related to other programs, and to consider an awardee under the requirements of 2 CFR §200.331(b) and (c) and TxGMS, which requires that the Department evaluate an applicant's risk of noncompliance and consider imposing conditions if appropriate prior to awarding funds for certain applicable programs and as described in §1.403 of Subchapter D of this chapter (relating to Single Audit Requirements). It is also the purpose of this rule to provide for the considerations and processes of award approvals, and to address actions of the Board relating to the Executive Director's recommendations. Capitalized terms used in this section herein have the meaning assigned in the specific chapters and rules of this title that govern the program associated with the request, or assigned by federal or state laws.(b) Award Recommendation Process.(1) A positive recommendation by the Executive Director represents a determination that, at the time of the recommendation and based on available information, the Department has not identified a rule or statutory-based impediment that would prohibit the Board from making an award.(2) A positive recommendation may have conditions placed on it. Conditions placed on an award will be limited to those conditions noted in subsection (e) of this section, or as suggested by the Applicant and agreed upon by the Department.(3) The Applicant will be notified of proposed conditions. If the Applicant does not concur with the applicability of one or more of the conditions, it will be provided an opportunity to dispute the conditions as described in subsection (g) of this section, regarding Disputes.(4) Category 3 applicants that will be recommended for denial will be notified and informed of their right to dispute the negative recommendation as described in subsection (g) of this section, regarding Disputes.(5) Applications for 4% credits that do not include other resources from TDHCA and that are only being issued a Determination Notice are not considered awards for purposes of this rule and do not require approval by the Executive Director prior to issuance of such Notice, even if being presented to the Board in relation to public comment or possible requests for waivers.(c) Conditions to an award may be placed on a single Development, a Combined Portfolio, or a portion of a Combined Portfolio if applicable (e.g., one region of a management company is having issues, while other areas are not). The conditions listed in subsection (e) of this section may be customized to provide specificity regarding affected Developments, Persons or dates for meeting conditions. Category 2 or Category 3 Applications may be awarded with the imposition of one or more of the conditions listed in subsection (e) of this section.(d) Possible Conditions.(1) Applicant/Owner is required to ensure that each Person subject to previous participation review for the Combined Portfolio will correct all applicable issues of non-compliance identified by the previous participation review on or before a specified date and provide the Department with evidence of such correction within 30 calendar days of that date.(2) Owner is required to have qualified personnel or a qualified third party perform a one-time review of an agreed upon percentage of files and complete the recommended actions of the reviewer on or before a specified deadline for an agreed upon list of Developments. Evidence of reviews and corrections must be submitted to the Department upon request.(3) The Applicant or the management company contracted by the Applicant is required to prepare or update its internal procedures to improve compliance outcomes and to provide copies of such new or updated procedures to the Department upon request or by a specified date.(4) Owner agrees to hire a third party to perform reviews of an agreed upon percentage of their resident files on a quarterly basis, and complete the recommended actions of the reviewer for an agreed upon list of Developments. Evidence of reviews and corrections must be submitted to the Department upon request.(5) Owner is required to designate a person or persons to receive Compliance correspondence and ensure that this person or persons will provide timely responses to the Department for and on behalf of the proposed Development and all other Development subject to TDHCA LURAs over which the Owner has the power to exercise Control.(6) Owner agrees to replace the existing management company, consultant, or management personnel, with another of its choosing.(7) Owner agrees to establish an email distribution group in CMTS (or other Department required system), to be kept in place until no later than a given date, and include agreed upon employee positions and/or designated Applicant members.(8) Owner is required to revise or develop policies regarding the way that it will handle situations where persons under its control engage in falsification of documents. This policy must be submitted to TDHCA on or before a specified date and revised as required by the Department.(9) Owner or Subrecipient is required to ensure that agreed upon persons attend and/or review the trainings listed in subparagraphs (A), (B), (C) and/or (D) of this paragraph (only for Applications made and reviewed under §1.301 of this subchapter (relating to Definitions and Previous Participation Reviews for Multifamily Awards and Ownership Transfers)) and/or (E) for applications made and reviewed under §1.302 of this subchapter (relating to Previous Participation Reviews for Department Program Awards Not Covered by §1.301 of this Subchapter) and provide TDHCA with certification of attendance or completion no later than a given date.(A) Housing Tax Credit Training sponsored by the Texas Apartment Association;(B) Income Determination Training conducted by TDHCA staff;(C) Review one or more of the TDHCA Compliance Training Presentation webinars:(i) 2012 Income and Rent Limits Webinar Video;(ii) 2023 Supportive Services Webinar Video;(iii) Income Eligibility Presentation Video;(iv) 2013 Annual Owner's Compliance Report (AOCR) Webinar Video;(v) Most current Tenant Selection Criteria Presentation;(vi) Most current Affirmative Marketing Requirements Presentation;(vii) Fair Housing Webinars (including but not limited to the 2017 FH webinars);(viii) Multifamily Direct Loan Presentation Video;(ix) 2022 Housing Tax Credit Monitoring after the Compliance Period Presentation Video;(x) 2022 Section 811 Project Rental Assistance Presentation Video; and(xi) 2023 Utility Allowance Training Presentation Video;(D) Training for Certified Occupancy Specialist or Blended Occupancy Specialist; or(E) Any other training deemed applicable and appropriate by the Department, which may include but is not limited to, weatherization related specific trainings such as OSHA, Lead Renovator, or Building Analyst training.(10) Owner is required to submit the written policies and procedures for all Developments subject to a TDHCA LURA for review and will correct them as directed by the Department.(11) Owner is required to have qualified personnel or a qualified third party perform NSPIRE inspections of 5% of their Units on a quarterly basis for a period of one year, and promptly repair any deficiencies. Different Units must be selected every quarter. Evidence of inspections and corrections must be submitted to the Department upon request.(12) Within 60 days of the condition issuance date the Owner will contract for a third party Property Needs Assessment and will submit to the Department a plan for addressing noted issues along with a budget and timeframe for completion.(13) Owner agrees to have a third party accessibility review of the Development completed at a time to be determined by the Applicant, but no later than prior to requesting a TDHCA final construction inspection. Evidence of review must be submitted to the Department upon request.(14) Applicant/Owner is required to provide all documentation relating to a Single Audit on or before a specified date.(15) Any of the conditions identified in 2 CFR §200.207 which may include but are not limited to requiring additional, more detailed financial reports; requiring additional project monitoring; or establishing additional prior approvals. If such conditions are utilized, the Department will adhere to the notification requirements noted in 2 CFR §200.207(b).(16) Applicant is required to have qualified personnel or a qualified third party perform an assessment of its operations and/or processes and complete the recommended actions of the reviewer on or before a specified deadline.(17) Applicant is required to have qualified personnel or a qualified third party performs DOE required Quality Control Inspections of 5% of its Units on a quarterly basis for a period of one year, and promptly repair any deficiencies. Different Units must be selected every quarter. Evidence of inspections and corrections must be submitted upon request.(18) Applicant is required to provide evidence that reserves for physical repairs are fully funded as required by §10.404 of this title (relating to Replacement Reserves).(19) In the case of a Development being funded with direct Grant funds (where an ongoing compliance agreement is a requirement) or Loan funds, Applicant is required to provide evidence of invoices and a lien waiver from the contractor, subcontractor, materials supplier, equipment lessor or other party to the construction project stating they have received payment and waive any future lien rights to the property for the amount paid at the time of every draw request submitted.(e) Failure to meet conditions.(1) The Executive Director may, for good cause and as limited by federal commitment, expenditure, or other deadlines, grant one extension to a deadline specified in a condition, with no fee required, for up to six months, if requested prior to the deadline. Any subsequent extension, or extensions requested after the deadline, must be approved by the Board.(2) If any condition agreed upon by the Applicant and imposed by the Board is not met as determined by the evidence submitted (or lack thereof) when requested, the Applicant may be referred to the Enforcement Committee for debarment.(f) Dispute of Recommendations or Compliance Recommendations for 4% Applications Eligible for Administrative Approval.(1) The Appeal provisions in §1.7 of this title (relating to Appeals Process), relating to the appeals of a staff decision to the Executive Director, are not applicable.(2) If an Applicant does not agree with any of the following items, an Applicant or potential Subrecipient of an award may file a dispute that may be considered by Compliance, program area, or underwriting staff, (as applicable) or may be presented to the Board without further Department consideration consistent with paragraph (3) of this subsection.(A) Their category as determined under §1.301(f) of this subchapter;(B) Any conditions proposed by the program area, underwriting or Compliance; or(C) A negative recommendation by the program area, underwriting or Compliance.(3) Prior to the Board meeting at which the award recommendation is scheduled to be made, or within seven days of the notification of Compliance Conditions for 4% Application Eligible for Administrative Approval an Applicant or potential Subrecipient may submit to the Department (to the attention of Compliance staff), their Dispute detailing:(A) The condition or determination with which the Applicant or potential Subrecipient disagrees;(B) The reason(s) why the Applicant/potential Subrecipient disagrees with program, underwriting, or Compliance's recommendation or conditions;(C) If the Dispute relates to conditions, any suggested alternate condition language;(D) If the Dispute relates to a negative recommendation, any suggested conditions that the Applicant believes would allow a positive recommendation to be made; and(E) Any supporting documentation not already submitted to the Department.(4) An Applicant must file a written Dispute not later than the seventh calendar day after notice recommendation of denial or award with conditions has been provided. The Dispute must include any materials that the Applicant wishes Department staff and/or the Board to consider. An Applicant may request to meet with Department staff and staff is not obligated to meet with the Applicant.(5) Department staff is not required to consider a Dispute prior to making its recommendation to the Board.(6) If an Applicant proposes alternative conditions staff may provide the Board with a recommendation to accept, reject, or modify such proposed alternative conditions.(7) A Dispute will be included on the Board agenda if received at least seven calendar days prior to the required posting date of that agenda. If the Applicant desires to submit additional materials for Board consideration, it may provide the Department with such materials, provided in pdf form, to be included in the presentation of the matter to the Board if those materials are provided not later than close of business of the fifth calendar day before the date on which notice of the relevant Board meeting materials must be posted, allowing staff sufficient time to review the Applicant's materials and prepare a presentation to the Board reflecting staff's assessment and recommendation. The agenda item will include the materials provided by the Applicant and may include a staff response to the dispute and/or materials. It is within the Board chair's discretion whether or not to allow an applicant to supplement its response. An Applicant who wishes to provide supplemental materials at the time of the Board meeting must comply with the requirements of §1.10 of this chapter (relating to Public Comment Procedures). There is no assurance the Board chair will permit the submission, inclusion, or consideration of any such supplemental materials.(8) The Board will make reasonable efforts to accommodate properly and timely filed Disputes under this subsection.(g) Board Discretion. Subject to limitations in federal statute or regulation or in TxGMS, the Board has the discretion to accept, reject, or modify any recommendations in response to a recommendation for an award or in response to a Dispute. The Board may impose other conditions not noted or contemplated in this rule as recommended by the Department, or as requested by the Applicant; in such cases the conditions noted will have the force and effect of an order of the Board.</content><note type="source"><p>Source Note: The provisions of this §1.303 adopted to be effective November 30, 2023, 48 TexReg 6888.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c1/scD"><num value="D">SUBCHAPTER D</num><heading>UNIFORM GUIDANCE FOR RECIPIENTS OF FEDERAL AND STATE FUNDS</heading><section identifier="/us/state/tx/tac/t10/p1/c1/scD/s1.401"><num value="1.401">§1.401</num><heading>Effective Date and Definitions</heading><content>(a) Revisions to this Subchapter reflect updates to 2 CFR Part 180 and 2 CFR Part 200, which are generally effective for Contracts executed on or after October 1, 2024. This rule also reflects conformance with the Texas Grant Management Standards Version (TxGMS) 2.0 and 2.1 published by the Texas Comptroller of Public Accounts in October 2024 and October 2025, respectively. TxGMS 2.0 may be incorporated into Contracts executed on or after October 1, 2024 or Contracts with nonprofit organizations that administer state funds where funds are added on or after October 1, 2024. TxGMS 2.1 is effective for Contracts with local governments and block grants subject to Chapter 2105 of the Tex. Gov't Code executed on or after October 1, 2025 or where funds are added on or after October 1, 2025. TxGMS 2.1 will be incorporated into Contracts with nonprofit organizations that administer state funds, that are executed after the effective date of this rule, and may be incorporated into Contracts where funds are added after the effective date of this rule. Previous versions of these rules as memorialized in Contracts will continue to be effective unless the Contract is amended to reflect TxGMS 2.1.(b) Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Capitalized words used herein have the meaning assigned in the specific Chapters and Rules of this title that govern the program associated with the request, or assigned by federal or state law.(1) Affiliate--Shall have the meaning assigned by the specific program or programs described in this part.(2) Department--The Texas Department of Housing and Community Affairs.(3) Equipment--Tangible personal property having a useful life of more than one year or a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by entity for financial statement purposes, or $10,000.(4) Professional services--For a unit of government is as defined by state law. For Private Nonprofit Organizations it means services:(A) within the scope of the practice, as defined by state law, of:(i) accounting;(ii) architecture;(iii) landscape architecture;(iv) land surveying;(v) medicine;(vi) optometry;(vii) professional engineering;(viii) real estate appraising;(ix) professional nursing; or(x) legal services; or(B) provided in connection with the professional employment or practice of a person who is licensed or registered as:(i) a certified public accountant;(ii) an architect;(iii) a landscape architect;(iv) a land surveyor;(v) a physician, including a surgeon;(vi) an optometrist;(vii) a professional engineer;(viii) a state certified or state licensed real estate appraiser;(ix) attorney; or(x) a registered nurse.(5) Single Audit--The audit required by Office of Management and Budget (OMB), 2 CFR Part 200, Subpart F, or Tex. Gov't Code, chapter 783, Uniform Grant and Contract Management, as reflected in an audit report.(6) Single Audit Certification Form--A form that lists the source(s) and amount(s) of Federal funds and/or State funds expended by the Subrecipient during their fiscal year along with the outstanding balance of any loans made with federal or state funds if there are continuing compliance requirements other than repayment of the loan.(7) Subrecipient--Includes an entity receiving or applying for federal or state funds from the Department under Chapters 6, 7, 20, 23, 24, 25, or 26 as identified by Contract or in this subchapter. Except as otherwise noted in this subchapter or by Contract, the definition does not include Applicants/Owners who have applied for and/or received funds for rental development, except for CHDO Operating funds, NCO Nonprofit Capacity Building, NCO Operating Assistance, a grant made to a unit of government or nonprofit organization, or Affiliate with state funds, or TCAP-RF grants or loans when made to a unit of government or nonprofit organization or Affiliate. Except as otherwise noted in this subchapter or by Contract, this definition does not include vendors having been procured by the Department for goods or services. A Subrecipient may also be referred to as Administrator.(8) Supplies--Means tangible personal property other than "Equipment" in this section.(9) Texas Grant Management Standards (TxGMS)--The standardized set of financial management procedures and definitions established by Tex. Gov't Code, chapter 783 regarding Uniform Grant and Contract Management to promote the efficient use of public funds by requiring consistency among grantor agencies in their dealings with grantees, and by ensuring accountability for the expenditure of public funds. This includes TxGMS Version 2.1 published by the Texas Comptroller of Public Accounts in October 2025. State agencies are required to adhere to these standards when administering grants and other financial assistance agreements with cities, counties and other political subdivisions of the state. This includes all Public Organizations including public housing and housing finance agencies. In addition, Tex. Gov't Code Chapter 2105, regarding Administration of Block Grants, subjects Subrecipients of federal block grants (as defined therein) to TXGMS.(10) Uniform Grant Management Standards (UGMS)--The standardized set of financial management procedures used by the Department in Contracts that began before January 1, 2022.</content><note type="source"><p>Source Note: The provisions of this §1.401 adopted to be effective February 4, 2026, 51 TexReg 548.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scD/s1.402"><num value="1.402">§1.402</num><heading>Cost Principles and Administrative Requirements</heading><content>(a) Subrecipients shall comply with the cost principles and uniform administrative requirements set forth as applicable in TxGMS or UGMS provided, however, that all references therein to "local government" shall be construed to mean Subrecipient. A Subrecipient that is administering a housing Program under Chapters 24 or 26 of this Title, may receive a fixed amount of administrative funds. Private Nonprofit Subrecipients of Emergency Solutions Grant (ESG), HOME Investments Partnership Program (HOME), Neighborhood Stabilization Program (NSP), National Housing Trust Fund (NHTF), Low Income Household Water and Wastewater Program (LIHWAP), Community Service Block Grant (CSBG) discretionary awards to non-eligible entities, and Department of Energy Weatherization Assistance Program (DOE WAP) do not have to comply with TxGMS unless otherwise required by Notice of Funding Availability (NOFA) or Contract. For federal funds, Subrecipients will also follow 2 CFR Part 200, as interpreted by the federal funding agency.(b) In order to maintain adequate separation of duties, the Subrecipient shall ensure that no individual has the ability to perform more than one of the functions described in paragraphs (1) - (5) of this subsection that might result in a release of funds without appropriate controls:(1) Requisition authorization;(2) Encumbrance into software;(3) Check creation and/or automated payment disbursement;(4) Authorized signature/electronic signature; and(5) Distribution of paper check.(c) For Subrecipients with fewer than five paid employees, demonstration of sufficient controls to similarly satisfy the separation of duties required by subsection (b) of this section, must be provided at the time that funds are applied for and continue to be implemented through the term of the Contract.(d) Subrecipient will sign a Contract with the applicable Assurances in Appendix 6 of TxGMS as required by and in the form and substance acceptable to the Department's Legal Division.</content><note type="source"><p>Source Note: The provisions of this §1.402 adopted to be effective September 26, 2024, 49 TexReg 7634.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scD/s1.403"><num value="1.403">§1.403</num><heading>Single Audit Requirements</heading><content>(a) For this section, the word Subrecipient also includes Multifamily Development Owners who have applied for or received Direct Loan Funds, grants or 811 PRA funds from the Department who are or have an Affiliate that is required to submit a Single Audit, i.e. units of government, nonprofit organizations.(b) Procurement of a Single Auditor. A Subrecipient or Affiliate must procure their single auditor in the following manner unless subject to a different requirement in the Local Government Code:(1) Competitive Proposal procedures whereby competitors' qualifications are evaluated and a contract awarded to the most qualified competitor. Proposals should be advertised broadly, which may include going outside the entity's service area, and solicited from an adequate number (usually two or more) of qualified sources. Procurements must be conducted in a manner that prohibits the use of in-state or local geographical preferences in the evaluation of bids or proposals;(2) A Subrecipient may not use the sealed bid method for procurement of the Single Auditor. There is no requirement that the selected audit firm be geographically located near the Subrecipient. If a Subrecipient does not receive proposals from firms with appropriate experience or responses with a price that is not reasonable compared to the cost price analysis, the submissions must be rejected and procurement must be re-performed.(c) A Subrecipient or Affiliate must confirm that it is contracting with an audit firm that is properly licensed to perform the Single Audit and is not on a limited scope status or under any other sanction, reprimand or violation with the Texas State Board of Public Accountancy. The Subrecipient must ensure that the Single Audit is performed in accordance with the limitations on the auditor's license.(d) A Subrecipient is required to submit a Single Audit Certification form within two (2) months after the end of its fiscal year indicating the amount they expended in Federal and State funds during the fiscal year and the outstanding balance of any loans made with federal funds if there are continuing compliance requirements other than repayment of the loan.(e) A Subrecipient that expends $1,000,000 or more in an entity's fiscal year that starts on or after October 1, 2024 (or in the case of an entity's fiscal years starting before October 1, 2024, $750,000 or more) in federal and/or state awards or have an outstanding loan balance associated with a federal or state resource of $1,000,000 or $750,000 (as applicable for the fiscal year) with continuing compliance requirements, or a combination thereof must have a Single Audit or program-specific audit conducted. If the Subrecipient's Single Audit is required by 2 CFR 200, subpart F, the report must be submitted to the Federal Audit Clearinghouse the earlier of 30 calendar days after receipt of the auditor's report or nine (9) months after the end of its respective fiscal year. If a Single Audit is required but not under 2 CFR Part 200, subpart F, the report must be submitted to the Department the earlier of 30 calendar days after receipt of the auditor's report or nine months after the end of its respective fiscal year. If the deadline is on a Saturday, Sunday, federal holiday (for a Single Audit required to be submitted to the Federal Audit Clearinghouse), or a state holiday (for a Single Audit required to be submitted to the Department), the deadline is the next business day.(f) A Subrecipient is required to submit a notification to the Department within five business days of submission to the Federal Audit Clearinghouse. Along with the notice, the Subrecipient must indicate if the auditor issued a management letter. If a management letter was issued by the auditor, a copy must be sent to the Department.(g) The Department will review the Single Audit and issue a management decision letter for audit findings pertaining to the Federal or State award provided to the Subrecipient from the Department. If the Single Audit results in disallowed costs, those amounts must be repaid or an acceptable repayment plan must be entered into with the Department in accordance with 10 TAC §1.21 (relating to Action by Department if Outstanding Balances Exist).(h) In evaluating a Single Audit, the Department will consider both audit findings and management responses in its review. The Department will notify Subrecipients and Affiliates (if applicable) of any Deficiencies or Findings from within the Single Audit for which the Department requires additional information or clarification and will provide a deadline by which that resolution must occur.(i) The Subrecipient may submit written comments for consideration within five business days of the Department's management decision letter.(j) If the Subrecipient disagrees with the auditors finding(s), and the issue is related to administration of one of the Department's programs, an appeal process is available to provide an opportunity for the auditee to explain its disagreement to the Department. This is not an appeal of audit findings themselves. The Subrecipient may submit a letter of appeal and documentation to support the appeal. The Department will take the documentation and written appeal into consideration prior to issuing a management decision letter. If the Subrecipient does not disagree with the auditor's finding, no appeal to the Department is available.(k) In accordance with 2 CFR Part 200 and the State of Texas Single Audit Circular §225, with the exception of nondiscretionary CSBG funds except as otherwise required by federal laws or regulations, the Department may suspend and cease payments under all active Contracts, may elect not to recommend an award to the Board, may refrain from executing a reservation agreement or associated commitment of funds under a reservation agreement, or may refrain from executing a new Contract for any Board awarded contracts if any of the issues identified in paragraphs (1) through (3) of this section occur. The Department may also use its discretion to withhold a contract or funding associated with the Single Audit based on the type of Department program for which the Subrecipient is applying. Multifamily Development Owners that are applying for or have received an award for Multifamily Direct Loans will be evaluated against the criteria in this subsection for consideration or reconsideration only before loan closing.(1) the Single Audit is not received in accordance with the submission requirements detailed in subsection (e) and (f) of this section; (2) the required Single Audit Certification form detailed in subsection (d) of this section is not received; or(3) if any of the following issues have been identified:(A) in the most recent Single Audit:(i) the Single Audit identifies the Subrecipient as a ‘going concern’; (ii) the Single Audit identifies that the Subrecipient has systemic inadequate fiscal controls or ineffective financial processes; (iii) the Single Audit identifies one or more material weaknesses that relate to the responsibilities associated with the program to be funded;(iv) the Single Audit identifies a combination of weaknesses and deficiencies that when taken together reflect a high risk for noncompliant use of state or federal funds; or(v) the Single Audit has received a Modified, Adverse or Disclaimed determination by the auditor;(B) in at least two of the last three Single Audits for which the findings have not been corrected:(i) the Single Audits identify inaccurate reporting specific to Department funded programs;(ii) the Single Audits identify questioned costs related to Department funded programs;(iii) the Single Audits identify questioned costs relating to cross-cutting administrative or operational expenses such as cost allocation, procurement, or payroll; (iv) the Single Audits identify that there is inadequate separation of duties; or(v) the Single Audits identify a combination of weaknesses and deficiencies that when taken together reflect a high risk for noncompliant use of state or federal funds.(l) In accordance with Subchapter C of this Chapter (relating to Previous Participation Reviews), if a Subrecipient applies for funding or an award from the Department, findings noted in the Single Audit and the failure to timely submit a Single Audit Certification Form or Single Audit will be reported to the Executive Director.</content><note type="source"><p>Source Note: The provisions of this §1.403 adopted to be effective February 4, 2026, 51 TexReg 549.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scD/s1.404"><num value="1.404">§1.404</num><heading>Purchase and Procurement Standards</heading><content>(a) The procurement of all goods and services shall be conducted, to the maximum extent practical, in a manner providing full and open competition consistent with the standards of 2 CFR Part 200, UGMS, and TxGMS, as applicable.(b) Subrecipients shall establish, and require its subrecipients/Subcontractors (as applicable by program regulations) to establish, written procurement procedures that when followed, result in procurements that comply with federal, state and local standards, and grant award contracts. Procedures must:(1) include a cost or price analysis that provides for a review of proposed procurements to avoid purchase of unnecessary or duplicative items. Where appropriate, analyzing lease versus purchase alternatives, performing the proposed service in-house, and performing any other appropriate analysis to determine the most economical approach. (2) require that solicitations for goods and services provide for a clear and accurate description of the technical requirements for the material, product or service to be procured. In competitive procurements, such a description shall not contain features which unduly restrict competition, but must contain requirements that the bidder/offeror must fulfill and all other factors to be used in evaluating bids or proposals. A description, whenever practicable, of technical requirements in terms of functions to be performed or performance required, including the range of acceptable characteristics or minimum acceptable standards. The specific features of "brand name or equal value" that bidders are required to meet must be listed in the solicitation. (3) include a method for conducting technical evaluations of the proposals received and for selecting awardees.(c) Documentation of procurement processes, to include but not be limited to the items in paragraphs (1) to (9) of this subsection, must be maintained by the Subrecipient in accordance with the record retention requirements of the applicable program:(1) rationale for the type of procurement,(2) cost or price analysis,(3) procurement package,(4) advertising,(5) responses,(6) selection process,(7) contractor selection or rejection,(8) certification of conflict of interest requirements being satisfied, and(9) evidence that the awardee is not an excluded entity in the System for Award Management (SAM).(d) In accordance with 34 Texas Administrative Code, Part 1, Chapter 20, Subchapter D, Division 1, each Subrecipient shall make a good faith effort to utilize the state's Historically Underutilized Business Program in contracts for construction, services (including consulting and Professional Services) and commodities purchases.(e) The State of Texas conducts procurement for many materials, goods, and appliances. Use of the State of Texas Co-Op Purchasing Program does not satisfy the requirements of 2 CFR Part 200. For more detail about how to purchase from the state contract, please contact: State of Texas Co-Op Purchasing Program, Texas Comptroller of Public Accounts. If Subrecipients choose to use the Cooperative Purchasing Program, documentation of annual fee payment is required.(f) All vehicles considered for purchase with state or federal funds must be pre-approved by the Department. Subrecipient must present written justification for the needed vehicle. If approved such approval will be provided via written correspondence from the Department. Procurement procedures must include provisions for full and open competition and a comparison of the costs associated with leasing versus buying a vehicle. Any vehicle purchased without approval may result in disallowed costs.(g) For procurement transactions not subject to UGMS or TxGMS, the Department has adopted a $10,000 micropurchase and $250,000 simplified acquisition threshold. If the federal simplified acquisition threshold changes, as a result of 2 CFR §200.88, or if it is temporarily raised because of a federal disaster declaration, the Department will publish the new amount on its website. For procurement transactions subject to TxGMS 2.0, but not 2 CFR Part 200 Subrecipient must follow a $10,000 micropurchase threshold and a $500,000 Texas Acquisition Threshold. For procurement transactions subject to UGMS or TXGMS prior to version 2.0, Subrecipient must follow a $3,000 micropurchase threshold and a $250,000 Texas Acquisition Threshold. Certain political subdivisions (such as cities and counties) are required under state law to follow a $50,000 sealed bid threshold.</content><note type="source"><p>Source Note: The provisions of this §1.404 adopted to be effective September 26, 2024, 49 TexReg 7634; amended to be effective April 30, 2025, 50 TexReg 2586.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scD/s1.405"><num value="1.405">§1.405</num><heading>Bonding Requirements</heading><content>(a) The requirements described in this subsection relate to construction or facility improvements in DOE WAP, HOME, HOME-ARP, CDBG, NSP, HHSP, EH Fund, TCAP-RF, and ESG Subrecipients, or other fund source required by state or federal law or regulation to have bonding for construction or facility improvements.(1) For construction contracts exceeding $100,000, the Subrecipient must request and receive Department approval of the bonding policy and requirements of the Subrecipient to ensure that the Department is adequately protected.(2) For construction contracts in excess of $100,000, and for which the Department has not made a determination that the Department's interest is adequately protected, a "bid guarantee" from each bidder equivalent to 5% of the bid price shall be requested. The "bid guarantee" shall consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid as assurance that upon acceptance of the bid, the bidder will execute such contractual documents as may be required within the time specified. A bid bond in the form of any of the documents described in this paragraph may be accepted as a "bid guarantee."(A) A performance bond on the part of the Subrecipient for 100% of the contract price. A "performance bond" is one executed in connection with a contract, to secure fulfillment of all obligations under such contract.(B) A payment bond on the part of the subcontractor/vendor for 100% of the contract price. A "payment bond" is one executed in connection with a contract to assure payment as required by statute of all persons supplying labor and material in the execution of the work provided for in the contract.(C) Where bonds are required, in the situations described herein, the bonds shall be obtained from companies holding certificates of authority as acceptable sureties pursuant to 31 CFR Part 223, "Surety Companies Doing Business with the United States."(b) A unit of government must comply with the bond requirements contained in Texas statutes, including but not limited to Tex. Gov't Code ch. 2253 and Tex. Local Gov't Code §252.044, §262.032, or §392.0525, as applicable.</content><note type="source"><p>Source Note: The provisions of this §1.405 adopted to be effective September 26, 2024, 49 TexReg 7634.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scD/s1.406"><num value="1.406">§1.406</num><heading>Fidelity Bond Requirements</heading><content>The Department is required to assure that fiscal control and accounting procedures for federal and state funded entities will be established to assure the proper disbursal and accounting for the federal funds paid to the state. In compliance with that assurance the Department requires program Subrecipients administering federal or state funds to maintain adequate fidelity bond coverage. A fidelity bond is a bond indemnifying the Subrecipient against losses resulting from the fraud or lack of integrity, honesty or fidelity of one or more of its employees, officers, or other persons holding a position of trust.(1) In administering Contracts, Subrecipients shall observe their regular requirements and practices with respect to bonding and insurance. In addition, the Department may impose bonding and insurance requirements by Contract.(2) If a Subrecipient is a non-governmental organization, the Department requires an adequate fidelity bond. If the amount of the fidelity bond is not prescribed in the contract, the fidelity bond must be for at least the greater of $50,000 or 10% of the Contract amount. In the event that the Subrecipient is administering a Reservation Agreement, and the amount of funds committed under the Contract exceeds $500,000, the amount of the fidelity bond must be increased to ensure that the amount meets or exceeds 10% of total funds reserved. The bond must be obtained from a company holding a certificate of authority to issue such bonds in the State of Texas.(3) The fidelity bond coverage must include all persons authorized to sign or counter-sign checks or to disburse cash in an amount that exceeds $250. Persons who handle only amounts of less than $250 need not be bonded, nor is it necessary to bond officials who are authorized to sign payment vouchers, but are not authorized to sign or counter-sign checks or to disburse cash.(4) The Subrecipient must receive an assurance letter from the bonding company or agency stating the type of bond, the amount and period of coverage, the positions covered, and the annual cost of the bond. Compliance must be continuously maintained thereafter. A copy of the actual policy shall remain on file with the Subrecipient and shall be subject to monitoring by the Department.(5) Subrecipients are responsible for filing claims against the fidelity bond when a covered loss is discovered.(6) The Department may take any one or more of the actions described in Chapter 2, of this Part, relating to Enforcement in association with issues identified as part of filing claims against the fidelity bond.</content><note type="source"><p>Source Note: The provisions of this §1.406 adopted to be effective February 4, 2026, 51 TexReg 551.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scD/s1.407"><num value="1.407">§1.407</num><heading>Inventory Report</heading><content>(a) The Department requires the submission of an inventory report for all Contracts to be submitted to the Department, no later than 45 calendar days after the end of the Contract Term, or a more frequent period as reflected in the Contract. Real Property and Equipment must be inventoried and reported on the Department's required form. The form and instructions are found on the Department's website. (b) Real property and Equipment purchased with funds under a Contract with the Department must be inventoried and reported to the Department during the Contract Term. (c) Aggregate Supplies of over $10,000, must be reported to the Department at the end of the Contract Term using federal form SF-428, which is a standard form to collect information related to tangible personal property or other form required by the federal fund source.(d) For certain public facility activities funded by the Community Development Block Grant, inventory requirements will be those required by HUD for real property, as further identified in the Contract.</content><note type="source"><p>Source Note: The provisions of this §1.407 adopted to be effective September 26, 2024, 49 TexReg 7634; amended to be effective April 30, 2025, 50 TexReg 2586.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scD/s1.408"><num value="1.408">§1.408</num><heading>Travel</heading><content>The governing body of each Subrecipient must adopt and implement for the term of the Contract travel policies that adhere to 2 CFR Part 200, for cost allowability. The Subrecipient must follow either the federal travel regulations or State of Texas travel rules and regulations found on the Comptroller of Public Accounts website at www.cpa.state.tx.us, as applicable.</content><note type="source"><p>Source Note: The provisions of this §1.408 adopted to be effective September 26, 2024, 49 TexReg 7634.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scD/s1.409"><num value="1.409">§1.409</num><heading>Records Retention</heading><content>(a) For this section, the word Subrecipient also includes Multifamily Development Owners who have Direct Loan or HOME-ARP Funds or grants, or 811 PRA assistance. The Department requires Subrecipient organizations, and any entities who perform services and assistance on their behalf, to document client services and assistance. Subrecipient organizations must arrange for the security of all program-related computer files through a remote, online, or managed backup service. Confidential client files must be maintained in a manner to protect the privacy of each client and to maintain the same for future reference. Subrecipient organizations must store physical client files in a secure space in a manner that ensures confidentiality and in accordance with Subrecipient organization policies and procedures. To the extent that it is financially feasible, archived client files should be stored offsite from Subrecipient headquarters, in a secure space in a manner that ensures confidentiality and in accordance with organization policies and procedures.(b) Records of client eligibility must be retained for five years starting from the date the household activity is completed, unless otherwise provided in federal regulations governing the program.(c) Other records must be maintained as described in the Contract or the LURA, and in accordance with federal or state law for the programs described in the Chapters of this Part.</content><note type="source"><p>Source Note: The provisions of this §1.409 adopted to be effective September 26, 2024, 49 TexReg 7634.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scD/s1.410"><num value="1.410">§1.410</num><heading>Determination of Alien Status for Program Beneficiaries</heading><content>(a) Purpose. The purpose of this section is to provide uniform Department guidance on Section 401(a) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), which provides that an alien who is not a Qualified Alien is not eligible for any federal or state public benefit. (b) Definitions. The words and terms in this chapter shall have the meanings described in this subsection unless the context clearly indicates otherwise. Capitalized words used herein have the meaning assigned in the specific Chapters and Rules of this Title that govern the program under which program eligibility is seeking to be determined or assigned by federal or state law.(1) Administrator--An entity that receives federal or state funds passed through the Department. The term includes, but is not limited, to a Subrecipient, State Recipient, Recipient, or a Developer of single-family housing for homeownership. The term also applies to a For Profit Entity having been procured by the Department to determine eligibility for federal or state funds and as otherwise reflected in the Contract.(2) For Profit Entity--An Administrator that is neither a Public Organization nor a Nonprofit Charitable Organization.(3) Nonprofit Charitable Organization--An entity that is organized and operated for purposes other than making gains or profits for the organization, its members or its shareholders, and is precluded from distributing any gains or profits to its members or shareholders; and is organized and operated for charitable purposes.(4) Public Organization--An entity that is a Unit of Government or an organization established by a Unit of Government.(5) Qualified Alien--A person that is not a U.S. Citizen or a U.S. National and is described at 8 U.S.C. §1641(b) or (c).(6) State--The State of Texas or the Department, as indicated by context.(7) Systematic Alien Verification for Entitlements (SAVE)--Automated intergovernmental database that allows authorized users to verify the immigration status of program applicants.(c) Applicability for Federal Funds.(1) The determination of whether a federal program, or activity type under a federal program, is a federal public benefit for purposes of PRWORA is made by the federal agency with administration of a program or activity. Block grants have been determined to be subject to PRWORA. The only circumstance in which the Department will not apply this section is in cases in which the PRWORA statute provides, or the administering federal agency has given clear direction, that an activity is explicitly not a federal public benefit and does not require verification. (2) At the time of the publication of this rule, this rule applies to Contracts administered in the Single Family and Homeless Division and the Community Affairs Division for applicable federally funded Department programs including Low Income Home Energy Assistance Program, Department of Energy Weatherization Assistance Program, Community Services Block Grant Program, Community Development Block Grant Program, Emergency Solutions Grant Program, and to the extent used for single-family activities National Housing Trust Fund Program, the HOME Program and other programs as provided for in Administrator's Contracts or state guidance with an initial effective date on or after April 1, 2026, or for the Community Development Block Grant Program and HOME 2025 or later year funds added to an existing Contract. For those programs that operate reservation based funding methods this rule applies to Household Commitment Contracts with an initial effective date on or after April 1, 2026. (3) The requirements of this section are applicable to Subrecipients of federal funds passed through the Department as described in paragraph (1) of this subsection. However, certain exemptions under PRWORA may exist on a case specific, or activity specific basis as further provided by the applicable federal agency.(d) Applicability for State Funds. The Department has determined that State funds that are provided to a Subrecipient to be distributed directly to individuals, are a state public benefit. At the time of the publication of this rule, applicable state funded Department programs include TCAP-RF (to the extent used for single-family activities), the Homeless Housing and Services Program, the Amy Young Barrier Removal Program, and the Bootstrap Program and other programs as provided for in Administrator's Contracts or state guidance with an initial effective date on or after April 1, 2026. For those programs that operate reservation based funding methods this rule applies to Activity level commitment documents with an initial effective date on or after April 1, 2026.(e) Exemptions and Benefit Calculations under PRWORA. (1) If no exemptions under PRWORA are applicable to the activity type, as provided for by the federal agency or by the statute, then the Subrecipient must verify U.S. Citizen, U.S. National, or Qualified Alien status ("legal status") using the methods provided for in subsection (f) of this section and evaluate eligibility using the rules for the applicable program under this Title. (2) Administrators should review Program Rules and Contracts for additional information, including how benefit calculations are adjusted for households in which not all members can be verified.(3) Populations that are documented by the Administrator as covered by the Violence Against Women Act (VAWA) or the Family Violence Prevention and Services Act (FVPSA) are excepted from having verification under this rule performed, unless required to do so under federal guidance.(f) Verification Process Under PRWORA for Programs with Subrecipients.(1) Administrators must first seek to verify legal status through the use of several established documents as described more fully in guidance provided by the Department and in the Administrator's Contract. Only if unable to verify legal status with those documents will the SAVE system be utilized as described in this subsection. (2) Public Organizations. Administrators that are Public Organizations are required to perform the verifications through the SAVE system.(3) An Administrator is required to ensure compliance with the verification requirement as provided for in subparagraphs (A), (B) or (C) of this paragraph. Records must be maintained as required by subparagraph (D) of this paragraph. Notification of election of method must be provided in accordance with subparagraph (E) of this paragraph. (A) The Subrecipient requesting from the household and transmitting to the Department, or a party contracted by the Department, sufficient information or documentation so that the Department or its vendor can perform such verification and provide a determination to the Subrecipient; OR (B) As eligible, the Administrator electing to perform the verifications through the SAVE system, as authorized through the Department's access to such system; OR(C) The Subrecipient electing to procure an eligible qualified organization to perform such verifications on its behalf, subject to Department approval.(D) In the administration of subparagraph (A) of this paragraph, the Administrator must provide and maintain a sufficient method of electronic transmittal system that allows for such information to be provided to the Department or its vendor, and ensures the secure safekeeping of such paper and/or electronic files, and receipt of subsequent response back from the Department or its contracted party. In the administration of subparagraphs (B) or (C) of this paragraph, the Subrecipient or its procured provider must maintain sufficient evidence and documentation that verification has taken place so that such verification can be confirmed by the Department.(E) Notification of Election of method under subsection (f)(4)(A) through (C) of this section by Nonprofit Charitable Organizations and For Profit Entities must be provided to the Department as specified in this subparagraph. (i) For existing Applicants, Administrators with a Contract that is subject to Automatic Renewal, and Awardees or Administrators with a Reservation Contract. No later than 60 days after the effective date of this rule, all entities shall submit their election under subsection (f)(4)(A) through (C) of this section in writing to the applicable program director or his/her designee. (ii) A new Applicant must make its election under subsection (f)(4)(A) through (C) of this section in its application, or if there is no Application prior to Contract execution. (iii) For Administrators with no Application or Automatic Renewal once an election is made under this subsection or was made under a prior version of this rule, it does not need to be resubmitted or reelected, but will continue from the election made in the prior year unless the Administrator notifies the Department otherwise in writing at least three months prior to the renewal of the Contract (as applicable). (iv) If an Administrator does not notify the Department of the election in writing by the deadline or refuses to abide by its election the Administrator will not be eligible to perform as an Administrator in the program, which is considered good cause for nonrenewal or termination of a Contract.(g) The Department may further describe an Administrator's responsibilities under PRWORA, including but not limited to use of the SAVE system, in its Contract with the Administrator or in further guidance. Nothing in this rule shall be construed to be a waiver, ratification, or acceptance of noncompliant administration of a program prior to the rule becoming effective.(h) Regardless of method of verification, the results of the verification performed or received by the Administrator must be utilized by the Administrator in determining household eligibility, benefits, income, or other programmatic designations as required by applicable federal program guidance or as determined by other Program Rules under this Title.</content><note type="source"><p>Source Note: The provisions of this §1.410 adopted to be effective February 4, 2026, 51 TexReg 553.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c1/scD/s1.411"><num value="1.411">§1.411</num><heading>Administration of Block Grants under Chapter 2105 of the Tex. Gov't Code</heading><content>(a) Purpose. The purpose of this section is to inform compliance with Tex. Gov't Code Ch. 2105, Administration of Block Grants.(b) Applicability. This rule applies to all funds administered by the Department that are subject to Tex. Gov't Code Ch. 2105. The activities administered by the Department that are currently subject to Tex. Gov't Code Chapter 2105 are those funded by the Community Services Block Grant (CSBG) funds that are required to be distributed to Eligible Entities, the Low Income Home Energy Assistance Program (LIHEAP) funds that are distributed to Subrecipients, and the funds that the Department administers and distributes to Subrecipients from the annual allocation from the Community Development Block Grant (CDBG) Program. If additional block grant funds that would be subject to Tex. Gov't Code Ch. 2105 by its terms are assigned to the Department, they too would be subject to this rule. Capitalized terms used in this section are defined in the applicable Rules or chapters of this title or as assigned by federal or state law.(c) Hearings required to be held by Subrecipients. Consistent with Tex. Gov't Code §2105.058, Subrecipients that receive more than $5,000 from one or more of the programs noted in subsection (b) of this section must annually submit evidence to the Department that a public meeting or hearing was held solely to seek public comment on the needs or uses of block grant funds received by the Subrecipient. This meeting or hearing may be held in conjunction with another meeting or hearing if the meeting or hearing is clearly noted as being for the consideration of the applicable block grant funds under this subsection.(d) Complaints. The Department will notify a Subrecipient of any complaint received concerning the Subrecipient services. As authorized by Tex. Gov't Code §2105.104, the Department shall consider the history of complaints, for the preceding three year period, regarding a Subrecipient in determining whether to award, increase, or renew a Contract with a Subrecipient. The Department will not consider complaints in determining whether to award, increase, or renew a Contract with a Subrecipient that the Department has determined in accordance with 10 TAC §1.2 (relating to Department Complaint System to the Department) it has no authority to resolve, or that are not corroborated.(e) Requests for Reconsideration. Subrecipient must establish written procedures for the handling of denials of service when the denial involves a household inquiring or applying for services/assistance. This procedure must include, at a minimum:(1) A written denial of assistance notice being provided to the affected person within 10 calendar days of the determination. Such a determination is defined as a denial of assistance, but does not include a level of assistance lower than the possible program limits or a reduction in assistance, as long as such process is in accordance with the written policy. This notification shall include written notice of the right of a hearing or secondary review of income documentation, as applicable, the timeframe the affected person has to respond to the decision, and specific reasons for the denial of assistance. The Subrecipient may adopt a policy limiting the time period during which a request for a hearing will be accepted and the format for the request, but the Subrecipient must provide the affected person with at least 10 calendar days to request a hearing or secondary review.(2) If requested by the affected person, Subrecipient shall hold a private, recorded hearing (unless otherwise required by law) either virtually, by phone, or in person in an accessible location within 15 calendar days after the Subrecipient received the hearing request from the affected person and must provide the affected person notice in writing of the time/location of the hearing at least seven calendar days before the hearing.(3) The hearing shall allow time for a statement by the Subrecipient's staff with knowledge of the case.(4) The hearing shall allow the affected person at least equal time, if requested, to present relevant information contesting the decision.(5) If a denial is based solely on income eligibility, the provisions described in paragraphs (2) - (4) of this subsection do not apply, however the affected person may request a secondary review of income eligibility based on initial documentation provided at the time of the original request for assistance. Such a secondary review must include an analysis of the initial calculation based on the documentation received with the initial request for services and will be performed by an individual other than the person who performed the initial determination. If the secondary review upholds the denial based on income eligibility documents provided at the initial request, the affected person must be notified in writing.(6) If the affected person is not satisfied with the Subrecipient's determination at a hearing or as concluded based on a secondary income eligibility review, the affected person may request a subsequent review of the decision by the Department if the affected person requests a further review in writing within 10 calendar days of notification of an adverse decision. If applicable, Subrecipient's should hold funds aside in the amount needed to provide the services requested by the affected person until the Department completes its decision.(7) Affected persons, after having followed the steps in paragraphs (1) through (6) of this subsection, who allege that the Subrecipient has denied all or part of a service or benefit in a manner that is unjust, violates discrimination laws, or without reasonable basis in law or fact, may request a contested hearing under Tex. Gov't Code, Chapter 2001.(8) The hearing under subsection (e)(7) of this section shall be conducted by the State Office of Administrative Hearings on behalf of the Department in the locality served by the Subrecipient, for which the procedures are further described in §1.13 of this title (relating to Contested Case Hearing Procedures).(f) Nonrenewal or Reduction of Block Grant Funds to a Specific Subrecipient.(1) As required by Tex. Gov't Code §2105.202(a), this section defines "good cause" for nonrenewal of a Subrecipient contract or a reduction of funding. Good cause may include any one or more of the following:(A) Consistent and repeated corroborated complaints about a Subrecipient's failure to follow substantive program requirements, as provided for in subsection (d) of this section;(B) Lack of compliance with 10 TAC §1.403 (relating to Single Audit Requirements);(C) Statute, rule, or contract violations that have not been timely corrected and have prompted the Department to initiate proceedings under 10 TAC Chapter 2, (relating to Enforcement), and have resulted in a final order confirming such violation(s);(D) Disallowed costs in excess of $10,000 that have not been timely repaid;(E) Failure by Subrecipient to select an option as provided for in §1.410 of this title (relating to Determination of Alien Status for Program Beneficiaries) by the deadline;(F) The ineffective rendition of services to clients, which may include a Subrecipient's failure to perform on a Contract, and which may include materially failing to expend funds;(G) A failure to address an identified material lack of cost efficiency of programs;(H) A material failure of the services of the Subrecipient to meet the needs of groups or classes of individuals who are poor or underprivileged or have a disability;(I) Providing services that are adequately addressed by other programs in that area;(J) The extent to which clients and program recipients are involved in the Subrecipient's decision making;(K) Providing services in a manner that unlawfully discriminates on the basis of protected class status; or(L) Providing services outside of the designated geographic scope of the Subrecipient.(2) Notification of Reduction, Termination, or Nonrenewal of a Contract and Opportunity for a Hearing. As required by Tex. Gov't Code §2105.203 and §2105.301, the Department will send a Subrecipient a written statement specifying the reason for the reduction, termination, or nonrenewal of funds no later than the 30th calendar day before the date on which block grant funds are to be reduced, terminated, or not renewed, unless excepted for by paragraph (4) of this subsection. After receipt of such notice for reduction or nonrenewal, a Subrecipient may request an administrative hearing under Tex. Gov't Code Ch. 2001 if the Subrecipient is alleging that the reduction is not based on good cause as identified in subsection (f)(1) of this section or is without reasonable basis in fact or law. If a Subrecipient requests a hearing, the Department may, at its election, enter into an interim contract with either the Subrecipient or another provider for the services formerly provided by the provider while administrative or judicial proceedings are pending.(3) Notification of Reduction of Block Grant funds for a Geographical Area. If required by Tex. Gov't Code §2105.251 and §2105.252, the Department will send a Subrecipient a written statement specifying the reason for the reduction of funds no later than the 30th day before the date on which block grant funds are to be reduced.(4) Exceptions. As authorized by Tex. Gov't Code §2105.201(b), the notification and hearing requirements for reduction or nonrenewal of funding provided for in paragraphs (2) and (3) of this subsection do not apply if a Subrecipient's block grant funding becomes subject to the Department's competitive bidding rules. The Department will require such competitive bidding for awarding block grant funding subject to Tex. Gov't Code Ch. 2105 for Subrecipients and in the Department's procuring of Subrecipients or contractors to administer or assist in administering such block grant funds, which includes the competitive release of Notices of Funding Availability and competitive Requests for Subrecipients or Providers. The criteria for evaluation of competitive responses shall be set forth in the applicable notices of funds availability, requests, or other procurement invitation document.(5) Nothing in this section supersedes or is intended to conflict with the rights and responsibilities outlined in §2.203 of this title (relating to Termination and Reduction of Funding for CSBG Eligible Entities).</content><note type="source"><p>Source Note: The provisions of this §1.411 adopted to be effective September 26, 2024, 49 TexReg 7634.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c2"><num value="2">CHAPTER 2</num><heading>ENFORCEMENT</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c2/scA"><num value="A">SUBCHAPTER A</num><heading>GENERAL</heading><section identifier="/us/state/tx/tac/t10/p1/c2/scA/s2.101"><num value="2.101">§2.101</num><heading>Policy and Purpose</heading><content>This chapter sets forth the enforcement mechanisms that the Department may use to bring about compliant administration of Department funded state or federal programs and exclude or remove from Department programs. Persons who have established, through certain noncompliant behavior that they are either unwilling to act in a compliant manner, or are unable to do so. These enforcement mechanisms are in addition to any available contractual remedies under program agreements.</content><note type="source"><p>Source Note: The provisions of this §2.101 adopted to be effective April 1, 2021, 46 TexReg 1992; amended to be effective March 28, 2024, 49 TexReg 1891.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c2/scA/s2.102"><num value="2.102">§2.102</num><heading>Definitions</heading><content>The words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Capitalized words used herein have the meaning assigned in the specific chapters of this title that govern the program associated with the request, in Chapter 1 of this title (relating to Administration), or assigned by federal or state law.(1) Actively Monitored Development--A Development that within the last three years has been monitored by the Department, either through a Uniform Physical Condition Standards (UPCS) inspection, a National Standards for the Physical Inspection of Real Estate (NSPIRE) inspection, an onsite or desk file monitoring review, an Affirmative Marketing Plan review, or a Written Policies and Procedures Review. UPCS and NSPIRE inspections include inspections completed by Department staff, Department contractors and inspectors from the Real Estate Assessment Center through federal alignment efforts.(2) Consultant--A Person who provides services or advice for a fee in a capacity other than as an employee and does not have Control.(3) Control (including the terms Controlled and Controlling)--"Control" is defined in §11.1 of this title (relating to General) or as identified in the specific Program rule.(4) Debarment--A prohibition from future participation in some or all Programs administered by the Department. Except as otherwise stated in the Order, Debarment does not impact existing or ongoing participation in Department Programs, prior to the date of the Debarment, nor does it affect any continuing responsibilities or duties thereunder.(5) Enforcement Committee (Committee)--A Committee of employees of the Department appointed by the Executive Director. The Committee may be composed of any member of any Department division, but members from the referring division may not be present during deliberations. The Legal Division will designate person(s) to attend meetings and advise the Committee. A Legal Division designee will serve as Secretary to the Committee.(6) Event of Noncompliance (including the alternate term Finding of Noncompliance)--Any event for which a Person may be found to be in noncompliance with Texas Government Code Chapters 2105 or 2306, any rule adopted thereunder, any Program Agreement requirement, or federal program requirements.(7) Legal Requirements--All requirements, as it relates to the particular Department Program, of state, federal, or local statutes, rules, regulations, ordinances, orders, court opinions, official interpretations, policy issuances, OMB Circulars, representations to secure awards, or any similar memorialization of requirement, including contract requirements.(8) Monitoring Event--An onsite or desk monitoring review, a UPCS inspection, a NSPIRE inspection, the submission of the Annual Owner's Compliance Report, Final Construction Inspection, a Written Policies and Procedures Review, or any other instance when the Department's Compliance Division or other reviewing area provides written notice to an Owner or Contact Person requesting a response by a certain date. This would include, but not be limited to, responding to a tenant complaint.(9) Person--A legal entity including, without limitation, any natural person, corporation, partnership, limited partnership, joint venture, limited liability corporation, trust, estate, association, cooperative, government, political subdivision, agency or instrumentality or other organization or entity of any nature whatsoever, and shall include any group of Persons acting in concert toward a common goal, including individual members of the group.(10) Program--Includes any activity performed by a Subrecipient, Administrator, Contractor, Development Owner, or other Person under a Program Agreement or activities performed by a third party under a Program Agreement, including but not limited to a Subgrantee or Subcontractor.(11) Program Agreements include:(A) agreements between the Department and a Person setting forth Legal Requirements; and(B) agreements between a Person subject to a Program Agreement and a third party to carry out one or more Legal Requirements.(12) Responsible Party--Any Person subject to a Program Agreement.(13) Vendor--A person who is procured by a subrecipient to provide goods or services in any way relating to a Department program or activity.</content><note type="source"><p>Source Note: The provisions of this §2.102 adopted to be effective April 1, 2021, 46 TexReg 1992; amended to be effective March 28, 2024, 49 TexReg 1891.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c2/scA/s2.103"><num value="2.103">§2.103</num><heading>General</heading><content>(a) A Responsible Party must comply with all applicable Legal Requirements.(b) A failure by the Department to identify, address, or take action with respect to any one or more Events of Noncompliance does not constitute a waiver, ratification, or approval of, consent to, or agreement with such noncompliance. It is the responsibility of a Responsible Party to be familiar with the applicable Legal Requirements.(c) Recordkeeping. Each referring division will keep records in accordance with the Department's record retention schedule and any other state or Federal requirements of all Events of Noncompliance.(d) As provided for in Texas Government Code, §2306.6719, parties subject to certain compliance requirements must be afforded written notice and a reasonable period to correct identified Events of Noncompliance that are susceptible to being corrected. It is the responsibility of each division to provide any required cure, Corrective Action, or notice period(s) prior to referral of any matter to the Committee under this chapter. Matters should not be referred to the Committee until such cure, Corrective Action, or notice periods have been completed or expired.(e) For each Event of Noncompliance, the Department will evaluate which Person or Persons had Control of the Development, Program, or activity at the time the Event of Noncompliance occurred. A Person will not be referred for Debarment or assessed a Administrative Penalty because they have newly acquired a Development that has existing Events of Noncompliance, provided that the findings are resolved by transferee within a reasonable timeframe after purchase, in accordance with a plan that is approved by the Department in an ownership transfer request under §10.406 of this title (relating to Ownership Transfers (§2306.6713)). Sale or foreclosure of a property does not preclude Debarment consideration against the Person or Persons who had Control of the Development, Program, or activity at the time an Event of Noncompliance occurred.</content><note type="source"><p>Source Note: The provisions of this §2.103 adopted to be effective April 1, 2021, 46 TexReg 1992; amended to be effective March 28, 2024, 49 TexReg 1891.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c2/scA/s2.104"><num value="2.104">§2.104</num><heading>Enforcement Mechanisms</heading><content>(a) The enforcement mechanisms referenced in this chapter are not the exclusive mechanisms whereby compliance may be obtained in any particular circumstance. Enforcement mechanisms related to Department programs may include, where applicable, those required or employed by other entities or agencies. With regard to the low-income housing tax credit program, if an identified Event of Noncompliance is required to be reported to the Internal Revenue Service, (IRS) it will be reported by the Compliance Division on form 8823. For federally funded Programs or activities, the Department may recommend that a federal funding agency initiate a debarment proceeding under 2 CFR Part 180 or 2 CFR 2424, as applicable. Program Agreements may also include additional enforcement mechanisms, federal reporting, or penalties.(b) Enforcement mechanisms available to the Department include but are not limited to:(1) Enforcement of contractual provisions in the Program Agreements including, but not limited to, options to place a Development into receivership, and rights of suspension or termination, and placement on a cost reimbursement status as described in Subchapter B of this chapter (relating to Enforcement for Noncompliance with Program Requirements of Chapters 6 and 7);(2) Consideration of a reasonable plan for correction, warning letter, informal conference, and assessment of administrative penalties, as further described in Subchapter C of this chapter (relating to Administrative Penalties); or(3) Debarment, as described in Subchapter D of this chapter (relating to Debarment from Participation in Programs Administered by the Department).</content><note type="source"><p>Source Note: The provisions of this §2.104 adopted to be effective April 1, 2021, 46 TexReg 1992; amended to be effective March 28, 2024, 49 TexReg 1891.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c2/scB"><num value="B">SUBCHAPTER B</num><heading>ENFORCEMENT FOR NONCOMPLIANCE WITH PROGRAM REQUIREMENTS OF CHAPTERS 6 AND 7</heading><section identifier="/us/state/tx/tac/t10/p1/c2/scB/s2.201"><num value="2.201">§2.201</num><heading>Cost Reimbursement</heading><content>(a) The Department may place on Cost Reimbursement any Contract, other than non-Discretionary CSBG. Cost reimbursement requires Subrecipients to submit supporting documentation and back up for Expenditures or Obligations prior to the Department releasing funds. The Department staff will indicate for each entity placed on Cost Reimbursement status whether all expenses will be reviewed or a sample, and the nature of any additional documentation that the Department will require from the Subrecipient in connection therewith. The decision by the Department to release funds in a cost review situation does not constitute final approval of the expenditure. Funds so advanced remain subject to future reviews, monitoring, and audits and in no way does the decision to release funds constrains or limits those staff performing further reviews, monitoring, or audits.(b) In addition to the reporting requirements outlined in §6.7 of this Title (relating to Subrecipient Reporting Requirements) an entity on Cost Reimbursement must submit, at a minimum, their expanded general ledger, chart of accounts, cost allocation plan, and bank reconciliations for the previous three months. Upon review of those items the Department will request submission of back up for some or all of the reported Expenditures.(c) To the extent that the Contract has budget caps, the budget caps for each budget category will be enforced each month for which the entity is on Cost Reimbursement.(d) An entity will be removed from Cost Reimbursement when the Department determines that identified risks or concerns have been sufficiently mitigated.(e) An entity on Cost Reimbursement remains subject to further reviews, monitoring, and audits.(f) The Department reserves the right to outsource some or all of its work associated with the Cost Reimbursement process to a third party.</content><note type="source"><p>Source Note: The provisions of this §2.201 adopted to be effective April 30, 2025, 50 TexReg 2587.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c2/scB/s2.202"><num value="2.202">§2.202</num><heading>Sanctions and Contract Closeout</heading><content>(a) A Subrecipient that enters into a Contract with the Department to administer programs are required to follow all Legal Requirements governing these programs.(b) If a Subrecipient fails to comply with program and Contract requirements, rules, or regulations and in the event monitoring or other reliable sources reveal material Deficiencies or Findings in performance, or if the Subrecipient fails to correct any Deficiency or Finding within the time allowed by federal or state law, the Department, in order to protect state or federal funds, may take reasonable and appropriate actions, including, but not limited to, one or more of the items described in paragraphs (1) - (6) of this subsection. In so doing, the Department will not take any action that exceeds what it is permitted to do under applicable state and federal law. The Department, as appropriate, may provide written notice of its actions and the rights of a Subrecipient to appeal.(1) Place the Subrecipient on Cost Reimbursement as further described in §2.201 of this subchapter;(2) With the exception of non-Discretionary CSBG, withhold all payments from the Subrecipient (both reimbursements and advances) until acceptable confirmation of compliance with the rules and regulations are received by the Department;(3) Reduce the allocation of funds to Subrecipients as described in §2.203 of this subchapter (relating to Termination and Reduction of Funding for CSBG Eligible Entities) and as limited for LIHEAP funds as outlined in Tex. Gov't Code, Chapter 2105;(4) With the exception of non-Discretionary CSBG, suspend performance of the Contract or reduce funds until proof of compliance with the rules and regulations are received by the Department or a decision is made by the Department to initiate proceedings for Contract termination;(5) If permitted by applicable state and federal statute and regulations, elect not to provide future grant funds to the Subrecipient, either prospectively in general or until appropriate actions are taken to ensure compliance; and/or(6) Terminate the Contract. Adhering to the requirements governing each specific program administered by the Department, as needed, the Department may determine to proceed with the termination of a Contract, in whole or in part, at any time the Department establishes there is good cause for termination. Such cause may include, but is not limited to: fraud; waste; abuse; fiscal mismanagement; not providing services to clients, or failing to expend Contract funds to serve clients, as contemplated under the Contract; or other serious Findings in the Subrecipient's performance. For CSBG contract termination procedures, refer to §2.203 of this subchapter.(c) Contract Closeout. When a Contract is terminated, or voluntarily relinquished, the procedures described in paragraphs (1) - (12) of this subsection will be implemented. The terminology of a "terminated" Subrecipient below is intended to include a Subrecipient that is voluntarily terminating the Contract.(1) The Department will issue a termination letter to the Subrecipient no less than 30 days prior to terminating the Contract; in the case of a Subrecipient that has notified the Department in writing of voluntarily relinquishment, the Department will acknowledge that termination in writing. If the entity is an Eligible Entity the Department, following the CSBG Act, will simultaneously initiate proceedings to terminate the Eligible Entity status and the effectiveness of the contractual termination will be stayed automatically pending the outcome of those proceedings. The Department may determine to take one or more of the following actions: (A) suspend funds immediately; (B) allow the Subrecipient to pursue a temporary transfer to another Department-approved provider; (C) require Cost Reimbursement for closeout proceedings; and/or (D) provide instructions to the Subrecipient to prepare a proposed budget and written plan of action that supports the closeout of the Contract. The plan must identify the name and current job titles of Subrecipient staff that will perform the closeout and an estimated dollar amount to be incurred. The plan must identify the Certified Public Accountant or firm which will perform the Single Audit. The Department will issue an official termination date to allow all parties to calculate deadlines which are based on such date.(2) If the Department determines that Cost Reimbursement is appropriate to accomplish closeout, the provisions in §2.201 of this subchapter will be utilized. (3) No later than 30 calendar days after the Contract is terminated, the Subrecipient will perform a physical inventory of client files, including case management files.(4) The terminated Subrecipient will have 30 calendar days from the date of the physical inventory to make available to the Department all current client files, which must be boxed by the county in which a household received assistance. Current and active case management files also must be inventoried, and boxed by county.(5) Within 60 calendar days following the Subrecipient due date for preparing and boxing client files, Department staff will retrieve the client files.(6) The terminated Subrecipient will prepare and submit no later than 30 calendar days from the date the Department retrieves the client files, a final report containing a full accounting of all funds expended under the Contract.(7) A final monthly expenditure report and a final monthly performance report for all remaining expenditures incurred during the Contract period must be received by the Department no later than 45 calendar days from the date the Department determines that the closeout of the program and the period of transition are complete.(8) The Subrecipient will submit to the Department no later than 45 calendar days after the termination of the Contract, an inventory of the non-expendable personal property acquired in whole or in part with funds received under the Contract as further described in §1.407 of this title.(9) The Department may require transfer of title to Equipment to the Department or may direct that a Subrecipient transfer such title to Equipment to another entity receiving funds from the Department. The Department will make arrangements to remove Equipment covered by this paragraph within 90 calendar days following termination of the Contract.(10) Upon selection of a new service provider, the Department will transfer to the new provider client files and, as appropriate, Equipment.(11) A current year Single Audit must be performed for all entities that have exceeded the federal expenditure threshold under 2 CFR Part 200, Subpart F or the State expenditure threshold under Texas Grant Management Standards, as applicable. The Department will allow a proportionate share of program funds to pay for accrued audit costs, when an audit is required, for a Single Audit that covers the date up to the closeout of the Contract. The terminated Subrecipient must have a binding contract with a Certified Public Accounting firm on or before the termination date of the Contract. The actual costs of the Single Audit and accrued audit costs including support documentation must be submitted to the Department no later than 45 calendar days from the date the Department determines the closeout is complete.(12) Subrecipient shall submit within 45 calendar days after the date of the closeout process all financial, performance, and other applicable reports to the Department. The Department may approve extensions when requested by the Subrecipient. However, unless the Department authorizes an extension, the Subrecipient must abide by the 45 calendar day requirement of submitting all referenced reports and documentation to the Department.</content><note type="source"><p>Source Note: The provisions of this §2.202 adopted to be effective April 30, 2025, 50 TexReg 2587.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c2/scB/s2.203"><num value="2.203">§2.203</num><heading>Termination and Reduction of Funding for CSBG Eligible Entities</heading><content>(a) This section describes the Department's process for implementing HHS Information Memorandum 116 (Corrective Action, Termination, or Reduction of Funding) (IM 116) and 42 U.S.C. 9915. This process does not apply for Contracts awarded under CSBG Discretionary Funding.(b) Capitalized words used herein have the meaning assigned in, Chapter 1 of this title (relating to Administration), Chapter 2 of this title (relating to Enforcement), Chapter 6 of this title (relating to Community Affairs Programs), or assigned by federal or state law.(c) A Deficiency may be identified through failure to resolve issues identified in an onsite monitoring review, a review of the Eligible Entity's Single Audit, a review prompted by a complaint, through the Department's procedures for reviewing performance and expenditure reports, or in any other review under 42 U.S.C. §9914(a)(1) - (4).(d) If a Deficiency is identified, the Eligible Entity will be notified in writing. The Department will also review the training and technical assistance that has been provided to the Eligible Entity to determine if further training and technical assistance germane to the Deficiency is warranted. If so, the Eligible Entity will be offered additional training and technical assistance that specifically focuses on the Deficiency.(e) If an Eligible Entity does not respond to the written notification, does not resolve the Deficiency, or does not propose a reasonable corrective action plan, the uncorrected Deficiency identified by the Department will be considered a final decision that the Eligible Entity has failed to comply with requirements in a review pursuant to the CSBG Act, and can be considered cause for proceedings to terminate Eligible Entity status or reduce funding in accordance with IM 116 and 42 U.S.C. §§9908(b)(8) and 9915. Such a determination will be issued in a final determination letter from the Department to the Eligible Entity.(f) If the Department determines that the development and implementation of a Quality Improvement Plan (QIP) is an appropriate requirement and/or that additional training and technical assistance are needed, that requirement will be stated in the final determination letter. The Eligible Entity will be provided 25 calendar days from the date of the final determination letter to submit a proposed QIP compliant with §2.204 of this subchapter and identifying dates for correction. In general, the Deficiency should be cured within 60 calendar days from the date of the final determination letter. If a Deficiency will require more than 60 calendar days, the Eligible Entity must explain why and propose a later date for correction, which the Department may elect to accept or deny. In the event a Deficiency cannot be corrected due to it being a singular past occurrence, the Eligible Entity must demonstrate to the Department that the Deficiency's cause has been identified and properly addressed, so that the Deficiency will not reoccur.(g) Within 25 calendar days from the date the proposed QIP is received, the Department will either approve it or specify the reasons it cannot be approved. While the Department is reviewing the submitted QIP, the Department will consider the corrective action timeline proposed by the Eligible Entity and may accept that timeline, or recommend an alternate timeline, based on the nature of the Deficiency, and the nature of the correction. The Eligible Entity's inability to resolve the Deficiency within a reasonable timeframe may trigger the commencement of formal legal proceedings to terminate Eligible Entity status.(h) The Department approved QIP must be implemented as soon as possible and resolution of the Deficiency must be fully met within the specified and approved timelines agreed to by the Department.(i) If it is determined and/or documented that training and technical assistance are not appropriate; that a QIP is not appropriate; the QIP has not been approved; the QIP has not been met within the specified and approved timeline agreed to within the QIP; or the processes described in subsection (f) of this section have failed to resolve the Deficiency, the Department will contact the Executive Director of the Eligible Entity, and all known members of the Eligible Entity's Board to notify them that staff will be requesting that the Department's Governing Board authorize staff to pursue a hearing with the State Office of Administrative Hearings (SOAH). Such notification will be made at least 45 calendar days prior to the date of the meeting of the Department's Governing Board. If approved by the Department's Governing Board, the Department will arrange and set a date for a hearing with SOAH. If the Eligible Entity does not respond or appear for the SOAH hearing, the consideration of termination of the Eligible Entity's status or reduction of funding will appear on the agenda at a subsequent regularly scheduled meeting of the Department's Governing Board. An Eligible Entity receiving notice of the initiation of a contested case before SOAH is reminded that they will need to read and comply with SOAH's requirements in the way they handle and respond to the matter.(j) SOAH will issue a proposal for decision to the TDHCA Governing Board recommending whether there is cause, as defined by the CSBG Act, 42 U.S.C. §9908(c), to terminate or reduce funding to the Eligible Entity. The TDHCA Governing Board will be provided the proposal for decision and it will be considered as part of any final order by the Board in the matter.(k) If the TDHCA Governing Board determines that there is cause to terminate or reduce funding, pursuant to 42 U.S.C. §9915, the Department will notify the Eligible Entity that it has the right under 42 U.S.C. §9915 to seek review of the decision by the HHS. If HHS does not overturn the decision or if the Eligible Entity does not seek HHS review, on the 90th calendar day after the TDHCA Governing Board decision, the CSBG funding will be reduced, or the entity will lose its status as an Eligible Entity under the CSBG Act and all active CSBG Contracts will be terminated.(l) Any right or remedy given to the Department by this chapter does not preclude the existence of any other right or remedy, nor shall any action or lack of action by the Department in the exercise of any right or remedy be deemed a waiver of any other right or remedy.</content><note type="source"><p>Source Note: The provisions of this §2.203 adopted to be effective October 31, 2019, 44 TexReg 6334; amended to be effective June 1, 2023, 48 TexReg 2693.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c2/scB/s2.204"><num value="2.204">§2.204</num><heading>Contents of a Quality Improvement Plan</heading><content>(a) Capitalized words used herein have the meaning assigned in, Chapter 1 of this title (relating to Administration), Chapter 2 of this title (relating to Enforcement), Chapter 6 of this title (relating to Community Affairs Programs), or assigned by federal or state law.(b) If a QIP is required of an Eligible Entity under §2.203(f) of this chapter (relating to Termination and Reduction of Funding for CSBG Eligible Entities), it must comply with this section. While each QIP developed by an Eligible Entity is unique and must be responsive to the specific Deficiency identified, all of the items in this section, at a minimum, must be addressed.(c) The QIP must set forth a timeline for resolution of each Deficiency. In general, issues should be fully resolved within 60 calendar days from the final determination letter issued to the Eligible Entity as referenced in §2.203(e) of this chapter.(d) At minimum, the QIP must identify:(1) Specific actions that will be taken to address each Deficiency;(2) The date by when each Deficiency will be corrected; and(3) If applicable, an explanation for any Deficiency that cannot be corrected within 60 calendar days.</content><note type="source"><p>Source Note: The provisions of this §2.204 adopted to be effective October 31, 2019, 44 TexReg 6334.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c2/scC"><num value="C">SUBCHAPTER C</num><heading>ADMINISTRATIVE PENALTIES</heading><section identifier="/us/state/tx/tac/t10/p1/c2/scC/s2.301"><num value="2.301">§2.301</num><heading>General</heading><content>Department divisions will recommend to the Committee the initiation of proceedings to assess administrative penalties where the Responsible Party or Parties have violated Chapters 2105 or 2306 of the Texas Government Code or a rule or order adopted under Chapters 2105 or 2306 of the Texas Government Code and failed, despite written notice, to take appropriate and timely corrective action or seek and obtain for good cause an extension of the time to take corrective action. In addition, staff from any Department Divisions may recommend to the Committee the initiation of proceedings to assess administrative penalties where the Responsible Party or Parties has an established pattern of repeated substantive and material violations, even if corrected within the applicable corrective action periods. All correspondence shall be delivered electronically.</content><note type="source"><p>Source Note: The provisions of this §2.301 adopted to be effective April 1, 2021, 46 TexReg 1992; amended to be effective March 28, 2024, 49 TexReg 1891.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c2/scC/s2.302"><num value="2.302">§2.302</num><heading>Administrative Penalty Process</heading><content>(a) The Executive Director will appoint an Enforcement Committee, as defined in §2.102 of this chapter (relating to Definitions).(b) The referring division will recommend the initiation of administrative penalty proceedings to the Committee by referral to the secretary of the Committee (Secretary). At the time of referral for a multifamily rental Development, the referral letter from the referring Division will require the Responsible Party who Controls the Development to provide a listing of the Actively Monitored Developments in their portfolio. The Secretary will use this information to help determine whether mandatory Debarment should be simultaneously considered by the Enforcement Committee in accordance with §2.401(e)(2) of this section, related to repeated violations.(c) The Secretary shall promptly contact the Responsible Party. If fully acceptable corrective action documentation is submitted to the referring division before the Secretary sends an informal conference notice, the referral shall be closed with no further action provided that the Responsible Party is not subject to consideration for Debarment and provided that the referring division does not wish to move forward with the referral based upon a pattern of repeated violations. If the Secretary is not able to facilitate resolution, but receives a reasonable plan for correction, such plan shall be reported to the Committee to determine whether to schedule an informal conference, modify the plan, or accept the plan. If accepted, plan progress shall be regularly reported to the Committee, but an informal conference will not be held unless the approved plan is substantively violated, or an informal conference is later requested by the Committee or the Responsible Party. Plan examples include but are not limited to: a rehabilitation plan with a scope of work or contracts already in place, plans approved by the Department as part of the Previous Participation Review process provided for in 10 TAC Subchapter C for an ownership transfer or funding application, plans approved by the Executive Director, plans approved by the Asset Management Division, and/or plans relating to newly transferred Developments with unresolved Events of Noncompliance originating under prior ownership. Should the Secretary and Responsible Party fail to come to, an agreement or closer of the referral, or if the Responsible Party or ownership group's prior history of administrative penalty referrals does not support closure, or if consideration of Debarment is appropriate, the Secretary will schedule an informal conference with the Responsible Party to attempt to reach an agreed resolution.(d) When an informal conference is scheduled, a deadline for submitting Corrective Action documentation will be included, providing a final opportunity for resolution. If compliance is achieved at this stage, the referral will be closed with a warning letter provided that factors, as discussed below, do not preclude such closure. Closure with a warning letter shall be reported to the Committee. Factors that will determine whether it is appropriate to close with a warning letter include, but are not limited to:(1) Prior Enforcement Committee history relating to the Development or other properties in the ownership group;(2) Prior Enforcement Committee history regarding similar federal or state Programs;(3) Whether the deadline set by the Secretary in the informal conference notice has been met;(4) Whether the Committee has set any exceptions for certain finding types; and(5) Any other factor that may be relevant to the situation. (e) If an informal conference is held:(1) Notwithstanding the Responsible Party's attendance or presence of an authorized representative, the Enforcement Committee may proceed with the informal conference;(2) The Responsible Party may, but is not required to be, represented by legal counsel of their choosing at their own cost and expense;(3) The Responsible Party may bring to the meeting third parties, employees, and agents with knowledge of the issues;(4) Assessment of an administrative penalty and Debarment may be considered at the same informal conference; and(5) In order to facilitate candid dialogue, an informal conference will not be open to the public; however, the Committee may include such other persons or witnesses as the Committee deems necessary for a complete and full development of relevant information and evidence.(f) An informal conference may result in the following, which shall be reported to the Executive Director:(1) An agreement to dismiss the matter with no further action;(2) A compliance assistance notice issued by the Committee, available for Responsible Parties appearing for the first time before the Committee for matters which the Committee determines do not necessitate the assessment of an administrative penalty, but for which the Committee wishes to place the Responsible Party on notice with regard to possible future penalty assessment;(3) An agreement to resolve the matter through corrective action without penalty with a clear timeline included. If the agreement is to be included in an order, a proposed agreed order will be prepared and presented to the Board for approval;(4) An agreement to resolve the matter through corrective action with the assessment of an administrative penalty which may be probated in whole or in part, and may, where appropriate, include additional action to promote compliance such as requirements to obtain training. In this circumstance, a proposed agreed order will be prepared and presented to Department's Governing Board for approval;(5) A recommendation by the Committee to the Executive Director to determine that a violation occurred, and to issue a report to the Board and a Notice of Violation to the Responsible Party, seeking the assessment of administrative penalties through a contested case hearing with the State Office of Administrative Hearings (SOAH); or(6) Other action as the Committee deems appropriate.(g) Upon receipt of a recommendation from the Committee regarding the issuance of a report and assessment of an administrative penalty under subsection (f)(5), the Executive Director shall determine whether a violation has occurred. If needed, the Executive Director may request additional information and/or return the recommendation to the Committee for further development. If the Executive Director determines that a violation has occurred, the Executive Director will issue a report to the Board in accordance with §2306.043 of the Texas Government Code.(h) Not later than 14 days after issuance of the report to the Board, the Executive Director will issue a Notice of Violation to the Responsible Party, along with a Notice of Violation for Property Posting (which shall be printed and posted in two prominent places on the property subject to the Notice, and photographic proof of the posting shall be made). The Notice of Violation issued by the Executive Director will include:(1) A summary of the alleged violation(s) together with reference to the particular sections of the statutes and rules alleged to have been violated;(2) A statement informing the Responsible Party of the right to a hearing before the SOAH, if applicable, on the occurrence of the violation(s), the amount of penalty, or both;(3) Any other matters deemed relevant, including the requirements regarding the Notice of Violation for Property Posting; and(4) The amount of the recommended penalty. In determining the amount of a recommended administrative penalty, the Executive Director shall take into consideration the statutory factors at Tex. Gov't Code §2306.042 the penalty schedule shown in the tables in subsection (k) of this section and in the instance of a proceeding to assess administrative penalties against a Responsible Party administering the annual block grant portion of CDBG, CSBG, or LIHEAP, whether the assessment of such penalty will interfere with the uninterrupted delivery of services under such program(s). The Executive Director shall further take into account whether the Department's purposes may be achieved or enhanced by the use of full or partial probation of penalties subject to adherence to specific requirements and whether the violation(s) in question involve disallowed costs.(i) Not later than 20 days after the Responsible Party receives the Notice of Violation, the Responsible Party may accept the requirements of the Notice of Violation or request a SOAH hearing.(j) If the Responsible Party requests a hearing or does not respond to the Notice of Violation, the Executive Director, with the approval of the Board, shall cause the hearing to be docketed before a SOAH administrative law judge in accordance with §1.13 of this title (relating to Contested Case Hearing Procedures), which outlines the remainder of the process.(k) Penalty schedules.Attached GraphicAttached GraphicAttached Graphic</content><note type="source"><p>Source Note: The provisions of this §2.302 adopted to be effective February 4, 2026, 51 TexReg 560.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c2/scD"><num value="D">SUBCHAPTER D</num><heading>DEBARMENT FROM PARTICIPATION IN PROGRAMS ADMINISTERED BY THE DEPARTMENT</heading><section identifier="/us/state/tx/tac/t10/p1/c2/scD/s2.401"><num value="2.401">§2.401</num><heading>General</heading><content>(a) The Department may debar a Responsible Party, a Consultant, and/or a Vendor who has exhibited past failure to comply with any condition imposed by the Department in the administration of its programs. Any of the following discretionary debarment criteria must be past the provided corrective action deadline, if applicable. A Responsible Party, Consultant or Vendor may be referred to the Committee for Debarment for any of the following:(1) Refusing to provide an acceptable plan to implement and adhere to procedures to ensure compliant operation of the program after being placed on Modified Cost Reimbursement;(2) Refusing to repay disallowed costs;(3) Refusing to enter into a plan to repay disallowed costs or egregious violations of an agreed repayment plan;(4) Meeting any of the ineligibility criteria referenced in §11.202 of this title (relating to Ineligible Applicants and Applications) or other ineligibility criteria outlined in a Program Rule, with the exception of: ineligibility related to conflicts of interest disclosed to the Department for review, and ineligibility identified in a previous participation review in conjunction with an application for funds or resources (unless otherwise eligible for Debarment under this Subchapter D);(5) Providing fraudulent information, knowingly falsified documentation, or other intentional or negligent material misrepresentation or omission with regard to any documentation, certification or other representation made to the Department;(6) Failing to correct Events of Noncompliance as required by an order that became effective after April 1, 2021, and/or failing to pay an administrative penalty as required by such order, within six months of a demand being issued by the Department. In this circumstance, if the Debarment process is initiated but the Responsible Party, Consultant, and/or Vendor fully corrects the findings of noncompliance to the satisfaction of the referring division and pays the administrative penalty as required by the order before the Debarment is finalized by the Board, the Debarment recommendation may be cancelled or withdrawn by Committee recommendation and Executive Director concurrence. This type of referral would be initiated by the Secretary;(7) Controlling a multifamily Development that was foreclosed after April 1, 2021, where the foreclosure or deed in lieu of foreclosure terminates a TDHCA LURA. After January 1, 2026, this also applies if a TDHCA LURA is terminated because of bankruptcy;(8) Controlling a multifamily Development where there is no operable elevator in an elevator-serviced building after January 1, 2026, unless the Owner can provide evidence that necessary repairs were under contract and scheduled for repair with a licensed repair company within the corrective action period;(9) Controlling a multifamily Development and allowing a change in ownership after April 1, 2021, without Department approval;(10) Transferring a Development, after April 1, 2021, without regard for a Right of First Refusal requirement;(11) Being involuntary removed, or replaced due to a default by the General Partner under the Limited Partnership Agreement, after April 1, 2021;(12) Controlling a multifamily Development and failing to correct Events of Noncompliance before the expiration of a Land Use Restriction Agreement, after the effective date of this rule;(13) Refusing to comply with conditions approved by the Board that were recommended by the Executive Award Review Advisory Committee after April 1, 2021;(14) Having any Event of Noncompliance that occurs after April 1, 2021, that causes the Department to be required to repay federal funds to any federal agency including, but not limited to the U.S. Department of Housing and Urban Development; and/or(15) Submitting a written certification that non-compliance has been corrected when it is determined that the Event of Noncompliance was not corrected. For certain Events of Noncompliance, in lieu of documentation, the Compliance Division accepts a written certification that noncompliance has been corrected. If it is determined that the Event of Noncompliance was not corrected, a Person who signed the certification may be recommended for debarment;(16) Refusing to provide an amenity required by the LURA after April 1, 2021;(17) Failing to reserve units for Section 811 PRA participants after April 1, 2021;(18) Failing to notify the Department of the availability of 811 PRA units after April 1, 2021;(19) Taking "choice limiting" actions prior to receiving HUD environmental clearance (24 CFR §58.22);(20) Substandard construction, as defined by the Program, and repeated failure to conduct required inspections;(21) Repeated failure to provide eligible match. 24 CFR §92.220, 24 CFR §576.201, and as required by NOFA;(22) Repeated failure to report program income. As applicable, 24 CFR §200.80, 24 CFR §570.500, 24 CFR §576.407(c), 24 CFR §92.503 24 CFR §93.304, and 10 TAC §20.9, or as defined by Program Rule;(23) Participating in activities leading to or giving the appearance of "Conflict of Interest". As applicable, in 2 CFR Part 215, 2 CFR Part 200. 24 CFR §93.353, §92.356 24 CFR, §570.489, 24 CFR §576.404, 10 TAC §20.9, or as defined by Program Rule;(24) Repeated material financial system deficiencies. As applicable, 2 CFR Part 200, 24 CFR §§, 92.205, 92.206, 92.350, 92.505, and 92.508, 2 CFR Part 215, 2 CFR Part 225 (if applicable), 2 CFR Part 230 10 TAC §20.9, Uniform Grant Management Standards, and Texas Grant Management Standards, and as defined by Program Rule.(25) Repeated violations of Single Audit or other programmatic audit requirements;(26) Failure to remain a CHDO for Department committed HOME funds;(27) Commingling of funds, Misapplication of funds;(28) Refusing to submit a required Audit Certification Form, Single Audit, or other programmatic audit;(29) Refusing to timely respond to reports/provide required correspondence;(30) Failure to timely expend funds; and(31) A Monitoring Event determines that 50% or more of the client or household files reviewed do not contain required documentation to support income eligibility or indicate that the client or household is not income eligible.(b) The Department shall debar any Responsible Party, Consultant, and/or Vendor who is debarred from participation in any program administered by the United States Government.(c) Debarment for violations of the Department's Multifamily Programs. The Department shall debar any Responsible Party, Consultant, and/or Vendor who has materially or repeatedly violated any condition imposed by the Department in connection with the administration of a Department program, including but not limited to a material or repeated violation of a land use restriction agreement (LURA) or Contract. Subsection (d) of this section provides the criteria the Department will use to determine if there has been a material violation of a LURA. Subsections (e)(1) and (e)(2) of this section provide the criteria the Department shall use to determine if there have been repeated violations of a LURA. Any of the following mandatory debarment criteria must be past the corrective action deadline, if applicable.(d) Material violations of a LURA. A Responsible Party, Consultant, and/or Vendor will be considered to have materially violated a LURA, Program Agreement, or condition imposed by the Department and shall be referred to the committee for mandatory Debarment if they:(1) Control a Development that has, on more than one occasion scored 50 or less on a UPCS inspection or has, on more than one occasion scored 50 or less on a NSPIRE inspection, or any combination thereof. The Compliance Division may temporarily decrease this NSPIRE score threshold with approval by the Executive Director, for a period of time not longer than one year, so long as the score threshold is applied evenly to all properties;(2) Refuse to allow a monitoring visit when proper notice was provided or failed to notify residents, resulting in inspection cancellation, or otherwise fails to make units and records available;(3) Refuse to reduce rents to less than the highest allowed under the LURA;(4) Refuse to correct a UPCS, NSPIRE, or final construction inspection deficiency after the effective date of this rule;(5) Fail to meet minimum set aside by the end of the first year of the credit period (HTC Developments only) after April 1, 2021; or(6) Excluding an individual or family from admission to the Development solely because the household participates in the HOME Tenant Based Rental Assistance Program, the housing choice voucher program under Section 8, United States Housing Act of 1937 (42 U.S.C. §1-437), or other federal, state, or local government rental assistance program after April 1, 2021.(e) Repeated Violations of a LURA that shall be referred to the Committee for Debarment.(1) A Responsible Party, Consultant, and/or Vendor shall be referred to the Committee for mandatory Debarment if they Control a Development that, during two Monitoring Events in a row is found to be out of compliance with the following Events of Noncompliance: (A) No evidence of, or failure to certify to, material participation of a non-profit or HUB, if required by the Land Use Restriction Agreement;(B) Any Uniform Physical Condition Standards Violations that result in a score of 70 or below in sequential UPCS inspections after April 1, 2021 or NSPIRE violations that result in a score of 50 or below in sequential inspections after the effective date of this rule, or any combination thereof. The Compliance Division may temporally decrease this NSPIRE score threshold with approval by the Executive Director, for a period not to exceed one year, so long as the score threshold is applied evenly to all properties;(C) Refuse to submit all or parts of the Annual Owner's Compliance Report for two consecutive years after April 1, 2021; or(D) Gross rents exceed the highest rent allowed under the LURA or other deed restriction.(2) Repeated violations in a portfolio. Responsible Party who control five or more Actively Monitored Developments will be considered for Debarment based on repeated violations in a portfolio. A Person shall be referred to be committee if an inspection or referral, after April 1, 2021, indicates the following:(A) 50% or more of the Actively Monitored Developments in the portfolio that are Controlled by the Responsible Party, whether acting alone or in concert with others, have been referred to the Enforcement Committee within the last three years. The Enforcement Committee may increase this threshold at its discretion. For example, if three properties in a five-property portfolio are monitored in the same month, and then referred to the Enforcement Committee at the same time, it may be appropriate to increase the 50% threshold; or,(B) 50% or more of the Actively Monitored Developments in the portfolio score a 70 or less during a Uniform Physical Conditions Standards inspection or score 50 or less during a NSPIRE inspection, or any combination thereof. The Compliance Division may decrease this NSPIRE score threshold with approval by the Executive Director, for a period not to exceed one year, so long as the score threshold is applied evenly to all properties.(f) Debarment for violations of Department Programs, with the exception of the Non-Discretionary funds in the Community Services Block Grant program. Material or repeated violations of conditions imposed in connection with the administration of Programs administered by the Department. Administrators, Subrecipients, Responsible Parties, contractors, multifamily owners, and related parties shall be referred to the Committee for consideration for Debarment for violations including but not limited to:(1) 50% or more loan defaults in the first 12 months of the loan agreement after April 1, 2021;(2) The following Davis Bacon Act Violations:(A) Refusing to pay restitution (underpayment of wages). 29 CFR §5.31.(B) Refusing to pay liquidated damages (overtime violations). 29 CFR §5.8.(C) Repeated failure to pay full prevailing wage, including fringe benefits, for all hours worked. 29 CFR §5.31.(3) The following violations of the Uniform Relocation Act and requirements of §104(d):(A) Repeated failure to provide the General Information Notice to tenants prior to application. 49 CFR §24.203, 24 CFR §92.353, 24 CFR §93.352 and HUD Handbook 1378.(B) Repeated failure to provide all required information in the General Information Notice. 49 CFR §24.203, 24 CFR §570.606, 24 CFR §92.353, 24 CFR §93.352, or HUD Handbook 1378.(C) Repeated failure to provide the Notice of Eligibility and/or Notice of Non-displacement on or before the Initiation of Negotiations date. 49 CFR §24.203, 24 CFR §92.353, 24 CFR §93.352, or 24 CFR §570.606.(D) Repeated failure to provide all required information in the Notice of Eligibility and/or Notice of Non-displacement. 49 CFR §24.203, 24 CFR §92.353, 24 CFR §93.352, or 24 CFR §570.606.(E) Repeated failure to provide 90 Day Notices to all "displaced" tenants and/or repeated failure to provide 30 Day Notices to all "non-displaced" tenants. 49 CFR §24.203, 24 CFR §92.353, 24 CFR §93.352, or 24 CFR §570.606.(F) Repeated failure to perform and document "decent, safe and sanitary" inspections of replacement housing. 49 CFR §24.203, 24 CFR §92.353, 24 CFR §93.352, or 24 CFR §570.606.(G) Refusing to properly provide Uniform Relocation Act or §104(d) assistance. 49 CFR §24.203, 24 CFR §92.353, 24 CFR §570.606 and §104(d) of the Housing & Community Development Act of 1974 - 24 CFR Part 42.(4) Refusing to reimburse excess cash on hand;(5) Using Department funds to demolish a homeowner's dwelling and then refusing to rebuild;(6) Drawing down Department funds for an eligible use and then refusing to pay a properly submitted request for payment to a subgrantee or vendor with the drawn down funds.(g) The referring division shall provide the Responsible Party, Consultant, and/or Vendor with written notice of the referral to the Committee, setting forth the facts and circumstances that justify the referral for Debarment consideration. That notice shall require the Responsible Party to provide a current organizational chart showing ownership to the level of natural persons who are in Control of the development, and must indicate which entities and natural persons have the ability to Control the development. (h) The Secretary shall then offer the Responsible Party, Consultant, and/or Vendor the opportunity to attend an Informal Conference with the Committee to discuss resolution of the. In the event that the Debarment referral was the result of a violated agreed order or a determination that 50% or more of the Actively Monitored Developments in their portfolio have been referred to the Enforcement Committee, the above written notice of the referral to the Committee and the informal conference notice shall be combined into a single notice issued by the Secretary.(i) A Debarment Informal Conference may result in the following, which shall be reported to the Executive Director:(1) A determination that the Department did not have sufficient information and/or that the Responsible Party, Consultant, and/or Vendor does not meet any of the criteria for Debarment;(2) An agreed Debarment, with a proposed agreed order to be prepared and presented to the Board for approval;(3) A recommendation by the Committee to the Executive Director for Debarment;(4) A request for further information, to be considered during a future meeting; or,(5) If Debarment is not mandatory, one of the following results, which will then be reported to the Executive Director:(A) An agreement to dismiss the matter with no further action;(B) A recommendation for a voluntary non-participation agreement, with an alternative recommendation for Debarment to the Executive Director, with said Debarment recommendation to be made only in the event that the Responsible Party, Consultant, and/or Vendor refuses to enter into a voluntary non-participation agreement;(C) An agreement to dismiss the matter with corrective action being taken; or(D) Any other action as the Committee deems appropriate.(j) The Committee's recommendation to the Executive Director regarding a voluntary non-participation agreement shall include a recommended period during which the Responsible Party, Consultant, and/or Vendor will not participate in any new Department financing, assistance opportunity, or programs in any manner. Recommended periods of non-participation will be based on material factors such as repeated occurrences, seriousness of underlying issues, presence or absence of corrective action taken or planned, including corrective action to install new responsible persons and ensure they are qualified and properly trained. If the Department determines that this type of agreement is appropriate and the Responsible Party, Consultant, and/or Vendor agrees to the terms proposed by the Department, the Enforcement Committee will not recommend Debarment. This agreement will be placed on the Department website for the duration of its term. The Department will provide a quarterly report to the Board regarding any voluntary non-participation agreements that have been entered into during the previous quarter. The terms of a voluntary non-participation agreement are not appealable to the Board.(k) The Committee's recommendation to the Executive Director regarding Debarment shall include a recommended period of Debarment. Recommended periods of Debarment will be based on material factors such as repeated occurrences, seriousness of underlying issues, presence or absence of corrective action taken or planned, including corrective action to install new responsible persons and ensure they are qualified and properly trained. Recommended periods of Debarment if based upon HUD Debarment, shall be for the period of the remaining HUD Debarment; or, if based upon criminal conviction, shall be up to ten (10) years or until fulfillment of all conditions of incarceration and/or probation, whichever is greater.(l) The Executive Director shall accept, reject, or modify the Debarment recommendation by the Committee and shall provide written notice to the Responsible Party, Consultant, and/or Vendor of the determination, and an explanation of the determination if different than the Committee's recommendation, including the period of Debarment, if any. The Responsible Party, Consultant, and/or Vendor may appeal the Debarment determination in writing to the Board as described in §1.7 of this title (relating to Appeals Process).(m) The Debarment recommendation will be brought to the next Board meeting for which the matter can be properly posted. The Board reserves discretion to impose longer or shorter Debarment periods than those recommended by staff based on its finding that such longer or shorter periods are appropriate when considering all factors and/or for the purposes of equity or other good cause. An action on a proposed Debarment of an Eligible Entity under the CSBG Act will not become final until and unless proceedings to terminate Eligible Entity status have occurred, resulting in such termination and all rights of appeal or review have run or Eligible Entity status has been voluntarily relinquished.(n) Until the Responsible Party, Consultant, and/or Vendor's Debarment referral is fully resolved, the Responsible Party, Consultant, and/or Vendor may not participate in new Department financing and assistance opportunities.(o) Any person who has been debarred is prohibited from participation as set forth in the final order of Debarment for the term of their Debarment. Unless specifically stated in the order of Debarment, Debarment does not relieve a Responsible Party, Consultant, and/or Vendor from its current obligations, or prohibit it from continuing its participation in any existing engagements funded through the Department, nor limit its responsibilities and duties thereunder. The Board will not consider modifying the terms of the Debarment after the issuance of a final order of Debarment.(p) If an Eligible Entity under the CSBG Act meets any of the criteria for Debarment in this rule, the Department may recommend the Eligible Entity for Debarment. However, that referral or recommendation shall not proceed until the termination of the Eligible Entity's status under the CSBG Act has concluded, and no right of appeal or review remains.(q) All correspondence under this rule shall be delivered electronically.</content><note type="source"><p>Source Note: The provisions of this §2.401 adopted to be effective February 4, 2026, 51 TexReg 562.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c5"><num value="5">CHAPTER 5</num><heading>SECTION 8 HOUSING CHOICE VOUCHER PROGRAM</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c5/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p1/c5/sc/s5.801"><num value="5.801">§5.801</num><heading>Project Access Initiative</heading><content>(a) Purpose. The Project Access Program (PA Program) is a program that utilizes federal Section 8 Housing Choice Vouchers, Non-Elderly Disabled Vouchers, and Mainstream Vouchers administered by the Texas Department of Housing and Community Affairs (the Department) to assist low-income persons with disabilities in transitioning from institutions into the community by providing access to affordable housing. This rule provides the parameters and eligibility standards for this program.(b) Definitions.(1) At-Risk Applicant--A household that has applied to the Department's Section 8 Project Access program, and exited an Institution prior to issuance of a Department Section 8 Housing Choice Voucher using an alternate short term rental assistance solution and is at risk of that short term rental assistance ending.(2) HHSC--Texas Health and Human Services Commission.(3) HUD--The U.S. Department of Housing and Urban Development. (4) Institution--Congregate settings populated exclusively or primarily with individuals with disabilities; congregate settings characterized by regimentation in daily activities, lack of privacy or autonomy, policies limiting visitors, or limits on individuals' ability to engage freely in community activities and to manage their own activities of daily living; or settings that provide for daytime activities primarily with other individuals with disabilities. This definition includes but is not limited to a nursing facility, state psychiatric hospital, intermediate care facility, or board and care facility as defined by HUD. The definition for Institution is further limited for vouchers funded with NED as further provided for in subsection (e)(2)(C) of this section. This definition does not include a prison, jail, halfway house, or other setting that persons reside in as part of a criminal proceeding.(5) Mainstream Vouchers (MVP)--HUD's Mainstream Voucher Program.(6) Non-Elderly Disabled (NED)--HUD's Non-Elderly Disabled Program.(7) Section 8--HUD's Section 8 Housing Choice Voucher Program administered by the Department.(c) Regulations Governing Program. All Section 8 Program rules and regulations, including but not limited to, criterion at 24 CFR Part 982 apply to the program.(d) Project Access in the Department's PHA Plan. Project Access households have a preference in the Department's Section 8 Program, as designated in the Department's Annual PHA Plan. The total number of Project Access Vouchers will be determined each year in the Department's PHA Plan.(e) Eligibility for the Project Access Program.(1) A household that participates in the Project Access Program must meet all Section 8 eligibility criteria, and one member of the household must meet the eligibility criteria in subparagraphs (A) and (B) of this paragraph:(A) Must have a disability as defined in 24 CFR §5.403; and(B) Must meet one of the criteria in clauses (i) or (ii) of this subparagraph:(i) be a resident of an Institution at the time of voucher issuance; or(ii) be an At-Risk Applicant that meets one of the criteria of subclauses (I) through (IV) of this clause:(I) A current recipient of Tenant-Based Rental Assistance (TBRA) from a HOME Investment Partnership Program, whose assistance from that HOME source is within six months of expiration and is not eligible for extension or renewal, and was a previous resident of an Institution prior to receiving the TBRA assistance;(II) A household with a household member who meets the criteria of an At-Risk Applicant and has lost their TBRA from a HOME Investment Partnership Program due to lack of available funding;(III) A household that is a current recipient of rental assistance funded by HHSC, whose assistance from HHSC is within six months of expiration and is not eligible for extension or renewal, and was a previous resident of an Institution immediately prior to receiving the assistance; or(IV) A household that is a current recipient of HHSC funded group home housing that was a previous resident of a state hospital immediately prior to receiving the group home assistance.(2) NED and Mainstream Vouchers have additional eligibility criteria which are:(A) The household member with the disability as defined in 24 CFR §5.403, must be 18 but under 62 years of age at the time of voucher issuance;(B) For NED only, the head of household, spouse, co-head, or sole member, must be a person with a disability; and(C) For NED only, the qualifying household member must not be an At-Risk Applicant as described in this subsection, must be residing in a nursing facility, Texas state psychiatric hospital, or intermediate care facility immediately prior to voucher issuance, and must also be referred by the applicable HHSC funded agency.(f) Waiting List and Allocation of Vouchers.(1) Unless no longer authorized as a set-aside by HUD, no more than 10 percent of the vouchers used in the Project Access Program will be reserved for households with a household member eligible for a pilot program in partnership with the HHSC for Texas state psychiatric hospitals who otherwise meets the criteria of the Project Access Program at the time of voucher issuance.(2) The Department will accept an application for the PA Program at any time. An applicant for the PA Program is placed on a Waiting List until a voucher becomes available. An applicant who qualifies for the Project Access HHSC Pilot Program in subsection (f)(1) of this section is placed on a Waiting List for Project Access HHSC Pilot Program, and also for the general PA Program Waiting List.(3) The Department will select applicants off the Waiting List for the Project Access HHSC Pilot Program, and for the general PA Program waitlist. Households will first be assessed for eligibility for NED and Mainstream Vouchers. Households eligible for PA that are not eligible for NED or Mainstream may be issued a regular Section 8 Voucher. to(4) Maintaining Status on the Project Access Waiting List. A household on the Project Access waiting list may maintain their order and eligibility for a Project Access voucher if the household: (A) Applied for the PA Program and was placed on the waiting list prior to transition out of an Institution; and(B) Received continuous rental assistance from one of the eligible sources identified under subsection (e)(1)(B)(ii) of this section or other Department funding for rental assistance from the time of exit from an Institution until the issuance of the Project Access voucher.</content><note type="source"><p>Source Note: The provisions of this §5.801 adopted to be effective April 30, 2025, 50 TexReg 2590.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c5/sc/s5.802"><num value="5.802">§5.802</num><heading>Waiting List</heading><content>(a) Purpose. The U.S. Department of Housing and Urban Development (HUD) requires that the Texas Department of Housing and Community Affairs (the Department), in its role as a public housing authority (PHA) administering a Housing Choice Voucher (HCV) program, adopt a clear approach to accepting applications, placing households on the waiting list, and selecting households from the waiting list. This rule provides the Department's policies for taking applications, managing the waiting list and selecting households for HCV assistance specifically for its 34-county jurisdictional area.(b) Applicability.(1) This rule is applicable only to the specific geographically limited jurisdiction of the Department. This jurisdictional area is comprised of discrete areas within counties (currently 34), but may be expanded or reduced upon action of the Board. The jurisdictional area reflected on the Department's website will serve as the jurisdictional area for the purpose of this rule.(2) This rule does not apply to the waiting list for statewide Project Access vouchers which is addressed in §5.801 of this chapter (relating to Project Access Initiative). The rule does not address the specific waiting list process for project-based vouchers administered by the Department or for HUD Veterans Affairs Supportive Housing (VASH) vouchers administered by the Department. Should any special purpose vouchers, including Foster Youth to Independence (FYI) vouchers, be received by the Department that serve specific populations or geographic areas other than the geographically limited jurisdiction of the Department referenced in paragraph (1) of this subsection, these waiting lists policies are not required to be utilized. Additionally, certain households might be accepted into the HCV program if required by 24 CFR §982.203, or at the direction of HUD, as directed by a court of law, or as part of a TDHCA conciliation agreement. (c) Definitions and HUD Regulations.(1) While the HUD regulations in 24 CFR Parts 5, §§903 and 982 use the word "family," in order to be consistent with other rules in this Part, this rule will use the word "household." Both words are intended to have the same meaning.(2) Nothing in this rule is intended to conflict with federal statutes or regulations that govern the HCV assistance. If HUD mandates a process or procedure to be used for application or waiting list management that is not identified in this rule, the Department will follow HUD's direction and will amend this rule as soon as practicable.(d) Outreach and Affirmative Marketing.(1) HUD regulations require that all households have an equal opportunity to apply for and receive housing assistance, and that the PHA affirmatively further fair housing goals in the administration of the program (24 CFR §982.53).(2) The Department will conduct sufficient outreach to ensure that a sufficient number of applications will be received. HUD requires that at least 75% of the households served by the Department are extremely low-income households, and therefore the Department may need to conduct special outreach to ensure that an adequate number of extremely low-income households apply for assistance. All outreach will specify the number of households that will be accepted onto the waiting list.(3) All outreach efforts relating to the opening of the waiting list will take place at least 7 calendar days prior to the first day of the application acceptance period, but no longer than 45 calendar days prior to the first day of the application acceptance period.(4) Prior to performing outreach efforts for the opening of the waiting list, the Department will analyze the characteristics of the population being served by the program and the characteristics of the population as a whole in the PHA's jurisdiction to identify underserved populations. Targeted outreach efforts will be undertaken if a comparison suggests that certain populations are underrepresented in the program. Outreach materials will be provided in English, Spanish, and any other language as determined by a 4-factor analysis within each county service area.(5) Outreach efforts will include:(A) marketing through press releases to local newspapers, including minority newspapers;(B) communicating with councils of governments, regional planning councils, and community action agencies, whose jurisdictions include any one of the counties in the jurisdiction of the Department, to:(i) request that they distribute informational materials and flyers to their clients;(ii) offer training so that they can assist households with submitting an online application; and(iii) request that they make available a computer or web interface for clients to apply;(C) developing partnerships with other organizations that serve the low-income population and agencies that provide services to elderly persons, people with disabilities, and people with Limited English proficiency (LEP); and(D) clear guidance on how a person with a disability can request a reasonable accommodation for the application process.(6) The Department will maintain a designated telephone number where interested persons can receive specific directions on how and when to apply.(e) Application.(1) The Department will utilize an electronic application process available in multiple languages.(2) Any household that wishes to receive HCV assistance must apply for admission to the program.(3) All applications must be received through the Department's online application tool. Applications received in the mail or by hand delivery will not be considered.(4) To be placed on the waiting list only an initial pre-application is required to be submitted. However, the Department may elect to skip the pre-application and use only the full application. Only when an applicant is being pulled from the waiting list to be offered a voucher will a full application submission be required. Form HUD-92006, Supplement to Application for Federally Assisted Housing, must be submitted as an attachment to the Department's full application. A household must submit the completed pre-application or application to ensure that the Department receives the information needed to determine the household's eligibility.(5) Application Acceptance Period. Applications will be accepted for a 14-calendar day period.(6) Individuals who have a disability which would prevent them from making an application online may call the Department to make special arrangements so that Department staff can complete their application in time to be included in the lottery process. A Telecommunications Device for the Deaf (TDD) is available for the deaf.(f) Placement on Waiting List.(1) No applicant has a right or entitlement to be listed on the waiting list, or to any particular position on the waiting list (24 CFR §982.202(c)).(2) Placement on the waiting list does not indicate that the household is, in fact, eligible for assistance. A final determination of eligibility will be made when the household is selected from the waiting list.(3) Creation of Waiting List. The Department will establish a single waiting list for its jurisdictional area. The Department will announce in its outreach documents the total number of households it will place on its waiting list. Except for households on a project-based waiting list, all households that are on a special purpose waiting list at the beginning of the application acceptance period and that wish to live in the Department's jurisdictional area will be placed first on the jurisdictional waiting list based on the time they have been on the special purpose waiting list (i.e. oldest time on any special purpose waiting list gets assigned the first number). All other applications received during the application acceptance period will be assigned a number using a random number generator, called a lottery process. These applications will then be placed in numerical order according to that assigned number. The Department will then place applicants on the waiting list up to the number of households the Department announced it would accept on its waiting list in rising numerical order (inclusive of the households automatically placed on the jurisdictional waiting list because they were on a special purpose waiting list at the beginning of the application acceptance period). All other applications not within the number being accepted on the wait list will not be placed on the waiting list. All applications submitted will be notified in writing of having been added to the waiting list and their number ranking, or that they were not placed on the waiting list.(4) Ineligible for Placement on the Waiting List. If the Department can determine from the information provided that a household is ineligible, the household will not be placed on the waiting list or be able to participate in the lottery process described in this section for placement on the waiting list. Where a household is determined to be ineligible, the Department will send written notification of the ineligibility determination within 14 calendar days of receiving the complete application from the Department at the Department headquarters (24 CFR §982.201(f)). The notice will specify the reasons for ineligibility, and will inform the household of its right to request an informal review and explain the process for doing so.(5) Applicants with Special Purpose Characteristics. The application for the jurisdictional waiting list will ask if the household qualifies for any of the open special purpose waiting lists, including Project Access, that the Department maintains, except for a project-based waiting list or a waiting list in which a household may not directly apply. The applicant household, if qualified, may be added to one or more special purpose waiting lists at the end of the application acceptance period, but this will not impact their lottery number for the jurisdictional waiting list.(6) If the Department permanently absorbs vouchers from another housing authority and is reassigned the contract by HUD, the waiting list from the other housing authority will be maintained, in its existing order, but will not be further expanded. That waiting list will be treated as separate from the rest of the Department's waiting list until it has been depleted. If after absorption of that area, the Department opens its jurisdictional waiting list, applicants located in the absorbed area will be eligible to also apply to this waiting list.(g) Selection of Households from the Waiting List.(1) The actual order in which households are selected from the waiting list can be affected if a household has certain characteristics designated by HUD or the Department to receive preferential treatment, such as being impacted by a particular declared disaster. Funding earmarked exclusively for households with particular characteristics, such as eligibility for Project Access or FYI, may also alter the order in which households are served. HUD requires that extremely low-income (ELI) households make up at least 75% of the households admitted to the HCV program during the Department's fiscal year. ELI households are those with annual incomes at or below 30% of the area median income. To ensure this requirement is met, the Department may skip non-ELI household on the waiting list in order to select an ELI household. (24 CFR §982.201(b)(2)). The skipped non-ELI household will retain its position on the waiting list. Low-income households admitted to the program that are "continuously assisted" under the 1937 Housing Act (24 CFR 982.4(b)), as well as low-income or moderate-income households admitted to the program that are displaced as a result of the prepayment of the mortgage or voluntary termination of an insurance contract on eligible low-income housing, are not counted for income targeting purposes (24 CFR §982.201(b)(2)(v)).(2) When a voucher becomes available, the Department will select the household at the top of the waiting list. The order of admission from the waiting list IS NOT based on household size, or on the household unit size for which the household qualifies under the occupancy guidelines. If the Department does not have sufficient funds to subsidize the household unit size of the household at the top of the waiting list, the Department WILL NOT skip the top household to admit an applicant with a smaller household unit size. Instead, the household at the top of the waiting list will be admitted when sufficient funds are available. (24 CFR §982.204(d) and(e)).(3) When a household comes to the top of the waiting list and the Department is ready to issue a voucher, the household will be notified and required to complete the full application. The household will also be required to complete a Personal Declaration Form. A household that does not respond to the request for full application more than three times will be sent a notice consistent with program policies removing them from the waiting list.(4) A household's decision to apply for, receive, or refuse non-PHA federal, state, or local housing assistance will not affect the household's placement on the jurisdictional waiting list, or any preferences for which the household may qualify, except as specified in §5.801 of this chapter.(h) Reporting Changes in Household Circumstances While On the Waiting List. While a household is on the waiting list, the household must immediately inform the Department of changes in contact information, including current residence, mailing address, and phone number. The changes must be submitted in writing. Failure to provide this information may prevent the Department from being able to reach a household if a voucher becomes available and may result in removal from the waiting list.(i) Updating of the Waiting List and Removal from the Waiting List.(1) To ensure that the Department's waiting list reflects the most current applicant information, the waiting list may be updated no less than every twelve months.(2) Process.(A) To update the waiting list, the Department will send an update request to each household on the waiting list to determine whether the household continues to be interested in, and qualifies for, the program. This update request will be sent to the last address on record for the household and to any email address provided by the household.(B) The update request will provide a deadline by which the household must respond, which will be approximately 10 days from the date the letter is sent, and will state that failure to respond will result in the applicant's name being removed from the waiting list.(C) The household's response to the Department must be in writing and may be delivered, by mail, or by email. Responses should be postmarked or received by the Department no later than the deadline specified in the Department's letter.(D) If the household fails to respond by the specified deadline, the household will be removed from the waiting list without further notice. If the notice is returned to the Department by the post office with no forwarding address, the applicant will be removed from the waiting list without further notice. If the notice is returned to the Department by the post office with a forwarding address, the notice will be re-sent to the address indicated. The household will have a new deadline specified by which to respond.(3) Removal from the Waiting List.(A) If a household is removed from the waiting list for failure to respond, the Department may reinstate the household to their former position on the waiting list if it determines that the lack of response was due to Department error, or to circumstances beyond the household's control. Greater flexibility in this criterion may be provided as a reasonable accommodation.(B) If a household is removed from the waiting list because they have failed to respond to the Department's request for more information/updates or the Department has determined that they are no longer eligible for assistance, a notice will be sent to the household's address of record as well as to any alternate address or email address provided on the initial application. The notice will state the reasons the household was removed from the waiting list and will inform the household that they have 10 calendar days from the date of the written correspondence to request an informal review of the Department's decision (24 CFR §982.201(f)).(C) If a household accepts a tenant-based public housing voucher from the Department, the household will be removed from all tenant-based public housing Department waiting lists.</content><note type="source"><p>Source Note: The provisions of this §5.802 adopted to be effective April 30, 2025, 50 TexReg 2590.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c6"><num value="6">CHAPTER 6</num><heading>COMMUNITY AFFAIRS PROGRAMS</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c6/scA"><num value="A">SUBCHAPTER A</num><heading>GENERAL PROVISIONS</heading><section identifier="/us/state/tx/tac/t10/p1/c6/scA/s6.1"><num value="6.1">§6.1</num><heading>Purpose and Goals</heading><content>(a) The rules established herein are for CSBG, LIHEAP, and DOE-WAP. Additional program specific requirements are contained within each program Subchapter and Chapters 1 and 2 of this title (relating to Administration and Enforcement, respectively).(b) Programs administered by the Community Affairs (CA) Division of the Texas Department of Housing and Community Affairs (the Department) support the Department's statutorily assigned mission.(c) The Department accomplishes its mission chiefly by acting as a conduit for federal grant funds and other assistance for housing and community affairs programs. Ensuring program compliance with the state and federal laws that govern the CA programs is another important part of the Department's mission. Oversight and program mandates ensure state and federal resources are expended in an efficient and effective manner.(d) In instances of a disaster, the Department may pursue waivers or explore flexibilities as addressed in HHS Information Memorandum (IM) 154 (and any other subsequent guidance or similar guidance for LIHEAP or DOE WAP) through HHS or DOE within the CA programs in order to serve low income Texans. Non-annual federal allocations to any of these programs made to address disaster response (including but not limited to pandemic response or other temporary relief programs) are also subject to these rules unless federal or state law require different terms and conditions or provisions of these rules are waived following the procedures in this title and reflected in the Contract.</content><note type="source"><p>Source Note: The provisions of this §6.1 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scA/s6.2"><num value="6.2">§6.2</num><heading>Definitions</heading><content>(a) To ensure a clear understanding of the terminology used in the context of the CSBG, LIHEAP, and DOE-WAP programs of the Community Affairs Division, a list of terms and definitions has been compiled as a reference. Any capitalized terms not specifically defined in this section or any section referenced in this chapter shall have the meaning as defined in Chapter 2306 of the Tex. Gov't Code, Chapter 1 of this title (relating to Administration), Chapter 2 of this title (relating to Enforcement), or applicable federal regulations.(b) The words and terms in this chapter shall have the meanings described in this subsection unless the context clearly indicates otherwise. Refer to Subchapters B, C, and D of this chapter for program specific definitions.(1) Affiliate--An entity related to an Applicant that controls by contract or by operation of law the Applicant or has the power to control the Applicant or a third entity that controls, or has the power to control both the Applicant and the entity. Examples include but are not limited to entities submitting under a common application, or instrumentalities of a unit of government. This term also includes any entity that is required to be reported as a component entity under Generally Accepted Accounting Standards, is required to be part of the same Single Audit as the Applicant, is reported on the same IRS Form 990, or is using the same federally approved indirect cost rate.(2) Awarded Funds--The amount of funds or proportional share of funds committed by the Department's Board to a Subrecipient or Service Area.(3) Categorical Eligible/Eligibility--A method where a Subrecipient must deem a Household to be eligible for LIHEAP or DOE benefits if that Household includes at least one member that receives assistance under specific federal programs as identified in this chapter or by Contract.(4) Child--Household member not exceeding 18 years of age.(5) Code of Federal Regulations (CFR)--The codification of the general and permanent rules and regulations of the federal government as adopted and published in the Federal Register.(6) Community Action Agencies (CAAs)--Private Nonprofit Organizations and Public Organizations that carry out the Community Action Program, which was established by the 1964 Economic Opportunity Act to fight poverty by empowering the poor in the United States.(7) Community Services Block Grant (CSBG)--An HHS-funded program which provides funding for CAAs and other Eligible Entities that seek to address poverty at the community level.(8) Comprehensive Energy Assistance Program (CEAP)--A LIHEAP-funded program to assist low-income Households, in meeting their immediate home energy needs.(9) Concern--A policy, practice or procedure that has not yet resulted in a Finding or Deficiency, but if not changed will or may result in a Finding or Deficiency.(10) Contract--The executed written agreement between the Department and a Subrecipient performing an activity related to a program that describes performance requirements and responsibilities assigned by the document, for which the first day of the Contract Term is the point at which program funds may be considered by a Subrecipient for Expenditure, unless otherwise directed in writing by the Department.(11) Contract System--A web-based data collection platform which allows Subrecipients of Community Services programs to sign and view Contracts and submit performance and financial reports online.(12) Contract Term--The period of Expenditure under a Contract.(13) Contracted Funds--The gross amount of funds Obligated by the Department to a Subrecipient as reflected in a Contract.(14) Cost Reimbursement--A Contract sanction whereby reimbursement of costs incurred by the Subrecipient is made only after the Department has conducted such review as it deems appropriate, which may be complete or limited, such as on a sampling basis, and approved backup documentation provided by the Subrecipient to support such costs. Such a review and approval does not serve as a final approval and all uses of advanced funds remain subject to review in connection with future or pending reviews, monitoring, or audits and in no way serves to constrain or limit them.(15) Declaration of Income Statement (DIS)--A Department-approved form used only when it is not possible for an applicant to obtain third party or firsthand verification of income.(16) Deficiency--Consistent with the CSBG Act, a Deficiency exists when an Eligible Entity has failed to comply with the terms of an agreement or a State plan, or to meet a State requirement. The Department's determination of a Deficiency may be based on the Eligible Entity's failure to provide CSBG services, or to meet appropriate standards, goals, and other requirements established by the State, including performance objectives, or as provided for in §2.203(b) of this title (relating to Termination and Reduction of Funding for CSBG Eligible Entities). A Finding, Observation, or Concern that is not corrected, or is repeated, may become a Deficiency.(17) Deobligate/Deobligation--The partial or full removal of Contracted Funds from a Subrecipient. Partial Deobligation is the removal of some portion of the full Contracted Funds from a Subrecipient, leaving some remaining balance of Contracted Funds to be administered by the Subrecipient. Full Deobligation is the removal of the full amount of Contracted Funds from a Subrecipient. This definition does not apply to CSBG non-Discretionary funds.(18) Department of Energy (DOE)--Federal department that provides funding for a weatherization assistance program.(19) Department of Health and Human Services (HHS)--Federal department that provides funding for CSBG and LIHEAP energy assistance and weatherization.(20) Discretionary Funds--CSBG funds, excluding the 90% of the state's annual allocation that is designated for statewide allocation to CSBG Eligible Entities under §6.203 of this subchapter (relating to Formula for Distribution of CSBG Funds) and state administrative funds, maintained by the Department, at its discretion, for CSBG allowable uses as authorized by the CSBG Act.(21) Dwelling Unit--A house, including a stationary mobile home, an apartment, a group of rooms, or a single room occupied as separate living quarters.(22) Elderly Person--(A) For CSBG, a person who is 55 years of age or older; and(B) For CEAP and WAP, a person who is 60 years of age or older.(23) Eligible Entity--Those local organizations in existence and designated by the federal and state government to administer programs created under the Federal Economic Opportunity Act of 1964. This includes CAAs, limited-purpose agencies, and units of local government. The CSBG Act defines an Eligible Entity as an organization that was an Eligible Entity on the day before the enactment of the Coats Human Services Reauthorization Act of 1998 (October 27, 1998), or is designated by the Governor to serve a given area of the state and that has a tripartite board or other mechanism specified by the state for local governance.(24) Emergency--defined as:(A) A Natural Disaster;(B) A significant home energy supply shortage or disruption;(C) Significant increase in the cost of home energy, as determined by the Secretary of HHS;(D) A significant increase in home energy disconnections reported by a utility, a state regulatory agency, or another agency with necessary data;(E) A significant increase in participation in a public benefit program such as the food stamp program carried out under the Food Stamp Act of 1977 (7 U.S.C. §§2011, et seq.), the national program to provide supplemental security income carried out under Title XVI of the Social Security Act (42 U.S.C. §§1381, et seq.) or the state temporary assistance for needy families program carried out under Part A of Title IV of the Social Security Act (42 U.S.C. §§601, et seq.), as determined by the head of the appropriate federal agency;(F) A significant increase in unemployment, layoffs, or the number of Households with an individual applying for unemployment benefits, as determined by the Secretary of Labor; or(G) An event meeting such criteria as the Secretary of HHS, at the discretion of the Secretary of HHS, may determine to be appropriate.(25) Expenditure--Funds that have been accrued or remitted for purposes of the award.(26) Extended Foster Care--The Texas Department of Family Services program as identified in 40 TAC §700.346 or successor regulation.(27) Families with Young Children--A Household that includes a Child age five or younger. For LIHEAP-WAP only, a Family with Young Children also includes a Household that has a pregnant woman.(28) Federal Poverty Income Guidelines--The official poverty income guidelines as issued by HHS annually.(29) Finding--A Subrecipient's material failure to comply with rules, regulations, the terms of the Contract or to provide services under each program to meet appropriate standards, goals, and other requirements established by the Department or funding source (including performance objectives). A Finding impacts the organization's ability to achieve the goals of the program and jeopardizes continued operations of the Subrecipient. Findings include the identification of an action or failure to act that results or may result in disallowed costs.(30) Gross Annual Income--Defined as the total amount of non-excluded income earned annually before taxes or any deductions for all Household members 18 years of age and older.(31) High Energy Burden--A Household whose energy burden exceeds 11% of their Gross Annual Income, determined by dividing a Household's annual home energy costs by the Household's Gross Annual Income.(32) High Energy Consumption--A Household that is billed more than $1000 annually for related fuel costs for heating and cooling their Dwelling Unit.(33) Household--An individual or group of individuals, excluding unborn Children, who are living together as one economic unit. For DOE WAP this includes all persons living in the Dwelling Unit. For CSBG/LIHEAP it includes these persons customarily purchasing residential energy in common or making undesignated payments for energy. In CSBG/LIHEAP a live-in aide, or a Renter with a separate lease that includes a separate bill for utilities is not considered a Household member.(34) Inverse Ratio of Population Density Factor--The number of square miles of a county divided by the number of poverty Households of that county.(35) Low Income Household--Defined as:(A) For DOE WAP, a Household whose total combined annual income is at or below 200% of the Federal Poverty Income guidelines, or a Household who is Categorically Eligible;(B) For CEAP and LIHEAP-WAP, a Household whose total combined annual income is at or below 150% of the Federal Poverty Income guidelines, or a Household who is Categorically Eligible; and(C) For CSBG, a Household whose total combined annual income is at or below 125% of the Federal Poverty Income guidelines.(36) Low Income Home Energy Assistance Program (LIHEAP)--An HHS funded program which serves Low Income Households who seek assistance for their home energy bills and/or weatherization services.(37) Means Tested Veterans Program--A program whereby applicants who meet certain Veterans Affairs requirements, including but not limited to income and net worth limits set by Congress, receive payments from the U.S. Department of Veterans Affairs.(38) Mixed Status Household--A Household that contains one or more members that are U.S. Citizens, U.S. Nationals, or Qualified Aliens, and one or more members that are Unqualified Aliens.(39) Monthly Performance and Expenditure Report--Two separate but linked reports indicating a Subrecipient's or Eligible Entity's performance and financial information, due to the Department on or before the fifteenth day of each month of the Contract Term following the reporting month. If the fifteenth falls on a weekend or holiday, the reports must still be entered on or before the fifteenth. The data the Department collects is subject to change based on changes required by DOE or HHS.(40) Obligation--Funds become obligated upon approval of an award to Subrecipient by the Department's Governing Board, unless the Department does not receive sufficient funding from the cognizant federal entity.(41) Observation--A notable policy, practice or procedure observed through the course of monitoring.(42) Office of Management and Budget (OMB)--Office within the Executive Office of the President of the United States that oversees the performance of federal agencies and administers the federal budget.(43) OMB Circulars--Instructions and information issued by OMB to Federal agencies that set forth principles and standards for determining costs for federal awards and establish consistency in the management of grants for federal funds. Uniform cost principles and administrative requirements for local governments and for nonprofit organizations, as well as audit standards for governmental organizations and other organizations expending federal funds are set forth in 2 CFR Part 200, unless different provisions are required by statute or approved by OMB.(44) Outreach--The method used by a Subrecipient that attempts to identify customers who are in need of services, alerts these customers to service provisions and benefits, and helps them use the services that are available. Outreach is utilized to locate, contact and engage potential customers.(45) Performance Statement--A document which identifies the services to be provided by a Subrecipient.(46) Person with a Disability--Any individual who is:(A) An individual described in 29 U.S.C. §701 or has a disability under 42 U.S.C. §§12131 - 12134;(B) Disabled as defined in 42 U.S.C. §1382(a)(3)(A), 42 U.S.C. §423, or in 42 U.S.C. §15001;(C) Receiving benefits under 38 U.S.C. Chapter 11 or 15; or(D) An individual with a disability as defined in §1.202(4).(47) Population Density--The number of persons residing within a given geographic area of the state.(48) Private Nonprofit Organization--An organization described in §501(c) of the Internal Revenue Code (the Code) of 1986 and which is exempt from taxation under subtitle A of the Code and that is not a Public Organization.(49) Production Schedule--The estimated monthly and quarterly performance targets and Expenditures for a Contract Term. The Production schedule must be signed by the applicable approved signatory and approved by the Department in writing.(50) Program Year--January 1 through December 31 of each calendar year for CSBG and LIHEAP; July 1 through June 30 of each calendar year for DOE WAP.(51) Public Organization--A unit of government, as established by the Legislature of the State of Texas. Includes, but may not be limited to, cities, counties, and councils of governments.(52) Qualified Alien--A person that is not a U.S. Citizen or a U.S. National and is described at 8 U.S.C. §1641(b) and (c).(53) Referral--The documented process of providing information to a customer Household about an agency, program, or professional person that can provide the service(s) needed by the customer.(54) Reobligate/Reobligation--The reallocation of Deobligated funds to other Subrecipients or back to the Department for allowable uses.(55) Service Area--The geographical area where a Subrecipient must provide services under a Contract.(56) Single Audit--The audit required by OMB, 2 CFR Part 200, Subpart F, or Tex. Gov't Code, Chapter 738, Uniform Grant and Contract Management, as reflected in an audit report.(57) State--The State of Texas or the Department, as indicated by context.(58) Subcontractor--A person or an organization with whom the Subrecipient contracts with to provide services.(59) Subrecipient--An organization that receives federal funds passed through the Department to operate the CSBG, CEAP, DOE WAP, and/or LIHEAP program(s).(60) Supplemental Security Income (SSI)--A means tested program run by the Social Security Administration.(61) System for Award Management (SAM)--Combined federal database that includes the Excluded Parties List System (EPLS).(62) Systematic Alien Verification for Entitlements (SAVE)--Automated intergovernmental database that allows authorized users to verify the immigration status of applicants.(63) Texas Administrative Code (TAC)--A compilation of all state agency rules in Texas.(64) Texas Grant Management Standards (TxGMS) and Uniform Assurances--The standardized set of financial management procedures and Assurances established by Tex. Gov't Code Chapter 783 for Contracts executed on or after January 1, 2022, and as further described in Chapter 1 Subchapter D of this title (relating to Uniform Guidance for Recipients of Federal and State Funds). The term "Assurance" refers to a statement of compliance with federal or state law that is required of a local government as a condition for the receipt Contract funds to promote the efficient use of public funds in local government and in programs requiring cooperation among local, state, and Federal agencies. This includes all Public Organizations. In addition, Tex. Gov't Code Chapter 2105, subjects Subrecipients of federal block grants (as defined therein) to the Texas Grant Management Standards and Uniform Assurances.(65) Uniform Grant Management Standards (UGMS)--The standardized set of financial management procedures and definitions established by Tex. Gov't Code Chapter 783 for Contracts executed before January 1, 2022, to promote the efficient use of public funds by requiring consistency among grantor agencies in their dealings with grantees, and by ensuring accountability for the expenditure of public funds. State agencies are required to adhere to these standards when administering grants and other financial assistance agreements with cities, counties and other political subdivisions of the state. This includes all Public Organizations. In addition, Tex. Gov't Code Chapter 2105, subjects Subrecipients of federal block grants (as defined therein) to the Uniform Grant and Contract Management Standards.(66) United States Code (U.S.C.)--A consolidation and codification by subject matter of the general and permanent laws of the United States.(67) Unqualified Alien--A person that is not a U.S. Citizen, U.S. National, or a Qualified Alien.(68) Vendor Agreement--An agreement between the Subrecipient and energy vendors that contains assurances regarding fair billing practices, delivery procedures, and pricing for business transactions involving LIHEAP beneficiaries.(69) Vulnerable Populations--Elderly persons, Persons with a Disability, and Households with a Child at or below the age of five.(70) Weatherization Assistance Program (WAP)--DOE and LIHEAP funded program designed to reduce the energy cost burden of Low Income Households through the installation of energy efficient weatherization materials and education in energy use.</content><note type="source"><p>Source Note: The provisions of this §6.2 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scA/s6.3"><num value="6.3">§6.3</num><heading>Subrecipient Contract</heading><content>(a) Subject to prior Board approval, the Department and a Subrecipient shall enter into and execute a Contract for the disbursement of program funds. The Department, acting by and through its Executive Director or his/her designee, may authorize, execute, and deliver authorized modifications and/or amendments to the contract, as allowed by state and federal laws and rules.(b) The governing body of the Subrecipient must pass a resolution authorizing its Executive Director or his/her designee to have signature authority to enter into contracts, sign amendments, and review and approve reports. All Contract actions including extensions, amendments or revisions must be ratified by the governing body at a subsequent regularly scheduled meeting no later than 120 calendar days from the Contract action. Minutes relating to this resolution must be on file at the Subrecipient level.(c) Within 45 calendar days following the conclusion of a Contract issued by the Department, the Subrecipient shall provide a final expenditure and final performance report regarding funds expended under the terms of the Contract.(d) A Performance Statement and budget are attachments to the Contract between the Subrecipient and the Department. Execution of the Contract enables the Subrecipient to access funds through the Department's Contract System.(e) Amendments and Extensions to Contracts.(1) Except for quarterly amendments to non-Discretionary CSBG Contracts to add funds as they are received from HHS and amendments to reflect changes to laws governing Programs, and excluding amendments that move funds within budget categories but do not extend time or add funds, amendment and extension requests must be submitted in writing by the Subrecipient, and will not be granted if any of the following circumstances exist:(A) If the award for the Contract was competitively awarded and the amendment would materially change the scope of Contract performance;(B) If the Subrecipient is delinquent in the submission of their Single Audit or the Single Audit Certification form required by §1.403 of this title (relating to Single Audit Requirements), in Chapter 1 of this title (relating to Administration);(C) If the Subrecipient owes the Department disallowed amounts in excess of $1,000 and a Department-approved repayment plan is not in place or has been violated;(D) For amendments adding funds (not applicable to amendments for extending time) if the Department has cited the Subrecipient for violations within §6.11 of this subchapter (related to Compliance Monitoring) and the corrective action period has expired without correction of the issue or a satisfactory plan for correction of the issue or has otherwise notified the Subrecipient in accordance with §1.411 of this title (relating to Administration of Block Grants under Chapter 2105 of the Tex. Gov't Code) and corrective action has not been taken; or(E) A member of the Subrecipient's board has been debarred and has not been removed.(2) Within 30 calendar days of a Subrecipient's request for a Contract amendment or extension request the request will be processed or denied in writing. If denied, the applicable reason from this subsection or other applicable reason will be cited. The Subrecipient may appeal the decision to the Executive Director consistent with Chapter 1, §1.7, of this title (relating to the Appeals Process).</content><note type="source"><p>Source Note: The provisions of this §6.3 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scA/s6.4"><num value="6.4">§6.4</num><heading>Income Determination</heading><content>(a) Eligibility for program assistance is determined under the Federal Poverty Income Guidelines and calculated as described herein (in some Programs certain forms of income may qualify the Household as Categorically Eligible for assistance; however, Categorical Eligibility does not determine the level of benefit, which is determined through the Income Determination process). (b) Income means cash receipts earned and/or received by all Household members 18 years of age and older before taxes during applicable tax year(s), but not the excluded income listed in subsection (d) of this section. Income is to be based on the Gross Annual Income. (c) Exceptions to the use of Gross Annual Income are forms of income: (1) From non-farm or farm self-employment and independent contract work, net receipts must be used (i.e., receipts from a person's own business or from an owned or rented farm after deductions for business or farm expenses); and (2) From gambling or lottery winnings, net income must be used. (d) If an income source is not excluded in this subsection, it must be included when determining income eligibility. Excluded Income: (1) Capital gains; (2) Any assets drawn down as withdrawals from a bank; (3) Balance of funds in a checking or savings account; (4) Any amounts in an "individual development account" are excluded from assets and any assistance, benefit, or amounts earned by or provided to the individual development account are excluded from income, as provided by the Assets for Independence Act, as amended (42 U.S.C. 604(h)(4)); (5) Proceeds from the sale of property, a house, or a car; (6) One-time payments from a welfare agency to a family or person who is in temporary financial difficulty; (7) Tax refunds, Earned Income Tax Credit refunds, the economic impact payments from the Internal Revenue Service under section 103 of the American Taxpayer Act; (8) Jury duty compensation; (9) Gifts, loans, and lump-sum inheritances; (10) One-time insurance payments, or compensation for injury; (11) Non-cash benefits, such as the employer-paid or union-paid portion of health insurance or other employee fringe benefits; (12) Reimbursements (for mileage, gas, lodging, meals, etc.); (13) Employee fringe benefits such as food or housing received in lieu of wages; (14) The value of food and fuel produced and consumed on farms; (15) The imputed value of rent from owner-occupied non-farm or farm housing; (16) Federal non-cash benefit programs such as Medicare, Medicaid, Supplemental Nutrition Assistance Program (SNAP); school lunches; and housing assistance (Medicare deduction from Social Security Administration benefits should not be counted as income); (17) Combat zone pay to the military; (18) College scholarships, Pell and other grant sources, assistantships, fellowships and work study, VA Education Benefits (GI Bill), Bureau of Indian Affairs student assistance programs (20 U.S.C. 1087uu); (19) Child support payments received by the payee (amount paid by payor is included income); (20) Income of Household members under 18 years of age including payment to Children under the age of 18 made payable to a person over the age of 18; (21) Stipends from senior companion programs, such as Retired Senior Volunteer Program and Foster Grandparents Program; (22) Allowances, earnings, and payments to AmeriCorps participants under the National and Community Service Act of 1990 (42 U.S.C. 12637(d)); (23) Depreciation for farm or business assets; (24) Reverse mortgages; (25) Payments for care of Foster Children. This includes payments to a host Household for individuals in Extended Foster Care; (26) Payments or allowances made under the Low-Income Home Energy Assistance Program (42 U.S.C. 8624(f)); (27) Any amount of crime victim compensation that provides medical or other assistance (or payment or reimbursement of the cost of such assistance) under the Victims of Crime Act of 1984 received through a crime victim assistance program, unless the total amount of assistance that the applicant receives from all such programs is sufficient to fully compensate the applicant for losses suffered as a result of the crime (34 U.S.C. 20102(c)). This exclusion also applies to assets; (28) Federal assistance for a major disaster or emergency received by individuals and families under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Pub. L. 93-288, as amended) and comparable disaster assistance provided by States, local governments, and disaster assistance organizations (42 U.S.C. 5155(d)).; (29) Allowances, earnings, and payments to individuals participating in programs under the Workforce Innovation and Opportunity Act (29 U.S.C. 3101)); (30) Payments received from programs funded under Title V of the Older Americans Act of 1965 (42 U.S.C. 3056(g)); (31) The value of any child care provided or arranged (or any amount received as payment for such care or reimbursement for costs incurred for such care) under the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858(q)); (32) Certain payments received under the Alaska Native Claims Settlement Act (43 U.S.C. 1626(c)); (33) Income derived from certain submarginal land of the United States that is held in trust for certain Indian tribes (25 U.S.C. 459(e)); (34) Income derived from the disposition of funds to the Grand River Band of Ottawa Indians (94, §6); (35) The first $2,000 of per capita shares received from judgment funds awarded by the National Indian Gaming Commission or the U.S. Claims Court, the interests of individual Indians in trust or restricted lands, and the first $2000 per year of income received by individual Indians from funds derived from interests held in such trust or restricted lands (25 U.S.C. 1407 - 1408). This exclusion does not include proceeds of gaming operations regulated by the Commission; (36) Payments received on or after January 1, 1989, from the Agent Orange Settlement Fund (101) or any other fund established pursuant to the settlement in In Re Agent Orange Liability Litigation, M.D.L. No. 381 (E.D.N.Y.); (37) Payments received under the Maine Indian Claims Settlement Act of 1980 (96, 25 U.S.C. 1728); (38) Payments by the Indian Claims Commission to the Confederated Tribes and Bands of Yakima Indian Nation or the Apache Tribe of Mescalero Reservation (95); (39) Any allowance paid to children of Vietnam veterans born with spina bifida (38 U.S.C. 1802-05), children of women Vietnam veterans born with certain birth defects (38 U.S.C. 1811-16), and children of certain Korean and Thailand service veterans born with spina bifida (38 U.S.C. 1821-22) is excluded from income and assets (38 U.S.C. 1833(c)); (40) Payments, funds, or distributions authorized, established, or directed by the Seneca Nation Settlement Act of 1990 (25 U.S.C. 1774f(b)); (41) Payments from any deferred U.S. Department of Veterans Affairs disability benefits that are received in a lump sum amount or in prospective monthly amounts (42 U.S.C. §1437a(b)(4)); (42) A lump sum or a periodic payment received by an individual Indian pursuant to the Class Action Settlement Agreement in the case entitled Elouise Cobell et al. v. Ken Salazar et al., 816 F.Supp.2d 10 (Oct. 5, 2011 D.D.C.), for a period of one year from the time of receipt of that payment as provided in the Claims Resolution Act of 2010 (Pub. L. 111-291); (43) Per capita payments made from the proceeds of Indian Tribal Trust Settlements listed in IRS Notice 2013-1 and 2013-55 must be excluded from annual income unless the per capita payments exceed the amount of the original Tribal Trust Settlement proceeds and are made from a Tribe's private bank account in which the Tribe has deposited the settlement proceeds. Such amounts received in excess of the Tribal Trust Settlement are included in the gross income of the members of the Tribe receiving the per capita payments as described in IRS Notice 2013-1. The first $2,000 of per capita payments are also excluded from assets unless the per capita payments exceed the amount of the original Tribal Trust Settlement proceeds and are made from a Tribe's private bank account in which the Tribe has deposited the settlement proceeds (25 U.S.C. 117b(a), 25 U.S.C. 1407);(44) Payments of up to $100,000 a year from an account established under the Achieving a Better Life Experience Act of 2014 or the ABLE Act of 2014 (P.L. 113-295) to a qualified beneficiary that are expended on qualified disability expenses; (45) The value of the allotment provided to an eligible household under the Food Stamp Act of 1977 (7 U.S.C. 2017(b));(46) Payments, including for supportive services and reimbursement of out-of-pocket expenses, for volunteers under the Domestic Volunteer Service Act of 1973 (42 U.S.C. 5044(f)(1), 42 U.S.C. 5058), are excluded from income except that the exclusion shall not apply in the case of such payments when the Chief Executive Officer of the Corporation for National and Community Service appointed under 42 U.S.C. 12651c determines that the value of all such payments, adjusted to reflect the number of hours such volunteers are serving, is equivalent to or greater than the minimum wage then in effect under the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et seq.) or the minimum wage in Texas, whichever is the greater (42 U.S.C. 5044(f)(1)); (47) Amounts of student financial assistance funded under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070), including awards under Federal work-study programs or under the Bureau of Indian Affairs student assistance programs (20 U.S.C. 1087uu). For section 8 programs only (42 U.S.C. 1437f), any financial assistance in excess of amounts received by an individual for tuition and any other required fees and charges under the Higher Education Act of 1965 (20 U.S.C. 1001 et seq. ), from private sources, or an institution of higher education (as defined under the Higher Education Act of 1965 (20 U.S.C. 1002)), shall not be considered income to that individual if the individual is over the age of 23 with dependent children (Pub. L. 109-115, section 327) (as amended);(48) Allowances paid to certain children of certain Thailand service veterans born with spina bifida (38 U.S.C. 1822);(49) Earned income tax credit (EITC) refund payments received on or after January 1, 1991, for programs administered under the United States Housing Act of 1937, title V of the Housing Act of 1949, section 101 of the Housing and Urban Development Act of 1965, and sections 221(d)(3), 235, and 236 of the National Housing Act (26 U.S.C. 32(l));(50) The amount of any refund (or advance payment with respect to a refundable credit) issued under the Internal Revenue Code is excluded from income and assets for a period of 12 months from receipt (26 U.S.C. 6409); (51) Allowances, earnings, and payments to individuals participating in programs under the Workforce Investment Act of 1998 reauthorized as the Workforce Innovation and Opportunity Act of 2014 (29 U.S.C. 3241(a)(2));(52) Any amount received under the Richard B. Russell School Lunch Act (42 U.S.C. 1760(e)) and the Child Nutrition Act of 1966 (42 U.S.C. 1780(b)), including reduced-price lunches and food under the Special Supplemental Food Program for Women, Infants, and Children (WIC); (53) Any amounts (i) not actually received by the family, (ii) that would be eligible for exclusion under 42 U.S.C. 1382b(a)(7), and (iii) received for service-connected disability under 38 U.S.C. chapter 11 or dependency and indemnity compensation under 38 U.S.C. chapter 13 (25 U.S.C. 4103(9)(C)) as provided by an amendment by the Indian Veterans Housing Opportunity Act of 2010 (Pub. L. 111-269 section 2) to the definition of income applicable to programs under the Native American Housing Assistance and Self-Determination Act (NAHASDA) (25 U.S.C. 4101 et seq. );(54) Any amount in an Achieving Better Life Experience (ABLE) account, distributions from and certain contributions to an ABLE account established under the ABLE Act of 2014 (Pub. L. 113-295.), as described in Notice PIH 2019-09/H 2019-06 or subsequent or superseding notice is excluded from income and assets;(55) Assistance received by a household under the Emergency Rental Assistance Program pursuant to the Consolidated Appropriations Act, 2021 (Pub. L. 116-260, section 501(j)), and the American Rescue Plan Act of 2021 (Pub. L. 117-2, section 3201); and(56) Any other items which are excluded by virtue of federal or state legislation or by adopted federal regulations that have taken effect. The Department will, from time to time, provide on its website updated links to such federal or state exclusions. Notwithstanding such information, a Subrecipient may rely on any adopted federal or state exclusion on and after the date on which it took effect. (e) The requirements for determining whether an applicant Household is eligible for assistance require the Subrecipient to annualize the Household income based on verifiable documentation of income, within 30 days of the application date. (f) The Subrecipient must document all sources of income, including excluded income, for 30 days prior to the date of application, for all household members 18 years of age or older. (g) Identify all income sources, not on the excluded list, for income calculation. (1) The Subrecipient must calculate projected annual income by annualizing current income. Income that may not last for a full 12 months should be calculated assuming current circumstances will last a full 12 months, unless it can be documented that employment is less than 12 months/year and pay is not prorated over the entire 12 month period. For incomes not able to be annualized over a 12 month period, the income shall be calculated on the total annual earning period (e.g., for a teacher paid only nine months a year, the annual income should be the income earned during those nine months). In limited cases where income is not paid hourly, weekly, bi-weekly, semi-monthly nor monthly, the Subrecipient may contact the Department to determine an alternate calculation method in unique circumstances on a case-by-case basis. (2) For all customers including those with categorical eligibility, the Subrecipient must collect verifiable documentation of Household income received in the 30 days prior to the date of application. (3) Once all sources of income are known, Subrecipient must convert reported income to an annual figure. (One-time employment income should be added to the total after the income has been annualized.) Convert periodic wages to annual income by multiplying: (A) Hourly wages by the number of hours worked per year (2,080 hours for full-time employment with a 40-hour week and no overtime); (B) Weekly wages by 52; (C) Bi-weekly wages (paid every other week) by 26; (D) Semi-monthly wages (paid twice each month) by 24; and (E) Monthly wages by 12. (h) If a federal or state requirement provides an updated definition of income or method for calculating income, the Department will provide written notice to Subrecipients about the implementation date for the new requirements. (i) If proof of income is unobtainable, the applicant must complete and sign a Declaration of Income Statement (DIS). (j) For CSBG and LIHEAP, a live in aide or attendant is not considered part of the Household for purposes of determining Household income, but is considered for a benefit based on the size of the Household. Example: A Household applies for assistance. There are four people in the Household. One of the four people is a live-in aide. To determine if the Household is qualified, annualize the income of the other three Household members and compare it to the three person income limit. However, if the amount of benefit is based on Household size (such as benefit level based on the number of people in the Household), then this is a four person Household. (k) A Subrecipient shall not discourage anyone from applying for assistance. Subrecipient shall provide all potential customers with an opportunity to apply for programs.</content><note type="source"><p>Source Note: The provisions of this §6.4 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scA/s6.5"><num value="6.5">§6.5</num><heading>Application Intake and Frequency of Determining Customer Eligibility</heading><content>(a) Subrecipient shall:(1) Accept applications at sites that are geographically accessible to all Households in their Service Area (Applications may be accepted online if so elected by the Subrecipient, but must have a physical location(s) within the Service Area); and(2) Provide a Household who has insufficient means to travel to an application intake site, are physically infirm, or are technically unable to submit applications electronically (e.g., computer illiterate, insufficient equipment, disability that prevents submitting the application) with an alternative means to submit an application.(b) For CEAP and CSBG, income must be verified with a new application at least every twelve months.(c) For WAP, income must be verified at the initial application. If the customer is on a waitlist for over 12 months since initial application, Household income must be updated within at least 12 months of the Dwelling Unit work start date, as defined within program forms.</content><note type="source"><p>Source Note: The provisions of this §6.5 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scA/s6.6"><num value="6.6">§6.6</num><heading>Subrecipient Contact Information and Required Notifications</heading><content>(a) In accordance with §1.22 of this title (relating to Providing Contact Information to the Department), Subrecipient will notify the Department through the Contract System and provide contact information for key management staff (Executive Director, Chief Financial Officer, Program Director/Manager/Coordinator or any other person, regardless of title, generally performing such duties) vacancies and new hires within 30 days of such occurrence.(b) For Eligible Entities, as vacancies exceed the 90 day threshold within the Eligible Entity's Board of Directors or for a Public Organization for the advisory board of directors, the Department will be notified of such vacancies and, if applicable, the sector the board member or advisory board member represented.(c) Contact information for all members of the Board of Directors or advisory board of directors must be provided to the Department at least annually, and shall include: each board member's name, the position they hold, their term, their mailing address (which must be different from the organization's mailing address), phone number (different from the organization's phone number), fax number (if applicable), and the direct e-mail address for the chair of the advisory board.(d) The Department will rely solely on the contact information supplied by the Subrecipient in the Department's web-based Contract System. It is the Subrecipient's sole responsibility to ensure such information is current, accurate, and complete. Correspondence sent to the email or physical address shown in the Contract System will be deemed delivered to the Subrecipient. Correspondence from the Department may be directly uploaded to the Subrecipient's CA contract account using a secure electronic document attachment system. Once uploaded, notification of the attachment will be sent electronically to the email address listed in the Contract System. The Department is not required to send a paper copy and if it does so it does as a voluntary and non-precedential courtesy only.(e) Upon the hiring of a new program coordinator (e.g., the weatherization program coordinator) for an activity funded by non-discretionary CSBG, LIHEAP, or DOE-WAP the Subrecipient is required to contact the Department with written notification within 30 calendar days of the hiring, and to request training and technical assistance.(f) Contact information for a primary and secondary contact are required to be provided to the Department and accurately maintained as it relates to the handling of disaster response and emergency services as provided for in §6.207(d) of this title (relating to Subrecipient Requirements).</content><note type="source"><p>Source Note: The provisions of this §6.6 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scA/s6.7"><num value="6.7">§6.7</num><heading>Subrecipient Reporting Requirements</heading><content>(a) Subrecipient must submit the Monthly Performance and Expenditure Report through the Contract System not later than the fifteenth day of each month following the reported month of the Contract Term. Reports are required even if a fund reimbursement or advance is not being requested. It is the responsibility of the Subrecipient to upload information into the Department's designated database.(b) Subrecipient shall reconcile their expenditures with their performance on at least a monthly basis before seeking a request for funds for the following month. If the Subrecipient is unable to reconcile on a month-to-month basis, the Subrecipient must provide at the request of the Department, a written explanation for the variance and take appropriate measures to reconcile the subsequent month. It is the responsibility of a Subrecipient to demonstrate the compliant use of all funds provided during the Contract Term.(c) If the Department has provided funds to a Subrecipient in excess of the amount of reported Expenditures in the ensuing month's report, no additional funds will be released until those excess funds have been expended. For example, in January a Subrecipient requests and is advanced $50,000. In February, if the Subrecipient reports $10,000 in Expenditures and an anticipated need for $30,000, no funds will be released.(d) Subrecipient shall electronically submit to the Department, no later than 45 days after the end of the Subrecipient Contract Term, a final accounting of the Contract's expenditure or reimbursement utilizing the final Monthly Performance and Expenditure Report. If this or a later reconciliation results in funds owed to the Department, Subrecipient shall, within 10 calendar days, either send funds to the Department, or contact the Department to enter into a time-limited Department approved repayment plan.(e) CSBG Annual Report and National Survey. Federal requirements mandate all states to participate in the preparation of an annual performance measurement report. To comply with the requirements of 42 U.S.C. §9917, all CSBG Eligible Entities and other organizations receiving CSBG funds are required to participate.(f) The Subrecipient shall submit other reports, data, and information on the performance of the DOE and LIHEAP-WAP program activities as required by DOE pursuant to 10 CFR §440.25 or by the Department.(g) Subrecipient shall submit other reports, data, and information on the performance of the federal program activities as required by the Department.(h) A Subrecipient may refer a Contractor to the Department for Debarment consistent with §2.401 of this title, (relating to Debarment from Participation in Programs Administered by the Department).</content><note type="source"><p>Source Note: The provisions of this §6.7 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scA/s6.8"><num value="6.8">§6.8</num><heading>Appeals, Denial of Service, and Complaints</heading><content>(a) Appeals. LIHEAP Subrecipients and CSBG Eligible Entities must adhere to all of Chapter 1, Subchapter D, §1.411 of this title (relating to Administration of Block Grants under Chapter 2105 of the Tex. Gov't Code). Entities that receive CSBG Discretionary only, and DOE WAP must only follow §1.411(e)(1) - (6) of this title, relating to Requests for Reconsideration.(b) Denial of Service. Subrecipient shall establish a written procedure for the handling of denials of service when the denial involves an individual inquiring or applying for services/assistance whom is communicating or behaving in a threatening or abusive manner.(c) Complaints. Subrecipient shall establish a written procedure to address complaints of customer dissatisfaction. The procedure shall at a minimum include:(1) An investigation, completed within 10 days of complaint receipt, by at least one individual of the Subrecipient not originally associated with the complaint; and(2) If the customer is not satisfied with the investigation, a process wherein the Executive Director makes a final decision on whether to concur or disagree with the complainant. §6.9</content><note type="source"><p>Source Note: The provisions of this §6.8 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scA/s6.9"><num value="6.9">§6.9</num><heading>Training Funds for Conferences</heading><content>The Department may provide financial assistance to Subrecipients for training and technical activities for state sponsored, federally sponsored, and other relevant workshops and conferences. Subrecipients may use program training funds to attend conferences provided the conference agenda includes topics directly related to administering the program. Costs to attend the conference must be prorated by program for the appropriate portion. Only staff billed to the specific program, directly or indirectly, may charge any training and travel costs to the program.</content><note type="source"><p>Source Note: The provisions of this §6.9 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scA/s6.10"><num value="6.10">§6.10</num><heading>Board Approval</heading><content>Subrecipient's Board of Directors must be notified, and evidence of such notification provided to the Department, of any action taken by the Subrecipient's staff to voluntarily relinquish funds or to not accept proposed awards from the Department.</content><note type="source"><p>Source Note: The provisions of this §6.10 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scA/s6.11"><num value="6.11">§6.11</num><heading>Compliance Monitoring</heading><content>(a) Purpose and Overview.(1) This section provides the procedures that will be followed for monitoring for compliance with the programs in this chapter, 10 TAC Chapter 6.(2) Any entity administering any or all of the programs detailed in this chapter, 10 TAC Chapter 6, is a Subrecipient. A Subrecipient may also administer other programs, including programs administered by other state or federal agencies and privately funded programs. If the Subrecipient has contracts for other programs through the Department, including but not limited to the Emergency Solutions Grants, Ending Homelessness Fund, Homeless Housing and Services Program, HOME Partnerships Program, the Neighborhood Stabilization Program, or the State Housing Trust Fund, the Department may, but is not required to and does not commit to, coordinate monitoring of those programs with monitoring of Community Affairs Division funds under this subchapter.(3) Any entity administering any or all of the programs provided for in subsection (a) of this section as part of a Memorandum of Understanding (MOU), contract, or other legal agreement with a Subrecipient is a Subgrantee.(b) Frequency of Reviews, Notification, and Information Collection.(1) In general, a Subrecipient will be scheduled for monitoring based on state or federal monitoring requirements and/or a risk assessment. Factors to be included in the risk assessment include but are not limited to: the number of Contracts administered by the Subrecipient, the amount of funds awarded and expended, the length of time since the last monitoring, findings identified during previous monitoring, issues identified through the submission or lack of submission of a single audit, complaints received by the Department, and reports of fraud, waste and/or abuse. The risk assessment will also be used to determine which Subrecipients will have an onsite review and which may have a desk review.(2) The Department will provide a Subrecipient with written notice of any upcoming onsite or desk monitoring review, and such notice will be given to the Subrecipient and Subgrantee by email to the Subrecipient's chief executive officer at the email address most recently provided to the Department by the Subrecipient. In general, a 30 day notice will be provided. However, if a credible complaint of fraud or other egregious noncompliance is received the Department reserves the right to conduct unannounced monitoring visits. It is the responsibility of the Subrecipient to provide to the Department the current contact information for the organization and the Board in accordance with §6.6 of this chapter (relating to Subrecipient Contact Information and Required Notifications) and §1.22 of this title (relating to Providing Contact Information to the Department).(3) Upon request, a Subrecipient must make available to the Department all books and records that the Department determines are reasonably relevant to the scope of the Department's review. Typically, these records may include (but are not limited to):(A) Minutes of the governing board and any committees thereof, together with all supporting materials;(B) Copies of all internal operating procedures or other documents governing the Subrecipient's operations;(C) The Subrecipient's Board approved operating budget and reports on execution of that budget;(D) The Subrecipient's strategic plan or comparable document if applicable and any reports on the achievement of that plan;(E) Correspondence to or from any independent auditor;(F) Contracts with any third parties for goods or services and files documenting compliance with any applicable procurement and property disposition requirements;(G) All general ledgers and other records of financial operations (including copies of checks and other supporting documents);(H) Applicable customer files with all required documentation;(I) Applicable human resources records;(J) Monitoring reports from other funding entities;(K) Customer files regarding complaints, appeals and termination of services; and(L) Documentation to substantiate compliance with any other applicable Department contract provisions and state or federal requirements including, but not limited to UGMS, TXGMS, 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, Audit Requirements for Federal Awards, Lead Based Paint, the Personal Responsibility and Work Opportunity Act, and limited English proficiency requirements.(c) Post Monitoring Procedures.(1) In general, within 30 calendar days of the last day of the monitoring visit, a written monitoring report will be prepared for the Subrecipient describing the monitoring assessment and any corrective actions, if applicable. The monitoring report will be emailed to the Board Chair and the Subrecipient's Executive Director. For a Private Nonprofit Organization, all Department monitoring reports and Subrecipient responses to monitoring reports must be provided to the governing body of the Subrecipient within the next two regularly scheduled meetings. For a Public Organization all Department monitoring reports and Subrecipient responses to monitoring reports must be provided to the governing body of the Subrecipient, and for a CSBG Subrecipient to the advisory board within the next two regularly scheduled meetings. Issues of concern over which there is uncertainty or ambiguity may be discussed by the Department with the staff of cognizant agencies overseeing federal funding. Certain types of suspected or observed improper conduct may trigger requirements to make reports to other oversight authorities, state and federal, including but not limited to the State Auditor's Office and applicable Inspectors General.(2) Subrecipient Response. If there are any findings of noncompliance requiring corrective action, the Subrecipient will be provided 30 calendar days, from the date of the email, to respond which may be extended by the Department for good cause. In order to receive an extension, the Subrecipient must submit a written request to the Director of Compliance within the corrective action period, stating the basis for good cause that justifies the extension. The Department will approve or deny the extension request within five calendar days.(3) Monitoring Close Out. Within 45 calendar days after the end of the corrective action period, a close out letter will be issued to the Subrecipient. If the Subrecipient supplies evidence establishing continual compliance that negates the finding of noncompliance, the issue of noncompliance will be rescinded. If the Subrecipient's timely response satisfies all findings and concerns noted in the monitoring letter, the issue of noncompliance will be noted as corrected. In some circumstances, the Subrecipient may be unable to secure documentation to correct a finding. In those instances, if there are mitigating circumstances, the Department may note the finding is not corrected but close the issue with no further action required. If the Subrecipient's response does not correct all findings noted, the close out letter will identify the documentation that must be submitted to correct the issue.(4) Options for Review. If, following the submission of corrective action documentation, Compliance staff continues to find the Subrecipient in noncompliance, and the Subrecipient disagrees, the Subrecipient may request or initiate review of the matter using the following options, where applicable:(A) If the issue is related to a program requirement or prohibition of a federal program, the Subrecipient may contact the applicable federal program officer for guidance or request that the Department contact applicable federal program officer for guidance without identifying the Subrecipient.(B) If the issue is related to application of a provision of the Contract or a requirement of the Texas Administrative Code, the Subrecipient may request to submit an appeal to the Executive Director consistent with §1.7 of this title (relating to Appeals Process).(C) A Subrecipient may request Alternative Dispute Resolution (ADR). Subrecipient should send a proposal to the Department's Dispute Resolution Coordinator to initiate ADR pursuant to §1.17 of this title (relating to Alternative Dispute Resolution).(5) If a Subrecipient does not respond to a monitoring letter or fail to provide acceptable evidence of compliance, the matter will be handled through the procedures described in Chapter 2 of this title (relating to Enforcement).</content><note type="source"><p>Source Note: The provisions of this §6.11 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c6/scB"><num value="B">SUBCHAPTER B</num><heading>COMMUNITY SERVICES BLOCK GRANT</heading><section identifier="/us/state/tx/tac/t10/p1/c6/scB/s6.201"><num value="6.201">§6.201</num><heading>Background and Definitions</heading><content>(a) In addition to this subchapter, except where noted, the rules established in Subchapter A of this chapter (relating to General Provisions) and Chapters 1 and 2 (relating to Administration and Enforcement, respectively) of this title apply to the CSBG Program. The CSBG Act was amended by the "Community Services Block Grant Amendments of 1994" and the Coats Human Services Reauthorization Act of 1998. The Secretary is authorized to establish a community services block grant program and make grants available through the program to states to ameliorate the causes of poverty in communities within the states. Although Eligible Entities receive an allocation of CSBG funds, the CSBG program is not an entitlement program for eligible customers.(b) The Texas Legislature designates the Department as the lead agency for the administration of the CSBG program pursuant to Tex. Gov't Code, §2306.092. CSBG funds are made available to Eligible Entities to carry out the purposes of the CSBG program.(c) Except as otherwise noted herein all references in this subchapter to an Eligible Entity's board means both the governing board of the Private Nonprofit or the advisory board of the Public Organization.(d) Definitions.(1) Community Action Plan (CAP)--A plan required by the CSBG Act which describes the local Eligible Entity service delivery system, how coordination will be developed to fill identified gaps in services, how funds will be coordinated with other public and private resources, and how the local entity will use the funds to support innovative community and neighborhood based initiatives related to the grant.(2) Community Assessment--An assessment of community needs performed by the Eligible Entity for the areas to be served with CSBG funds.(3) CSBG Act--The CSBG Act is a law passed by Congress authorizing the Community Services Block Grant. The CSBG Act was amended by the Community Services Block Grant Amendments of 1994 and the Coats Human Services Reauthorization Act of 1998 under 42 U.S.C. §§9901, et seq. The CSBG Act authorized establishing a community services block grant program to make grants available through the program to states to ameliorate the causes of poverty in communities within the states.(4) Direct Customer Support--Includes salaries and fringe benefits of case management staff as well as direct benefits provided to customers.(5) National Performance Indicator (NPI)--A federally defined measure of performance within the Department's Contract System for measuring performance and results of Subrecipients of funds and Eligible Entities.(6) Quality Improvement Plan (QIP)--A plan developed by a CSBG Eligible Entity to correct Deficiencies identified by the Department as further described in §2.203 and §2.204 of this title (Termination and Reduction of Funding for CSBG Eligible Entities and Contents of a Quality Improvement Plan, respectively).(7) Results Oriented Management and Accountability (ROMA)--ROMA provides a framework for continuous growth and improvement among Eligible Entities. ROMA implementation is a federal requirement for receiving federal CSBG funds, outlined in HHS IM 152.(8) Self-sufficiency - A CSBG Household who has achieved an annual income in excess of 125% as a result of case management services to meet their basic household needs for 90 days or more.(9) Strategic Plan--A planning document which takes into consideration the needs of the targeted community and identifies an organization's vision and mission; its strengths, weaknesses, opportunities, and threats; external and internal factors impacting the organization; and utilizes this information to set goals, objectives, strategies, and measure to meet over an identified period of time.(10) Transitioned Out of Poverty (TOP)--A Household who was CSBG eligible and as a result of the delivery of CSBG-supported case management services attains Self-sufficiency to meet their basic needs and an annual income in excess of 125% of the poverty guidelines for 90 calendar days.(e) Use of certain terminology. In these rules and in the Department's administration of its programs, including the CSBG program, certain terminology is used that may not always align completely with the terminology employed in the CSBG Act. The term "monitoring" is used interchangeably with the CSBG Act term "review" as used in 42 U.S.C. §9915 of the CSBG Act. Similarly, the terms "findings," "concerns," and "violations" are used interchangeably with the term "deficiencies as used in 42 U.S.C. §9915 of the CSBG Act although, in a given context, they may be assigned more specific, different, or more nuanced meanings, as appropriate.</content><note type="source"><p>Source Note: The provisions of this §6.201 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scB/s6.202"><num value="6.202">§6.202</num><heading>Purpose and Goals</heading><content>The Department passes through CSBG funds to Public Organizations and Private Nonprofits that are to comply with the purposes of the CSBG Act.</content><note type="source"><p>Source Note: The provisions of this §6.202 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scB/s6.203"><num value="6.203">§6.203</num><heading>Formula for Distribution of CSBG Funds</heading><content>(a) The CSBG Act requires that no less than 90% of the state's annual allocation be allocated to Eligible Entities. The Department currently utilizes a multi-factor fund distribution formula to equitably provide CSBG funds throughout the state to the CSBG Eligible Entities. The formula is subject to adjustment from time to time when amended as part of the CSBG State Plan.(b) The distribution formula incorporates the most current U.S. Census Bureau Decennial Census and data from the American Community Survey for information on persons not to exceed 125% of poverty. The formula is applied as follows:(1) Each Eligible Entity receives a $50,000 base award;(2) Then, the factors of poverty population, weighted at 98% and inverse population density, weighted at 2%, are applied to the state's allocation required to be distributed among Eligible Entities;(3) If the base combined with the calculation resulting from the weighted factors in paragraph (2) of this subsection do not reach a minimum floor of $150,000, then a minimum floor of $150,000 is reserved for each of those CSBG eligible entities, resulting in a proportional reduction in other funds available for formula-based distribution; and(4) Then, the formula is re-applied to the balance of the 90% funds for distributing the remaining funds to the remaining CSBG Eligible Entities.(c) Following the use of the decennial Census data, then on a biennial basis, the Department will use the most recent American Community Survey five year estimate data that is available. To the extent that there are significant reductions in CSBG funds received by the Department, the Department may revise the CSBG distribution formula through a rulemaking process.(d) In years where permitted by the federal government, an Eligible Entity that does not obligate more than 20% of its base allocation in a Program Year (excluding any additional funds that may be distributed by the Department) by the end of the first quarter of the year following the allocation year for two consecutive years will have funding recaptured consistent with 42 U.S.C. §9907(a)(3). This recapture of funds does not trigger the procedures or protections of HHS IM 116. The Subrecipient of the funds will be provided a Contract for the average percentage of funds that they expended over the last two years. The Eligible Entity will be provided an opportunity to redistribute the funds through a competitive request for proposals to a Private Nonprofit Organization, located within the community served by the Eligible Entity. If the Eligible Entity selects this option it will be responsible for monitoring the Private Nonprofit Organization selected. If the Subrecipient does not provide them to an eligible Private Nonprofit Organization, located within the community served by the Subrecipient, the Department in accordance with HHS IM 42 shall redistribute the funds to another Eligible Entity to be used in accordance with the CSBG and Department rules.(e) Five percent of the Department's annual allocation of CSBG funds may be expended on activities listed in 42 U.S.C. §9907(b)(A) - (H) and further described in the annual plan or by Board approval. The Department may also opt to distribute unexpended funds described in subsection (f) of this section for these activities.(f) Up to 5% of the State's annual allocation of CSBG funds will be used for the Department's administrative purposes consistent with state and federal law.</content><note type="source"><p>Source Note: The provisions of this §6.203 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scB/s6.204"><num value="6.204">§6.204</num><heading>Use of Funds</heading><content>CSBG funds are contractually obligated to Eligible Entities, and accessed through the Department's web-based Contract System. Prior to executing a Contract for CSBG funds, the Department will verify that neither the entity, nor any member of the Eligible Entity's Board is federally debarred or excluded. Unless modified by Contract, the annual allocation has a beginning date of January 1 and an end date of December 31, regardless of the Eligible Entity's fiscal year. Eligible Entities may use the funds for administrative support and/or for direct services such as: education, employment, housing, health care, nutrition, transportation, linkages with other service providers, youth programs, emergency services, i.e., utilities, rent, food, Shelter, clothing, etc.</content><note type="source"><p>Source Note: The provisions of this §6.204 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scB/s6.205"><num value="6.205">§6.205</num><heading>Limitations on Use of Funds</heading><content>(a) Construction of Facilities. CSBG funds may not be used for the purchase, construction or improvement of land, or facilities as described in (42 U.S.C. §9918(a)).(b) The CSBG Act prohibits the use of funds for partisan or nonpartisan political activity; any political activity associated with a candidate, contending faction, or group in an election for public or party office; transportation to the polls or similar assistance with an election; or voter registration activity (for example, contacting a congressional office to advocate for a change to any law is a prohibited activity).(c) Utility and rent deposit refunds from vendors must be reimbursed to the Subrecipient and not the customer. Refunds must be treated as program income, and returned to the Department within 10 calendar days of receipt.</content><note type="source"><p>Source Note: The provisions of this §6.205 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scB/s6.206"><num value="6.206">§6.206</num><heading>Strategic Plan, Community Assessment, and Community Action Plan</heading><content>(a) In accordance with CSBG Organizational Standards, every five years each Eligible Entity shall complete a Strategic Plan using the full Results Oriented Management and Accountability (ROMA) cycle or a comparable system. The Strategic Plan shall, at a minimum, meet the requirements of CSBG Organizational Standards (specifically Organizational Standards 4.3, 6.1 - 6.5, and 9.3) and any other requirements established by the Department as a result of federal law, regulation or guidance, or state law. The Strategic Plan must comply with Department requirements and be submitted on or before a date specified by the Department.(b) In accordance with CSBG Organizational Standards, every three years each Eligible Entity shall complete a Community Assessment (may also be called "Community Needs Assessment" or CNA), using the full ROMA cycle or a comparable system. The annual Community Action Plan (CAP) will be based on the most recent approved Community Assessment. The Community Assessment shall, at minimum, meet the requirements of CSBG Organizational Standards (specifically Organizational Standards 1.2, 2.2, 3.1-3.5, and 4.3). The Community Assessment must comply with Department requirements and be submitted on or before a date specified by the Department. The Community Assessment will require, among other items specified in the Department's Community Assessment Guide, that the top five needs of the Service Area that can be addressed, are identified.(c) In accordance with CSBG Organizational Standards, each Eligible Entity must submit a CAP on an annual basis using the full ROMA cycle or a comparable system. The CAP shall, at minimum, meet the requirements of CSBG Organizational Standards (specifically Organizational Standards 4.2, 4.3, 4.4, and 9.3). The CAP must comply with Department requirements and be submitted on or before a date specified by the Department, for approval prior to execution of a Contract.(d) If circumstances warrant amendments to the Community Assessment or the CAP, each Eligible Entity must provide a written request to the Department identifying the specific requested change(s) to the document with a justification for each change. The Department will approve or deny amendment requests in writing.(e) Hearing. In conjunction with the submission of the CAP, the Eligible Entity must annually submit to the Department a certification from its board that a public hearing was posted, and conducted on the proposed needs or uses of block grant funds for the upcoming year's funds.(f) The Strategic Plan and Community Assessment require Department review for whether Organizational Standards are met and whether the Eligible Entity provided a notification of acceptance. The CAP and annual Budget require Department approval; those that do not meet the Department's requirements as articulated in these rules, in federal guidance, in each Eligible Entity's Contract, and in Department guidance will be required to be revised until they meet the Department's satisfaction.(g) Consistent with CSBG Organizational Standards relating to Data Analysis and Performance, the Eligible Entity must present to its governing board for review or action, at least every 12 months, an analysis of the agency's outcomes and any operational or strategic program adjustments and improvements identified as necessary; and the organization must submit its annual CSBG Information Survey data report which reflects customer demographics and organization-wide outcomes.(h) Services to Poverty Population. An Eligible Entity administering services to customers in one or more counties in its CSBG Service Area shall ensure that such services are rendered reasonably and in an equitable manner to ensure fairness among all potential applicants eligible for services. Services rendered, either directly or through partnerships, must reflect the poverty population ratios in the Service Area and services should be distributed based on the proportionate representation of the poverty population within a county. A variance of greater than plus or minus 20% may constitute a Deficiency. An Eligible Entity administering services to customers in one or more counties shall demonstrate marketing and outreach efforts to make available direct services to a reasonable percentage of the county's eligible population based on the most recent census or American Community Survey data, as directed by the Department. Services should also be distributed based on the proportionate representation of the poverty population within a county. Other CSBG-funded organizations shall ensure that services are rendered in accordance with requirements of the CSBG Contract.</content><note type="source"><p>Source Note: The provisions of this §6.206 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scB/s6.207"><num value="6.207">§6.207</num><heading>Eligible Entity Requirements</heading><content>(a) An Eligible Entity shall submit information regarding the planned use of funds as part of the CAP as described in §6.206 of this subchapter (relating to Strategic Plan, Community Assessment, and Community Action Plan).(b) HHS issues terms and conditions for receipt of funds under the CSBG. Eligible Entities must comply with the requirements of the terms and conditions of the CSBG award.(c) CSBG Eligible Entities, and other CSBG organizations where applicable, are required to coordinate CSBG funds and form partnerships and other linkages with other public and private resources and coordinate and establish linkages between governmental and other social service programs to assure the effective delivery of services and avoid duplication of services.(d) CSBG Eligible Entities will provide, on an emergency basis, the provision of supplies and services, nutritious foods, and related services as may be necessary to counteract the conditions of starvation and malnutrition among low-income individuals. The nutritional needs may be met through a referral source that has immediate resources available to meet the needs.(e) CSBG Eligible Entities and other CSBG organizations are required to coordinate for the provision of employment and training activities through local workforce investment systems under the Workforce Innovation and Opportunity Act, as applicable.(f) CSBG Eligible Entities are required to inform custodial parents in single-parent families that participate in programs, activities, or services about the resources available through the Texas Attorney General's Office with respect to the collection of child support payments and refer eligible parents to the Texas Attorney General's Office of Child Support Services Division.(g) Documentation of Services. Eligible Entities must maintain a record of referrals and services provided.(h) Intake Form. To fulfill the requirements of 42 U.S.C. §9917, Eligible Entities must complete and maintain an intake form that screens for income, assesses customer needs, and captures the demographic and household characteristic data required for the Monthly Performance and Expenditure Report, referenced in Subchapter A of this chapter (relating to General Provisions), for all Households receiving a community action service. Eligible Entities must complete and maintain a manual or electronic intake form for all customers at least every twelve months.(i) Case Management.(1) An Eligible Entity is required to provide integrated case management services. Eligible Entities are required to identify and set goals for Households they serve through the case management process. Eligible Entities are required to evaluate and assess the effect its case management system has on the short-term (less than three months) and long-term (greater than three months) impact on customers, such as enabling the customer to move from poverty to self-sufficiency, to maintain stability. CSBG funds may be used for short term case management to meet immediate needs. In addition, CSBG funds may be used to provide long-term case management to persons working to transition out of poverty and achieve self-sufficiency.(2) An Eligible Entity must have and maintain documentation of case management services provided.(3) An Eligible Entity is assigned a minimum TOP goal by the Department. Eligible Entities must provide ongoing case management services for these TOP Households. The case management services must include the components described in subparagraphs (A) - (L) of this paragraph. Eligible Entities must also provide case management clients with a Customer Satisfaction Survey, described in subparagraph (M) of this paragraph, for the client to complete anonymously. At least annually, Eligible Entities must evaluate the effectiveness of their case management services, as described in subparagraph (N) of this paragraph. The forms or systems utilized for each component may be manual or electronic forms provided by the Department or manual or electronic forms created by the Eligible Entity that at minimum contain the same information as the Department-issued form:(A) Self-Sufficiency Customer Questionnaire to assess a customer's status in the areas of employment, job skills, education, income, housing, food, utilities, Child care, Child and family development, transportation, healthcare, and health insurance;(B) Self-Sufficiency Outcomes Matrix to assess the customer's status in the self-sufficiency domains;(C) Case Management Screening Questions to assess the customer's willingness to participate in case management services on an ongoing basis;(D) For customers who are willing to engage in long term case management services, a Case Management Agreement between the Eligible Entity and customer;(E) Release of Information Form;(F) Case Management Service Plan to document planned goals agreed upon by the case manager and customer along with steps and timeline to achieve goals;(G) Case management follow-up, which provides a system to document customer progress at completing steps and achieving goals. Case management follow-up should occur, at a minimum, every 30 days, either through a meeting, phone call or email. In person meetings should occur, at a minimum, once a quarter;(H) A record of referral resources and documentation of the results;(I) A system to document services received and to collect and report NPI data;(J) A system to document Case Management Closure form to document persons that have exited case management;(K) TOP Income Tracker form to document income for persons that have maintained an income level above 125% of the Federal Poverty Income Guidelines for 90 days;(L) A system to document and notify customers of termination of case management services;(M) Customer Satisfaction Survey; and(N) On an annual basis, an Eligible Entity should determine the effectiveness of its case management services and identify strategies for improvement, including identification of reasons for customer terminations and strategies to limit their occurrence.(j) Effective January 1, 2016, Eligible Entities shall meet the CSBG Organizational Standards as issued by HHS IM 138 (as revised), except that where the word bylaws is used the Department has modified the standards to read Certificate of Formation/Articles of Incorporation and bylaws; also, Eligible Entities must follow the requirements in TxGMS (as applicable) including the State of Texas Single Audit Circular. Failure to meet the CSBG Organizational Standards as described in this subsection may result in HHS IM 116 proceedings as described in Chapter 2 of this title (relating to Enforcement).</content><note type="source"><p>Source Note: The provisions of this §6.207 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scB/s6.208"><num value="6.208">§6.208</num><heading>Designation and Re-designation of Eligible Entities in Unserved Areas</heading><content>If any geographic area of the state ceases to be served by an Eligible Entity, the requirements of 42 U.S.C. §9909 will be followed.</content><note type="source"><p>Source Note: The provisions of this §6.208 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scB/s6.209"><num value="6.209">§6.209</num><heading>CSBG Requirements for Tripartite Board of Directors</heading><content>(a) General Board Requirements.(1) The Coats Human Services Reauthorization Act (Public Law 105-285) addresses the CSBG program and requires that Eligible Entities administer the CSBG program through a tripartite board. The Act requires that governing boards or a governing body be involved in the development, planning, implementation, and evaluation of the programs serving the low-income sector.(2) Federal requirements for establishing a tripartite board require board oversight responsibilities for public entities, which differ from requirements for private organizations. Where differences occur between private and public organizations, requirements for each entity have been noted in related sections of the rule.(b) Each CSBG Eligible Entity shall comply with the provisions of this rule and if necessary, the Eligible Entity's by-laws/Certificate of Formation/Articles of Incorporation shall be amended to reflect compliance with these requirements.</content><note type="source"><p>Source Note: The provisions of this §6.209 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scB/s6.210"><num value="6.210">§6.210</num><heading>Board Structure</heading><content>(a) Eligible Entities that are Private Nonprofit Organizations shall administer the CSBG program through a tripartite board that fully participates in the development, planning, implementation, and evaluation of the program to serve low-income communities. Records must be retained for all seated board members in relation to their elections to the board for the longer of the board member's term on the Board, or the federal record retention period. Some of the members of the board shall be selected by the Private Nonprofit Organization, and others through a democratic process; the board shall be composed so as to assure that the requirements of the CSBG Act are followed and are composed as:(1) One-third of the members of the board shall be elected public officials, holding office on the date of the selection, or their representatives. In the event that there are not enough elected public officials reasonably available and willing to serve on the board, the entity may select appointive public officials to serve on the board. The public officials selected to serve on the board may each choose one permanent representative or designate an alternate to serve on the board. Appointive public officials or their representatives or alternates may be counted in meeting the 1/3 requirement.(2) Not fewer than 1/3 of the members are persons chosen in accordance with the Eligible Entity's Board-approved written democratic selection procedures adequate to assure that these members are representative of low-income individuals and families in the neighborhood served; and each representative of low-income individuals and families selected to represent a specific neighborhood within a community resides in the neighborhood represented by the member.(3) The remainder are members of business, industry, labor, religious, law enforcement, education, or other major groups and interests in the community served.(b) For a Public Organization that is an Eligible Entity, the entity shall administer the CSBG grant through an advisory board that fully participates in the development, planning, implementation and evaluation of programs that serve low-income communities or through another mechanism specified by the state and that satisfies the requirements of a tripartite board in subsection (a) of this section. The advisory board is the only alternative mechanism for administration the Department has specified.(c) An Eligible Entity administering the Head Start Program must comply with the Head Start Act (42 U.S.C. §9837) that requires the governing body membership to comply with the requirements of §642(c)(1) of the Head Start Act.(d) Residence Requirement. Board members must follow any residency requirements outlined in 42 U.S. Code §9910, or federal regulations made pursuant to that section. Low income representatives must reside in the CSBG Service Area.(e) Selection.(1) Public Officials:(A) Elected public officials or appointed public officials, selected to serve on the board, shall have either general governmental responsibilities or responsibilities which require them to deal with poverty-related issues.(B) Permanent Representatives and Alternates. The public officials selected to serve on the board may each choose one permanent representative or designate an alternate to serve on the board.(i) Permanent Representatives. The representative need not be a public official but shall have full authority to act for the public official at meetings of the board. Permanent representatives may hold an officer position on the board. If a permanent representative is not chosen, then an alternate may be designated by the public official selected to serve on the board. Alternates may not hold an officer position on the board.(ii) Alternate Representatives. If the Private Nonprofit Entity or Public Organization advisory board chooses to allow alternates, the alternates for low-income representatives shall be elected at the same time and in the same manner as the board representative is elected to serve on the board. Alternates for representatives of private sector organizations may be designated to serve on the board and should be selected at the same time the board representative is selected. In the event that the board member or alternate ceases to be a member of the organization represented, he/she shall no longer be eligible to serve on the board. Alternates may not hold an officer position on the board.(2) Low-Income Representatives:(A) The CSBG Act and its amendments require representation of low-income individuals on boards. The CSBG statute requires that not fewer than one-third of the members shall be representatives of low-income individuals and families and that they shall be chosen in accordance with democratic selection procedures adequate to assure that these members are representative of low-income individuals and families in the neighborhoods served; and that each representative of low-income individuals and families selected to represent a specific neighborhood within a community resides in the neighborhood represented by the member.(B) Board members representing low-income individuals and families must be selected in accordance with a democratic procedure. This procedure, as detailed in subparagraph (D) of this paragraph, may be either directly through election, public forum, or, if not possible, through a similar democratic process such as election to a position of responsibility in another significant service or community organization such as a school PTA, a faith-based organization leadership group; or an advisory board/governing council to another low-income service provider; For a Private Nonprofit Entity the democratic selection process must be detailed in the agency's Certificate of Formation/Articles of Incorporation or bylaws, but the method detailed in the bylaws (if so described) must not be inconsistent with any method of selection of Board members outlined in the Certificate of Formation/Articles of Incorporation; failure to comply could result in a default procedure that does not meet the CSBG requirements and potentially jeopardizes the Eligible Entity status of the organization as detailed in §6.213 of this subchapter (relating to Board Responsibility). For a Public Organization the democratic procedure must be written in the advisory board's procedures, and approved at a board meeting.(C) Every effort should be made by the Private Nonprofit Entity or Public Organization to assure that low-income representatives are truly representative of current residents of the CSBG Service Area, including racial and ethnic composition, as determined by periodic selection or reselection by the community. "Current" should be defined by the recent or annual demographic changes as documented in the needs/Community Assessment. This does not preclude extended service of low-income community representatives on boards, but it does suggest that continued board participation of longer term members be revalidated and kept current through some form of democratic process.(D) The procedure used to select the low-income representative must be documented to demonstrate that a democratic selection process was used. Among the selection processes that may be utilized, either alone or in combination, are:(i) selection and elections, either within neighborhoods or within the community as a whole; at a meeting or conference, to which all neighborhood residents, and especially those who are poor, are openly invited;(ii) selection of representatives to a community-wide board by members of neighborhood or sub-area boards who are themselves selected by neighborhood or area residents;(iii) selection, on a small area basis (such as a city block); or(iv) selection of representatives by existing organizations whose membership is predominately composed of poor persons.(E) A Public Organization must not adopt a democratic selection process that requires all of the low-income representatives to reside in the political boundaries of the Public Organization, or that excludes all residents not in the political boundaries of the Public Organization from all participation in the democratic selection of all of the low-income representatives.(3) Representatives of Private Groups and Interests.(A) The Private Nonprofit or Public Organization shall select the remainder of persons to represent the private sector on the board or it may select private sector organizations from which representatives of the private sector organization would be chosen to serve on the board.(B) The individuals and/or organizations representing the private sector should be selected in such a manner as to assure that the board will benefit from broad community involvement. The board composition for the private sector shall draw from officials or members of business, industry, labor, religious, law enforcement, education, school districts, representatives of education districts and other major groups and interests in the community served.(f) An Eligible Entity must have written procedures under which a low-income individual, community organization, religious organization, or representative of such may petition for adequate representation on the board of the Eligible Entity. Such petitions must be heard at a subsequent board meeting not more than 120 days after receiving the petition.(g) Improperly Constituted Board. If the Department determines that a board of an Eligible Entity is improperly constituted, the Department shall prescribe the necessary remedial action, a timeline for implementation, and possible sanctions as described in §2.202 of this title (relating to Sanctions and Contract Closeout).</content><note type="source"><p>Source Note: The provisions of this §6.210 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scB/s6.211"><num value="6.211">§6.211</num><heading>Board Administrative Requirements</heading><content>(a) Compensation. Board members, including advisory board members, are not entitled to compensation for their service on the board. Reimbursement of reasonable and necessary expenses incurred by a board member in carrying out his/her duties is allowed.(b) Conflict of Interest. Board members must follow the conflict of interest requirements in UGMS or TxGMS, as applicable, for both procurement and non-procurement transactions.(c) Board Service. No employee of the local CSBG Subrecipient or of the Department may serve on the board.(d) Interim Appointments. A seated board member is permitted to be appointed to serve in an interim executive capacity, such as an interim Executive Director, for up to 180 days so long as the Department is so notified, the board member did not participate in the vote that designated them for the position, the board member does not vote during the period for which they serve in the position, and the member is not considered a board member for purposes of quorum. In such cases, the board member seat is not considered vacated, and is available for that board member to return.</content><note type="source"><p>Source Note: The provisions of this §6.211 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scB/s6.212"><num value="6.212">§6.212</num><heading>Board Size</heading><content>(a) Board Service Limitations for Private Nonprofit Entities and Public Organizations. The Eligible Entity may establish term limits and/or procedures for the removal of board members.(b) Vacancies/Removal of Board Members.(1) Vacancies. Except as allowed under §6.211(d) of this subchapter (relating to Interim Appointments) the board shall not allow a public, private, or low-income sector board position to remain vacant for more than 90 days. An Eligible Entity shall report the number of board vacancies by sector in its Monthly Performance and Expenditure Report. Compliance with the CSBG Act requirements for board membership is a condition for Eligible Entities to receive CSBG funding. There is no provision for a waiver or exception to these requirements.(2) Removal of Board Members/Private Nonprofit Entities. Public officials or their representatives, may be removed from the board either by the board or by the entity that appointed them to serve on the board. Other members of the board may be removed by the board or pursuant to any procedure provided in the private nonprofit's Certificate of Formation/Articles of Incorporation or bylaws.(3) Removal of Board Members/Public Organizations. Public officials or their representatives may be removed from the advisory board by the Public Organization, or by the advisory board if the board is so empowered by the Public Organization. The advisory board may petition the Public Organization to remove an advisory board member. All other board members may be removed by the advisory board.(4) In order to meet the 1/3 requirement for the Public Official representation detailed in §6.210 of this subchapter (relating to Board Structure), board size shall be a number divisible by three.</content><note type="source"><p>Source Note: The provisions of this §6.212 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scB/s6.213"><num value="6.213">§6.213</num><heading>Board Responsibility</heading><content>(a) Tripartite boards have a fiduciary responsibility for the overall operation of the Eligible Entity. Members are expected to carry out their duties as any reasonably prudent person would do.(b) At a minimum, board members are expected to:(1) Maintain regular attendance of board and committee meetings;(2) Develop thorough familiarity with core agency information as appropriate, such as the agency's bylaws, Certificate of Formation/Articles of Incorporation, sources of funding, agency goals and programs, federal and state CSBG statutes;(3) Exercise careful review of materials provided to the board;(4) Make decisions based on sufficient information;(5) Ensure that proper fiscal systems and controls, as well as a legal compliance system, are in place;(6) Maintain knowledge of all major actions taken by the agency; and(7) Receive regular reports that include:(A) Review and approval of all funding requests (including budgets);(B) Review of reports on the organization's financial situation;(C) Regular reports on the progress of goals specified in the Performance Statement or program proposal;(D) Regular reports addressing the rate of expenditures as compared to those projected in the budget;(E) Updated modifications to policies and procedures concerning employees and fiscal operations;(F) Updated information on community conditions that affect the programs and services of the organization; and(G) Reports on any monitoring correspondence transmitted by the Department.(c) Individuals that agree to participate on a tripartite governing board, accept the responsibility to assure that the agency they represent continues to:(1) Assess and respond to the causes and conditions of poverty in their community;(2) Achieve anticipated family and community outcomes; and(3) Remains administratively and fiscally sound.(d) Excessive absenteeism of board members compromises the mission and intent of the program.</content><note type="source"><p>Source Note: The provisions of this §6.213 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scB/s6.214"><num value="6.214">§6.214</num><heading>Board Meeting Requirements</heading><content>(a) A Board of an Eligible Entity must meet and have a quorum at least once per calendar quarter, and at a minimum five times per year and, must give each Board member a notice of meeting five calendar days in advance of the meeting.(b) Tex. Gov't Code, Chapter 551, Texas Open Meetings Act, addresses specific requirements regarding meetings and meeting notices. Tex. Gov't Code, §551.001(3)(J), includes in the definition of a governmental body a nonprofit corporation that is eligible to receive funds under the federal CSBG program, and that is authorized by the state to serve a geographic area of the state. Thus, all Eligible Entities must follow the requirements of the Texas Open Meetings Act. As set forth in that law, there is the potential for individual criminal liability for violations.(c) Tex. Gov't Code, §551.005 requires elected or appointed officials to receive training in Texas Open Government laws. The Department requires that all board members or advisory board members receive training in Texas Open Government laws, according to the requirements of §551.005.(d) A copy of the attendance roster for all Board trainings shall be maintained at the Subrecipient level.(e) The minimum number of members required to meet quorum is three unless the Subrecipient's Certification of Formation/Articles of Incorporation, bylaws, or the Texas Open Meetings Act requires a greater number.</content><note type="source"><p>Source Note: The provisions of this §6.214 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c6/scC"><num value="C">SUBCHAPTER C</num><heading>COMPREHENSIVE ENERGY ASSISTANCE PROGRAM</heading><section identifier="/us/state/tx/tac/t10/p1/c6/scC/s6.301"><num value="6.301">§6.301</num><heading>Background and Definitions</heading><content>(a) The Comprehensive Energy Assistance Program (CEAP) is funded through the Low Income Home Energy Assistance Act of 1981 (Title XXVI of the Omnibus Budget Reconciliation Act of 1981, Public Law 97-35, as amended). LIHEAP has been in existence since 1982. LIHEAP is a federally funded block grant program that is implemented to serve Low Income Households who seek assistance for their home energy bills. LIHEAP is not an entitlement program, and there are not sufficient funds to serve all eligible customers or to provide the maximum benefit for which a customer may qualify.(b) Definitions.(1) Crisis Assistance--A type of CEAP assistance limited to Households who meet the requirements related to Extreme Weather Conditions, Life Threatening Crisis, or a Disaster, and have already lost service or are in immediate danger of losing service.(2) Customer Obligations--Funds become obligated upon a Subrecipient's pledge of payment to a specific Household toward a service or form of assistance and it being recorded in Subrecipient's client tracking software.(3) Disaster--An event declared by the President of the United States or the Governor of the State of Texas.(4) Extreme Weather Conditions--For winter months (November, December, January, and February), extreme cold weather conditions exist when the temperature has been at least two degrees below the lowest winter month's temperature or below 32 degrees, for at least three days during the client's billing cycle. For summer months (June, July, August, and September), extreme hot weather conditions exist when the temperature is at least two degrees above the highest summer month's temperature for at least three days during the client's billing cycle. Extreme Weather Conditions will be based on either data for "1981-2010 Normals" temperatures recorded by National Centers for Environmental Information of the National Oceanic and Atmospheric Administration (NOAA) and available at https://www.ncdc.noaa.gov/cdo-web/datatools/normals, or on data determined by the Subrecipient, and approved by the Department in writing. Subrecipient must maintain documentation of local temperatures and reflect their standard for Extreme Weather Conditions in its Service Delivery Plan.(5) Life Threatening Crisis--A Life Threatening Crisis exists when the life of at least one person in the applicant Household who is a U.S. Citizen, U.S. National, or a Qualified Alien would likely, in the opinion of a reasonable person, be endangered if utility assistance or heating and cooling assistance is not provided. Examples of life endangerment include, but are not limited to, a Household member who needs electricity for life-sustaining equipment (e.g., kidney dialysis machines, oxygen concentrators, medicinal refrigeration and cardiac monitors); a Household member whose medical professional has prescribed that the ambient air temperature be maintained at a certain temperature; a Household member whose life is endangered if absence of heating or cooling were to continue; or the presence of noxious gases as a result of heating or cooling the Dwelling Unit. In cases concerning an applicant's medical condition or need for life-sustaining equipment, documentation must not be requested about the medical condition of the applicant but the applicant must affirm that such a device is required in the Dwelling Unit because of a life threatening illness or risk of death.(6) Low on Fuel--A reference to propane tanks which are below 20% supply (according to customer).(7) Natural Disaster--A Disaster that is primarily not of man-made origins.(8) Vendor Refund--A sum of money refunded by a utility company or supplier due to a credit on the account or due to a deposit. See §6.312 of this subchapter (relating to Payments to Subcontractors and Vendors) for more information.</content><note type="source"><p>Source Note: The provisions of this §6.301 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scC/s6.302"><num value="6.302">§6.302</num><heading>Purpose and Goals</heading><content>The purpose of CEAP is to assist low-income Households, particularly those with the lowest incomes, and High Energy Consumption Households to meet their immediate home energy needs. The LIHEAP Statute requires priority be given to those with the highest home energy needs, meaning Low Income Households with High Energy Consumption, a High Energy Burden and/or the presence of Vulnerable Population in the Household. CEAP services include: energy education, utility payment assistance, repair of existing heating and cooling units, and crisis-related purchase of portable heating and cooling units.</content><note type="source"><p>Source Note: The provisions of this §6.302 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scC/s6.303"><num value="6.303">§6.303</num><heading>Distribution of CEAP Funds</heading><content>(a) The Department distributes funds to Subrecipients by an allocation formula.(b) The formula allocates funds based on the number of low income Households in a Service Area and takes into account the special needs of individual Service Areas. The need for energy assistance in an area is addressed through a weather factor (based on heating and cooling degree days). The extra expense in delivering services in sparsely populated areas is addressed by an inverse population density factor. The lack of additional services available in very poor counties is addressed by a county median income factor. Finally, the Elderly are given priority by giving greater weight to this population. The five factors used in the formula are calculated as:(1) County Non-Elderly Poverty Household Factor (weight of 40%)--Defined by the Department as the number of Non-Elderly Poverty Households in the county divided by the number of Non-Elderly Poverty Households in the State;(2) County Elderly Poverty Household Factor (weight of 40%)--Defined by the Department as the number of Elderly Poverty Households in the county divided by the number of Elderly Poverty Households in the State;(3) County Inverse Household Population Density Factor (weight of 5%)--Defined by the Department as:(A) The number of square miles of the county divided by the number of Poverty Households of the county (equals the Inverse Poverty Household Population Density of the county); and(B) Inverse Poverty Household Population Density of the county divided by the sum of Inverse Household Densities;(4) County Median Income Variance Factor (weight of 5%)--Defined by the Department as:(A) State Median Income minus the County Median Income (equals county variance); and(B) County Variance divided by sum of the State County Variances; and(5) County Weather Factor (weight of 10%)--Defined by the Department as:(A) County heating degree days plus the county cooling degree days, multiplied by the poverty Households, divided by the sum of county heating degree days and county cooling degree days of counties (equals County Weather); and(B) County Weather divided by the total sum of the State County Weather.(c) All demographic factors are based on the most recent decennial U.S. Census for which Census Bureau published information is available.(d) The total sum of subsection (b)(1) - (5) of this section, multiplied by total funds allocation, equals the county's allocation of funds. The sum of the county allocations within each Subrecipient Service Area equals the Subrecipient's total allocation of funds.(e) The Department may, in the future, undertake to reprocure the entities that comprise the network of CEAP providers, in which case this allocation formula will be reassessed and, if material changes are needed, amended by rulemaking.</content><note type="source"><p>Source Note: The provisions of this §6.303 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scC/s6.304"><num value="6.304">§6.304</num><heading>Deobligation and Reobligation of CEAP Funds</heading><content>(a) A written "Notification of Possible Deobligation" will be sent to the Executive Director and the Board of Directors or other governing body of the Subrecipient by the Department in a timely manner when the Department identifies that a criterion listed in subsection (b) or (c) of this section is at risk of not being met.(b) The Department may Deobligate funds from all budget categories from Subrecipients whose combined Direct Services Expenditures and Customer Obligations are less than 30% as of the April 15 Monthly Performance and Expenditure Report. Subrecipient may avoid Deobligation at this point if one of the following has occurred:(1) On or before the first business day in April, the Subrecipient has submitted a written request for an exception due to extenuating circumstances with a plan to improve Direct Services Expenditures and Customer Obligations. The request and plan must be approved by the Department in writing; or(2) On or before the first business day in April, the Subrecipient has submitted a written request for training and/or technical assistance. Once such assistance has been delivered, as determined by the Department, the Subrecipient must submit a clear specific plan, as outlined by the Department, for improving Direct Services Expenditures and Customer Obligations, and that plan must be approved by the Department in writing.(c) The Department may Deobligate funds from all budget categories from Subrecipients whose combined Direct Services Expenditures and Customer Obligations are less than 50% as of the May Monthly Performance and Expenditure Report, unless on or before the first business day in June the Subrecipient submits a written request for an exception due to extenuating circumstances with a plan to improve Direct Services Expenditures and Customer Obligations. The request and plan must be approved by the Department in writing.(d) Funds Deobligated under this section, or additional funds should they become available, will be Reobligated proportionally by the formula described in §6.303 of this subchapter (relating to Distribution of CEAP Funds), or if six months or less remain for the Department to expend the funds another method approved by the Department's Board amongst all Subrecipients that did not have any funds Deobligated to ensure full utilization of funds.(e) A Subrecipient which has had funds Deobligated under subsection (b) or (c) of this section that fully Expends the reduced amount of its Contract by January 31 of the following year as reported in the Monthly Performance and Expenditure Report due February 15, will have access to the full amount of the following Program Year CEAP allocation. A Subrecipient which has had funds Deobligated under subsection (b) or (c) of this section that fails to fully expend the reduced amount of its Contract will automatically have the following Program Year CEAP allocation Deobligated by the lesser of 24.99%, or the proportional amount that had been Deobligated from the prior year Contract.(f) The cumulative balance of the funds made available through subsection (e) of this section will be allocated proportionally by the formula described in §6.303 of this subchapter to the Subrecipients not having funds reduced under that subsection.(g) In no event will involuntary Deobligations that occur through subsection (b) or (c) of this section exceed 24.99% of the Subrecipient's Program Year CEAP Contracted Funds, without an opportunity for a hearing as required by Tex. Gov't Code, Chapter 2105.(h) Failure by the Subrecipient to Expend 98% of a prior year Contract by the Monthly Performance and Expenditure Report due April 15th of the subsequent year for two consecutive original Contract Terms is good cause for nonrenewal of a Contract.</content><note type="source"><p>Source Note: The provisions of this §6.304 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scC/s6.305"><num value="6.305">§6.305</num><heading>Subrecipient Eligibility</heading><content>(a) The Department administers the program through the existing Subrecipients that have demonstrated that they are operating the program in accordance with their Contract, the Economic Opportunity Act of 1964, the Low-Income Home Energy Assistance Act of 1981, as amended (42 U.S.C. §§8621, et seq.), and the Department rules. If a Subrecipient is successfully administering the program, the Department may offer to renew the Contract.(b) If the Department determines that a Subrecipient is not administering the program satisfactorily, the Subrecipient will be notified of such a Finding as provided for in §6.11 of this chapter (relating to Compliance Monitoring) or otherwise notify the Subrecipient in accordance with §1.411 of this title (relating to Administration of Block Grants under 2105 of the Texas Government Code), and the Subrecipient may be required to take corrective actions to remedy the problem. If Subrecipient fails to correct the Finding, or take other corrective actions, in order to ensure continuity of services, the Department may reassign up to 24.99% of the funds for the Service Area to one or more other existing Subrecipients.(c) If the Subrecipient does not complete the corrective action within the required timeframe, the Department may conduct a solicitation for selection of an interim Subrecipient. The affected Subrecipient may request a hearing in accordance with the Tex. Gov't Code, §2105.204.(d) If it is necessary to designate a new Subrecipient to administer CEAP, the Department shall give special consideration to Subrecipients receiving funds under LIHEAP or DOE WAP, in accordance with Assurance 6 of the Low Income Home Energy Assistance Act of 1981.</content><note type="source"><p>Source Note: The provisions of this §6.305 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scC/s6.306"><num value="6.306">§6.306</num><heading>Service Delivery Plan</heading><content>Prior to any Expenditure of funds, Subrecipient is required to submit on an annual basis a Service Delivery Plan (SDP), which includes information on how they plan to implement CEAP in their Service Area. The SDP must: establish a Subrecipient's priority rating sheet and priority Households; the alternate billing method; how customer education is being addressed; how the Subrecipient is determining the number of payments to be made and which types of Households are qualified for a given number of payments; the local standard to be used for Extreme Weather Conditions; and any other requirements imposed by federal or state law. The SDP must be submitted on or before a date specified by the Department. The Department may not release new CEAP contracts until the Subrecipient has an approved SDP for the applicable program year.</content><note type="source"><p>Source Note: The provisions of this §6.306 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scC/s6.307"><num value="6.307">§6.307</num><heading>Subrecipient Requirements for Customer Eligibility Criteria, Provision of Services, and Establishing Priority for Eligible Households</heading><content>(a) The customer income eligibility level is at or below 150% of the federal poverty level in effect at the time the customer makes an application for services.(b) Categorical Eligibility for CEAP benefits exists when at least one person in the Household receives assistance from:(1) SSI payments from the Social Security Administration;(2) Means Tested Veterans Program payments. See paragraph (37) of §6.2 of this chapter (relating to Definitions);(3) Supplemental Nutrition Assistance Program (SNAP); or(4) Temporary Assistance for Needy Families (TANF).(c) A complete application is required for all Households. Subrecipient shall determine customer income using the definition of income and process described in §6.4 of this chapter (relating to Income Determination). Household income documentation must be collected by the Subrecipient for the purposes of determining the Household's benefit level.(d) Social security numbers are not required for applicants.(e) Subrecipient must establish a written procedure to serve Households that have a Vulnerable Population Household member, Households with High Energy Burden, and Households with High Energy Consumption. High Energy Burden shall be the highest rated item in sliding scale priority determinations. The Subrecipient must maintain documentation of the use of the criteria.(f) A Dwelling Unit cannot be served if the meter is utilized by another Household that is not a part of the application for assistance. In instances where separate structures share a meter and the applicant is otherwise eligible for assistance, Subrecipient must provide services if:(1) The members of the separate structures that share a meter meet the definition of a Household per §6.2 of this chapter;(2) The members of the separate structures that share a meter submit one application as one Household; and(3) All persons and applicable income from each structure are counted when determining eligibility.(g) United States Citizen, United States National, or Qualified Alien. Except for items described in 10 TAC §6.310(c)(4) and §6.310(d) (relating to Crisis Assistance Component), Unqualified Aliens are not eligible to receive CEAP benefits. Mixed Status Households shall not be denied CEAP assistance based solely on the presence of a non-qualified member, except if the member is the sole member of the Household. In accordance with §1.410(f) of this title (relating to Exemptions under PRWORA), Subrecipients must document U.S. Citizen, U.S. National, and Qualified Alien status using the Department approved form. Qualified Alien status must also be verified and documented using SAVE.(h) Subrecipient must begin providing utility assistance services to customers upon receipt of Contract and throughout the Contract Term unless Subrecipient has expended its entire Contract.(i) Subrecipient must develop and publicly display a written procedure addressing the timeframe within which applications are determined to be eligible or ineligible once the application is complete, processing of the application and assistance delivery, and notification to the applicant.</content><note type="source"><p>Source Note: The provisions of this §6.307 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scC/s6.308"><num value="6.308">§6.308</num><heading>Allowable Subrecipient Administrative and Program Services Costs</heading><content>(a) Funds available for Subrecipient administrative activities will be calculated by the Department as a percentage of direct services Expenditures. Administrative costs shall not exceed the maximum percentage of total direct services Expenditures, as indicated in the Contract. All other administrative costs, exclusive of administrative costs for program services, must be paid with nonfederal funds. Allowable administrative costs for administrative activities includes costs for general administration and coordination of CEAP, and all indirect (or overhead) costs, and activities as described in paragraphs (1) - (7) of this subsection:(1) Salaries;(2) Fringe benefits;(3) Non-training travel;(4) Equipment;(5) Supplies;(6) Audit (limited to percentage of the contract expenditures, excluding training/travel costs as indicated in the Contract); and(7) Office space (limited to percentage of the contract expenditures, excluding training/travel costs as indicated in the Contract).(b) Program Services costs shall not exceed the maximum percentage of total direct services Expenditures, as indicated in the Contract. Program Services costs are allowable when associated with providing customer direct services. Program services costs may include outreach activities and expenditures on the information technology and computerization needed for tracking or monitoring required by CEAP, and activities as described in paragraphs (1) - (9) of this subsection:(1) Direct administrative cost associated with providing the customer direct service;(2) Salaries and fringe benefits cost for staff providing program services;(3) Supplies;(4) Equipment;(5) Travel;(6) Postage;(7) Utilities;(8) Rental of office space; and(9) Staff time to provide energy conservation education, needs assessments, and referrals.</content><note type="source"><p>Source Note: The provisions of this §6.308 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scC/s6.309"><num value="6.309">§6.309</num><heading>Types of Assistance and Benefit Levels</heading><content>(a) Allowable CEAP Expenditures include customer education, utility payment assistance, repair of existing heating and cooling units, replacement of irreparable existing heating and cooling unit components, purchase of heating and cooling units when none exist, and crisis-related purchase of portable heating and cooling units.(b) Total maximum possible annual Household benefit (all allowable benefits combined) shall not exceed $12,600 during a Program Year, not including arrears.(c) Benefit determinations are based on the Household's income (even if the Household is Categorically Eligible), the Household size, Vulnerable Populations in the Household, plus other priority status, whether a Household has one or more Unqualified Aliens for which calculation adjustments must be made as described in paragraphs (1) and (2) of this subsection, and the availability of funds.(1) Count income for all Household members 18 years of age and older, including Unqualified Aliens; and(2) Adjust the Household size for determining eligibility and benefit assistance level to exclude all Unqualified Aliens.(d) For purposes of determining Categorical Eligibility or Vulnerable Populations (i.e. priority status), the Household is not considered to satisfy the definition of having Categorical Eligibility or Vulnerable Population if the only individual(s) in the Household with that Categorical Eligibility or Vulnerable Population status are Unqualified Aliens. For purposes of reporting, all individuals in the Households should be reported.(e) Benefit determinations for the Utility Payment Assistance Component and the Crisis Assistance Component cannot exceed the sliding scale described in paragraphs (1) - (3) of this subsection:(1) Households with Incomes of 0 to 50% of Federal Poverty Guidelines may receive an amount not to exceed $1,800 per Component;(2) Households with Incomes more than 50% but at or below 75% of Federal Poverty Guidelines may receive an amount not to exceed $1,500 per Component; and(3) Households with Incomes more than 75% but at or below 150% of Federal Poverty Guidelines may receive an amount not to exceed $1,200 per Component.(f) Service and Repair of existing heating and cooling units. Households may receive up to $9,000 for service and repair of existing heating and cooling units when the Household has an inoperable heating or cooling system based on requirements in §6.310 of this subchapter (relating to Crisis Assistance Component) for Non-Vulnerable Population Households and §6.311 of this subchapter (relating to Utility Assistance Component) for Vulnerable Population Households. Subrecipients should attempt to repair individual components of a system; if a component(s) of the heating or cooling system cannot be repaired using parts, the Subrecipient can replace the component(s) in order to repair the heating or cooling system.(g) Purchase of heating and cooling units. Households may receive up to $9,000 for the purchase of a heating and cooling unit when a heating or cooling system is nonexistent based on requirements in §6.310 of this subchapter (relating to Crisis Assistance Component) for Non-Vulnerable Population Households and §6.311 of this subchapter (relating to Utility Assistance Component) for Vulnerable Population Households.(h) Assistance with purchase of portable cooling and/or heating units, window units, evaporative coolers, and mini splits cannot exceed $9,000. Refer to §6.310(c)(5) of this subchapter for requirements relating to purchase of these types of units.(i) Energy bills already paid may not be reimbursed by the program. Funds from CEAP shall not be used to weatherize dwelling units, for medicine, food, transportation assistance (e.g., vehicle fuel) except as noted in §6.310(d) of this subchapter, income assistance, or to pay for penalties or fines assessed to customers except in the case of arrearage payments as noted in paragraph (9) of this subsection. Subrecipient shall provide only the types of assistance described in this subsection with funds from CEAP:(1) Payment to vendors and suppliers of fuel/utilities, goods, and other services, such as past due or current bills related to the procurement of energy for heating and cooling needs of the residence, not to include security lights and other items unrelated to energy assistance as follows:(A) Subrecipient must make utility payments on behalf of Households based on the previous 12 month's home energy consumption history, including allowances for cost inflation. If a 12 month's home energy consumption history is unavailable, Subrecipient must base payments on a Department approved alternative billing method. If neither a 12 month's home energy consumption history nor an approved alternative billing method exists, then Subrecipient may base payments on current bill. Subrecipient will note such exceptions in customer files. Benefit amounts exceeding the actual bill shall be treated as a credit for the customer with the utility company;(B) Vulnerable Population Households can receive benefits to cover the remaining bills within the Program Year as long as the cost does not exceed the maximum annual benefit for the Utility Assistance Component. Bill payment may cover two separate fuel sources; and(C) Non-Vulnerable Population Households can receive benefits to cover up to six remaining bills within the Program Year as long as the cost does not exceed the maximum annual benefit for the Utility Assistance Component. Bill payment may cover two separate fuel sources;(2) Needs assessment and energy conservation tips, coordination of resources, and referrals to other programs;(3) Payment of water, wastewater and solid waste charges are not an allowable LIHEAP expense even in cases where those charges are an inseparable part of a utility bill. Whenever possible, Subrecipient shall negotiate with the utility providers to pay only the "home energy" (heating and cooling) portion of the bill or utilize other funds to pay for the water related charges;(4) Payment of reconnection fees in line with the registered tariff filed with the Public Utility Commission and/or Texas Railroad Commission. Payment cannot exceed that stated tariff cost. Subrecipient shall negotiate to reduce the costs to cover the actual labor and material and to ensure that the utility does not assess a penalty for delinquency in payments;(5) Payment of security deposits only when state law requires such a payment, or if the Public Utility Commission or Texas Railroad Commission has listed such a payment as an approved cost, and where required by law, tariff, regulation, or a deferred payment agreement includes such a payment. Subrecipient shall not pay such security deposits that the energy provider will eventually return to the customer;(6) While rates and repair charges may vary from vendor to vendor, Subrecipient shall negotiate for the lowest possible payment. Prior to making any payments to an energy vendor a Subrecipient shall have a signed vendor agreement on file from the energy vendor receiving direct CEAP payments from the Subrecipient;(7) Subrecipient may make payments to landlords on behalf of eligible renters who pay their utility and/or fuel bills indirectly. Subrecipient shall notify each participating Household of the amount of assistance paid on its behalf. Subrecipient shall document this notification. Subrecipient shall maintain proof of utility or fuel bill payment. Subrecipient shall ensure that amount of assistance paid on behalf of customer is deducted from customer's rent; and(8) In lieu of deposit required by an energy vendor, Subrecipient may make advance payments. The Department does not allow CEAP Expenditures to pay deposits, except as noted in paragraph (5) of this subsection. Advance payments may not exceed an estimated two months' billings.(9) Payment of existing arrearages related to home energy costs. Such payments have no maximum cost limit and do not count towards the total maximum possible annual Household benefit. Payment of arrearages may include the payment of penalties and fines related to home energy.</content><note type="source"><p>Source Note: The provisions of this §6.309 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scC/s6.310"><num value="6.310">§6.310</num><heading>Crisis Assistance Component</heading><content>(a) Crisis Assistance can be provided to persons who have already lost service or are in immediate danger of losing service only under one of the conditions listed in paragraphs (1) - (3) of this subsection, and shall not exceed the caps as defined in §6.309 of this subchapter (relating to Types of Assistance and Benefit Levels): (1) Extreme Weather Conditions, as defined in §6.301 of this subchapter (relating to Background and Definitions), with assistance provided within 48 hours; (2) Disaster, as defined in §6.301 of this subchapter, with assistance provided within 48 hours; or (3) Life Threatening Crisis, as defined in §6.301 of this subchapter, with assistance provided within 18 hours. (b) In order to resolve the crisis, Subrecipient shall ensure that for customers assisted through Crisis Assistance services are provided within the timeframes as described in subsection (a) of this section. The time limit commences upon completion of the application process. The application process is considered complete when an agency representative accepts an application and completes the eligibility process. Subrecipient must maintain written documentation in customer files showing crises resolved within the appropriate timeframe. The Department may disallow improperly documented Expenditures. (c) Low Income Households as defined in §6.2 of this chapter (relating to Definitions) may be eligible for any one or more of the types of assistance listed in paragraphs (1) - (8) of this subsection: (1) Payment of utilities or fuel bills and utility bill deposits necessary to retain heating or cooling. (2) Emergency deliveries of fuel up to 250 gallons per crisis per Household, at the prevailing price. This benefit may include coverage for tank pressure testing. (3) Utility reconnection costs. (4) Blankets, as tangible benefits to keep individuals warm. (5) For Non-Vulnerable Populations meeting the conditions described in subsection (a) of this section, service and repair of existing heating and cooling units is allowed when the Household has an inoperable heating or cooling system or the system is not functioning according to its intended purpose. If a component(s) of the heating or cooling system cannot be repaired using parts, the Subrecipient can replace the component(s) in order to repair the heating or cooling system. When a heating or cooling system is nonexistent, purchase of heating or cooling, or heating and cooling units for up to $9,000 is allowed. The cost shall not exceed $9,000 and will not be counted towards the total maximum benefit level per Household under the Crisis Assistance Component. (6) When a Household meets the definition of Life Threatening Crisis, purchase of portable cooling and/or heating units, window units, evaporative coolers, and mini splits is allowable. Units must be Energy Star® . In cases where the type of unit is not Energy Star® , or if Energy Star® units are not available due to supply shortages, Subrecipient may purchase the highest rated unit available. Purchase of more than two of these types of units for a Household requires prior written approval from the Department. (7) Purchase of fans. The number, type, size and cost of these items may not exceed the minimum needed to resolve the crisis. (8) If necessary, the purchase of a generator is allowable when a Household meets the definition of Life Threatening Crisis. (d) When Disasters result in energy supply shortages or other energy-related emergencies, CEAP will allow home energy related expenditures for: (1) Temporary Shelter in the limited instances that supply of power to the Dwelling Unit is disrupted causing a temporary evacuation. (2) Cost to temporary Shelter or house individuals in hotel, apartments or other living situations in which homes have been destroyed or damaged when health and safety is endangered by loss of access to heating and cooling. (3) Costs for transportation (e.g., cars, shuttles, buses) to move the individuals away from the crisis area to Shelters when health and safety is endangered by loss of access to heating and cooling. (e) Subrecipient may request a waiver from the Executive Director or designee for the 18 and 48 hour timeframes in the case of a Natural Disaster. The Executive Director or designee may grant a waiver if good cause is found. (f) Benefit Level for Crisis Assistance: (1) Crisis Assistance for one Household cannot exceed the maximum allowable benefit level in one Program Year as defined in §6.309 of this subchapter. If a Household's Crisis Assistance needs exceed that maximum allowable benefit, Subrecipient may pay up to the Crisis Assistance limit only if the remaining amount of Household need can be paid from other funds to resolve the crisis. If the Household's crisis requires more than the Household limit to resolve and no other funds are available, the crisis exceeds the scope of this Component. (2) Payments may not exceed Household's actual utility bill. (3) Payments may not exceed the Maximum Household allowable assistance benefit level. (4) Temporary Shelter not to exceed the annual Household benefit limit for the duration of the Contract Term.</content><note type="source"><p>Source Note: The provisions of this §6.310 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scC/s6.311"><num value="6.311">§6.311</num><heading>Utility Assistance Component</heading><content>(a) A Subrecipient may use home energy payments to assist Low Income Households to reduce their home energy costs. Subrecipient shall combine home energy payments with energy conservation tips, participation by utilities, and coordination with other services in order to assist low income Households to reduce their home energy needs.(b) Subrecipient must make payments directly to vendors and/or landlords on behalf of eligible Households.(c) For Vulnerable Population Households, service and repair of existing heating and cooling units is allowed when the Household has an inoperable heating or cooling system or the system is not functioning according to its intended purpose. If a component(s) of the heating or cooling system cannot be repaired using parts, the Subrecipient can replace the component(s) in order to repair the heating or cooling system. If a heating or cooling system is nonexistent, purchase of heating or cooling, or heating and cooling units for up to $9,000 is allowed. The cost shall not exceed $9,000 and will not be counted towards the total maximum benefit level per Household under the Utility Assistance Component. Subrecipients may leverage this type of assistance with LIHEAP and/or DOE Weatherization.</content><note type="source"><p>Source Note: The provisions of this §6.311 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scC/s6.312"><num value="6.312">§6.312</num><heading>Payments to Subcontractors and Vendors</heading><content>(a) A bi-annual Vendor Agreement is required to be implemented by the Subrecipient and shall contain assurances as to fair billing practices, delivery procedures, and pricing procedures for business transactions involving CEAP beneficiaries. The Subrecipient must use the Department's current Vendor Agreement template. These agreements are subject to monitoring procedures performed by the Department staff.(b) Subrecipient shall maintain proof of payment to Subcontractors and vendors as required by Chapter 1, Subchapter D of this title (relating to Uniform Guidance for Recipients of Federal and State Funds).(c) Subrecipient shall notify each participating Household of the amount of assistance to be paid on its behalf. Subrecipient shall document this notification.(d) Subrecipients shall use the Vendor Payment method for CEAP components. Subrecipient shall not make cash payments directly to eligible Household for any of the CEAP components.(e) Payments to vendors for which a valid Vendor Agreement is not in place may be subject to disallowed costs unless prior written approval is obtained from the Department.(f) A Vendor Refund is program income and must be reimbursed to the Subrecipient, and not the customer. When a Vendor Refund is issued, Subrecipient shall determine which TDHCA Contract the payment(s) was charged to, the Household associated to the payment, and if the Contract remains open.(1) If the Contract remains open, Subrecipient must enter the amount into the Contract System in the appropriate budget line item into the adjustment column in the next monthly report, and make the appropriate note in the system. This will credit back the Vendor Refund for the Subrecipient to expend on eligible expenses.(2) If the Contract is closed, Subrecipient must return the Vendor Refund to the Department within ten calendar days of receipt. The payment must contain the Contract number and appropriate budget line item associated with the refund.</content><note type="source"><p>Source Note: The provisions of this §6.312 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scC/s6.313"><num value="6.313">§6.313</num><heading>Outreach, Accessibility, and Coordination</heading><content>(a) The Department may continue to develop interagency collaborations with other low-income program offices and energy providers to perform outreach to targeted groups.(b) Subrecipient shall conduct outreach activities. Outreach activities may include:(1) Providing information through home visits, site visits, group meetings, or by telephone for disabled low-income persons;(2) Distributing posters/flyers and other informational materials via websites and social media and at local and county social service agencies, offices of aging, Social Security offices, etc.;(3) Providing information on the program and eligibility criteria in articles in local newspapers or broadcast media announcements;(4) Coordinating with other low-income services to provide CEAP information in conjunction with other programs;(5) Providing information on one-to-one basis for applicants in need of translation or interpretation assistance;(6) Providing CEAP applications, forms, and energy education materials in English and Spanish (and other appropriate language(s));(7) Working with energy vendors in identifying potential applicants;(8) Assisting applicants to gather needed documentation; and(9) Mailing information and applications.(c) Subrecipient shall handle Reasonable Accommodation requests, in accordance with §1.204 of this title (relating to Reasonable Accommodations).(d) Subrecipient shall coordinate with other social service agencies through cooperative agreements to provide services to customer Households. Cooperative agreements must clarify procedures, roles, and responsibilities of all involved entities.(e) Subrecipient shall coordinate with other energy related programs. Specifically, Subrecipient shall make documented referrals to the local WAP Subrecipient.(f) Subrecipient shall coordinate with local energy vendors to arrange for arrearage reduction, reasonably reduced payment schedules, or cost reductions.</content><note type="source"><p>Source Note: The provisions of this §6.313 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c6/scD"><num value="D">SUBCHAPTER D</num><heading>WEATHERIZATION ASSISTANCE PROGRAM</heading><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.401"><num value="6.401">§6.401</num><heading>Background</heading><content>The Weatherization Assistance Program was established by the Energy Conservation in Existing Buildings Act of 1976, as amended 42 U.S.C. §§6851, et seq. The Department funds the Weatherization Programs through the Department of Energy Weatherization Assistance Program (DOE-WAP) which is funded through the U.S. Department of Energy Weatherization Assistance Program for Low Income Persons grant and the Low Income Home Energy Assistance Program Weatherization Assistance Program (LIHEAP-WAP) which is funded through the U.S. Department of Health and Human Services' Low-Income Home Energy Assistance Program (LIHEAP) grant.</content><note type="source"><p>Source Note: The provisions of this §6.401 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.402"><num value="6.402">§6.402</num><heading>Purpose and Goals</heading><content>(a) DOE-WAP and LIHEAP-WAP offers awards to Private Nonprofit Organizations, and Public Organizations with targeted beneficiaries being Households with low incomes, with priority given to Vulnerable Populations, High Energy Burden, and Households with High Energy Consumption. In addition to meeting the income-eligibility criteria, the weatherization measures to be installed must meet specific energy-savings goals. Neither of these programs are entitlement programs and there are not sufficient funds to serve all customers that may be eligible.(b) The programs fund the installation of weatherization materials and provide energy conservation education. The programs help control energy costs to ensure a healthy and safe living environment.(c) Organizations administering a Department-funded weatherization program must administer both the DOE-WAP and the LIHEAP-WAP. Organizations that have one Weatherization program removed will have both program removed. If it is necessary to designate a new Subrecipient to administer WAP, the Department shall give special consideration to Subrecipients receiving funds under LIHEAP or DOE WAP, in accordance with Assurance 6 of the Low Income Home Energy Assistance Act of 1981, as amended.(d) The Department shall administer and implement the DOE-WAP program in accordance with DOE rules (10 CFR Part 440 and active DOE WAP Program Notices/Memorandums) and the current DOE State Plan. The Department shall administer and implement the LIHEAP-WAP program in accordance with a combination of LIHEAP statute (42 U.S.C. §§6861, et seq.) and DOE rules. LIHEAP Weatherization measures may be leveraged with DOE Weatherization measures in which case all DOE rules and requirements as described in this title and in the Contract will apply.</content><note type="source"><p>Source Note: The provisions of this §6.402 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.403"><num value="6.403">§6.403</num><heading>Definitions</heading><content>(a) Department of Housing and Urban Development (HUD)--Federal department that provides funding for certain housing and community development activities.(b) Electric Base-Load Measure (EBL)--Weatherization measures which address the energy efficiency and energy usage of lighting and appliances.(c) Energy Audit--The energy audit software and procedures used to determine the cost effectiveness of Weatherization measures to be installed in a Dwelling Unit.(d) Energy Repairs--Weatherization-related repairs necessary to protect or complete regular Weatherization energy efficiency measures.(e) Multifamily Dwelling Unit--A structure containing more than one Dwelling Unit.(f) Priority List--A Department approved LIHEAP Priority List or a DOE approved Priority List, as updated when applicable, which provides the prescribed method to be used by Subrecipients when addressing weatherization measures.(g) Rental Unit--A Dwelling Unit occupied by a person who pays rent for the use of the Dwelling Unit.(h) Renter--A person who pays rent for the use of the Dwelling Unit.(i) Reweatherization--If a Dwelling Unit has been damaged by fire, flood, or act of God and repair of the damage to Weatherization materials is not paid for by insurance; or if a Dwelling Unit was partially weatherized in the previous 15 years, the Dwelling Unit may be reweatherized to receive further weatherization assistance.(j) Shelter--A Dwelling Unit or Units whose principal purpose is to house on a temporary basis individuals who may or may not be related to one another and who are not living in nursing homes, prisons, or similar institutional care facilities.(k) Significant Energy Savings--A Savings to Investment Ratio (SIR) of 1.0 or greater.(l) Single Family Dwelling Unit--A structure containing no more than one Dwelling Unit.(m) Weatherization Assistance Program Policy Advisory Council (WAP PAC)--The WAP PAC was established by the Department in accordance with 10 CFR §440.17 to provide advisory services in regards to the DOE WAP program.(n) Weatherization Material--The material listed in Appendix A of 10 CFR Part 440.(o) Weatherization--A program conducted to reduce heating and cooling demand of Dwelling Units that are energy inefficient.</content><note type="source"><p>Source Note: The provisions of this §6.403 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.404"><num value="6.404">§6.404</num><heading>Distribution of WAP Funds</heading><content>(a) Except for the Reobligation of Deobligated funds, the Department distributes funds to Subrecipients by an allocation formula.(b) The allocation formula allocates funds based on the number of Low Income Households in a Service Area and takes into account certain special needs of individual Service Areas, as set forth in this subsection. The need for energy assistance in an area is addressed through a weather factor (based on heating and cooling degree days). The extra expense in delivering services in sparsely populated areas is addressed by an inverse Population Density factor. The lack of additional services available in very poor counties is addressed by a county median income factor. Finally, the Elderly are given priority by giving greater weight to this population. The five factors used in the formula are calculated as follows:(1) County Non-Elderly Poverty Household Factor--The number of Non-Elderly Poverty Households in the County divided by the number of Non-Elderly Poverty Households in the State;(2) County Elderly Poverty Household Factor--The number of Elderly Poverty Households in the county divided by the number of Elderly Poverty Households in the State;(3) County Inverse Household Population Density Factor--(A) The number of square miles of the county divided by the number of Households of the county (equals the inverse Household population density of the county); and(B) Inverse Household Population density of the county divided by the sum of inverse Household densities;(4) County Median Income Variance Factor--(A) State median income minus the county median income (equals county variance); and(B) County variance divided by sum of the State county variances; and(5) County Weather Factor--(A) County heating degree days plus the county cooling degree days, multiplied by the poverty Households, divided by the sum of county heating and cooling degree days of counties (equals County Weather); and(B) County Weather divided by the total sum of the State County Weather.(c) The five factors carry the following weights in the allocation formula: number of Non-Elderly Poverty Households (40%), number of poverty Households with at least one member who is 60 years of age or older (40%), Household density as an inverse ratio (5%), the median income of the county (5%), and a weather factor based on heating degree days and cooling degree days (10%). All demographic factors are based on the most current decennial U.S. Census. The formula is as follows:(1) County Non-Elderly Poverty Household Factor (0.40) plus;(2) County Elderly Poverty Household Factor (0.40) plus;(3) County Inverse Household Population Density Factor (0.05) plus;(4) County Median Income Variance Factor (0.05) plus;(5) County Weather Factor (0.10);(6) Total sum of paragraphs (1) - (5) of this subsection is multiplied by the total funds allocation to generate the county's allocation of funds; and(7) The sum of the county allocation within each Subrecipient Service Area equals the Subrecipient's total allocation of funds.(d) In the event that a Subrecipient who has been awarded LIHEAP-WAP funds elects to voluntarily transfer some portion of their LIHEAP-WAP funds to the LIHEAP CEAP activity, a request to do so must be submitted prior to August 1 of the first year of the federal LIHEAP award period. The amount of funds being voluntarily transferred will be returned to the Department and redistributed among LIHEAP CEAP providers to ensure appropriate coverage among counties. This may mean the LIHEAP Awarded Funds to that same Subrecipient having made the request, but alternatively could mean that the Awarded funds may be to one or more other CEAP Subrecipients providing CEAP services in the counties for which the WAP funds were transferred. The Department will distribute the funds proportionally to the affected counties and CEAP Subrecipients in the Service Area using the allocation formula in §6.303 of this title (relating to Distribution of CEAP Funds).(e) To the extent federal funding awarded to Texas is limited from one of the two WAP funding sources, possible allocations of funds to Subrecipients may be made in varying proportions from each source to maximize efficient program administration.(f) The Department may, in the future, undertake to reprocure the entities that comprise the network of Weatherization providers, in which case this allocation formula will be reassessed and, if material changes are needed, amended by rulemaking.</content><note type="source"><p>Source Note: The provisions of this §6.404 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.405"><num value="6.405">§6.405</num><heading>Deobligation and Reobligation of Awarded Funds</heading><content>(a) A Subrecipient that does not expend more than 20% of its Program Year formula allocation (excluding any additional funds that may be distributed by the Department and any funds voluntarily transferred to LIHEAP CEAP) by the end of the first quarter of the Contract Term following the Program Year for two consecutive years will have funding recaptured. A Subrecipient's Contract will be amended to reflect the average percentage of funds that were expended over the last two years. LIHEAP-WAP funding recapture will be consistent with Tex. Gov't Code, Chapter 2105.(b) The cumulative balance of the funds made available in subsection (a) of this section will be allocated proportionally by formula to Subrecipients who have expended the greatest proportion of the prior year's Contract, excluding adjustments made in subsection (a) of this section, by the end of the original Contract Term.(c) At any time that a Subrecipient believes they may be at risk of meeting one of the criteria noted in subsection (n) of this section relating to criteria for Deobligation of funds, notification must be provided to the Department.(d) A written "Notification of Possible Deobligation" will be sent to the Executive Director and all known Board Members or other governing body of the Subrecipient by the Department as soon as the Department identifies that a criterion listed in subsection (n) of this section is at risk of not being met. Written notice will be sent electronically. The notice will include an explanation of the criteria met. A Notification will not be sent, and the steps in this section not triggered, if an Amendment increasing funds has been provided to the Subrecipient in the prior 90 calendar days.(e) Within 15 calendar days of the date of the "Notification of Possible Deobligation" referenced in subsection (d) of this section, a Mitigation Action Plan must be submitted to the Department by the Subrecipient in the format prescribed by the Department.(f) A Mitigation Action Plan is not limited to but must include:(1) Explanation of why the identified criteria under this section occurred setting out all fully relevant facts.(2) Explanation of how the criteria will be immediately, permanently, and adequately mitigated such that funds are expended during the Contract Term. For example, if production or expenditures appear insufficient to complete the Contract timely, the explanation would need to address how production or expenditures will be increased in the short- and long-term to restore projected full Expenditure and timely execution of the contract.(3) If applicable because of failure to produce Unit Production or Expenditure targets under the existing Production Schedule, a detailed narrative of how the Production Schedule will be adjusted, going forward, to assure achievement of sufficient, achievable Unit Production and Expenditures to ensure timely and compliant full utilization of all funds.(4) An explanation of how the other criteria under this section will be mitigated. For example, if Unit Production criteria for a time period were not met, then the explanation will need to include how the other criteria will not be triggered.(5) If relating to a Unit Production or Expenditure criteria, a description of activities currently being undertaken including an accurate description of the number of units in progress, broken down by number of units in each of these categories: units that have been qualified, audited, assessed, contracted, inspected, and invoiced and as reflected in an updated Production Schedule.(6) Provide any request for a reduction in Contracted Funds, reasons for the request, desired Contracted Funds amount, and revised Production Schedule reflecting the reduced Contracted Funds.(g) At any time after sending a Notification of Deobligation, the Department or a third-party assigned by the Department may monitor, conduct onsite visits, perform other assessments, or engage in any other oversight of the Subrecipient that is determined appropriate by the Department under the facts and circumstances.(h) The Department or a third-party assigned by the Department will review the Mitigation Action Plan, and where applicable, assess the Subrecipient's ability to meet the revised Production Schedule or remedy other Concern.(i) After the Department's receipt of the Mitigation Action Plan, the Department will provide the Subrecipient a written Corrective Action Notice which may include one or more of the criteria identified in this section (relating to Deobligation and other mitigating actions) or other acceptable solutions or remedies.(j) The Subrecipient has seven calendar days from the date of the Corrective Action Notice to appeal the Corrective Action Notice to the Executive Director. Appeals may include:(1) A request to retain the full Fund Award if Partial Deobligation was indicated;(2) A request for only partial Deobligation of the full Contracted Fund if full Deobligation was indicated in the Corrective Action Notice; or(3) Request for other lawful action consistent with the timely and full completion of the Contract and Production Schedule for all Contracted Funds.(k) In the event that an appeal of a staff decision under this section is submitted to the Executive Director, the Executive Director may grant extensions or forbearance of targets included in the Production Schedule, may provide for continued operation of a Contract, may authorize Deobligation, or may take other lawful action that is designed to ensure the timely and full completion of the Contract for all Contracted Funds.(l) In the event an appeal is not submitted within seven calendar days from the date of the Corrective Action Notice, the Corrective Action Notice will automatically become final without need of any further action or notice by the Department, and the Department will amend/terminate the Contract with the Subrecipient to effectuate the Corrective Action Notice.(m) In the event the Executive Director denies an appeal of a staff decision under this section, the Subrecipient may appeal that decision in accordance with §1.7(f) of this title (relating to the Process for Filing an Appeal of the Executive Director's Decision to the Board).(n) Any one or more of the criteria noted in this subsection may prompt the Deobligation process under this rule. If the criteria are met, then notification and ensuing processes discussed elsewhere in this subchapter will apply.(1) Subrecipient fails to provide the Department with a Production Schedule for its current Contract within 30 calendar days of receipt of the draft Contract. The Production Schedule must be signed by the Subrecipient's Executive Director/Chief Executive Officer, and approved by the Department in writing;(2) By the third program reporting deadline, Subrecipient must report at least one unit weatherized for each Weatherization Contract;(3) By the fifth program reporting deadline, less than 25% of total expected unit production has occurred based on the Production Schedule, or less than 20% of total Awarded Funds have been expended;(4) By the seventh program reporting deadline, less than 50% of total expected unit production has occurred based on the Production Schedule, or less than 50% of total Awarded Funds have been expended; or(5) The Subrecipient fails to submit a required monthly report explaining any variances between the Production Schedule and actual results on Production Schedule criteria.(o) A Subrecipient that has funds Deobligated under this section but that fully expends the reduced amount of its Contract, will have access to the full amount of the following Program Year WAP allocation. A Subrecipient which has had funds Deobligated under this section that fails to fully expend the reduced amount of its Contract will automatically have its following Program Year WAP allocation Deobligated by the lesser of 24.99% or the proportional amount that had been Deobligated in the prior year.(p) Funds Deobligated under this section, funds voluntarily relinquished, or additional funds should they become available, will be Reobligated proportionally by the formula described in §6.404 of this subchapter (relating to Distribution of WAP Funds) or other method approved by the Department's Board amongst those Subrecipients who have expended the greatest proportion of their current Contract during this evaluation period to ensure full utilization of funds within a limited timeframe including possible allocation of WAP funds to Subrecipients in varying populations from each funding source (DOE and LIHEAP), based on availability of the source.</content><note type="source"><p>Source Note: The provisions of this §6.405 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.406"><num value="6.406">§6.406</num><heading>Subrecipient Requirements for Establishing Household Eligibility and Priority Criteria</heading><content>(a) The structure's design must allow for energy conservation retrofits and meet the definition of a Dwelling Unit per §6.2 of this chapter (relating to Definitions).(b) A Dwelling Unit cannot be served if a single meter is utilized by another Dwelling Unit that is not a part of the application for assistance. In instances where separate structures share a meter and the applicant is otherwise eligible for assistance, Subrecipient must provide services if:(1) The members of the separate structures that share a meter submit a separate Household application to include all persons and applicable income for each Dwelling Unit attached to the meter; and(2) All Household Dwelling Units served by the meter are determined eligible to receive weatherization benefits.(c) Subrecipient shall establish a written procedure to serve Households that have a Vulnerable Population Household member, Households with High Energy Burden, and Households with High Energy Consumption. High Energy Burden shall be the highest rated item in sliding scale priority determinations. The Subrecipient must maintain documentation of the use of the criteria.(d) Subrecipient shall determine applicant income eligibility in compliance with §6.4 of this chapter (relating to Income Determination).(e) Categorical Eligibility for DOE-WAP benefits exist when at least one person in the Household receives assistance payments under Title IV or XVI of the Social Security Act at any time during the 12-month period preceding the determination of eligibility or resides in a building that receives assistance under specific federal programs as identified in §6.414 of this chapter (relating to Eligibility for Multifamily Dwelling Units and Shelters) or by Contract. Categorical Eligibility for LIHEAP-WAP benefits are the same as those specified for CEAP benefits described in §6.307(b) of this chapter (relating to Subrecipient Requirements for Customer Eligibility Criteria, Provision of Services, and Establishing Priority for Eligible Households).(f) Social Security numbers are not required for applicants.(g) U.S. Citizen, U.S. National or Qualified Alien. Unqualified Aliens are not eligible to receive WAP benefits. Mixed Status Households shall not be denied WAP assistance based solely on the presence of a non-qualified member, except if the member is the sole member of the Household. In accordance with §1.410(f) of this title (relating to Determination of Alien Status for Program Beneficiaries), relating to Exemptions under PRWORA, Subrecipient must document U.S. Citizen, U.S. National, and Qualified Alien status using the Department approved form. Qualified Alien status must also be verified and documented using SAVE. Assistance shall be determined as follows:(1) Count income for all Household members eighteen years of age and older, including Unqualified Aliens; and(2) Adjust the Household size for determining eligibility and benefit assistance level to exclude all Unqualified Aliens.(h) For purposes of determining Categorical Eligibility or Vulnerable Populations (e.g. priority status) the Household is not considered to satisfy the definition of having Categorical Eligibility or Vulnerable Population if the only individual(s) in the Household with Categorical Eligibility or Vulnerable Population status is an Unqualified Alien. For purposes of reporting, all individuals in the Household should be reported.</content><note type="source"><p>Source Note: The provisions of this §6.406 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.407"><num value="6.407">§6.407</num><heading>Program Requirements</heading><content>(a) Each Dwelling Unit weatherized requires completion of a written whole house assessment, unless an alternative process is approved by the Department. Subrecipient must perform the whole house assessment then let that assessment guide whether the Dwelling Unit is best served through DOE and/or LIHEAP-WAP funds utilizing the Energy Audit or Priority List(s), as applicable.(b) Any Dwelling Unit that is weatherized using DOE funds must either use the State of Texas approved Energy Audit or DOE approved Priority List as a guide for installed measures. A Subrecipient combining DOE funds with LIHEAP-WAP funds on an individual Dwelling Unit or building may use the Energy Audit to justify all measures installed or utilize the DOE and LIHEAP Priority Lists together to address all measures allowed.(c) Any Dwelling Unit that is weatherized using LIHEAP only must be completed using the LIHEAP Priority List as a guide for installed measures.(d) If a Subrecipient's Weatherization work does not consistently meet DOE Standard Work Specifications Weatherization standards, the Department may proceed with the removal of the programs from the Subrecipient.</content><note type="source"><p>Source Note: The provisions of this §6.407 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.408"><num value="6.408">§6.408</num><heading>Department of Energy Weatherization Requirements</heading><content>(a) In addition to cost principles and administrative requirements listed in §1.402 in Chapter 1 of this title (relating to Cost Principles and Administrative Requirements), Subrecipients administering DOE programs must also adhere to 10 CFR Part 440, 10 CFR Part 600, active DOE WAP Program Notices/Memorandums, NREL Standard Work Specifications, Build America, Buy America as further outlined in the Contract, and the applicable International Residential Code (IRC).(b) WAP Policy Advisory Council. In accordance with Tex. Gov't Code, §2110.005 and 10 CFR §440.17, the Department shall establish the Weatherization Assistance Program Policy Advisory Council (WAP PAC), with which it will consult prior to the submission of the annual plan and award of funds to DOE.(c) Adjusted Average Expenditure Per Dwelling Unit. Expenditures of financial assistance provided under DOE-WAP funding for the Weatherization services for labor, weatherization materials, and program support shall not exceed the DOE adjusted average expenditure limit for the current Program Year per Dwelling Unit as provided by DOE, and as cited in the Contract, without special agreement via an approved waiver from the Department.(d) Electric Base Load Measures. DOE has approved the inclusion of selected Electric Base Load (EBL) measures as part of the Weatherization of eligible residential units. Refrigerator usage data must be obtained either by metering the appliance for a minimum of two (2) hours or from a DOE approved tool when calculating the EBL SIR.(e) Energy Audit Procedures.(1) SIR for the Energy Audit procedures will determine the installation of allowable Weatherization measures. The Weatherization measures must result in energy cost savings over the lifetime of the measure(s), discounted to present value, that equal or exceed the cost of materials, and installation. An Energy Audit may consist of Incidental Repairs, Energy-Saving Measures (starting with Duct Sealing and Infiltration Reduction), and Health and Safety Measures. All Energy-Saving Measures must rank with an SIR of one or greater. The total Cumulative SIR, prior to Health and Safety measures, must be a one or greater in order to weatherize the dwelling unit.(2) The Energy Audit has not been approved for multifamily buildings containing 25 or more units. A Subrecipient that proposes weatherizing a building containing 25 or more units must receive approval from the Department prior to beginning any Weatherization activity.(3) Energy Auditors must use the established R-values for existing measures provided in the International Energy Conservation Code (IECC when entering data into the Energy Audit. Subrecipient must follow minimum requirements set in the applicable IRC or jurisdictions authorized by state law to adopt later editions.(4) A Subrecipient utilizing the Energy Audit must enter into the audit all materials and labor measures proposed to be installed.(f) Priority List Procedures. Subrecipient is limited to Weatherization measures as detailed in the DOE approved Priority List. Measures must be addressed according to the instructions in the Weatherization Contract, Priority List criteria, and the Department's DOE Priority List policies and procedures.</content><note type="source"><p>Source Note: The provisions of this §6.408 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.409"><num value="6.409">§6.409</num><heading>LIHEAP Weatherization Requirements</heading><content>(a) Allowable Expenditure per Dwelling Unit. Expenditures of financial assistance provided under LIHEAP-WAP funding for the weatherization services for labor, Weatherization materials, and program support shall not exceed the allowable figure as set forth in the current Contract, without prior written approval from the Department. The cumulative cost per unit (materials, labor and program support), shall not exceed the maximum allowable by the end of the Contract Term.(b) Allowable Activities. Subrecipient is limited to Weatherization measures as detailed in the Priority List Exhibit to the Weatherization Contract. Measures must be addressed according to the instructions in the Exhibit.(c) Outreach and Accessibility. Subrecipient shall conduct outreach activities, which may include but are not limited to:(1) Providing information through home visits, site visits, group meetings, or by telephone for disabled low-income persons;(2) Distributing posters/flyers and other informational materials at local and county social service agencies, offices of aging, social security offices, etc.;(3) Providing information on the program and eligibility criteria in articles in local newspapers or broadcast media announcements;(4) Coordinating with other low-income services to provide LIHEAP information in conjunction with other programs;(5) Providing information on one-to-one basis for applicants in need of translation or interpretation assistance;(6) Providing LIHEAP applications, forms, and energy education materials in English and Spanish (and other appropriate language);(7) Working with energy vendors in identifying potential applicants;(8) Assisting applicants to gather needed documentation; and(9) Mailing information and applications.(d) LIHEAP Subrecipient Eligibility.(1) The Department administers the program through the existing Subrecipients that have demonstrated that they are operating the program in accordance with their Contract, the Economic Opportunity Act of 1964, the Low-Income Home Energy Assistance Act of 1981, as amended (42 U.S.C. §§8621, et seq.), and the Department rules. If a Subrecipient is successfully administering the program, the Department may offer to renew the Contract.(2) If the Department determines that a Subrecipient is not administering the program satisfactorily, the Subrecipient will be required to take corrective actions to remedy the problem within the timeframe referenced in the issued monitoring report, unless it is a case of customer health or safety. If Subrecipient fails to correct the Deficiency or Finding, in order to ensure continuity of services, the Department may take an action in accordance with §1.411(f) of this title (relating to Nonrenewal or Reduction of Block Grant Funds to a Specific Subrecipient).</content><note type="source"><p>Source Note: The provisions of this §6.409 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.410"><num value="6.410">§6.410</num><heading>Liability Insurance and Warranty Requirement</heading><content>Subrecipient Weatherization work shall be covered by general liability insurance for an amount not less than combined total of materials, labor, support and health and safety. The Department strongly recommends Pollution Occurrence Insurance to be part of or an addendum to Subrecipient's general liability insurance coverage. Subrecipient must ensure that each Subcontractor performing Weatherization activities maintain adequate insurance coverage for all units to be weatherized. Weatherization contractors must provide a one-year warranty on their work for parts and labor; the period for the warranty coverage shall begin at the completion of installation. If Subrecipient relinquishes its Weatherization program, Weatherization work completed within 12 months of the date of surrender of the program, must be covered by general liability insurance or contractor warranty. Public Organizations that have self insurance complying with Tex. Gov't Code Chapter 2259 covering weatherization work, may, but are not required to, purchase additional coverage.</content><note type="source"><p>Source Note: The provisions of this §6.410 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.411"><num value="6.411">§6.411</num><heading>Customer Education</heading><content>Subrecipient shall provide customer education to each WAP customer on energy conservation practices. Subrecipient shall provide education to identify energy waste, manage Household energy use, and strategies to promote energy savings. Subrecipient is encouraged to use oral, written, and visual educational materials.</content><note type="source"><p>Source Note: The provisions of this §6.411 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.412"><num value="6.412">§6.412</num><heading>Mold-like Substances</heading><content>(a) If the Subrecipient's energy auditor discovers the presence of mold-like substances that the Weatherization Subcontractor cannot adequately address, then the Dwelling Unit shall be referred to the Texas Department of Licensing and Regulation or its successor agency.(b) The Subrecipient shall provide the applicant written notification that their home cannot, at this time, be weatherized and why. Subrecipient shall also inform the applicant in writing that they should contact the Texas Department of Licensing and Regulation, or successor agency, to report the presence of mold-like substances. The applicant should be advised that when the issue is resolved they may reapply for Weatherization. Should the applicant reapply for Weatherization, the Subrecipient must obtain written documentation of resolution of the issue from the applicant prior to proceeding with any Weatherization work.(c) If the energy auditor determines that the mold-like substance is treatable and covers less than the 25 contiguous square feet limit allowed to be addressed by the Texas Department of Licensing and Regulation's, or successor agency's guidelines, the Subrecipient shall notify the applicant of the existence of the mold-like substance and potential health hazards, the proposed action to eliminate the mold-like substance, that no guarantee is offered that the mold-like substance will be eliminated, and that the mold-like substance may return. The energy auditor must obtain written approval from the applicant to proceed with the Weatherization work, and maintain the documentation in the customer file.(d) Subrecipient shall be responsible for providing mold training to their employees and Weatherization Subcontractors.</content><note type="source"><p>Source Note: The provisions of this §6.412 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.413"><num value="6.413">§6.413</num><heading>Lead Safe Practices</heading><content>Subrecipient are required to document that its Weatherization staff as well as all Subcontractors follow the Environmental Protection Agency's Renovation, Repair and Painting Program (RRP) Final Rule, 40 CFR Part 745 and HUD's Lead Based Housing Rule, 24 CFR Part 35, as applicable.</content><note type="source"><p>Source Note: The provisions of this §6.413 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.414"><num value="6.414">§6.414</num><heading>Eligibility for Multifamily Dwelling Units and Shelters</heading><content>(a) Multifamily building and Shelter weatherization is not considered a federal public benefit and the activity is exempt from the requirements of §6.406(g) and (h) of this subchapter (relating to U.S. Citizen, U.S. National or Qualified Alien, and determining Categorical Eligibility or Vulnerable Populations, respectively).(b) A Subrecipient may weatherize a building containing Rental Units if not less than 66% (50% for duplexes and four-unit buildings) of the Dwelling Units in the building are occupied by low income Households, or will become occupied by Low-income Households within 180 days under a Federal, State, or local government program for rehabilitating the building or making similar improvements to the building.(c) In order to weatherize large multifamily buildings containing twenty-five or more Dwelling Units or those with shared central heating (e.g., boilers) and/or shared cooling plants (e.g., cooling towers that use water as the coolant) regardless of the number of Dwelling Units, Subrecipient shall submit in writing to the Department a request for approval along with evidence which clearly shows that an investment of funds would result in Significant Energy Savings because of upgrades to equipment, energy systems, common space, or the building shell. When necessary, the Department will seek approval from DOE. Approvals from the Department in writing must be received prior to the installation of any Weatherization measures in this type of structure.(d) In order to weatherize Shelters, Subrecipient shall submit a written request for approval from the Department. Written approval from the Department must be received prior to the installation of any Weatherization measures. Income determination is not required to be done for residents of Shelters.(e) If roof repair is to be considered as an eligible repair cost under the Weatherization process, the expenses must be shared equally by all eligible Dwelling Units weatherized under the same roof. If multiple storied buildings are weatherized, eligible ground floor units must be allocated a portion of the roof cost as well as the eligible top floor units. All Weatherization measures installed in multifamily units must meet applicable IRC requirements, NREL Standard Work Specifications, the standards set in 10 CFR §440.18(d)(9) and (15), and Appendix A-Standards for Weatherization Materials.(f) Subrecipient shall establish a multifamily master file for each multifamily project in addition to the applicable Dwelling Unit recordkeeping requirements found in the Contract. The multifamily master file must include, at a minimum, the forms (available on the Department's website) listed in paragraphs (1) - (6) of this subsection:(1) Multifamily Project Preparation Checklist;(2) Multifamily Project Completion Checklist;(3) Landlord Permission to Perform Assessment and Inspections for Rental Units;(4) Landlord Agreement;(5) Landlord Financial Participation Form; and(6) Multifamily Project Building Data Checklist.(g) Subrecipient shall contact the Department for record keeping guidance if it wishes to weatherize a Shelter.(h) For DOE WAP, if a public housing or assisted multi-family building has HUD assisted tenants, the most current and applicable Weatherization Program Notice shall be utilized in determining client and building eligibility.(i) For any Dwelling Unit that is weatherized using funding provided under DOE WAP, all Weatherization measures installed must be justified with an approved Energy Audit or with the DOE approved Priority List. If using the Energy Audit, all allowable Weatherization measures needed must be entered. Weatherization measures will be performed in order of highest SIR to lowest depending on funds available. If using the Priority List, included Weatherization measures must be addressed according to the instructions in the Weatherization Contract, Priority List criteria, and the Department's DOE Priority List policies and procedures (if applicable).</content><note type="source"><p>Source Note: The provisions of this §6.414 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.415"><num value="6.415">§6.415</num><heading>Health and Safety and Unit Deferral</heading><content>(a) Health and Safety expenditures at the end of the Contract Term for DOE WAP and LIHEAP WAP may not exceed the amount equal to the Health and Safety budget, divided by the sum of Materials/Program Support/Labor budget and the Health and Safety budget. The budget line items are identified in the Budget and Performance Statement of the DOE WAP and LIHEAP WAP Contracts.(b) Subrecipient shall provide Weatherization services with the primary goal of energy efficiency. The Department considers establishing a healthy and safe home environment to be important to ensuring that energy savings result from Weatherization work.(c) Subrecipient must test for high carbon monoxide (CO) levels and bring CO levels to acceptable levels before Weatherization work can start. The Department has defined maximum acceptable CO readings in its Standard Work Specifications.(d) A Dwelling Unit shall not be weatherized when there is a potentially harmful situation that may adversely affect the occupants or the Subrecipient's Weatherization crew and staff, or when a Dwelling Unit is found to have structural concerns that render the Dwelling Unit unable to benefit from Weatherization. The Subrecipient must declare their intent to defer Weatherization on an eligible unit on the assessment form. The assessment form should include the customer's name and address, dates of the assessment, and the date on which the customer was informed of the issue in writing. The written notice to the customer must include a clear description of the problem, conditions under which Weatherization could continue, the responsibility of all parties involved, and any rights or options the customer has. A copy of the notice must be given to the customer, and a signed copy placed in the customer application file. Only after the issue has been corrected to the satisfaction of the Subrecipient shall Weatherization work begin.(e) If structural concerns or health and safety issues identified (which would be exacerbated by any Weatherization work performed) on an individual Dwelling Unit cannot be abated within program rules or within the allowable WAP limits, the Dwelling Unit exceeds the scope of this program.</content><note type="source"><p>Source Note: The provisions of this §6.415 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.416"><num value="6.416">§6.416</num><heading>Whole House Assessment</heading><content>(a) Subrecipient must conduct a whole house assessment on all eligible Dwelling Units, unless an alternative process is approved by the Department. Unless using an alternative Department approved method, then whole house assessments must be used to determine whether the Priority List or an Energy Audit is most appropriate for the unit. Whole house assessments must collect all required information, to include items described in paragraphs (1) - (15) of this subsection:(1) Wall--Condition, type, orientation, and existing R-values;(2) Windows--Condition, type material, glazing type, leakiness, and solar screens;(3) Doors--Condition, type;(4) Attic--Type, condition, existing R-values, and ventilation;(5) Foundation--Condition, existing R-values, and floor height above ground level;(6) Heating System--For all systems: unit type, fuel source (primary or secondary), thermostat, and output; for combustion systems only: vented or unvented efficiency, CO-levels, complete fuel gas analysis, gas leaks, and combustion venting;(7) Cooling System--Unit type, condition, area cooled, size in BTU rating, Seasonal Energy Efficiency Rating (SEER) or Energy Efficiency Rating (EER), manufacture date, and thermostat;(8) Duct System--Condition, existing insulation level, evaluation of registers, duct infiltration, return air register size, and condition of plenum joints;(9) Water Heater--For all water heaters: condition, fuel type, efficiencies (UEF, RE, EF, etc.) input and output ratings, size, existing insulation levels, existing pipe insulation; for combustion water heaters only: carbon monoxide levels, draft test, complete fuel gas analysis;(10) Refrigerator--Condition, manufacturer, manufacture date and make, model, and consumption reading (minutes and meter reading); customer refusal must be documented;(11) Lighting System--Quantity, watts, and estimated hours used per day;(12) Water Savers--Number of showerheads, estimated gallons per minute and estimated minutes used per day;(13) Health and Safety--For all units: smoke detectors, wiring, minimum air exchange, moisture problems, lead paint present, asbestos siding present, condition of chimney, plumbing problems, mold; for units with combustion appliances: unvented space heaters, carbon monoxide levels on all combustion appliances, carbon monoxide detectors;(14) Air Infiltration--To be determined from Blower Door testing; areas requiring air sealing will be noted; and(15) Repairs--Measures needed to preserve or protect installed Weatherization measures may include lumber, shingles, flashing, siding, masonry supplies, minor window repair, gutters, downspouts, paint, stains, sealants, and underpinning.(b) If using the Energy Audit, all allowable Weatherization measures must be justified by a properly run and supported energy audit. If using the Priority List, included Weatherization measures must be addressed according to the instructions in the Weatherization Contract, Priority List criteria, and the Department's DOE Priority List policies and procedures (if applicable).</content><note type="source"><p>Source Note: The provisions of this §6.416 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c6/scD/s6.417"><num value="6.417">§6.417</num><heading>Blower Door Standards</heading><content>Subrecipient is required to use the most current Blower Door and Duct Blaster Data Sheet form adopted by the Department and available on the Department's website.</content><note type="source"><p>Source Note: The provisions of this §6.417 adopted to be effective January 1, 2025, 49 TexReg 10509.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c7"><num value="7">CHAPTER 7</num><heading>HOMELESSNESS PROGRAMS</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c7/scA"><num value="A">SUBCHAPTER A</num><heading>GENERAL POLICIES AND PROCEDURES</heading><section identifier="/us/state/tx/tac/t10/p1/c7/scA/s7.1"><num value="7.1">§7.1</num><heading>Purpose and Goals</heading><content>(a) The rules established in this Chapter relate to Homeless Programs, for which the General Provisions provided in this subchapter apply to all of the Homeless Programs, unless otherwise noted. Additional program specific requirements are contained within each program subchapter.(b) The Homeless Programs administered by the Texas Department of Housing and Community Affairs (the "Department") support the Department's statutorily assigned mission to address homelessness among Texans.(c) The Department accomplishes this mission by acting as a conduit for state and federal funds directed for homelessness programs. Ensuring program compliance with the state and federal laws that govern these programs is another important part of the Department's mission. Oversight and program mandates ensure state and federal resources are expended in an efficient and effective manner.(d) Unless otherwise noted herein or required by federal law or regulation, or state statute, all provisions of this chapter apply to any Application received for federal funds and any Contract of state funds on or after the effective date of this rule.</content><note type="source"><p>Source Note: The provisions of this §7.1 adopted to be effective February 27, 2024, 49 TexReg 1048.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scA/s7.2"><num value="7.2">§7.2</num><heading>Definitions</heading><content>The words and terms in this chapter shall have the meanings described in this subsection unless the context clearly indicates otherwise. Other definitions may be found in Chapters 1 of this title, concerning Administration, Chapter 2 of this title, concerning Enforcement, or in federal or state law, including, but not limited to, 24 CFR Parts 91, 200, 576, 582, and 583, and UGMS or TXGMS, as applicable.(1) Affiliate--An entity related to an Applicant that controls by contract or by operation of law the Applicant or has the power to control the Applicant or a third entity that controls, or has the power to control both the Applicant and the entity. Examples include but are not limited to entities submitting under a common application, or instrumentalities of a unit of government. This term also includes any entity that is required to be reported as a component entity under Generally Accepted Accounting Standards, is required to be part of the same Single Audit as the Applicant, is reported on the same IRS Form 990, or is using the same federally approved indirect cost rate.(2) Allocation Formula--Mathematical relationship among factors, authorized by the Board, that determines, when applicable, how much funding is available in an area or region in Subchapters B, C, and D of this chapter, relating to Homelessness Programs.(3) Applicant--A unit of local government, nonprofit corporation or other entity, as applicable, who has submitted to the Department an Application for Department funds or other assistance.(4) Application--A request for a Contract award submitted by an Applicant to the Department, in a form prescribed by the Department, including any exhibits or other supporting material.(5) At-risk of Homelessness--Defined by 24 CFR §576.2, except as otherwise defined by Contract, the income limits for Program Participants are determined by the Subrecipient but, at a minimum, do not exceed the moderate income level pursuant to Tex. Gov't Code §2306.152. (6) CoC Lead Agency--CoC collaborative applicant in the HUD CoC Program per 24 CFR §578.3.(7) Code of Federal Regulations (CFR)--The codification of the general and permanent rules and regulations of the federal government as adopted and published in the Federal Register. (8) Continuum of Care (CoC)--The group composed of representatives of relevant organizations, which generally includes nonprofit homeless providers; victim service providers; faith-based organizations; governments; businesses; advocates; public housing agencies; school districts; social service providers; mental health agencies; hospitals; universities; affordable housing developers; law enforcement; organizations that serve homeless and formerly homeless veterans, and homeless and formerly homeless persons that are organized to plan for and provide, as necessary, a system of outreach, engagement, and assessment; emergency shelter; rapid re-housing; transitional housing; permanent housing; and prevention strategies to address the various needs of homeless persons and persons at risk of homelessness for a specific geographic area. HUD funds a CoC Program designed to assist sheltered and unsheltered homeless people by providing the housing and/or services needed to help individuals move into transitional and permanent housing, with the goal of long-term stability.(9) Contract--The executed written agreement between the Department and a Subrecipient performing a program activity that describes performance requirements and responsibilities assigned by the document.(10) Contract System--The electronic recordkeeping system established by the Department, as required by the program.(11) Contract Term--Period of time identified in the Contract during which program activities may be conducted.(12) Cost Reimbursement--A Contract sanction whereby reimbursement of costs incurred by the Subrecipient occurs only after the Department has reviewed all relevant documentation provided by the Subrecipient to support Expenditures. Reimbursement will only be approved by the Department where the documentation clearly supports the eligible use of funds.(13) Declaration of Income Statement (DIS)--A Department-approved form used only when it is not possible for a Subrecipient to obtain third-party or firsthand verification of income, per 24 CFR §576.500(e)(4). (14) Dwelling Unit--A residence that meets Habitability Standards that is not an emergency shelter, hotel, jail, institution, or similar temporary lodging. Transitional Housing is included in this definition unless the context clearly states otherwise. Common areas supporting the Dwelling Unit are also included in this definition.(15) Elderly Person--(A) For state funds, a person who is 60 years of age or older; and(B) For ESG, a person who is 62 years of age or older.(16) Emergency Solutions Grants (ESG)--A HUD-funded program which provides funds for services necessary to help persons that are at risk of homelessness or homeless quickly regain stability in permanent housing.(17) Emergency Solutions Grants CARES (ESG CARES)--A HUD-funded program which provides funds for services necessary to help persons that are at risk of homelessness or homeless quickly regain stability in permanent housing authorized by the Coronavirus Aid, Relief, and Economic Security Act (CARES).(18) Ending Homelessness (EH) Fund--The voluntary-contribution state program established in Texas Transportation Code §502.415.(19) ESG Interim Rule--The regulations with amendments promulgated at 24 CFR Part 576 as published by HUD for the ESG Program.(20) Expenditure--An amount of money accounted for by a Subrecipient as spent.(21) Finding--A Subrecipient's material failure to comply with rules, regulations, the terms of the Contract, or to provide services under each program to meet appropriate standards, goals, and other requirements established by the Department or funding source (including performance objectives). A Finding impacts the organization's ability to achieve the goals of the program and jeopardizes continued operations of the Subrecipient. Findings include the identification of an action or failure to act that results in disallowed costs.(22) Head of Household--As defined in the most recent Homeless Management Information System (HMIS) Data Dictionary issued by HUD.(23) HMIS Data Dictionary--The Dictionary published by HUD which defines terms for the use of HMIS and comparable databases.(24) HMIS Data Standards Manual--Manual published by HUD which documents the requirements for the programming and use of all HMIS and comparable databases.(25) HMIS Lead Agency--The entity designated by the CoC to operate the CoC's HMIS on its behalf.(26) HMIS-Comparable Database--Database established and operated by a victim service provider or legal service provider that is comparable to HMIS and collects Program Participant-level data over time.(27) Homeless Housing and Services Program (HHSP)--The state-funded program established under Tex. Gov't Code §2306.2585.(28) Homeless Management Information System (HMIS)--Information system designated by the CoC to comply with the HUD's data collection, management, and reporting standards and used to collect Program Participant-level data and data on the provision of housing and services to homeless individuals and families and persons at-risk of homelessness.(29) Homeless or Homeless Individual--An individual as defined by 42 U.S.C. §§11371 - 11378 and 24 CFR §576.2. For state-funded programs, a homeless individual may have right of occupancy because of a signed lease, but still qualify as homeless if his or her primary nighttime residence is an emergency shelter or place not meant for human habitation.(30) Homeless Programs--Reference to programs that have the specific purpose of addressing homelessness administered by the Department, including ESG Program, ESG CARES, HHSP, and EH Fund.(31) Homeless Subpopulations--Persons experiencing Homelessness who are part of the special population categories as defined by the most recent Point In Time Data Collection guidance issued by HUD.(32) Household--A Household is a single individual or a group of persons who apply together for assistance and who live together in one Dwelling Unit, or, for persons who are not housed or in a shelter, who would live together in one Dwelling Unit if they were housed, or as defined in the most recent HMIS Data Dictionary issued by HUD.(33) Households Served--A single individual or a group of persons who apply for Homeless Program assistance, meets a Homeless Program's eligibility requirements, receives a Homeless Program's services, and whose data is entered into an HMIS or comparable database.(34) Land Use Restriction Agreement (LURA)--An agreement, regardless of its title, between the Department and a property owner, including an emergency shelter, which is a binding covenant upon the property owner and successors in interest, that, when recorded, encumbers the property with respect to the requirements of the programs for which it receives funds.(35) Match--A contribution to the ESG Program from a non-ESG source governed by 24 CFR §576.201.(36) Monthly Expenditure Report--Information on Expenditures from Subrecipient to the Department.(37) Monthly Performance Report--Information on Program Participants and program activities from Subrecipient to the Department.(38) Notice of Funding Availability (NOFA)--Notice of Funding Availability or announcement of funding published by the Department notifying the public of available funds for a Program with certain requirements.(39) Outcome--A benefit or change achieved by a Program Participant served by the Department's Homeless Programs.(40) Performance Target--Number of persons/Households to be served, outcomes to be reached, or construction/rehabilitation/conversion to be performed that the Subrecipient commits to accomplish during the Contract Term.(41) Private Nonprofit Organization--An organization described in §501(c) of the Internal Revenue Code (the "Code") of 1986 and which is exempt from taxation under subtitle A of the Code, has an accounting system and a voluntary board, and practices nondiscrimination in the provision of assistance. This does not include a governmental organization such as a public housing authority or a housing finance agency.(42) Program Participant--An individual or Household that is assisted by a Homeless Program.(43) Program Year--Contracts with funds from a specific federal allocation (ESG and ESG CARES) or year of a state biennium (HHSP).(44) Project--A group of eligible activities identified in an Application or Contract to the Department, and designated in HMIS or HMIS-comparable database.(45) Recertification--Required review of a Program Participant's eligibility determination for continuation of assistance.(46) Service Area--The city(ies), county(ies) and/or place(s) identified in the Application (as applicable), and Contract that the Subrecipient will serve.(47) State--The State of Texas or the Department, as indicated by context.(48) Subcontract--A contract made between the Subrecipient and a purveyor of goods or services through a procurement relationship.(49) Subcontractor--A person or an organization with whom the Subrecipient contracts to provide services.(50) Subgrant--An award of financial assistance in the form of money made under a grant by a Subrecipient to an eligible Subgrantee. The term includes financial assistance when provided by contractual legal agreement, but does not include procurement purchases.(51) Subgrantee--The legal entity to which a Subgrant is awarded and which is accountable to the Subrecipient for the use of the funds provided.(52) Subrecipient--An organization that receives federal or states funds passed through the Department to operate ESG and/or state funded Homeless Programs.(53) Texas Administrative Code (TAC)--A compilation of all state agency rules in Texas.(54) Unit of General Purpose Local Government--A unit of government which has, among other responsibilities, the authority to assess and collect local taxes and to provide general governmental services.(55) United States Code (U.S.C.)--A consolidation and codification by subject matter of the general and permanent laws of the United States.(56) United States Department of Housing and Urban Development (HUD)--Federal department that provides funding for ESG.(57) Youth Headed Household--Household that includes unaccompanied youth 24 years of age and younger, parenting youth 24 years of age and younger and children of parenting youth 24 years of age and younger.</content><note type="source"><p>Source Note: The provisions of this §7.2 adopted to be effective February 27, 2024, 49 TexReg 1048.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scA/s7.3"><num value="7.3">§7.3</num><heading>HHSP and EH Construction Activities</heading><content>(a) A Subrecipient of Homeless Program funds that constructs or rehabilitates a building or Dwelling Unit, or converts a building(s) for use as a shelter may be required to enter into a LURA. No new construction, renovation (other than repairs), rehabilitation, or conversion of a shelter, or construction or rehabilitation of a Dwelling Unit may be performed using ESG funds.(b) Tex. Gov't Code §2306.185 requires certain multifamily rental developments to have, among other provisions, a 30-year LURA.(c) A Subrecipient that intends to expend funds for new construction, rehabilitation, or conversion must submit a copy of the activity budget inclusive of all sources and uses of funding, documents for a construction plan review, and identification of the entity and signature authorization of the individual (name and title) that will execute the LURA. These documents must be submitted no less than 90 calendar days prior to the end of the Contract Term under which funds for the activity are provided. The Department may elect to reconsider award amounts if financial resources other than those presented in the Application are subsequently committed to an activity.(d) A Subrecipient must request a final construction inspection within 30 calendar days of construction completion. The inspection will cover the Shelter and Housing Standards, National Standards for the Physical Inspection of Real Estate, 2012 International Residential Code (or municipality adopted later version), Minimum Energy Efficiency Requirements for Single Family Construction Activities, and the Accessibility Standards in Chapter 1, Subchapter B, as applicable for the Homeless Program and activity.</content><note type="source"><p>Source Note: The provisions of this §7.3 adopted to be effective February 27, 2024, 49 TexReg 1048.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scA/s7.4"><num value="7.4">§7.4</num><heading>Subrecipient Contract</heading><content>(a) Subject to prior Board approval, the Department and a Subrecipient shall enter into and execute a Contract for the disbursement of program funds. The Department, acting by and through its Executive Director or his/her designee, may authorize, execute, and deliver authorized modifications and/or amendments to the Contract, as allowed by state and federal laws and rules.(b) Subrecipients of state funds may Subcontract for the delivery of Program Participant assistance without obtaining Department's prior approval, but must obtain the Department's written permission before entering into a Subgrant. Department ESG funds and ESG Match may not be Subgranted.(c) The Subrecipient is responsible for ensuring that the performance rendered under all Subcontracts, Subgrants, and other agreements are rendered so as to comply with Homeless Program requirements, as if such performance rendered were rendered by the Subrecipient. Department maintains the right to monitor and require the Subrecipient's full compliance with the terms of the Subrecipient Contract.(d) A performance statement and budget are attachments to the Contract between the Subrecipient and the Department. Execution of the Contract enables the Subrecipient to access funds through the Department's Contract System.(e) Amendments and Extensions to Contracts.(1) Except for amendments that only move funds within budget categories, program staff will recommend denial of amendment requests if any of the following conditions exist:(A) if the award for the Contract was competitively awarded and the amendment would materially change the scope of the Contract performance or affected the score;(B) if the Subrecipient is delinquent in the submission of their Single Audit or their Single Audit Certification form required by §1.403 of this title (relating to Single Audit Requirements);(C) for an amendment adding funds to the Contract, if the Subrecipient owes the Department disallowed amounts in excess of $1,000 and a Department-approved repayment plan is not in place or has been violated;(D) for an amendment adding funds (not applicable to amendments for extending time), if the Department has cited the Subrecipient for violations within §7.11 of this subchapter (related to Compliance Monitoring) and the corrective action period has expired without correction of the issue or a satisfactory plan for correction of the issue;(E) the Contract has expired; or(F) a member of the Subrecipient's board has been debarred and has not been removed.(2) Except for amendments that only move funds within budget categories, program staff may recommend denial of amendment requests if any of the following conditions exist:(A) the request for an amendment was received in writing less than 30 calendar days from the end of the Contract Term; or(B) if the funds associated with the Contract will reach their federal or state expiration date within 45 calendar days of the request.(3) Denial of an amendment may be subject to §1.7 of this title (relating to Appeals Process).(4) The Executive Director may on appeal approve an amendment where the Single Audit Certification Form has not been submitted as reflected in paragraph (1)(B) of this subsection. In addition, the Executive Director may on appeal approve an amendment where the conditions in paragraph (2)(A) and paragraph (2)(B) of this subsection exist. The Subrecipient must demonstrate good cause for the amendment, and such an amendment must not cause the Department to miss a federal obligation or expenditure deadline, or a state expenditure deadline.(5) Additional program specific requirements for amendments and extensions to Contracts are found in the program rules of this chapter, relating to Homelessness Programs.(f) The Department reserves the right to request supporting Expenditure documentation at any time in reviewing an Expenditure report for approval. The Department will use full Cost Reimbursement method of payment whenever any of the following conditions exists:(1) The Department determines that the Subrecipient has maintained cash balances in excess of need;(2) The Department identifies significant deficiency in the cash controls or financial management system used by the Subrecipient; or(3) The Subrecipient fails to comply with the reporting requirements in §7.5 (relating to Subrecipient Reporting) and §7.6 (relating to Subrecipient Data Collection) of this subchapter.(g) Voluntary deobligation. The Subrecipient may fully relinquish funds in the form of a written request signed by the signatory, or successor thereto, of the Contract. The Subrecipient may partially relinquish funds under a Contract in the form of a written request from the signatory if the partial relinquishment in performance measures and budget would not have impacted the award of the Contract. Voluntary relinquishment of a Contract does not limit a Subrecipient's ability to participate in future funding.(h) Funds provided under a Contract may not be used for sectarian or explicitly religious activities such as worship, religious instruction, or proselytization and must be for the benefit of persons regardless of religious affiliation.</content><note type="source"><p>Source Note: The provisions of this §7.4 adopted to be effective February 27, 2024, 49 TexReg 1048.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scA/s7.5"><num value="7.5">§7.5</num><heading>Subrecipient Reporting</heading><content>(a) Subrecipient will be reimbursed for the amount of actual cash disbursements as reflected in the approved Monthly Expenditure Reports.(b) Subrecipient must submit a Monthly Performance Report and a Monthly Expenditure Report through the Contract System not later than the last day of each month which reflects performance and expenditures conducted in the prior month.(c) For performance reports, Program Participants that are assisted continuously as a Contract ends and a new Contract begins in the same program will count as new Program Participants for the new Contract. However, the start of a new Contract does not require new eligibility determination or documentation for Program Participants, except as required for Recertification.(d) Subrecipient shall reconcile their Expenditures with their performance at least monthly before seeking a request for funds for the following month. If the Subrecipient is unable to reconcile on a month-to-month basis, the Subrecipient must provide, at the request of the Department, a written explanation for the variance and take appropriate measures to reconcile the subsequent month. It is the responsibility of a Subrecipient to ensure that it has documented the compliant use of all funds provided prior to receipt of additional funds, or if this cannot be done to address the repayment of such funds.(e) Failure of a Subrecipient to provide reports as required under Department rules or the Contract may be sufficient reason for the Department to deobligate funds for which a Monthly Expenditure Report has not been submitted.(f) If the Subrecipient fails to submit within 45 calendar days of its due date, any report or response required by this section and responses to monitoring reports, Department may, in its sole discretion, suspend payments, place the Subrecipient on Cost Reimbursement method of payment, and initiate proceedings to terminate any active Contract.(g) Subrecipient must report on all measures in the Monthly Performance Report for demographics and Program Participant Services for which they are awarded.(h) Subrecipient must submit information requested by the Department for annual or biannual reporting. The annual reporting may extend over multiple Contracts.(1) ESG Subrecipients will submit information yearly as required for the Consolidated Annual Performance and Evaluation Report, including, but not limited to:(A) HMIS exports as required per HUD; and(B) Section 3 provision of the HUD Act of 1968, as required per HUD.(2) Subrecipients of state funds will submit information for biennial reporting to the Texas Legislature, including, but not limited to:(A) The successes and challenges of the program, including using state funding in ways that cannot be used by other funding sources; and(B) How funds were used to leverage other funding sources to persons experiencing homelessness.</content><note type="source"><p>Source Note: The provisions of this §7.5 adopted to be effective February 27, 2024, 49 TexReg 1048.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scA/s7.6"><num value="7.6">§7.6</num><heading>Subrecipient Data Collection</heading><content>(a) Subrecipient must ensure that data on all persons served and all activities assisted under Homeless Programs is entered into the applicable HMIS or HMIS-comparable database for domestic violence or legal service providers in order to integrate data from all homeless assistance and homelessness prevention projects in a CoC.(b) The Performance Targets shall be indicated in the Contract.</content><note type="source"><p>Source Note: The provisions of this §7.6 adopted to be effective February 27, 2024, 49 TexReg 1048.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scA/s7.7"><num value="7.7">§7.7</num><heading>Subrecipient Contact Information</heading><content>(a) In accordance with §1.22 of this title (relating to Providing Contact Information to the Department), Subrecipient will notify the Department and provide contact information for staff that approve the Contract and submit/approve reports in the Contract System. A primary and secondary contact are required to be provided to the Department for submission and approval of reports. The notification will be sent to the Department by updating its Contract System access request information.(b) If the organization is a nonprofit organization, contact information for the chair and vice-chair of the organization's governing board must be provided to the Department and shall include the:(1) Board Member's name;(2) Beginning and end dates of the member's term;(3) Member's mailing address (which must be different from the organization's mailing address);(4) Member's phone number (different from the organization's phone number); and(5) Member's direct email address.(c) Subrecipient will notify the Department and provide contact information for Subcontractors and Subgrantee within 30 calendar days of the effective date of the Subcontract or Subgrant. Contact information for the entities with which the Subrecipients' Subcontract or Subgrant must be provided to the Department, including the organization name, name and title of authorized person who entered into the Subgrant or Subcontract, phone number, e-mail address, and type of services provided.(d) At the start of the Contract and within 30 calendar days of contact information changes, including entering into Subcontracts or Subgrants, Subrecipient will notify the Department of contact information used for the public to receive assistance through Homeless Programs. The contact information for the public should include, but is not limited to, organization name, phone number to receive assistance, email to receive assistance, type of assistance offered, and Service Area in which the assistance is offered.(e) The Department will rely solely on the contact information supplied by the Subrecipient as indicated in the Department's web-based Contract System. It is the Subrecipient's sole responsibility to ensure such information is current, accurate, and complete. Correspondence sent to the email or physical address shown in the Contract System will be deemed delivered to the Subrecipient. The Department is not required to send a paper copy and if it does so it does as a voluntary and non-precedential courtesy only.</content><note type="source"><p>Source Note: The provisions of this §7.7 adopted to be effective February 27, 2024, 49 TexReg 1048.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scA/s7.8"><num value="7.8">§7.8</num><heading>Records Retention</heading><content>(a) Records must be kept in accordance with §1.409 of this title (relating to Records Retention).(b) Record retention for construction/rehabilitation/conversion of emergency shelters or Dwelling Units must be retained until the expiration of the LURA.(c) For ESG, retention for records relevant to the ESG Contract (including but not limited to shelter and habitability inspections) shall be kept in accordance with 24 CFR §576.500 and TXGMS, as defined at §1.401 of this title (relating to Definitions), as applicable except if any litigation, claim, negotiation, audit, monitoring, inspection, or other action has started before the expiration of the required record retention period, records must be retained until completion of the action and resolution of all issues which arise from it, or until the end of the required period, whichever is later. The record retention period does not begin until one year after the expiration of the Contract.(d) For state funds, retention for records relevant to the Contract (including but not limited to shelter and habitability inspections) shall be kept in accordance with UGMS or TXGMS, as applicable, and retained by the Subrecipient for a period of three years from the expiration of the Contract except if any litigation, claim, negotiation, audit, monitoring, inspection, or other action has started before the expiration of the required record retention period, records must be retained until completion of the action and resolution of all issues which arise from it, or until the end of the required period, whichever is later.</content><note type="source"><p>Source Note: The provisions of this §7.8 adopted to be effective February 27, 2024, 49 TexReg 1048.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scA/s7.9"><num value="7.9">§7.9</num><heading>Contract Termination and Deobligation</heading><content>(a) When a Contract is terminated or voluntarily relinquished, the procedures described in this section will be implemented.(b) The terminology of a "terminated" Subrecipient is intended to include the Subrecipient that is voluntarily or involuntarily terminating their Contract, but does not include Contracts that expire without being sent a termination letter.(1) The Department will issue a termination letter to the Subrecipient no less than 30 calendar days prior to terminating the Contract. The Department may determine to take any of the following actions: suspend funds immediately or allow a temporary transfer to another Subrecipient; or provide instructions to the Subrecipient to prepare a proposed budget and written plan of action that supports the closeout of the Contract. The plan must identify the name and current titles of staff that will perform the closeout and an estimated dollar amount to be incurred. The plan must identify the CPA or firm which will perform the Single Audit. The Department will issue an official termination date to allow all parties to calculate deadlines which are based on such date.(2) No later than 30 calendar days after the Contract is terminated, the Subrecipient will take a physical inventory of Program Participant files, including case management files.(3) The terminated Subrecipient will have 30 calendar days from the date of the physical inventory to make available to the Department all Program Participant files. Current and active case management files also must be inventoried.(4) The terminated Subrecipient will prepare and submit, no later than 30 calendar days from the date the Department retrieves the files, a final report containing a full accounting of all funds expended under the Contract.(5) A Monthly Expenditure Report and a Monthly Performance Report for all remaining expenditures incurred during the closeout period must be received by the Department no later than 45 calendar days from the date the Department determines that the closeout of the program and the period of transition are complete.(6) The Subrecipient will submit to the Department no later than 45 calendar days after the termination of the Contract, an inventory of the non-expendable personal property acquired in whole or in part with funds received under the Contract.(7) The Department may require transfer of Equipment title to the Department or to any other entity receiving funds under the program in question. The Department will make arrangements to remove Equipment covered by this paragraph within 90 calendar days following termination of the Contract.(8) A current year Single Audit must be performed for all entities that have exceeded the federal expenditure threshold under 2 CFR Part 200, Subpart F or the State expenditure threshold under TXGMS, as applicable. The Department will allow a proportionate share of program funds to pay for accrued audit costs, when an audit is required, for a Single Audit that covers the date up to the closeout of the Contract. To be reimbursed for a Single Audit, the terminated Subrecipient must have a binding contract with a CPA firm on or before the termination date of the Contract. The actual costs of the Single Audit and accrued audit costs including support documentation must be submitted to the Department no later than 45 calendar days from the date the Department determines the closeout is complete. See §1.403 of this title (relating to Single Audit Requirements) for more information.(9) Subrecipient shall submit within 45 calendar days after the date of the closeout process all financial, performance, and other applicable reports to the Department. The Department may approve extensions when requested by the Subrecipient. However, unless the Department authorizes an extension, the Subrecipient must abide by the 45 calendar day requirement of submitting all referenced reports and documentation to the Department.</content><note type="source"><p>Source Note: The provisions of this §7.9 adopted to be effective February 27, 2024, 49 TexReg 1048.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scA/s7.10"><num value="7.10">§7.10</num><heading>Inclusive Marketing</heading><content>(a) The purpose of this section is to highlight certain policies and/or procedures that are required to have written documentation. Other items that are required for written standards are included in the federal or state rules.(b) Participant selection criteria:(1) Selection criteria will be applied in a manner consistent with all applicable laws, including the Texas and Federal Fair Housing Acts, program guidelines, and the Department's rules.(2) If the local CoC has adopted priority for certain Homeless subpopulations or a specific funding source has a statutory or regulatory preference, then those subpopulations may be given priority by the Subrecipient. Such priority must be listed in the participant selection criteria.(3) Notifications on denial, non-renewal, or termination of Assistance must:(A) State that a Person with a Disability may request a reasonable accommodation in relation to such notice.(B) Include any appeal rights the participant may have in regards to such notice.(C) Inform Program Participants in any denial, non-renewa,l or termination notice information on rights they may have under VAWA (for ESG only, in accordance with the Violence Against Women Reauthorization Act of 2022 (VAWA) protections). Subrecipient may not deny admission on the basis that the applicant has been a victim of domestic violence, dating violence, sexual assault, or stalking.(c) Other policies and procedures:(1) Affirmative Fair Housing Marketing Plan. Subrecipients providing project-based rental assistance must have an Affirmative Fair Housing Marketing Plan created in accordance with HUD requirements to direct specific marketing and outreach to potential tenants who are considered "least likely" to know about or apply for housing based on an evaluation of market area data. Subrecipient must comply with HUD's Affirmative Fair Housing Marketing and the Age Discrimination Act of 1975.(2) Language Access Plan. A Subrecipient that interacts with Program Participants must create a Language Access Plan for Limited English Proficiency (LEP) Requirements. Consistent with Title VI and Executive Order 13166, Subrecipient is also required to take reasonable steps to ensure meaningful access to programs and activities for LEP persons.(3) Affirmative Outreach. If it is unlikely that outreach will reach persons of any particular race, color, religion, sex, age, national origin, familial status, or disability who may qualify for those facilities and services, the Subrecipient must establish policies and procedures that target outreach to those persons. Subrecipient must take appropriate steps to ensure effective communication with persons with disabilities including, but not limited to, adopting procedures that will make available to interested persons information concerning the location of assistance, services, and facilities that are accessible to persons with disabilities. Subrecipient must make known that use of the facilities, assistance, and services that are available to all on a nondiscriminatory basis.(4) Reasonable Accommodation. Subrecipient must comply with state and federal fair housing and antidiscrimination laws. Subrecipient's policies and procedures must address Reasonable Accommodation, including, but not limited to, consideration of Reasonable Accommodations requested to apply for assistance. See Chapter 1, Subchapter B of this title, relating to Accessibility and Reasonable Accommodations, for more information.</content><note type="source"><p>Source Note: The provisions of this §7.10 adopted to be effective February 27, 2024, 49 TexReg 1048.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scA/s7.11"><num value="7.11">§7.11</num><heading>Compliance Monitoring</heading><content>(a) Purpose and Overview(1) This section provides the procedures that will be followed for monitoring for compliance with the programs in this chapter.(2) Any entity administering any or all of the programs detailed in this chapter is a Subrecipient. A Subrecipient may also administer other programs, including programs administered by other state or federal agencies and privately funded programs. If the Subrecipient has Contracts for other programs through the Department, including, but not limited to, the HOME Partnerships Program, the Neighborhood Stabilization Program, or the Texas Housing Trust Fund, the Department may, but is not required to and does not commit to, coordinate monitoring of those programs with monitoring of those programs under this Chapter.(3) Any entity administering any or all of the programs provided for in subsection (a)(2) of this section as part of a Memorandum of Understanding (MOU), contract, or other legal agreement with a Subrecipient is a Subgrantee.(b) Frequency of Reviews, Notification and Information Collection.(1) In general, the Subrecipient or Subgrantee will be scheduled for monitoring based on state or federal monitoring requirements and/or a risk assessment. Factors to be included in the risk assessment include, but are not limited to: the number of Contracts administered by the Subrecipient or Subgrantee, the amount of funds awarded and expended, the length of time since the last monitoring, findings identified during previous monitoring, issues identified through the submission or lack of submission of a Single Audit, complaints received by the Department, and reports of fraud, waste, and/or abuse. The risk assessment will also be used to determine which Subrecipients or Subgrantees will have an onsite review and which may have a desk review.(2) The Department will provide the Subrecipient or Subgrantee with written notice of any upcoming onsite or desk monitoring review, and such notice will be given to the Subrecipient and Subgrantee by email to the Subrecipient's and Subgrantee's Contract contact at the email address most recently provided to the Department by the Subrecipient or Subgrantee. In general, a 30 calendar day notice will be provided. However, if a credible complaint of fraud or other egregious noncompliance is received the Department reserves the right to conduct unannounced monitoring visits. It is the responsibility of the Subrecipients to provide to the Department the current contact information for the organization and the Board in accordance with §7.7 of this subchapter (relating to Subrecipient Contact Information) and §1.22 of this title (relating to Providing Contact Information to the Department).(3) Upon request, Subrecipient and Subgrantee (if applicable) must make available to the Department all books and records that the Department determines are reasonably relevant to the scope of the Department's review. Typically, these records may include, but are not limited to:(A) Minutes of the governing board and any committees thereof, together with all supporting materials;(B) Copies of all internal operating procedures or other documents governing the Subrecipient's operations;(C) The Subrecipient's Board approved operating budget and reports on execution of that budget;(D) The Subrecipient's strategic plan or comparable document if applicable and any reports on the achievement of that plan;(E) Correspondence to or from any independent auditor;(F) Contracts with any third parties for goods or services and files documenting compliance with any applicable procurement and property disposition requirements;(G) All general ledgers and other records of financial operations (including copies of checks and other supporting documents);(H) Applicable Program Participant files with all required documentation;(I) Applicable human resources records;(J) Monitoring reports from other funding entities;(K) Program Participant files regarding complaints, appeals, and termination of services; and(L) Documentation to substantiate compliance with any other applicable state or federal requirements including, but not limited to, the Davis-Bacon Act, HUD requirements for environmental clearance, Lead Based Paint, the Personal Responsibility and Work Opportunity Act, HUD LEP requirements, and requirements imposed by Section 3 of the Housing and Urban Development Act of 1968.(c) Post Monitoring Procedures.(1) In general, within 30 calendar days of the last day of the monitoring visit, a written monitoring report will be prepared for the Subrecipient describing the monitoring assessment and any corrective actions, if applicable. The monitoring report will be emailed to the Subrecipient's Board Chair and Executive Director. All Department monitoring reports and Subrecipient responses to monitoring reports must be provided to the governing body of the Subrecipient within the next two regularly scheduled meetings. Issues of concern over which there is uncertainty or ambiguity may be discussed by the Department with the staff of cognizant agencies overseeing federal funding. Certain types of suspected or observed improper conduct may trigger requirements to make reports to other oversight authorities, state and federal, including, but not limited to, the State Auditor's Office and applicable Inspectors General.(2) Subrecipient Response. If there are any Findings of noncompliance requiring corrective action, the Subrecipient will be provided 30 calendar days from the date of the email to respond, which may be extended for good cause. In order to receive an extension, the Subrecipient must submit a written request to the Director of Compliance within the corrective action period, stating the basis for good cause that justifies the extension. The Department will approve or deny the extension request within five calendar days.(3) Monitoring Close Out. Within 45 calendar days after the end of the corrective action period, a close out letter will be issued to the Subrecipient. If the Subrecipient's response satisfies issues raised in the monitoring letter, the issue of noncompliance will be noted as resolved. If the Subrecipient's response does not correct all Findings, the follow-up letter will identify the documentation that must be submitted to correct the issue.(4) Options for Review. If, following the submission of corrective action documentation, Compliance staff continues to find the Subrecipient or Subgrantee in noncompliance, and the Subrecipient disagrees, the Subrecipient may request or initiate review of the matter using the following options, where applicable:(A) If the issue is related to a program requirement or prohibition of a federal program, the Subrecipient may contact the applicable federal program officer for guidance or request that the Department contact applicable federal program officer for guidance without identifying the Subrecipient.(B) If the issue is related to application of a provision of the Contract or a requirement of the Texas Administrative Code, the Subrecipient may request to submit an appeal to the Executive Director consistent with §1.7 of this title (relating to Appeals Process).(C) The Subrecipient may request Alternative Dispute Resolution (ADR). Subrecipient may send a proposal to the Department's Dispute Resolution Coordinator to initiate ADR pursuant to Chapter 1, Subchapter A of this title, relating to General Policies and Procedures.(5) If the Subrecipient does not respond to a monitoring letter or fails to provide acceptable evidence of compliance, the matter will be handled through the procedures described in Chapter 2 of this title, relating to Enforcement.</content><note type="source"><p>Source Note: The provisions of this §7.11 adopted to be effective February 27, 2024, 49 TexReg 1048.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scA/s7.12"><num value="7.12">§7.12</num><heading>Waivers</heading><content>(a) The Department's Governing Board (the "Board") may waive rules in this chapter for good cause to meet the purpose of the Homeless Programs described further in §7.1 of this title (relating to Purpose and Goals). However, any waiver cannot conflict with the federal statutes or regulations, the Department's Action Plan, or state statutes governing any of the Homeless Programs.(b) A provision of a closed NOFA may not be waived except in the case of a disaster as described in §1.5 of this title (related to Waiver Applicability in the Case of Federally Declared Disasters) or a change in federal law that makes adherence to the requirements of the NOFA impossible or impracticable as determined by the Board.</content><note type="source"><p>Source Note: The provisions of this §7.12 adopted to be effective February 27, 2024, 49 TexReg 1048.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c7/scB"><num value="B">SUBCHAPTER B</num><heading>HOMELESS HOUSING AND SERVICES PROGRAM (HHSP)</heading><section identifier="/us/state/tx/tac/t10/p1/c7/scB/s7.21"><num value="7.21">§7.21</num><heading>Purpose and Use of Funds</heading><content>(a) In accordance with Tex. Gov't Code §2306.2585, HHSP provides funding to municipalities with populations of 285,500 or greater (which the Department will determine with the most recent available 1 Year American Community Survey (ACS) data) to develop programs to prevent and eliminate Homelessness.(b) HHSP eligible activities are:(1) administrative costs associated with HHSP, including Program Participant tracking using HMIS or a HMIS-comparable database;(2) case management for households experiencing or At-risk of Homelessness to assess, arrange, coordinate and monitor the delivery of services;(3) construction/rehabilitation/conversion of buildings or Dwelling Unit (including administrative facilities) to serve persons experiencing Homelessness or At-risk of Homelessness;(4) essential services for Homeless Households or Households At-risk of Homelessness to find or maintain housing stability;(5) homelessness prevention to provide financial assistance to Homeless Households or Households At-risk of Homelessness;(6) homelessness assistance to provide financial assistance provided to Homeless Households or Households At-risk of Homelessness;(7) operation of emergency shelters or administrative facilities to serve Homeless Households or Households At-risk of Homelessness;(8) transitional living activities for Youth Headed Households designed to provide safe short-term housing (typically less than 24 months) in conjunction with appropriate supportive services designed to foster self-sufficiency; and(9) other local programs to assist Homeless Households or Households At-risk of Homelessness, if approved by the Department in writing in advance of the Expenditure.</content><note type="source"><p>Source Note: The provisions of this §7.21 adopted to be effective February 27, 2024, 49 TexReg 1049.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scB/s7.22"><num value="7.22">§7.22</num><heading>HHSP Subrecipient Application and Selection</heading><content>(a) Any written information provided to the Department in order to execute a Contract is part of the Application, including but not limited to the information in this subsection.(b) The municipality may apply to administer the funding directly or designate a Private Nonprofit Organization or other governmental entity to apply to administer the funds in the municipality in accordance with Tex. Gov't Code §2306.2585(a).(1) Designation of administering entity. The municipality that is designating an entity to administer the funds within their jurisdiction shall provide notification to the Department within 60 calendar days of notification of the allocated amount. The notification must be in the form of a resolution or other city council action from the municipality's governing body, and should indicate that the municipality is designating another entity to administer the funds on behalf of the municipality.(2) The municipality may designate the other entity for one or two years, as desired by the municipality. If designated for two years, the requirement that the resolution or council action be submitted within 60 calendar days of notification of allocated amount will be considered met for the second year since the council action was approved.(c) Application for funds. Application for funds will be submitted within 60 calendar days of notification of the allocated amount. After 60 calendar days of notification, if no application for funding is received, the funding may be reallocated through the formula outlined in this section to the other areas receiving HHSP funding. The Application for funding will include, but not be limited to:(1) information sufficient to conduct a Previous Participation review for the municipality or entity designated to administer HHSP funds;(2) proposed budget;(3) proposed performance targets; and(4) activity descriptions.(d) Prior to Contract execution, entities expected to administer an award of HHSP funds must submit a resolution, governing body action, or other approved documentation approved by entity's direct governing body which includes authorization to enter into a Contract for HHSP funds and title of the person authorized to represent the entity and who also has signature authority to execute a Contract. The documentation submitted must be dated no more than 12 months from the date of Contract execution.(e) An entity recommended for HHSP funds is subject to the Department's Previous Participation Rule, found in §1.302 of this title (relating to Previous Participation Reviews for Department Program Awards Not Covered by §1.301 of this Subchapter). In addition to the considerations of the Previous Participation Rule, an entity receiving HHSP funds may not be in breach or violation, after notice and a reasonable opportunity to cure, of any contract with the Department or LURA.(f) Subrecipient must enter into a Contract with the Department governing the use of such funds. If the source of funds for HHSP is funding under another specific Department program, such as the Housing Trust Fund, as authorized by Tex. Gov't Code, §2306.2585(c), the Contract will incorporate any requirements applicable to such funding source.</content><note type="source"><p>Source Note: The provisions of this §7.22 adopted to be effective February 27, 2024, 49 TexReg 1049.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scB/s7.23"><num value="7.23">§7.23</num><heading>Allocation of Funds and Formula</heading><content>(a) Contract Award Funding Limits. The funding will be established by Allocation Formula as described in this section.(b) HHSP funds will be awarded upon appropriation from the legislature, and will be made available to any of those municipalities subject to the requirements of this rule and be distributed in accordance with the formula set forth in subsection (c) of this section relating to Formula.(c) General Population Formula. Funds made available under HHSP for the general population shall be distributed in accordance with an Allocation Formula that is calculated each year that takes into account the proportion of the following factors:(1) population of the municipality, as determined by the most recent available 1 Year American Community Survey (ACS) data;(2) poverty, defined as persons in the municipality's population with incomes at or below the poverty threshold, as determined by the most recent available 1 Year ACS data;(3) population of Homeless persons, as determined by the most recent publicly available Point-In-Time Counts submitted to HUD by the CoCs in Texas or by the Texas Homeless Network;(4) population of Homeless veterans, as determined by the most recent publicly available Point-In-Time Counts submitted to HUD by the CoCs in Texas or by the Texas Homeless Network;(5) population of Homeless Unaccompanied Youth, Parenting Youth, and Children of Parenting Youth, as determined by the most recent publicly available Point-In-Time Counts submitted to HUD by the CoCs in Texas or by the Texas Homeless Network;(6) population of persons with disabilities, defined as that percentage of the municipality's population composed of persons with disabilities, as determined by the most recent available 1 Year ACS data; and(7) incidents of family violence, as determined by reports from local police departments.(d) The factors enumerated shall be used to calculate distribution percentages for each municipal area based on the following formula:(1) thirty percent weight for population;(2) thirty percent weight for poverty populations;(3) twenty percent weight for the Homeless population;(4) five percent weight for population of Homeless Veterans;(5) five percent weight for population of Homeless Unaccompanied Youth, Parenting Youth, and Children of Parenting Youth;(6) five percent weight for population of persons with disabilities; and(7) five percent weight for instances of family violence.(e) Youth Population Formula. Funds made available to HHSP for youth shall be distributed in accordance with an Allocation Formula that is calculated each year that takes into account the proportion of the following factors:(1) population of the municipality, as determined by the most recent available 1 Year American Community Survey (ACS) data;(2) poverty, defined as persons in the municipality's population with incomes at or below the poverty threshold, as determined by the most recent available 1 Year ACS data;(3) population of Homeless Unaccompanied Youth, Parenting Youth, and Children of Parenting Youth, as determined by the most recent publicly available Point-In-Time Counts submitted to HUD by the CoCs in Texas;(4) population of persons with disabilities, defined as that percentage of the municipality's population composed of persons with disabilities, as determined by the most recent available 1 Year ACS data; and(5) incidents of family violence, as determined by reports from local police departments.(f) The factors enumerated shall be used to calculate distribution percentages for each municipal area based on the following formula:(1) thirty percent weight for population;(2) thirty percent weight for poverty populations;(3) thirty percent weight for population of Homeless Unaccompanied Youth, Parenting Youth, and Children of Parenting Youth;(4) five percent weight for population of persons with disabilities; and(5) five percent weight for instances of family violence.(g) Prior to month nine of the Contract, the HHSP Subrecipient may choose to voluntarily deobligate up to 15% of the total amount of funds in the Contract if the HHSP Subrecipient anticipates that it will not expend all the funds. The Department reserves the right to refuse any returned funds prior to the end of the Contract Term. The Department may reallocate the voluntary deobligated funds to existing HHSP Subrecipients with the highest expenditure rates based on percent of funds expended. The eligible HHSP Subrecipients may be required to complete a Previous Participation Review, as outlined in §1.302 of this title (relating to Previous Participation Reviews for Department Program Awards Not Covered by §1.301 of this Subchapter), and any reallocated funds in excess of 25% of the original Contract award will require a complete Previous Participation Review.</content><note type="source"><p>Source Note: The provisions of this §7.23 adopted to be effective February 27, 2024, 49 TexReg 1049.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scB/s7.24"><num value="7.24">§7.24</num><heading>General HHSP Requirements</heading><content>(a) Subrecipient must have written policies and procedures to ensure that sufficient records are established and maintained to enable a determination that HHSP requirements are met.(b) Subrecipient must have written standards for providing HHSP assistance to Program Participants. The written standards must be applied consistently for all Program Participants. The written standards must include, but not be limited to, Inclusive Marketing outlined in §7.10 of this chapter (relating to Inclusive Marketing).(c) Rent restriction. Rental assistance cannot be provided unless the gross rent complies with the standard of rent reasonableness established in the Subrecipient's written policies and procedures. Gross rent includes the contract rent and an estimate of utilities established by the Public Housing Authority for the area in which the Dwelling Unit is located.(d) The occupancy standard set by the Subrecipient must not conflict with local regulations or Texas Property Code §92.010.(e) Subrecipient must document compliance with the Shelter and Housing Standards in this Chapter, relating to Homelessness Programs, including but not limited to construction and shelter inspection reports, and the Accessibility Standards in Chapter 1, Subchapter B of this title.(f) If the Subrecipient is providing funds for single family ownership, the requirements of Chapters 20, relating to Single Family Programs Umbrella Rule, and 21 Minimum Energy Efficiency Requirements for Single Family Construction Activities of this Part, will apply.(g) If the Subrecipient is providing funds to an entity for rental ownership, operations, or providing project-based vouchers/rental assistance, the rental development must comply with the greater of regulatory regulations governing the development or program to which HHSP funds are comingled, or, if none, must comply with local health and safety codes.</content><note type="source"><p>Source Note: The provisions of this §7.24 adopted to be effective February 27, 2024, 49 TexReg 1049.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scB/s7.25"><num value="7.25">§7.25</num><heading>Program Income</heading><content>(a) Program income includes but is not limited to: income from fees for services performed, the use or rental of real or personal property acquired under this award, the sale of commodities or items fabricated under this award, and from payments of principal and interest on loans made with this award, where authorized. Program income does not include interest on federal grant funds, rebates, credits, discounts, refunds, etc. and interest earned on any of them. Interest earned in excess of $250 on grants or loans from purely state sources is considered program income.(b) Security and utility deposits must be reimbursed to the Program Participant and are not considered program income. The deposit must remain with the Program Participant and be returned only to the Program Participant.(c) In accounting for program income, the Subrecipient must accurately reflect the receipt of such funds separate from the receipt of program funds and Subrecipient funds.(d) Program income that is received during the Contract Term may be expended for HHSP eligible costs during the Contract Term, and reported in the Monthly Expenditure Report.(e) Program income that is received after the end of the Contract Term, or not expended within the Contract Term, must be returned to the Department within 10 calendar days of receipt.</content><note type="source"><p>Source Note: The provisions of this §7.25 adopted to be effective February 27, 2024, 49 TexReg 1049.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scB/s7.26"><num value="7.26">§7.26</num><heading>Conflict of Interest</heading><content>(a) Subrecipient shall maintain written standards of conduct governing the performance of its employees engaged in the award and administration of Contracts. Failure to maintain written standards of conduct and to follow and enforce the written standards is a condition of default and may result in termination of the Contract or deobligation of funds.(b) No employee, officer, or agent of Subrecipient shall participate in the selection, award, or administration of a contract supported by funds if a real or apparent conflict of interest would be involved. Such a conflict would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the listed parties, has a financial or other interest in the firm selected for an award.(c) The officers, employees, and agents, including consultants, officers, or elected or appointed officials of the Subrecipient or its Subgrantees shall neither solicit nor accept gratuities, favors, or anything of monetary value from contractors, or parties to subagreements. Subrecipient may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct shall provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the Subrecipient.(d) The provision of any type or amount of direct HHSP assistance may not be conditioned on a Program Participant's acceptance or occupancy of emergency shelter or housing owned by the Subrecipient or Subgrantee, or a parent or subsidiary of the Subrecipient or Subgrantee.(e) No Subrecipient may, with respect to Household occupying a Dwelling Unit owned by the Subrecipient or Subgrantee, or any parent or subsidiary of the Subrecipient or Subgrantee, carry out the initial intake required for Program Participant files.(f) For transactions and activities other than the procurement of goods and services, no officers, employees, and agents, including consultants, officers, or elected or appointed officials of the Subrecipient, Subgrantee, or Subcontractor who exercises or has exercised any functions or responsibilities with respect to activities assisted under HHSP, or who is in a position to participate in a decision-making process or gain inside information with regard to activities assisted under the program, may obtain a financial interest or benefit from an assisted activity; have a financial interest in any contract, subcontract, or agreement with respect to an assisted activity; or have a financial interest in the proceeds derived from an assisted activity, either for him or herself or for those with whom he or she has family or business ties, during his or her tenure or during the one-year period following his or her tenure.</content><note type="source"><p>Source Note: The provisions of this §7.26 adopted to be effective February 27, 2024, 49 TexReg 1049.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scB/s7.27"><num value="7.27">§7.27</num><heading>Eligible Costs</heading><content>(a) Administrative costs include employee compensation and related costs for staff performance of management, reporting, and accounting of HHSP activities, including office space. Costs associated with the purchase or licensing of HMIS or an HMIS-comparable databases are eligible administrative costs.(b) Case management costs include staff salaries related to assessing, arranging, coordinating and monitoring the delivery of services related to finding or maintaining housing. Costs include, but are not limited to, Household eligibility determination, counseling, coordinating services and obtaining mainstream benefits for Program Participants, monitoring Program Participant progress, providing safety planning for persons under VAWA, developing a housing and service plan, and entry into HMIS or an HMIS-comparable database.(c) Construction rehabilitation, and conversion costs include, but are not limited to, costs for:(1) Pre-Development, such as environmental review, site-control, survey, appraisal, architectural fees, and legal fees.(2) Development, such as:(A) land acquisition;(B) site work (including infrastructure for service utilities, walkways, curbs, gutters);(C) lot clearance and site preparation;(D) construction to meet uniform building codes, international energy conservation code, or local rehabilitation standards;(E) accessibility features to site and building;(F) essential improvements and energy-related improvements;(G) abatement of lead-based paint hazards;(H) barrier removal/construction for accessibility features for persons with disabilities; and(I) non-luxury general property improvements.(d) Essential services costs are associated with finding and maintaining stable housing, and include, but are not limited to, costs for:(1) out-patient medical services;(2) child care;(3) education services;(4) legal services;(5) mental health services;(6) local transportation assistance;(7) drug and alcohol rehabilitation; and(8) job training.(e) Homelessness prevention and homelessness assistance costs are associated with housing relocation, stabilization and assistance costs. Staff time entering information into HMIS or HMIS-comparable database related to homelessness prevention and homeless assistance is also an eligible cost. Homeless prevention and homelessness assistance costs include, but are not limited to, hotel or motel costs; transitional housing; rental and utility assistance; rental arrears; utility reconnection fees; reasonable and customary security and utility deposits; and moving costs.(f) Operation costs include rent, utilities, supplies and equipment purchases, food pantry supplies, and other related costs necessary to operate an emergency shelter or Transitional Living Activities, serving individuals experiencing or at-risk of homelessness.</content><note type="source"><p>Source Note: The provisions of this §7.27 adopted to be effective February 27, 2024, 49 TexReg 1049.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scB/s7.28"><num value="7.28">§7.28</num><heading>Program Participant Eligibility and Program Participant Files</heading><content>(a) A Program Participant must satisfy the eligibility requirements by meeting the appropriate definition of Homeless or At-risk of Homelessness in this Chapter, relating to Homelessness Programs, including but not limited to applicable income requirements.(b) A Program Participant who is Homeless qualifies for emergency shelter, Transitional Living Activities, case management, essential services, and homeless assistance.(c) A Program Participant who is At-risk of Homelessness qualifies for case management, essential services, and homeless prevention.(d) The Subrecipient shall establish income limits that do not exceed the moderate income level pursuant to Tex. Gov't Code §2306.152 in its written policies and procedures, and may adopt the income limit calculation method and procedures in HUD Handbook 4350 to satisfy this requirement.(e) Recertification. Recertification is required for Program Participants receiving homelessness prevention and homelessness assistance within 12 months of the assistance start date. Subrecipient's written policies may require more frequent recertification. At a minimum, recertification includes that Program Participants receiving homelessness prevention or homelessness assistance:(1) meet the income eligibility requirements as established by the Subrecipient , if such limits are implemented in the Subrecipient's policies and procedures and required to be reviewed at Recertification; and(2) lack sufficient resources and support networks necessary to retain housing without assistance.(f) Break in service. The Subrecipient must document eligibility before providing services after a break in service. A break in service occurs when a previously assisted household has exited the program and is no longer receiving services through Homeless Programs. Upon reentry into HHSP, the Household is required to complete a new intake application and provide updated source documentation, if applicable. The Subrecipient would not need to document further eligibility for HHSP if the Program Participant is currently receiving assistance through ESG.(g) Program participant files. Subrecipient or their Subgrantees shall maintain Program Participant files, for non-emergency activities providing direct subsidy to or on behalf of a Program Participant that contain the following:(1) an Intake Application, including the signature or legally identifying mark of all adult Household members certifying the validity of information provided, an area to identify the staff person completing the intake application, and the language as required by Tex. Gov't Code §434.212;(2) certification from the Applicant that they meet the definition of Homeless or At-risk of Homelessness. The certification must include the Program Participant's signature or legally identifying mark;(3) documentation of income eligibility, if applicable, which may include a DIS if documentation is unobtainable;(4) documentation of annual recertification, as applicable, including income eligibility determination and verification that the Program Participant lacks sufficient resources and supports networks necessary to retain housing without assistance;(5) documentation of determination of ineligibility for assistance when assistance is denied. Documentation must include the reason for the determination of ineligibility;(6) copies of all leases and rental assistance agreements for the provision of rental assistance, documentation of payments made to owners for the provision of rental assistance, and supporting documentation for these payments, including dates of occupancy by Program Participants;(7) documentation of the monthly allowance for utilities used to determine compliance with the rent restriction; and(8) documentation that the Dwelling Unit for Program Participants receiving rental assistance complies with the Housing Standards in this Chapter, relating to Homelessness Programs.</content><note type="source"><p>Source Note: The provisions of this §7.28 adopted to be effective February 27, 2024, 49 TexReg 1049.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scB/s7.29"><num value="7.29">§7.29</num><heading>Shelter and Housing Standards</heading><content>(a) Minimum standards for emergency shelters. Any building for which HHSP funds are used for construction, rehabilitation, conversion, or other renovation, must meet state or local government safety and sanitation standards, as applicable, and the following minimum safety and sanitation standards. Any emergency shelter that receives assistance for shelter operations must also meet the following minimum safety and sanitation standards.(1) Structure and materials. The shelter building must be structurally sound to protect residents from the elements and not pose any threat to health and safety of the residents. Any renovation (including major rehabilitation and conversion) carried out with HHSP assistance must use Energy Star and WaterSense or equivalent products and appliances.(2) Access. The shelter must be accessible in accordance with Section 504 of the Rehabilitation Act (29 U.S.C. 794) and implementing regulations at 24 CFR Part 8; the Fair Housing Act (42 U.S.C. 3601 et seq.) as outlined in 10 TAC Chapter 1, Subchapter B, and implementing regulations at 24 CFR Part 100; and Title II of the Americans with Disabilities Act (42 U.S.C. 12131 et seq.) and 28 CFR Part 35; where applicable.(3) Space and security. Except where the shelter is intended for day use only, the shelter must provide each program participant in the shelter with an acceptable place to sleep and adequate space and security for themselves and their belongings.(4) Interior air quality. Each room or space within the shelter must have a natural or mechanical means of ventilation. The interior air must be free of pollutants at a level that might threaten or harm the health of residents.(5) Water supply. The shelter's water supply must be free of contamination.(6) Sanitary facilities. Each program participant in the shelter must have access to sanitary facilities that are in proper operating condition and are adequate for personal cleanliness and the disposal of human waste.(7) Thermal environment. The shelter must have any necessary heating/cooling facilities in proper operating condition.(8) Illumination and electricity. The shelter must have adequate natural or artificial illumination to permit normal indoor activities and support health and safety. There must be sufficient electrical sources to permit the safe use of electrical appliances in the shelter.(9) Food preparation. Food preparation areas, if any, must contain suitable space and equipment to store, prepare, and serve food in a safe and sanitary manner.(10) Sanitary conditions. The shelter must be maintained in a sanitary condition.(11) Fire safety. There must be at least one working smoke detector in each occupied unit of the shelter. Where possible, smoke detectors must be located near sleeping areas. The fire alarm system must be designed for hearing-impaired residents. All public areas of the shelter must have at least one working smoke detector. There must also be a second means of exiting the building in the event of fire or other emergency.(b) Minimum standards for housing for occupancy. Housing assisted under HHSP must meet the minimum habitability standards within 30 calendar days after the term of assistance begins. HHSP funds may assist a Program Participant in returning the Dwelling Unit to the minimum habitability standard in cases where the Program Participant is the responsible party for ensuring such conditions.(1) Structure and materials. The structures must be structurally sound to protect residents from the elements and not pose any threat to the health and safety of the residents.(2) Space and security. Each resident must be provided adequate space and security for themselves and their belongings. Each resident must be provided an acceptable place to sleep.(3) Interior air quality. Each room or space must have a natural or mechanical means of ventilation. The interior air must be free of pollutants at a level that might threaten or harm the health of residents.(4) Water supply. The water supply must be free from contamination.(5) Sanitary facilities. Residents must have access to sufficient sanitary facilities that are in proper operating condition, are private, and are adequate for personal cleanliness and the disposal of human waste.(6) Thermal environment. The Dwelling Unit must have any necessary heating/cooling facilities in proper operating condition.(7) Illumination and electricity. The structure must have adequate natural or artificial illumination to permit normal indoor activities and support health and safety. There must be sufficient electrical sources to permit the safe use of electrical appliances in the structure.(8) Food preparation. All food preparation areas must contain suitable space and equipment to store, prepare, and serve food in a safe and sanitary manner.(9) Sanitary conditions. The housing must be maintained in a sanitary condition.(10) Fire safety.(A) There must be a second means of exiting the building in the event of fire or other emergency.(B) Each Dwelling Unit must include at least one battery-operated or hard-wired smoke detector, in proper working condition, on each occupied level of the unit. Smoke detectors must be located, to the extent practicable, in a hallway adjacent to a bedroom. If the unit is occupied by hearing impaired persons, smoke detectors must have an alarm system designed for hearing-impaired persons in each bedroom occupied by a hearing-impaired person.(C) The public areas of all Dwelling Units must be equipped with a sufficient number, but not less than one for each area, of battery-operated or hard-wired smoke detectors. Public areas include, but are not limited to, laundry rooms, community rooms, day care centers, hallways, stairwells, and other common areas.(c) Lead-based paint remediation and disclosure. The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations in 24 CFR Part 35, subparts A, B, H, J, K, M, and R apply to all shelters and all Dwelling Units occupied by Program Participants.</content><note type="source"><p>Source Note: The provisions of this §7.29 adopted to be effective February 27, 2024, 49 TexReg 1049.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c7/scC"><num value="C">SUBCHAPTER C</num><heading>EMERGENCY SOLUTIONS GRANTS (ESG)</heading><section identifier="/us/state/tx/tac/t10/p1/c7/scC/s7.31"><num value="7.31">§7.31</num><heading>Purpose</heading><content>(a) The purpose of this rule is to provide guidance and procedures for the Emergency Solutions Grants (ESG) and the Emergency Solutions Grant CARES (ESG CARES) programs as authorized by Tex. Gov't Code §2306.053. ESG and ESG CARES funds are federal funds awarded to the State of Texas by HUD and administered by the Department.(b) The regulations in this subchapter, relating to ESG and ESG CARES, govern the administration of funds and establish policies and procedures for use of ESG funds to meet the purposes contained in Title IV of the Stewart B. McKinney Homeless Assistance Act (42 U.S.C. §§11371 - 11378) (the Act), as amended by the Homeless Emergency Assistance and Rapid Transition to Housing Act (HEARTH Act).(c) In addition to this subchapter, a Subrecipient shall comply with the regulations applicable to the ESG and ESG CARES programs as set forth in Chapters 1 and 2 of this title (relating to Administration and Enforcement, respectively), Subchapter A of Chapter 7 of this title (relating to General Policies and Procedures) and as set forth in 24 CFR Parts 5, 91, and 576 (the Federal Regulations). A Subrecipient must also follow all other applicable federal and state statutes and the regulations established in this chapter, relating to Homelessness Programs, as amended or supplemented.(d) In the event that Congress, the Texas Legislature, or HUD add or change any statutory or regulatory requirements, special conditions, or waivers, concerning the use or administration of these funds, a Subrecipient shall comply with such requirements at the time they become effective.</content><note type="source"><p>Source Note: The provisions of this §7.31 adopted to be effective July 7, 2022, 47 TexReg 3805.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scC/s7.32"><num value="7.32">§7.32</num><heading>Use of ESG Funds</heading><content>(a) ESG Applications for provision of Program Participant services under emergency shelter, street outreach, homeless prevention and/or rapid re-housing may include a request for funds for Homeless Management Information Systems (HMIS) activities. Applications proposing to provide only HMIS activities are not eligible for an award of funds.(b) Subrecipient may not Subgrant funds, but may Subcontract for the provision of services. Such Subcontracts are subject to applicable procurement requirements.(c) The Department's Governing Board of Directors, Executive Director, or his/her designee may limit activities in a NOFA, or by Contract.(d) Program Participant services may be provided under street outreach, emergency shelter, homeless prevention or rapid re-housing, as described in this subsection or otherwise permitted in Federal Regulations.(e) The street outreach component may be provided to unsheltered Homeless persons as defined in 24 CFR §576.101(a). Eligible costs for Program Participants of street outreach include the following services:(1) Engagement costs to locate, identify, and build relationships with unsheltered Homeless persons, including assessment of needs, crisis counseling, addressing urgent physical needs, provision of information and referrals;(2) Case management costs to assess housing and service needs and coordinate delivery of services;(3) Emergency health services to the extent that other health services are inaccessible or unavailable in the area;(4) Emergency mental health services to the extent that other mental health services are inaccessible or unavailable in the area; and(5) Transportation for outreach workers and Program Participants, not including the purchase or lease of vehicles.(f) The emergency shelter component may be provided to Homeless persons per 24 CFR §576.102. Eligible emergency shelter costs are for Program Participant services and costs related to the shelter building, relocation, and operation.(1) Eligible costs for Program Participants of emergency shelter services include:(A) Case management to coordinate individualized services;(B) Child care for children under the age of 13, and for disabled children under the age of 18;(C) Education services providing instruction or training to enhance their ability to obtain and maintain housing, including but not limited to literacy, English literacy, General Educational Requirement (GED) preparation, consumer education, health education, and substance abuse prevention;(D) Employment assistance and job training services;(E) Outpatient health services to the extent that other health services are inaccessible or unavailable in the area;(F) Legal services, to the extent that legal services are unavailable or inaccessible within the community, to assist with housing needs, excluding immigration and citizenship matters, matters related to mortgages, legal retainers and contingency fees;(G) Life skills training including budgeting resources, managing money, managing a household, resolving conflict, shopping for food and need items, improving nutrition, using public transportation, and parenting;(H) Outpatient mental health services to the extent that other mental health services are inaccessible or unavailable in the area;(I) Outpatient substance abuse treatment services up to 30 days, excluding inpatient treatment; and(J) Transportation for staff and Program Participants related to the provision of essential services, not including the purchase or lease of vehicles.(2) Eligible emergency shelter costs related to the shelter building, relocation, and operation include:(A) Certain costs for operation of emergency shelters, including provision of hotel or motel vouchers to Program Participants when no appropriate emergency shelter is available and minor or routine repairs to the shelter facility; and(B) Assistance required under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970.(g) The homelessness prevention component may be provided to Homeless persons and persons At-risk of Homelessness per 24 CFR §576.103, and the rapid re-housing component may be provided to Homeless persons per 24 CFR §576.104. Homelessness prevention and rapid re-housing may be provided for up to 24 months of assistance in a 36-month period. Eligible costs for homelessness prevention and rapid re-housing include housing relocation and stabilization for financial assistance, housing relocation and stabilization services, and rental assistance.(1) Housing relocation and stabilization for financial assistance include:(A) Rental application fees;(B) Security deposits (equal to not more than two month's rent) and last month's rent;(C) Utility deposits and/or utility payments;(D) Moving costs, such as truck rental or hiring a moving company. Payment of arrearages for temporary storage is not an eligible cost; and(E) Costs to break a lease to effect an emergency transfer per 24 CFR §5.2005(e), if Program Participant is receiving rental assistance under ESG.(2) Housing relocation and stabilization services include:(A) Housing search and placement costs to assist in locating, obtaining, and retaining suitable permanent housing;(B) Housing stability case management for assessing, arranging, coordinating and monitoring the delivery of individual services to facilitate housing stability;(C) Mediation between the Program Participant and the landlord/owner to prevent loss of current housing;(D) Legal services for housing needs excluding immigration and citizenship matters, matters related to mortgages, legal retainers and contingency fees; and(E) Credit repair and resolution, excluding payment or modification of debts.(3) Non-duplicative rental assistance may be provided for up to 24 months within any 36-month period. Late payment penalties during the term of assistance are not eligible ESG expenses. Rental assistance includes:(A) Short-term rental assistance which is up to three months of rent, inclusive of arrearages, late fees accrued prior to the term of assistance, and last month's rent; and(B) Medium-term rental assistance which is more than three months of rent but not more than 24 months of rent, inclusive of up to six months of arrearages, late fees accrued prior to the term of assistance, and last month's rent.(h) Costs to participate in HMIS are eligible ESG costs. Eligible costs related to HMIS include:(1) Hardware, software, equipment, office space, utility costs;(2) Salary and staff costs for operation of HMIS, including technical support;(3) HMIS training and overhead costs, including travel to HUD sponsored and approved HMIS training programs and travel costs for staff to conduct intake;(4) HMIS participation fees charged by the HMIS lead agency; and(5) HMIS-comparable databases for victim services providers or legal services providers.(i) Eligible administrative costs for ESG are:(1) General management and oversight of the ESG award, excluding cost to purchase office space;(2) Provision of ESG training and costs to attend HUD-sponsored ESG training; and(3) Costs to carry out required environmental reviews.</content><note type="source"><p>Source Note: The provisions of this §7.32 adopted to be effective July 7, 2022, 47 TexReg 3805.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scC/s7.33"><num value="7.33">§7.33</num><heading>Apportionment of ESG Funds</heading><content>(a) The Department will retain funds for Administrative activities. Funds for Administrative or Program Participant services may be retained by TDHCA to Subgrant specific ESG activities, such as legal services or as operating costs for non-congregate emergency shelters funded by the Department's allocation of funds from the HOME American Rescue Plan Act.(b) If the Department receives ESG funding from HUD that has additional activity or geographic restrictions, the Department may elect not to use the Allocation Formula. Funds retained under subsection (a) of this section are not subject to the Allocation Formula.(c) ESG funds not retained for the purposes outlined in subsections (a) and (b) of this section will be made available by CoC region based on an Allocation Formula. Allocation Formula factors noted in paragraphs (1) - (4) of this subsection will be used to calculate distribution percentages for each CoC region as follows:(1) Fifty percent weight will be apportioned to renter cost burden for Households with incomes less than 30% Area Median Family Income (AMFI), as calculated in the U.S. Department of Housing and Urban Development's (HUD) Comprehensive Housing Affordability Strategy;(2) Fifty percent weight will be apportioned for the number of persons in poverty from the most recent five-year estimate of the American Community Survey released by the U.S. Census Bureau;(3) Fifty percent weight will be apportioned to point-in-time counts, which are annual counts of sheltered and unsheltered persons experiencing homelessness on one day during the last two weeks of January as required by HUD for CoCs. If a CoC did not conduct a point-in-time count or only completed a partial point-in-time count, the results of the most recent point-in-time count conducted that covered both the sheltered and unsheltered persons experiencing homelessness will be utilized for the purposes of the Allocation Formula; and(4) Negative 50% weight will be apportioned based on a total of all ESG funding allocated by HUD to local jurisdictions within the CoC region, and ESG funding awarded by the Department within the region from the previous fiscal year.(d) Each CoC region is allocated a minimum amount of $100,000. This is accomplished by taking the amounts of all regions with over $100,000 during the initial allocation and redistributing a proportional share to the regions with less than $100,000. If the Department distributes by Allocation Formula less than the amount required to provide all regions with $100,000, then the funds will be split evenly among the CoC regions.(e) Not less than 70% of ESG funding allocated to the CoC regions shall be initially withheld from competition for use by Subrecipients eligible for continuing awards as described under §7.34 of this subchapter (relating to Continuing Awards).(f) Those ESG funds allocated based on the formula in subsection (c) of this section will be made available for the provision of Program Participant services; they will be made available through a NOFA for both continuing awards described in subsection (e) of this section and for competitive Applications which will be released on an annual basis.(1) Not more than 60% of total ESG funds under direct Subgrants, continuing, and competitive awards may be awarded for the provision of street outreach and emergency shelter activities. Funds will first be made available to direct Subgrants, then continuing awards. Remaining funds made available for competitive awards.(2) Contract funding limits include the funding request for all Program Participant services proposed in the Application, HMIS, and Administrative funds.(A) Funding request minimums and maximums will be noted in the NOFA.(B) Funds awarded for HMIS are limited to 12% of the amount of funds awarded for Program Participant services.(C) Administrative activities are limited to three percent of the amount of funds awarded for Program Participant services.(g) ESG funds that have been deobligated by the Department or that have been voluntarily returned from an ESG Contract may be reprogrammed at the discretion of the Department, and are not included in the Allocation Formula or award process detailed in subsections (c) - (f) or (h) - (j) of this section.(h) An ESG Applicant may have the right to appeal funding decisions per §1.7 of this title (relating to Appeals Process).(i) The Department reserves the right to negotiate the final Contract amount and local Match requirement with an Applicant.(j) Percentages described in this subchapter will not be rounded up to the nearest whole number.</content><note type="source"><p>Source Note: The provisions of this §7.33 adopted to be effective July 7, 2022, 47 TexReg 3805.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scC/s7.34"><num value="7.34">§7.34</num><heading>Continuing Awards</heading><content>(a) TDHCA will withhold a portion of funds from the competition for funds to be used for continuing awards to prior Subrecipients of its ESG allocation, not including ESG CARES or Contracts for reallocated funds from prior years only, in accordance with §7.33 of this subchapter (related to Apportionment of ESG Funds).(b) ESG funds withheld for continuing awards by the Department will be allocated in accordance with the Allocation Formula, and are not subject to the award process and requirements outlined in §7.38 of this subchapter (relating to Competitive Award and Funding Process).(c) The subsequent years of allocation of ESG funds received by the Department will be offered to eligible Subrecipients of ESG funds (not including ESG CARES) that were awarded funds from at least three of the prior four allocations of ESG. An ESG Subrecipient is eligible for an offer of a continuing award of funds if the Subrecipient meets the following requirements:(1) Submits an abbreviated Application for funding within 21 days of the request from the Department as promulgated by the Department;(2) Resolves administrative deficiencies within the timeframe and in the manner outlined in §7.37 of this subchapter (relating to Application Review and Administrative Deficiency Process for Department NOFAs);(3) Submitted two or fewer delinquent monthly reports for each of their active ESG Contracts or for the most recently closed ESG Contract if there are no active ESG Contracts, (not including ESG CARES) for reports due in the six-month period preceding the application submission deadline;(4) Satisfies the requirements of the Previous Participation Review as provided for in §1.302 of this title (relating to Previous Participation Reviews for Department Program Awards Not Covered by §1.301 of this title);(5) Does not have unresolved monitoring findings in any TDHCA funded program after the corrective action period;(6) Does not have monitoring findings in any TDHCA funded program which resulted in disallowed costs in excess of $5,000;(7) Does not apply for funds within the same COC Region under the competitive Application process for Program Participant service(s) in which they are already funded for a Continuing Award;(8) Expended a minimum of 95% of their contracted award amount, as amended in their most recently closed ESG Contract (not including ESG CARES);(9) Did not voluntarily deobligate an amount that exceeds 5% of their contracted award amount, as amended for increases due to reallocated funds, on their most recently closed ESG Contract (not including ESG CARES);(10) Submitted the most recent yearly report information, as required in 10 TAC §7.5(h)(1), in SAGE by the deadline established by the Department for the report due in the period preceding the application submission deadline; and(11) Is approved by the Department's Governing Board.(d) Any offer of ESG funds made under this section is contingent on retaining similar terms and conditions or agreeing to adjustments reflective of funding amount, including but not limited to performance and match requirements, in the active ESG annual Contract issued under a NOFA.(e) Offers of funding will be based on the prior year's award, excluding Contracts comprised exclusively of reallocated funds, before amendments, and will be proportionally increased or decreased in proportion to the total amount of ESG funds available subject to the allocation formula.(f) If additional funds are made available due to reduced continuing awards in the region, awards may be increased proportionate to the increased withheld funds. In any event, an increased award from funds made available from reduced awards may not exceed 115% of the award amount under the allocation or the maximum award amount established in the NOFA.(g) Funds that remain available after all eligible continuing awards have been accepted will be transferred to the competition for funds for the regional competition in accordance with §7.38 of this subchapter.(h) Percentages identified in this section will not be rounded up to the nearest whole number.</content><note type="source"><p>Source Note: The provisions of this §7.34 adopted to be effective May 29, 2025, 50 TexReg 3119.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scC/s7.35"><num value="7.35">§7.35</num><heading>Eligible Applicants</heading><content>(a) An eligible Subrecipient is a Unit of Local Government as defined by HUD in CPD Notice 17-10, or a Private Nonprofit Organization.(b) The Department reserves the option to limit eligible Subrecipient entities in a given NOFA.</content><note type="source"><p>Source Note: The provisions of this §7.35 adopted to be effective July 7, 2022, 47 TexReg 3805.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scC/s7.36"><num value="7.36">§7.36</num><heading>General Threshold Criteria</heading><content>(a) Applications submitted to the Department are subject to general threshold criteria. Applications which do not meet the general threshold criteria or which cannot resolve an administrative deficiency related to general threshold criteria are subject to termination. Applicants applying directly to the Department to administer the ESG Program must submit an Application on or before the deadlines specified in the NOFA, notification of a direct Subgrant, or notification of availability of a continuing award, and must include items in paragraphs (1) - (13) of this subsection:(1) Application materials as published by the Department including, but not limited to, program description, budget, and performance statement.(2) An ESG budget that does not exceed the total amount available within the CoC region, other geographic limitation, Subgrant, or offer of continuing award, as applicable.(3) A copy of the Applicant's written standards that comply with the requirements of 24 CFR §576.400 and certification of compliance with these standards. Any occupancy standard set by the Subrecipient must not conflict with local regulations or Texas Property Code §92.010.(4) A copy of the Applicant's policy for termination of assistance that complies with the requirements of 24 CFR §576.402 and certification of compliance with these standards.(5) A Service Area which consists of at least the entirety of one county or multiple counties within the CoC region under which Application is made, unless a CoC region does not include an entire county. When the CoC region does not encompass at least the entirety of one county, the Service Area must encompass the entire CoC region. The Service Area selected within an Application must be fully contained within one CoC region.(6) Commitment in the budget to the provision of 100% Match, or request for a Match waiver, as applicable. Match waivers will be considered by the Department based on the rank of the Application. Applicants requesting an award of funds in excess of the minimum award amount as described in the NOFA for Program Participant services are not eligible to request or receive a Match waiver. In the event that the Match waivers requested exceed $100,000, the waivers will be considered only for the highest scoring eligible Applications, subject to availability of excess Match provided by ESG Applicants. Applicants that do not receive the waiver and are unable to provide a source of Match will be ineligible for an ESG award.(7) Applicant certification of compliance with State and federal laws, rules and guidance governing the ESG Program as provided in the Application.(8) Evidence of a Unique Entity Identifier (UEI) number for Applicant.(9) Documentation of existing Section 501(c) tax-exempt status, as applicable.(10) Completed previous participation review materials, as outlined in Chapter 1, Subchapter C of this title (relating to Previous Participation), for Applicant.(11) Local government approval per 24 CFR §576.202(a)(2) for an Applicant that will be providing shelter activities with ESG or as ESG Match, as applicable. This documentation must be submitted not later than 30 calendar days after the Application submission deadline as specified in the NOFA, or prior to execution of a Contract for Subrecipients subject to a direct Subgrant, or continuing award. Receipt of the local government approval is a condition prior to the Department obligating ESG funding.(12) A resolution or other governing body action from the Applicant's direct governing body which includes:(A) Authorization of the submission of the Application;(B) Title of the person authorized to represent the entity and who also has signature authority to execute a Contract; and(C) Date that the resolution was passed by the governing body, which must be not older than 12 months preceding the date the Application is submitted.(13) Applicants with an ESG Contract(s) must have submitted the most recent yearly report information, as required in 10 TAC §7.5(h)(1), in SAGE by the deadline established by the Department for the report due in the period preceding the application submission deadline.(b) An Application must be substantially complete when received by the Department. An Application may be terminated if the Application is so unclear or incomplete that a thorough review cannot reasonably be performed, as determined by the Department. Such Application will be terminated without being processed as an administrative deficiency. Specific reasons for a Department termination will be included in the notification sent to the Applicant but, because the termination may occur prior to completion of the full review, will not necessarily include a comprehensive list of all deficiencies in the Application. Termination of an Application may be subject to §1.7 of this title (relating to Appeals Process).</content><note type="source"><p>Source Note: The provisions of this §7.36 adopted to be effective May 29, 2025, 50 TexReg 3119.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scC/s7.37"><num value="7.37">§7.37</num><heading>Application Review and Administrative Deficiency Process</heading><content>(a) The Department will accept Applications on an ongoing basis during the Application acceptance period as specified in the NOFA or notification of an offer of a continuing award, as applicable. Applications will be reviewed for threshold criteria and selection criteria, if applicable, administrative deficiencies, and competitive Applications will be ranked based upon the score of the Application as determined by the Department upon completion of the review.(b) The administrative deficiency process allows the Applicant to provide additional information with regard to an Application after the Application acceptance period has ended, but only if it is requested in writing by Department staff. Staff may request that an Applicant provide clarification, correction, or non-material missing information to resolve inconsistencies in the original Application or to assist staff in evaluating the Application. Staff will request such information via a deficiency notice. Staff will send the deficiency notice via email and responses must be in kind unless otherwise defined in the notice. A review of the Applicant's response may reveal that additional administrative deficiencies are exposed or that issues initially identified as an administrative deficiency are actually determined to be beyond the scope of an administrative deficiency process, meaning that they are in fact matters of a material nature not susceptible to be resolved. For example, a response to an administrative deficiency that causes a new inconsistency which cannot be resolved without reversing or eliminating the need for the first deficiency response would be an example of an issue that is beyond the scope of an administrative deficiency. Department staff will make a good faith effort to provide an Applicant confirmation that an administrative deficiency response has been received and/or that such response is satisfactory. Communication from staff that the response was satisfactory does not establish any entitlement to points, eligibility status, or to any presumption of a final determination that the Applicant has fulfilled any other requirements as such is the sole determination of the Department's Board.(c) An Applicant may not change or supplement any part of an Application in any manner after submission to the Department, except in response to a direct written request from the Department to remedy an administrative deficiency or by amendment of an Application after the Board approval of an ESG award. An administrative deficiency may not be cured if it would, in the Department's determination, substantially change an Application including score, or if the Applicant provides any new unrequested information to cure the deficiency.(d) The time period for responding to a deficiency notice commences on the first day following the deficiency notice date.(1) If an administrative deficiency is not resolved to the satisfaction of the Department by 5:00 p.m. on the seventh calendar day following the date of the deficiency notice, then one point shall be deducted from the selection criteria score for each additional day the deficiency remains unresolved. If administrative deficiencies are not resolved by 5:00 p.m. on the fourteenth calendar day following the date of the deficiency notice for an Application in response to a NOFA, then the Application shall be terminated(2) If an administrative deficiency is not resolved to the satisfaction of the Department by 5:00 p.m. on the seventh calendar day following the date of the deficiency notice for an Application in response to a continuing award offer, then the Application shall be terminated.</content><note type="source"><p>Source Note: The provisions of this §7.37 adopted to be effective February 27, 2024, 49 TexReg 1052.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scC/s7.38"><num value="7.38">§7.38</num><heading>Competitive Award and Funding Process</heading><content>(a) An Application may by submitted requesting funds for Program Participant services under street outreach, emergency shelter, homeless prevention, and/or rapid re-housing. Each Application submission will include one uniform Application with information applicable across all Program Participant service types, and then information on each Program Participant service requested. Each Program Participant service reflected in an Application will be treated as a separate Application, assigned a separate Application number per service type, and will be scored and ranked separately for each service type selected. Applicants may be awarded funds for one or more Program Participant services in accordance with this section. Because each Program Participant service is reviewed separately and competes separately, an award of funds for provision of one Program Participant service does not affect an award of funds in any other Program Participant service reflected in that same Application submission.(b) Applications submitted directly to the Department for under this section will receive points based on experience, program design, budget, previous performance, and performance measures. Applications will be scored and ranked based on selection criteria described in this subchapter.(c) Applicants for a competitive award will be required to submit a self-score within the Application. In no event will the points awarded to the Applicant exceed the point value of the self-score in any selection criterion.(d) Tie breakers. Each Application submitted to the Department for a competitive award shall be assigned a number between one and the total number of applications. The number assignment will be determined in a random selection process to occur immediately following the close of the application acceptance period, and Applicants will be notified of said number assignment as soon as possible thereafter. The randomly assigned numbers will be used to resolve ties, with the highest assigned number having the highest priority.(e) Partial awards. In order to maintain funding within the Allocation Formula amounts designated for each CoC region as determined in this subchapter, an Applicant for a competitive award may be offered a partial award of their requested funds. An Applicant offered a partial award of funds must confirm their acceptance of a partial award, and submit updated information related to the reduction within seven calendar days following the date of notification. Scoring criteria may be updated based on the reduced funding request, but any changes to the scoring criteria must allow the Application to maintain its rank.(f) Regional Funding Competition. Funding will be recommended first for Applicants within the CoC region up to the Allocation Formula amount designated for the CoC region as determined in this subchapter.(1) Eligible Applications will be ranked in descending order by score within the CoC region which the Application proposes to serve. Subsection (d) of this section will be used to determine the priority of tied scores.(2) ESG funds allocated to each CoC region will be awarded starting with the highest ranking Application and continue until the funds allocated for that CoC region are fully utilized, but not exceeded, or until the Applicant for the last Application to be recommended in the region declines an offer of a partial award.(3) Applications proposing street outreach or emergency shelter will be ranked alongside all Applications in the region, however, a recommendation for a full award of an Application for street outreach or emergency shelter will not be made through the first level of funding if funding recommendations in the CoC region for street outreach and emergency shelter will exceed 60% of the funding remaining in the CoC region after direct Subgrants and acceptance of continuing awards. Applications proposing street outreach and emergency shelter services but causing awards for such services in the region to exceed 60% of the available funding in the region, will be offered a partial award of up to the amount remaining to reach 60% for the region. If no funds remain available that would not exceed 60% at the regional level for a partial award, or if they decline such partial award, the Application will be passed over and recommendation of funding would proceed to the next highest scoring Application(s) in the region in order to fully fund the Formula Allocation amount for the region. Applications that were passed over for funding may be eligible to compete in the statewide funding competition, if no more than 60% of funds have been awarded for street outreach and emergency shelter in the total allocated funds.(4) A partial award may be offered to the last highest ranking Application which is otherwise eligible for funding within the regional competition to ensure that the amount of funds recommended for a region does not initially exceed the amount identified in the Formula Allocation. Partial awards will be offered under the regional competition only if the funding remaining in the CoC region is more than $30,000.(A) The Applicant or Applicants that accept an offer of a partial award may be required to amend the Application if the reduction in funds is expected to impact scored items and to adjust performance deliverables based on the reduced amount of funding. The revised score based on the partial award must still ensure the Application ranking would not be affected. If a partial award or the Applicant's subsequent adjustments results in a reduced score that alters their scoring rank within the regional competition, the opportunity to be funded from the first level of funding recommendations will not be offered to the Application.(B) The Applicant may decline the partial award of funds and instead request to be included for consideration in the statewide competition.(g) Statewide Funding Competition. If any funds remain after recommendations for all eligible Applications in the regional funding competition, such funds shall collapse and be made available in the statewide competition.(1) All eligible Applications not recommended to be awarded under the regional funding competition will be ranked in descending order of score with the highest scoring unfunded Application, regardless of region, having the highest priority rank. Subsection (e) of this section will be used to determine the outcome of tied scores.(2) Funds will be awarded in the statewide funding competition starting with the highest ranked Application and continuing until no funds remain available to award or until there are no eligible Applications left to be recommended for funding.(3) Applications proposing street outreach or emergency shelter will be ranked alongside all Applications. If the 60% of the allocated funds has been awarded to Applications proposing street outreach and emergency shelter, Applications proposing these activities will not be recommended and will be passed over to fund Applications proposing homeless prevention or rapid re-housing.(4) The final award in the statewide funding competition and the 60% capped street outreach and emergency shelter funding may be a partial award if an Application cannot be fully funded.(A) An Applicant that accepts an offer of a partial award may be required to amend the Application if the reduction in funds is expected to impact scored items and to adjust performance deliverables based on the reduced amount of funding. The revised score based on the partial award must still ensure the Application's ranking would not be affected. Partial awards may only be offered if the remaining funding exceeds the minimum award amount as stated in the NOFA.(B) The Applicant may decline a partial award of funds. Applicants that decline a partial award of funding within the statewide competition will be withdrawn from competition, as there are not sufficient remaining funds to award the Application.(C) If a partial award or the Applicant's subsequent adjustments result in a reduced score that alters the scoring rank or an Applicant declines a partial award, the next highest ranked Application will be presented with the opportunity to be funded.(h) If there are still funds available after the statewide funding competition, the Department may offer and recommend award amounts in excess of the funds requested and in excess of the award amount limits identified in §7.33(c) of this subchapter (relating to Apportionment of ESG Funds), starting with the highest scoring Applications already identified to be recommended for an award, not to exceed an award more than 50% greater than their original request. The Department will provide notice of the proposed increase to the impacted Applicants. The budget and Performance targets would increase proportionally to the additional funding received. An Applicant will have the opportunity to accept or reject the recommendation for increased funding prior to final award by the Department.(i) The Department reserves the right to negotiate the final Contract amount and local Match with a Subrecipient.</content><note type="source"><p>Source Note: The provisions of this §7.38 adopted to be effective July 7, 2022, 47 TexReg 3805.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scC/s7.39"><num value="7.39">§7.39</num><heading>Uniform Selection Criteria</heading><content>An Application for funding allocated in accordance with §7.33(b) of this section (relating to Apportionment of ESG Funds) and made to the Department may be awarded points under the following uniform selection criteria. The total of the score under this part will be the uniform Application score. The uniform Application score will be comprised of points awarded under each of the following criteria:(1) Homeless participation. An Application may receive a maximum of three points for the participation of persons who are Homeless in the Applicant's program design. Points may be earned under subparagraphs (A) and (B) of this paragraph for a total of up to three points.(A) An Application may receive a maximum of two points when at least one person who is Homeless or formerly Homeless is a member of or consults with the Applicant's policy-making entity for facilities, services, or assistance under ESG; and(B) An Application may receive a maximum of one point when at least one person who is Homeless or formerly Homeless is employed in a paid position with duties that include constructing, renovating, maintaining, or operating the Applicant's ESG facilities, or providing services for occupants of its ESG facilities.(2) Organizational or management experience. An Application may receive a maximum of eight points for an Applicant or its management staff's experience administering federal or State homeless programs.(A) An Application may receive a maximum of three points for an Applicant or its management staff with at least two but less than four years of experience;(B) An Application may receive a maximum of five points for an Applicant or its management staff with at least four but less than six years of experience; or(C) An Application may receive a maximum of eight points for an Applicant or its management staff with six or more years of experience.(3) Percentage of prior ESG awarded funds expended. An Application may receive a maximum of six points for the Applicant's past expenditure performance of ESG funds proportionate to the award of funds from TDHCA to the Applicant. This will apply to any and all ESG Contract(s), exclusive of ESG CARES Contracts, administered by the Applicant that were closed within 12 months prior to the date of the Application deadline established in the by the Department. Contract Expenditures will be averaged among all ESG Contracts that were closed within 12 months of the Application deadline, without requiring an amendment if the Applicant was awarded multiple Contracts. The percentage of ESG funds expended will be calculated utilizing the amount of the Contract as of its closing as stated in the Contract prior to amendments, except where the Applicant voluntarily return funds in accordance with this subchapter. Expenditure will be defined as the Applicant having reported the funds as expended. Applications may receive:(A) Two points if the Applicant expended 91-94% of its prior ESG Contract funds as of its closing as stated in the Contract prior to amendments;(B) Three points if the Applicant expended 95% to less than 100% of its prior ESG Contract funds as of its closing as stated in the Contract prior to amendments; or(C) Six points if the Applicant expended 100% of its prior ESG Contract funds as of its closing as stated in the Contract prior to amendments.(4) Contract History on Reporting and percentage of Outcomes. An Applicant may receive a maximum of twelve points for its prior timeliness of reports and performance achieved for previously awarded ESG Contract(s), exclusive of ESG CARES Contracts, that closed within 12 months prior to the date of the Application deadline established by the Department. Points may be requested under subparagraphs (A) - (E) of this paragraph, not to exceed a total of ten points. The Outcome percentages will be averaged among all prior ESG Contracts, exclusive of ESG CARES Contracts, that closed within 12 months prior to the date of the Application deadline to determine the final percentage amount for this scoring criterion. Applications may receive points as follows:(A) Two points if the Applicant submitted the last three reports on or before the Contract end date within the reports' respective reporting deadlines;(B) Two points if the Applicant met 100% or more of their street outreach target of persons exiting to temporary or transitional or permanent housing destination;(C) Two points if the Applicant met 100% or more of their emergency shelter exits to permanent housing;(D) Two points if the Applicant met 100% or more of their Homeless prevention target for maintaining housing for three months or more;(E) Two points if the Applicant met 100% or more of their rapid re-housing target for maintaining housing for three months or more; and(F) Two points if the Applicant met 100% or more of their Match obligation.(G) Twelve points if the Applicant has not previously been awarded an ESG Contract closed within 12 months prior to the date of the Application deadline.(5) Monitoring history. Applications may receive a maximum of five points for the Applicant's previous ESG and ESG CARES monitoring history. The Department will consider the monitoring history for three years before the date that Applications are first accepted under the NOFA when determining the points awarded under this criterion. Findings that were subsequently rescinded will not be considered Findings for the purposes of this scoring criterion. Applications may be limited to a maximum of:(A) Five points if the Applicant has not received any monitoring Findings, including Applicants with no previous monitoring history;(B) Not more than three points if the monitoring history has a close-out letter that included Findings, but the Findings were not related to Household eligibility or violations of procurement requirements;(C) Not more than two points if the monitoring history has a close-out letter that included Findings related to Household eligibility;(D) Not more than one point if the monitoring history has a monitoring close-out letter that included Findings related to violations of procurement requirements; or(E) Zero points may be requested under this criterion if the Applicant received a Finding resulting in disallowed costs in excess of $5,000 which required repayment to the Department.(6) Priority for certain communities. Applications may receive two points if at least one Colonia, as defined in Tex. Gov't Code §2306.083, is included in the Service Area identified in the Application. Applicants awarded points under this criterion will be contractually required to maintain a Service Area that includes at least one Colonia as identified on the Office of Attorney General's website.(7) Previously unserved areas. Applications may receive a maximum of 10 points for provision of ESG services if at least one county in the Service Area included in the Application has not received ESG funds from the Department or directly from HUD within the previous federal funding year for services. Applications may receive a maximum (of ten points if at least one county within the Service Area as stated in the Application did not receive an award of ESG annual funds from the Department within the previous federal funding year.(8) Percentages identified in this section will not be rounded up to the nearest whole number.</content><note type="source"><p>Source Note: The provisions of this §7.39 adopted to be effective March 1, 2023, 48 TexReg 1040.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scC/s7.40"><num value="7.40">§7.40</num><heading>Competitive Program Participant Services Selection Criteria</heading><content>(a) An Application for competitive funding allocated under §7.33(b) of this subchapter (relating to Apportionment of ESG Funds), and made to the Department, may be awarded points for Program Participant services under each category. Points awarded for Program Participant services will be separately tabulated and added to the uniform Application score to determine a score for each of the Program Participant services Applications submitted. All scoring criteria that are based upon measurable future performance expectations will be measured and expected to be fulfilled by being included as a performance requirement in the Contract should the Application be awarded funds.(b) Street outreach. An Application proposing street outreach may receive points under the following criteria:(1) Matching funds for street outreach. An Application may receive a maximum of three points if the Applicant commits Matching funds equal to or greater than 110% of the total ESG funds requested for street outreach.(2) Street outreach serving Homeless Subpopulations. An Application may receive a maximum of five points by proposing to serve persons who are in a Homeless Subpopulation, as defined in §7.2(31) of this chapter (relating to Definitions). An Applicant providing street outreach may receive a maximum of:(A) One point based on a minimum target of 70% of persons served who are in one or more Homeless Subpopulation;(B) Two points based on a minimum target of 80% of persons served who are in one or more Homeless Subpopulation;(C) Three points based on a minimum target of 90% of persons served who are in one or more Homeless Subpopulation;(D) Four points based on a minimum target of 95% of persons served who are in one or more Homeless Subpopulation; or(E) Five points based on a minimum target of 100% of persons served who are in one or more Homeless Subpopulation.(3) Street outreach exit to a positive housing destination. An Application may receive a maximum of five points based on the percentage of persons served within the 12 months prior to the Application due date who exited homelessness to a positive housing destination per HMIS data standards:(A) Two points based on 25% of persons served with street outreach who exited to positive housing destinations;(B) Three points based on 35% of persons served with street outreach who exited to positive housing destinations;(C) Four points based on 45% of persons served with street outreach who exited to positive housing destinations; or(D) Five points based on 55% of persons served with street outreach who exited to positive housing destinations.(4) Street outreach staff qualifications. An Applicant may receive a maximum of six points if a member of the staff interacting with Program Participants in the street outreach component has one or more of the following qualifications:(A) Two points if a member is a licensed mental health provider through the Texas Behavioral Executive Health Council;(B) Two points if a member of staff is fluent in one or more languages identified in the Applicant's Language Access Plan as necessary to provide equitable, meaningful access for persons with Limited English Proficiency; and(C) Two points if program includes a paid staff member who has formerly experienced homelessness.(5) Street outreach temporary/transitional/permanent housing target. An Application may receive a maximum of three points based on the percentage of persons targeted to be served with street outreach who will be placed in temporary, transitional or permanent housing. An Application may receive a maximum of:(A) One point based on a minimum target of 35% of persons served with street outreach who will be placed in temporary housing;(B) Two points based on a minimum target of 45% of persons served with street outreach who will be placed in temporary housing; or(C) Three points based on a minimum target of 55% of persons served with street outreach who will be placed in temporary housing.(6) Street outreach services. An Application may receive a maximum of five points based on the number of street outreach services provided through ESG or other funds including engagement, case management, emergency health services, emergency mental health services, and transportation services. Emergency health services and emergency mental services may only be provided by ESG funds if these services are inaccessible or unavailable within the area. An Application may receive a maximum of:(A) Two points if the Applicant provides street outreach engagement and case management;(B) Three points if the Applicant provides street outreach engagement and case management, and one other service;(C) Four points if the Applicant provides street outreach engagement and case management, and two other services; or(D) Five points if the Applicant provides street outreach engagement and case management, and three other services.(7) Experience providing street outreach. An Application may receive a maximum of 10 points based on the Applicant's experience providing street outreach services.(A) Two points if the Applicant has provided street outreach for up to two years;(B) Four points if the Applicant has provided street outreach for up to four years;(C) Six points if the Applicant has provided street outreach for up to six years;(D) Eight points if the Applicant has provided street outreach for up to eight years; or(E) Ten points if the Applicant has provided street outreach for 10 or more years.(c) Emergency shelter. An Application proposing emergency shelter may receive points under the following criteria:(1) Matching funds for emergency shelter. An Application may receive a maximum of three points if the Applicant commits Matching funds equal to or greater than 110% of the total ESG funds requested for emergency shelter.(2) Emergency shelter serving Homeless Subpopulations. An Application may receive a maximum of five points by proposing to serve persons who are in a Homeless Subpopulation, as defined in §7.2(31) of this chapter (relating to Definitions). An Applicant providing emergency shelter may receive a maximum of:(A) One point based on a minimum target of 70% of persons served who are in one or more Homeless Subpopulation;(B) Two points based on a minimum target of 80% of persons served who are in one or more Homeless Subpopulation;(C) Three points based on a minimum target of 90% of persons served who are in one or more Homeless Subpopulation;(D) Four points based on a minimum target of 95% of persons served who are in one or more Homeless Subpopulation; or(E) Five points based on a minimum target of 100% of persons served who are in one or more Homeless Subpopulation.(3) Emergency shelter exit to a positive housing destination. An Application may receive a maximum of five points based on the percentage of persons served within the 12 months prior to the Application due date exited homelessness to a positive housing destination per HMIS data standards:(A) Two points based on 25% of persons served with emergency shelter who exited to positive housing destinations;(B) Three points based on 35% of persons served with emergency shelter who exited to positive housing destinations;(C) Four points based on 45% of persons served with emergency shelter who exited to positive housing destinations; or(D) Five points based on 55% of persons served with emergency shelter who exited to positive housing destinations.(4) Emergency shelter staff qualifications. An Applicant may receive a maximum of six points if a member of the staff interacting with Program Participants in the street outreach component has one or more of the following qualifications:(A) Two points if a member is a licensed mental health provider through the Texas Behavioral Executive Health Council;(B) Two points if a member of staff is fluent in one or more languages, other than English, identified in the Applicant's Language Access Plan as necessary to provide equitable, meaningful access for persons with Limited English Proficiency; and(C) Two points if program includes a paid staff member who has formerly experienced homelessness.(5) Emergency shelter permanent housing. An Applicant may receive a maximum of three points based on the percentage of persons served with emergency shelter targeted to be placed in permanent housing. An Application may receive a maximum of:(A) One point based on a minimum target of 35% of persons served with emergency shelter who will be placed in permanent housing;(B) Two points based on a minimum target of 45% of persons served with emergency shelter who will be placed in permanent housing; or(C) Three points based on a minimum target of 55% of persons served with emergency shelter who will be placed in permanent housing.(6) Emergency shelter services. An Applicant may receive a maximum of five points based on the number of emergency shelter services provided through ESG or other funds, as listed in 24 CFR §576.102. Emergency shelter services include case management, child care, education services, employment assistance and job training, outpatient health services, legal services, life skills training, outpatient mental health services, outpatient substance abuse treatment services, and transportation. Outpatient health services, mental services, and substance abuse treatment services should only be provided by ESG funds if these services are otherwise inaccessible or unavailable within the Service Area. This selection criterion will become a contractual requirement if the Applicant is awarded a Contract. An Application may receive a maximum of:(A) Two points if the Applicant provides case management and two of the other services;(B) Three points if the Applicant provides case management and three of the other services;(C) Four points if the Applicant provides case management and four of the other services; or(D) Five points if the Applicant provides case management and five of the other services.(7) Experience providing emergency shelter. An Application may receive a maximum of 10 points based on the Applicant's experience providing emergency shelter services.(A) Two points if the Applicant has provided emergency shelter for up to two years;(B) Four points if the Applicant has provided emergency shelter for up to four years;(C) Six points if the Applicant has provided emergency shelter for up to six years;(D) Eight points if the Applicant has provided emergency shelter for up to eight years; or(E) Ten points if the Applicant has provided emergency shelter for 10 or more years.(d) Homeless prevention. An Application proposing homeless prevention may receive points under the following criteria:(1) Matching funds for homeless prevention. An Application may receive a maximum of three points if the Applicant commits Matching funds equal to or greater than 110% of the total ESG funds requested for homelessness prevention.(2) Homelessness prevention serving Homeless Subpopulations. An Application may receive a maximum of five points by proposing to serve persons who are in a Homeless Subpopulation, as defined in §7.2(31) of this chapter (relating to Definitions). An Applicant providing homelessness prevention may receive a maximum of:(A) One point based on a minimum target of 70% of persons served who have one or more special needs;(B) Two points based on a minimum target of 80% of persons served who have one or more special needs;(C) Three points based on a minimum target of 90% of persons served who have one or more special needs;(D) Four points based on a minimum target of 95% of persons served who have one or more special needs; or(E) Five points based on a minimum target of 100% of persons served who have one or more special needs.(3) Homelessness prevention exit to a positive housing destination. An Application may receive a maximum of five points based on the percentage of persons served within the 12 months prior to the Application due date exited homelessness to a positive housing destination per HMIS data standards:(A) Two points based on 25% of persons served with homelessness prevention who exited to positive housing destinations;(B) Three points based on 35% of persons served with homelessness prevention who exited to positive housing destinations;(C) Four points based on 45% of persons served with homelessness prevention who exited to positive housing destinations; or(D) Five points based on 55% of persons served with homelessness prevention who exited to positive housing destinations.(4) Homeless prevention staff qualifications. An Applicant may receive a maximum of six points if a member of the staff interacting with Program Participants in the homeless prevention component has one or more of the following qualifications:(A) Two points if a member is a licensed mental health provider through the Texas Behavioral Executive Health Council;(B) Two points if a member of staff is fluent in one or more languages, other than English, identified in the Applicant's Language Access Plan as necessary to provide equitable, meaningful access for persons with Limited English Proficiency; and(C) Two points if program includes a paid staff member who has formerly experienced homelessness.(5) Homeless prevention maintaining housing. An Application may receive a maximum of three points based on the percentage of persons served with Homelessness prevention who are targeted to maintain their housing for three months or more after program exit. Applications may receive a maximum of:(A) One point based on a minimum target of 50% of persons served with homelessness prevention maintaining housing for three months;(B) Two points based on a minimum target of (60% of persons served with homelessness prevention maintaining housing for three months; or(C) Three points based on a minimum target of 70% of persons served with homelessness prevention maintaining housing for three months.(6) Homeless prevention services and rental assistance. An Application may receive a maximum of five points based on the number of homeless prevention services and type of rental assistance provided through ESG or other funds. Homeless prevention services and rental assistance include rental application fees, security deposits and last month's rent, utility payments/deposits, moving costs, housing search and placement, housing stability case management, mediation, legal services, credit repair, short-term rental assistance, and medium-term rental assistance. An Application may receive a maximum of:(A) Two points if the Applicant provides housing stability case management and three of the other services or rental assistance;(B) Three points if the Applicant provides housing stability case management and four of the other services or rental assistance;(C) Four points if the Applicant provides housing stability case management and five of the other services or rental assistance; or(D) Five points if the Applicant provides housing stability case management and six of the other services or rental assistance.(7) Experience providing homeless prevention or rental assistance services. An Application may receive a maximum of 10 points based on the Applicant's experience providing homeless prevention or tenant-based rental assistance services.(A) Two points if the Applicant has provided homeless prevention or tenant-based rental assistance services for up to two years;(B) Four points if the Applicant has provided homeless prevention or tenant-based rental assistance services for up to four years;(C) Six points if the Applicant has provided homeless prevention or tenant-based rental assistance services for up to six years;(D) Eight points if the Applicant has provided homeless prevention or tenant-based rental assistance services for up to eight years; or(E) Ten points if the Applicant has provided homeless prevention or tenant-based rental assistance services for 10 or more years.(e) Rapid re-housing. An Application proposing rapid re-housing may receive points under the following criteria:(1) Matching funds for rapid re-housing. Applications may receive a maximum of three points if the Applicant commits Matching funds equal to or greater than 110% of the total ESG funds requested for rapid re-housing.(2) Rapid re-housing serving Homeless Subpopulations. An Application may receive a maximum of five points by proposing to serve persons who are in a Homeless Subpopulation, as defined in §7.2(31) of this chapter (relating to Definitions). Applicants providing rapid re-housing may receive a maximum of:(A) One point based on a minimum target of 70% of persons served who are in one or more Homeless Subpopulation;(B) Two points based on a minimum target of 80% of persons served who are in one or more Homeless Subpopulation;(C) Three points based on a minimum target of 90% of persons served who are in one or more Homeless Subpopulation;(D) Four points based on a minimum target of 95% of persons served who are in one or more Homeless Subpopulation; or(E) Five points based on a minimum target of 100% of persons served who are in one or more Homeless Subpopulation.(3) Rapid re-housing exit to a positive housing destination. An Application may receive a maximum of five points based on the percentage of persons served within the 12 months prior to the Application due date exited homelessness to a positive housing destination per HMIS data standards:(A) Two points based on 25% of persons served with rapid re-housing exited to positive housing destinations;(B) Three points based on 35% of persons served with rapid re-housing who exited to positive housing destinations;(C) Four points based on 45% of persons served with rapid re-housing who exited to positive housing destinations; or(D) Five points based on 55% of persons served with rapid re-housing who exited to positive housing destinations.(4) Rapid re-housing staff qualifications. An Applicant may receive a maximum of six points if a member of the staff interacting with Program Participants in the rapid re-housing component has one or more of the following qualifications:(A) Two points if a member is a licensed mental health provider through the Texas Behavioral Executive Health Council;(B) Two points if a member of staff is fluent in one or more languages, other than English, identified in the Applicant's Language Access Plan as necessary to provide equitable, meaningful access for persons with Limited English Proficiency; and(C) Two points if program includes a paid staff member who has formerly experienced homelessness.(5) Rapid re-housing maintaining housing. Applicants may receive a maximum of three points based on the percentage of persons served with rapid re-housing targeted to maintain their housing for three months or more after program exit. Applications may receive a maximum of:(A) One point based on a minimum target of 50% of persons served with rapid re-housing maintaining housing for three months;(B) Two points based on a minimum target of 60% of persons served with rapid re-housing maintaining housing for three months; or(C) Three points based on a minimum target of 70% of persons served with rapid re-housing maintaining housing for three months.(6) Rapid re-housing services and rental assistance. Applicants may receive a maximum of five points based on the number of rapid re-housing services and type of rental assistance provided through ESG or other funds. Rapid re-housing services and rental assistance include rental application fees, security deposits/last month's rent, utility payments/deposits, moving costs, housing search and placement, housing stability case management, mediation, legal services, credit repair, short-term rental assistance, medium-term rental assistance. Applications may receive a maximum of:(A) Two points if the Applicant provides housing stability case management and three of the other services or rental assistance;(B) Three points if the Applicant provides housing stability case management and four of the other components;(C) Four points if the Applicant provides housing stability case management and five of the other components; or(D) Five points if the Applicant provides housing stability case management and six of the other components.(7) Experience providing rapid re-housing or tenant-based rental assistance services. Applications may receive a maximum of 10 points based on the Applicant's experience providing homeless prevention or tenant-based rental assistance services.(A) Two points if the Applicant has provided rapid re-housing or tenant-based rental assistance services for up to two years;(B) Four points if the Applicant has provided rapid re-housing or tenant-based rental assistance services for up to four years;(C) Six points if the Applicant has provided rapid re-housing or tenant-based rental assistance services for up to six years;(D) Eight points if the Applicant has provided rapid re-housing or tenant-based rental assistance services for up to eight years; or(E) Ten points if the Applicant has provided rapid re-housing or tenant-based rental assistance services for 10 or more years.</content><note type="source"><p>Source Note: The provisions of this §7.40 adopted to be effective March 1, 2023, 48 TexReg 1040.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scC/s7.41"><num value="7.41">§7.41</num><heading>Contract Term, Expenditure Benchmark, Return of Funds, and Performance Targets</heading><content>(a) The Contract Term for ESG funds may not exceed 12 months. All funds awarded under the Contract must be expended by the Subrecipient on or before the expiration of the Contract, unless an extension has been granted in accordance with this section. A request to extend the Contract Term must show evidence that the extension is necessary to provide services required under the Contract, and provide good cause for failure to timely expend the funds. Extensions of Contract Terms are considered on a case-by-case basis, but are subject to §7.4(e) of this title (relating to Amendments and Extensions of Contracts).(1) The Executive Director or his or her designee may approve an extension to the ESG Contract Term of up to six months from the original Contract Term; and may approve an extension to the Expenditure deadline for ESG CARES.(2) Board approval is required if the Subrecipient requests to extend an ESG Contract Term for more than six months from the original Contract Term.(3) Amendments of Expenditure requirements will not be granted by the Executive Director or the Board when such action would cause the Department to miss a federal Expenditure deadline.(b) Subrecipient is required to have reported Expenditures in its Monthly Expenditure Reports reflecting at least 50% of the Contracted funds by month nine of the original Contract Term. A Subrecipient that has not met this Expenditure benchmark must submit a plan to the Department evidencing the ability of the Subrecipient to expend the remaining funds by month 12 of the original Contract Term. This Expenditure benchmark may not be extended though amendment.(c) Not later than 60 days prior to the end of the Contract Term, a Subrecipient may submit a written request to voluntarily return some or all of its funds to the Department. Voluntary return of funds prior to the Expenditure benchmark constitutes a reduction in the awarded amount, and returned funds at or prior to the Expenditure benchmark will not be considered deobligated funds for the purpose of future funding recommendations. Subrecipient must return any funds that would result in a violation of the administrative and HMIS expenditure limits of the Contract, as outlined in §7.33(f) of this subchapter prior to approval of a request to voluntarily deobligate funds for any Program Participant services.(d) Funds remaining at the end of Contract which are not reflected in the last Monthly Expenditure Report will be automatically deobligated. Deobligation of funds may affect future funding recommendations.(e) The Department may request information regarding the performance or status of a Contract prior to the Expenditure benchmark, at various times during the Contract, or during the record retention period. Subrecipient must respond within the time limit stated in the request. Prolonged or repeated failure to respond may result in suspension of funds, termination of the Contract by the Department, and could impact future funding recommendations.(f) If additional funds become available through returned or deobligated amounts from an award made under the allocation formula or program income generated from an award made under the allocation formula, the funds may be offered to ESG Subrecipients with active Contracts that have not been amended to extend the Contract Term. Returned or deobligated funds will be offered with priority given to ESG Subrecipients with the highest Expenditure rate as of the most recent Monthly Expenditure Report. However, funds may not be offered to any Subrecipient that returned funds, or from whom funds were deobligated. The Executive Director or designee may increase the Contract of an ESG Subrecipient or authorize a new Contract with a Subrecipient by up to 25% of the original Contract amount. The increase of reallocated funds may not exceed 25% of the initial Contract award, unless approved by the Board.(g) Funds that have been returned more than once or returned less than three months before the federal Expenditure deadline may be retained by the Department.(h) The Contract will reflect the Performance Targets that were utilized as selection criteria for the award of funds. Requests to amend Performance Targets may not be submitted less than 60 days prior to the end of the Contract Term. Requests to amend Performance Targets will not be granted if such an amendment would have precluded the award to the Subrecipient.</content><note type="source"><p>Source Note: The provisions of this §7.41 adopted to be effective February 27, 2024, 49 TexReg 1052.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scC/s7.42"><num value="7.42">§7.42</num><heading>General Administrative Requirements</heading><content>(a) Subrecipient must have written policies and procedures to ensure that sufficient records are established and maintained to enable a determination that applicable federal and state requirements are met. The written standards must be applied consistently for all Program Participants. Written policies must include, but not be limited to, Inclusive Marketing outlined in §7.10 of this chapter (relating to Inclusive Marketing).(b) Subrecipient must obtain the correct level of environmental clearance prior to expenditure of funds. Activities for which the Subrecipient does not properly complete the Department's environmental review process are ineligible, and funds will not be reimbursed or will be required to be repaid.(c) Subrecipient is prohibited from charging occupancy fees for emergency shelter activities supported by funds covered by this subchapter.(d) If a Private Nonprofit Organization Subrecipient wishes to expand the geographic scope of its emergency shelter activities after Contract execution, an updated certification of approval from the Unit of General Purpose Local Government with jurisdiction over the updated Service Area must be submitted to the Department before funds are spent on emergency shelter in those areas.(e) Subrecipient must document compliance with the shelter and housing standards per 24 CFR §576.500(j) and (k), including but not limited to, maintaining sufficient construction and shelter inspection reports.(f) Rental developments must comply with all construction or operational requirements governing the development or program to which funds are comingled, and must comply with local health and safety codes.(g) Subrecipient may be required to complete Contract orientation training prior to submission of the first Monthly Expenditure Report. Subrecipient must also complete training as requested by the Department in response to Findings or other issues identified while managing the Contract.(h) Subrecipient must develop and establish written procurement procedures that comply with federal, State, and local procurement requirements. A conflict of interest related to procurement is prohibited by 2 CFR §200.317-318 or Chapter 171 of the Local Government Code, as applicable.(i) In instances where a potential conflict of interest exists related to a beneficiary of assistance to a Program Participant, Subrecipient must submit a request to the Department to grant an exception to any conflicts prohibited using the procedures at 24 CFR §576.404. The request submitted to the Department must include a disclosure of the nature of the conflict, accompanied by an assurance that there has been public disclosure of the conflict, a description of how the public disclosure was made, and an attorney's opinion that the conflict does not violate State or local law. No funds will be committed to assist a Household until HUD has granted an exception.(j) Subrecipient will comply with the requirements under 24 CFR §576.409, "Protection for victims of domestic violence, dating violence, sexual assault, or stalking."(1) Compliance with 24 CFR §576.409 includes, but is not limited to, providing two Departmental forms called "Notice of Occupancy Rights under the Violence Against Women Act" based on HUD form 5380 and "Certification of Domestic Violence, Dating Violence, Sexual Assault, or Stalking," HUD form 5382, to each of the following:(A) All applicants for short- and medium-term rental assistance at the time of admittance or denial;(B) Program Participants of short- and medium-term rental assistance prior to execution of a Rental Assistance Agreement;(C) Program Participants of short- and medium-term rental assistance with any notification of eviction or notification of termination of assistance; and(D) Program Participants of short- and medium-term rental assistance either during an annual Recertification or lease renewal process, whichever is applicable.(2) Subrecipient will adopt and follow an Emergency Transfer Plan based on HUD's model Emergency Transfer Plan, pursuant to 24 CFR §5.2005(e). Within three calendar days after Program Participants request transfers, Subrecipient will inform Program Participants of their eligibility under their Emergency Transfer Plan and keep records of all outcomes.</content><note type="source"><p>Source Note: The provisions of this §7.42 adopted to be effective July 7, 2022, 47 TexReg 3805.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scC/s7.43"><num value="7.43">§7.43</num><heading>Program Income</heading><content>(a) Program income is gross income received by the Subrecipient or its Affiliates directly generated by a grant supported activity, or earned only as a result of the grant agreement during the grant period.(b) Program income received and expended during the Contract Term will count toward meeting the Subrecipient's Matching requirements, per 24 CFR §576.201(f), provided the costs are eligible costs that supplement the program.(c) Security and utility deposits paid on behalf of a Program Participant should be treated as a grant to the Program Participant. The deposit must remain with the Program Participant, and if returned, is to be returned only to the Program Participant. If the landlord or the utility service provider requires that the deposit be returned to the Subrecipient, Affiliate, Subcontractor, or Subgrantee, the deposit is program income, and must be treated as described in this subsection.(d) In accounting for program income, the Subrecipient must accurately reflect the receipt of such funds separate from the receipt of federal funds and Subrecipient funds.(e) Program income that is received after the end of the Contract Term, or not expended within the Contract Term, along with program income received two years following the end of the Contract Term must be returned to the Department within 10 calendar days of receipt. Income directly generated by a grant-supported activity after the two year period is no longer program income and may be retained by the Subrecipient.</content><note type="source"><p>Source Note: The provisions of this §7.43 adopted to be effective July 7, 2022, 47 TexReg 3805.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scC/s7.44"><num value="7.44">§7.44</num><heading>Program Participant Eligibility and Program Participant Files</heading><content>(a) Program participants must meet the applicable definitions of Homeless or At-risk of Homelessness. Proof of the eligibility or ineligibility for Program Participants must be maintained in accordance with 24 CFR §576.500, Recordkeeping and reporting requirements. The Applicant must retain income documentation for Program Participants receiving homelessness prevention and Program Participants receiving rapid re-housing that require annual Recertification. Program Participant income eligibility must be calculated and documented in accordance with the Requirements of HUD Handbook 4350, except that the Department's DIS form may be utilized if income cannot be documented in accordance with 24 CFR §576.500(e)(4). A DIS must be completed and signed by Program Participants whom are subject to income eligibility determination.(b) The Subrecipient must document eligibility before providing services after a break-in-service. A break-in-service occurs when a previously assisted Household has exited the program and is no longer receiving services through Homeless Programs. Upon reentry, the Household is required to complete a new intake application and provide updated source documentation, if applicable.(c) The Subrecipient must utilize the rental assistance agreement promulgated by the Department if providing rental assistance. The rental assistance agreement does not take the place of the lease agreement between the landlord/property manager and the tenant.(d) The Subrecipient must retain a copy of the signed Disclosure Information on Lead Based Paint and/or Lead-Based Hazards for housing built before 1978 in the Program Participant's file in accordance with 24 CFR §576.403(a).</content><note type="source"><p>Source Note: The provisions of this §7.44 adopted to be effective July 7, 2022, 47 TexReg 3805.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c7/scD"><num value="D">SUBCHAPTER D</num><heading>ENDING HOMELESSNESS FUND</heading><section identifier="/us/state/tx/tac/t10/p1/c7/scD/s7.61"><num value="7.61">§7.61</num><heading>Purpose and Use of Funds</heading><content>(a) As authorized by Tex. Transp. Code §502.415, the Ending Homelessness Fund (EH Fund) provides grant funding only to counties and municipalities for the purpose of combating homelessness. (b) The Department shall publish an EH Fund Plan each biennium, as approved by the Department's Board. The EH Fund Plan shall include a description of EH Fund eligible activities, and an outline of activities and Subrecipients that will be given funding priority.(c) Permitted EH Fund eligible activities include any activity determined to provide local programs to prevent and eliminate homelessness. Such activities may include any activity eligible under Subchapter B of this Chapter, Homeless Housing and Services Program (HHSP). The EH Fund Plan may further limit eligible activities.(d) Capitalized terms used in this subchapter shall follow the meanings defined in Subchapter A of this chapter, unless the context clearly indicates otherwise. Additionally, any words and terms not defined in this section but defined or given specific meaning in 24 CFR Part 576, or used in that Part and defined elsewhere in state or federal law or regulation, when used in this chapter, shall have the meanings defined therein, unless the context herein clearly indicates otherwise.(e) Funds awarded under the EH Fund are not subject to any Match requirements, but may be used as Match for other programs that do require Match.</content><note type="source"><p>Source Note: The provisions of this §7.61 adopted to be effective February 5, 2025, 50 TexReg 650.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scD/s7.62"><num value="7.62">§7.62</num><heading>EH Fund Subrecipient Application and Selection</heading><content>(a) The Department will produce an Application which, if properly completed by an eligible Applicant and approved by the Department, may satisfy the Department's requirements to receive an award of funds under the EH Fund. Applicants that have an existing ESG or HHSP Contract or who have been awarded ESG or HHSP funds may be eligible to submit an abbreviated EH Fund Application if such Application is made available by the Department.(b) Funds will be available to Applicants as further described in the EH Fund Plan.(c) Application for funds. Applicants for an award from the EH Fund must submit the following items:(1) A complete Application including an Applicant certification of compliance with state rules, federal laws, rules, and guidance governing the EH Fund as provided in the Application;(2) All information required under Subchapter B of this chapter (related to Homeless Housing and Services Program) to conduct a Previous Participation and Executive Award Review and Advisory Committee review;(3) A proposed budget in the format required by the Department;(4) Proposed performance targets in the format required by the Department; and(5) Activity descriptions, as further described in the EH Fund Plan.(d) The Department must receive all Applications within 30 calendar days of notification of eligibility to Applicants per §7.63(b)(1) of this subchapter (relating to Application Review Process), or as specified in the EH Plan, as applicable.</content><note type="source"><p>Source Note: The provisions of this §7.62 adopted to be effective February 5, 2025, 50 TexReg 650.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scD/s7.63"><num value="7.63">§7.63</num><heading>Application Review Process</heading><content>(a) Review of Applications. When an Application is received in response to solicitation by the Department, it will be assigned a "Received Date" and processed as noted below. An Application will be prioritized for review based on its "Received Date." All Applications received by the deadline described in §7.62(e) of this subchapter (relating to EH Fund Subrecipient Application and Selection) will be reviewed by the Department for completeness and administrative deficiencies to prepare for Board action and potential funding.(b) The administrative deficiency process allows staff to request that an Applicant provide clarification, correction, or non-material missing information to resolve inconsistencies in the original Application or to assist staff in evaluating the Application. Staff will request such information via a deficiency notice. Staff will send the deficiency notice via email. Responses to the Department's deficiency notice must be submitted electronically to the Department. A review of the Applicant's response may reveal that additional administrative deficiencies are exposed or that issues initially identified as an administrative deficiency are actually determined to be beyond the scope of an administrative deficiency process, meaning that they are, in fact, matters of a material nature not susceptible to be resolved. For example, a response to an administrative deficiency that causes a new inconsistency which cannot be resolved without reversing the first deficiency response would be an example of an issue that is beyond the scope of an administrative deficiency. Department staff will make a good faith effort to provide an Applicant with confirmation that an administrative deficiency response has been received and/or that such response is satisfactory. Communication from staff that the response was satisfactory does not establish any entitlement to points, eligibility status, or to any presumption of a final determination that the Applicant has fulfilled any other requirements.(1) An Application with outstanding administrative deficiencies may be suspended from further review until all administrative deficiencies have been cured or addressed to the Department's satisfaction. The administrative deficiency process allows staff to request that an Applicant provide clarification, correction, or missing information to resolve inconsistencies in the original Application or to assist staff in evaluating the Application.(2) Applications that have completed the review process may be presented to the Board for approval with priority over Applications that continue to have administrative deficiencies at the time Board materials are prepared, regardless of "Received Date."(3) If all funds available under a solicitation from the Department are awarded, all remaining Applicants will be notified and the remaining Applications will not be processed.(c) Responses to administrative deficiencies. The time period for responding to a deficiency notice commences on the first calendar day following the deficiency notice date. If an administrative deficiency is not resolved to the satisfaction of the Department by 5:00 p.m., Austin local time, on the seventh calendar day following the date of the deficiency notice, the Application shall be terminated. Applicants that have been terminated may reapply unless the Application period has closed.(d) An Application must be substantially complete when received by the Department. An Application may be terminated if the Application is so unclear or incomplete that a thorough review cannot reasonably be performed, as determined by the Department. Such Application will be terminated without being processed as an administrative deficiency. Specific reasons for a Department termination will be included in the notification sent to the Applicant but, because the termination may occur prior to completion of the full review, will not necessarily include a comprehensive list of all deficiencies in the Application. Termination of an Application may be subject to §1.7 of this title (relating to Appeals Process).</content><note type="source"><p>Source Note: The provisions of this §7.63 adopted to be effective February 5, 2025, 50 TexReg 650.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c7/scD/s7.64"><num value="7.64">§7.64</num><heading>Contract Term and Limitations</heading><content>(a) The Department requires evidence in the form of a certification or resolution adopted by the governing body of the Applicant specifying who is authorized to enter into a Contract on behalf of the Applicant. This certification or resolution is due to the Department prior to Contract execution, and must include:(1) Authorization to enter into a Contract for EH Funds;(2) Title of the person authorized to represent the organization and who also has signature authority to execute a Contract; and(3) Date that the certification or resolution was adopted by the governing body, which must be within 12 months of Application submission.(b) EH Fund Contracts will generally have an initial period of 12 months for fund Expenditure. A request to extend the Contract Term must evidence that the extension is necessary to provide activities required under the Contract, and provide good cause for failure to timely expend the funds. Extensions of a Contract Term are considered on a case-by-case basis and are subject to §7.4(e) of this title (relating to Amendments and Extensions of Contracts).(1) The Executive Director or his or her designee may approve an extension to the Contract Term that for up to six months from the original Contract Term.(2) Board approval is required if the Subrecipient requests to extend the Contract Term for more than six months from the original Contract Term. Extensions for greater than 12 months may not be granted.</content><note type="source"><p>Source Note: The provisions of this §7.64 adopted to be effective February 5, 2025, 50 TexReg 650.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c8"><num value="8">CHAPTER 8</num><heading>PROJECT RENTAL ASSISTANCE PROGRAM RULE</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c8/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p1/c8/sc/s8.1"><num value="8.1">§8.1</num><heading>Purpose</heading><content>The purpose of the Section 811 Project Rental Assistance Program ("Section 811 PRA Program") is to provide federally funded project-based rental assistance to participating multifamily properties on behalf of extremely low-income persons with disabilities linked with long term services provided through a formalized partnership and other state of Texas agencies that provide health and human services.</content><note type="source"><p>Source Note: The provisions of this §8.1 adopted to be effective April 3, 2022, 47 TexReg 1621.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c8/sc/s8.2"><num value="8.2">§8.2</num><heading>Definitions</heading><content>Terms defined in this chapter apply to the 811 PRA Program administered by the Department. Any capitalized terms not specifically mentioned in this section or any section referenced in this document shall have the meaning ascribed to them in or for the purposes of the Program Requirements or in Chapters 1, 2, 10, or 11 of the Texas Administrative Code, as applicable.(1) Assisted Units--rental units made available to or occupied by an Eligible Tenant in Eligible Multifamily Properties receiving assistance under 42 U.S.C. §8013(b)(3)(A).(2) Contract Rent--the total amount of rent specified in the Rental Assistance Contract (RAC) as payable to the Owner for the Assisted Unit.(3) Cooperative Agreement--the Section 811 Project Rental Assistance Program Cooperative Agreement including all exhibits and attachments thereto, by and between the Department as "Grantee" and HUD, entered into as a condition to and in consideration of the Department's participation in the Section 811 Project Rental Assistance Program.(4) Eligible Applicant--an Extremely Low-Income Person with Disabilities, between the ages of 18 and 61 and who meets the requirements of the Target Population, and Extremely Low Income Families, which includes at least one Person with a Disability, who is between the ages of 18 and 61 and who meets the requirements of the Target Population, at the time of admission. The Person with a Disability must be eligible for community-based, long-term care services as provided through Medicaid waivers, Medicaid state plan options, comparable state funded services or other appropriate services related to the type of disability(ies) targeted under the Inter-Agency Partnership Agreement.(5) Eligible Families or Eligible Family--shall have the same meaning as Eligible Tenant.(6) Eligible Multifamily Property or Eligible Multifamily Properties--any new or existing property owned by a private or public nonprofit, or for-profit entity with at least five (5) housing units and as specifically identified in a Participation Agreement.(7) Eligible Tenant--an Eligible Applicant, also referred to as an Eligible Family, who is being referred to available Assisted Units in accordance with the Inter-Agency Partnership Agreement and for whom community-based, long-term care services are available at time of referral. Such services are voluntary; referral shall not be based on willingness to accept such services. Eligible Tenant also means an Extremely Low-Income Person with a Disability, between the ages of 18 and 61 at the time of referral, who meets the requirements of the Target Population and Extremely Low-Income Families, which includes at least one Person with a Disability, who is between the ages of 18 and 61 at the time of referral and who meets the requirements of the Target Population.(8) Enterprise Income Verification System (EIV)--a HUD web-based application which provides Owners with employment, unemployment and Social Security benefit information for tenants participating in U.S. Department of Housing and Urban Development assisted housing programs.(9) Existing Development--for purposes of 811 PRA Program participation, a property within the Department's Multifamily Program Applicant's portfolio that is not actively applying for multifamily award at the time, and is being considered to serve as the Eligible Multifamily Property as part of an Applicant's or an Affiliate's current multifamily application. For full applications made on or after January 1, 2018, Existing Developments do not include properties for which the only Ownership interest is through the participation of a Historically Underutilized Business, which owns less than 50% of an Existing Development.(10) Extremely Low-Income--a household whose annual income does not exceed thirty percent (30%) of the median income for the area, as determined by HUD's Extremely-Low Income Limit: families whose incomes do not exceed the higher of The Federal Poverty Level; or 30 percent of Area Median Income, as determined by HUD, with adjustments for smaller and larger families, except that HUD may establish income ceilings higher or lower than thirty percent (30%) of the median income for the area if HUD finds that such variations are necessary because of unusually high or low family incomes. HUD's income exclusions, as defined under 24 CFR §5.609 (as amended), apply in determining income eligibility and Eligible Tenant's rent.(11) HUD--the U. S. Department of Housing and Urban Development.(12) Inter-Agency Partnership Agreement--the Inter-Agency Partnership Agreement between TDHCA and State Health and Human Services Medicaid Agency(ies) that provides a formal structure for collaboration to participate in TDHCA's Section 811 Project Rental Assistance Program to develop permanent supportive housing for Extremely Low-Income Persons with Disabilities.(13) Multifamily Rules--Chapters 10, 11, and/or 13 of this Title, as applicable.(14) Owner--the entity that owns the Eligible Multifamily Property. Additionally, Owner means the entity named as such in the Property Agreement, its successors, and assigns.(15) Owner & Property Management Manual--a set of guidelines designed to be an implementation tool for the Program, which allows the Owner and the Owner's designated property manager to better administer the Program, which also includes adherence to the "Owner Occupancy Requirements" set forth in Section IV of HUD Notice H 2013-24.(16) Participation Agreement--(also known as Property Agreement) agreement to be executed by the Owner and the Department reflecting the agreement of participation in the Section 811 Project Rental Assistance Program with regards to a given number of assisted housing units on a certain multifamily rental housing property.(17) Persons with Disability or Persons with Disabilities--shall have the same meaning as defined under 42 U.S.C. §8013(k)(2) and 24 CFR §891.305.(18) Program--The Department's Section 811 Project Rental Assistance Program under Section 811 of the Cranston-Gonzales National Affordable Housing Act (42 U.S.C. §8013(b)(3)(A)), as amended by the Frank Melville Supportive Housing Investment Act of 2010 (Public Law 111-374) designed to provide permanent supportive housing for Extremely Low-Income persons with disabilities receiving long term supports and services in the community.(19) Program Requirements--means but is not limited to: the Participation Agreement; Tex. Gov't Code Ann. Chapter 2306; the applicable state program rules under Title 10, Chapters 1, 2, and 8 of the Texas Administrative Code; the Owner & Property Management Manual; the Cooperative Agreement; HUD Notice 2013-24 issued on August 23, 2013; Section 811 of the Cranston-Gonzales National Affordable Housing Act (42 U.S.C. §8013(b)(3)(A)), as amended by the Frank Melville Supportive Housing Act of 2010 (Public Law 111-374; Consolidated and Further Continuing Appropriations Act of 2012 (Public Law 112-55); Notice of Funding Availability (NOFA) for Fiscal Year 2012 Section 811 Project Rental Assistance Program published on May 15, 2012; (NOFA) for Fiscal Year 2013 Section 811 Project Rental Assistance Program published on March 4, 2014, for Fiscal Year 2019 Project Rental Assistance Section 811 Program for Persons with Disabilities published on October 8, 2019, and Technical Corrections to NOFA; and all laws applicable to the Program.(20) Proposed Development--the Development proposes to be awarded funds or an allocation as part of a Multifamily application.(21) Rental Assistance Contract (RAC)--the HUD contract (form HUD-92235-PRA and form HUD-92237-PRA) by and between the Department and the Owner of the Eligible Multifamily Property which sets forth additional terms, conditions and duties of the Parties with respect to the Eligible Multifamily Property and the Assisted Units.(22) Rental Assistance Payments--the payment made by the Department to Owners as provided in the Rental Assistance Contract. Where the Assisted Units are leased to an Eligible Tenant, the payment is the difference between the Contract Rent and the Tenant Rent. An additional payment is made to the Eligible Tenant when the Utility Allowance is greater than the Total Tenant Payment. A vacancy payment may be made to the Owner when an Assisted Unit is vacant, in accordance with the RAC and other Program Requirements.(23) Target Population--the specific group or groups of Eligible Applicants and Eligible Tenants described in the Department's Inter-Agency Partnership Agreement who are intended to be solely served or to be prioritized under the Department's Program.(24) Tenant Rent--the rent as defined in 24 CFR Part 5.(25) Total Tenant Payment--the payment as defined in 24 CFR Part 5.(26) Use Agreement--an agreement by and between the Department and Owner in the form prescribed by HUD under Exhibit 10 of the Cooperative Agreement (form HUD-92238-PRA) encumbering the Eligible Multifamily Property with restrictions and guidelines under the Program for operating Assisted Units during a thirty (30) year period, to be recorded in the official public property records in the county where the Eligible Multifamily Property is located.</content><note type="source"><p>Source Note: The provisions of this §8.2 adopted to be effective April 3, 2022, 47 TexReg 1621.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c8/sc/s8.3"><num value="8.3">§8.3</num><heading>Participation as a Proposed Development</heading><content>(a) To the extent that Applications under Department's rules or NOFAs allow for and/or require use of a Proposed Development to participate in the 811 PRA Program, the Proposed Development must satisfy the following criteria:(1) Unless the Development is also proposing to use any federal funding or has received federal funding after 1978, the Development must not be originally constructed before 1978;(2) The Development Site must be located in one of the following areas: Austin-Round Rock MSA, Brownsville-Harlingen MSA, Corpus Christi MSA; Dallas-Fort Worth-Arlington MSA; El Paso MSA; Houston-The Woodlands-Sugar Land MSA; McAllen-Edinburg-Mission MSA; or San Antonio-New Braunfels MSA; and(3) No new construction of structures shall be located in the mapped 500-year floodplain or in the 100-year floodplain according to FEMA's Flood Insurance Rate Maps (FIRM). Rehabilitation Developments that have previously received HUD funding or obtained HUD insurance do not have to follow subparagraphs (A) - (C) of this paragraph. Except for sites located in coastal high hazard areas (V Zones) or regulatory floodways, existing structures are eligible in these areas, but must meet the following requirements:(A) The existing structures must be flood-proofed or must have the lowest habitable floor and utilities elevated above both the 500-year floodplain and the 100-year floodplain.(B) The project must have an early warning system and evacuation plan that includes evacuation routing to areas outside of the applicable floodplains.(C) Existing structures in the 100-year floodplain must obtain flood insurance under the National Insurance Program. No activities or projects located within the 100-year floodplain may be assisted in a community that is not participating in or has been suspended from the National Flood Insurance Program.(b) The following requirements must be satisfied for the Units that participate in the 811 PRA Program. Failure for a Unit to meet these requirements does not make the entire Development ineligible, rather only those Units.(1) Units in the Development are not eligible for Section 811 assistance if they have an existing or proposed project-based or an operating housing subsidy attached to them or if they have received any form of long-term operating subsidy within six months prior to receiving Section 811 Rental Assistance Payments.(2) Units with an existing or proposed 62 or up age restriction are not eligible.(3) Units with an existing or proposed limitation for persons with disabilities are not eligible. A Development having a preference for Persons with Disabilities, or a use restriction for Special Needs Populations, which could include but is not limited to Persons with Disabilities, is not a Unit limitation for purposes of this item.(4) Units with an existing or proposed occupancy restriction for households at 30% or below are not eligible, unless there are no other Units at the Development.(c) Developments cannot exceed the integration requirements of the Department and HUD. Properties that are exempt from the Department's Integrated Housing Rule at §1.15 of this title (relating to Integrated Housing Rule) are not exempt from HUD's Integration Requirement maximum of 25%. The maximum number of units a Development can exclusively set aside or have an occupancy preference for persons with disabilities, including Section 811 PRA units is 25% of the total units in the Eligible Multifamily Property.(d) Section 811 PRA units must be dispersed throughout the Development.</content><note type="source"><p>Source Note: The provisions of this §8.3 adopted to be effective April 3, 2022, 47 TexReg 1621.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c8/sc/s8.4"><num value="8.4">§8.4</num><heading>Qualification Requirements for Existing Developments</heading><content>Eligible Existing Developments must meet all of the requirements in §8.3 of this chapter (relating to Participation as a Proposed Development). In addition, the Existing Development must meet the following requirements:(1) The Development received an award (tax credit, direct loan, etc.) under a Department administered program in or after 2002, or has been otherwise approved by the Department in writing;(2) The Development has at least 5 housing units;(3) For Developments that were placed in service on or before January 1, 2020, the most current vacancy report as reflected in CMTS evidences that the Development maintained at least 85% physical occupancy for a period of at least 3 consecutive months;(4) For Developments that have received a UPCS inspection, the Development received a UPCS score of at least 80 on its most recent Department REAC inspection and all compliance issues associated with that inspection have been resolved; or for Developments whose most recent Department inspection is an NSPIRE inspection, the Development must have received a NSPIRE score of at least 75 and all compliance issues associated with that inspection must have been resolved;(5) The Development is operating in accordance with the accessibility requirements of Section 504, the Rehabilitation Act of 1973 (29 U.S.C. Section 794), as specified under 24 C.F.R. Part 8, Subpart C, or operating under the 2010 ADA standards with the exceptions listed in "Nondiscrimination on the Basis of Disability in Federally Assisted Programs and Activities" Federal Register 79 FR 29671; and(6) The Development is not Transitional Housing as defined in Chapter 11 of this title.</content><note type="source"><p>Source Note: The provisions of this §8.4 adopted to be effective April 3, 2022, 47 TexReg 1621; amended to be effective February 26, 2024, 49 TexReg 1053.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c8/sc/s8.5"><num value="8.5">§8.5</num><heading>Disposition of Conflicts with other Department Rules</heading><content>To the extent that any conflicts arise between this rule and the rules provided in Chapter 1, Administration, Chapter 2 Enforcement, Chapter 10, Uniform Multifamily Rules, Chapter 11, Qualified Allocation Plan, and Chapter 13, Multifamily Direct Loan Rule, federal requirements will first prevail, after which the requirements of the other Multifamily Rules will take precedence.</content><note type="source"><p>Source Note: The provisions of this §8.5 adopted to be effective April 3, 2022, 47 TexReg 1621.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c8/sc/s8.6"><num value="8.6">§8.6</num><heading>Program Regulations and Requirements</heading><content>(a) Participation in the 811 PRA Program is encouraged and may be incentivized through the Department's Rules and NOFAs. Once committed in the Multifamily Application, a Development must not accept a fund source that would prevent it from participating in the 811 PRA Program.(b) An Existing Development that is already participating in the 811 PRA Program is eligible to have an additional commitment of 811 PRA Units as long as the integrated housing requirements as noted in §8.3(c) of this chapter (relating to Participation as a Proposed Development) are not violated.(c) The types (e.g., accessible, one bedroom, first floor, etc.) and the specific number of Assisted Units (e.g., units 101, 201, etc.) will be "floating" (flexible) and dependent on the needs of the Department and the availability of the Assisted Units on the Eligible Multifamily Property.(d) Occupancy Requirements. Owner is required to follow all applicable Program Requirements including but not limited to the following occupancy requirements found in HUD Handbook 4350.3 REV-1 and Housing Notices:(1) H 2012-06, Enterprise Income Verification (EIV) System;(2) H 2012-26, Extension of Housing Notice 2011-25, Enterprise Income Verification (EIV) & You Brochure-Requirements for Distribution and Use;(3) H 2012-22, Further Encouragement for O/As to Adopt Optional Smoke-Free Housing Policies;(4) H 2012-11, State Registered Lifetime Sex Offenders in Federally Assisted Housing;(5) H 2012-09, Supplemental Information to Application for Assistance Regarding Identification of Family Member, Friend or Other Persons or Organization Supportive of a Tenant for Occupancy in HUD Assisted Housing;(6) H 2017-05, Violence Against Women Act (VAWA) Reauthorization Act of 2013, Additional Guidance for Multifamily Owners and Management Agents, as revised by FHEO-2023-01, Notice to Public Regarding FHEO Enforcement Authority and Procedures: Violence Against Women Act 2022 (VAWA);(7) H 2022-01, Carbon Monoxide Alarms or Detectors in U.S. Housing and Urban Development (HUD) -Assisted Housing;(8) H 2023-10, Implementation Guidance: Sections 102 and 104 of the Housing Opportunity Through Modernization Act of 2016 (HOTMA); and(9) H 2013-24, Section 811 Project Rental Assistance (PRA) Occupancy Interim Notice.(e) Use Agreements. The Owner must execute the Use Agreement at the execution of the RAC and comply with the following:(1) Use Agreement must be properly recorded according to local laws in the official public records on the Eligible Multifamily Property. The Owner shall provide to the Department within 30 days of its receipt of the recorded Use Agreement, a copy of the executed, recorded Use Agreement.(2) From the date the Property Agreement is entered into, the Owner shall not enter into any future use agreements or other subsidy programs that would diminish the number of Assisted Units that can be placed on the Eligible Multifamily Property.(3) The Department will enforce the provisions of the Use Agreement and RAC consistent with HUD's internal control and fraud monitoring requirements.(f) TRACS & EIV, Reporting, Tenant Certifications and Compliance.(1) TRACS & EIV Systems. The Owner shall have appropriate methods to access the Tenant Rental Assistance Certification System (TRACS) and the EIV System. The Owner shall be responsible for ensuring Program information is entered into these systems. TRACS is the only system by which an Eligible Multifamily Property can request Project Rental Assistance payments.(2) EIV Policies and Procedures. Upon the execution of a RAC, the Owner must submit a copy of the property's EIV Policies and Procedures to the Department for review. If deficiencies are identified, the Owner will be required to correct and resubmit to the Department until all deficiencies have been properly corrected.(3) Outside Vendors. The Owner has the right to refuse assistance from outside vendors hired by the Department, but is still required to satisfy the Program Requirements.(4) Tenant Certification. The Owner shall transmit Eligible Tenant's certification and recertification data, transmit voucher data, and communicate errors electronically in a form consistent with HUD reporting requirements for HUD Secure Systems.(5) Compliance Reviews. The Department's Compliance Division will conduct a monitoring review in conjunction with the review of any other Department administered housing program layered with the Development. If the Development is layered with Housing Tax Credits and has exceeded the 15-year Federal Compliance Period, monitoring reviews of the Program will still be conducted at least every three years.(6) The Department will review the Property's Tenant Selection Plan and Criteria, as defined by and in accordance with §10.802 of this chapter (relating to Written Policies and Procedures).(g) Tenant Selection and Screening.(1) Target Population. The Department will screen Eligible Applicants for compliance with the Department's Program Target Population criteria and do an initial screening for Program Requirements. The Inter-Agency Partnership Agreement describes the specific Target Population eligible for the Department's Program. The Target Population may be revised, with HUD approval.(2) Tenant Eligibility and Selection. The Owner is responsible for ultimate eligibility and selection of an Eligible Tenant and will comply with the following:(A) The Owner must accept referrals of an Eligible Tenant from the Department and retain copies of all applications received. The Owner is responsible for notifying the prospective Eligible Tenant and the Department in writing regarding any denial of a prospective Eligible Tenant's application to an Eligible Multifamily Property and the reason for said denial. In the notice of denial, the Owner is responsible for notifying the Eligible Tenant of the right to dispute a denial, as outlined in HUD Handbook 4350.3. The results of the dispute must be sent to the Eligible Tenant and the Department in writing.(B) The Owner is responsible for determining age of the qualifying member of the Eligible Families. Eligible Family member must be at least 18 years of age and under the age of 62.(C) The Owner is responsible for criminal background screening as required by HUD Handbook 4350.3.(D) Verification of Income, Assets, and Deductions. The Owner is responsible for determining income of Eligible Families. The Owner shall verify income through the Enterprise Income Verification (EIV) System per HUD Handbook 4350.3 and HUD Notices. The Owner must certify an Eligible Tenant and Eligible Families at least annually and verify their income. Use of the EIV system as third party verification is not acceptable for the Housing Tax Credit or Multifamily Direct Loan Program.(h) Rental Assistance Contracts.(1) Applicability. If requested by the Department, the Owner shall enter into a RAC. Not all properties with an Owner Participation Agreement will have a RAC, but when notified by the Department, the Eligible Multifamily Property must enter into a RAC(s) and begin serving Eligible Applicants.(2) Notice. The Department will provide written notice to the Owner if and when it intends to enter into a RAC with the Owner.(3) Assisted Units. The Department will determine the number of Units (up to the maximum listed in the Property Agreement) to place in the RAC(s) which may be fewer than the number of Units identified in the Property Agreement.(4) The Department will designate the bedroom composition of the Assisted Units, as required by the RAC. However, based on an actual Eligible Tenant, this may fluctuate. It is possible that an Eligible Multifamily Property will have a RAC for fewer units than the number committed in the Participation Agreement.(5) If no additional applicants are referred to the Development, the Department may begin a RAC amendment to reduce the number of Assisted Units. An Owner who has an amended, executed RAC must continue to notify the Department of units that become vacant that are committed under the Agreement.(6) Amendments. The Owner agrees to amend the RAC(s) upon request of the Department. Some examples are amendments that may either increase or decrease the total number of Assisted Units or increase or decrease the associated bedroom sizes; multiple amendments to the RAC may occur over time. The total number of Assisted Units in the RAC will not exceed the number of Assisted Units committed in the Participation Agreement, unless by request of the Owner.(7) Contract Term. The Department will specify the effective date of the RAC. During the first year of the RAC and with approval from HUD, the Owner may request to align the anniversary date of the RAC with existing federal or state housing programs layered on the Eligible Multifamily Property.(8) Rent Increase. Owners must submit a written request to the Department 30 days prior to the anniversary date of the RAC to request an annual increase.(9) Utility Allowance. The RAC will identify the Department approved Utility Allowance used for the Assisted Units for the Eligible Multifamily Property. The Owner must notify the Department if there are changes to the Utility Allowance calculation methodology being used.(10) Termination. Although the Department has discretion to terminate a RAC due to good cause, an Owner cannot opt-out of a RAC. The RAC survives a foreclosure, assignment, sale in lieu of foreclosure, or sale of the Eligible Multifamily Property to the extent allowed by law.(11) Foreclosure of Eligible Multifamily Property. Upon foreclosure, assignment, sale in lieu of foreclosure, or sale of the Eligible Multifamily Property to the extent allowed by law:(A) The RAC shall be transferred to new owner by contractual agreement or by the new owner's consent to comply with the RAC, as applicable;(B) Rental Assistance Payments will continue uninterrupted in accordance with the terms of the RAC; and(C) Voluntary and involuntary transfers or conveyances of property must adhere to the ownership transfer process in §10.406 of this title (relating to Ownership Transfers (§2306.6713)).(i) Advertising and Affirmative Marketing.(1) Advertising Materials. Upon the execution of the Property Agreement, the Owner must provide materials for the purpose of advertising the Eligible Multifamily Property, including but not limited to:(A) Depictions of the units including floor plans;(B) Brochures;(C) Tenant selection criteria;(D) House rules;(E) Number and size of available units;(F) Number of units with accessible features (including, but not limited to units designed to meet Uniform Federal Accessibility Standards, the Fair Housing Act, or the Americans with Disabilities Act);(G) Documentation on access to transportation and commercial facilities; and(H) A description of onsite amenities.(2) Affirmative Marketing. The Department and its service partners are responsible for affirmatively marketing the Program to Eligible Applicants.(3) At any time, the Department may choose to advertise the Eligible Multifamily Property, even if the Eligible Multifamily Property has not yet entered into a RAC.(j) Leasing Activities.(1) Segregation of Assisted Units. The Owner must take actions or adopt procedures to ensure that the Assisted Units are not segregated to one area of a building (such as on a particular floor or part of a floor in a building) or in certain sections within the Eligible Multifamily Property.(2) Form of Lease. The Owner will use the HUD Section 811 PRA Model Lease (HUD-92236-PRA), Exhibit 11 of the Cooperative Agreement and any Department approved Addendums, for all Eligible Families once a RAC is signed. The initial lease will be for not less than one year.(3) Communication. Owners are required to document in writing all communication between the Eligible Tenant and the Owner, or Owner-designated agent regarding applications, notifications, evictions, complaints, non-renewals and move outs.(4) Lease Renewals and Changes. The Owner must notify the Department of renewals of leases with Eligible Families and any changes to the terms of the lease.(5) Development Policies. Upon the execution of the RAC, an Owner is required to submit a copy of the Development Policies (House Rules) to the Department for review. If deficiencies are noted, the Development will be required to correct and resubmit to the Department until all deficiencies have been properly corrected. The Owner is required to send a copy of amendments to the House Rules to the Department before implementing changes.(k) Rent.(1) Tenant Rent Payment. The Owner will determine the Tenant Rent payment of the Eligible Tenant, based on HUD Handbook 4350.3 and HUD Notices, and is responsible for collecting the Tenant Rent payment.(2) Utility Reimbursement. The Owner is responsible for remitting any Tenant Rent payment due to the Eligible Tenant if the Utility Allowance exceeds the Total Tenant Payment no later than the 5th day of each month, beginning 30 days after initial move in.(3) Rent Increase. Owner must provide the Eligible Tenant with at least 30 days notice before increasing rent, in accordance with HUD Handbook 4350.3.(4) Rent Restrictions. Owner will comply with the following rent restrictions:(A) If a Unit at the Development has a Department enforced rent restriction that is equal to or lower than Fair Market Rent (FMR), the initial rent is the maximum Department enforced rent restriction for that Unit, not to exceed the 60% Area Median Family Income limit.(B) If there is no existing Department enforced rent restriction on the Unit, or the existing Department enforced rent restriction is higher than FMR, the Department will work with the Owner to conduct a market analysis of the Eligible Multifamily Property to support that a rent higher than FMR is attainable.(C) After the signing of the original RAC with the Department, the Owner may request a new anniversary date to be consistent with other rent restrictions on the Eligible Multifamily Property allowed by the Department.(D) After the signing of the original RAC, upon request from the Owner to the Department, Rents may be adjusted on the anniversary date of the RAC.(E) Adjustments may not result in higher rents charged for an Assisted Unit as compared to a non-assisted unit. The calculation or methodology used for the annual increase amount will be identified in the Eligible Multifamily Property's RAC.(F) Owner can submit a request for a rent increase or to change the contract anniversary date using HUD Form 92458.(l) Vacancy; Household Changes; Transfers; Eviction.(1) Holding Assisted Units. Once an Owner signs a RAC, the Eligible Multifamily Property must hold an available Assisted Unit for 60 days while a qualified Eligible Applicant applies for and moves into the Assisted Unit.(2) Notification. Owner will notify the Department of determination of ineligibility or the termination of any participating Eligible Families or any member of a participating Eligible Family.(3) Initial Lease-up. Owners of a newly constructed, acquired and/or rehabilitated Eligible Multifamily Property must notify the Department no later than 180 days before the Eligible Multifamily Property will be available for initial move-in. Failure to reserve the agreed upon number of Assisted Units for Eligible Families will be cited as noncompliance, be referred for administrative penalties, and be considered possible grounds for Debarment.(4) Vacancy. Upon execution of the RAC, the Owner must notify the Department of any vacancy of an Assisted Unit at the Eligible Multifamily Property as soon as possible, not to exceed seven calendar days from when the Owner becomes aware of the eligible Unit availability. Once the Department acknowledges receipt of the notice, the Department will notify the Owner within three business days if the Unit is acceptable and submit a referral. If the qualifying Eligible Tenant vacates the Assisted Unit, the Department will determine if the remaining family member(s) is eligible for continued assistance from the Program.(5) Vacancy Payment. The Department may provide vacancy payments that cannot exceed 80% of the Contract Rent for up to 60 days from the effective date of the RAC. After the 60 days, the Owner may lease the Assisted Unit to a non-Eligible Tenant. Developments without an executed RAC are not eligible for vacancy payments.(6) Household Changes. Owner will notify the Department of any changes in family composition in an Assisted Unit within three business days. If the change results in the Assisted Unit being smaller or larger than is appropriate for the Eligible Family size, the Owner must refer to the Department's written policies regarding family size, unit transfers and waitlist management. If the Department discovers the Eligible Family is ineligible for the size of the Assisted Unit, the Owner will be notified but Rental Assistance Payments will not be reduced or terminated until the Eligible Family can be transferred to an appropriate sized Assisted Unit.(7) Transfers. Owner must notify the Department if the Eligible Family requests a transfer to another Assisted Unit within the Development. The Department will determine if the Eligible Family qualifies for the unit transfer, if the new Unit is eligible as an Assisted Unit and then notify the Owner. If the Department determines the Eligible Family is ineligible for the size of the Assisted Unit, the Department will notify the Owner and Rental Assistance Payments will not be reduced or terminated until the Eligible Family can be transferred to an appropriate sized Assisted Unit.(8) Notice to Vacate and Nonrenewal. Owners are required to notify the Department at least three calendar days prior to issuing a Notice to Vacate or a Notice of Non-Renewal to the Eligible Family. Notices must be compliance with HUD Handbook 4350.3 8-13(B)(2) and HUD Notices. A copy of the applicable Notice must be submitted via email to 811info@tdhca.state.tx.us.(A) Owner is required to notify the Department within seven calendar days of when the Development is notified that the Eligible Family will vacate or in the event that the Eligible Family vacates without notice, upon discovery that the Assisted Unit is vacant. Notification of vacancy must be submitted to 811info@tdhca.state.tx.us.(B) Upon move out, Owner must submit a move out disposition to the Department to ensure proper processing of the security deposit per HUD Handbook 4350.3 6-18.(m) Construction Standards, Inspections, Repair and Maintenance, and Accessibility.(1) Construction Standards. Upon execution of a RAC, the Eligible Multifamily Property shall be required to conform to National Standards for the Physical Standards of Real Estate (NSPIRE) which are uniform national standards established by HUD for housing that is decent, safe, sanitary, and in good repair. The site, building exterior, building systems, dwelling units and common areas of the Eligible Multifamily Property, as more specifically described in 24 CFR §5.703, must be inspected in any physical inspection of the property.(2) Inspection. Prior to occupancy, the Eligible Tenant must be given the opportunity to be present for the move-in unit inspection.(3) Repair and Maintenance. Owner will perform all repair and maintenance functions, including ordinary and extraordinary maintenance; will replace capital items; and will maintain the premises and equipment, appurtenant thereto, in good repair, safe and sanitary condition consistent with HUD and Department requirements.(4) Accessibility. Owner must ensure that the Eligible Multifamily Property meets or exceeds the accessibility requirements under 24 CFR Part 8, which implements Section 504 of the Rehabilitation Act of 1973; the Fair Housing Act Design Manual; Titles II and III of the Americans with Disabilities Act (42 U.S.C. §§12131 - 12189), as implemented by the U.S. Department of Justice regulations at 28 CFR Parts 35 and 36; and the Federal Fair Housing Act as implemented by HUD at 24 CFR Part 100. However, Assisted Units can consist of a mix of accessible units for those persons with physical disabilities and non-accessible units for those persons without physical disabilities.(n) Owner Training. The Owner is required to train all property management staff engaging with Eligible Families on the requirements of the Program. Owner training must include, but is not limited to the HUD Handbook 4350.3 and the Department's webpage at https://www.tdhca.state.tx.us/section-811-pra/index.htm.(o) Reporting Requirements. Owner shall submit to the Department such reports on the operation and performance of the Program as required by the Participation Agreement and as may be required by the Department. Owner shall provide the Department with all reports necessary for the Department's compliance with 24 CFR Part 5, or any other federal or state law or regulation.(p) Environmental Laws and Regulations.(1) Compliance with Laws and Regulations. Owner must comply with, as applicable, any federal, state, or local law, statute, ordinance, or regulation, whether now or hereafter in effect, pertaining to health, industrial hygiene, or the environmental conditions on, under, or about the Land or the Improvements, including without limitation, the following, as now or hereafter amended:(A) Hazardous Materials Transportation Act (49 U.S.C.A. §1801 et seq.);(B) Insecticide Fungicide and Rodenticide Act (7 U.S.C.A. §136 et seq.);(C) National Environmental Policy Act (42 U.S.C. §4321 et seq.) (NEPA);(D) Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.A. §9601 et seq.) (CERCLA), as amended by the Superfund Amendments and Reauthorization Act of 1986 (Pub. L. No. 99-499, 100 Stat. 1613, as amended Pub. L. No. 107-377) (Superfund or SARA);(E) Resource, Conservation and Recovery Act (24 U.S.C.A. §6901 et seq.) (RCRA);(F) Toxic Substances Control Act, (15 U.S.C.A. §2601 et seq.);(G) Emergency Planning and Community Right to Know Act of 1986 (42 U.S.C.A. §1101 et seq.);(H) Clean Air Act (42 U.S.C.A. §7401 et seq.) (CAA);(I) Federal Water Pollution Control Act and amendments (33 U.S.C.A. §1251 et seq.) (Clean Water Act or CWA);(J) Any corresponding state laws or ordinances including but not limited to Chapter 26 of the Texas Water Code regarding Water Quality Control;(K) Texas Solid Waste Disposal Act (Chapter 361 of the Texas Health & Safety Code, formerly Tex. Rev. Civ. Stat. Ann. Art. 4477-7);(L) Comprehensive Municipal Solid Waste Management, Resource Recovery, and Conservation Act (Chapter 363 of the Texas Health & Safety Code);(M) County Solid Waste Control Act (Chapter 364 of the Texas Health & Safety Code);(N) Texas Clean Air Act (Chapter 382 of the Texas Health & Safety Code);(O) Hazardous Communication Act (Chapter 502 of the Texas Health & Safety Code); and(P) Regulations, rules, guidelines, or standards promulgated pursuant to such laws, statute and regulations, as such statutes, regulations, rules, guidelines, and standards, as amended from time to time.(2) Environmental Review. The environmental effects of each activity carried out with funds provided under this Agreement must be assessed in accordance with the provisions of the Program Requirements, National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. §432 et seq.). Each such activity must have an environmental review completed and support documentation prepared in accordance with §11.305 of this title (relating to complying with the NEPA, including screening for vapor encroachment following American Society for Testing and Materials (ASTM) 2600-10.(q) Labor Standards.(1) Owner understands and acknowledges that every contract for the construction (rehabilitation, adaptive reuse, or new construction) of housing that includes 12 or more units assisted with Program funds must contain provisions in accordance with Davis-Bacon Regulations.(2) Owner understands and acknowledges that every contract involving the employment of mechanics and laborers of said construction shall be subject to the provisions, as applicable, of the Contract Work Hours and Safety Standards Act, as amended (40 U.S.C. §§3701 to 3708), Copeland (Anti-Kickback) Act (40 U.S.C. §3145), the Fair Labor Standards Act of 1938, as amended (29 U.S.C. §201, et seq.) and Davis-Bacon and Related Acts (40 U.S.C. §§3141 - 3148).(3) Owner further acknowledges that if more housing units are constructed than the anticipated 11 or fewer housing units, it is the Owner's responsibility to ensure that all the housing units will comply with these federal labor standards and requirements under the Davis-Bacon Act as supplemented by the U.S. Department of Labor regulations ("Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction" at 29 CFR Part 5).(4) Owner also understands that structuring the proposed assistance for the rehabilitation or construction of housing under this Agreement to avoid the applicability of the Davis-Bacon Act is prohibited.(5) Construction contractors and subcontractors must comply with regulations issued under these federal acts described herein, with other federal laws, regulations pertaining to labor standards, including but not limited to "Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction" at 29 CFR Part 5, HUD Federal Labor Provisions (HUD form 4010).(r) Lead-Based Paint. Housing assisted with Program funds is subject to the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. §§4821 - 4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. §§4851 - 4856), and implementing regulations Title X of the 1992 Housing and Community Development Act at 24 CFR Part 35, (including subparts A, B, J, K, M and R). Owner shall also comply with the Lead: Renovation, Repair, and Painting Program Final Rule, 40 CFR Part 745 and Response to Children with Environmental Intervention Blood Lead Levels. Failure to comply with the lead-based paint requirements may be subject to sanctions and penalties pursuant to 24 CFR §35.170.(s) Limited English Proficiency. Owner shall comply with the requirements in Executive Order 13166 of August 11, 2000, reprinted at 65 FR 50121, August 16, 2000, Improving Access to Services for Persons with Limited English Proficiency and 67 FR 41455. To ensure compliance the Owner must take reasonable steps to insure that LEP persons have meaningful access to the program and activities. Meaningful access may entail providing language assistance services, including oral and written translation, where necessary.(t) Procurement of Recovered Materials. Owner, its subrecipients, and its contractors must comply with Section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act. The requirements of Section 6002 include procuring only items designated in guidelines of the Environmental Protection Agency (EPA) at 40 CFR Part 247 that contain the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition, where the purchase price of the item exceeds $10,000 or the value of the quantity acquired by the preceding fiscal year exceeded $10,000; procuring solid waste management services in a manner that maximizes energy and resource recovery; and establishing an affirmative procurement program for procurement of recovered materials identified in the EPA guidelines.(u) Drug-Free Workplace. Owner will follow the Drug-Free Workplace Act of 1988 (41 U.S.C §701, et seq.) and HUD's implementing regulations at 2 CFR Part 2429. Owner affirms by executing the Certification Regarding Drug-Free Workplace Requirements attached hereto as Addendum B, that it is implementing the Drug-Free Workplace Act of 1988.(v) Equal Opportunity, Fair Housing, Nondiscrimination, and Equal Access.(1) Equal Opportunity. The Owner agrees to carry out an Equal Employment Opportunity Program in keeping with the principles as provided in President's Executive Order 11246 of September 24, 1965, as amended, and its implementing regulations at 41 CFR Part 60.(2) Fair Housing Poster. The Owner is required to place a fair housing poster (HUD-928.1 and HUD-9281.A) provided by the Department in the leasing office, online, or anywhere else rental activities occur pursuant to 24 CFR §200.620(e). A copy of the poster in Spanish and in English can be found at http://www.tdhca.state.tx.us/section-811-pra/participating-agents.htm.(3) Nondiscrimination Laws. Owner shall ensure that no person shall, on the grounds of race, color, religion, sex, disability, familial status, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any Program or activity funded in whole or in part with funds provided under this Agreement. Owner shall follow Title VI of the Civil Rights Act of 1964, as amended (42 U.S.C. §2000d et seq.), the Age Discrimination Act of 1975 (42 U.S.C. §6101 et seq.) and its implementing regulations at 24 CFR Part 146, Titles II and III of the Americans with Disabilities Act (42 U.S.C. §§12131 - 12189; 47 U.S.C. §§155, 201, 218 and 255) as implemented by U.S. Department of Justice at 28 CFR Parts 35 and 36, Section 527 of the National Housing Act (12 U.S.C. §1701z-22), the Equal Credit Opportunity Act (15 U.S.C. §1691 et seq.), the Equal Opportunity in Housing (Executive Order 11063 as amended by Executive Order 12259) and its implementing regulations at 24 CFR Part 107 and The Fair Housing Act (42 U.S.C. §3601 et seq.), as implemented by HUD at 24 CFR Part 100-115.(4) Affirmatively Furthering Fair Housing. By Owner's execution of the Agreement and pursuant to Section 808(e)(5) of the Fair Housing Act, Owner agrees to use funds in a manner that follows the State of Texas' "Analysis of Impediments" or "Assessment of Fair Housing", as applicable and as amended, and will maintain records in this regard.(5) Protections for Victims of Domestic Violence, Dating Violence, Sexual Assault, or Stalking. Subpart L of 24 CFR part 5 shall apply to the Assisted Units in Eligible Multifamily Properties.(w) Security of Confidential Information.(1) Systems Confidentiality Protocols. Owner must undertake customary and industry standard efforts to ensure that the systems developed and utilized under this Agreement protect the confidentiality of every Eligible Applicant's and Eligible Tenant's personal and financial information, both electronic and paper, including credit reports, whether the information is received from the Eligible Applicants, Tenants or from another source. Owner must undertake customary and industry standard efforts so that neither they nor their systems vendors disclose any Eligible Applicant's or Tenant's personal or financial information to any third party, except for authorized personnel in accordance with this Agreement.(2) Protected Health Information. If Owner collects or receives documentation for disability, medical records or any other medical information in the course of administering the Program, Owner shall comply with the Protected Health Information state and federal laws and regulations, as applicable, under §1.24 of this title (relating to Protected Health Information), Chapter 181 of the Texas Health and Safety Code, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) (Pub. L. 104-191, 110 Stat. 1936, enacted August 21, 1996), and the HIPAA Privacy Rules (45 CFR Part 160 and Subparts A and E of 45 CFR Part 164).(x) Real Property Acquisition and Relocation. Except as otherwise provided by federal statute, HUD-assisted programs or projects are subject to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (Uniform Act or URA) (42 U.S.C. §4601), and the government wide implementing regulations issued by the U.S. Department of Transportation at 49 CFR Part 24. The Uniform Act's protections and assistance apply to acquisitions of real property and displacements resulting from the acquisition, rehabilitation, or demolition of real property for federal or federally assisted programs or projects. With certain limited exceptions, real property acquisitions for a HUD-assisted program or project must comply with 49 CFR Part 24, Subpart B. To be exempt from the URA's acquisition policies, real property acquisitions conducted without the threat or use of eminent domain, commonly referred to as voluntary acquisitions, the Owner must satisfy the applicable requirements of 49 CFR §24.101(b)(1) - (5). Evidence of compliance with these requirements must be maintained by the recipient. The URA's relocation requirements remain applicable to any tenant who is displaced by an acquisition that meets the requirements of 49 CFR §24.101(b)(1) - (5). The relocation requirements of the Uniform Act, and its implementing regulations at 49 CFR Part 24, cover any person who moves permanently from real property or moves personal property from real property as a direct result of acquisition, rehabilitation, or demolition for a program or project receiving HUD assistance. While there are no statutory provisions for temporary relocation under the URA, the URA regulations recognize that there are circumstances where a person will not be permanently displaced but may need to be moved from a project for a short period of time. Appendix A of the URA regulation (49 CFR §24.2(a)(9)(ii)(D)) explains that any tenant who has been temporarily relocated for a period beyond one year must be contacted by the displacing agency and offered URA relocation assistance.(y) Dispute Resolution; Conflict Management.(1) Eligible Tenant Disputes. The Owner or Owner's representative is required to participate in a Dispute Resolution process, as required by HUD, to resolve an appeal of an Eligible Tenant dispute with the Owner.(2) Agreement Disputes. In accordance with Tex. Gov't Code 2306.082, it is the Department's policy to encourage the use of appropriate alternative dispute resolution procedures (ADR) under the Governmental Dispute Resolution Act and the Negotiated Rulemaking Act (Chapters 2009 and 2006 respectively, Tex. Gov't Code), to assist in the fair and expeditious resolution of internal and external disputes involving the Department and the use of negotiated rulemaking procedures for the adoption of Department rules. As described in Chapter 154, Civil Practices and Remedies Code, ADR procedures include mediation. Except as prohibited by the Department's ex parte communications policy, the Department encourages informal communications between Department staff and the Owner, to exchange information and informally resolve disputes. The Department also has administrative appeals processes to fairly and expeditiously resolve disputes. If at any time the Owner would like to engage the Department in an ADR procedure, the Owner may send a proposal to the Department's Dispute Resolution Coordinator. For additional information on the Department's ADR policy, see the Department's Alternative Dispute Resolution and Negotiated Rulemaking at §1.17 of this title (relating to Alternative Dispute Resolution).(3) Conflict Management. The purpose of the Conflict Management process is to address any concerns that Owner or Owner's agent or representative may have with an Eligible Family. At any time, an Eligible Family may choose to give consent to their Section 811 service coordinator to work directly with the property manager of the Eligible Multifamily Property. However, such consent cannot be made a condition of tenancy.</content><note type="source"><p>Source Note: The provisions of this §8.6 adopted to be effective April 3, 2022, 47 TexReg 1621; amended to be effective September 26, 2024, 49 TexReg 7634.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c10"><num value="10">CHAPTER 10</num><heading>UNIFORM MULTIFAMILY RULES</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c10/scE"><num value="E">SUBCHAPTER E</num><heading>POST AWARD AND ASSET MANAGEMENT REQUIREMENTS</heading><section identifier="/us/state/tx/tac/t10/p1/c10/scE/s10.400"><num value="10.400">§10.400</num><heading>Purpose</heading><content>(a) The purpose of this subchapter is to establish the requirements governing the post award and asset management activities associated with awards of multifamily Development assistance pursuant to Tex. Gov't Code, Chapter 2306 and its regulation of multifamily funding provided through the Texas Department of Housing and Community Affairs (the "Department") as authorized by the legislature. This subchapter is designed to ensure that Developers and Development Owners of low-income Developments that are financed or otherwise funded through the Department maintain safe, decent and affordable housing for the term of the affordability period. Therefore, unless otherwise indicated in the specific section of this subchapter, any uncorrected issues of noncompliance outside of the corrective action period or outstanding fees (related to the Development subject to the request) owed to the Department must be resolved to the satisfaction of the Department before a request for any post award activity described in this subchapter will be acted upon. Non-compliance issues that cannot be corrected will be taken into account and will be reviewed by Asset Management staff to determine if additional action is required by the Development Owner.(b) The capitalized terms in this subchapter shall have the meaning as defined in this title in Chapter 1 relating to Administration, Chapter 2 relating to Enforcement, Chapter 10 relating to Uniform Multifamily Rules, Chapter 11 relating to the Qualified Action Plan (QAP), Chapter 12 relating to the Multifamily Housing Revenue Bond Rules, Chapter 13 relating to the Multifamily Direct Loan Rule, Tex. Gov't Code Chapter 2306, Internal Revenue Code (the Code) §42, the HOME Final Rule, the NHTF Interim Rule, and other federal or Department rules, as applicable.</content><note type="source"><p>Source Note: The provisions of this §10.400 adopted to be effective February 3, 2022, 47 TexReg 266.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scE/s10.401"><num value="10.401">§10.401</num><heading>Housing Tax Credit and Tax Exempt Bond Developments</heading><content>(a) 10% Test (Competitive HTC Only). No later than July 1 of the year following the submission of the Carryover Allocation Agreement or as otherwise specified in the applicable year's Qualified Allocation Plan, documentation must be submitted to the Department verifying that the Development Owner has expended more than 10% of the Development Owner's reasonably expected basis, pursuant to §42(h)(1)(E)(i) and (ii) of the Code and Treasury Regulations, 26 CFR §1.42-6. The Development Owner must submit, in the form prescribed by the Department, documentation evidencing paragraphs (1) - (7) of this subsection, along with all information outlined in the Post Award Activities Manual. Satisfaction of the 10% Test will be contingent upon the submission of the items described in paragraphs (1) - (7) of this subsection as well as all other conditions placed upon the Application in the Commitment. Requests for an extension will be reviewed on a case by case basis as addressed in §10.405(c) of this subchapter and §11.2 of this title, as applicable, and a point deduction evaluation will be completed in accordance with Tex. Gov't Code §2306.6710(b)(2) and §11.9(f) of this title. Documentation to be submitted for the 10% Test includes:(1) An Independent Accountant's Report and Taxpayer's Basis Schedule form. The report must be prepared on the accounting firm's letterhead and addressed to the Development Owner or an Affiliate of the Development Owner. The Independent Accountant's Report and Taxpayers Basis Schedule form must be signed by the Development Owner. If, at the time the accountant is reviewing and preparing their report, the accountant has concluded that the taxpayer's reasonably expected basis is different from the amount reflected in the Carryover Allocation agreement, then the accountant's report should reflect the taxpayer's reasonably expected basis as of the time the report is being prepared;(2) Any conditions of the Commitment or Real Estate Analysis underwriting report due at the time of 10% Test submission;(3) Evidence that the Development Owner has purchased, transferred, leased, or otherwise has ownership of the Development Site and a current title policy. The Development Site must be identical to the Development Site that was submitted at the time of Application submission. For purposes of this paragraph, any changes to the Development Site acreage between Application and 10% Test must be addressed by written explanation or, as appropriate, in accordance with §10.405 of this subchapter (relating to Amendments and Extensions);(4) A current survey or plat of the Development Site, prepared and certified by a duly licensed Texas Registered Professional Land Surveyor. The survey or plat must clearly delineate the flood plain boundary lines and show all easements and encroachments;(5) For New Construction, Reconstruction, and Adaptive Reuse Developments, a certification from a Third Party civil engineer or architect stating that all necessary utilities will be available at the Development Site and that there are no easements, licenses, royalties, or other conditions on or affecting the Development that would materially or adversely impact the ability to acquire, develop, and operate as set forth in the Application. Copies of supporting documents may be required by the Department;(6) For the Development Owner and on-site or regional property manager, training certificate(s) from a Department approved "property owner and manager Fair Housing trainer" showing that a controlling Principal in the Development Owner structure and an on-site or regional property manager attended and passed at least five hours of Fair Housing training. For architects and engineers, training certificate(s) from a Department approved "architect and engineer Fair Housing trainer" showing that the lead architect or engineer responsible for certifying compliance with the Department's accessibility and construction standards has attended and passed at least five hours of Fair Housing training. Certifications required under this paragraph must not be older than three years from the date of submission of the 10% Test Documentation, and must verify that all parts or phases of the offered training have been completed; two certificates supplied for the same part or phase of an offered training will not be counted towards the five hour required minimum, even if they were attended on different dates; and(7) A Certification from the lender and syndicator identifying all known Guarantors. If identified Guarantors have changed from the Guarantors or Principals identified at the time of Application, a non-material amendment may be required in accordance with §10.405 of this subchapter (relating to Amendments and Extensions), and the new Guarantors or Principals must be reviewed in accordance with Chapter 1, Subchapter C of this title (relating to Previous Participation and Executive Award Review and Advisory Committee).(8) Evidence of submission of the CMTS Filing Agreement pursuant to §10.607(a) of this title (relating to Reporting Requirements).(b) Construction Status Report (All Multifamily Developments). All multifamily Developments must submit a construction status report. Construction status reports shall be due by the tenth day of the month following each reporting quarter's end (January, April, July, and October) and continue on a quarterly basis until the entire Development is complete as evidenced by one of the following: Certificates of occupancy for each building, the Architect's Certificate(s) of Substantial Completion (AIA Document G704 or equivalent form) for the entire Development, the final Application and Certificate for Payment (AIA Document G702 and G703), or an equivalent form approved for submission by the construction lender and/or investor. For Competitive Housing Tax Credit Developments, the initial report is due by October 10th following the year of award (this includes Developments funded with HTC and TDHCA Multifamily Direct Loans), and for Developments awarded under the Department's Multifamily Direct Loan programs only, the initial report is due by the 90th calendar day after loan closing. For Tax Exempt Bond Developments, the initial construction status report must be submitted as part of the Post Bond Closing Documentation and is due by the 60th calendar day following closing on the bonds. A Construction Status Report not submitted by the due date will incur an extension fee in accordance with §11.901 of this title (relating to Fee Schedule). The initial report for all multifamily Developments shall consist of the items identified in paragraphs (1) - (6) of this subsection, unless stated otherwise. All subsequent reports shall contain items identified in paragraphs (4) - (6) of this paragraph and must include any changes or amendments to items in paragraphs (1) - (3) if applicable:(1) The executed partnership agreement with the investor or, for Developments receiving an award only from the Department's Direct Loan Program, other documents setting forth the legal structure and ownership. If identified Guarantors or Principals of a Guarantor entity were not already identified as a Principal of the Owner, Developer, or Guarantor at the time of Application, a non-material amendment must be requested in accordance with §10.405 of this subchapter, and the new Guarantors and all of its Principals, as applicable, must be reviewed in accordance with Chapter 1, Subchapter C of this title (relating to Previous Participation and Executive Award Review and Advisory Committee);(2) The executed construction contract for the General Contractor, prime subcontractor(s) and Affiliates or Related Party subcontractor(s);(3) The construction loan agreement. If the loan has not closed, the anticipated closing date must be provided and, upon closing, the agreement must be provided to the Department;(4) The most recent Application and Certificate for Payment (AIA Document G702 and G703) certified by the Architect of Record (or equivalent form approved for submission by the construction lender and/or investor) for the General Contractor, prime subcontractor(s) and Affiliates or Related Party subcontractor(s);(5) All Third Party construction inspection reports not previously submitted. If the lender and/or investor does not require third party construction inspection reports, the Development Owner must hire a third party inspector to perform these inspections on a quarterly basis and submit the reports to the Department. Third Party construction inspection reports must include, at a minimum, the date construction started (initial submission only), a discussion of site conditions as of the date of the site visit, current photographs of the construction site and exterior and interior of buildings, an estimated percentage of construction completion as of the date of the site visit, identification of construction delays and other relevant progress issues, if any, and the anticipated construction completion date; and(6) Minority Owned Business Report (HTC only) showing the attempt to ensure that at least 30% of the construction and management businesses with which the Applicant contracts in connection with the Development are Minority Owned Businesses as required and further described in Tex. Gov't Code §2306.6734.(c) LURA Origination.(1) The Development Owner must request origination of the HTC LURA as directed in the Post Award Activities Manual. The Department will draft a LURA for the Development Owner that will impose the income and rent restrictions identified in the Development's final underwriting report and other representations made in the Application, including but not limited to specific commitments to provide tenant services, to lease to Persons with Disabilities, and/or to provide specific amenities. After origination, the Department executed LURA and all exhibits and addendums will be sent to the Development Owner to execute and record in the real property records for the county in which the Development is located. A copy of the fully executed, recorded LURA must be returned to the Department no later than the end of the first year of the Credit Period. In general, no Housing Tax Credits are allowed to be issued for a building unless there is a properly executed and recorded LURA in effect at the end of the first year of the Credit Period. Nothing in this section negates a Development Owner's responsibility for full compliance with §42(h)(6) of the Code. The Department will not issue IRS Form(s) 8609 until it receives a copy of the fully executed, recorded LURA.(2) LURAs for Direct Loan awardees will be prepared by the Department's Legal Division and executed at loan closing.(d) Cost Certification (Competitive and Non-Competitive HTC, and related activities only). The Department conducts a feasibility analysis in accordance with §42(m)(2)(C)(i)(III) of the Code and Chapter 11, Subchapter D of this title (relating to Underwriting and Loan Policy) to make a final determination on the allocation of Housing Tax Credits. For Non-Competitive HTC Developments, the amount of tax credits reflected in the IRS Form(s) 8609 may be greater or less than the amount set forth in the Determination Notice based upon the Department's determination as of each building's placement in service. Any increase of tax credits will only be permitted if it is determined necessary by the Department, as required by §42(m)(2)(D) of the Code through the submission of the Cost Certification package. Increases to the amount of tax credits that exceed 120% of the amount of credits reflected in the Determination Notice must be approved by the Board. Increases to the amount of tax credits that do not exceed 120% of the amount of credits reflected in the Determination Notice may be approved administratively by the Executive Director or designee. All credit increases are subject to the Tax-Exempt Bond Credit Increase Request Fee as described in Chapter 11, Subchapter E of this Part (relating to Fee Schedule, Appeals, and other Provisions). The requirements for cost certification include those identified in paragraphs (1) - (3) of this subsection.(1) For Competitive HTC Developments, Development Owners must file cost certification documentation no later than January 15 following the first year of the Credit Period, as defined in §42(f)(1) of the Code. For Tax-Exempt Bond Developments, Development Owners must file cost certification documentation no later than May 15 following the first year of the Credit Period.(2) The Department will evaluate the cost certification documentation and notify the Development Owner of any additional required documentation needed to complete the review. The Department reserves the right to request additional documents or certifications as it deems necessary or useful in the determination of the Development's eligibility for a final Housing Tax Credit allocation amount. Any communication issued to the Development Owner pertaining to the cost certification documentation may also be sent to the syndicator. In accordance with Tex. Gov't Code §2306.6724(g), IRS Form(s) 8609 will be issued no later than the 120th day following the date on which the Department receives a complete cost certification package, and the Development Owner has fulfilled any requests for information.(3) The cost certification package must meet the conditions as stated in subparagraphs (A) - (G) of this paragraph. The Development Owner has:(A) Provided evidence that all buildings in the Development have been placed in service by:(i) December 31 of the year the Commitment was issued;(ii) December 31 of the second year following the year the Carryover Allocation Agreement was executed; or(iii) the approved Placed in Service deadline;(B) Provided a complete final cost certification package in the format prescribed by the Department. As used herein, a complete final cost certification package means a package that meets all of the Department's criteria with all required information and exhibits listed in clauses (i) - (xxxiv) of this subparagraph, and pursuant to the Post Award Activities Manual. If any item on this list is determined to be unclear, deficient, or inconsistent with the cost certification review completed by the Department, a Request for Information (RFI) will be sent to the Development Owner. Requirements include:(i) Owner's signed and notarized Statement of Certification verifying the CPA firm's licenses and validity, including any restrictions;(ii) Owner Summary & Organization Charts for the Owner, Developer, and Guarantors;(iii) Evidence of Qualified Nonprofit or CHDO Participation;(iv) Certification and evidence of Historically Underutilized Business (HUB) Participation;(v) Development Team List;(vi) Development Summary with Architect's Certification;(vii) Development Change Documentation;(viii) As Built Survey;(ix) A copy of the fully executed Closing Statement for each parcel of land and/or buildings purchased and included in the Development;(x) Development Owner's Title Policy for the Development;(xi) Title Policy Update;(xii) Placement in Service;(xiii) Evidence of Placement in Service;(xiv) Architect's Certification of Completion Date and Date Ready for Occupancy (for Developments located in areas where Certificates of Occupancy (COs) are not issued by a local government or rehabilitation Developments that cannot provide COs);(xv) Auditor's Certification of Acquisition/Rehabilitation Placement in Service Election;(xvi) Independent Auditor's Report;(xvii) Independent Auditor's Report of Bond Financing;(xviii) Development Cost Schedule;(xix) Contractor's Application for Final Payment (G702/G703) for the General Contractor, all prime subcontractors, Affiliated Contractors, and Related Party Contractors;(xx) Additional Documentation of Offsite Costs;(xxi) Rent Schedule;(xxii) Utility Allowances;(xxiii) Annual Operating Expenses;(xxiv) 30 Year Rental Housing Operating Pro Forma;(xxv) Current Operating Statement in the form of a trailing twelve month statement;(xxvi) Current Rent Roll;(xxvii) Summary of Sources and Uses of Funds;(xxviii) Final Limited Partnership Agreement with all amendments and exhibits;(xxix) All Loan Agreements and Promissory Notes (except for Agreements and Notes issued directly by the Department);(xxx) Architect's Certification of Accessibility Requirements;(xxxi) Development Owner Assignment of Individual to Compliance Training;(xxxii) TDHCA Compliance Training Certificate (not older than two years from the date of cost certification submission);(xxxiii) TDHCA Final Inspection Clearance Letter or evidence of submitted final inspection request to the Compliance Division (IRS Form(s) 8609 will not be issued without a TDHCA Final Inspection Clearance Letter); and(xxxiv) Other Documentation as Required, including but not limited to conditions to be satisfied at cost certification as reflected in the Development's latest Underwriting Report;(C) Informed the Department of and received written approval for all amendments, extensions, and changes in ownership relating to the Development in accordance with §10.405 of this subchapter (relating to Amendments and Extensions) and §10.406 of this subchapter (relating to Ownership Transfers (§2306.6713));(D) Paid all applicable Department fees, including any past due fees;(E) Met all conditions noted in the Department underwriting report, Determination Notice, and Commitment;(F) Corrected all issues of noncompliance, including but not limited to noncompliance status with the LURA (or any other document containing an Extended Low-income Housing Commitment) or the program rules in effect for the subject Development, as described in this chapter. Developments in the corrective action period and/or with any uncorrected issues of noncompliance outside of the corrective action period will not be issued IRS Form(s) 8609s until all events of noncompliance are corrected or otherwise approved by the Executive Director or designee; and(G) Completed an updated underwriting evaluation in accordance with Chapter 11, Subchapter D of this Part based on the most current information at the time of the review.</content><note type="source"><p>Source Note: The provisions of this §10.401 adopted to be effective February 3, 2022, 47 TexReg 266; amended to be effective February 1, 2023, 48 TexReg 348; amended to be effective February 27, 2024, 49 TexReg 1054.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scE/s10.402"><num value="10.402">§10.402</num><heading>Requests for Subordination Agreements, HUD Amendments to Restrictive Covenants, or HUD Riders to Restrictive Covenants</heading><content>(a) Requests for Subordination Agreements, HUD Amendments to Restrictive Covenants or HUD Riders to Restrictive Covenants from the Department must be reviewed and approved by the Department's Asset Management Division and Legal Division prior to execution. The Development Owner must demonstrate that the Development will remain feasible with the proposed new debt. For HTC Developments seeking to refinance within two years from the issuance of the IRS Form(s) 8609, a review of the Development's cost certification will be conducted to determine if the change in the financing structure would have affected the credit award. If it is determined that the change to the financing structure, net of additional costs associated with the refinance, would have resulted in over sourcing the Development, thereby resulting in an adjustment to the credit award, the Development Owner may be required to fund a Special Reserve Account in accordance with §10.404 of this subchapter (relating to Reserve Accounts). Approval from the Board will be required for loan amounts that would cause the Developments to be over-sourced after accounting for the additional costs associated with the refinance and the deposit into the Special Reserve Account. Subordinations or re-subordinations of Developments with Direct Loans from the Department are also subject to the requirements under §13.13(c)(2) of this title (relating to Multifamily Direct Loan Rule) and Chapter 11, Subchapter D of this title (relating to Underwriting and Loan Policy), including but not limited to §11.302(g)(4).(b) All requests must include:(1) Requested document on Department approved template, if available, and completed with the Development specific information;(2) Documentation such as a loan commitment or application that identifies the proposed loan amount and terms;(3) If the proposed legal description is different from the legal description in the Department's regulatory agreement, a survey, title commitment, or recorded plat that agrees with the legal description in the requested document. Changes to the Development Site may be subject to further review and approval under §10.405 of this subchapter (relating to Amendments and Extensions); and(4) Development's most recent 12-month trailing operating statement. If the financial statement indicates that the proposed new debt cannot be supported by the Development, the Development Owner must submit an operating pro forma and a written explanation for the differences from the actual performance of the Development.</content><note type="source"><p>Source Note: The provisions of this §10.402 adopted to be effective February 3, 2022, 47 TexReg 266; amended to be effective February 27, 2024, 49 TexReg 1054.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scE/s10.403"><num value="10.403">§10.403</num><heading>Review of Annual HOME, HOME-ARP, HOME Match, NSP, TCAP-RF, and National Housing Trust Fund Rents</heading><content>(a) Applicability. For participants of the Department's Multifamily HOME, HOME American Rescue Plan HOME-ARP, and NSP Direct Loan program, where Commitment of Funds occurred on or after August 23, 2013, the Department is required by 24 CFR §92.252(f) and for all National Housing Trust Fund (NHTF) recipients by 24 CFR §93.302(c)(2), to review and approve or disapprove HOME/HOME-ARP/NSP/NHTF rents on an annual basis. The Department is also required by 24 CFR §92.219 and §92.252(d)(2) to approve rents for HOME Match units. Development Owners must submit documentation for the review of HOME/HOME-ARP/HOME Match/NSP/NHTF/TCAP-RF rents by no later than August 1st of each year as further described in the Post Award Activities Manual.(b) Documentation for Review. The Department will furnish a rent approval request packet for this purpose that will include a request for Development information and an Owner's proposed rent schedule and will require submission of a current rent roll, the most recent 12-month operating statement for the Development, and utility allowance information. The Department may request additional documentation to perform a determination, as needed, including but not limited to annual operating statements, market surveys, or other information related to determining whether rents are sufficient to maintain the financial viability of a project or are in compliance with maximum rent limits.(c) Review Process. Rents will be approved or disapproved within 30 days of receipt of all items required to be submitted by the Development Owner, and will be issued in the form of a signed letter from the Asset Management Division. Development Owners must keep copies of all approval letters on file at the Development site to be reviewed at the time of Compliance Monitoring reviews.(d) Compliance. Development Owners for whom this section is applicable are subject to compliance under §10.622 of this chapter (relating to Special Rules Regarding Rents and Limit Violations) and may be subject to penalties under §10.625 of this chapter (relating to Events of Noncompliance). Approval of rents by the Asset Management Division will be limited to a review of the documentation submitted and will not guarantee compliance with the Department's rules or otherwise absolve an Owner of any past, current, or future non-compliance related to Department rules, guidance, Compliance Monitoring visits, or any other rules or guidance to which the Development or its Owner may be subject.</content><note type="source"><p>Source Note: The provisions of this §10.403 adopted to be effective February 3, 2022, 47 TexReg 266; amended to be effective February 1, 2023, 48 TexReg 348; amended to be effective February 27, 2024, 49 TexReg 1054.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scE/s10.404"><num value="10.404">§10.404</num><heading>Reserve Accounts</heading><content>(a) Replacement Reserve Account (§2306.186). The Department will require Development Owners to provide regular maintenance to keep housing sanitary, safe and decent by establishing and maintaining a reserve for replacement account for the Development in accordance with Tex. Gov't Code, §2306.186. The reserve account must be established, in accordance with paragraphs (3) - (6) of this subsection, and maintained through annual or more frequent regularly scheduled deposits, for each Unit in a Development of 25 or more rental Units regardless of the amount of rent charged for the Unit. If the Department is processing a request for loan modification or other request under this subchapter and the Development does not have an existing replacement reserve account or sufficient funds in the reserve to meet future capital expenditure needs of the Development as determined by a history of uncorrected UPCS violations, ongoing issues related to keeping housing sanitary, safe, and decent, an account balance below the annual reserve deposit amount as specified in this section, or as indicated by the number or cost of repairs included in a third party Physical Needs Assessment (PNA), the Development Owner will be required to establish and maintain a replacement reserve account or review whether the amount of regular deposits to the replacement reserve account can be increased, regardless of the number of Units at the Development. The Department shall, through cooperation of its divisions responsible for asset management and compliance, ensure compliance with this section. The duties of the Development Owner under this section cease on the date of a change in ownership of the Development; however, the subsequent Development Owner of the Development is subject to the requirements of this section and any additional or revised requirements the Department may impose after reviewing a Development's compliance history, a PNA submitted by the Owner, or the amount of reserves that will be transferred at the time of any property sale.(1) The LURA requires the Development Owner to begin making annual deposits to the replacement reserve account on the later of the:(A) Date that occupancy of the Development stabilizes as defined by the First Lien Lender or, in the absence of a First Lien Lender other than the Department, the date the Property is at least 90% occupied; or(B) The date when the permanent loan is executed and funded.(2) The Development Owner shall continue making deposits into the replacement reserve account until the earliest of the:(A) Date on which the owner suffers a total casualty loss with respect to the Development or the date on which the Development becomes functionally obsolete, if the Development cannot be or is not restored;(B) Date on which the Development is demolished;(C) Date on which the Development ceases to be used as a multifamily rental property; or(D) End of the Affordability Period specified by the LURA, or if an Affordability Period is not specified and the Department is the First Lien Lender, then when the Department's loan has been fully repaid or as otherwise agreed by the Owner and Department.(3) If the Department is the First Lien Lender with respect to the Development or if the establishment of a Reserve Account for repairs has not been required by the First Lien Lender or Bank Trustee, each Development Owner receiving Department assistance for multifamily rental housing shall deposit annually into a separate, Development-specific Reserve Account through the date described in paragraph (2) of this subsection as follows:(A) For New Construction and Reconstruction Developments, not less than $250 per Unit. Withdrawals from such account will be restricted for up to five years following the date of award except in cases in which written approval from the Department is obtained relating to casualty loss, natural disaster, reasonable accommodations, or demonstrated financial hardship (but not for the construction standards required by the NOFA or program regulations); or(B) For Adaptive Reuse and Rehabilitation Developments, the greater of the amount per Unit per year either established by the information presented in a Scope and Cost Review in conformance with Chapter 11, Subchapter D of this title (relating to Underwriting and Loan Policy) or $300 per Unit per year.(4) For all Developments, a PNA must be conducted at intervals that are consistent with requirements of the First Lien Lender, other than the Department. If the Department is the First Lien Lender, or the First Lien Lender does not require a Third Party PNA, a PNA must be conducted at least once during each five-year period beginning with the 11th year after the awarding of any financial assistance from the Department. PNAs conducted by the Owner at any time or for any reason other than as required by the Department in the year beginning with the 11th year of award must be submitted to the Department for review within 30 days of receipt by the Owner.(5) Where there is a First Lien Lender other than the Department or a Bank Trustee as a result of a bond trust indenture or tax credit syndication, the Development Owner shall comply with the lesser of the replacement reserve requirements of the First Lien Lender or the requirements in paragraph (3) of this subsection. In addition, the Department should be listed as a party to receive notice under any replacement reserve agreement entered into by the Development Owner. The Development Owner shall submit on an annual basis, within the Department's required Development Owner's Financial Certification packet, requested information regarding:(A) The reserve for replacement requirements under the first lien loan agreement (if applicable) referencing where those requirements are contained within the loan documents;(B) Compliance with the first lien lender requirements outlined in subparagraph (A) of this paragraph;(C) If the Owner is not in compliance with the lender requirements, the Development Owner's plan of action to bring the Development in compliance with all established reserve for replacement requirements; and(D) Whether a PNA has been ordered and the Owner's plans for any subsequent capital expenditures, renovations, repairs, or improvements.(6) Where there is no First Lien Lender but the allocation of funds by the Department and Tex. Gov't Code, §2306.186 requires that the Department oversee a Reserve Account, the Development Owner shall provide at their sole expense an escrow agent acceptable to the Department to act as Bank Trustee as necessary under this section. The Department shall retain the right to replace the escrow agent with another Bank Trustee or act as escrow agent at a cost plus fee payable by the Development Owner due to breach of the escrow agent's responsibilities or otherwise with 30 days prior notice of all parties to the escrow agreement.(7) Penalties and Non-Compliance. If the Development Owner fails to comply with the replacement reserve account requirements stated in this paragraph, and request for extension or waiver of these requirements is not approved by the Department, then a penalty of up to $200 per dwelling Unit in the Development and/or characterization of the Development as being in default with this requirement, may be imposed. Causes include:(A) A Reserve Account, as described in this section, has not been established for the Development;(B) The Department is not a party to the escrow agreement for the Reserve Account, if required;(C) Money in the Reserve Account:(i) is used for expenses other than necessary repairs, including property taxes or insurance; or(ii) falls below mandatory annual, monthly, or Department approved deposit levels;(D) Development Owner fails to make any required deposits;(E) Development Owner fails to obtain a Third-Party PNA as required under this section or submit a copy of a PNA to the Department within 30 days of receipt; or(F) Development Owner fails to make necessary repairs in accordance with the Third Party PNA or §10.621 of this chapter (relating to Property Condition Standards).(8) Department-Initiated Repairs. The Department or its agent may make repairs to the Development within 30 calendar days of written notice from the Department if the Development Owner fails to complete necessary repairs indicated in the submitted PNA or identified by Department physical inspection. Repairs may be deemed necessary if the Development Owner fails to comply with federal, state, and/or local health, safety, or building code requirements. Payment for necessary repairs must be made directly by the Development Owner or through a replacement Reserve Account established for the Development under this section. The Department or its agent will be allowed to produce a Request for Bids to hire a contractor to complete and oversee necessary repairs. In the event the circumstances identified in subparagraphs (A) or (B) of this paragraph occur, funds withdrawn must be replaced from Cash Flow after payment of Operating Expenses but before return to Development Owner or deferred Developer Fee until the mandatory deposit level is replenished. The Department reserves the right to re-evaluate payments to the reserve, increase such payments or require a lump sum deposit to the reserve, or require the Owner to enter into a separate Reserve Agreement if necessary to protect the long term feasibility of the Development. On a case-by-case basis, the Department may determine that the money in the Reserve Account may be used for expenses other than necessary repairs, including property taxes or insurance, if:(A) Development income before payment of return to Development Owner or deferred Developer Fee is insufficient to meet operating expense and debt service requirements; or(B) Development income after payment of operating expenses, but before payment of return to Development Owner or deferred developer fee is insufficient to fund the mandatory deposit levels.(9) Exceptions to Replacement Reserve Account. This section does not apply to a Development for which the Development Owner is required to maintain a Reserve Account under any other provision of federal or state law.(10) In the event of paragraph (7) or (8) of this subsection occurring, the Department reserves the right to require by separate Reserve Agreement a revised annual deposit amount and/or require Department concurrence for withdrawals from the Reserve Account to bring the Development back into compliance. Establishment of a new Bank Trustee or transfer of reserve funds to a new, separate and distinct account may be required if necessary to meet the requirements of such Agreement. The Agreement will be executed by the Department, Development Owner, and financial institution representative.(b) Lease-up Reserve Account. A lease-up reserve funds start-up expenses in excess of the revenue produced by the Development prior to stabilization. The Department will consider a reasonable lease-up reserve account based on the documented requirements from a third-party lender, third-party syndicator, or the Department. During the underwriting at the point of the Cost Certification review, the lease-up reserve may be counted as a use of funds only to the extent that it represents operating shortfalls net of escrows for property taxes and property insurance. Funds from the lease-up reserve used to satisfy the funding requirements for other reserve accounts may not be included as a use of funds for the lease-up reserve. Funds from the lease-up reserve distributed or distributable as cash flow to the Development Owner will be considered and restricted as developer fee.(c) Operating Reserve Account. At various stages during the application, award process, and during the operating life of a Development, the Department will conduct a financial analysis of the Development's total development costs and operating budgets, including the estimated operating reserve account deposit required. For example, this analysis typically occurs at application and cost certification review. The Department will consider a reasonable operating reserve account deposit in this analysis based on the needs of the Development and requirements of third-party lenders or investors. The amount used in the analysis will be the amount described in the project cost schedule or balance sheet, if it is within the range of two to six months of stabilized operating expenses plus debt service. The Department may consider a greater amount proposed or required by the Department, any superior lien lender, or syndicator, if the detail for such greater amount is reasonable and well documented. Reasonable operating reserves in this chapter do not include capitalized asset management fees, guaranty reserves, or other similar costs. In no instance will operating reserves exceed 12 months of stabilized operating expenses plus debt service (exclusive of transferred replacement reserves for USDA or HUD financed rehabilitation transactions). Operating reserves are generally for the term of the permanent loan. In no instance will operating reserves released within five years be included as a cost.(d) Special Reserve Account. If the funding program requires or allows for the establishment and maintenance of a Special Reserve Account for the purpose of assisting residents at the Development with expenses associated with their tenancy, this will be established in accordance with a written agreement with the Development Owner.(1) The Special Reserve Account is funded through a one-time payment or annually through an agreed upon percentage of net cash flow generated by the Development, excess development funds at completion as determined by the Department, or as otherwise set forth in the written agreement. For the purpose of this account, net cash flow is defined as funds available from operations after all expenses and debt service required to be paid have been considered. This does not include a deduction for depreciation and amortization expense, deferred developer fee payment, except as allowed by §11.302(g)(4) of this title (relating to Underwriting Rules and Guidelines), or other payments made to Related Parties or Affiliates, except as allowed by the Department for property management. Proceeds from any refinancing or other fund raising from the Development will be considered net cash flow for purposes of funding the Special Reserve Account unless otherwise approved by the Department. The account will be structured to require Department concurrence for withdrawals.(2) All disbursements from the account must be approved by the Department.(3) The Development Owner will be responsible for setting up a separate and distinct account with a financial institution acceptable to the Department. A Special Reserve Account Agreement will be drafted by the Department and executed by the Department and the Development Owner.(4) The Development Owner must make reasonable efforts to notify tenants of the existence of the Special Reserve Account and how to submit an application to access funds from the Special Reserve. Documentation of such efforts must be kept onsite and made available to the Department upon request.(e) Other Reserve Accounts. At cost certification, reserves may not include capitalized asset management fees, guaranty reserves, tenant services reserves, working capital reserves, or other similar costs.</content><note type="source"><p>Source Note: The provisions of this §10.404 adopted to be effective February 3, 2022, 47 TexReg 266; amended to be effective February 27, 2024, 49 TexReg 1054.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scE/s10.405"><num value="10.405">§10.405</num><heading>Amendments and Extensions</heading><content>(a) Amendments to Housing Tax Credit (HTC) Application or Award Prior to Land Use Restriction Agreement (LURA) recording or amendments that do not result in a change to the LURA (§2306.6712). The Department expects the Development Owner to construct or rehabilitate, operate, and own the Development consistent with the representations in the Application. The Department must receive notification of any amendments to the Application. Regardless of development stage, the Board shall re-evaluate a Development that undergoes a material change, as identified in paragraph (3) of this subsection at any time after the initial Board approval of the Development (§2306.6731(b)). The Board may deny an amendment request and subsequently may rescind any Commitment or Determination Notice issued for an Application, and may reallocate the credits to other Applicants on the waiting list. (1) Requesting an amendment. The Department shall require the Applicant to file a formal, written request for an amendment to the Application. Such request must include a detailed explanation of the amendment request and other information as determined to be necessary by the Department, and the applicable fee as identified in Chapter 11, Subchapter E of this title (relating to Fee Schedule, Appeals, and other Provisions) in order to be received and processed by the Department. Department staff will evaluate the amendment request to determine if the change would affect an allocation of Housing Tax Credits by changing any item that received points, by significantly affecting the most recent underwriting analysis, or by materially altering the Development as further described in this subsection. (2) Notification Items. The Department must be notified of the changes described in subparagraphs (A) - (F) of this paragraph. The changes identified are subject to staff agreement based on a review of the amendment request and any additional information or documentation requested. Notification items will be considered satisfied when an acknowledgment of the specific change(s) is received from the Department and include: (A) Changes to Development Site acreage required by the City or other local governmental authority, or changes resulting from survey discrepancies, as long as such change does not also result in a modification to the residential density of more than 5%; (B) Minor modifications to the site plan that will not significantly impact development costs, including, but not limited to, relocation or rearrangement of buildings on the site (as long as the number of residential and non-residential buildings remains the same), and movement, addition, or deletion of ingress/egress to the site; (C) Increases or decreases in net rentable square footage or common areas that do not result in a material amendment under paragraph (4) of this subsection; (D) Changes in amenities that do not require a change to the recorded LURA and do not negatively impact scoring, including changes to outdated amenities that could be replaced by an amenity with equal benefit to the resident community; (E) Changes in Developers or Guarantors (notifications for changes in Guarantors that are also the General Contractor or are only providing guaranties during the construction period are not required) with no new Principals (who were not previously checked by Previous Participation review that retain the natural person(s) used to meet the experience requirement in Chapter 11 of this title (relating to Qualified Allocation Plan)); and (F) Any other amendment not identified in paragraphs (3) and (4) of this subsection. (3) Non-material amendments. The Executive Director or designee may administratively approve all non-material amendments, including, but not limited to: (A) Any amendment that is determined by staff to exceed the scope of notification acknowledgement, as identified in paragraph (2) of this subsection but not to rise to a material alteration, as identified in paragraph (4) of this subsection; (B) Changes in Developers or Guarantors (excluding changes in Guarantors that are also the General Contractor or are only providing guaranties during the construction period) not addressed in §10.405(a)(2)(E). Changes in Developers or Guarantors will be subject to Previous Participation requirements as further described in Chapter 11 of this title and the credit limitation described in §11.4(a) of this title; and (C) For Exchange Developments only, requests to change elections made on line 8(b) of the IRS Form(s) 8609 to group buildings together into one or more multiple building projects. The request must include an attached statement identifying the buildings in the project. The change to the election may only be made once during the Compliance Period. (4) Material amendments. Amendments considered material pursuant to this paragraph must be approved by the Board. When an amendment request requires Board approval, the Development Owner must submit the request and all required documentation necessary for staff's review of the request to the Department at least 45 calendar days prior to the Board meeting in which the amendment is anticipated to be considered. Before the 15th day preceding the date of Board action on the amendment, notice of an amendment and the recommendation of the Executive Director and Department staff regarding the amendment will be posted to the Department's website and the Applicant will be notified of the posting (§2306.6717(a)(4)). Material Amendment requests may be denied if the Board determines that the modification proposed in the amendment would materially alter the Development in a negative manner or would have adversely affected the selection of the Application in the Application Round. Material alteration of a Development includes, but is not limited to: (A) A significant modification of the site plan; (B) A modification of the number of Units or bedroom mix of Units; (C) A substantive modification of the scope of tenant services; (D) A reduction of 3% or more in the square footage of the Units or common areas; (E) A significant modification of the architectural design of the Development; (F) A modification of the residential density of at least 5%; (G) A request to implement a revised election under §42(g) of the Code prior to filing of IRS Form(s) 8609; (H) Exclusion of any requirements as identified in Chapter 11, Subchapter B of this title (relating to Site and Development Requirements and Restrictions) and Chapter 11, Subchapter C of this title (relating to Application Submission Requirements, Ineligibility Criteria, Board Decisions and Waiver of Rules); or (I) Any other modification considered material by the staff and therefore required to be presented to the Board as such. (5) Amendment requests will be denied if the Department finds that the request would have changed the scoring of an Application in the competitive process such that the Application would not have received a funding award or if the need for the proposed modification was reasonably foreseeable or preventable by the Applicant at the time the Application was submitted, unless good cause is found for the approval of the amendment. (6) This section shall be administered in a manner that is consistent with §42 of the Code. If a Development has any uncorrected issues of noncompliance outside of the corrective action period (other than the provision being amended) or otherwise owes fees to the Department, such non-compliance or outstanding payment must be resolved to the satisfaction of the Department before a request for amendment will be acted upon. (7) In the event that an Applicant or Developer seeks to be released from the commitment to serve the income level of tenants identified in the Application and Credit Underwriting Analysis Report at the time of award and as approved by the Board, the procedure described in subparagraphs (A) and (B) of this paragraph will apply to the extent such request is not prohibited based on statutory and/or regulatory provisions: (A) For amendments that involve a reduction in the total number of Low-Income Units, or a reduction in the number of Low-Income Units at any rent or income level, as approved by the Board, evidence noted in either clause (i) or (ii) of this subparagraph must be presented to the Department to support the amendment: (i) In the event of a request to implement (rent to a household at an income or rent level that exceeds the approved AMI limits established by the minimum election within the Development's Application or LURA) a revised election under §42(g) of the Code prior to an Owner's submission of IRS Form(s) 8609 to the IRS, Owners must submit updated information and exhibits to the Application as required by the Department; or (ii) For all other requests for reductions in the total number of Low-Income Units or reductions in the number of Low-Income Units at any rent or income level, prior to issuance of IRS Form(s) 8609 by the Department, the lender and syndicator must submit written confirmation that the Development is infeasible without the adjustment in Units. The Board may or may not approve the amendment request; however, any affirmative recommendation to the Board is contingent upon concurrence from Department staff that the Unit adjustment is necessary for the continued financial feasibility of the Development; and (B) If it is determined by the Department that the loss of low-income targeting points would have resulted in the Application not receiving an award in the year of allocation, and the amendment is approved by the Board, the approved amendment will carry a penalty that prohibits the Applicant and all Persons or entities with any ownership interest in the Application (excluding any tax credit purchaser/syndicator), from participation in the Housing Tax Credit Program (for both the Competitive Housing Tax Credit Developments and Tax-Exempt Bond Developments) for 24 months from the time that the amendment is approved. (b) Amendments to LURAs. Department approval shall be required for any amendment to a LURA in accordance with this section. An amendment request shall be submitted in writing, containing a detailed explanation of the request, the reason the change is necessary, the good cause for the change, financial information related to any financial impact on the Development, information related to whether the necessity of the amendment was reasonably foreseeable at the time of application, and other information as determined to be necessary by the Department, along with any applicable fee as identified in Chapter 11, Subchapter E of this title (relating to Fee Schedule, Appeals, and other Provisions). The Department may order or require the Development Owner to order a Market Study or appraisal at the Development Owner's expense. If a Development has any uncorrected issues of noncompliance outside of the corrective action period (other than the provision being amended) or otherwise owes fees to the Department, such non-compliance or outstanding payment must be resolved to the satisfaction of the Department, before a request for amendment will be acted upon. The Department will not approve changes that would violate state or federal laws including the requirements of §42 of the Code, 24 CFR Part 92 (HOME Final Rule), 24 CFR Part 93 (NHTF Interim Rule), Chapter 1 of this title (relating to Administrative Requirements), Chapter 11 of this title (relating to Qualified Allocation Plan), Chapter 12 of this title (relating to Multifamily Housing Revenue Bond Rules), Chapter 13 of this title (relating to Multifamily Direct Loan Rule), Tex. Gov't Code, Chapter 2306, and the Fair Housing Act. For Tax-Exempt Bond Developments, compliance with their Regulatory Agreement and corresponding bond financing documents. Prior to staff taking a recommendation to the Board for consideration, the procedures described in paragraph (3) of this subsection must be followed. (1) Non-Material LURA Amendments. The Executive Director or designee may administratively approve all LURA amendments not defined as Material LURA Amendments pursuant to paragraph (2) of this subsection. A non-material LURA amendment may include but is not limited to: (A) HUB participation removal. Removal of a HUB participation requirement will only be processed as a non-material LURA amendment after the issuance of IRS Form(s) 8609 and requires that the Department find that: (i) The HUB is requesting removal of its own volition or is being removed as the result of a default under the organizational documents of the Development Owner; (ii) the participation by the HUB has been substantive and meaningful, or would have been substantive or meaningful had the HUB not defaulted under the organizational documents of the Development Owner, enabling it to realize not only financial benefit but to acquire skills relating to the ownership and operating of affordable housing; and (iii) where the HUB will be replaced as a general partner or special limited partner that is not a HUB and will sell its ownership interest, an ownership transfer request must be submitted as described in §10.406 of this subchapter; (B) A change resulting from a Department work out arrangement as recommended by the Department's Asset Management Division; (C) A change in the Right of First Refusal period as described in amended §2306.6726 of the Tex. Gov't Code; (D) Where the Board has approved a de minimis modification of the Unit Mix or bedroom mix of Units to increase the Development's accessibility; (E) In accordance with HOMEFires, Vol. 17 No. 1 (January 2023, as may be amended from time to time) bifurcation of the term of a HOME or NSP LURA with the Department that requires a longer affordability period than the minimum federal requirement, into a federal and state affordability period; or (F) A correction of error. (2) Material LURA Amendments. Development Owners seeking LURA amendment requests that require Board approval must submit the request and all required documentation necessary for staff's review of the request to the Department at least 45 calendar days prior to the Board meeting at which the amendment is anticipated to be considered. Before the 15th day preceding the date of Board action on the amendment, notice of an amendment and the recommendation of the Executive Director and Department staff regarding the amendment will be posted to the Department's website and the Applicant will be notified of the posting (§2306.6717(a)(4)). The Board must consider the following material LURA amendments: (A) Reductions to the number of Low-Income Units; (B) Changes to the income or rent restrictions; (C) Changes to the Target Population; (D) The removal of material participation by a Nonprofit Organization as further described in §10.406 of this subchapter; (E) The removal of material participation by a HUB prior to filing of IRS Form(s) 8609; (F) Any amendment that affects a right enforceable by a tenant or other third party under the LURA; or (G) Any LURA amendment deemed material by the Executive Director. (3) Prior to staff taking a recommendation to the Board for consideration, the Development Owner must provide reasonable notice and hold a public hearing regarding the requested amendment(s) at least 20 business days prior to the scheduled Board meeting where the request will be considered. Development Owners will be required to submit a copy of the notification with the amendment request. If a LURA amendment is requested prior to issuance of IRS Form(s) 8609 by the Department, notification must be provided to the recipients described in subparagraphs (A) - (E) of this paragraph. If an amendment is requested after issuance of IRS Form(s) 8609 by the Department, notification must be provided to the recipients described in subparagraph (A) - (B) of this paragraph. Notifications include: (A) Each tenant of the Development; (B) The current lender(s) and investor(s); (C) The State Senator and State Representative of the districts whose boundaries include the Development Site; (D) The chief elected official for the municipality (if the Development Site is within a municipality or its extraterritorial jurisdiction); and (E) The county commissioners of the county in which the Development Site is located (if the Development Site is located outside of a municipality). (4) Contents of Notification. The notification must include, at a minimum, all of the information described in subparagraphs (A) - (D) of this paragraph: (A) The Development Owner's name, address and an individual contact name and phone number; (B) The Development's name, address, and city; (C) The change(s) requested; and (D) The date, time, and location of the public hearing where the change(s) will be discussed. (5) Verification of public hearing. Minutes of the public hearing and attendance sheet must be submitted to the Department within three business days after the date of the public hearing. (6) Approval. Once the LURA Amendment has been approved administratively or by the Board, as applicable, Department staff will provide the Development Owner with a LURA amendment for execution and recording in the county where the Development is located. (c) HTC Extensions. Extensions must be requested if the original deadline associated with Carryover, the 10% Test (including submission and expenditure deadlines), construction status reports, or cost certification requirements will not be met. Extension requests submitted at least 30 calendar days in advance of the applicable original deadline will not be required to submit an extension fee as described in §11.901 of this title. Any extension request submitted fewer than 30 days in advance of the applicable original deadline or after the original deadline will not be processed unless accompanied by the applicable fee. Extension requests will be approved by the Executive Director or designee, unless, at staff's discretion it warrants Board approval due to extenuating circumstances stated in the request. The extension request must specify a requested extension date and the reason why such an extension is required. If the Development Owner is requesting an extension to the Carryover submission or 10% Test deadline(s), a point deduction evaluation will be completed in accordance with Tex. Gov't Code, §2306.6710(b)(2), and §11.9(f) of this title (relating to Factors Affecting Scoring and Eligibility in current and future Application Rounds). Therefore, the Development Owner must clearly describe in their request for an extension how the need for the extension was beyond the reasonable control of the Applicant/Development Owner and could not have been reasonably anticipated. Carryover extension requests will not be granted an extended deadline later than December 1st of the year the Commitment was issued.</content><note type="source"><p>Source Note: The provisions of this §10.405 adopted to be effective February 3, 2022, 47 TexReg 266; amended to be effective February 1, 2023, 48 TexReg 348; amended to be effective February 27, 2024, 49 TexReg 1054; amended to be effective May 4, 2025, 50 TexReg 2591.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scE/s10.406"><num value="10.406">§10.406</num><heading>Ownership Transfers (§2306.6713)</heading><content>(a) Ownership Transfer Notification. All multifamily Development Owners must provide written notice and a completed Ownership Transfer packet, if applicable, to the Department at least 45 calendar days prior to any sale, transfer, or exchange of the Development or any portion of or Controlling interest in the Development. Except as otherwise provided herein, the Executive Director's prior written approval of any such transfer is required. The Executive Director may not unreasonably withhold approval of the transfer requested in compliance with this section. (b) Exceptions. The exceptions to the ownership transfer process in this subsection are applicable. (1) A Development Owner shall be required to notify the Department but shall not be required to obtain Executive Director approval when the transferee is an Affiliate of the Development Owner with no new Principals, or the transferee is a Related Party who does not Control the Development and the transfer is being made for estate planning purposes. (2) Transfers that are the result of an involuntary removal of the general partner by the investment limited partner do not require advance approval, but must be reported to the Department as soon as possible due to the sensitive timing and nature of this decision. In the event the investment limited partner has proposed a new general partner or will permanently replace the general partner, a full Ownership Transfer packet must be submitted. (3) Changes to the investment limited partner, non-Controlling limited partner, or other non-Controlling partners affiliated with the investment limited partner do not require Executive Director approval. A General Partner's acquisition of the interest of the investment limited partner does not require Executive Director approval, unless some other change in ownership is occurring as part of the same overall transaction. (4) Changes resulting from foreclosure do not require advance approval but acquiring parties must notify the Department as soon as possible of the revised ownership structure and ownership contact information. (5) Changes resulting from a deed-in-lieu of foreclosure do not require Executive Director approval. However, advance notification must be provided to both the Department and to the tenants at least 30 days prior to finalizing the transfer. This notification must include information regarding the applicable rent/income requirements post deed-in-lieu of foreclosure. (c) General Requirements. (1) Any new Principal in the ownership of a Development must be eligible under §11.202 of Subchapter C (relating to Ineligible Applicants and Applications). In addition, Persons and Principals will be reviewed in accordance with Chapter 1, Subchapter C of this title (relating to Previous Participation and Executive Award Review and Advisory Committee). (2) Changes in Developers or Guarantors must be addressed as non-material amendments to the application under §10.405 of this Subchapter. (3) To the extent an investment limited partner or its Affiliate assumes a Controlling interest in a Development Owner, such acquisition shall be subject to the Ownership Transfer requirements set forth herein. Principals of the investment limited partner or Affiliate will be considered new Principals and will be reviewed as stated under paragraph (1) of this subsection. (4) Simultaneous transfer or concurrent offering for sale of the General Partner's and Limited Partner's control and interest will be subject to the Ownership Transfer requirements set forth herein and will trigger a Right of First Refusal, if applicable. (5) Any initial operating, capitalized operating, or replacement reserves funded with an allocation from the HOME American Rescue Plan (HOME-ARP) and Special Reserves required by the Department must remain with the Development. (d) Transfer Actions Warranting Debarment. If the Department determines that the transfer, involuntary removal, or replacement was due to a default by the General Partner under the Limited Partnership Agreement, or other detrimental action that put the Development at risk of failure or the Department at risk for financial exposure as a result of non-compliance, staff will refer the matter to the Enforcement Committee for debarment consideration pursuant to §2.401 of this title (relating to Enforcement, Debarment from Participation in Programs Administered by the Department). In addition, a record of transfer involving Principals in new proposed awards will be reported and may be taken into consideration in accordance with Chapter 1, Subchapter C of this title (relating to Previous Participation and Executive Award Review and Advisory Committee), prior to recommending any new financing or allocation of credits. (e) Transfers Prior to 8609 Issuance or Construction Completion. Prior to the issuance of IRS Form(s) 8609 (for Housing Tax Credits) or the completion of construction (for all Developments funded through other Department programs), an Applicant may request a change to its ownership structure to add Principals or to remove Principals provided not all controlling Principals identified in the Application will be removed. The party(ies) reflected in the Application as having Control must remain in the ownership structure and retain Control, unless approved otherwise by the Executive Director. A development sponsor, General Partner or Development Owner may not sell the Development in whole or voluntarily end their Control prior to the issuance of 8609s. In addition, for Competitive HTC Developments, changes in the ownership structure for the addition of a public facility corporation, a housing finance corporation, or a public housing authority prior to the issuance of 8609s that will result in a 100% property tax exemption that was not previously reflected in the Application, require a resolution of support from the municipality, or if the Development is not within a municipality or its Extra Territorial Jurisdiction (ETJ), a resolution of support from the commissioners court.(f) Nonprofit Organizations. If the ownership transfer request is to replace a nonprofit organization within the Development ownership entity, the replacement nonprofit entity must adhere to the requirements in paragraph (1) or (2) of this subsection. (1) If the LURA requires ownership or material participation in ownership by a Qualified Nonprofit Organization, and the Development received Tax Credits pursuant to §42(h)(5) of the Code, the transferee must be a Qualified Nonprofit Organization that meets the requirements of §42(h)(5) of the Code and Tex. Gov't Code §2306.6706, if applicable, and can demonstrate planned participation in the operation of the Development on a regular, continuous, and substantial basis. (2) If the LURA requires ownership or material participation in ownership by a nonprofit organization or CHDO, the Development Owner must show that the transferee is a nonprofit organization or CHDO, as applicable, that complies with the LURA. If the transferee has been certified as a CHDO by TDHCA prior to 2016 or has not previously been certified as a CHDO by TDHCA, a new CHDO certification package must be submitted for review. If the transferee was certified as a CHDO by TDHCA after 2016, provided no new federal guidance or rules concerning CHDO have been released and the proposed ownership structure at the time of review meets the requirements in 24 CFR Part 92, the CHDO may instead submit a CHDO Self-Certification form with the Ownership Transfer package. (3) Exceptions to paragraphs (1) and (2) of this subsection may be made on a case by case basis if the Development (for MFDL) is past its Federal Affordability Period or (for HTC Developments) is past its Compliance Period, was not reported to the IRS as part of the Department's Nonprofit Set Aside in any HTC Award year, and follows the procedures outlined in §10.405(b)(1) - (5) of this subchapter. The Board must find that: (A) The selling nonprofit is acting of its own volition or is being removed as the result of a default under the organizational documents of the Development Owner; (B) The participation by the nonprofit was substantive and meaningful during the full term of the Compliance Period but is no longer substantive or meaningful to the operations of the Development; and (C) The proposed purchaser is an affiliate of the current Owner or otherwise meets the Department's standards for ownership transfers. (g) Historically Underutilized Business (HUB) Organizations. If a HUB is the general partner or special limited partner of a Development Owner and it determines to sell its ownership interest, after the issuance of IRS Form(s) 8609, the purchaser of that partnership interest or the general or special limited partner is not required to be a HUB as long as the LURA does not require it or the procedure described in §10.405(b)(1) of this chapter (relating to Non-Material LURA Amendments) has been followed and approved. The removal of a HUB requirement prior to filing of IRS Form(s) 8609 is subject to the procedure described in §10.405(b)(2) of this Chapter (relating to Material LURA Amendments). (h) Documentation Required. A Development Owner must submit documentation requested by the Department to enable the Department to understand fully the facts and circumstances pertaining to the transfer and the effects of approval or denial. Documentation must be submitted as directed in the Post Award Activities Manual, which includes but is not limited to: (1) A written explanation outlining the reason for the request; (2) Ownership transfer information, including but not limited to the type of sale, terms of any new financing introduced as a result of the transfer, amount of Development reserves to transfer in the event of a property sale, and the prospective closing date; (3) Pre- and post-transfer organizational charts with TINs of each organization down to the level of natural persons in the ownership structure as described in §11.204(12)(B) of Subchapter C of this title (relating to Required Documentation for Application Submission); (4) A list of the names and contact information for transferees and Related Parties; (5) Previous Participation information for any new Principal as described in §11.204(12)(C) of this title (relating to Required Documentation for Application Submission); (6) Agreements among parties associated with the transfer; (7) Owners Certifications with regard to materials submitted as further described in the Post Award Activities Manual; (8) Detailed information describing the organizational structure, experience, and financial capacity of any party holding a controlling interest in any Principal or Controlling entity of the prospective Development Owner; (9) Evidence and certification that the tenants in the Development have been notified in writing of the proposed transfer at least 30 calendar days prior to the date the transfer is approved by the Department. The ownership transfer approval letter will not be issued until this 30-day period has expired; and(10) Any required exhibits and the list of exhibits related to specific circumstances of transfer or Ownership as detailed in the Post Award Activities Manual. (i) Once the Department receives all necessary information under this section and as required under the Post Award Activities Manual, staff shall initiate a qualifications review of a transferee, in accordance with Chapter 1, Subchapter C of this title (relating to Previous Participation and Executive Award Review and Advisory Committee), to determine the transferee's past compliance with all aspects of the Department's programs, LURAs and eligibility under this chapter and §11.202 of this title (relating to Ineligible Applicants and Applications). (j) Credit Limitation. As it relates to the Housing Tax Credit amount further described in §11.4(a) of this title (relating to Tax Credit Request and Award Limits), the credit amount will not be applied in circumstances described in paragraphs (1) and (2) of this subsection: (1) In cases of transfers in which the syndicator, investor or limited partner is taking over ownership of the Development and not merely replacing the general partner; or (2) In cases where the general partner is being replaced if the award of credits was made at least five years prior to the transfer request date. (k) Penalties, Past Due Fees, and Underfunded Reserves. The Development Owner must comply with any additional documentation requirements as stated in Subchapter F of this chapter (relating to Compliance Monitoring) and Subchapter G of this chapter (relating to Affirmative Marketing Requirements and Written Policies and Procedures). The Development Owner on record with the Department will be liable for any penalties or fees imposed by the Department (even if such penalty can be attributable to the new Development Owner) unless an ownership transfer has been approved by the Department. In the event a transferring Development has a history of uncorrected UPCS or NSPIRE violations, ongoing issues related to keeping housing sanitary, safe, and decent, an account balance below the annual reserve deposit amount as specified in §10.404(a) (relating to Replacement Reserve Accounts), or that appears insufficient to meet capital expenditure needs as indicated by the number or cost of repairs included in a PNA or SCR, the prospective Development Owner may be required to establish and maintain a replacement reserve account or increase the amount of regular deposits to the replacement reserve account by entering into a Reserve Agreement with the Department. The Department may also request a plan and timeline relating to needed repairs or renovations that will be completed by the departing and/or incoming Owner as a condition to approving the Transfer. A PNA or SCR may be requested if one has not already been received under §10.404 of this section (relating to Reserve Accounts). (l) Ownership Transfer Processing Fee. The ownership transfer request must be accompanied by the corresponding ownership transfer fee as outlined in §11.901 of this title (relating to Fee Schedule).</content><note type="source"><p>Source Note: The provisions of this §10.406 adopted to be effective February 3, 2022, 47 TexReg 266; amended to be effective February 1, 2023, 48 TexReg 348; amended to be effective February 27, 2024, 49 TexReg 1054; amended to be effective May 4, 2025, 50 TexReg 2591; amended to be effective August 13, 2025, 50 TexReg 5201.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scE/s10.407"><num value="10.407">§10.407</num><heading>Right of First Refusal</heading><content>(a) General. This section applies to Development Owners that agreed to offer a Right of First Refusal (ROFR) to a Qualified Entity or as applicable a Qualified Nonprofit Organization, as memorialized in the applicable LURA. For the purposes of this section, a Qualified Nonprofit Organization also includes an entity 100% owned by a Qualified Nonprofit Organization pursuant to §42(h)(5)(C) of the Code and operated in a similar manner. The purpose of this section is to provide administrative procedures and guidance on the process and valuation of properties under the LURA. All requests for ROFR submitted to the Department, regardless of existing regulations, must adhere to this process.(1) The Development Owner may market the Property for sale and enter into an agreement to sell the Property to a Qualified Entity, or as applicable a Qualified Nonprofit Organization without going through the ROFR process outlined in this section, unless otherwise restricted or prohibited and only in the following circumstances:(A) The LURA includes a 90-day ROFR and the Development Owner is selling to a Qualified Nonprofit Organization;(B) The LURA includes a two-year ROFR and the Development Owner is selling to a Qualified Nonprofit Organization that meets the definition of a Community Housing Development Organization (CHDO) under 24 CFR Part 92, as approved by the Department; or(C) The LURA includes a 180-day ROFR, and the Development Owner is selling to a Qualified Entity that meets the definition of a CHDO under 24 CFR Part 92, or to an entity that includes a CHDO as one of its controlling members, as approved by the Department, or to the public housing authority or public facility corporation that owns the fee title to the Development Owner's leasehold estate.(2) A ROFR request must be made in accordance with the LURA for the Development. If there is a conflict between the Development's LURA and this subchapter, every effort will be made to harmonize the provisions. If the conflict cannot be resolved, requirements in the LURA will supersede this subchapter. If there is a conflict between the Development's LURA and Tex. Gov't Code Chapter 2306, every effort will be made to harmonize the provisions. A Development Owner may request a LURA amendment to make the ROFR provisions in the LURA consistent with Tex. Gov't Code Chapter 2306 at any time.(3) If a LURA includes the ROFR provision, the Development Owner may not request a Preliminary Qualified Contract (if such opportunity is available under the applicable LURA and §10.408 of this Subchapter) until the requirements outlined in this section have been satisfied.(4) The Department reviews and approves all ownership transfers pursuant to §10.406 of this subchapter. Thus, if a proposed purchaser is identified by the Owner in accordance with paragraph (1) of this subsection or in the ROFR process, the Development Owner and proposed purchaser must complete the ownership transfer process. A Development Owner may not transfer a Development to a Qualified Nonprofit Organization or Qualified Entity that is considered an ineligible entity under the Department's rules. In addition, ownership transfers to a Qualified Entity or as applicable a Qualified Nonprofit Organization pursuant to the ROFR process are subject to Chapter 1, Subchapter C of this title (relating to Previous Participation and Executive Award Review and Advisory Committee).(5) Satisfying the ROFR requirement does not terminate the LURA or the ongoing application of the ROFR requirement to any subsequent Development Owner.(6) If there are multiple buildings in the Development, the end of the 15th year of the Compliance Period will be based upon the date the last building(s) began their credit period(s). For example, if five buildings in the Development began their credit periods in 2007 and one in 2008, the 15th year would be 2022. The ROFR process is triggered upon:(A) The Development Owner's determination to sell the Development to an entity other than as permitted in paragraph (1) of this subsection; or(B) The simultaneous transfer or concurrent offering for sale of a General Partner's and limited partner's interest in the Development Owner's ownership structure.(7) The ROFR process is not triggered if a Development Owner seeks to transfer the Development to a newly formed entity:(A) That is under common control with the Development Owner; and(B) The primary purpose of the formation of which is to facilitate the financing of the rehabilitation of the Development using assistance administered through a state financing program.(8) This section applies only to a Right of First Refusal memorialized in the Department's LURA. This section does not authorize a modification of any other agreement between the Development Owner and a Qualified Nonprofit Organization or Qualified Entity. The enforceability of a contractual agreement between the Development Owner and a Qualified Nonprofit Organization or Qualified Entity may be impacted by the Development Owner's commitments at Application and recorded LURA.(b) Right of First Refusal Offer Price. There are two general expectations of the ROFR offer price identified in the outstanding LURAs. The descriptions in paragraphs (1) and (2) of this subsection do not alter the requirements or definitions included in the LURA but provide further clarification as applicable:(1) Fair Market Value is established using either a current appraisal (completed within three months prior to the ROFR request and in accordance with §11.304 of this title (relating to Appraisal Rules and Guidelines)) of the Property or an executed purchase offer that the Development Owner would like to accept. In either case the documentation used to establish Fair Market Value will be part of the ROFR property listing on the Department's website. The purchase offer must contain specific language that the offer is conditioned upon satisfaction of the ROFR requirement. If a subsequent ROFR request is made within six months of the previously approved ROFR posting, the lesser of the prior ROFR posted value or new appraisal/purchase contract amount must be used in establishing Fair Market Value;(2) Minimum Purchase Price, pursuant to §42(i)(7)(B) of the Code, is the sum of the categories listed in subparagraphs (A) and (B) of this paragraph:(A) The principal amount of outstanding indebtedness secured by the project (other than indebtedness incurred within the five year period immediately preceding the date of said notice); and(B) All federal, state, and local taxes incurred or payable by the Development Owner as a consequence of such sale. If the Property has a minimum Applicable Fraction of less than one, the offer must take this into account by multiplying the purchase price by the applicable fraction and the fair market value of the non-Low-Income Units. Documentation submitted to verify the Minimum Purchase Price calculation will be part of the ROFR property listing on the Department's website.(c) Required Documentation. Upon establishing the ROFR offer price, the ROFR process is the same for all types of LURAs. To proceed with the ROFR request, documentation must be submitted as directed in the Post Award Activities Manual, which includes:(1) ROFR fee as identified in §11.901 of this title (relating to Fee Schedule);(2) A notice of intent to the Department;(3) Certification that the Development Owner has provided, to the best of their knowledge and ability, a notice of intent to all additional required persons and entities in subparagraph (A) of this paragraph and that such notice includes, at a minimum the information in subparagraph (B) of this paragraph;(A) Copies of the letters or emailed notices provided to all persons and entities listed in clauses (i) to (vi) of this subparagraph as required by this paragraph and applicable to the Development at the time of the submission of the ROFR documentation must be attached to the Certification:(i) All tenants and tenant organizations, if any, of the Development;(ii) Mayor of the municipality (if the Development is within a municipality or its extraterritorial jurisdiction);(iii) All elected members of the Governing Body of the municipality (if the Development Site is within a municipality or its extraterritorial jurisdiction);(iv) Presiding officer of the Governing Body of the county in which the Development is located;(v) The local housing authority, if any; and(vi) All prospective buyers maintained on the Department's list of prospective buyers.(B) Letters must include, at a minimum, all of the information required in clauses (i) to (vii) of this subparagraph and must not contain any statement that violates Department rules, statute, Code, or federal requirements:(i) The Development's name, address, city, and county;(ii) The Development Owner's name, address, individual contact name, phone number, and email address;(iii) Information about tenants' rights to purchase the Development through the ROFR;(iv) The length of the ROFR posting period;(v) The ROFR offer price;(vi) A physical description of the Development, including the total number of Units and total number of Low-Income Units; and(vii) Contact information for the Department staff overseeing the Development's ROFR application.(4) Documentation evidencing any contractual ROFR between the Development Owner and a Qualified Nonprofit Organization or Qualified Entity, along with evidence that such Qualified Nonprofit Organization or Qualified Entity is in good standing in the state of its organization;(5) Documentation verifying the ROFR offer price of the Property:(A) If the Development Owner receives an offer to purchase the Property from any buyer other than a Qualified Entity or Qualified Nonprofit Organization that the Development Owner would like to accept, the Development Owner may execute a sales contract, conditioned upon satisfaction of the ROFR requirement, and submit the executed sales contract to establish fair market value; or(B) If the Development Owner chooses to establish fair market value using an appraisal, the Development Owner must submit an appraisal of the Property completed during the last three months prior to the date of submission of the ROFR request, establishing a value for the Property in compliance with Chapter 11, Subchapter D of this title (relating to Underwriting and Loan Policy) in effect at the time of the request. The appraisal should take into account the existing and continuing requirements to operate the Property under the LURA and any other restrictions that may exist. Department staff will review all materials within 30 calendar days of receipt. If, after the review, the Department does not agree with the fair market value proposed in the Development Owner's appraisal, the Department may order another appraisal at the Development Owner's expense; or(C) If the LURA requires valuation through the Minimum Purchase Price calculation, submit documentation verifying the calculation of the Minimum Purchase Price as described in subsection (b)(2) of this section regardless of any existing offer or appraised value;(6) Description of the Property, including all amenities;(7) Copies of all documents imposing income, rental and other restrictions (non-TDHCA), if any, applicable to the operation of the Property;(8) A current title commitment or policy not older than six months prior to the date of submission of the ROFR request or the most recent title policy along with a title endorsement or nothing further certificate not older than six months prior to the date of submission of the ROFR request;(9) The most recent Physical Needs Assessment, pursuant to Tex. Gov't Code §2306.186(e) conducted by a Third-Party. If the PNA/SCR identifies the need for critical repairs that significantly impact habitability and tenant safety, the identified repairs and replacements must be resolved to the satisfaction of the Department before the Development will be considered eligible to proceed with a Right of First Refusal Request;(10) Copy of the monthly operating statements, including income statements and balance sheets for the Property for the most recent 12 consecutive months (financial statements should identify amounts held in reserves);(11) The three most recent consecutive annual operating statements (audited would be preferred);(12) Detailed set of photographs of the Property, including interior and exterior of representative units and buildings, and the Property's grounds;(13) Current and complete rent roll for the Property; and(14) If any portion of the land or improvements is leased for other than residential purposes, copies of the commercial leases.(d) Posting and offers. Within 30 business days of receipt of all required documentation, the Department will review the submitted documents and notify the Development Owner of any deficiencies. During that time, the Department will notify any Qualified Entity or as applicable any Qualified Nonprofit Organization identified by the Development Owner as having a contractual ROFR of the Development Owner's intent to sell. Once any deficiencies are resolved and the Development Owner and Department come to an agreement on the ROFR offer price of the Property, the Department will list the Property for sale on the Department's website and notify entities registered to the email list maintained by the Department of the availability of the Property at a price as determined under this section. The Department will notify the Development Owner when the Property has been listed. The ROFR posting period commences on the date the Property is posted for sale on the Department's website. During the ROFR posting period, a Qualified Nonprofit Organization or Qualified Entity can submit an offer to purchase as follows:(1) if the LURA requires a 90 day ROFR posting period with no priority for any particular kind of Qualified Nonprofit Organization or tenant organization, any Qualified Nonprofit Organization or tenant organization may submit an offer to purchase the property; or(2) If the LURA requires a two year ROFR posting period, a Qualified Nonprofit Organization may submit an offer to purchase the Property as follows:(A) During the first six months of the ROFR posting period, only a Qualified Nonprofit Organization that is a Community Housing Development Organization (CHDO) under 24 CFR Part 92, or that is 100% owned by a CHDO, as approved by the Department, may submit an offer;(B) During the next six months of the ROFR posting period, only a Qualified Nonprofit Organization as described by Tex. Gov't Code §2306.6706, or that is 100% owned by Qualified Nonprofit Organization as described by Tex. Gov't Code §2306.6706, or a tenant organization may submit an offer; and(C) During the final 12 months of the ROFR posting period, any Qualified Nonprofit Organization may submit an offer; or(3) If the LURA requires a 180-day ROFR posting period, a Qualified Entity may submit an offer to purchase the Property consistent with the subparagraphs of this paragraph.(A) During the first 60 days of the ROFR posting period, only a Qualified Entity that is:(i) a CHDO under 24 CFR Part 92, or to an entity that includes a CHDO as one of its controlling members or general partners, as approved by the Department, may submit an offer. In accordance with 24 CFR Part 92, Developments committed HOME CHDO funding on or after August 23, 2013, and still within the Federal Affordability Period must have a CHDO or its wholly owned entity (as applicable) as its only controlling entities and no other entities are eligible;(ii) if the public housing authority or public facility corporation owns the fee title to the Development Owner's leasehold estate:(I) a public housing authority; or(II) a public facility corporation created by a public housing authority under Chapter 303, Local Government Code; or(iii) controlled by an entity described by either clause (i) or (ii) of this subparagraph.(B) During the second 60 days of the ROFR posting period, only a Qualified Entity as described by Tex. Gov't Code §2306.6706, or that is controlled by Qualified Entity as described by Tex. Gov't Code §2306.6706, or a tenant organization such may submit an offer.(C) During the final 60 days of the ROFR posting period, any Qualified Entity may submit an offer.(4) If the LURA does not specify a required ROFR posting timeframe or is unclear on the required ROFR posting timeframe and the required ROFR value is determined by the Minimum Purchase Price method, any Development that received a tax credit allocation prior to September 1, 1997, is required to post for a 90-day ROFR period, and any Development that received a tax credit allocation on or after September 1, 1997, and until September 1, 2015, is required to post for a two year ROFR, unless the LURA is amended under §10.405(b), or after September 1, 2015, is required to post for a 180-day ROFR period as described in Tex. Gov't Code, §2306.6726.(e) Acceptance of offers. A Development Owner may accept or reject any offer received during the ROFR posting period; provided however, that to the extent the LURA gives priority to certain classifications of Qualified Nonprofit Organizations or Qualified Entities to make offers during certain portions of the ROFR posting period, the Development Owner can only negotiate a purchase contract with such classifications of entities during their respective periods. For example, during the CHDO priority period, the Development Owner may only accept an offer from and enter into negotiations with a Qualified Nonprofit Organization or Qualified Entity in that classification. A property may not be transferred under the ROFR process for less than the Minimum Purchase Price, but if the sequential negotiation created by statute yields a higher price, the higher price is permitted.(f) Satisfaction of ROFR.(1) A Development Owner that has posted a Property under the ROFR process is deemed to have satisfied the ROFR requirements in the following circumstances:(A) The Development Owner does not receive any bona fide offers at or above the posted ROFR offer price (or, in the case of a posted minimum purchase price, at the price yielded by the sequential negotiation) from a Qualified Nonprofit Organization or Qualified Entity during the required ROFR posting period;(B) A bona fide offer from a Qualified Nonprofit Organization or Qualified Entity is received at or above the posted ROFR offer price (or, in the case of a posted minimum purchase price, at the price yielded by the sequential negotiation), the Development Owner accepts the offer, the Qualified Nonprofit Organization or Qualified Entity fails to close the purchase, the failure is determined to not be the fault of the Development Owner, and the Development Owner received no other bona fide offers from a Qualified Nonprofit Organization or Qualified Entity during the required ROFR posting period;(C) A bona fide offer from a Qualified Nonprofit Organization or Qualified Entity is received at or above the posted ROFR offer price (or, in the case of a posted minimum purchase price, at the price yielded by the sequential negotiation), the Qualified Nonprofit Organization or Qualified Entity is not approved by the Department during the ownership transfer review due to issues identified during the Previous Participation Review process pursuant to Chapter 1, Subchapter C of this title (relating to Previous Participation and Executive Award Review and Advisory Committee), and the Development Owner received no other bona fide offers at or above the posted ROFR offer price (or, in the case of a posted minimum purchase price, at the price yielded by the sequential negotiation) from a Qualified Nonprofit Organization or Qualified Entity during the required ROFR posting period; or(D) An offer from a Qualified Nonprofit Organization or Qualified Entity is received at a price below the posted ROFR offer price, and the Development Owner received no other bona fide offers from a Qualified Nonprofit Organization or Qualified Entity during the required ROFR posting period at or above the posted ROFR offer price; or(2) A Development Owner with a LURA that identifies a specific Qualified Nonprofit Organization or Qualified Entity to be the beneficiary of the ROFR will satisfy the ROFR if:(A) The identified beneficiary is in existence and conducting business;(B) The Development Owner offers the Development to the identified beneficiary pursuant to the terms of the ROFR;(C) If the ROFR includes a priority for a certain type of Qualified Entity (such as a CHDO) to have the first opportunity make an offer to acquire the Development, the identified beneficiary meets such classification; and(D) The identified entity declines to purchase the Development in writing, and such evidence is submitted to and approved by the Department.(g) Non-Satisfaction of ROFR. A Development Owner that has posted a Property under the ROFR process does not satisfy the ROFR requirements in the following circumstances:(1) A bona fide offer from a Qualified Nonprofit Organization or Qualified Entity is received at or above the posted ROFR offer price (or, in the case of a posted minimum purchase price, at the price yielded by the sequential negotiation), and the Development Owner does not accept the offer;(2) The LURA identifies a specific Qualified Nonprofit Organization or Qualified Entity to be the beneficiary of the ROFR, and such entity no longer exists or is no longer conducting business and the Development Owner received other bona fide offers at or above the posted ROFR offer price (or, in the case of a posted minimum purchase price, at the price yielded by the sequential negotiation) from a Qualified Nonprofit Organization or Qualified Entity during the ROFR posting period and fails to accept any of such other offers;(3) A bona fide offer from a Qualified Nonprofit Organization or Qualified Entity is received at or above the posted ROFR offer price (or, in the case of a posted minimum purchase price, at the price yielded by the sequential negotiation), the Development Owner accepts the offer, the Qualified Nonprofit Organization or Qualified Entity fails to close the purchase, the failure is determined to not be the fault of the Development Owner, the Development Owner received other bona fide offers from a Qualified Nonprofit Organization or Qualified Entity during the ROFR posting period and then fails to accept any of such other offers;(4) A bona fide offer from a Qualified Nonprofit Organization or Qualified Entity is received at or above the posted ROFR offer price (or, in the case of a posted minimum purchase price, at the price yielded by the sequential negotiation), the Development Owner accepts the offer, the Qualified Nonprofit Organization or Qualified Entity fails to close the purchase, and such failure is determined to be the fault of the Development Owner;(5) A bona fide offer from a Qualified Nonprofit Organization or Qualified Entity is received at or above the posted ROFR offer price (or, in the case of a posted minimum purchase price, at the price yielded by the sequential negotiation), the Qualified Nonprofit Organization or Qualified Entity is not approved by the Department during the ownership transfer review due to issues identified during the Previous Participation Review process pursuant to Chapter 1, Subchapter C of this title (relating to Previous Participation and Executive Award Review and Advisory Committee), the Development Owner received other bona fide offers from a Qualified Nonprofit Organization or Qualified Entity during the ROFR posting period and fails to accept any of such other offers; or(6) An offer from a Qualified Nonprofit Organization or Qualified Entity is received at a price below the posted ROFR offer price, the Development Owner received other bona fide offers from a Qualified Nonprofit Organization or Qualified Entity during the ROFR posting period at or above the posted ROFR offer price (or, in the case of a posted minimum purchase price, at the price yielded by the sequential negotiation), and the Development Owner fails to accept any of such offers.(h) Activities Following ROFR.(1) If a Development Owner satisfies the ROFR requirement pursuant to subsection (f)(1) - (2) of this section, it may request a Preliminary Qualified Contract (if such opportunity is available under §10.408 of this Subchapter) or proceed with the sale to an entity that is not a Qualified Nonprofit Organization or Qualified Entity at or above the ROFR offer price (or, in the case of a posted minimum purchase price, at the price yielded by the sequential negotiation).(2) Following notice that the ROFR requirement has been met, if the Development Owner does not post the Property for Qualified Contract in accordance with §10.408 of this Subchapter or sell the Property to an entity that is not a Qualified Nonprofit Organization or Qualified Entity within 24 months of the Department's written indication that the ROFR has been satisfied, the Development Owner must follow the ROFR process for any subsequent transfer.(3) If the Department determines that the ROFR requirement has not been met during the ROFR posting period, the Owner may not re-post under this provision at a ROFR offer price that is higher than the originally posted ROFR offer price until 24 months has expired from the Department's written indication that the ROFR has not been satisfied. The Development Owner may market the Property for sale and sell the Property to a Qualified Nonprofit Organization or Qualified Entity during this 24 month period in accordance with subsection (a)(1) of this section.(i) Sale and closing.(1) Prior to closing a sale of the Property, the Development Owner must obtain Department approval of the transfer through the ownership transfer process in accordance with §10.406 of this Subchapter (relating to Ownership Transfers (§2306.6713)). The request should include, among other required transfer documents outlined in the Post Award Activities Manual, the final sales contract with all amendments.(2) If the closing price is materially less than the ROFR offering price or the terms and conditions of the sale change materially from what was submitted in the ROFR posting, in the Department's sole determination, the Development Owner must go through the ROFR process again with a revised ROFR offering price equal to the reduced closing price or adjusted terms and conditions based upon the revised terms, before disposing of the Property.(j) Appeals. A Development Owner may appeal a staff decision in accordance with §11.902 of this title (relating to Appeals Process).</content><note type="source"><p>Source Note: The provisions of this §10.407 adopted to be effective February 3, 2022, 47 TexReg 266; amended to be effective February 1, 2023, 48 TexReg 348.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scE/s10.408"><num value="10.408">§10.408</num><heading>Qualified Contract Requirements</heading><content>(a) General. Pursuant to §42(h)(6) of the Code, after the end of the 14th year of the Compliance Period, the Development Owner of a Development utilizing Housing Tax Credits can request that the allocating agency find a buyer at the Qualified Contract Price. If a buyer cannot be located within one year, the Extended Use Period will expire. This section provides the procedures for the submittal and review of a Qualified Contract Request.(b) Eligibility. Development Owners who received an award of credits on or after January 1, 2002, are not eligible to request a Qualified Contract prior to the 30 year anniversary of the date the property was placed in service (§2306.185); if the property's LURA indicates a commitment to an Extended Use Period beyond 30 years, the Development Owner is not eligible to request a Qualified Contract until the expiration of the Extended Use Period. Development Owners awarded credits prior to 2002 may submit a Qualified Contract Request at any time after the end of the year preceding the last year of the Initial Affordability Period, provided it is not precluded by the terms of the LURA, following the Department's determination that the Development Owner is eligible. The Initial Affordability Period starts concurrently with the credit period, which begins at placement-in-service or is deferred until the beginning of the next tax year, if there is an election. Unless the Development Owner has elected an Initial Affordability Period longer than the Compliance Period, as described in the LURA, this can commence at any time after the end of the 14th year of the Compliance Period. References in this section to actions which can occur after the 14th year of the Compliance Period shall refer, as applicable, to the year preceding the last year of the Initial Affordability Period, if the Development Owner elected an Initial Affordability Period longer than the Compliance Period.(1) If there are multiple buildings placed in service in different years, the end of the Initial Affordability Period will be based upon the date the last building placed in service. For example, if five buildings in the Development began their credit periods in 2005 and one began in 2006, the 15th year would be 2020.(2) If a Development received an allocation in multiple years, the end of the Initial Affordability Period will be based upon the last year of a multiple allocation. For example, if a Development received its first allocation in 2004 and a subsequent allocation and began the credit period in 2006, the 15th year would be 2020.(c) Preliminary Qualified Contract Request. All eligible Development Owners must file a Preliminary Qualified Contract Request.(1) In addition to determining the basic eligibility described in subsection (b) of this section, the pre-request will be used to determine that:(A) The Development does not have any uncorrected issues of noncompliance outside the corrective action period;(B) There is a Right of First Refusal (ROFR) connected to the Development that has been satisfied; and(C) The Compliance Period under the LURA has expired; and(2) In order to assess the validity of the pre-request, the Development Owner must submit:(A) Preliminary Request Form;(B) Qualified Contract Pre-Request fee as outlined in §11.901 of this title (relating to Fee Schedule);(C) Copy of all regulatory agreements or LURAs associated with the Property (non-TDHCA); and(D) Copy of a Physical Needs Assessment (PNA), conducted by a Third Party, that is no more than 12 months older than the request date. If the PNA identifies the need for critical repairs that significantly impact habitability and tenant safety, the identified repairs and replacements must be resolved to the satisfaction of the Department before the Development will be considered eligible to submit a Qualified Contract Request.(3) The pre-request will not bind the Development Owner to submit a Qualified Contract Request and does not start the One Year Period (1YP). A review of the pre-request will be conducted by the Department within 90 days of receipt of all documents and fees described in paragraph (2) of this subsection. If the Department determines that this stage is satisfied, a letter will be sent to the Development Owner stating that they are eligible to submit a Qualified Contract (QC) Request.(d) Qualified Contract Request. A Development Owner may file a QC Request any time after written approval is received from the Department verifying that the Development Owner is eligible to submit the Request.(1) Documentation that must be submitted with a Request is outlined in subparagraphs (A) - (P) of this paragraph:(A) A completed application and certification;(B) The Qualified Contract price calculation worksheets completed by a licensed Third-Party certified public accountant (CPA). The CPA shall certify that they have reviewed annual partnership tax returns for all years of operation, loan documents for all secured debt, and partnership agreements. They shall also certify that they are not being compensated for the assignment based upon a predetermined outcome;(C) A thorough description of the Development, including all amenities;(D) A description of all income, rental and other restrictions (non-TDHCA), if any, applicable to the operation of the Development;(E) A current title report;(F) A current appraisal with the effective date within six months of the date of the QC Request and consistent with Chapter 11, Subchapter D of this title (relating to Underwriting and Loan Policy);(G) A current Phase I Environmental Site Assessment (and Phase II, if necessary) with the effective date within six months of the date of the QC Request and consistent with Chapter 11, Subchapter D of this title;(H) A copy of the most recent Physical Needs Assessment of the property conducted by a Third Party, if different from the assessment submitted during the preliminary qualified contract request, consistent with Chapter 11, Subchapter D of this title;(I) A copy of the monthly operating statements for the Development for the most recent 12 consecutive months;(J) The three most recent consecutive annual operating statements (audited would be preferred) for the Development;(K) A detailed set of photographs of the Development, including interior and exterior of representative units and buildings, and the property's grounds;(L) A current and complete rent roll for the Development;(M) A certification that all tenants in the Development have been notified in writing of the request for a Qualified Contract. A copy of the letter used for the notification must also be included;(N) If any portion of the land or improvements is leased, copies of the leases;(O) The Qualified Contract Fee as identified in §11.901 of this title (relating to Fee Schedule); and(P) Additional information deemed necessary by the Department.(2) Unless otherwise directed by the Department pursuant to subsection (g) of this section, the Development Owner shall contract with a broker to market and sell the Property. The Department may, at its sole discretion, notify the Owner that the selected Broker is not approved by the Department. The fee for this service will be paid by the seller, not to exceed 6% of the QC Price.(3) Within 90 days of the submission of a complete Request, the Department will notify the Development Owner in writing of the acceptance or rejection of the Development Owner's QC Price calculation. The Department will have one year from the date of the acceptance letter to find a Qualified Purchaser and present a QC. The Department's rejection of the Development Owner's QC Price calculation will be processed in accordance with subsection (e) of this section and the 1YP will commence as provided therein.(e) Determination of Qualified Contract Price. The QC Price calculation is not the same as the Minimum Purchase Price calculation for the ROFR. The CPA contracted by the Development Owner will determine the QC Price in accordance with §42(h)(6)(F) of the Code taking the following into account:(1) Outstanding indebtedness secured by, or with respect to, the building;(2) Distributions to the Development Owner of any and all cash flow, including incentive management fees, capital contributions not reflected in outstanding indebtedness or adjusted investor equity, and reserve balance distributions or future anticipated distributions, but excluding payments of any eligible deferred developer fee. These distributions can only be confirmed by a review of all prior year tax returns for the Development;(3) All equity contributions will be adjusted based upon the lesser of the consumer price index or 5% for each year, from the end of the year of the contribution to the end of year fourteen or the end of the year of the request for a QC Price if requested at the end of the year or the year prior if the request is made earlier than the last month of the year; and(4) These guidelines are subject to change based upon future IRS Rulings and/or guidance on the determination of Development Owner distributions, equity contributions and/or any other element of the QC Price.(f) Appeal of Qualified Contract Price. The Department reserves the right, at any time, to request additional information to document the QC Price calculation or other information submitted. If the documentation does not support the price indicated by the CPA hired by the Development Owner, the Department may engage its own CPA to perform a QC Price calculation and the cost of such service will be paid for by the Development Owner. If a Development Owner disagrees with the QC Price calculated by the Department, a Development Owner may appeal in writing in accordance with §11.902 of this title (relating to Appeals Process). A meeting will be arranged with representatives of the Development Owner, the Department and the CPA contracted by the Department to attempt to resolve the discrepancy. The 1YP will not begin until the Department and Development Owner have agreed to the QC Price in writing. Further appeals can be submitted in accordance with §11.902 of this title (relating to Appeals Process) and Tex. Gov't Code §2306.0321 and §2306.6715.(g) Marketing of Property. By submitting a Request, the Development Owner grants the Department the authority to market the Development and provide Development information to interested parties. Development information will consist of pictures of the Development, location, amenities, number of Units, age of building, etc. Development Owner or broker contact information will also be provided to interested parties. The Development Owner is responsible for providing staff any requested information to assist with site visits and inspections. Marketing of the Development will continue until such time that a Qualified Contract is presented or the 1YP has expired. Notwithstanding subsection (d)(2) of this section, the Department reserves the right to contract directly with a Third Party in marketing the Development. Cost of such service, including a broker's fee, will be paid for by the existing Development Owner. The Department must have continuous cooperation from the Development Owner. Lack of cooperation will cause the process to cease and the Development Owner will be required to comply with requirements of the LURA for the remainder of the Extended Use Period. Responsibilities of the Development Owner include but are not limited to the items described in paragraphs (1) - (3) of this subsection. The Development Owner must:(1) Allow access to the Property and tenant files;(2) Keep the Department informed of potential purchasers; and(3) Notify the Department of any offers to purchase.(h) Presentation of a Qualified Contract. If the Department finds a Qualified Purchaser willing to present an offer to purchase the property for an amount at or above the QC Price, the Development Owner may accept the offer and enter into a commercially reasonable form of earnest money agreement or other contract of sale for the property and provide a reasonable time for necessary due diligence and closing of the purchase. If the Development Owner chooses not to accept the QC offer that the Department presents, the QC request will be closed and the possibility of terminating the Extended Use Period through the Qualified Contract process is eliminated; the Property remains bound by the provisions of the LURA for the remainder of the Extended Use Period. If the Development Owner decides to sell the development for the QC Price pursuant to a QC, the purchaser must complete all requirements of an ownership transfer request and be approved by the Department prior to closing on the purchase, but the consummation of such a sale is not required for the LURA to continue to bind the Development for the remainder of the Extended Use Period.(1) The Department will attempt to procure a QC only once during the Extended Use Period. If the transaction closes under the contract, the new Development Owner will be required to fulfill the requirements of the LURA for the remainder of the Extended Use Period.(2) If the Department fails to present a QC before the end of the 1YP, the Department will file a release of the LURA and the Development will no longer be restricted to low-income requirements and compliance. However, in accordance with §42(h)(6)(E)(ii) of the Code, for a three-year period commencing on the termination of the Extended Use Period, the Development Owner may not evict or displace tenants of Low-Income Units for reasons other than good cause and will not be permitted to increase rents beyond the maximum tax credit rents. Additionally, the Development Owner should submit to the Department a request to terminate the LURA and evidence, in the form of a signed certification and a copy of the letter, to be approved by the Department, that the tenants in the Development have been notified in writing that the LURA will be terminated and have been informed of their protections during the three-year time frame.(3) Prior to the Department filing a release of the LURA, the Development Owner must correct all instances of noncompliance at the Development.(i) Compliance Monitoring during Extended Use Period. For Developments that continue to be bound by the LURA and remain affordable after the end of the Compliance Period, the Department will monitor in accordance with the applicable requirements in Subchapters F and G of this chapter (relating to Uniform Multifamily Rules).</content><note type="source"><p>Source Note: The provisions of this §10.408 adopted to be effective February 3, 2022, 47 TexReg 266.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c10/scF"><num value="F">SUBCHAPTER F</num><heading>COMPLIANCE MONITORING</heading><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.601"><num value="10.601">§10.601</num><heading>Compliance Monitoring Objectives and Applicability</heading><content>(a) The objectives of the Department in performing regular monitoring of affordable rental housing are: (1) To provide for monitoring that meets applicable requirements of: (A) The U.S. Department of Housing and Urban Development (HUD); (B) The U.S. Department of the Treasury (Treasury); (C) The Internal Revenue Service (the IRS); and (D) Applicable state laws and rules; (2) To enable the Department to report information to HUD, Treasury, the IRS, and the Governing Board, as required, regarding the condition and operations of such developments; (3) To enable the Department to communicate with responsible persons regarding the condition and operation of their developments and understand clearly, with a documented record, how they are performing in meeting their obligations; (4) To identify matters of noncompliance so that they can be appropriately addressed and to assist in targeting issues that may require compliance assistance education; (5) To ensure that responsible persons understand the compliance status of their developments and the implications of such status; (6) To articulate and communicate clear standards to promote the maintenance and operation of such developments in a manner that meets the high standards of the Department's affordable rental programs; and (7) To provide a transparent system whereby all interested parties, including residents, community organizations, local governmental entities, and the affordable housing industry, may find accountability, consistency, and an awareness of the high quality standards of affordable housing in the State of Texas. (b) This subchapter applies to the monitoring of affordable rental housing under the programs described in paragraphs (1) - (11) of this subsection: (1) The Housing Tax Credit Program (HTC); (2) The HOME Investment Partnerships Program (HOME), inclusive of HOME Match Units; (3) The Tax Exempt Bond Program (Bond); (4) The Texas Housing Trust Fund Program (HTF, SHTF, or THTF), inclusive of Preservation; (5) The Tax Credit Assistance Program (TCAP); (6) The Tax Credit Exchange Program (Exchange); (7) The Neighborhood Stabilization Program (NSP); (8) Section 811 Project Rental Assistance (811 PRA or 811) Program; (9) Tax Credit Assistance Program Repayment Funds (TCAP RF); (10) The National Housing Trust Fund (NHTF)(11) HOME American Rescue Plan (HOME-ARP); and(12) Emergency Rental Assistance (ERA).(c) Monitoring activity evaluates the physical condition of the Developments and whether they are being operated in documented compliance with program requirements. (d) The results of the Department's monitoring activities will be documented and, communicated to the owner in writing within 90 days of the monitoring visit. (e) The Department may contract with an independent third party to monitor a Development during its construction or rehabilitation and during its operation for compliance with any conditions imposed by the Department in connection with the award of any Department funds, including allocations of housing tax credits, and appropriate state and federal laws, rules, regulations, orders, and other applicable legal requirements. (f) The capitalized terms or phrases used herein are defined in this title. Any other capitalized terms in this subchapter shall have the meaning as defined in Tex. Gov't Code Chapter 2306, Internal Revenue Code (the Code) §42, the HOME Final Rule, and other federal or Department rules, as applicable. Defined terms, when not capitalized, are to be read in context and construed according to common usage.</content><note type="source"><p>Source Note: The provisions of this §10.601 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.602"><num value="10.602">§10.602</num><heading>Notice to Owners and Corrective Action Periods</heading><content>(a) The Department will provide written notice to the Owner if the Department does not receive the Annual Owner Compliance Report (AOCR) timely or if the Department discovers through monitoring, audit, inspection, review, or any other manner that the Development is not in compliance with the provisions of the LURA, deed restrictions, application for funding, conditions imposed by the Department, this subchapter, or other program rules and regulations, including but not limited to §42 of the Internal Revenue Code. All such requirements are the Owner's responsibility, even if the Owner is using a manager or management company's services. Accordingly, Owners should ensure that they hire competent and properly trained managers or management companies, and that they exercise appropriate oversight of any manager or management company activities, including oversight of all responses to noncompliance identified by the Department. (b) For a violation other than a violation that poses an imminent hazard or threat to health and safety, the notice will specify a 30 day Corrective Action Period for noncompliance related to the AOCR, and a 90 day Corrective Action Period for other violations. During the Corrective Action Period, the Owner has the opportunity to show that either the Development was never in noncompliance or that the Event of Noncompliance has been corrected. Documentation of correction must be received during the Corrective Action Period for an event to be considered corrected during the Corrective Action Period. The Department may extend the Corrective Action Period for up to six months from the date of the notice to the Development Owner only if there is good cause for granting an extension and the Owner requests an extension during the original 90 day Corrective Action Period, and the request would not cause the Department or the Owner to miss a federal deadline. Requests for an extension may be submitted to: compliance.extensionrequest@tdhca.texas.gov. If an Owner submits evidence of corrective action during the Corrective Action Period that addresses each finding, but does not fully address all findings, the Department will give the Owner written notice and an additional 10 calendar day period to submit evidence of full corrective action. References in this subchapter to the Corrective Action Period include this additional 10 calendar day period. (c) If any communication to the Owner under this section is returned to the Department as refused, unclaimed, or undeliverable, the Development may be considered not in compliance without further notice to the Owner. The Owner is responsible for providing the Department with current contact information, including address(es) (physical and electronic) and phone number(s). The Owner must also provide current contact information to the Department as required by §1.22 of this title (relating to Providing Contact Information to the Department), and ensure that such information is at all times current and correct. (d) The Department will notify Owners of upcoming reviews and instances of noncompliance. The Department will rely solely on the information supplied by the Owner in the Department's web-based Compliance Monitoring and Tracking System (CMTS) to meet this requirement. It is the Owner's sole responsibility to ensure at all times that such information is current, accurate, and complete. Correspondence sent to the email or physical address shown in CMTS will be deemed delivered to the Owner. Correspondence from the Department may be directly uploaded to the property's CMTS account using the secure electronic document attachment system. Once uploaded, notification of the attachment will be sent electronically to the email address listed in CMTS. The Department is not required to send a paper copy, and if it does so it does as a voluntary and non-precedential courtesy only. (e) Unless otherwise required by law or regulation, Events of Noncompliance will not be reported to the IRS, referred for enforcement action, considered as cause for possible debarment, or reported in an applicant's compliance history or Previous Participation Review, until after the end of the Corrective Action Period described in this section. (f) Upon receipt of facially valid complaints the Department may contact the Owner and request submission of documents or written explanations to address the issues raised by the complainant. The deadline to respond to the issue will be specific to the matter. Whenever possible and not otherwise prohibited or limited by law, regulation, or court order, the complaint received by the Department will be provided along with the request for documents or Owner response. (g) If another federal or state requirement applicable to funding or resources that the Department monitors stipulates that corrective action must be completed with less than a 90 day Corrective Action Period, the Department will inform the Owner in writing and enforce the applicable timeframe.</content><note type="source"><p>Source Note: The provisions of this §10.602 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.603"><num value="10.603">§10.603</num><heading>Notices to the Internal Revenue Service (HTC Developments during the Compliance Period)</heading><content>(a) Even when an Event of Noncompliance is corrected, the Department is required to file IRS Form 8823 with the IRS. When required, IRS Form 8823 generally will be filed not later than 45 days after the end of the correction period specified in the Notice to Owner (including any extensions permitted by the Department), but will not be filed before the end of the correction period. The Department will indicate on IRS Form 8823 the nature of the noncompliance and will indicate whether the Development Owner has corrected the noncompliance. (b) The Department will retain records of noncompliance for six years beyond the Department's filing of the respective IRS Form 8823. (c) The Department will send the Owner of record copies of any IRS Forms 8823 submitted to the IRS.</content><note type="source"><p>Source Note: The provisions of this §10.603 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.604"><num value="10.604">§10.604</num><heading>Options for Review</heading><content>If, following the submission of corrective action documentation, Compliance staff continues to find the Owner in noncompliance, the Owner may request or initiate review of the matter using the following options, where applicable: (1) If the issue is related to the inclusion or exclusion of tenant income, assets, or appropriate household size, the National Center for Housing Management (NCHM) can be contacted. In order to obtain guidance from NCHM, the requestor must have an active Certified Occupancy Specialist designation. If no representative of the owner has this designation, Department staff may make the request on the owner's behalf. (2) If the compliance matter is related to the Housing Tax Credit program, Owners may contact the IRS Program Analyst for guidance or request that Department staff contact the IRS for general guidance without identifying the taxpayer. The issue will be handled in accordance with the guidance received from the IRS. (3) If the compliance matter is related to the HOME, NHTF, NSP, or HOME-ARP program, Owners may request that the Department contact the U.S. Department of Housing and Urban Development Texas Field Office for guidance. The issue will be handled in accordance with guidance received from a HUD official with oversight responsibility, provided it is clear and can be corroborated (e.g., such guidance is provided in writing). (4) Owners may request Alternative Dispute Resolution (ADR). An Owner may send a proposal to the Department's Dispute Resolution Coordinator to initiate ADR pursuant to §1.17 of this title (relating to Alternative Dispute Resolution). Note that even if the Department and Owner are engaged in ADR, the Department must meet Treasury Regulation §1.42-5 and file IRS Form 8823 within 45 days after the end of the Corrective Action Period. Therefore, it is possible that the Owner and Department may still be engaged in ADR when an IRS Form 8823 is filed. Should this happen, the form, including all Owner-supplied documentation, will be sent to the IRS with an explanation that the Owner disagrees with the Department's assessment and is pursuing ADR. Although the violation will be reported to the IRS within the required timeframes, it will not be considered part of an applicant's compliance history nor subject to administrative penalties pending the outcome of the ADR process.</content><note type="source"><p>Source Note: The provisions of this §10.604 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.605"><num value="10.605">§10.605</num><heading>Elections under IRC §42(g)</heading><content>(a) Under the Code, HTC Development Owners elect a minimum set-aside requirement of 20/50 (20% of the Units restricted at the 50% income and rent limits), 40/60 (40% of the Units restricted at the 60% income and rent limits), or the average income test. (b) HTC projects must meet the required election under IRC §42(g) no later than the end of the first year of the Credit Period. (c) An Owner that elects the average income test under IRC §42(g) must disperse 20%, 30%, 40%, 50%, 60%, 70%, and 80% Unit designations across all Unit Types to the greatest extent feasible, and in a manner that does not violate fair housing laws. (d) Until and unless the Internal Revenue Service or the Treasury Department issues conflicting or additional guidance, the Department will examine the actual gross rent and income of all households to determine if a Project that elected the average income test is at or below the federal minimum average of 60% AMI. (e) Under Section 1.42-19T(c)(4) of the Treasury regulations, the Department has broad authority to grant, on a case-by-case basis, written relief of a taxpayer's failure to properly designate a group of units that meets the requirements of a qualified group under Section 1.42-19(b)(2) of the Treasury regulations. Under the Treasury regulations, the Department must grant such relief in writing within 180 days of the discovery of the failure by the taxpayer or the Department.</content><note type="source"><p>Source Note: The provisions of this §10.605 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.606"><num value="10.606">§10.606</num><heading>Construction Inspections</heading><content>(a) Owners are required to submit evidence of final construction within 30 calendar days of completion in a format prescribed by the Department. Owners are encouraged to request a final construction inspection promptly to allow the Department to inspect Units prior to occupancy to avoid disruption of households in the event that corrective action is required. In addition, the Architect of Record must submit a certification that the Development was built in compliance with all applicable laws, and the Engineer of Record (if applicable) must submit a certification that the Development was built in compliance with the design requirements. (b) During the inspection, the Department will confirm that amenities committed in the Application have been provided and will inspect for compliance with the applicable accessibility requirements. In addition, an inspection using National Standards for the Physical Inspection of Real Estate may be completed. (c) IRS Form(s) 8609 will not be released until the Owner receives written notice from the Department that all noted deficiencies have been resolved.</content><note type="source"><p>Source Note: The provisions of this §10.606 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.607"><num value="10.607">§10.607</num><heading>Reporting Requirements</heading><content>(a) The Department requires reports to be submitted electronically through CMTS and in the format prescribed by the Department. The Electronic Compliance Reporting Filing Agreement and the Owner's Designation of Administrator of Accounts forms must be emailed to cmts.requests@tdhca.texas.gov for: (1) 9% Housing Tax Credit Developments - no later than the 10% Test; (2) 4% Housing Tax Credit Developments - no later than Post Bond Closing Documentation Requirements(3) For all other rental Developments - no later than September 1st of the year following the award; or (4) For all rental Developments that have received Department approval of Ownership transfer - no later than 10 days following the completion of Ownership transfer.(b) Each Development is required to submit an Annual Owner's Compliance Report (AOCR). Depending on the Development, some or all of the Report must be submitted. The first AOCR is due the second year following the award in accordance with the deadlines set out in subsection (e) of this section. Example 607(1): A Development was allocated Housing Tax Credits in July 2022. The first report is due April 30, 2024, even if the Development has not yet commenced leasing activities. (c) The AOCR is comprised of four parts: (1) Part A "Owner's Certification of Program Compliance." All Owners must annually certify compliance with applicable program requirements. The AOCR Part A shall include answers to all questions required by the U. S. Department of the Treasury to be addressed, including those required by Treasury Regulation 1.42-5(b)(1) or the applicable program rules; (2) Part B "Unit Status Report." All Developments must annually report and certify the information related to individual household income, rent, certification dates and other necessary data to ensure compliance with applicable program regulations. In addition, Owners are required to report on the race and ethnicity, family composition, age, use of rental assistance, disability status, and monthly rental payments of individuals and families applying for and receiving assistance or if the household elects not to disclose the information, such election; (3) Part C "Housing for Persons with Disabilities." The Department is required to establish a system that requires Owners of state or federally assisted housing Developments with 20 or more housing Units to report information regarding housing Units designed for persons with disabilities. The certified answers to the questions on Part C satisfy this requirement; and (4) Part D "Form 8703." Tax exempt bond properties funded by the Department must file Form 8703 each calendar year of the qualified project period. The form is due to the IRS by March 31 after the close of the calendar year for which the certification is made. The Department requires Tax Exempt Bond Development Owners to submit a copy of the filed Form 8703 for the preceding calendar year. (d) The Owner is required to report certain financial information to the Department electronically through CMTS. If supplemental information is required, it must be uploaded to the Development's CMTS account. "Annual Owner's Financial Certification" (formerly Part D of the AOCR). Developments funded by the Department must annually provide and certify to the data represented in the Annual Owner's Financial Certification (AOFC). (e) Parts A, B, C, and D of the AOCR and the AOFC must be provided to the Department no later than April 30th of each year, reporting data current as of December 31st of the previous year (the reporting year). (f) Periodic Unit Status Reports. All Developments must submit a Quarterly Unit Status Report to the Department through the Compliance Monitoring and Tracking System. Quarterly reports are due in January, April, July, and October on the 10th day of the month. The report must report occupancy as of the last day of the previous month for the reporting period. For example, the report due October 10th should report occupancy as of September 30th of the preceding month. The first quarterly report is due on the first quarterly reporting date after leasing activity commences. Failure to report occupancy timely will result in a finding of noncompliance. (g) Owners are encouraged to continuously maintain current resident data in the Department's CMTS. Under certain circumstances, such as in the event of a natural disaster, the Department may alter the reporting schedule and require all Developments to provide current occupancy data through CMTS. (h) All rental Developments funded or administered by the Department will be required to submit an accurate Unit Status Report prior to a monitoring review and/or a physical inspection. (i) Housing Tax Credit and Tax Credit Exchange Developments must submit IRS Form(s) 8609 with Part II complete through CMTS by the second monitoring review. If an owner elects to group buildings together into one or more multiple building projects, the owner must attach a statement identifying the buildings within the project. (j) Within six (6) months but at least 90 days prior to the end of the Affordability Period and/or the end of the Land Use Restriction Term, the Owner must provide written notice to the current tenants and applicants. If the Development Owner has been approved for new funding, through the Department, and/or awarded new credits such notice is not required. The Notice must contain the following: proposed new rents, any rehabilitation plans and information on how to access the Departments Vacancy Clearinghouse to locate other affordable housing options.</content><note type="source"><p>Source Note: The provisions of this §10.607 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.608"><num value="10.608">§10.608</num><heading>Recordkeeping Requirements</heading><content>(a) Development Owners must comply with program recordkeeping requirements. Records must include sufficient information to comply with the reporting requirements of §10.607 of this subchapter (relating to Reporting Requirements) and any additional programmatic requirements. HTC Development Owners must retain records sufficient to comply with the reporting requirements of Treasury Regulation 1.42-5(b)(1). Records must be kept for each qualified Low-Income Unit and building in the Development, commencing with lease up activities and continuing on a monthly basis until the end of the Affordability Period. (b) Each Development that is administered by the Department must retain records as required by the specific funding program rules and regulations and executed contracts or Land Use Restriction Agreements. In general, retention schedules include, but are not limited to, the provision of subsections (c) - (g) of this section. (c) HTC records must be retained for at least six years after the due date (with extensions) for filing the federal income tax return for that year; however, the records for the first year of the Credit Period must be retained for at least six years beyond the due date (with extensions) for filing the federal income tax return for the last year of the Compliance Period of the building (§1.42-5(b)(2) of the Code). (d) Retention of records for TCAP-RF, HOME, ERA, and HOME-ARP rental Developments must comply with the provisions of 24 CFR §92.508(c), which generally require retention of rental housing records for five years after the Affordability Period terminates. HOME-ARP rental Developments must also comply with HUD CPD Notice 21-10. (e) Retention of records for NHTF must comply with the provisions of 24 CFR §93.407(b), which generally require retention of rental housing records for five years after the Affordability Period terminates. (f) Retention of records for NSP rental Developments must comply with the provisions of 24 CFR §570.506, which generally requires retention of rental housing records for five years after the Department has closed out the grant with HUD. (g) THTF rental Developments must retain tenant files for at least three years beyond the date the tenant moves from the Development. Records pertinent to the funding of the award, including, but not limited to, the Application and Development costs and documentation, must be retained for at least five years after the Affordability Period terminates. (h) Section 811 PRA tenant records must be maintained for the term of tenancy plus three years. After the end of the record retention period, all Enterprise Income Verification (EIV) data must be destroyed. (i) Other rental Developments funded or administered in whole or in part by the Department must comply with record retention requirements as required by federal regulations, statute, rule, or deed restriction. (j) All required records must be made available and accessible for a monitoring review, physical inspection, and whenever requested by the Department. The Department permits electronic records. Digital signatures of both property management and household are acceptable. Developments should have policies in place that allow the household to choose between electronic or hard copy documents. It is the responsibility of the Development Owner to maintain policies and procedures that mitigate fraud, waste, and abuse on an ongoing basis. (k) Prior to completion of ownership and/or management agent change, a current (no earlier than 45 days prior to owner/management agent change) waitlist must be submitted to the Department through CMTS.</content><note type="source"><p>Source Note: The provisions of this §10.608 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.609"><num value="10.609">§10.609</num><heading>Notices to the Department</heading><content>If any of the events described in paragraphs (1) - (7) of this section occur, written notice must be provided to the Department within the respective timeframes. Failure to do so will result in an Event of Noncompliance and may be taken into consideration during Previous Participation Reviews in accordance with Chapter 1 Subchapter C of this title, or in Enforcement actions in accordance with Chapter 2 of this title. (1) Written notice must be provided at least 30 days prior to any proposed sale, transfer, or exchange of the Development or any portion of the Development, and the Department must give its prior written approval to any such sale, transfer, or exchange, which will include a previous participation review on the proposed new ownership, requiring that they complete and provide a Previous Participation Review Form, in accordance with §10.406 of this chapter (relating to Ownership Transfers (§2306.6713)); (2) Notification must be provided within 30 days following the event of any casualty loss, in whole or in part, to the Development, using the Department's Notice of Casualty Loss (for general casualty losses) or Notice of Disaster Casualty Loss (specific to loss as a result of a Presidentially Declared Disaster). Within 30 days of completion of all restorative repairs, the Owner must provide the executed Notice of Property Restoration accompanied by all supporting documentation. Supporting documentation can include, but is not limited to: Certificates of Occupancy, photographs of all restorative repairs completed on buildings and/or Units, invoices from contractors, insurance assessments and/or a written summary of restorative repairs required. The Department may require additional documentation not specified in this section on a case-by-case basis; (3) Owners of Bond Developments shall notify the Department of the date on which 10% of the Units are occupied and the date on which 50% of the Units are occupied, and notice must occur within 90 days of each such date; (4) Within 30 days after a foreclosure, the Department must be provided with documentation evidencing the foreclosure and a rent roll establishing occupancy on the day of the foreclosure; (5) Within 10 days of a change in the contact information (including contact persons, physical addresses, mailing addresses, email addresses, phone numbers, and/or the name of the property as know by the public) for the Ownership entity, management company, and/or Development the Department's CMTS must be updated. Separate contact information must be provided for Ownership entity, management company, and onsite manager at the Development. A single contact may be used for the owner and management if they are the same entity. (6) Within 30 days of completion of the American Institute of Architects form G704- Certificate of Substantial Completion, or Form HUD-92485 for instances in which a federally insured HUD loan is utilized, an Owner must request a Final Construction Inspection; and (7) Development Owners that have agreed to participate in the Section 811 PRA program are required to notify the Department about the availability of Units as described in accordance with §8.6(l)(3) and §8.6(l)(4) of this title (relating to Program Regulations and Requirements).</content><note type="source"><p>Source Note: The provisions of this §10.609 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.610"><num value="10.610">§10.610</num><heading>Written Policies and Procedures</heading><content>Written Policies and Procedures are required as specified at §10.802 of this chapter (relating to Written Policies and Procedures).</content><note type="source"><p>Source Note: The provisions of this §10.610 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.611"><num value="10.611">§10.611</num><heading>Determination, Documentation and Certification of Annual Income</heading><content>(a) For all rental programs administered by the Department, annual income shall be determined consistent with the Section 8 Program administered by HUD, using the definitions of annual income described in 24 CFR §5.609 as further described in the HUD Handbook 4350.3, as amended from time to time. For the Housing Tax Credit program, where there is a conflict between the HUD Handbook 4350.3 and the IRS Guide for Completing IRS Form 8823, the IRS guidance will be controlling. At the time of program designation as a low income household, Owners must certify and document household income. In general, all low income households must be certified prior to move in. Certification and documentation of household income is an Owner's responsibility, even if the Owner is using the services of a manager or management company to handle tenant intake and leasing. Accordingly, Owners should ensure that they hire competent and properly trained managers or management companies and that they exercise appropriate oversight of any managers or management companies. (b) For every certification, requiring verification of income and assets, of a household residing in a HOME, NHTF, NSP, TCAP RF, or HOME-ARP assisted Unit, Owners must examine at least two months (60 days) of source documents evidencing annual income (e.g., wage statement, interest statement, unemployment compensation). Qualified populations in HOME-ARP Units may not need to meet an income requirement upon move-in, but will have their income verified to determine rental portion of payment. (c) Department administered programs are permitted to utilize the Section 8 Verification of income process, available on the Department website, for the verification of household income at initial or subsequent annual certifications. This permission is removed if any entity that is in the Control of the operation of the Development or is in any way associated with the certifying Housing Authority. This permission is only granted for households that currently are utilizing a Housing Choice Voucher. No other means tested verifications are allowable.(d) A household's lowest designation, as recorded on the Income Certification, at the time of move in, cannot be increased unless the household was found to never have income qualified for the Unit, no longer income qualifies for the Unit, or program rules required the change. In addition, a household's low income status cannot be removed because of an increase in income at recertification unless the increase causes the Unit to go over income as defined in §10.615 of this subchapter (relating to Elections under IRC §42(g) and Additional Income and Rent Restrictions for HTC, Exchange, and TCAP Developments), IRC §42(g), or the HOME Final Rule.(e) For all programs, for every certification that requires verification of income and assets, those verifications must be dated within 120 days of the certification effective date. The only exceptions are lifetime benefits (e.g. pension, annuities, Social Security).</content><note type="source"><p>Source Note: The provisions of this §10.611 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.612"><num value="10.612">§10.612</num><heading>Tenant File Requirements</heading><content>(a) At the time of program designation as a low income household (or Qualified Population for HOME-ARP), typically at initial occupancy, Owners must create and maintain a file that at a minimum contains: (1) A Department approved Income Certification form signed by all adults. At the time of program designation as a low income household or Qualified Population, Owners must certify and document household income. In general, all low-income households and Qualified Populations for HOME-ARP must be certified prior to move in. The Department requires the use of the TDHCA Income Certification form, unless the Development also participates in the USDA - Rural Development or a Project Based HUD Program, in which case, the other program's Income Certification form will be accepted; (2) Documentation to support the Income Certification form including, but not limited to, applications (one per adult or married couple), first hand or third party verification of income and assets, and documentation of student status (if applicable). The application must provide a space for applicants to indicate if they are a veteran. In addition, the application must include the following statement: "Important Information for Former Military Services Members. Women and men who served in any branch of the United States Armed Forces, including Army, Navy, Marines, Coast Guard, Air Force, Reserves or National Guard, may be eligible for additional benefits and services. For more information please visit the Texas Veterans Portal at https://veterans.portal.texas.gov/"; (3) The Department permits Owners to use check stubs or other firsthand documentation of income and assets provided by the applicant or household in lieu of third party verification forms. It is not necessary to first attempt to obtain a third party verification form. Owners should scrutinize these documents to identify and address any obvious attempts at forgery, alteration, or generation of falsified documents; and (4) A lease with all necessary addendums to ensure that compliance with applicable federal regulations and §10.613 of this subchapter (relating to Lease Requirements). (b) Annually thereafter on the anniversary date of the household's move in or initial designation: (1) Throughout the Affordability Period, all Owners of Housing Tax Credit, TCAP, and Exchange Developments must collect and maintain current data on each household that includes the number of household members, age, ethnicity, race, disability status, student status, and rental assistance (if any). This information can be collected on the Department's Annual Eligibility Certification form, the Income Certification form, HUD Income Certification form, USDA-Rural Development Income Certification form (as applicable). (2) During the Compliance Period for all Housing Tax Credit, TCAP, and Exchange Developments and throughout the Affordability Period for all Bond Developments and HOME, TCAP RF, and HOME-ARP Units Owners must collect and maintain current student status data for each low-income household. This information must be collected within 120 days before the anniversary of the effective date of the original Income Certification and can be collected on the Department's Annual Eligibility Certification or the Department's Certification of Student Eligibility form or the Department's Income Certification form. Throughout the Compliance Period for HTC, TCAP, and Exchange developments, low-income households comprised entirely of full-time students must qualify for a HTC program exception, and supporting documentation must be maintained in the household's file. For Bond Developments, if the household is not an eligible student household, it may be possible to re-designate the full-time student household to an Eligible Tenant (ET). For HOME, TCAP RF, and HOME-ARP Units an individual does not qualify as a low income or very low income family if the individual is a student who is not eligible to receive Section 8 assistance under 24 CFR §5.612. (3) The types of Developments described in subparagraphs (A) - (D) of this paragraph are required to recertify annually the income of each low-income household using a Department approved Income Certification form and documentation to support the Income Certification (see subsection (a)(1) - (2) of this section): (A) Mixed income Housing Tax Credit, TCAP and Exchange projects (as defined by line 8(b) of IRS Form(s) 8609 and accompanying statements, if any) that have not completed the 15 year Compliance Period. (B) All Bond Developments with less than 100% of the Units set aside for households with an income less than 50% or 60% of area median income. If subsequent legislation allows for the use of the Average Income minimum set aside for the Bond program, the income threshold will increase to 80% area median income.(C) THTF Developments with Market Rate Units. However, THTF Developments with other Department administered programs will comply with the requirements of the other program. (D) HOME, TCAP RF, NHTF, and HOME-ARP Developments. Refer to subsection (c) of this section. (c) Ongoing tenant file requirements for HOME, TCAP RF, NHTF, and HOME-ARP Developments: (1) HOME, TCAP RF, NHTF, and HOME-ARP Developments must complete a recertification with verifications of each assisted Unit every sixth year of the Development's Affordability Period. The recertification is due on the anniversary of the household's move-in date. For purposes of this section the beginning of a HOME, TCAP RF, NHTF, HOME-ARP Development Affordability Period is the effective date in the HOME, TCAP RF, NHTF, and HOME-ARP LURA. Example 612(1): A HOME Development with a LURA effective date of May 2020, will have the following years of the affordability period: (A) Year 1: May 15, 2020 - May 14, 2021; (B) Year 2: May 15, 2021 - May 14, 2022; (C) Year 3: May 15, 2022 - May 14, 2023; (D) Year 4: May 15, 2023 - May 14, 2024; (E) Year 5: May 15, 2024 - May 14, 2025; (F) Year 6: May 15, 2025 - May 14, 2026; (G) Year 7: May 15, 2026 - May 14, 2027; (H) Year 8: May 15, 2027 - May 14, 2028; (I) Year 9: May 15, 2028 - May 14, 2029; (J) Year 10: May 15, 2029 - May 14, 2030; (K) Year 11: May 15, 2030 - May 14, 2031; and (L) Year 12: May 15, 2031 - May 14, 2032. (2) In the scenario described in paragraph (1) of this subsection, all households in HOME, TCAP RF, NHTF, and HOME-ARP Units must be recertified with source documentation during the sixth and twelfth years or between May 15, 2025, to May 14, 2026, and between May 15, 2031, and May 14, 2032. (3) In the intervening years the Development must collect a self-certification within 120 days before the anniversary of the effective date of the original Income Certification from each household that is assisted with HOME, TCAP RF, NHTF, and HOME-ARP funds. The Development must use the Department's Income Certification form, unless the property also participates in the Rural Development or a project Based HUD program, in which case, the other program's Income Certification form will be accepted. If the household reports on their self-certification that their annual income exceeds the current 80% applicable income limit or there is evidence that the household's written statement failed to completely and accurately provide information about the household's characteristics and/or income, then an annual income recertification with verifications is required. (d) Tenant File requirements for HOME-ARP Qualified Populations Units. Files for households assisted under the HOME-ARP program as Qualified Population must document evidence that the households meet the definition of: (1) Homeless as defined in 24 CFR §91.5; (2) At-risk of homelessness as defined in 24 CFR §91.5; (3) Fleeing, or Attempting to Flee, Domestic Violence, Dating Violence, Sexual Assault, Stalking, or Human Trafficking, as defined in CPD Notice 21-10; (4) Other Families Requiring Services or Housing Assistance to Prevent Homelessness, which are households who have previously been qualified as homeless, are currently housed due to temporary, or emergency assistance, including financial assistance, services, temporary rental assistance or some type of other assistance to allow the household to be housed, and who need additional housing assistance or supportive services to avoid a return to homelessness; (5) At Greatest Risk of Housing Instability as cost burdened, which are households who have an annual income that is less than or equal to 30% of the area median income, as determined by HUD and is experiencing severe cost burden (i.e. is paying more than 50% of monthly household income toward housing costs.); or (6) At Greatest Risk of Housing Instability, which meets the definition of at-risk of homelessness as defined in 24 CFR §91.5, but with an income up to 50% AMI.</content><note type="source"><p>Source Note: The provisions of this §10.612 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.613"><num value="10.613">§10.613</num><heading>Lease Requirements</heading><content>(a) Eviction and/or termination of a lease. HTC, TCAP, and Exchange Developments must specifically state in the lease or in an addendum attached to the lease that evictions or terminations of tenancy for other than good cause are prohibited. To terminate tenancy, the Owner must serve written notice to the tenant specifying the grounds for the action. For nonpayment of rent, HTC, TCAP, Exchange, and NHTF Developments require a thirty (30) day written notice. If the CARES Act is modified to eliminate the 30-day notice requirement, HUD or Treasury requirements will supersede this 30-day notice requirement for nonpayment of rent. (b) HOME, ERA, TCAP RF, NHTF, NSP, and HOME-ARP Developments are prohibited from evicting low income residents or refusing to renew a lease except for serious or repeated violations of the terms and conditions of the lease, for violations of applicable federal, state or local law, for completion of the tenancy period for Transitional Housing (if applicable), for households that were found to never have income qualified for the highest income designation under the program or for other good cause. It must be specifically stated in the lease or in an addendum attached to the lease that evictions or non-renewal of leases for other than good cause are prohibited (24 CFR §92.253 and 24 CFR §93.303). Owners must also comply with all other lease requirements and prohibitions stated in 24 CFR §92.253 or 24 CFR §93.303, as applicable. To terminate or refuse to renew tenancy in HOME, TCAP RF, NSP, and HOME-ARP Developments, the Owner must serve written notice to the tenant specifying the grounds for the action at least 30 days before the termination of tenancy. For HOME-ARP, Owners may not terminate the tenancy or refuse to renew the lease of the Qualifying Household in any Unit that is supported by capitalized operating costs because of the household's inability to pay rent of more than 30 percent of the qualifying household's income toward rent during the longer of the federal affordability period or the time period identified in the Contract. (c) In accordance with the Violence Against Women Act, an incident of actual or threatened domestic violence, dating violence, sexual assault, or stalking against the documented victim of such actual or threatened domestic violence, dating violence, sexual assault, or stalking shall not be construed as a serious or repeated violation of a lease or good cause for termination of tenancy of the victim(s). Additionally, it shall not be construed as a serious or repeated violation of a lease or action eligible for termination of tenancy if a person has opposed any act or practice made unlawful by the Violence Against Women Act 2022, or because that person testified, assisted, or participated in any matter covered by the Violence Against Women Act 2022. (d) A Development must use a lease or lease addendum that requires households to report changes in student status. (e) Owners of HTC, TCAP, and Exchange Developments are prohibited from locking out or threatening to lock out any Development resident, except by judicial process, unless the exclusion is necessary for the purpose of performing repairs or construction work, or in cases of emergency. Owners are further prohibited from seizing or threatening to seize the personal property of a resident except by judicial process unless the resident has abandoned the premises. These prohibitions must be included in the lease or lease addendum. (f) For HOME, TCAP, TCAP RF, NHTF, 811 PRA, NSP, ERA and HOME-ARP Developments, properties that were initially built for occupancy prior to 1978 must include in their lease or lease addendum a Lead Warning Statement. To demonstrate compliance, the Department will monitor that all households at HOME, TCAP, TCAP RF, NHTF, NSP, ERA, and HOME-ARP Developments have signed the Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards. (24 CFR §92.355, 24 CFR §93.361 and §570.487(c), and Section 1018 of Title X, as applicable). The addendum and disclosure are not required if all lead has been certified to have been cleared from the Development in accordance with 24 CFR §35.130, and the Owner has the required certification in its on-site records. (g) An Owner may bifurcate a lease to terminate the tenancy of an individual who is a tenant or lawful occupant and engages in criminal activity directly relating to domestic violence, dating violence, sexual assault, or stalking against another lawful occupant living in the Unit or other affiliated individual as defined in the VAWA 2013. (h) All NHTF, TCAP RF, NSP, HOME, and HOME-ARP Developments for which the contract is executed on or after December 16, 2016, must use the Department created VAWA lease addendum which provides the ability for the tenant to terminate the lease without penalty if the Department determines that the tenant qualifies for an emergency transfer under 24 CFR §5.2005(e). 811 PRA Units are prohibited from using the expired 2005 VAWA lease addendum. After OMB approval of a VAWA lease addendum, all 811 PRA households must have a valid and executed VAWA lease addendum. For the 811 PRA program certain addenda for the HUD model lease may be required such as Lead Based Paint Disclosure form, house rules, and pet rules. No other attachments to the lease are permissible without approval from the Department's 811 PRA staff. (i) Leasing of HOME, TCAP RF, or NHTF Units to an organization that, in turn, rents those Units to individuals is not permissible for Developments with contracts dated on or after August 23, 2013. Leases must be between the Development and an eligible household. NSP and HOME-ARP Developments may only utilize Master Leases, if specifically allowed in the Development's LURA. (j) Housing Tax Credit, TCAP, and Exchange Units leased to an organization through a supportive housing program where the owner receives a rental payment for the Unit regardless of physical occupancy will be found out of compliance if the Unit remains vacant for over 60 days. The Unit will be found out of compliance under the Event of Noncompliance "Violation of the Unit Vacancy Rule." (k) It is a Development Owner's responsibility at all times to know what it has agreed to provide by way of common amenities, Unit amenities, and services. (l) A Development Owner shall post in a common area of the leasing office a copy and provide each household, during the application process and upon a subsequent change to the items described in paragraph (2) of this subsection, the brochure made available by the Department, A Tenant Rights and Resources Guide, which includes: (1) Information about Fair Housing and tenant choice; (2) Information regarding common amenities, Unit amenities, and services;(3) A certification that a representative of the household must sign prior to, but no more than 120 days prior to, the initial lease execution acknowledging receipt of this brochure; (4) In the event this brochure is not provided timely or the household does not certify to receipt of the brochure, correction will be achieved by providing the household with the brochure and receiving a signed certification that it was received; and (5) A Development Owner must state in the Tenant Rights and Resources Guide if part or all of the Development Site is located in the 100 year floodplain. Developments where all or part of the Development Site is located in a 100 year floodplain where the latest award from the Department is after 2019, under a Project-Based Voucher HAP Contract or 811 PRA Use Agreement with the Department, within any federal affordability period (including a HOME Match affordability period), that have a loan with the Department with an outstanding loan balance, or that has flood insurance as contractual or requirement in its LURA must maintain flood insurance, and provide evidence to the Department upon request.(m) For Section 811 PRA Units, Owners must use the HUD Model lease, HUD form 92236-PRA. (n) Except as identified in federal or state statute or regulation for Direct Loans, or as otherwise identified in this Chapter, the Department does not determine if an Owner has good cause or if a resident has violated the lease terms. Challenges to evictions or terminations of tenancy must be determined by a court of competent jurisdiction or an agreement of the parties (including an agreement made in arbitration), and the Department will rely on that determination.</content><note type="source"><p>Source Note: The provisions of this §10.613 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.614"><num value="10.614">§10.614</num><heading>Utility Allowances</heading><content>(a) Purpose. The purpose of this section is to provide the guidelines for calculating a Utility Allowance under the Department's multifamily programs. The Department will cite noncompliance and/or not approve a Utility Allowance if it is not calculated in accordance with this section. Owners are required to comply with the provisions of this section as well as any existing federal or state program guidance. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. Other capitalized terms used in this section herein have the meanings assigned in Chapters 1, 2, 10, 11, and 12 of this title. (1) Building Type. The HUD Office of Public and Indian Housing (PIH) characterizes building and unit configurations for HUD programs. The Department will defer to the guidance provided by HUD found at: http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_11608.pdf (or successor Uniform Resource Locator (URL)) when making determinations regarding the appropriate building type(s) at a Development. (2) Power to Choose. The Public Utility Commission of Texas database of retail electric providers in the areas of the state where the sale of electricity is open to retail competition: http://www.powertochoose.org/ (or successor URL). In areas of the state where electric service is deregulated, the Department will verify the availability of residential service through Power to Choose. If the Utility Provider is not listed as a provider of residential service in the Development's ZIP code for an area that is deregulated, the request will not be approved. It is the Owner's responsibility to ensure that a Development in a deregulated area, but within the boundaries of a regulated municipality, is using the appropriate provider. (3) Component Charges. The actual cost associated with the billing of a residential utility. Each Utility Provider may publish specific utility service information in varying formats depending on the service area. Such costs include, but are not limited to: (A) Rate(s). Any cost incurred for the actual unit of measure for the utility (e.g., base cost per kilowatt hour for electricity, TDU delivery charges, rate per gallon of water, etc.); (B) Fees. The cost associated with a residential utility that is incurred regardless of the amount of the utility the household consumes (e.g., Customer Charge); (C) Taxes. Taxes for electricity and gas are regulated by the Texas Comptroller of Public Accounts and can be found http://comptroller.texas.gov/ (or successor URL). Local Utility Providers have control of the tax structure related to water, sewer and trash. To identify if taxes are imposed for these utilities, obtain documentation directly from the Utility Provider. (4) Multifamily Direct Loan (MFDL). Funds provided through the HOME, NSP, NHTF, TCAP RF, HOME-ARP, ERA, or other program available through the Department, local political subdivision, or administrating agency for multifamily development that require a Utility Allowance. MFDLs may also include deferred forgivable loans or other similar direct funding, regardless if it is required to be repaid. Housing Tax Credits, Tax Exempt Bonds, CDBG, and Project Based Vouchers are not MFDLs. (5) Renewable Source. Energy produced from energy property described in IRC §48 or IRC §45(d)(1) through (4), (6), (9), or (11). The manner in which a resident is billed is limited to the rate at which the local Utility Provider would have charged the residents for the utility if that entity had provided it to them, and as may be further limited by the Texas Utilities Code or by regulation. (6) Submetered Utility. A utility purchased from or through a local Utility Provider by the building Owner where the resident is billed directly by Owner of the building or to a third party billing company and the utility is: (A) Based on the residents' actual consumption of that utility and not an allocation method or Ratio Utility Billing System (RUBS); (B) The rate at which the utility is billed does not exceed the rate incurred by the building Owner for that utility; and (C) Tenants receiving a tenant-based Housing Choice Voucher or residing in a Housing Tax Credit Development may not be charged a service fee for submetered utilities. For MFDL Developments where tenants are being charged a service fee for submetered utilities, the fee must either be included in the Utility Allowance or be included in the gross rent calculation as a mandatory fee.(7) Utility Allowance. An estimate of the expected monthly cost of any utility for which a resident is financially responsible, other than telephone, cable television, or internet. A utility allowance is considered implemented once the Unit Status Report is updated and rents are restricted. (A) For HTC, TCAP, Exchange buildings, Bonds, and THTF include: (i) Utilities paid by the household directly to the Utility Provider; (ii) Submetered Utilities; and (iii) Renewable Source Utilities. (B) For a Development with an MFDL, unless otherwise prescribed in the program's Regulatory Agreement, include all utilities regardless of how they are paid. (8) Utility Provider. The company that provides residential utility service (e.g., electric, gas, water, wastewater, and/or trash) to the buildings. If the Utility Provider offers more than one rate plan, the plan selected must be available to all households in the building.(c) Methods. The following options are available to establish a Utility Allowance for all programs except most Developments funded with MFDL funds, which are addressed in subsection (d) of this section. HOME-ARP may use methods in this subsection or subsection (d) of this section, but cannot combine two methods in one building. (1) Rural Housing Services (RHS) buildings or buildings with RHS assisted residents. The applicable Utility Allowance for the Development will be determined under the method prescribed by the RHS (or successor agency). No other utility method described in this section can be used by RHS buildings or buildings with RHS assisted residents. (2) HUD-Regulated buildings layered with any Department program. If neither the building nor any resident in the building receives RHS rental assistance payments, and the rents and the Utility Allowances of the building are regulated by HUD (HUD-regulated building), the applicable Utility Allowance for all rent restricted Units in the building is the applicable HUD Utility Allowance. No other utility method described in this section can be used by HUD-regulated buildings. Unless further guidance is received from the U.S. Department of Treasury or the Internal Revenue Service (IRS), the Department considers Developments awarded an MFDL (e.g., HOME) to be HUD-Regulated buildings. (3) Other Buildings. For all other rent-restricted Units, Development Owners must use one of the methods described in subparagraphs (A) - (E) of this paragraph: (A) Public Housing Authority (PHA). The Utility Allowance established by the applicable PHA for the Housing Choice Voucher Program. The Department will utilize the Texas Local Government Code, Chapter 392 to determine which PHA is the most applicable to the Development. (i) If the PHA publishes different schedules based on Building Type, the Owner is responsible for implementing the correct schedule based on the Development's Building Type(s). Example 614(1): The applicable PHA publishes a separate Utility Allowance schedule for Apartments (5+ units), one for Duplex/Townhomes and another for Single Family Homes. The Development consists of 20 buildings, 10 of which are Apartments (5+ units) and the other 10 buildings are Duplexes. The Owner must use the correct schedule for each Building Type. (ii) In the event the PHA publishes a Utility Allowance schedule specifically for energy efficient units, and the Owner desires to use such a schedule, the Owner must demonstrate that the building(s) meet the housing authority's specifications for energy efficiency once every five years. (iii) If the applicable PHA allowance lists flat fees for any utility, those flat fees must be included in the calculation of the Utility Allowance if the resident is responsible for that utility. (iv) If the individual components of a Utility Allowance are not in whole number format, the correct way to calculate the total allowance is to add each amount and then round the total up to the next whole dollar. Example 614(2): Electric cooking is $8.63, Electric Heating is $5.27, Other Electric is $24.39, Water and Sewer is $15. The Utility Allowance in this example is $54.00. If the PHA schedule reflects a rounded amount, then the PHA method of rounding should be used. (v) If an Owner chooses to implement a methodology as described in subparagraph (B), (C), (D), or (E) of this paragraph, for Units occupied by Section 8 voucher holders, the Utility Allowance remains the applicable PHA Utility Allowance established by the PHA from which the household's voucher is received. (vi) If the Development is located in an area that does not have a municipal, county, or regional housing authority that publishes a Utility Allowance schedule for the Housing Choice Voucher Program, Owners must select an alternative methodology, unless the building(s) is located in the published Housing Choice Voucher service area of: (I) A Council of Government created under Texas Local Government Code, Chapter 303, that operates a Housing Choice Voucher Program; (II) The Department's Housing Choice Voucher Program; or (III) Another PHA which publishes a separate utility allowance schedule specific to the Development's location. (B) Written Local Estimate. The estimate must come from the local Utility Provider, be signed by the Utility Provider representative, and specifically include all Component Charges for providing the utility service. (C) HUD Utility Schedule Model. The HUD Utility Schedule Model and related resources can be found at http://www.huduser.gov/portal/resources/utilallowance.html (or successor URL). Each item on the schedule must be displayed out two decimal places. The total allowance must be rounded up to the next whole dollar amount. The Component Charges used can be no older than those in effect 60 days prior to the beginning of the 90 day period described in subsection (f)(3) of this section related to Effective Dates. (i) The allowance must be calculated using the MS Excel version available at http://www.huduser.org/portal/resources/utilmodel.html (or successor URL), as updated from time to time, with no changes or adjustments made other than entry of the required information needed to complete the model. (ii) In the event that the zip code for the Development is not listed in "Location" tab of the workbook, the Department will default to the PHA code from the PHA that is closest in distance to the Development using online mapping tolls (e.g. Google Maps). If neither the zip code nor the PHA code is listed, a zip code that borders the Development's zip code will be used The Department will obtain the PHA codes from https://www.hud.gov/sites/dfiles/PIH/documents/PHA_Contact_Report_TX.pdf (or successor Uniform Resource Locator (URL)). (iii) Green Discount. If the Owner elects any of the Green Discount options for a Development, documentation to evidence that the units and the buildings meet the Green Discount standard as prescribed in the model is required for the initial approval and every subsequent annual review. Energy Star certifications will require the certificates for each Unit at the time of the initial Utility Allowance review and a letter from a properly licensed engineer annually thereafter. The engineer letter will be accepted for a period of five (5) years and must be updated thereafter.(I) In the event the allowance is being calculated for an application of Department funding (e.g., 9% Housing Tax Credits), upon request, the Department will provide both the Green Discount and the non-Green Discount results for application purposes. (II) At lease up, the owner may use the utility allowance taking into consideration the green discount if they obtain written documentation from a qualified professional (e.g., a qualified energy efficiency consultant) indicating that the Units and buildings will meet the qualifications for the Green Discount within six months of the placed in service date or for MFDL within six months of the construction completion date. (iv) Do not take into consideration any costs (e.g., penalty) or credits that a consumer would incur because of their actual usage. Example 614(3): The Electric Fact Label for ABC Electric Utility Provider provides a Credit Line of $40 per billing cycle that is applied to the bill when the usage is greater than 999 kWh and less than 2000 kWh. Example 614(4): A monthly minimum usage fee of $9.95 is applied when the usage is less than 1000 kWh in the billing cycle. When calculating the allowance, disregard these types of costs or credits. (D) Energy Consumption Model. The model must be calculated by a properly licensed mechanical engineer. The license of the engineer must be submitted along with the model. The individual must not be related to the Owner within the meaning of §267(b) or §707(b) of the Code. The utility consumption estimate must, at minimum, take into consideration specific factors that include, but are not limited to, Unit size, building type and orientation, design and materials, mechanical systems, appliances, characteristics of building location, and available historical data. Component Charges used must be no older than those in effect 60 days prior to the beginning of the 90 day period described in subsection (f)(3) of this section related to Effective Dates; and (E) An allowance based upon an average of the actual use of similarly constructed and sized Units in the building using actual utility usage data and Component Charges, provided that the Development Owner has the written permission of the Department. This methodology is referred to as the "Actual Use Method." For a Development Owner to use the Actual Use Method they must: (i) Provide a minimum sample size of usage data for at least five Continuously Occupied Units of each Unit Type or 20% of each Unit Type, whichever is greater. If there are less than five Units of any Unit Type, data for 100% of the Unit Type must be provided; and (ii) Upload the information in subclauses (I) - (IV) of this clause to the Development's CMTS account no later than the beginning of the 90 day period after which the Owner intends to implement the allowance, reflecting data no older than 60 days prior to the 90 day implementation period described in described in subsection (f)(3) of this section related to Effective Dates. (I) An Excel spreadsheet listing each Unit for which data was obtained to meet the minimum sample size requirement of a Unit Type, the number of bedrooms, bathrooms and square footage for each Unit, the household's move-in date, the utility usage (e.g., actual kilowatt usage for electricity) for each month of the 12 month period for each Unit for which data was obtained, and the Component Charges in place at the time of the submission; (II) All documentation obtained from the Utility Provider (or billing entity for the utility provider) and/or copies of actual utility bills gathered from the residents, including all usage data not needed to meet the minimum sample size requirement and any written correspondence from the utility provider; (III) The rent roll showing occupancy as of the end of the month for the month in which the data was requested from the utility provider; and (IV) Documentation of the current Utility Allowance used by the Development. (iii) Upon receipt of the required information, the Department will determine if the Development Owner has provided the minimum information necessary to calculate an allowance using the Actual Use Method. If so, the Department shall calculate the Utility Allowance for each bedroom size using the guidelines described in subclauses (I) - (V) of this clause; (I) If data is obtained for more than the sample requirement for the Unit Type, all data will be used to calculate the allowance; (II) If more than 12 months of data is provided for any Unit, only the data for the most current 12 will be averaged; (III) The allowance will be calculated by multiplying the average units of measure for the applicable utility (i.e., kilowatts over the last 12 months by the current rate) for all Unit Types within that bedroom size. For example, if sufficient data is supplied for 18 two bedroom/one bath Units, and 12 two bedroom/two bath Units, the data for all 30 Units will be averaged to calculate the allowance for all two bedroom Units; (IV) The allowance will be rounded up to the next whole dollar amount. If allowances are calculated for different utilities, each utility's allowance will be rounded up to the next whole dollar amount and then added together for the total allowance; and (V) If the data submitted indicates zero usage for any month, the data for that Unit will not be used to calculate the Utility Allowance. (iv) The Department will complete its evaluation and calculation within 45 days of receipt of all the information requested in clause (ii) of this subparagraph; (d) In accordance with 24 CFR §§92.252 and 93.302, for an MFDL in which the Department is the funding source, the Utility Allowance will be established in the following manner: (1) For Developments with fixed MFDL Units, only one utility allowance may be used in buildings with MFDL units. For Developments with floating MFDL Units, only one utility allowance may be used for the entire Development.(2) For Developments that, as a result of funding, must calculate the Utility Allowance under HUD Multifamily Notice H-2015-4, as revised from time to time, the applicable Utility Allowance for all rent restricted Units in the building is the applicable Utility Allowance calculated under that Notice. No other utility method described in this section can be used. (3) Other Buildings. The Utility Allowance may be initiated by the Owner using the methodologies described in subsection (c)(3)(B), (C), (D), or (E) of this section related to Methods. Buildings for which the only source of MFDL funding is HOME-ARP and which contain no HOME-Match Units may calculate the Utility Allowance using the methodology described in subsection (c)(3)(A) of this section. The methodology must be annually reviewed and approved by the Department. (4) If a request is not received by October 1st, the Department will calculate the Utility Allowance using the HUD Utility Schedule Model. For property specific data, the Department will use: (A) The information submitted in the Annual Owner's Compliance Report; (B) Monitor Review Questionnaires submitted with prior monitoring reviews; or (C) The owner may be contacted and required to complete the Utility Allowance Questionnaire. In such case, a five day period will be provided to return the completed questionnaire. (D) Utilities will be evaluated in the following manner: (i) For regulated utilities, the Department will contact the Utility Provider directly and apply the Component Charges in effect no later than 60 days before the allowance will be effective. (ii) For deregulated utilities: (I) The Department will use the Power to Choose website and search available Utility Providers by ZIP code; (II) The plan chosen will be the median cost per kWh based on average price per kWh for the average monthly use of 1000 kWh of all available plans; and (III) The actual Component Charges from the plan chosen in effect no later than 60 days before the allowance will be effective will be entered into the Model. (E) The Department will notify the Owner contact in CMTS of the new allowance and, if requested, provide the backup for how the allowance was calculated. The owner will be provided a five day period to review the Department's calculation and note any errors. Only errors related to the physical characteristics of the building(s) and utilities paid by the residents will be reconsidered; the utility plan and Utility Provider selected by the Department and Component Charges used in calculating the allowance will not be changed. During this five day period, the owner also has the opportunity to submit documentation and request use of any of the available Green Discounts. (F) The allowance must be implemented for rent due in all program Units thirty days after the Department notifies the Owner of the allowance. (5) Buildings in which there are Units under an MFDL program are considered HUD-Regulated buildings and the applicable Utility Allowance for all rent restricted Units in the building is the Utility Allowance calculated under the MFDL program. If the Department is the awarding entity, no other utility method described in this section can be used. If the Department is not the awarding jurisdiction, Owners are required to obtain, annually, the Utility Allowance established by the awarding jurisdiction, and to document all efforts to obtain such allowance to evidence due diligence in the event that the jurisdiction is nonresponsive. In such an event, provided that sufficient evidence of due diligence is demonstrated, the Department, in its sole discretion, may allow for the use of the methods described in subsection (c)(3)(B), (C), (D) or (E) of this section related to Methods to calculate and establish its utility allowance. (e) Acceptable Documentation. For the Methods where utility specific information is required to calculate the allowance (e.g., base charges, cost per unit of measure, taxes) Owners should obtain documentation directly from the Utility Provider and/or Regulating State Agency. Any Component Charges related to the utility that are published by the Utility Provider and/or Regulating State Agency must be included. In the case where a utility is billed to the Owner of the building(s) and the Owner is billing residents through a third party billing company, the Component Charges published by the Utility Provider and not the third party billing company will be used. (f) Changes in the Utility Allowance. An Owner may not change Utility Allowance methods, start or stop charging residents for a utility without prior written approval from the Department. Example 614(5): A Housing Tax Credit Development has been paying for water and sewer since the beginning of the Compliance Period. In year eight, the Owner decides to require residents to pay for water and sewer. Prior written approval from the Department is required. Any such request must include the Utility Allowance Questionnaire found on the Department's website and supporting documentation. Developments may not start or stop charging residents for a utility during a lease term. (1) The Department will review all requests, with the exception of the methodology prescribed in subsection (c)(3)(E) of this section related to Methods, within 90 days of the receipt of the request. (2) If the Owner fails to post the notice to the residents and simultaneously submit the request to the Department by the beginning of the 90 day period, the Department's approval or denial will be delayed for up to 90 days after Department notification. Example 614(6): The Owner has chosen to calculate the electric portion of the Utility Allowance using the written local estimate. The annual letter is dated July 5, 2022, and the notice to the residents was posted in the leasing office on July 5, 2022. However, the Owner failed to submit the request to the Department for review until September 15, 2022. Although the Notice to the Residents was dated the date of the letter from the utility provider, the Department was not provided the full 90 days for review. As a result, the allowance cannot be implemented by the owner until approved by the Department. (3) Effective dates. If the Owner uses the methodology as described in subsection (c)(3)(A) of this section related to Methods, no posting is required, and any changes to the allowance can be implemented immediately, but must be implemented for rent due at least 90 days after the change. For methodologies as described in subsection (c)(3)(B), (C), (D) and (E) of this section related to Methods, the allowance cannot be implemented until the estimate is submitted to the Department and is made available to the residents by posting in a common area of the leasing office at the Development. This action must be taken by the beginning of the 90 day period in which the Owner intends to implement the Utility Allowance. Nothing in this section prohibits an Owner from reducing a resident's rent prior to the end of the 90 day period when the proposed allowance would result in a gross rent issue. Attached Graphic(g) Requirements for Annual Review. (1) RHS and HUD-Regulated Buildings. Owners must demonstrate that the utility allowance has been reviewed annually and in accordance with the RHS or HUD regulations. (2) Buildings using the PHA Allowance. Owners are responsible for periodically determining if the applicable PHA released an updated schedule to ensure timely implementation. When the allowance changes or a new allowance is made available by the PHA, it can be implemented immediately, but must be implemented for rent due 90 days after the PHA published effective date. (3) Written Local Estimate, HUD Utility Model Schedule and Energy Consumption Model. Owners must update the allowance once a calendar year. The update and all back up documentation required by the method must be submitted to the Department no later than October 1st of each year. However, Owners are encouraged to submit prior to the deadline to ensure the Department has time to review. At the same time the request is submitted to the Department, the Owner must post, at the Development, the Utility Allowance estimate in a common area of the leasing office where such notice is unobstructed and visible in plain sight. The Department will review the request for compliance with all applicable requirements and reasonableness. If, in comparison to other approved Utility Allowances for properties of similar size, construction and population in the same geographic area, the allowance does not appear reasonable or appears understated, the Department may require additional support and/or deny the request. With the exception of MFDL developments, if an Owner fails to submit for annual review during the calendar year, the Development's Utility Allowance will default to the applicable PHA allowance. If the Development is located in an area that does not have a PHA, the Development fails to have a properly calculated Utility Allowance. The Utility Allowance for MFDL Developments that fail to submit for annual review will be calculated pursuant to subsection (d) of this section. (4) Actual Use Method. Owners must update the allowance once a calendar year. The update and all back up documentation required by the method must be submitted to the Department no later than August 1st of each year. However, Owners are encouraged to submit prior to the deadline to ensure the Department has time to review. With the exception of MFDL developments, if an Owner fails to submit for annual review during the calendar year, the Development's Utility Allowance will default to the applicable PHA allowance. If the Development is located in an area that does not have a PHA, the Development fails to have a properly calculated Utility Allowance. The Utility Allowance for MFDL Developments that fail to submit for annual review will be calculated using the HUD Utility Model Schedule. (h) For Owners participating in the Department's Section 811 Project Rental Assistance (PRA) Program, the Department's 811 division staff will approve the Utility Allowance for all 811 Units. On an annual basis, the Owner is responsible for submitting a Utility Allowance to the Department's 811 division for review. Once approved, the 811 division will provide the Owner with a property-specific rent schedule containing the approved Utility Allowance. The allowance listed on the rent schedule only applies to 811 PRA Units, not the entire building, and is the only allowance approved for use on 811 PRA Units. Failure to obtain an updated rent schedule for changes in utility allowances and gross rents will result in noncompliance and will require the Department to monitor tenant rents using the current approved rent schedule.(i) Combining Methods. In general, Owners may combine any methodology described in this section for each utility service type paid directly by the resident and not by or through the Owner of the building (e.g., electric, gas). For example, if residents are responsible for electricity and gas, an Owner may use the appropriate PHA allowance to determine the gas portion of the allowance and use the Actual Use Method to determine the electric portion of the allowance. RHS and certain HUD-Regulated buildings (e.g., buildings with MFDL funds) are not allowed to combine methodologies. (j) The Owner shall maintain and make available for inspection by the resident all documentation, including, but not limited to, the data, underlying assumptions and methodology that was used to calculate the allowance. Records shall be made available at the resident manager's office during reasonable business hours or, if there is no resident manager, at the dwelling Unit of the resident at the convenience of both the Owner and resident. (k) Utility Allowances for Applications. (1) If the application includes RHS assisted buildings or tenants, the utility allowance is prescribed by the RHS program. No other method is allowed. (2) If the application includes HUD-Regulated buildings for HUD programs other than an MFDL program the applicable Utility Allowance for all rent restricted Units in the building is the applicable HUD Utility Allowance. No other utility method is allowed. (3) If the application includes MFDL funds from the Department, Applicants may calculate the utility allowance in accordance with subsection (c)(3)(B), (C), (D) or (E) of this section related to Methods. Applicants must submit their utility allowance to the Compliance Division prior to full application submission. In the event that the application has an MFDL from the Department, and receives federal funds from a unit of local government, the Department will require the use of the allowance approved by the Department. HOME-ARP may use subsection (c)(3)(A) of this section. (4) If the application includes federal funds from a unit of local government but no MFDL from the Department, Applicants are required to request in writing the Utility Allowance from the awarding jurisdiction. If the awarding jurisdiction does not respond or requests the Department calculate the allowance, the Department will establish the initial Utility Allowance in accordance with subsection (d)(3) of this section. (5) For all other applications, Applicants may calculate the utility allowance in accordance with subsection (c)(3)(A), (B), (C), (D), or (E) of this section related to Methods. If using the method described in subsection (c)(3)(B), (C), (D), or (E) of this section, applicants must submit their utility allowance to the Compliance Division prior to full application submission. (A) Upon request, the Compliance Division will calculate or review an allowance for application. The request must be submitted to the Compliance Division no later than 21 days, but no earlier than 90 days, from when the application is due. (B) Example 614(7): An application for a 9% HTC is due March 1, 2022. The applicant would like Department approval to use an alternative method by February 15, 2022. The request must be submitted to the Compliance Division no later than January 25, 2022, three weeks before February 15, 2022. (C) Example 614(8): An Applicant intends to submit an application for a 4% HTC with Tax Exempt Bonds on August 11, 2022, and would like to use an alternative method. Because approval is needed prior to application submission, the request can be submitted no earlier than May 13, 2022, (90 days prior to August 11, 2022) and no later than July 21, 2022, (21 days prior to August 11, 2022). (D) Any requests for new resources (either additional funds or tax credits) on a Development with an existing Department LURA must use the method that is in effect on the existing Development. If the Owner wishes to change or if for an MFDL application is required to change the methods for the purposes of the application, a request for the existing Development must first be submitted to the Compliance Division for approval. (6) All Utility Allowance requests related to applications of funding must: (A) Be submitted directly to UA-Application@tdhca.texas.gov. Requests not submitted to this email address will not be recognized. (B) Include the "Utility Allowance Questionnaire for Applications" along with all required back up based on the method. If back-up is not submitted the Utility Allowance will be calculated using the HUD Utility Schedule Model as described in subsection (d)(3) of this section. (l) If Owners want to change to a utility allowance other than what was used for underwriting the Owner must submit Utility Allowance documentation for Department approval, at minimum, 90 days prior to the commencement of leasing activities. The Owner is not required to review the utility allowances, or implement new utility allowances, until the building has achieved 90% occupancy for a period of 90 consecutive days or the end of the first year of the Credit Period (if applicable), whichever is earlier. Once a request to change the utility allowance is approved or implemented, the utility allowance used at underwriting is no longer valid. (m) Department review and approval of Renewable Sources (e.g. solar)(1) Methods outlined in subsection (c)(3)(A), (B), (C), (D) and (E) of this section are allowable if the Utility Provider or PHA publishes a rate plan or schedule specific to Renewable Sources. The method outlined in subsection (c)(3)(E) of this section is allowable only after occupancy is established as outlined in subsection (c)(3)(E) of this section.(2) Only buildings benefitting from Renewable Sources can use a Renewable Source utility allowance.(3) Tenants (not Owners) must benefit from the Renewable Source in a manner that is not a discount or credit. To evidence the benefit, 20% of current tenant bills must be submitted with the request.(4) Owners must submit both the Renewable Source allowance and the non-Renewable Source allowance for approval regardless of methodology or current occupancy. If the Renewable Source is damaged or inoperable for more than 30 days, the non-Renewable Source allowance must be implemented. At the time of the first review or the first annual utility allowance review, whichever is first, the Owner must be able to demonstrate with tenant bills that the tenants are benefitting from the Renewable Source; otherwise the non-Renewable allowance must be used.(n) The Department reserves the right to outsource to a third party the review and approval of all or any Utility Allowance requests to use the Energy Consumption Model or when review requires the use of expertise outside the resources of the Department. In accordance with Treasury Regulation §1.42-10(c) any costs associated with the review and approval shall be paid by the Owner. (o) All requests described in this subsection must be complete and uploaded directly to the Development's CMTS account using the "Utility Allowance Documents" in the type field and "Utility Allowance" as the TDHCA Contact. The Department will not be able to approve requests that are incomplete and/or are not submitted correctly.</content><note type="source"><p>Source Note: The provisions of this §10.614 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.615"><num value="10.615">§10.615</num><heading>Elections under IRC §42(g) and Additional Income and Rent Restrictions for HTC, Exchange, and TCAP Developments</heading><content>(a) Under the Code, HTC Development Owners may elect 20% of the Units restricted at the 50% income and rent limits (20/50), 40% of the Units restricted at the 60% income and rent limits (40/60) or the average income minimum set aside. Many Developments have additional income and rent requirements (e.g., 30%, 40% and 50%) that are lower than or in addition to the election requirement. This requirement is referred to as "additional occupancy restrictions" and is reflected in the Development's LURA. (b) A Development with additional rent and occupancy restrictions must maintain a waiting list for their lower rent restricted Units. The Development's waitlist policy must inform applicants and current residents of the availability of lower rent Units and the process for renting a lower rent Unit. Unless otherwise approved at Application, underwriting, and cost certification, all Unit sizes must be available at the lower rent limits. The waitlist policy for Developments with lower rent restricted Units must address how the waiting list for their lower rent restricted Units will be managed. The policy must not give a preference to prospective applicants over existing households. However, a Development may, but is not required to, prioritize existing households over prospective applicants. (c) The Department will examine the actual gross rent (tenant portion of rent plus utility allowance plus any mandatory fees) and income levels of all households to determine if the additional income and rent requirements of the LURA are met. The Department will examine the actual gross rent and income of all households to determine if Developments that elected the average income minimum set aside have met the federal requirements and any lower additional occupancy restriction reflected in the Development's LURA. (d) The Department will monitor the Available Unit Rule in the following manner for Developments that elected the average income minimum set aside: (1) If the income of the household who, at the last certification, had an income and rent less than the 60% limits exceeds 140% of the 60% limit, the household must be redesignated as over income. (2) If the income of a household with an income or rent above the 60% level and less than or equal to the 70% limits exceeds 140% of the 70% limit, the household must be designated as over income. (3) If the income of a household with an income or rent above the 70% level and less than or equal to the 80% limits exceeds 140% of the 80% limit, the household must be designated as over income. (4) Owners are not required to terminate the tenancy of over income households. When the Unit occupied by an over income household is vacated, it must be reoccupied by a household with an income and rent level equal to or less than the rent level of the household that went over income. In addition, the Unit must be reoccupied by a household that restores the low income average of the project to 60% or less. (e) Units at 80% area median income and rent on HTC Developments. In certain years, the Department's Qualified Allocation Plan provided incentives to lease 10% of the Development's Market Rate Units to households at 80% income and rents. This section provides guidance for implementation. If the LURA requires 10% of the Market Rate Units be leased to households at 80% income and rent limits, the Owner must certify the 80% households at the time of move in only. Recertifications will not be required. Student rules do not apply to Units occupied by 80% households. Noncompliance with the requirement to lease to 80% households is not reportable to the IRS on IRS Form 8823 but will be cited as noncompliance under the event "Development failed to meet additional state required rent and occupancy restrictions." (f) The Department does not require Developments to lease more Units under the additional occupancy restrictions than established in their LURA. However, if a Development inadvertently designates more households than required under the additional rent and occupancy restrictions, they may only decrease to the minimum number through attrition and new move ins, not by removing designations. (g) Developments where 100% of the households pay rent equal to 30% of their adjusted income are not required to comply with subsection (b) of this section regarding wait lists for lower designated Units. In addition, Developments where 100% of the households pay rent equal to 30% of their adjusted income will not be required to change designations if the tenant portion of rent increases because of an increase in household income. Compliance will be evaluated without regard for how the owner designated the households on the Income Certification or the Unit Status Report. Instead, for Developments where 100% of the households pay rent equal to 30% of their adjusted income, compliance with additional rent and occupancy restrictions will be determined by a review of the actual incomes and rents charged.</content><note type="source"><p>Source Note: The provisions of this §10.615 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.616"><num value="10.616">§10.616</num><heading>Household Unit Transfer Requirements for All Programs</heading><content>(a) The requirements and restrictions regarding household transfers for HTC, Exchange, and TCAP Developments are based on whether the tax credit project is 100% low-income or mixed income and if the Owner elected to treat buildings in the project as part of a multiple building project. To determine if a Development is a multiple building project, refer to the election on IRS Form(s) 8609 line 8(b) and accompanying statements (if any). If IRS Form(s) 8609 have not yet been issued by the Department and filed by the Owner, each building is its own project. The Department may allow Owners to indicate their intended 8(b) elections and will monitor accordingly. Failure to file the same elections with the IRS may result in noncompliance, additional monitoring, an additional monitoring fee and findings of noncompliance. (1) 100% low-income multiple building projects: Households may transfer to any Unit in a 100% low-income multiple building project and retain their program designation. The household does not need to be and should not be certified at the time of transfer. The move in date remains the date the household was first designated under the program. (2) Each building is its own project (100% low-income and mixed income projects). Developments that made the 20/50 or 40/60 election: at the time of transfer, the household must be certified and have a current annual income less than the income limit established by the minimum set aside the Owner selected. Developments that elected the average income test under IRC §42(g): the household must be certified and their current designation averaged together with the designations of the other households in the project must be equal to or less than the percentage represented at the time of Application. (3) Mixed income multiple building projects: Low-income households retain their program designation when they transfer to any Unit in a multiple building project if at the last annual certification their income was less than 140% of area median income level set by the minimum set aside. (b) Household transfers for Bond, THTF, NHTF, HOME, TCAP RF, NSP, and HOME-ARP with floating Units. Households may transfer to any Unit within the Development. A certification is not required at the time of transfer. If the household transfers to a different Unit Type, the Development must maintain the Unit Type dispersion as reflected in its LURA, by re-leasing the vacated Unit to a program eligible household. If the Development is required to perform annual income recertifications, the recertification is due on the anniversary date the household originally moved into the Development. If the Development is layered with Housing Tax Credits, use the transfer guidelines described in subsection (a) of this section (relating to Household Unit Transfer Requirements). (c) Household transfers for NHTF, HOME, TCAP RF, NSP, and HOME-ARP with fixed Units. Households may transfer to any Unit and do not need to be certified at the time of the transfer. If the household transfers to a Unit that is not fixed, the Development must re-lease the vacated Unit to a program eligible household. If the Development is required to perform annual income recertifications, the recertification is due on the anniversary date the household originally moved into the Development. If the Development is layered with Housing Tax Credits, use the transfer guidelines described in subsection (a) of this section (relating to Household Unit Transfer Requirements). (d) Household Transfers in the Same Building for the HTC Programs. A Household may transfer to a new Unit within the same building (for the HTC program within the meaning of IRS Notice 88-91). The Unit designations will swap status.</content><note type="source"><p>Source Note: The provisions of this §10.616 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.617"><num value="10.617">§10.617</num><heading>Affirmative Marketing Requirements</heading><content>Affirmative Marketing Requirements are a requirement of the Department on monitored Developments as provided for in more specificity at §10.801 of this chapter (relating to Affirmative Marketing Requirements).</content><note type="source"><p>Source Note: The provisions of this §10.617 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.618"><num value="10.618">§10.618</num><heading>Monitoring and Inspections</heading><content>(a) The Department may perform an onsite monitoring review, a mail in desk review and physical inspection of any Development, and review and photocopy all documents and records supporting compliance with Departmental programs through the end of the Compliance Period or the end of the period covered by the LURA, whichever is later. The Development Owner shall permit the Department access to the Development premises and records. (b) The Department will perform monitoring reviews and physical inspections of each low-income Development. The Department will conduct: (1) The first review or inspection of HTC, TCAP, and Exchange Developments by the end of the second calendar year following the year the last building in the Development is placed in service; (2) The first review or inspection of all Developments, other than those described in paragraph (1) of this subsection, as leasing commences; (3) During the Federal Compliance Period subsequent reviews and inspections will be conducted at least once every three years; (4) After the Federal Compliance Period, Developments will be monitored and inspected in accordance with §10.623 of this subchapter (relating to Monitoring Procedures for Housing Tax Credit, TCAP, and Exchange Properties After the Compliance Period); (5) A physical inspection of the Development including the exterior of the Development, Development amenities, and an interior inspection of a sample of Units; (6) A Development that scores a 70 or below or that is deemed to be in poor physical condition will be subject to an accelerated in-person physical inspection schedule;(7) Limited reviews of physical conditions, including follow-up inspections to verify completion of reported corrective action, may be conducted without prior notice (unless access to tenant units is required, in which case at least 48 hours notice will be provided); and (8) Reviews, meetings, and other appropriate activity in response to complaints or investigations. (c) The Department will perform onsite file reviews or a mail in desk review and monitor: (1) Low-income resident files in each Development, and review the Income Certifications; (2) The documentation the Development Owner has received to support the certifications; (3) The rent records; and (4) Any additional aspects of the Development or its operation that the Department deems necessary or appropriate. (d) The LURA for most HOME, NSP, TCAP RF, NHTF, and HOME-ARP Developments specifies a required Unit Mix and income level. During the monitoring review it will be determined if the minimum number of affordable Units and exact square footage has been provided. Failure to provide the exact square footage listed in the LURA will be cited as "Failure to provide correct square footage". Failure to provide the required number of Units required by the LURA will be cited as "Household income above income limit upon initial occupancy". (1) Example 618(1). A TCAP RF LURA requires eight low-income units at 60% AMI with the following Unit mix: (A) Three one bedroom, one bath units with a Net Rentable Area (NRA) of 770 sq ft; (B) One two bedroom one bath units with a NRA of 900 sq ft; and (C) Four three bedroom two bath units with a NRA of 1000 sq ft. (2) If during the monitoring review the Development has eight units designated as TCAP RF, but is not exactly the Units and square footage mix shown in subparagraphs (A) - (C) of this paragraph in Example 618(2) (even if the actual square footage provided is greater) the noncompliance "Failure to provide correct square footage" will be cited. (e) At times other than monitoring reviews, the Department may request for review, in a format designated by the Department, information on tenant income and rent for each Low-Income Unit and may require a Development Owner to submit copies of the tenant files, including copies of the Income Certification, the documentation the Development Owner has received to support that certification, and the rent record for any low-income tenant. (f) The Department will select the Low-Income Units and tenant records that are to be inspected and reviewed. Original records are required for review. The Department will not give Development Owners advance notice that a particular Unit, tenant record, or a particular year will be inspected or reviewed. However, the Department will give reasonable notice, as defined in Treasury Regulation 1.42-5, to the Development Owner that an onsite inspection or a tenant record review will occur so the Development Owner may notify tenants of the inspection or assemble original tenant records for review. If a credible complaint of fraud or other egregious alleged or suspected noncompliance is received, the Department reserves the right to conduct unannounced onsite monitoring visits and/or physical inspections. (g) In order to prepare for monitoring reviews and physical inspections and to reduce the amount of time spent onsite, Department staff must review certain requested documentation described in the notification. Owners are required to submit documentation by the required deadline indicated in the notification. Failure to submit required documentation will result in a finding of noncompliance.</content><note type="source"><p>Source Note: The provisions of this §10.618 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.619"><num value="10.619">§10.619</num><heading>Monitoring for Social Services</heading><content>(a) If a Development's LURA or application requires the provision of social services, the Department will confirm this requirement is being met in accordance with the LURA or application. Owners are required to maintain sufficient documentation to evidence that services are actually being provided. Documentation will be reviewed during monitoring reviews beginning with the first monitoring review. Planned services with specific dates may suffice as evidence of compliance during the first monitoring review. Evidence of services must be submitted to the Department upon request. The first monitoring review Example 619(1): The Owner's LURA requires provision of onsite daycare services. The Owner maintains daily sign in sheets to demonstrate attendance and keeps a roster of the households that are regularly participating in the program. The Owner also keeps copies of all newsletters and fliers mailed out to the Development tenants that reference daycare services. Example 619(2): The Owner's LURA requires a monetary amount to be expended on a monthly basis for supportive services. The Owner maintains a copy of an agreement with a Supportive Service provider and documents the amount expended as evidence that this requirement is being met. (b) A substantive modification of the scope of tenant services requires Board approval. Such requests must comply with procedures in §10.405 of this chapter (relating to Amendments and Extensions). It is not necessary to obtain prior written approval to change the provider of services unless the scope of services is being changed. Failure to comply with the requirements of this section shall result in a finding of noncompliance. (c) If the Development's LURA or application requires a monthly expenditure for the provision of services, the Department will monitor to confirm compliance. Includable costs to support the expenditure include those costs directly related to providing the service(s). Such costs can include, but are not limited to, the cost of contracting the services with a qualified provider, cost of notification of such services (for example, a monthly newsletter), and other costs that can be documented and would only be incurred as a result of the service. An Owner cannot include any costs related to the normal expense of maintaining or operating a Development, utility bills of any kind, in-kind contributions or services, cleaning or contracted janitorial services, office supplies, cost of copier or fax, costs incurred for maintenance of machinery, or volunteer hours. This list is not inclusive, but any other costs identified by the Owner shall be reviewed for consistency with this subsection. (d) If the Development's LURA or application requires an afterschool learning center for the Mitigation for Schools requirements, the Department will confirm this requirement is being met.</content><note type="source"><p>Source Note: The provisions of this §10.619 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.620"><num value="10.620">§10.620</num><heading>Monitoring for Non-Profit Participation, HUB, or CHDO Participation</heading><content>(a) If a Development's LURA or application requires the material participation of a non-profit or Historically Underutilized Business (HUB), the Department will confirm whether this requirement is being met. Owners are required to maintain sufficient documentation to evidence that a non-profit or HUB so participating is in good standing with the Texas Comptroller of Public Accounts, Texas Secretary of State and/or IRS as applicable and that it is actually materially participating in a manner that meets the requirements of the IRS. Documentation may be reviewed during onsite visits or must be submitted to the Department upon request. (b) If the HOME funds were awarded from the Community Housing and Development Organization (CHDO) set aside on or after August 23, 2013, the Department will monitor that the Development remains controlled by a CHDO throughout the federal affordability period. (c) If an Owner wishes to change the participating non-profit, HUB, or CHDO, prior written approval from the Department is necessary. In addition, the IRS will be notified if the non-profit is not materially participating on an HTC Development during the Compliance Period. (d) The Department does not enforce partnership agreements or other agreements between third parties or determine fund distributions of partnerships. These disputes are matters for a court of competent jurisdiction or other agreed resolution among the parties.</content><note type="source"><p>Source Note: The provisions of this §10.620 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.621"><num value="10.621">§10.621</num><heading>Property Condition Standards</heading><content>(a) All Developments funded by the Department must be decent, safe, sanitary, in good repair, and suitable for occupancy throughout the Affordability Period. The Department will use HUD's National Standards for the Physical Inspection of Real Estate (NSPIRE) to determine compliance with property condition standards. In addition, Developments must comply with all local health, safety, and building codes. Timelines for correcting deficiencies under the NSPIRE standards are as follows: (1) Life-Threatening and Severe deficiencies must be corrected within 24 hours. (2) Moderate deficiencies must be corrected within 30 days. (3) Low deficiencies must be corrected within 60 days. (b) HTC Development Owners are required by Treasury Regulation §1.42-5 to report (through the Annual Owner's Compliance Report) any local health, safety, or building code violations. HTC Developments that fail to comply with local codes shall be reported to the IRS. (c) The Department is required to report any HTC Development that fails to comply with any requirements of the NSPIRE or local codes at any time during the compliance period to the IRS on IRS Form 8823. Accordingly, the Department will submit IRS Form 8823 for any NSPIRE violation. (d) Acceptable evidence of correction of deficiencies is a certification from an appropriate licensed professional that the item now complies with the inspection standard or other documentation that will allow the Department to reasonably determine when the repair was made and whether the repair sufficiently corrected the violation(s) of NSPIRE standards. Acceptable documentation includes: copies of work orders (listing the deficiency, action taken or repairs made to correct the deficiency, date of corrective action, and signature of the person responsible for the correction), invoices (from vendors, etc.), or other proof of correction. Photographs are not required but may be submitted if labeled and only in support of a work order or invoice. The Department will determine if submitted materials satisfactorily document correction of noncompliance. (e) Selection of Units for Inspection. (1) Vacant Units will not be inspected (alternate Units will be selected) if a Unit has been vacant for fewer than 30 days. (2) Units vacant for more than 30 days are assumed to be ready for occupancy and may be inspected. No deficiencies will be cited for inspectable items that require utility service, if utilities are turned off and the inspectable item is present and appears to be in working order. (f) The Department will consider a request for review of a NSPIRE score using a process similar to the process established by the U. S. Department of Housing and Urban Development Real Estate Assessment Center. The request must be submitted in writing within 45 calendar days of receiving the initial NSPIRE inspection report and score. The request must be accompanied by evidence that supports the claim, which if corrected will result in a significant improvement in the overall score of the property. Upon receipt of this request from the Owner the Department will review the inspection and evidence. If the Department's review determines that an objectively verifiable and material error (or errors) or adverse condition(s) beyond the Owner's control has been documented and that it is likely to result in a significant improvement in the Development's overall score, the Department will take one or a combination of the following actions: (1) Undertake a new inspection; (2) Correct the original inspection; or (3) Issue a new physical condition score. (g) The responsibility rests with the Owner to demonstrate that an objectively verifiable and material error (or errors) or adverse conditions occurred in Department's inspection through submission of materials, which if corrected will result in a significant improvement in the Development's overall score. To support its request for a technical review of the physical inspection results, the Owner may submit photographic evidence, written material from an objective source with subject matter expertise that pertains to the item being reviewed such as a local fire marshal, building code official, registered architect, or professional engineer, or other similar third party-documentation. (h) Examples of items that can be adjusted include, but are not limited to: (1) Building Data Errors--The inspection includes the wrong building or a building that is not owned by the Development. (2) Unit Count Errors--The total number of units considered in scoring is incorrect as reported at the time of the inspection. (3) Non-Existent Deficiency Errors--The inspection cites a deficiency that did not exist at the time of the inspection. (4) Local Conditions and Exceptions--Circumstances include inconsistencies between local code requirements and the NSPIRE inspection protocol, such as conditions permitted by local variance or license (e.g., child guards allowed on sleeping room windows by local building codes) or preexisting physical features that do not conform to or are inconsistent with the Department's physical condition protocol. (5) Ownership Issues--Items that were captured and scored during the inspection that are not owned and not the responsibility of the Development. Examples include sidewalks, roads, fences, retaining walls, and mailboxes owned and maintained by adjoining properties or the city/county/state and resident-owned appliances that are not maintained by the Owner. However, if the Owner has an agreement with the city/county/state for the responsibility of maintenance on accessible routes including sidewalks, then the Owner will be responsible for any repairs. (6) Modernization Work In Progress--Developments undergoing extensive modernization work in progress, underway at the time of the physical inspection, may qualify for an adjustment. All elements of the Unit that are not undergoing modernization at the time of the inspection (even if modernization is planned) will be subject to the Department's physical inspection protocol without adjustment. Any request for a technical review process for modernization work in progress must include proof the work was contracted before any notice of inspection was issued by the Department. (i) Examples of items that cannot be adjusted include, but are not limited to: (1) Deficiencies that were repaired or corrected during or after the inspection; or (2) Deficiencies recorded with no associated point loss (for example, inoperable smoke detectors) or deficiencies for survey purposes only (for example, fair housing accessibility). (j) All Life-Threatening and Severe deficiencies must be corrected within 24 hours. Project Owner's Certification That All Life Threatening and Severe Deficiencies Have Been Corrected must be completed and uploaded to CMTS within 72 hours (three Department business days).</content><note type="source"><p>Source Note: The provisions of this §10.621 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.622"><num value="10.622">§10.622</num><heading>Special Rules Regarding Rents and Rent Limit Violations</heading><content>(a) Rent or Utility Allowance Violations of the maximum allowable limit for the HTC, TCAP, and Exchange programs. Under the HTC, TCAP, and Exchange programs, the amount of rent paid by the household plus an allowance for utilities, plus any mandatory fees, cannot exceed the maximum applicable limit (as determined by the minimum set-aside elected by the Owner) published by the Department. If it is determined that an HTC Development, during the Compliance Period, collected rent in excess of the rent limit established by the minimum set-aside, the Owner must correct the violation by reducing the rent charged. The Department will report the violation as corrected on January 1st of the year following the violation. The refunding of overcharged rent does not avoid the disallowance of the credit by the IRS. (b) Rent or Utility Allowance Violations of additional rent restrictions under the HTC, TCAP, and Exchange programs. If Owners agreed to additional rent and occupancy restrictions, the Department will monitor to confirm compliance. If noncompliance is discovered, the Department will require the Owner to refund or credit the affected residents the amount of rent that was overcharged. The Owner must obtain in writing, from the household, the election to receive a full refund check or to have the entire overpaid amount credited to their household's account. In the absence of a household's election, a full refund check must be presented to the household within thirty days. (c) Rent Violations of the maximum allowable limit due to application fees. Under the HTC, TCAP, and Exchange programs, Owners may not charge tenants any overhead costs as part of the application fee. Owners must only charge the actual cost for application fees as supported by invoices from the screening company the Owner uses. (1) The amount of time Development staff spends checking an applicant's income, credit history, and landlord references may be included in the Development's application fee. Development Owners may add up to $5.50 per Unit for their other out-of-pocket costs for processing an application without providing documentation. The $5.50 will be adjusted annually based on the Cost of Living increased published by the Social Security Administration. Example 622(1): A Development's out-of-pocket cost for processing an application is $17.00 per adult. The property may charge $22.50 for the first adult and $17.00 for each additional adult. (2) Documentation of Development costs for application processing or screening fees must be made available during monitoring reviews or upon request. The Department will review application fee documentation during monitoring reviews. If the Development pays a flat monthly fee to a third party for credit or criminal background checks, Owners must calculate the appropriate fee to be charged applicants by using the total number of applications processed, not just approved applications. Developments that pay a flat monthly fee must determine the appropriate application fee at least annually based on the prior year's activity. If the Department determines from a review of the documentation that the Owner has overcharged residents an application fee or collected impermissible deposits, the noncompliance will be reported to the IRS on Form 8823 under the category "gross rent(s) exceeds tax credit limits." The noncompliance will be corrected on January 1st of the next year. (3) Owners are not required to refund the overcharged fee amount. To correct the issue, Owners must reduce the application fee for prospective applicants. Once the fee is reduced for prospective applicants, the Department will report the affected Units back in compliance on January 1st of the year after they were overcharged the application fee or an impermissible deposit. (4) Throughout the Affordability Period, Owners may not charge a deposit or any type of fee (other than an application fee) for a household to be placed on a waiting list. (d) Rent or Utility Allowance Violations on MFDL programs. The amount of rent paid by the household plus an allowance for utilities, plus any mandatory fees and any rental assistance (unless otherwise described in the LURA) cannot exceed the designated applicable limit published by the Department. If it is determined that the Development collected rent in excess of the allowable limit, the Department will require the Owner to refund or credit the affected residents the amount of rent that was overcharged. The Owner must obtain in writing, from the household, the election to receive a full refund check or to have the entire overpaid amount credited to their household's account. In the absence of a household's election, a full refund check must be presented to the household within thirty days. (e) Rent or Utility Allowance Violations on HTC, TCAP, and Exchange Developments after the Compliance Period, HTC, TCAP, and Exchange Developments for three years after the LURA is released as a result of a foreclosure or deed in lieu of foreclosure (as applicable), BOND Developments, and THTF Developments. The amount of rent paid by the household plus an allowance for utilities, plus any mandatory fees cannot exceed the designated applicable limit published by the Department. If it is determined that the Development collected rent in excess of the allowable limit, the Department will require the Owner to refund or credit the affected residents the amount of rent that was overcharged. The Owner must obtain in writing, from the household, the election to receive a full refund check or to have the entire overpaid amount credited to their household account. In the absence of a tenant election, a full refund check must be presented to the household within thirty days. (f) Trust Account to be established. If the Owner is required to refund rent under subsection (b), (d) or (e) of this section and cannot locate the resident, the excess monies must be deposited into a trust account for the household. If the violation effects multiple households, the Owner may set up a single account with all of the unclaimed funds. The account must remain open for the shorter of a four year period, until all funds are claimed, or the expiration of the Extended Use Agreement. If funds are not claimed after the required period, the unclaimed funds must be remitted to the Texas Comptroller of Public Accounts Unclaimed Property Holder Reporting Section to be disbursed as required by Texas unclaimed property statutes. All unclaimed property remissions to the Comptroller must be broken out by individuals and particular amounts. (g) Rent Adjustments for HOME, TCAP RF, and HOME-ARP Developments: (1) 100% HOME/TCAP-RF/HOME-ARP assisted Developments. If a household's income exceeds 80% at recertification, the Owner must charge a gross rent equal to 30% of the household's adjusted income; (2) HOME/TCAP-RF/HOME-ARP Developments with any Market Rate Units. If a household's income exceeds 80% at recertification, the Owner must charge a gross rent equal to the lesser of 30% of the household's adjusted income or the comparable Market rent; and (3) HOME/TCAP-RF/HOME-ARP Developments layered with other Department affordable housing programs. If a household's income exceeds 80% at recertification, the owner must charge a gross rent equal to the lesser of 30% of the household's adjusted income or the rent allowable under the other Program. (h) Rent Adjustments for HOME-ARP Qualified Populations: (1) Units restricted for occupancy by Qualifying Populations with incomes equal to or less than 50% will have gross rents equal to the lesser of 30% of the adjusted income of the household, or the Low HOME rent limit with adjustments for number of bedrooms in the unit. (2) Units restricted for occupancy by Qualifying Populations with incomes greater than 50% of median income but at or below 80% of the median income must pay rent not greater than the rent specified in 24 CFR §92.252(a), high HOME rent. (3) Units restricted for occupancy by Qualifying Populations with incomes greater than 80% of median income will follow the rent adjustments of subsection (g) of this section. (i) Employee Occupied Units (HTC, TCAP, Exchange, and THTF Developments). IRS Revenue Rulings 92-61, 2004-82 and Chief Counsel Advice Memorandum POSTN-111812-14 provide guidance on employee occupied units. In general, employee occupied units are considered facilities reasonably required for the project(s) and not residential rental units. Since the building's applicable fraction is calculated using the residential rental units/space in a building, employee occupied units are taken out of both the numerator and the denominator. (j) Owners of HOME, NSP, TCAP-RF, NHTF, and HOME-ARP must comply with §10.403 of this chapter (relating to Review of Annual HOME, NSP, TCAP-RF, and National Housing Trust Fund Rents) which requires annual rent review and approval by the Department's Asset Management Division or Department-procured vendor. Failure to do so will result in an Event of Noncompliance. (k) Owners are not permitted to increase the household portion of rent more than once during a 12 month period, even if there are increases in rent limits or decreases in utility allowances, unless the Unit or household is governed by a federal housing program that requires such changes or the household transfers to a Unit with additional Bedrooms. If it is determined that the Development increases rent more than once in a 12-month period, the Department will require the Owner to refund or credit the affected household. The Owner must obtain in writing, from the household, the election to receive a full refund check or to have the entire overpaid amount credited to their household account. In the absence of a tenant election, a full refund check must be presented to the household. (l) If an Owner is increasing a household's rent $75 or more per month, the Owner is required to provide the household a 75-day written notice of such increase, unless the Unit or household is governed by a federal housing program that allows for such a change. If an Owner increases the household's rent $75 or more without providing a 75-day notice, any amounts in excess of $75 per month must be refunded or credited to the affected household(s). The Owner must obtain in writing, from the household, the election to receive a full refund check or to have the entire overpaid amount credited to their household account. In absence of a tenant election, a full refund check must be presented to the household. (m) Owners must provide an option to pay rent in a manner that does not involve additional out of pocket costs to the household.</content><note type="source"><p>Source Note: The provisions of this §10.622 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.623"><num value="10.623">§10.623</num><heading>Monitoring Procedures for Housing Tax Credit, TCAP, and Exchange Properties After the Compliance Period</heading><content>(a) HTC properties allocated credit in 1990 and after are required under §42(h)(6) of the Code to record a LURA restricting the Development for at least 30 years. Various sections of the Code specify monitoring rules State Housing Finance Agencies must implement during the Compliance Period. (b) After the Compliance Period, the Department will continue to monitor HTC, TCAP, and Exchange Developments using the criteria detailed in paragraphs (1) - (14) of this subsection: (1) The frequency and depth of monitoring household income, rents, social services and other requirements of the LURA will be determined based on risk. Factors will include changes in ownership or management, compliance history, timeliness of reports and timeliness of responses to Department requests; (2) At least once every three years the property will be physically inspected including the exterior of the Development, all building systems and 10% of Low-Income Units. No less than five but no more than 35 of the Development's Low-Income Units will be physically inspected to determine compliance with HUD's National Standards for the Physical Inspection of Real Estate; (3) Each Development shall submit an annual report in the format prescribed by the Department; (4) Reports to the Department must be submitted electronically as required in §10.607 of this subchapter (relating to Reporting Requirements); (5) Compliance monitoring fees will continue to be submitted to the Department annually in the amount stated in the LURA; (6) All households must be income qualified upon initial occupancy of any Low Income Unit. Proper verifications of income are required, and the Department's Income Certification form must be completed unless the Development participates in the Rural Rental Housing Program or a project-based HUD program, in which case the other program's certification form will be accepted; (7) Rents will remain restricted for all Low-Income Units. After the Compliance Period, utilities paid to the Owner are accounted for in the utility allowance. Bond and THTF Developments layered with Housing Tax Credits, TCAP and Exchange no longer within the Compliance Period also include utilities paid to the Owner as part of the utility allowance. The tenant paid portion of the rent plus the applicable utility allowance must not exceed the applicable limit. Any excess rent collected must be refunded or credited to amounts owed. The Owner must obtain in writing, from the household, the election to receive a full refund check or to have the entire overpaid amount credited to their household's account. In the absence of a household's election, a full refund check must be presented to the household within thirty days; (8) All additional income and rent restrictions defined in the LURA remain in effect; (9) For Additional Use Restrictions, defined in the LURA (such as supportive services, nonprofit participation, elderly, etc.), refer to the Development's LURA to determine if compliance is required after the completion of the Compliance Period or if the Compliance Period was specifically extended beyond 15 years; (10) The Owner shall not terminate the lease or evict low-income residents for other than good cause; (11) The total number of required Low-Income Units can be maintained Development wide; (12) Owners may not charge fees for amenities that were included in the Development's Eligible Basis; (13) Once a calendar year, Owners must continue to collect and maintain current data on each household that includes the number of household members, age, ethnicity, race, disability status student status and rental assistance (if any). This information can be collected on the Department's Annual Eligibility Certification form or the Income Certification form or HUD Income Certification form or USDA Income Certification form; and (14) Employee occupied units will be treated in the manner prescribed in §10.622(h) of this chapter (relating to Special Rules Regarding Rents and Rent Limit Violations). (c) After the first 15 years of the Extended Use Period, certain requirements will not be monitored as detailed in paragraphs (1) - (4) of this subsection. (1) The student restrictions found in §42(i)(3)(D) of the Code. An income qualified household consisting entirely of full time students may occupy a Low-Income Unit. If a Development markets to students or leases more than 15% of the total number of units to student households, the property will be found in noncompliance unless the LURA is amended through the Material Amendments procedures found in §10.405 of this chapter (relating to Amendments); (2) All households, regardless of income level or 8609 elections, will be allowed to transfer between buildings within the Development; (3) The Department will not monitor the Development's application fee after the Compliance Period is over; and (4) Mixed income Developments are not required to conduct annual income recertifications. However, Owners must continue to collect and report data in accordance with subsection (b)(13) of this section. (d) While the requirements of the LURA may provide additional requirements, right and remedies to the Department or the tenants, the Department will monitor post year 15 in accordance with this section as amended. (e) Unless specifically noted in this section, all requirements of this chapter, the LURA and §42 of the Code remain in effect for the Extended Use Period. These Post-Year 15 Monitoring Rules apply only to the HTC, TCAP, and Exchange Developments administered by the Department. Participation in other programs administered by the Department may require additional monitoring to ensure compliance with the requirements of those programs.</content><note type="source"><p>Source Note: The provisions of this §10.623 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.624"><num value="10.624">§10.624</num><heading>Compliance Requirements for Developments with 811 PRA Units</heading><content>(a) 811 PRA will be monitored for compliance with the HUD 4350.3 Handbook and HUD Notice 2013-24, as amended from time to time.(b) Compliance with 811 PRA requirements may be monitored annually throughout the term of the Participation Agreement, either through an onsite review or a desk review.(c) Program and property requirements:(1) Development Owners that have agreed to participate in the Section 811 PRA program are required to notify the Department about the availability of Units, notices of termination, and outcomes of referred applications as described in accordance with §8.6 of this title (relating to Program Regulations and Requirements).(2) Adjusted income shall be determined consistent with the Section 8 Program administered by HUD, using the definitions of adjusted income described in 24 CFR §5.611 as further described in the HUD Handbook 4350.3, as amended from time to time. During the following certifications, Owners must certify and document annual income, adjusted income, and tenant rents: Move-In, Interim, Annual, and Initial. A Unit designated for the 811 PRA program may not be designated at the 30% AMI for any other Department program.(3) Files for households assisted under the 811 PRA program must document the household's eligibility for the program, the deductions for which the household qualifies and the following HUD forms (or any subsequent HUD form number):(A) Development application,(B) Documentation screening for eligible deductions,(C) Verification(s) of income, assets, and eligible deductions,(D) Verification(s) for students,(E) Section 811 Project Rental Assistance Application,(F) Self-certification of disposed of assets,(G) Verification of Information Provided by Applicants and Tenants of Assisted Housing: HUD-9887-A(H) Notice and Consent for the Release of Information: HUD-9887,(I) Verification of disability: HUD-90102,(J) Tenant acknowledgment of the "How your rent is determined" fact sheet,(K) Tenant acknowledgment of the "Resident Rights and Responsibilities" brochure,(L) Tenant acknowledgment of the "EIV and You" brochure,(M) Tenant selection plan or acknowledgment page for the 811 PRA program,(N) Verification(s) of age(s),(O) Verification(s) of Social Security number(s),(P) Screening for drug abuse, lifetime sex offender, and other criminal activity,(Q) Supplement to Application for Federally Assisted Housing: HUD-92006,(R) Annual Recertification Initial Notice,(S) Annual Recertification First Reminder Notice,(T) Annual Recertification Second Reminder Notice (when applicable),(U) Annual Recertification Third Reminder Notice (when applicable),(V) Notices of increases or decreases in tenant rents or utility reimbursements,(W) Notices of change on house or pet rules,(X) Race and Ethnic Data Reporting form: HUD-27061-H,(Y) Annual unit inspection,(Z) HUD model lease HUD-92236-PRA with required addenda,(AA) Document evidencing compliance with occupancy requirements for households occupying bedroom sizes larger or smaller than normally appropriate,(BB) Tenant ledger, including all transactions, and documentation supporting the actual out-of-pocket costs for permissible fees,(CC) Documentation supporting HUD-50059 and HUD-50059-A certifications,(DD) EIV Existing Tenant Search and documentation to resolve discrepancies,(EE) Documentation to resolve any discrepancy from EIV master reports,(FF) EIV Summary Report and documentation to resolve discrepancies,(GG) EIV Income Report and Income Discrepancy Report and any documentation to resolve discrepancies,(HH) Move-out paperwork:(i) Notice of move-out inspection,(ii) Move-out inspection,(iii) Evidence of security and pet deposit refunding (when applicable),(iv) Itemized list of any charges (unpaid rent, damages to the unit, etc.),(v) Tenant rent ledger (including all debts, credits, and balances),(vi) Correspondences between former tenant disputing charges,(vii) Tenant notices related to moving out (notices to vacate, lease violations, etc.).(4) The tenant file must contain an executed HUD model lease HUD-92236-PRA. No other lease contract or addenda is permitted, except those listed here. Attached to the HUD-92236-PRA, must be the following addenda:(A) Owner's Certification of Compliance with HUD's Tenant Eligibility and Rent Procedures: HUD-50059 (original and corrected versions),(B) Owner's Certification of Compliance with HUD's Tenant Eligibility and Rent Procedures: HUD-50059-A (original and corrected versions for unit transfers, move-outs, gross rent changes, etc.),(C) Move-in inspection report and waiver of right to be present during move-in inspection when applicable,(D) House rules,(E) Lead-based paint disclosure form as further outlined in §10.613(f) of this Title (relating to Lease Requirements) (as applicable),(F) Pet rules (if applicable),(G) Live-in Aide, (if applicable),(H) Bedbug addendum (if elected),(I) 811 PRA Units are prohibited from using the expired 2005 VAWA lease addendum. After OMB approval of a VAWA lease addendum, all 811 PRA households must have a valid and executed VAWA lease addendum, and(J) As a requirement of the 10 TAC §10.613 of this subchapter, there are no liens or lockouts for unpaid sums. As the HUD Model lease does not include these requirements, the Department-approved addendum must be included with the HUD Model Lease to incorporate these provisions in accordance with Texas Government Code 2306.6738.(5) Household unit transfer requirements. For the 811 PRA program, tenants may transfer to any Unit within the Development with prior Department approval. At the time of a transfer, Owners must complete a HUD-50059-A, which may adjust rents. Although a certification of annual income may be required for other layered programs, a HUD-50059 and income certification should not be conducted at the time of transfer for the 811 PRA program. Annual recertifications are due on the anniversary date the household originally moved into the Development. Households that are under-housed or over-housed may be required to transfer to comply with occupancy requirements.(6) Special rules regarding rents and fees. Tenants are required only to pay the Tenant Rent portion of rent and may not be held responsible for Assistance Payments. Owners may not charge application fees, must cap the security and pet deposits, and may not charge impermissible fees. An employee may not occupy an 811 PRA unit. Owners must adjust rent as required under the program.(7) Monitoring for eligibility(A) The household must include at least one person with a disability and who is 18 years of age or older and less than 62 years of age at the time of admission into the Development; and the person with a disability must be part of one or more of the target populations for the 811 PRA program. (B) The household's income is less than the extremely low income limit at move in. (C) The Owner must check the following criminal history of the household. Households in the 811 PRA program must not include: (i) Any member(s) who was evicted in the last three years from federally assisted housing for drug-related criminal activity; (ii) Any member that is currently engaged in illegal use of drugs or for which the Owner has reasonable cause to believe that a member's illegal use or pattern of illegal use of a drug may interfere with the health, safety, and right to peaceful enjoyment of the property by other residents; and (iii) Any member who is subject to a State sex offender lifetime registration requirement. (D) Student Status. If the household includes a student, the student must meet all of the criteria described in HUD Handbook 4350.3 par. 3-13B, as modified by the September 21, 2016, Federal Register Notice 5969-N-01.(8) Developments must prominently display 11 x 14 inch sized, as required by 24 CFR Part 110, Fair Housing Poster HUD-928.1 (English), HUD 928.1A (Spanish), and in other languages as required by Limited English Proficiency Requirements.(9) Number, Unit Mix, and Segregation of Assisted Units. The Department will monitor that the Owners of Participating Developments have set aside and made available on a continuous basis for Eligible Applicants the required number of Assisted Units and unit mix of bedroom sizes as required under the Rental Assistance Contract, as amended. Owners may not segregate Eligible Tenants to one area of a building or in certain sections within the Development. If an Owner is not able to meet these requirements, documentation must be maintained and available upon request to demonstrate good faith efforts to meet their obligations. (d) Eligibility for assistance and occupancy.(1) Income limits. At Move-In and Initial Certification, the household must be at or below the current extremely-low limit (30 percent AMI) as published and updated annually by HUD. Income limits do not apply at Annual Recertification or Interim Recertification. An adult child is not eligible to move into a unit after initial occupancy unless they are performing the functions of a live-in aide and are eligible to be certified as a live-in aide for eligibility purposes; documentation under these circumstances must be kept in the file.(2) Occupancy standards. Tenant files must maintain evidence that a tenant meets an exception when assigning a smaller or larger unit than required under normal circumstances or that a request for a transfer under these circumstances is denied.(3) Verification of Family Type and Individual Status. To verify disability status, the tenant file must include a copy of the HUD-90102 (Verification of Disability) provided to the Owner at the time of referral from the 811 Administration Division at the Department. (4) Verification of Income Eligibility. The tenant file must include a copy of the Section 811 Project Rental Assistance Program Application provided to the Owner at the time of referral from the 811 Administration Division at the Department. This document is not sufficient to screen for eligibility requirements under the program. An application that sufficiently screens for eligibility, income, assets, deductions and which complies with §10.612(a)(2) of this subchapter (relating to Tenant File Requirements) is required.(5) A household may not be disqualified for participation in the program solely based on their citizenship status.(e) Determining income and calculating rent. (1) Total Tenant Payment (TTP) is the amount a tenant is expected to contribute for rent and utilities. TTP is based on the family's income. Calculation of the TTP is the greater of 30 percent of the monthly adjusted income or 10 percent of the monthly gross income. Welfare rent and a $25 minimum rent do not apply. By the effective date found in the Rent Schedule provided by the Department, the utility allowance must be applied when calculating Tenant Rent. Please refer to §10.614 of this subchapter (relating to Utility Allowances) for details.(2) A tenant is not required to reimburse the Owner for undercharges caused solely by the Owner's failure to follow HUD's procedures for computing rent or assistance payments, including calculations of Annual Income, Adjusted Income, Tenant Rent, Utility Reimbursements, security deposits, or when the Owner fails to address timely discrepancies in income as indicated in an Enterprise Income Verification (EIV) System report.(f) Lease requirements and leasing activities(1) Lease term. The term of the initial lease must not be for less than twelve months. The lease will automatically be renewed for successive one-month terms if a new lease is not signed.(2) Fees and deposits.(A) Security deposits.(i) At the time of move-in, the Owner may collect a security deposit from each family in an amount equal to one month's Total Tenant Payment or $50, whichever is greater.(ii) The Owner must place the security deposit in a segregated, interest-bearing account. The balance of this account must at all times be equal to the total amount collected from the household, plus any accrued interest. The Owner must comply with any applicable State and local laws concerning interest payments on security deposits and return the security deposit to the family as required.(B) Pet deposits. Pet rules for a development may require tenants to pay a refundable pet deposit, but apply only to those tenants who own or keep cats or dogs in their units. The pet deposit must not exceed $300 for all pets. The deposit may be paid in full or in installments. If paid in installments, the initial deposit cannot exceed $50 at the time the pet is brought onto the premises. The pet rules must allow for gradual accumulation of the remaining required deposits, not to exceed $10 per month until the deposit is reached, but not prevent a tenant to pay more than $10 per month if the household chooses to do so.(C) Owners may not charge any deposits other than security and pet deposits as outlined in the subparagraph above.(D) Fees prior to occupancy. Owners may not charge application fees for any cost associated with accepting and processing applications, screening applicants, or verifying income and eligibility.(E) Fees during occupancy. (i) Owners cannot charge fees for late payment of rent.(ii) Owners may not charge any impermissible fee, such as unpaid utility bills fees (reimbursement of utility bills is permitted), pet fees, etc.(g) Notices to tenants. (1) Initial and reminder notices for an annual recertification. (A) Notices must not indicate a tenant will have their tenancy terminated for failing to recertify.(B) Notices must indicate a tenant will have their assistance terminated for failing to recertify. (C) The Third Reminder notice must indicate that if a tenant fails to recertify, their assistance will be terminated. The notice must also inform the tenant of the new rent they will pay without the assistance. (2) Any change in Tenant Rent or Utility Reimbursements requires a notice to the tenant, with increases requiring the notice to be at least 30 days in advance of the increase. Owners may not begin to charge or retroactively charge Tenant Rent when failing to properly notify the tenant of an in increase in Tenant Rent.(h) Terminations(1) Termination of assistance. Tenants whose assistance is terminated may remain in the unit. Rent will be capped at the rent limit for the other Department-monitored programs under which the unit is restricted.(2) Termination of tenancy. Refusal by a tenant to participate in or accept 811-specific services is not a basis for lease termination.(i) Enterprise Income Verification (EIV)(1) Owner must address discrepancies timely, which is within approximately thirty (30) days from the date of the EIV report.(2) Owners must document attempts to address and resolve discrepancies between certification paperwork and data from the EIV system; however, Owners may not suspend, terminate, reduce, make a final denial of rental assistance, or take any other adverse action against an individual based solely on the data in EIV.(3) Upon request by the Department, Owners must provide a list of staff with access to EIV systems or EIV reports. The list must provide the level of access and official title with the company for each staff member. EIV data may not be viewed or used by staff without a signed EIV Rules of Behavior, a certificate of completion dated within the last twelve (12) months for the Cyber-Awareness Challenge training (or the training required by HUD to replace this training), or without having an official and appropriate purpose for accessing the data.(4) Upon request by the Department, Owners must provide for EIV Coordinators a Coordinator Authorization Access Form (CAAF) for initial access and annual recertification of access to EIV systems and for EIV Users a User Authorization Access Form (UAAF) for initial access and annual recertification of access to EIV systems. If a CAAF or UAAF printed from the EIV system is not available, a CAAF or UAAF executed by both the EIV user and HUD official may be accepted. (5) Owners may not transmit to the Department EIV data or reports through the Department's Compliance Monitoring and Tracking System (CMTS).(6) In a physical or electronic binder, Owners must maintain the following EIV Master Binder reports and summary of the resolution of any discrepancies identified:(A) New Hires Report(B) Multiple Subsidy Report(C) Failed EIV Pre-screening Report(D) Failed Verification Report (Failed SSA Identity Test)(E) Deceased Tenant Report(F) No Income Reported on 50059 (as outlined in Owner's policies and procedures)(G) No Income Reported by HHS or SSA (as outlined in Owner's policies and procedures)</content><note type="source"><p>Source Note: The provisions of this §10.624 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.625"><num value="10.625">§10.625</num><heading>Events of Noncompliance</heading><content>Figure: 10 TAC §10.625 lists events for which a multifamily rental Development may be found to be in noncompliance for compliance monitoring purposes. This list is not an exclusive list of events and issues for which an Owner may be subject to an administrative penalty, debarment or other enforcement action. The first column of the chart identifies the noncompliance event. The second column indicates to which program(s) the noncompliance event applies. The last column indicates whether the issue is reportable on IRS Form 8823 for HTC Developments. Attached Graphic</content><note type="source"><p>Source Note: The provisions of this §10.625 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.626"><num value="10.626">§10.626</num><heading>Liability</heading><content>Full compliance with all applicable program requirements, including compliance with §42 of the Code, is the responsibility of the Development Owner. If the Development Owner engages a third party to address any such requirements, they are jointly and severally liable with the Development Owner. By monitoring for compliance, the Department in no way assumes any liability whatsoever for any action or failure to act by the Development Owner, including the Development Owner's noncompliance with §42 of the Code, the Fair Housing Act, §504 of the Rehabilitation Act of 1973, HOME, HOME-ARP, NHTF, TCAP RF, and NSP program regulations, Bond, and ERA program requirements, and any other laws, regulations, requirements, or other programs monitored by the Department.</content><note type="source"><p>Source Note: The provisions of this §10.626 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scF/s10.627"><num value="10.627">§10.627</num><heading>Temporary Suspensions of Sections of this Subchapter</heading><content>(a) Subject to the limitations stated in this section, temporary suspensions of sections of this subchapter may be granted by the Executive Director if there are extenuating circumstances which make it not possible or an undue administrative burden to comply with a requirement of this subchapter as long as substantial compliance is still in effect. For example, the Executive Director could suspend the requirement to report online or use Department approved forms, or alter the sample size for calculating a utility allowance using the actual use method. (b) Under no circumstances can the Executive Director, the Enforcement Committee or the Board suspend for any period of time compliance with the HOME Final Rule, NHTF Interim Rule, or regulations issued by HUD or any other federal agency when required by federal law. (c) Under no circumstances can the Executive Director, the Enforcement Committee or the Board suspend for any period of time Treasury Regulations, IRS publications controlling the submission of IRS Form 8823, or any sections of 26 U.S.C. §42.</content><note type="source"><p>Source Note: The provisions of this §10.627 adopted to be effective January 2, 2025, 49 TexReg 10513</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c10/scG"><num value="G">SUBCHAPTER G</num><heading>AFFIRMATIVE MARKETING REQUIREMENTS AND WRITTEN POLICIES AND PROCEDURE</heading><section identifier="/us/state/tx/tac/t10/p1/c10/scG/s10.800"><num value="10.800">§10.800</num><heading>Definitions</heading><content>The capitalized terms in this subchapter shall have the meaning as defined in this title in Chapter 1 (relating to Administration), Chapter 2 (relating to Enforcement), Chapter 11 (relating to the Qualified Allocation Plan), Chapter 12 (relating to the Multifamily Housing Revenue Bond Rules), Chapter 13 (relating to the Multifamily Direct Loan Rule), or Tex. Gov't Code Chapter 2306, Internal Revenue Code (the Code) §42, the HOME Final Rule, and other federal or Department rules, as applicable.</content><note type="source"><p>Source Note: The provisions of this §10.800 adopted to be effective November 16, 2023, 48 TexReg 6587.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scG/s10.801"><num value="10.801">§10.801</num><heading>Affirmative Marketing Requirements</heading><content>(a) Applicability. Compliance with this section is required for all Developments with five or more total units to further the objectives of Title VIII of the Civil Rights Act of 1968 and Executive Order 13166.(b) General. A Development Owner with five or more total Units must affirmatively market the Units to promote equal housing choice for prospective tenants, regardless of race, color, religion, sex, national origin, familial status, or disability and must develop and carry out an Affirmative Fair Housing Marketing Plan (or Affirmative Marketing Plan) to provide for marketing strategies and documentation of outreach efforts to prospective applicants identified as "least likely to apply." To determine the "least likely to apply" populations, a Development Owner is encouraged to use Worksheet 1 of HUD Form 935.2A, but at a minimum the Owner must document that they have compared the demographic composition of the Development to the market area to determine the populations least likely to apply. All Affirmative Marketing Plans must provide for affirmative marketing to Persons with Disabilities. Although not related to Affirmative Marketing requirements in this section, some Developments may be required by their LURAs to market units specifically to veterans or other populations as part of their regular marketing activities. If a Development has included veterans in the Development's Affirmative Marketing Plan it will not be cited as noncompliance the first time the Development's Affirmative Marketing Plan is reviewed, but the Development will be directed to revise the Affirmative Marketing Plan to not include this subpopulation in the plan.(c) Plan format. A Development Owner must prepare, have in its onsite records, and submit to the Department upon request, a written Affirmative Marketing Plan. Owners are encouraged to use any version of HUD Form 935.2A to meet Affirmative Marketing requirements. An Owner participating in a HUD funded program administered by the Department must use the version utilized by the program.(d) Marketing and Outreach.(1) The plan must include special outreach efforts to the "least likely to apply" populations through specific media, organizations, or community contacts that work with least likely to apply populations or work in areas where least likely to apply populations live. The outreach efforts identified in the Affirmative Marketing Plan must be performed by the Development at least once per calendar year.(2) To the extent that advertisements and/or marketing materials are utilized for the Development, those materials must contain:(A) The Fair Housing logo;(B) The contact information for the individual who can assist if reasonable accommodations are needed in order to complete the application process; and(C) Property contact information must be provided in both English and Spanish, and may be required to be provided in other languages in accordance with Limited English Proficiency Requirements.(e) Timeframes.(1) An Owner must begin its affirmative marketing efforts for each of the identified populations least likely to apply at least six months prior to the anticipated date the first building is to be available for occupancy.(2) Once every five years, Owners must determine if there have been any changes to the "least likely to apply" populations by completing Worksheet 1 of HUD Form 935.2A or a written process with equivalent information. In addition, owners must determine if current advertising sources still exist, and if the outreach that has been performed is still the most applicable. If the Owner determines that the plan does not need to be updated, the backup used to complete Worksheet 1 or its equivalent must be dated and maintained and may be reviewed by Department staff during reviews of the Affirmative Marketing Plan. If there have been changes to the least likely to apply populations or if the community contacts and advertising outlets no longer exist, the plan must be updated. Developments funded by HUD or USDA must also update their plans in accordance with HUD or USDA requirements that apply.(f) Recordkeeping. Owners must maintain records of each Affirmative Marketing Plan and specific outreach efforts completed for the greater of three years or the recordkeeping requirement identified in the LURA.(g) Exception to Affirmative Marketing. If the Development has closed its waitlist, Affirmative Marketing is not required. Affirmative Marketing is required as long as the Owner is accepting applications, has an open waitlist, or is marketing prior to the building being ready for occupancy as required under subsection (e)(1) of this section.</content><note type="source"><p>Source Note: The provisions of this §10.801 adopted to be effective November 16, 2023, 48 TexReg 6587.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scG/s10.802"><num value="10.802">§10.802</num><heading>Written Policies and Procedures</heading><content>(a) The purpose of this section is to outline the policies and/or procedures of the Department (also called tenant section criteria) that are required to have written documentation. If an Owner fails to have such Written Policies and Procedures, or fails to follow their Written Policies and Procedures it will be handled as an Event of Noncompliance as further provided in §10.803 of this subchapter (relating to Compliance and Events of Noncompliance).(1) Owners must inform applicants/tenants in writing, at the time of application, or at the time of other actions described in this section, that such policies/procedures as described in this section are available, and that the Owner will provide copies upon request to applicants/tenants or their representatives.(2) The Owner must have all policies and related documentation required by this section and the TDHCA form based on HUD form 5380 "Notice of Occupancy Rights under the Violence Against Women Act" and the HUD form 5382 "Certification of Domestic Violence, Dating Violence, Sexual Assault, or Stalking and Alternate Documentation" available in the leasing office and anywhere else where applications are taken; Developments that accept electronic applications must maintain on their website these Written Policies and Procedures and the same noted forms.(3) All policies must have an effective date. Any changes made to the policies require a new effective date, and a notice regarding the availability of new policies must be communicated to tenants in writing. Acceptable forms of notification in writing are:(A) Written notice to each household through an active communications portal or online rental payment portal, if either are used at the Development;(B) written notice via hard copy placed on the door to each occupied Unit;(C) a notice online on the Development's website, if the Development has one; or(D) a hard copy notice posted in the leasing office's public area for at least 30 calendar days.(4) In general, policies addressing credit, criminal history, and occupancy standards cannot be applied retroactively. Tenants who already reside in the Development or applicants on the waitlist at the time new or revised tenant selection criteria are applied, and who are otherwise in good standing under the lease or waitlist, must not receive notices of termination or non-renewal based solely on their failure to meet the new or revised tenant selection criteria or be passed over on the waitlist. However, criteria related to program eligibility may be applied retroactively when a market rate development receives a new award of tax credits, federal, or state funds and a household is not eligible under the new program requirements, or when prior criteria violate federal or state law.(b) Tenant Selection Criteria. A Development Owner must maintain current and prior versions of the written Tenant Selection Criteria, for the longer of the records retention period that applies to the program, or for as long as tenants who were screened under the historical criteria are occupying the Development.(1) The criteria identified by a Development must be reasonably related to an applicant's ability to perform under the lease (for a Development with MFDL funding this means to pay the rent, not to damage the housing, and not to interfere with the rights and quiet enjoyment of other tenants) and include at a minimum:(A) Requirements that determine an applicant's basic eligibility for the Development, including any preferences, restrictions (such as the Occupancy Standard Policy), the Waitlist Policy, Changes in Housing Designation Policy, low income unit designations utilized, and any other tenancy requirements. Any restrictions on student occupancy and any exceptions to those restrictions, as documented in the tenant file as provided for in 10 TAC §10.612(b)(2) of this chapter (relating to Tenant File Requirements) must be stated in the policies;(B) Applicant screening criteria, including what applicant attributes are screened and what scores or findings would result in ineligibility;(C) The following statement: Screening criteria will be applied in a manner consistent with all applicable laws, including the Texas and Federal Fair Housing Acts, the Federal Fair Credit Reporting Act, program guidelines, and TDHCA's rules;(D) Specific age requirements if the Development is operating as an Elderly Property either under the Housing for Older Persons Act of 1995 as amended (HOPA), or the age related eligibly criteria required by its use of federal funds.(2) The criteria must not:(A) Include preferences for admission, unless it is in a recorded LURA which has been approved by the Department (preferences are required to be in a LURA when a Development has federal or state funding, except for the preference allowed by paragraph (3) of this subsection), is required by a program in which the Owner is participating which requires the preference, or is allowed by paragraph (3) of this subsection. Owners that include preferences in their leasing criteria due to other federal financing must provide to the Department either written approval from HUD, USDA, or VA for such preference, or identify the statute, written agreement, or federal guidance documentation that permits the adoption of this preference;(B) Exclude an individual or family from admission to the Development solely because the household participates in the HOME Tenant Based Rental Assistance Program, the housing choice voucher program under Section 8, United States Housing Act of 1937 (42 U.S.C. §1-437), or other federal, state, or local government rental assistance program. If an Owner adopts a minimum income standard for households participating in a voucher program, it is limited to the greater of a monthly income of 2.5 times the household's share of the total monthly rent amount or $2,500 annually; or(C) In accordance with VAWA, deny admission on the basis that the applicant has been a victim of domestic violence, dating violence, sexual assault, or stalking.(3) If the Development is funded with HOME, HOME ARP, TCAP RF, NHTF, or NSP funds, in accordance with 24 CFR §93.356 and 24 CFR §92.359, the criteria may have a preference for persons who have experienced domestic violence, dating violence, sexual assault, or stalking.(4) Occupancy Standard Policy.(A) If the Development restricts the number of occupants in a Unit in a more restrictive manner than found in Section 92.010 of the Texas Property Code, the Occupancy Standard Policy must allow at least two persons per Bedroom plus one additional person per Unit. An Efficiency Unit that is greater than 600 square feet, must also have an Occupancy Standard Policy of at least three persons per Unit. In an SRO or in an Efficiency that is less than 600 square feet, the Occupancy Standard Policy must allow at least two persons per Unit. Supportive housing or transitional housing Developments where all Units in the Development are SROs or Efficiencies, are not required by the Department to have an Occupancy Standard Policy, except as required for the 811 PRA Program or as reflected in the Development's LURA.(B) A Development may adopt a more restrictive standard than described in subparagraph (A) of this paragraph, if the Development is required to utilize a more restrictive standard by a local governmental entity, or a federal funding source. However, the Development must have this information available onsite for Department review.(C) Except for an Elderly Development that meets the requirements of the Housing for Older Persons Act exception under the Fair Housing Act, the Occupancy Standard Policy must state that children that join the household after the start of a lease term will not cause a household to be in violation of the lease.(c) Reasonable Accommodations Policy. Owners must maintain a written Reasonable Accommodations policy. The policy must be maintained at the Development. Owners are responsible for ensuring that their employees and contracted third party management companies are aware of and comply with the reasonable accommodation policy.(1) The policy must provide:(A) Information on how an applicant or current resident with a disability may request a reasonable accommodation;(B) How transfers related to a reasonable accommodation will be addressed; and(C) A timeframe in which the Owner will respond to a request that is compliant with §1.204(b)(3) and (d) of this title (relating to Reasonable Accommodations).(2) The policy must not:(A) Require a household to make a reasonable accommodation request in writing;(B) Require a household whose need is readily apparent to provide third party documentation of a disability;(C) Require a household to provide specific medical or disability information other than the disability verification that may be requested to verify eligibility for reasonable accommodation;(D) Exclude a household with person(s) with disabilities from admission to the Development because an accessible unit is not currently available; or(E) Require a household to rent a unit that has already been made accessible.(d) Waitlist Policy. Owners must maintain a written waitlist policy, regardless of current Unit availability. The policy must be maintained at the Development. The policy must include procedures the Development uses in:(1) Opening, closing, and selecting applicants from the waitlist, including but not limited to the requirements in §10.615(b) of this title (relating to Elections under IRC §42(g) and Additional Income and Rent Restrictions for HTC, Exchange, and TCAP Developments);(2) Determining how lawful preferences are applied; and(3) Procedures for prioritizing applicants needing accessible Units in accordance with 24 CFR §8.27, and Chapter 1, Subchapter B of this title (relating to Accessibility and Reasonable Accommodations).(e) Changes in Household Designation Policy. This is applicable if a Development has adopted a policy in accordance with §10.611(c) of this subchapter (relating to Determination, Documentation and Certification of Annual Income).(f) Denied Application Policies. Owners must maintain a written policy regarding the procedures they will follow when denying an application and when notifying denied applicants of their rights.(1) The policy must address the manner by which rejections of applications will be handled, including timeframes and appeal procedures, if any.(2) Within seven days after the determination is made to deny an application, the owner must provide any rejected or ineligible applicant that completed the application process a written notification of the grounds for rejection. The written notification must include:(A) The specific reason for the denial and reference the specific leasing criteria upon which the denial is based;(B) Contact information for any third parties that provided the information on which the rejection was based and information on the appeals process, if one is used by the Development. An appeals procedure is required for HOME Developments that are owned by Community Housing Development Organizations, and Units at Developments that lease Units under the Department's Section 811 PRA program. The appeals process must provide a 14-day period for the applicant to contest the reason for the denial, and comply with other requirements of the HUD Handbook 4350.3 4-9; and(C) The TDHCA form based on HUD form 5380 "Notice of Occupancy Rights under the Violence Against Women Act" and the HUD form 5382 "Certification of Domestic Violence, Dating Violence, Sexual Assault, or Stalking and Alternate Documentation."(3) The Development must keep and may periodically be requested to submit to the Department a log of all denied applicants that completed the application process to include:(A) Basic household demographic and rental assistance information, if requested during any part of the application process; and(B) The specific reason for which an applicant was denied.(4) If an 811 applicant is being denied, within three calendar days of the denial the Department's 811 PRA Program point of contact must be notified and provided with a copy of the written notice that was provided to the applicant.(g) Non-renewal and/or Termination Notices. A Development Owner must maintain a written policy regarding procedures for providing households non-renewal and termination notices.(1) The owner must provide in any non-renewal or termination notice, a specific and lawful reason for the termination or non-renewal.(2) The notification must:(A) Be delivered as required under applicable program rules and the lease. For HOME, HOME ARP, TCAP RF, NHTF, NSP, HTC, TCAP and Exchange Developments, see 10 TAC §10.613(a) - (b) of this chapter (relating to Lease Requirements). For Section 811 PRA, see 24 CFR §247.4(a) - (f);(B) Include the TDHCA form based on HUD form 5380 "Notice of Occupancy Rights under the Violence Against Women Act" and the HUD form 5382 "Certification of Domestic Violence, Dating Violence, Sexual Assault, or Stalking and Alternate Documentation." To avoid providing applicants and residents with duplicate information, TDHCA administered Developments layered with other federal funds are permitted to amend the TDHCA VAWA forms to incorporate requirements of other funders. However, none of the information included in the TDHCA created form may be omitted;(C) State how a person with a disability may request a reasonable accommodation in relation to such notice; and(D) Include information on the appeals process if one is used by the Development (this is required under some LURAs, for HOME Developments that are owned by Community Housing Development Organizations, and for 811 PRA units).(h) At the time of application Owners must provide each adult in the household the TDHCA form based on HUD form 5380 "Notice of Occupancy Rights under the Violence Against Women Act" and the HUD form 5382 "Certification of Domestic Violence, Dating Violence, Sexual Assault, or Stalking and Alternate Documentation." To avoid providing applicants and residents with duplicate information, TDHCA administered Developments layered with other federal funds are permitted to amend the TDHCA VAWA forms to incorporate requirements of other funders. However, none of the information included in the TDHCA created form may be omitted.(i) Policies and procedures will be reviewed periodically by the Department's Fair Housing staff, as a result of complaints, or through an owner initiated written policies and procedures review. Owners may request a review of the written policies and procedures for a portfolio of Developments by submitting a request to fair.housing@tdhca.state.tx.us. After review by the Department, an Owner may make non-substantive changes to the policies.(j) Development Owners must allow applicants to submit applications via mail and at the Development site or leasing office; if the Development is electronically equipped, the Development may also allow applications to be submitted via email, website form, or fax. The Development's tenant selection criteria must state available alternate means of submission and include address, email, or other necessary contact information on the form or its attached leasing criteria.</content><note type="source"><p>Source Note: The provisions of this §10.802 adopted to be effective November 16, 2023, 48 TexReg 6587.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scG/s10.803"><num value="10.803">§10.803</num><heading>Compliance and Events of Noncompliance</heading><content>(a) The Department will provide written notice to the Owner if the Department discovers through monitoring, review, resident complaint, or any other manner that the Development is not in compliance with the provisions of this subchapter. A 90 day Corrective Action Period will be provided. Documentation of correction must be received during the Corrective Action Period for an Event of Noncompliance to be considered corrected during the Corrective Action Period. The Department may extend the Corrective Action Period for up to six months from the date of the notice to the Development Owner only if there is good cause for granting an extension and the owner requests an extension during the original 90 day Corrective Action Period, and the request would not cause the Department or the Owner to miss a federal deadline. Requests for an extension may be submitted to: fair.housing@tdhca.state.tx.us.(b) If an Owner submits evidence of corrective action during the Corrective Action Period that addresses each issue, but does not fully address all issues, the Department will give the Owner written notice and an additional 10 calendar day period to submit evidence of full corrective action.(c) If communications to the Owner under this subchapter have a pattern of being returned to the Department as refused, unclaimed, or undeliverable, the Development may be considered not in compliance without further notice to the Owner. The Owner is responsible for providing the Department with current contact information, including address(es) (physical and electronic) and phone number(s). The Owner must also provide current contact information to the Department as required by §1.22 of this title (relating to Providing Contact Information to the Department), and ensure that such information is at all times current and correct.(d) The Department will rely solely on the information supplied by the Owner in the Department's web-based Compliance Monitoring and Tracking System (CMTS) for notifications under this subchapter. It is the Owner's sole responsibility to ensure at all times that such information is current, accurate, and complete. Correspondence sent to the email or physical address shown in CMTS will be deemed delivered to the Owner. Correspondence from the Department may be directly uploaded to the property's CMTS account using the secure electronic document attachment system. Once uploaded, notification of the attachment will be sent electronically to the email address listed in CMTS. The Department is not required to send a paper copy, and if it does so it does as a voluntary and non-precedential courtesy only.(e) Events of Noncompliance identified in the evaluation of the requirements of this subchapter will be those specified in §10.625 of this title (relating to Events of Noncompliance).</content><note type="source"><p>Source Note: The provisions of this §10.803 adopted to be effective November 16, 2023, 48 TexReg 6587.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c10/scH"><num value="H">SUBCHAPTER H</num><heading>INCOME AND RENT LIMITS</heading><section identifier="/us/state/tx/tac/t10/p1/c10/scH/s10.1001"><num value="10.1001">§10.1001</num><heading>Purpose</heading><content>The purpose of this subchapter is to codify the income and rent limits applicable to the multifamily programs administered by the Texas Department of Housing and Community Affairs (the Department). The Department may, but is not required to, calculate and provide income and rent limits for programs administered by the Department. Income and rent limits will be derived from data released by Federal agencies including the U.S. Department of Housing and Urban Development (HUD).</content><note type="source"><p>Source Note: The provisions of this §10.1001 adopted to be effective May 4, 2023, 48 TexReg 2182.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scH/s10.1002"><num value="10.1002">§10.1002</num><heading>Definitions</heading><content>(a) Unless otherwise defined here, terms have the meaning in §11.1 of this title (relating to Definitions), or federal or state law.(b) Multifamily Tax Subsidy Program Imputed Income Limit--Using the income limits provided by HUD pursuant to §142(d), the imputed income limit is the income limitation which would apply to individuals occupying the unit if the number of individuals occupying the unit were as described in paragraphs (1) and (2) of this subsection:(1) in the case of a unit which does not have a separate bedroom, 1 individual; or(2) in the case of a unit which has 1 or more separate bedrooms, 1.5 individuals for each separate bedroom.(c) Tax Credit Assistance Program (TCAP)--Funds awarded as part of the American Recovery and Reinvestment Act to assist Low Income Housing Tax Credit projects funded during 2007, 2008, and 2009.(d) Tax Credit Assistance Program Repayment Funds (TCAP RF)--Multifamily Direct Loan funds made available through income generated from loan repayments from the Tax Credit Assistance Program.</content><note type="source"><p>Source Note: The provisions of this §10.1002 adopted to be effective May 4, 2023, 48 TexReg 2182.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scH/s10.1003"><num value="10.1003">§10.1003</num><heading>Tax Exempt Bond Developments</heading><content>(a) Tax Exempt Bond Developments must use the Multifamily Tax Subsidy Program (MTSP) income limits released by HUD, generally, on an annual basis. The MTSP limit tables include:(1) The 50% and 60% Area Median Gross Income (AMGI) by household size.(2) In areas where the income limits did not decrease in 2007 and 2008 because of HUD's hold harmless policy, a HERA Special 50% and HERA Special 60% income limit by household size. These higher limits can only be used if at least one building in the Project was placed in service on or before December 31, 2008.(b) If HUD releases a 20%, 30%, 40%, 60%, 70% or 80% income limit in the MTSP charts the Department will make that data available without any calculations. Otherwise, the following methodology will be used, without rounding, to determine additional income limits:(1) To calculate the 20% AMGI, the 50% AMGI limit will be multiplied by .40 or 40%.(2) To calculate the 30% AMGI, the 50% AMGI limit will be multiplied by .60 or 60%.(3) To calculate the 40% AMGI, the 50% AMGI limit will be multiplied by .80 or 80%.(4) To calculate the 60% AMGI, the 50% AMGI limit will be multiplied by 1.2 or 120%.(5) To calculate the 70% AMGI, the 50% AMGI limit will be multiplied by 1.4 or 140%.(6) To calculate the 80% AMGI, the 50% AMGI limit will be multiplied by 1.6 or 160%.(c) The Land Use Restriction Agreement (LURA) for some, but not all, Tax Exempt Bond properties restricts the amount of rent the Development Owner is permitted to charge. If the LURA restricts rents, rent limits will be calculated in accordance with §10.1004(d) of this subchapter (relating to Housing Tax Credit Properties, TCAP, Exchange and HTF).(d) Tax Exempt Bond LURAs are hereby amended to be consistent with this section.(e) The Department will make available a memorandum in a recordable form reflecting the applicable rent limits in accordance with this section and the legal description of the affected property. The owner of the property will bear any costs associated with recording such memorandum in the real property records for the county in which the property is located.(f) Nothing in this section prevents a Development Owner from pursuing a Material Amendment to their LURA in accordance with the procedures found in §10.405 of this chapter (relating to Amendments and Extensions).</content><note type="source"><p>Source Note: The provisions of this §10.1003 adopted to be effective May 4, 2023, 48 TexReg 2182.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scH/s10.1004"><num value="10.1004">§10.1004</num><heading>Housing Tax Credit Properties, TCAP, Exchange and SHTF</heading><content>(a) Except for certain rural properties, Housing Tax Credit, TCAP, Exchange, and SHTF Developments must use the Multifamily Tax Subsidy Program (MTSP) income limits released by HUD, generally, on an annual basis. The MTSP limit tables include:(1) The 50% and 60% Area Median Gross Income (AMGI) by household size.(2) In areas where the income limits did not decrease in 2007 and 2008 because of HUD's hold harmless policy, a HERA Special 50% and HERA Special 60% income limit by household size. These higher limits can only be used if at least one building in the Project (as defined on line 8b on Form 8609) was placed in service on or before December 31, 2008.(b) If HUD releases a 20%, 30%, 40%, 60%, 70% or 80% income limit in the MTSP charts, the Department will use that data. Otherwise, the following calculation will be used, without rounding, to determine additional income limits:(1) To calculate the 20% AMGI, the 50% AMGI limit will be multiplied by .40 or 40%.(2) To calculate the 30% AMGI, the 50% AMGI limit will be multiplied by .60 or 60%.(3) To calculate the 40% AMGI, the 50% AMGI limit will be multiplied by .80 or 80%.(4) To calculate the 60% AMGI, the 50% AMGI limit will be multiplied by 1.2 or 120%.(5) To calculate the 70% AMGI, the 50% AMGI limit will be multiplied by 1.4 or 140%.(6) To calculate the 80% AMGI, the 50% AMGI limit will be multiplied by 1.6 or 160%.(c) Treatment of Rural Properties. Section 42(i)(8) of the Code permits certain Housing Tax Credit, Exchange, and Tax Credit Assistance properties to use the national non-metropolitan median income limit when the area median gross income limit for a place is less than the national non-metropolitan median income.(1) The Department will identify rural eligible places in accordance with:(A) Section 520 of the Housing Act of 1949, as amended from time to time; and(B) Chapter 2306 of the Texas Government Code, as amended from time to time.(2) The Department allows the use of rural income limits for SHTF multifamily rental Developments that are considered rural using the process described in this subsection.(d) Rent limits are a calculation of income limits and cannot exceed 30% of the applicable Imputed Income Limit. Rent limits are published by number of bedrooms and will be rounded down to the nearest dollar.(1) Example 1004(1): To calculate the 30% 1 bedroom rent limit:(A) Determine the imputed income limited by multiplying the number of bedrooms by 1.5: 1 bedroom x 1.5 persons = 1.5.(B) To calculate the 1.5 person income limit, average the 1 person and 2 person income limits: If the 1 person 30% income limit is $12,000 and the 2 person 30% income limit is $19,000, the imputed income limit would be $15,500 ($12,000 + $19,000 = $31,000/2 = $15,500).(C) To calculate the 30% 1 bedroom rent limit, multiply the imputed income limit of $15,500 by 30%, then divide by 12 months and round down. In this example, the 30% 1 bedroom limit is $387 ($15,500 times 30% divided by 12 = $387.50 per month. Rounded down the limit is $387).(2) Example 1004(2): to calculate the 50% 2 bedroom rent limit:(A) Determine the imputed income limited to be calculated by multiplying the number of bedrooms by 1.5: 2 bedrooms x 1.5 persons = 3.(B) The 3 person income limit is already published; for this example the applicable 3 person 50% income limit is $27,000.(C) To calculate the 50% 2 bedroom rent limit, multiply $27,000 by 30%, then divide by 12. In this example, the 50% 2 bedroom limit is $675 ($27,000 times 30% divided by 12 = $675. No rounding is needed since the calculation yields a whole number).(e) The Department releases rent limits assuming that the gross rent floor is set by the date the Housing Tax Credits were allocated.(1) For a 9% Housing Tax Credit, the allocation date is the date the Carryover Agreement is signed by the Department.(2) For a 4% Housing Tax Credit, the allocation date is the date of the Determination Notice.(3) For TCAP, the allocation date is the date the accompanied credit was allocated.(4) For Exchange, the allocation date is the effective date of the Subaward agreement.(f) Revenue Procedure 94-57 permits, but does not require, owners to set the gross rent floor to the limits that are in effect at the time the Project (as defined on line 8b on Form 8609) places in service. However, this election must be made prior to the Placed in Service Date. A Gross Rent Floor Election form is available on the Department's website. Unless otherwise elected, the initial date of allocation described in subsection (e) of this section will be used.(1) In the event an owner elects to set the gross rent floor based on the income limits that are in effect at the time the Project places in service and wishes to revoke such election, prior approval from the Department is required. The request will be treated as non-material amendment, subject to the fee described in §11.901of this title (relating to Fee Schedule) and the process described in §10.405 of this chapter (relating to Amendments and Extensions).(2) An owner may request to change the election only once during the Compliance Period.(g) For the SHTF program, the date the LURA is executed is the date that sets the gross rent floor.(h) Held Harmless Policy.(1) In accordance with Section 3009 of the Housing and Economic Recovery Act of 2008, once a Project (as defined on line 8b on Form 8609) places in service, the income limits shall not be less than those in effect in the preceding year.(2) Unless other guidance is received from the U.S. Treasury Department, in the event that a place no longer qualifies as rural, a Project that was placed in service prior to loss of rural designation can continue to use the rural income limits that were in effect before the place lost such designation for the purposes of determining the applicable income and rent limit. However, if in any subsequent year the rural income limits increase, the existing project cannot use the increased rural limits. Example 1004(3): Project A was placed in service in 2010. At that time, the place was classified as Rural. In 2012 that place lost its rural designation. The rural income limits increased in 2013. Project A can continue to use the rural income limits in effect in 2012 but cannot use the higher 2013 rural income limits. For owners that execute a carryover for a Project located in a rural place that loses such designation prior to the placed in service date, unless other guidance is received from the U.S. Treasury Department, the Department will monitor using the rent limits calculated from the rural limits that were in effect at the time of the carryover. However, for the purposes of determining household eligibility, such Project must use the applicable MTSP income limits published by HUD.</content><note type="source"><p>Source Note: The provisions of this §10.1004 adopted to be effective May 4, 2023, 48 TexReg 2182.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scH/s10.1005"><num value="10.1005">§10.1005</num><heading>HOME, HOME-ARP, TCAP RF, and NSP</heading><content>(a) HOME, HOME-ARP, HOME Match and TCAP RF units must use the HOME Program Income and Rent Limits that are calculated annually by HUD's Office of Policy Development and Research (PDR). The limits are made available for each Metropolitan Statistical Areas (MSA), Primary Metropolitan Statistical Areas (PMSA) and Area, District or County by State.(1) Upon publication, the Department will determine which counties are in each MSA, PMSA, Area or District.(2) Generally, PDR publishes income limits in tables identifying the following Area Median Gross Income (AMGI) by household size:(A) Extremely Low-Income Limits which are generally 30% of median income, which will be shown as the 30% limit in the Department's income limits;(B) Very Low-Income Limits which are generally 50% of median income, which will be shown as the 50% limit in the Department's income limits;(C) 60% Limits; and(D) Low-Income Limits which are generally 80% of the median income, but capped at the national median income with some exceptions which will be shown as the 80% limits in the Department's income limits.(3) If not published, the Department will use the following methodology to calculate, without rounding, additional income limits from the HOME Program income limits released by PDR:(A) To calculate the 30% AMGI, the 50% AMGI limit will be multiplied by .60 or 60%.(B) To calculate the 40% AMGI, the 50% AMGI limit will be multiplied by .80 or 80%.(C) To calculate the 60% AMGI, the 50% AMGI limit will be multiplied by 1.2 or 120%.(b) PDR publishes High and Low HOME rent limits by bedroom size.(c) PDR does not publish a 30% or 40% rent limits that certain HOME, HOME-ARP and TCAP RF Developments are required to use. These limits will be calculated using the same formulas described in §10.1004 of this subchapter (relating to Housing Tax Credit Properties, TCAP, Exchange and SHTF).(d) In the event that PDR publishes rent limits after the HOME program income limits, the Department permits HOME, HOME-ARP and TCAP RF Developments to delay the implementation of the 30% and 40% rent limits until the High and Low HOME rent limits must be used.(e) NSP income limits are published annually by HUD for each county with tables identifying the 50% AMGI and 120% AMGI for household size. If not published, the Department will use the following methodology to calculate, without rounding, additional income limits from the HOME Program income limits released by HUD:(1) To calculate the 30% AMGI, the 50% AMGI limit will be multiplied by .60 or 60%.(2) To calculate the 40% AMGI, the 50% AMGI limit will be multiplied by .80 or 80%.(3) To calculate the 60% AMGI, the 50% AMGI limit will be multiplied by 1.2 or 120%.(4) To calculate the 80% AMGI, the 50% AMGI limit will be multiplied by 1.6 or 160%.(f) If the LURA for an NSP Development restricts rents, the amount of rent the Development Owner is permitted to charge will be the High or Low HOME rent published by PDR or calculated in the same manner described in §10.1004 of this subchapter using the HOME income limits.(g) The LURA for HOME-ARP may require the rent and income limit to follow a different Department program during the state affordability period. In that case, rent will be calculated in the manner of the program identified in the LURA and described in this subchapter.</content><note type="source"><p>Source Note: The provisions of this §10.1005 adopted to be effective May 4, 2023, 48 TexReg 2182; amended to be effective February 26, 2024, 49 TexReg 1069.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scH/s10.1006"><num value="10.1006">§10.1006</num><heading>National Housing Trust Fund (NHTF)</heading><content>(a) The 30% National Housing Trust Fund Income and Rent Limits are calculated annually by HUD's Office of Policy Development and Research (PDR). The limits are made available for each Metropolitan Statistical Areas (MSA), Primary Metropolitan Statistical Areas (PMSA) and Area, District or County by State. Generally, PDR publishes income limits in tables identifying the Area Median Gross Income (AMGI) by household size. The 30% NHTF income limit is the greater of the 30% limit and the federal poverty line. The 15% NHTF income limit will be half of the 30% NHTF income limit.(b) PDR publishes 30% NHTF Rent Limits by bedroom size. The 30% NHTF rent limit is calculated based on the greater of the 30% AMGI or the federal poverty line. The 15% NHTF rent limit will be half of the 30% NHTF rent limit.</content><note type="source"><p>Source Note: The provisions of this §10.1006 adopted to be effective May 4, 2023, 48 TexReg 2182.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scH/s10.1007"><num value="10.1007">§10.1007</num><heading>Emergency Rental Assistance (ERA)</heading><content>(a) The Emergency Rental Assistance Developments (ERA) must use the Section 8 income limits released by HUD, generally, on an annual basis. The Section 8 limit tables include the 30% and 50% by household size.(b) The Land Use Restriction Agreement (LURA), for Emergency Rental Assistance Developments restricts the amount of rent the Development Owner is permitted to charge.(1) If ERA is layered with Housing Tax Credit Properties, TCAP, Exchange and SHTF, the LURA restricted rent limits will be calculated in accordance with §10.1004(d) of this subchapter (relating to Housing Tax Credit properties, TCAP, Exchange and SHTF).(2) If ERA is layered with HOME, HOME-ARP, TCAP RF, and NSP, the LURA restricted rent limits will be calculated in accordance with §10.1005(b) of this subchapter (relating to HOME, HOME-ARP, TCAP RF, and NSP).(3) If ERA is layered with NHTF, the LURA restricted rent limits will be calculated in accordance with §10.1006(b) of this subchapter (relating to NHTF).</content><note type="source"><p>Source Note: The provisions of this §10.1007 adopted to be effective May 4, 2023, 48 TexReg 2182.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c10/scI"><num value="I">SUBCHAPTER I</num><heading>PUBLIC FACILITY CORPORATION COMPLIANCE MONITORING</heading><section identifier="/us/state/tx/tac/t10/p1/c10/scI/s10.1101"><num value="10.1101">§10.1101</num><heading>Purpose</heading><content>The purpose of Chapter 10, Subchapter I is to:(1) Establish rules governing Developments owned or sponsored by a Public Facility Corporation (PFC) that are subject to Sections 303.0421 and 303.0425 of the Texas Local Government Code.(2) Enable the Department to communicate with Responsible Parties and persons with an interest in the Development, regarding the results of the Audit Report.(3) Establish qualifications for Auditors and reporting standards and formats.(4) Implement compliance requirements, tenant protections, and affirmative marketing requirements, as required by Sections 303.0421 and 303.0425 of the Texas Local Government Code.</content><note type="source"><p>Source Note: The provisions of this §10.1101 adopted to be effective February 26, 2024, 49 TexReg 1070.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scI/s10.1102"><num value="10.1102">§10.1102</num><heading>Definitions</heading><content>The capitalized terms or phrases used herein are defined in the title. Any other capitalized terms in the subchapter shall have the meaning defined in Chapter 2306 of the Texas Government Code, Chapter 303, Texas Local Government Code, , and other state or Department rules, as applicable. Defined terms, when not capitalized, are to be read in context and construed according to common usage.(1) Audit Report--A report completed by an Auditor or compliance expert, in a manner and format prescribed by the Department.(2) Auditor--An individual who is an independent auditor or compliance expert with an established history of providing similar audits on housing compliance matters, meeting the criteria established herein.(3) Board--The governing board of the Texas Department of Housing and Community Affairs.(4) Chief Appraiser--The chief appraiser of the appraisal district in which a Development is located.(5) Department--The Texas Department of Housing and Community Affairs.(6) Development--A multifamily residential development owned by a Public Facility Corporation and operated by an Operator.(7) Housing Choice Voucher Program--The housing choice voucher program under Section 8, United States Housing Act of 1937 (42 U.S.C. Section 1437(f).(8) HUD--The United States Department of Housing and Urban Development.(9) Public Facility Corporation (PFC)--A nonprofit corporation that can be created by a municipality, county, school district, housing authority or a Sponsor, as outlined in Chapter 303 of the Texas Local Government Code.(10) Public Facility User--a public-private partnership entity or a developer or other private entity that has an ownership interest or a leasehold or other possessory interest in a public facility that is a multifamily residential development. For purposes of all provisions within this rule, the terms "Public Facility User" and "Operator" shall have the same meaning and shall be interchangeable.(11) Regulatory Agreement--A Land Use Restriction Agreement (LURA), Ground Lease, Deed Restriction, and any similar restrictive instrument that is recorded in the real property records of the county in which the Development is located.(12) Responsible Parties--The Texas Comptroller of Public Accounts, and with respect to a Development, the applicable Operator, the PFC, the governing body of the PFC's Sponsor, and, if the PFC's Sponsor is a housing authority, the elected officials responsible for appointing the housing authority's governing board.(13) Restricted Unit--A residential unit in a Development that is reserved for or occupied by a household meeting certain income limitations established in the Regulatory Agreement, with rent for such unit restricted as set forth in these rules. Restricted Units may float in a Development and need not be permanently fixed.(14) Sponsor--A municipality, county, school district, housing authority, or special district that causes a corporation to be created to act in accordance with Chapter 303, Texas Local Government Code.(15) Unit Type--Means the type of unit determined by the number of bedrooms.</content><note type="source"><p>Source Note: The provisions of this §10.1102 adopted to be effective February 26, 2024, 49 TexReg 1070.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scI/s10.1103"><num value="10.1103">§10.1103</num><heading>Reporting Requirements</heading><content>The following reporting requirements apply to all Developments owned by a Public Facility Corporation (PFC), subject to Sections 303.0421 and 303.0425 of the Texas Local Government Code, and not eligible under Section 10(b) or (c) of House Bill 2071, 88th Texas Legislative Session, effective June 18, 2023, (the Act) for continuation of the former law in effect prior to the effective date of the Act. Pursuant to Section 10(d) of the Act, all Developments owned by a PFC as described in Tex. Local Gov't Code §303.0421(a), and with respect to which an exemption is sought or claimed under §303.042(c) - regardless of when the Development was acquired, approved, or occupied - must submit an Audit Report in accordance with §303.0426(b) as described below.(1) No later than June 1 of each year, the Public Facility User will submit to the Department an Audit Report from an Auditor, obtained at the expense of the Public Facility User. Concurrently with submission of the Audit Report, the Operator will complete the contact information form available on the Department's website. For Developments eligible for continuation of the former law in effect prior to June 18, 2023, the first Audit Report (due no later than December 15, 2024, with a one-time discretionary extension of 30 days available from the Department upon written showing of good cause, if submitted to pfc.monitoring@tdhca.texas.gov prior to 5:00 p.m. on December 15th), will satisfy the requirements of Tex. Local Gov't Code §303.0426(b)(1) (compliance with new statutory provisions) by demonstrating its eligibility to continue under the former law, but must still fully address the requirements of §303.0426(b)(2) (identifying the difference in rent charged for income-restricted residential units and the estimated maximum market rents that could be charged for those units without the rent or income restrictions).(2) The first Audit Report must include a copy of the Regulatory Agreement. The first Audit Report for a Development must be submitted no later than June 1 of the year following the first anniversary of:(A) The date of the PFC acquisition for an occupied Development; or(B) The date a newly constructed PFC Development first becomes occupied by one or more tenants.(3) No later than 60 days after the receipt of the Audit Report, the Department will post a summary of the Audit Report on its website. A copy of the summary will also be provided to the Development and all Responsible Parties. The summary must describe in detail the nature of any noncompliance.(4) If any noncompliance with Sections 303.0421 and 303.0425 are identified by the Auditor, no later than 45 days after receipt of the Audit Report the Department will notify the Public Facility User. The notification must include a detailed description of the noncompliance and at least one option for corrective action to resolve the noncompliance. The Public Facility User will be given 60 days to correct the noncompliance. At the end of the 60 days, the Department will post a final report on its website.(5) If all noncompliance is not corrected within the 60 days, the Department will notify the Public Facility User, appropriate appraisal district, and the Texas Comptroller. The Department will also recommend a loss of tax-exempt status.(6) The qualification of the Auditor must be submitted with each Audit Report. Qualifications must include experience auditing housing compliance, a current Certified Occupancy Specialist (COS) certification or an equivalent certification, and resume. The Auditor may not be affiliated with or related to any Responsible Parties. Additionally, a current or previous Management Agent that has or had oversight of the Development or is/was responsible for reviewing and approving tenant files does not qualify as an Auditor under these rules.(7) The Public Facility User may not engage the same individual as Auditor for a particular Development for more than three consecutive years. After the third consecutive Audit Report by the same Auditor, the Public Facility User must engage a new Auditor for at least two reporting years before re-engaging with a prior Auditor.(8) Audit Reports and supporting documentation and required forms must be submitted to the following email address: pfc.monitoring@tdhca.state.tx.us.</content><note type="source"><p>Source Note: The provisions of this §10.1103 adopted to be effective February 26, 2024, 49 TexReg 1070; amended to be effective November 27, 2024, 49 TexReg 9494.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scI/s10.1104"><num value="10.1104">§10.1104</num><heading>Audit Requirements</heading><content>(a) The Auditor must use the Department's Public Facility Corporation monitoring forms made available on the website. The review performed by the Auditor may be completed either onsite or electronically. Original records must be made available to the Auditor. The file sample used by the Auditor must contain at least twenty percent (20%) of the total number of Restricted Units for the Development, but no more than a total of fifty (50) household files. The selection of Restricted Units should primarily be new move-ins but should also include at least ten percent (10%) sample of all the household files that have recertified.(b) The Auditor will ensure Development meets the following requirements and will identify any deficiencies found in the report:(1) The Development has a properly recorded Regulatory Agreement with an initial minimum 10-year term.(2) For newly constructed Developments:(A) At least ten percent (10%) of the units in the Development are reserved for, or occupied by, households at or below sixty percent (60%) Area Median Income (AMI), adjusted for household size, as established by HUD;(B) At least an additional forty percent (40%) of the units in the Development are reserved for, or occupied by, households at or below eighty percent (80%) AMI, adjusted for household size, as established by HUD.(3) For occupied Developments acquired by the PFC:(A) At least twenty-five percent (25%) of the units in the Development are reserved for, or occupied by, households at or below sixty percent (60%) AMI, adjusted for household size, established by HUD; and(B) At least an additional forty percent (40%) of the units in the Development are reserved for, or occupied by, households at or below eighty percent (80%) AMI, adjusted for household size, as established by HUD; or(C) The Development meets the household income restrictions set forth in §10.1104(B); and(D) The Operator expends at least fifteen percent (15%) of the gross cost of the Development, as shown in the settlement statement, on rehabilitating, renovating, reconstructing, or repairing, the Development, with such activities commencing no later than the first anniversary of the date of acquisition, and concluding no later than the third anniversary of the date of acquisition.(4) Monthly rent for Restricted Units may not exceed thirty percent (30%) of the imputed household income limitation for the unit, adjusted for an imputed family size of one person per bedroom plus one person, as determined by HUD. Notwithstanding the foregoing, if a Restricted Unit is occupied by a household with a Housing Choice Voucher, and the payment standard for that voucher is less than the monthly rent for the Restricted Unit established pursuant to the immediately preceding sentence, the household may be required to pay the difference between the payment standard and the monthly rent.(5) The percentage of Restricted Units in each Unit Type in the Development, must be the same or greater percentage as the percentage of each Unit Type of units that are not Restricted Units in the Development.(6) Occupants of Restricted Units are required to recertify at the time of the renewal of a lease agreement, the income of the household using a Department-approved Income Certification form. If a household exceeds the income limit at an annual income recertification, the Operator should follow the Available Unit Rule as outlined in Section 42(g)(2)(D) of the Internal Revenue Code.(7) The Development must affirmatively market to households participating in the Housing Choice Voucher program and local housing authorities.(8) The PFC's website must include information about the Development and its compliance with Section 303.0425, Texas Local Government Code, along with its policies on the acceptance of Housing Choice Voucher holders.(c) The Auditor will review the Development's form of tenant lease and leasing polices to ensure the Development meets the following requirements and will report any deficiencies found in the Audit Report:(1) Public Facility User cannot refuse to rent to an individual or family solely because the individual or family participates in a Housing Choice Voucher program.(2) Public Facility User cannot require a minimum income standard for families participating in a Housing Choice Voucher program that exceeds two hundred and fifty percent (250%) of the tenant portion of rent.(3) Each residential lease agreement for a Restricted Unit must provide the following:(A) The landlord may not retaliate against the tenant or the tenant's guests by taking action because the tenant established, attempted to establish, or participated in a tenant organization;(B) The landlord may only choose to not renew the lease if the tenant is in material noncompliance with the lease, including nonpayment of rent; committed one or more substantial violations of the lease; failed to provide required information on the income, composition, or eligibility of the tenant's household; or committed repeated minor violations of the lease that: disrupt the livability of the Development, adversely affect the health and safety of any person or the right to quiet enjoyment of the leased premises and related Development facilities, interfere with the management of the Development, or have an adverse financial effect on the Development, including the failure of the tenant to pay rent in a timely manner.(C) To non-renew a lease, the landlord must provide, at minimum, a thirty (30)-day written notice of non-renewal to the tenant.(D) Tenants may not waive these protections in a lease or lease addendum.(d) For occupied Developments acquired by a Public Facility Corporation, the Audit Report must calculate the annual savings to households living in Restricted Units (when compared to the annual rental income that would have been collected on those Restricted Units if they were charged market rate. Market rate will be determined as the highest rent charged for the same Unit Type at the Development; for Developments that do not have market rate units the Auditor must submit a proposed reasonable methodology for determining market rent. The calculated savings is required for exemption eligibility after the first anniversary of the acquisition of the Development. Total savings for rent-restricted households must be no less than sixty percent (60%) of the estimated amount of the annual ad-valorem taxes that would be imposed on the Development without an exemption.(e) The Auditor must maintain monitoring records and papers for each Audit Report for three years, and must provide the Department and/or the Chief Appraiser a copy of their monitoring records upon request.</content><note type="source"><p>Source Note: The provisions of this §10.1104 adopted to be effective February 26, 2024, 49 TexReg 1070.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scI/s10.1105"><num value="10.1105">§10.1105</num><heading>Income and Rent Requirements</heading><content>(a) Annual Income for a household occupying a Restricted Unit shall be determined consistent with the Section 8 Program administered by the U.S. Department of Housing and Urban Development (HUD), using the definitions of annual income described in 24 CFR §5.609 as further described in the HUD Handbook 4350.3, as amended from time to time.(b) Income and rent limits will be derived from data released by HUD.(c) The income and rent limits specified in the Regulatory Agreement will be used to determine if a household's income and rent is restricted.</content><note type="source"><p>Source Note: The provisions of this §10.1105 adopted to be effective February 26, 2024, 49 TexReg 1070.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scI/s10.1106"><num value="10.1106">§10.1106</num><heading>Penalties</heading><content>Noncompliance with Sections 303.0421 and or 303.0425 of the Texas Local Government Code, or this Subchapter, continuing after all available notice and corrective action periods, will result in a Department report to the Texas Comptroller and Chief Appraiser, and recommendation of loss of the ad valorem exemption for the Development for the tax year in which a multifamily residential development that is owned by a public facility corporation is determined by the Department based on an Audit to not be in compliance with the requirements of Section 303.0421 or 303.0425.</content><note type="source"><p>Source Note: The provisions of this §10.1106 adopted to be effective February 26, 2024, 49 TexReg 1070.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c10/scI/s10.1107"><num value="10.1107">§10.1107</num><heading>Options for Review</heading><content>(a) The Public Facility User must attempt to address any issues of noncompliance identified in the Audit Report with the Auditor, prior to submission of the Audit Report to the Department.(b) The Public Facility User may request to meet with a Compliance Director or Manager at the Department. The Public Facility User and Auditor, as applicable, must provide all documentation requested by the Department within three calendar days prior to the meeting.(c) A Public Facility User may request alternative dispute resolution in accordance with the Department's rules regarding such resolution set forth at §1.17 of this title (related to Alternative Dispute Resolution).</content><note type="source"><p>Source Note: The provisions of this §10.1107 adopted to be effective February 26, 2024, 49 TexReg 1070.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c11"><num value="11">CHAPTER 11</num><heading>QUALIFIED ALLOCATION PLAN (QAP)</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c11/scA"><num value="A">SUBCHAPTER A</num><heading>PRE-APPLICATION, DEFINITIONS, THRESHOLD REQUIREMENTS AND COMPETITIVE SCORING</heading><section identifier="/us/state/tx/tac/t10/p1/c11/scA/s11.1"><num value="11.1">§11.1</num><heading>General</heading><content>(a) Authority. This chapter applies to the awarding and allocation by the Texas Department of Housing and Community Affairs (the Department) of Competitive Housing Tax Credits, the state Housing Tax Credit, and the issuance of Determination Notices for non-Competitive Housing Tax Credits. The federal laws providing for the awarding and allocation of Competitive Housing Tax Credits and issuance of Determination Notices for non-Competitive Housing Tax Credits require states to adopt a qualified allocation plan. Pursuant to Tex. Gov't Code, Chapter 2306, Subchapter DD, the Department is assigned responsibility for this activity and pursuant to Tex. Gov't Code, Chapters 171 and 233, the Department is assigned responsibility for the adoption of rules relating to the State Housing Tax Credit. As required by Internal Revenue Code (the Code), §42(m)(1), the Department has developed this Qualified Allocation Plan (QAP) and it has been duly approved to establish the procedures and requirements relating to an award and allocation of Competitive Housing Tax Credits and issuance of Determination Notices for non-Competitive Housing Tax Credits. All requirements herein and all those applicable to a Housing Tax Credit Development or an Application under Chapter 10 of this title (relating to Post Award and Asset Management Requirements, Compliance Monitoring, and Incomes and Rents rules) collectively constitute the QAP required by Tex. Gov't Code §2306.67022 and §42(m)(1)(B) of the Code. Unless otherwise specified, certain provisions in this section and §§11.2 - §11.4 of this title also apply to non-Competitive Housing Tax Credits and Multifamily Direct Loans. Subchapters B - E of this chapter also apply to non-Competitive Housing Tax Credits and Multifamily Direct Loans. Applicants are required to certify, among other things, that they have familiarized themselves with the rules that govern that specific program including, but not limited to, Chapter 1 of this title (relating to Administration), Chapter 2 of this title (relating to Enforcement), Chapter 10 of this title (relating to Uniform Multifamily Rules), Chapter 12 of this title (relating to Multifamily Housing Revenue Bond Rules), Chapter 13 of this title (relating to Multifamily Direct Loan Rule), and other Department rules. This subchapter does not apply to operating assistance programs or funds unless incorporated by reference in whole or in part in a Notice of Funding Availability (NOFA) or rules for such a program, except to the extent that Developments receiving such assistance and otherwise subject to this chapter remain subject to this chapter. This chapter is subject to change based on any changes in applicable rule or law. (b) Due Diligence and Applicant Responsibility.(1) Department staff may, from time to time, make available for use by Applicants information and informal guidance in the form of reports and responses to specific questions. The Department encourages communication with staff in order to clarify any issues that may not be fully addressed in the QAP, or may be unclear when applied to specific facts. However, while these resources are offered to help Applicants prepare and submit accurate information, Applicants should also appreciate that this type of guidance is limited by its nature, and that staff will apply the rules of the QAP to each specific situation as it is presented in the submitted Application. The Multifamily Programs Procedures Manual is not a rule and is provided as good faith guidance and assistance, but in all respects the statutes and rules governing the Low Income Housing Tax Credit program supersede these guidelines and are controlling. Moreover, after the time that an issue is initially presented and guidance is provided, additional information may be identified and the issue itself may continue to develop based upon additional research and guidance. Thus, until confirmed through final action of the Board, staff guidance must be considered merely as an aid and an Applicant continues to assume full responsibility for any actions Applicant takes regarding an Application. In addition, although the Department may compile data from outside sources in order to assist Applicants in the Application process, it remains the sole responsibility of the Applicant to perform independently the necessary due diligence to research, confirm, and verify any data, opinions, interpretations, or other information upon which an Applicant bases an Application or includes in any submittal in connection with an Application.(2) Developments with Existing LURAs. Applicants proposing to submit an Application requesting an award of Housing Tax Credits or a Direct Loan for a Development that already has a LURA in place should review the existing LURA(s) on the Property to ensure there are no conflicts with the proposed Application. Where an Applicant has identified a potential conflict, it is incumbent upon the Applicant to consult with staff regarding the steps that may be necessary to resolve the conflict(s). This may include, but is not limited to, an Application amendment or LURA amendment, a waiver, or other action that may necessitate additional staff time for review or a Board determination. Depending on the timing constraints associated with the proposed Application, Applicants should be mindful that resolving issues relating to the existing LURA and for Direct Loans the existing Contract may not coincide with the timing needed for a new award if such requests are not submitted early in the process. A copy of the existing LURA must be included in the Application.(c) Competitive Nature of Program. Applying for Competitive Housing Tax Credits is a technical process that must be followed completely and correctly. Any person who desires to request any reasonable accommodation for any aspect of this process is directed to §1.1 of this title (relating to Reasonable Accommodation Requests to the Department). As a result of the highly competitive nature of applying for Competitive Housing Tax Credits, an Applicant should proceed on the assumption that deadlines are fixed and firm as further provided for in subsection (f) of this section.(d) Definitions. The capitalized terms or phrases used herein are defined below. Any capitalized terms not specifically mentioned in this section or any section referenced in this document shall have the meaning as defined in Tex. Gov't Code Chapter 2306, Internal Revenue Code (the Code) §42, the HOME Final Rule, and other federal or Department rules, as applicable. Defined terms, when not capitalized, are to be read in context and construed according to common usage.(1) Adaptive Reuse--The change-in-use of an existing building not, at the time of Application, being used, in whole or in part, for residential purposes, into a building which will be used, in whole or in part, for residential purposes. Adaptive Reuse requires that at least 75% of the original building remains at completion of the proposed Development. Ancillary non-residential buildings, such as a clubhouse, leasing office, or amenity center may be newly constructed outside the walls of the existing building or as detached buildings on the Development Site. Adaptive Reuse Developments will be considered as New Construction.(2) Administrative Deficiency--Information requested by Department staff to clarify, explain, confirm, or restrict the Development proposal to a logical and definitive plan or to provide missing information in the original Application or pre-application; or to assist staff in evaluating the Application or pre-application that, in the Department staff's reasonable judgment, may be cured by supplemental information or explanation which will not necessitate a substantial reassessment or re-evaluation of the Application or pre-application. Administrative Deficiencies may be issued at any time while the Application or pre-application is under consideration by the Department, including at any time after award or allocation and throughout the Affordability Period. A matter may begin as an Administrative Deficiency but later be determined to have constituted a Material Deficiency. Applicants must intend that the pre-Application or Application is the final version to be reviewed by staff, and should not rely on the Administrative Deficiency process when applying for funding.(A) The following issues will be treated by Department staff as Administrative Deficiencies that are curable through the Deficiency process only if the issues, when taken as a whole, do not constitute a Material Deficiency as defined in §11.1(d) of this chapter:(i) For Applications that are substantially complete, a minor quantity of missing signatures, documents, or similar clerical matters, the curing of which will not create change within the Application, unless the missing documentation is required to have existed as of the appropriate deadline and did not, or is otherwise not susceptible to resolution. For Competitive HTC or Direct Loan Applications, this may include documents submitted to substantiate points claimed in the Application only if:(I) The documents can be readily identified to have existed prior to the Full Application Delivery Date (Competitive HTC) or the Application Acceptance Date (Direct Loan), and the submission of the documents does not necessitate additional changes in the Application to qualify for the points; or(II) For scoring items that are predicated solely on third-party data, characteristics inherent to the proposed Development Site, or are otherwise not influenced by the actions of the Applicant, the Application's eligibility for these points can be clearly established to have existed prior to the Full Application Delivery Date (Competitive HTC) or the Application Acceptance Date (Direct Loan), and the submission of the documents does not necessitate additional changes in the Application to qualify for the points.(ii) Inconsistencies that exist between facts presented in the Application and/or its supporting documentation. A discrepancy between the requested points and the points supported by the Application will not be treated as an inconsistency if the facts presented within the Application are otherwise consistent.(iii) At the Department's sole discretion, additional information that is necessary to assist in the review of the Application. (B) The following issues will not be treated by Department staff as Administrative Deficiencies that are curable through the Deficiency process:(i) Any matter that will materially change the Application, except for matters that must be addressed in accordance with 10 TAC §11.1(d) (relating to the definition of Administrative Deficiency), in which case staff will direct the Applicant to resolve the inconsistency in the manner that creates the least change within the Application. Under no circumstance can the resolution of an Administrative Deficiency increase the Application's score from what was initially requested.(ii) Changes to the Application that are submitted only to qualify for points claimed in the Application.(iii) Except at staff's written request, changes to the Application that alter the amount of Housing Tax Credits or Direct Loan requested.(C) In all cases, final determinations regarding the sufficiency of documentation submitted to cure a Deficiency as well as the distinction between material and non-material missing information are reserved for the Department Staff and Board.(3) Affiliate--An individual, corporation, partnership, joint venture, limited liability company, trust, estate, association, cooperative, or other organization or entity of any nature whatsoever that directly, or indirectly through one or more intermediaries, has Control of, is Controlled by, or is under common Control with any other Person. All entities that share a Principal are Affiliates.(4) Affordability Period--The Affordability Period commences as specified in the Land Use Restriction Agreement (LURA) or federal regulation, or commences on the first day of the Compliance Period as defined by the Code §42(i)(1), and continues through the appropriate program's affordability requirements or termination of the LURA, whichever is earlier. The term of the Affordability Period shall be imposed by the LURA or other deed restriction, and in some circumstances may be terminated upon foreclosure or deed in lieu of foreclosure. The Department reserves the right to extend the Affordability Period for Developments that fail to meet program requirements. During the Affordability Period, the Department shall monitor to ensure compliance with programmatic rules, as applicable, regulations, and Application representations.(5) Applicable Percentage--The percentage used to determine the amount of the Housing Tax Credit for any Development, as defined more fully in Code, §42(b). For purposes of the Application, the Applicable Percentage will be:(A) nine percent for 70% present value credits; or(B) four percent for 30% present value credits.(6) Applicant--Any Person or a group of Persons and any Affiliates of those Persons who file an Application with the Department requesting funding or a tax credit allocation subject to the requirements of this chapter or Chapters 12 or 13 of this title and who have undertaken or may contemplate the later formation of one or more business entities, such as a limited partnership, that is to be engaged in the ownership of a Development.(7) Application Acceptance Period--That period of time during which Applications may be submitted to the Department. For Tax-Exempt Bond Developments it is the date the Application is submitted to the Department.(8) Award Letter --A document that may be issued to an awardee of a Direct Loan before the issuance of a Contract which preliminarily sets forth the terms and conditions under which the Direct Loan will be made available. An Award Letter will typically be contingent on the awardee satisfying certain requirements prior to executing a Contract.(9) Bank Trustee--A federally insured bank with the ability to exercise trust powers in the State of Texas.(10) Bathroom--either:(A) Full Bathroom--A portion of a Unit that is self-contained and includes all of the components of a Half Bathroom, plus a shower or bathtub (including a shower curtain rod if applicable) and towel bar. Rehabilitation (excluding Reconstruction) Developments in which Full Bathroom configurations are not being altered, will be exempt from the requirements, except as needed to comply with accessibility requirements.(B) Half Bathroom--A portion of a Unit that is self-contained with a door and that has at least one toilet, wall-hung toilet paper holder, ventilation fan, electrical outlets, wall mirror, sink, and a faucet. Rehabilitation (excluding Reconstruction) Developments in which Half Bathroom configurations are not being altered, will be exempt from the requirements, except as needed to comply with accessibility requirements.(11) Bedroom--A portion of a Unit which is no less than 100 square feet; has no width or length less than eight feet; is self-contained with a door (or the Unit contains a second level sleeping area of 100 square feet or more); has at least one window that provides exterior access; and has at least one closet that is not less than two feet deep and three feet wide and high enough to accommodate five feet of hanging space. A den, study, or other similar space that could reasonably function as a Bedroom and meets this definition is considered a Bedroom. Rehabilitation (excluding Reconstruction) Developments in which Unit configurations are not being altered will be exempt from the bedroom and closet width, length, and square footage requirements. Supportive Housing Developments will be exempt from the bedroom and closet width, length, and square footage requirements.(12) Breakeven Occupancy--The occupancy level at which rental income plus secondary income is equal to all operating expenses, including replacement reserves and taxes, and mandatory debt service requirements for a Development.(13) Building Costs--Cost of the materials and labor for the vertical construction or rehabilitation of buildings and amenity structures.(14) Carryover Allocation--An allocation of current year tax credit authority by the Department pursuant to the provisions of the Code, §42(h)(1)(C) and U.S. Treasury Regulations, §1.42-6. (15) Carryover Allocation Agreement--A document issued by the Department, and executed by the Development Owner, pursuant to §11.907 of this title (relating to Carryover Agreement General Requirements and Required Documentation).(16) Cash Flow--The funds available from operations after all expenses and debt service required to be paid have been considered.(17) Certificate of Reservation or Traditional Carryforward Designation--The notice given by the Texas Bond Review Board (TBRB) to an issuer reserving a specific amount of the private activity bond state ceiling for a specific Development.(18) Code--The Internal Revenue Code of 1986, as amended from time to time, together with any applicable regulations, rules, rulings, revenue procedures, information statements, or other official pronouncements issued thereunder by the U.S. Department of the Treasury or the Internal Revenue Service (IRS).(19) Code of Federal Regulations (CFR)--The codification of the general and permanent rules and regulations of the federal government as adopted and published in the Federal Register.(20) Commitment Notice (also referred to as Commitment)--An agreement issued pursuant to §11.905(a) of this title (relating to General Information for Commitments or Determination Notices), setting forth the terms and conditions under which Competitive Housing Tax Credits from the Department will be made available. A Commitment or Commitment Notice does not mean commitment of federal funds under the Direct Loan Program.(21) Commitment of Funds--Occurs after the Development is approved by the Board and once a Contract is executed between the Department and Development Owner. The Department's Commitment of Funds may not align with commitments made by other financing parties.(22) Common Area-- All enclosed or covered space not included in Net Rentable Area. (23) Comparable Unit--A Unit, when compared to the subject Unit, is similar in net rentable square footage, number of Bedrooms, number of bathrooms, overall condition, location (with respect to the subject Property based on proximity to employment centers, amenities, services, and travel patterns), age, Unit amenities, utility structure, and common amenities.(24) Competitive Housing Tax Credits --Sometimes referred to as Competitive HTC. Tax credits available from the State 9% Housing Credit Ceiling.(25) Compliance Period--With respect to a building financed, in part with proceeds of Housing Tax Credits, the period of 15 taxable years, beginning with the first taxable year of the credit period, pursuant to Code, §42(i)(1).(26) Continuously Occupied--The same household has resided in the Unit for at least 12 months.(27) Contract--A legally binding agreement between the Development Owner and the Department, setting forth the terms and conditions under which Multifamily Direct Loan Program funds will be made available.(28) Contract Rent--Net rent based upon current and executed rental assistance contract(s), typically with a federal, state, or local governmental agency.(29) Contractor--See General Contractor.(30) Control (including the terms "Controlling," "Controlled by," and "under common Control with")--The power, ability, or authority, acting alone or in concert with others, directly or indirectly, to manage, direct, superintend, restrict, regulate, govern, administer, or oversee. As used herein "acting in concert" involves more than merely serving as a single member of a multi-member body. A member of a multi-member body is not acting in concert and therefore does not exercise control in that role, but may have other roles, such as executive officer positions, which involve actual or apparent authority to exercise control. Controlling entities of a partnership include the general partners, may include special limited partners when applicable, but not investor limited partners or special limited partners who do not possess other factors or attributes that give them Control. Persons with Control of a Development must be identified in the Application. Controlling individuals and entities are set forth in subparagraphs (A) - (E) of this paragraph. Multiple Persons may be deemed to have Control simultaneously.(A) For for-profit corporations, any officer authorized by the board of directors, regardless of title, to act on behalf of the corporation, including, but not limited to, the president, vice president, secretary, treasurer, and all other executive officers, and each stock holder having a 50% or more interest in the corporation, and any individual who has Control with respect to such stockholder.(B) For nonprofit corporations or governmental instrumentalities (such as housing authorities), any officer authorized by the board, regardless of title, to act on behalf of the corporation, including, but not limited to, the president, vice president, secretary, treasurer, and all other executive officers, the Audit committee chair, the Board chair, and anyone identified as the executive director or equivalent.(C) For trusts, all beneficiaries that have the legal ability to Control the trust who are not just financial beneficiaries.(D) For limited liability companies, all managers, managing members, members having a 50% or more interest in the limited liability company, any individual Controlling such members, or any officer authorized to act on behalf of the limited liability company.(E) For partnerships, Principals include all General Partners, and Principals with ownership interest and special limited partners with ownership interest who also possess factors or attributes that give them Control.(31) Debt Coverage Ratio (DCR)--Sometimes referred to as the "Debt Coverage" or "Debt Service Coverage." Calculated as Net Operating Income for any period divided by scheduled debt service required to be paid during the same period, and as described in §11.302(d)(4) of this chapter (relating to Operating Feasibility).(32) Deferred Developer Fee--The portion of the Developer Fee used as a source of funds to finance the development and construction of the Property, and as described in §11.302(i)(2) of this chapter (relating to Feasibility Conclusion).(33) Deobligated Funds--The funds released by the Development Owner or recovered by the Department canceling a Contract or award involving some or all of a contractual financial obligation between the Department and a Development Owner or Applicant.(34) Determination Notice--A notice issued by the Department to the Development Owner of a Tax- Exempt Bond Development which specifies the Department's preliminary determination as to the amount of tax credits that the Development may be eligible to claim pursuant to the Code, §42(m)(1)(D).(35) Developer--Any Person entering into a contractual relationship with the Owner to provide Developer Services with respect to the Development and receiving the right to earn a fee for such services and any other Person receiving any portion of a Developer Fee, whether by subcontract or otherwise, except if the Person is acting as a consultant with no Control. The Developer may or may not be a Related Party or Principal of the Owner.(36) Developer Fee--Compensation in amounts defined in §11.302(e)(7) of this chapter (relating to Total Housing Development Costs) paid by the Owner to the Developer for Developer Services inclusive of compensation to a Development Consultant(s), Development Team member, or any subcontractor that performs Developer Services or provides guaranties on behalf of the Owner will be characterized as Developer Fee. A person who is entitled to a Developer Fee assumes the risk that it may not be paid if the anticipated sources of repayment prove insufficient.(37) Developer Services--A scope of work relating to the duties, activities, and responsibilities for pre-development, development, design coordination, and construction oversight of the Property generally including, but not limited to:(A) Site selection and purchase or lease contract negotiation; (B) Identifying and negotiating sources of construction and permanent financing, including financing provided by the Department;(C) Coordination and administration of activities, including the filing of applications to secure such financing;(D) Coordination and administration of governmental permits, and approvals required for construction and operation;(E) Selection and coordination of development consultants including architect(s), engineer(s), third- party report providers, attorneys, and other design or feasibility consultants;(F) Selection and coordination of the General Contractor and construction contract(s);(G) Construction oversight;(H) Other consultative services to and for the Owner;(I) Guaranties, financial, or credit support if a Related Party or Affiliate; and(J) Any other customary and similar activities determined by the Department to be Developer Services.(38) Development--A residential rental housing project that consists of one or more buildings under common ownership and financed under a common plan which has applied for Department funds. This includes a proposed qualified low income housing project, as defined by Code, §42(g), that consists of one or more buildings containing multiple Units that is financed under a common plan, and that is owned by the same Person for federal tax purposes, and may consist of multiple buildings that are located on scattered sites and contain only rent restricted Units. (§2306.6702(a)(6)).(A) Development will be considered to be a scattered site if the Property where buildings or amenities are located do not share a common boundary and there is no accessible pedestrian route that the Development Owner controls (transportation in a motor vehicle will not meet the requirement for an accessible route).(B) A Development for which several parcels comprise the Development Site and are separated only by a private road controlled by the Development Owner, or a public road or similar barrier where the Development Owner has a written agreement with the public entity for at least the term of the LURA stating that the accessible pedestrian route will remain, is considered contiguous. The written agreement with the public entity must be in place by the earlier of the 10% Test for Competitive HTC, the Determination Notice date for a Tax-Exempt Bond Development issued by the Department, Cost Certification for Tax-Exempt Bond Developments where the Determination Notice is issued administratively, or the execution of the Multifamily Direct Loan Contract, as applicable.(39) Development Consultant or Consultant--Any Person who provides professional or consulting services relating to the filing of an Application, or post award documents, as required by the program.(40) Development Owner (also referred to as "Owner")--Any Person, General Partner, or Affiliate of a Person who owns or proposes a Development or expects to acquire Control of a Development under a purchase contract or ground lease approved by the Department and is responsible for performing under the allocation or Commitment with the Department. (§2306.6702(a)(7)).(41) Development Site--The area or, if more than one tract (which may be deemed by the Internal Revenue Service or the Department to be a scattered site), areas on which the Development is proposed and to be encumbered by a LURA, including access to that area or areas through ingress and egress easements.(42) Development Team--All Persons and Affiliates thereof that play a role in the development, construction, rehabilitation, management, or continuing operation of the Development, including any Development Consultant and Guarantor.(43) Direct Loan--Funds provided through the HOME Program, Neighborhood Stabilization Program (NSP), National Housing Trust Fund (NHTF), HOME American Rescue Plan (HOME-ARP), Tax Credit Assistance Program Repayment Funds (TCAP RF), Texas Housing Trust Fund (THTF), or other programs available through the Department for multifamily development. The terms and conditions for Direct Loans will be determined by provisions in Chapter 13 of this title (relating to Multifamily Direct Loan Rule), the NOFA under which they are awarded, the Contract, and the loan documents. The tax-exempt bond program is specifically excluded.(44) Educational Provider-- A school district; open-enrollment charter school; or Education Service Center. Private schools and private childcare providers, whether nonprofit or for profit, are not eligible parties, unless the private school or private childcare provider has entered into a partnership with a school district or open-enrollment charter school to provide a HQ Pre-K program in accordance with Texas Education Code Chapter 29, Subchapter E-1.(45) Economically Distressed Area--An area that is in a census tract that has a median household income that is 75% or less of the statewide median household income and in a municipality or, if not within a municipality, in a county that has been awarded funds under the Economically Distressed Areas Program administered by the Texas Water Development Board. Notwithstanding all other requirements, for funds awarded to another type of political subdivision (e.g., a water district), the Development Site must be within the jurisdiction of the political subdivision.(46) Effective Gross Income (EGI)--As provided for in §11.302(d)(1)(D) of this chapter (relating to Operating Feasibility). The sum total of all sources of anticipated or actual income for a rental Development, less vacancy and collection loss, leasing concessions, and rental income from employee-occupied units that is not anticipated to be charged or collected.(47) Efficiency Unit--A Unit without a separately enclosed Bedroom.(48) Elderly Development--A Development that either meets the requirements of the Housing for Older Persons Act (HOPA) under the Fair Housing Act, or a Development that receives federal funding that has a requirement for a preference or limitation for elderly persons or households, but must accept qualified households with children.(49) Eligible Hard Costs--Hard Costs includable in Eligible Basis for the purposes of determining a Housing Credit Allocation. (50) Environmental Site Assessment (ESA)--An environmental report that conforms to the Standard Practice for Environmental Site Assessments: Phase I Assessment Process (ASTM Standard Designation: E 1527) and conducted in accordance with §11.305 of this chapter (relating to Environmental Site Assessment Rules and Guidelines) as it relates to a specific Development.(51) Existing Residential Development--Any Development Site which contains any type of existing residential dwelling at any time as of the beginning of the Application Acceptance Period.(52) Extended Use Period--With respect to an HTC building, the period beginning on the first day of the Compliance Period and ending the later of:(A) The date specified in the LURA; or(B) The date which is 15 years after the close of the Compliance Period.(53) First Lien Lender--A lender whose lien has first priority as a matter of law or by operation of a subordination agreement or other intercreditor agreement.(54) Forward Commitment--the issuance of a Commitment of Housing Tax Credits from the State Housing Credit Ceiling for the calendar year following the year of issuance, made subject to the availability of State Housing Credit Ceiling in the calendar year for which the Commitment has been made.(55) General Contractor (including "Contractor")--One who contracts to perform the construction or rehabilitation of an entire Development, rather than a portion of the work. The General Contractor hires subcontractors, such as plumbing contractors, electrical contractors, etc., coordinates all work, and is responsible for payment to the subcontractors. A prime subcontractor will also be treated as a General Contractor, and any fees payable to the prime subcontractor will be treated as fees to the General Contractor, in the scenarios described in subparagraphs (A) or (B) of this paragraph:(A) Any subcontractor, material supplier, or equipment lessor receiving more than 50% of the contract sum in the construction contract will be deemed a prime subcontractor; or(B) If more than 75% of the contract sum in the construction contract is subcontracted to three or fewer subcontractors, material suppliers, and equipment lessors, such parties will be deemed prime subcontractors.(56) General Partner--Any person or entity identified as a general partner in a certificate of formation for the partnership or is later admitted to an existing partnership as a general partner that is the Development Owner and that Controls the partnership. Where a limited liability corporation is the legal structure employed rather than a limited partnership, the manager or managing member of that limited liability corporation is deemed, for the purposes of these rules, to be the functional equivalent of a general partner.(57) Governing Body--The elected or appointed body of public or tribal officials responsible for the enactment, implementation, and enforcement of local rules and the implementation and enforcement of applicable laws for its respective jurisdiction.(58) Governmental Entity--Includes federal, state or local agencies, departments, boards, bureaus, commissions, authorities, and political subdivisions, special districts, tribal governments, and other similar entities.(59) Gross Capture Rate--Calculated as the Relevant Supply divided by the Gross Demand, and as described in §11.302(i)(1) of this chapter (relating to Feasibility Conclusion).(60) Gross Demand--The sum of Potential Demand from the Primary Market Area (PMA) and demand from other sources, as described in §11.303(d)(9)(E)(ii) of this chapter (relating to Market Analysis Rules and Guidelines).(61) Gross Program Rent--Maximum rent limits based upon the tables promulgated by the Department's division responsible for compliance, which are developed by program and by county or Metropolitan Statistical Area (MSA) or Primary Metropolitan Statistical Area (PMSA) or national non-metro area.(62) Guarantor--Any Person that provides, or is anticipated to provide, a guaranty for all or a portion of the equity or debt financing for the Development.(63) Hard Costs--The sum total of Building Costs, Site Work costs, Off-Site Construction costs, and contingency.(64) Historically Underutilized Businesses (HUB)--An entity that is certified as such under and in accordance with Tex. Gov't Code, Chapter 2161.(65) HOME Match Eligible Unit--A Unit in the Development that may or may not be assisted with HOME Program funds, but would qualify as eligible for Match under 24 CFR Part 92 and CPD Notice 97-03 or subsequent HUD guidance. (66) Housing Contract System (HCS)--The electronic information system established by the Department for tracking, funding, and reporting Department Contracts and Developments. The HCS is primarily used for Direct Loan Programs administered by the Department.(67) Housing Credit Allocation--An allocation of Housing Tax Credits by the Department to a Development Owner as provided for in Code.(68) Housing Credit Allocation Amount--With respect to a Development or a building within a Development, the amount of Housing Tax Credits the Department and the Board, if applicable, determines to be necessary for the financial feasibility of the Development and its viability as a Development throughout the Affordability Period.(69) HTC Development (also referred to as HTC Property)--A Development subject to an active LURA for Housing Tax Credits allocated by the Department.(70) HTC Property--See HTC Development.(71) Initial Affordability Period--The Compliance Period or such longer period as shall have been elected by the Owner as the minimum period for which Units in the Development shall be retained for low-income tenants and rent restricted, as set forth in the LURA.(72) Integrated Disbursement and Information System (IDIS)--The electronic grants management information system established by HUD to be used for tracking and reporting HOME and NHTF funding and progress, and which may be used for other sources of funds as established by HUD.(73) Land Use Restriction Agreement (LURA)--An agreement, regardless of its title, between the Department and the Development Owner which is a binding covenant upon the Development Owner and successors in interest, that, when recorded, encumbers the Development with respect to the requirements of the programs for which it receives funds. (§2306.6702) (74) Low-Income Unit (also referred to as a Rent Restricted Unit)--A Unit that is intended to be restricted for occupancy by an income eligible household, as defined by the Department utilizing its published income limits.(75) Managing General Partner--A general partner of a partnership (or, as provided for in the definition of General Partner in this subsection, its functional equivalent) that is vested with the authority to take actions that are binding on behalf of the partnership and the other partners. The term Managing General Partner can also refer to a manager or managing member of a limited liability company where so designated to bind the limited liability company and its members under its Agreement or any other person that has such powers in fact, regardless of their organizational title.(76) Market Analysis--Sometimes referred to as "Market Study." An evaluation of the economic conditions of supply, demand, and rental rates conducted in accordance with §11.303 of this chapter (relating to Market Analysis Rules and Guidelines) as it relates to a specific Development.(77) Market Analyst--A real estate appraiser or other professional satisfying the qualifications in §11.303(c) of this chapter, and familiar with the subject property's market area who prepares a Market Analysis.(78) Market Rent--The achievable rent at the subject Property for a Unit without rent and income restrictions determined by the Market Analyst or Underwriter after adjustments are made to actual rents on Comparable Units to account for differences in net rentable square footage, functionality, overall condition, location (with respect to the subject Property based on proximity to primary employment centers, amenities, services, and travel patterns), age, Unit amenities, utility structure, and Common Area amenities. The achievable rent conclusion must also consider the proportion of market Units to total Units proposed in the subject Property.(79) Market Study--See Market Analysis.(80) Material Deficiency--Any deficiency in a pre-application or an Application or other documentation that exceeds the scope of an Administrative Deficiency. Inability to provide documentation that existed prior to submission of an Application to substantiate claimed points or meet threshold requirements may be considered material and may result in denial of the requested points or a termination in the case of threshold items. It is possible that multiple deficiencies that could individually be characterized as Administrative Deficiencies, when taken as a whole, would create a need for substantial re-review of the Application and as such would be characterized as constituting a Material Deficiency.(81) Multifamily Programs Procedures Manual--The manual produced and amended from time to time by the Department which reiterates and implements the rules and provides guidance for the filing of multifamily related documents. The Manual is not a rule and is provided only as good faith guidance and assistance.(82) National Standards for the Physical Inspection of Real Estate (NSPIRE)-- As developed by the Real Estate Assessment Center of HUD.(83) Net Operating Income (NOI)--The income remaining after all operating expenses, including replacement reserves and taxes have been paid, as provided for in §11.302(d)(3) of this chapter (relating to Operating Feasibility).(84) Net Program Rent--Calculated as Gross Program Rent less Utility Allowance.(85) Net Rentable Area (NRA)--The Unit space that is available exclusively to the tenant and is heated and cooled by a mechanical HVAC system. NRA is measured to the outside of the studs of a Unit or to the middle of walls in common with other Units. If the construction does not use studs, NRA is measured to the outside of the material to which the drywall is affixed. Remote Storage of no more than 25 square feet per Unit may be included in NRA. For Developments using Multifamily Direct Loan funds the Remote Storage may only be included in NRA if the storage area shares a wall with the residential living space. NRA does not include common hallways, stairwells, elevator shafts, janitor closets, electrical closets, balconies, porches, patios, or other areas not actually available to the tenants for their furnishings, nor does NRA include the enclosing walls of such areas.(86) Non-HTC Development--Sometimes referred to as Non-HTC Property. Any Development not utilizing Housing Tax Credits or Exchange funds.(87) Notice of Funding Availability (NOFA)--A notice issued by the Department that announces funding availability, usually on a competitive basis, for multifamily rental programs requiring Application submission from potential Applicants.(88) Office of Rural Affairs--An office established within the Texas Department of Agriculture; formerly the Texas Department of Rural Affairs.(89) Off-Site Construction--Improvements up to the Development Site such as the cost of roads, water, sewer, and other utilities to provide access to and service the Site.(90) One Year Period (1YP)--The period commencing on the date on which the Department and the Owner agree to the Qualified Contract price in writing and continuing for 12 calendar months.(91) Owner--See Development Owner.(92) Person--Without limitation, any natural person, corporation, partnership, limited partnership, joint venture, limited liability company, trust, estate, association, cooperative, government, political subdivision, agency or instrumentality, or other organization or entity of any nature whatsoever, and shall include any group of Persons acting in concert toward a common goal, including the individual members of the group.(93) Person or Persons with Disabilities--With respect to an individual, means that such person has:(A) A physical or mental impairment that substantially limits one or more major life activities of such individual;(B) A record of such an impairment; or(C) Is regarded as having such an impairment, to include persons with severe mental illness and persons with substance abuse disorders.(94) Physical Needs Assessment--See Scope and Cost Review.(95) Place--An area defined as such by the United States Census Bureau which, in general, includes an incorporated city, town, or village, as well as unincorporated areas known as Census Designated Places. Any part of a Census Designated Place that, at the time of Application, is within the boundaries of an incorporated city, town, or village will be considered as part of the incorporated area. Areas that are annexed by a city, town, or village through limited-purpose annexation are considered to be part of the incorporated area of that city, town, or village for purposes of this chapter. The Department may provide a list of Places for reference.(96) Post Award Activities Manual--The manual produced and amended from time to time by the Department which explains the post award requirements and provides guidance for the filing of such documentation.(97) Potential Demand--The number of income-eligible, age-, size-, and tenure-appropriate target households in the designated market area at the proposed placement in service date.(98) Preservation--Activities that extend the Affordability Period for rent-restricted Developments that are at risk of losing low-income use restrictions or subsidies.(99) Primary Market--Sometimes referred to as "Primary Market Area." The area defined by the Market Analyst as described in §11.303 of this chapter (relating to Market Analysis Rules and Guidelines) from which a proposed or existing Development is most likely to draw the majority of its prospective tenants or homebuyers.(100) Primary Market Area (PMA)--See Primary Market.(101) Principal--Persons that will be capable of exercising Control pursuant to §11.1(d) of this chapter (relating to the definition of Control) over a partnership, corporation, limited liability company, trust, or any other private entity.(102) Pro Forma Rent--For a restricted Unit, the lesser of the Net Program Rent or the Market Rent. For an unrestricted Unit, the Market Rent. Contract Rents, if applicable, will be used as the Pro Forma Rent.(103) Property--The real estate and all improvements thereon which are the subject of the Application (including all items of personal property affixed or related thereto), whether currently existing or proposed to be built or rehabilitated thereon in connection with the Application.(104) Qualified Census Tract (QCT)--those tracts designated as such by the U.S. Department of Housing and Urban Development.(105) Qualified Contract (QC)--A bona fide contract to acquire the non-low-income portion of the building for fair market value and the low-income portion of the building for an amount not less than the Applicable Fraction (specified in the LURA) of the calculation as defined within §42(h)(6)(F) of the Code.(106) Qualified Contract Price (QC Price)--Calculated purchase price of the Development as defined within Code, §42(h)(6)(F) and as further delineated in §10.408 of this title (relating to Qualified Contract Requirements).(107) Qualified Contract Request (Request)--A request containing all information and items required by the Department relating to a Qualified Contract.(108) Qualified Entity--Any entity permitted under Code, §42(i)(7)(A) and any entity controlled by such a qualified entity.(109) Qualified Nonprofit Development--A Development which meets the requirements of Code, §42(h)(5), includes the required involvement of a Qualified Nonprofit Organization, and is seeking Competitive Housing Tax Credits.(110) Qualified Nonprofit Organization--An organization that meets the requirements of Code §42(h)(5)(C) for all purposes, and for an allocation in the nonprofit set-aside or subsequent transfer of the Property, when applicable, meets the requirements of Tex. Gov't Code §2306.6706, and §2306.6729, and Code, §42(h)(5), including having a Controlling interest in the Development.(111) Reconstruction--The demolition of one or more residential buildings in an Existing Residential Development and the construction of Units on the same or another Development Site. At least one Unit must be reconstructed in order to qualify as Reconstruction. The total number of Units to be reconstructed will be determined by program requirements. Developments using Multifamily Direct Loan funds are required to follow the applicable federal requirements.(112) Rehabilitation--The improvement or modification of an Existing Residential Development through alteration, incidental addition, or enhancement. The term includes the demolition of an Existing Residential Development and the Reconstruction of any Development Units on the Development Site, but does not include Adaptive Reuse. (§2306.004(26-a)) Reconstructed Units will be considered New Construction for purposes of calculating the Replacement Reserves under §11.302(d)(2)(I) (relating to Operating Feasibility). More specifically, Rehabilitation is the repair, refurbishment, or replacement of existing mechanical or structural components, fixtures, and finishes. Rehabilitation will correct deferred maintenance, reduce functional obsolescence to the extent possible, and may include the addition of: energy efficient components and appliances; life and safety systems; site and resident amenities; and other quality of life improvements typical of new residential Developments.(113) Relevant Supply--The supply of Comparable Units in proposed and Unstabilized Developments targeting the same population including:(A) The proposed subject Units; and(B) Comparable Units in previously approved but Unstabilized Developments in the PMA.(114) Report--See Underwriting Report.(115) Request--See Qualified Contract Request.(116) Reserve Account--An individual account:(A) Created to fund any necessary repairs or other needs for a Development; and(B) Maintained by a First Lien Lender or Bank Trustee.(117) Right of First Refusal (ROFR)--An Agreement to provide a series of priority rights to negotiate for the purchase of a Property by a Qualified Entity or a Qualified Nonprofit Organization at a negotiated price at or above the minimum purchase price as defined in Code §42(i)(7) or as established in accordance with an applicable LURA.(118) Rural Area--(A) A Place that is located:(i) outside the boundaries of a primary metropolitan statistical area or a metropolitan statistical area;(ii) within the boundaries of a primary metropolitan statistical area or a metropolitan statistical area, if the statistical area has a population of 25,000 or less and does not share a boundary with an Urban Area; or(iii) within the boundaries of a local political subdivision that is outside the boundaries of an Urban Area.(B) For areas not meeting the definition of a Place, the designation as a Rural Area or Urban Area is assigned in accordance with §11.204(5)(A) of this chapter (relating to Required Documentation for Application Submission) or as requested in accordance with §11.204(5)(B) of this chapter.(119) Scope and Cost Review (SCR)--Sometimes referred to as "Physical Needs Assessment," "Project Capital Needs Assessment," or "Property Condition Report." The SCR provides an evaluation of the physical condition of an existing Property to evaluate the immediate cost to rehabilitate and to determine costs of future capital improvements to maintain the Property. The SCR must be prepared in accordance with §11.306 of this chapter (relating to Scope and Cost Review Guidelines), as it relates to a specific Development.(120) Scoring Notice--Notification provided to an Applicant of the score for their Application after staff review. More than one Scoring Notice may be issued for a Competitive HTC or a Direct Loan Application.(121) Single Room Occupancy (SRO)--An Efficiency Unit that meets all the requirements of a Unit except that it may, but is not required, to be rented on a month to month basis to facilitate Transitional Housing. Buildings with SRO Units have extensive living areas in common and are required to be Supportive Housing and include the provision for substantial supports from the Development Owner or its agent on site.(122) Site Control--Ownership or a current contract or series of contracts that meets the requirements of §11.204(9) of this chapter, that is legally enforceable giving the Applicant the ability, not subject to any legal defense by the Owner or anyone else, to develop and operate a Property and subject it to a LURA reflecting the requirements of any awards of assistance it may receive from the Department.(123) Site Work--Materials and labor for the horizontal construction generally including excavation, grading, paving, underground utilities, and site amenities.(124) State Housing Credit Ceiling--The aggregate amount of Competitive Housing Credit Allocations that may be made by the Department during any calendar year, as determined from time to time by the Department in accordance with applicable federal law, including Code, §42(h)(3)(C), and Treasury Regulation §1.42-14.(125) Sub-Market--An area defined by the Underwriter based on general overall market segmentation promulgated by market data tracking and reporting services from which a proposed or existing Development is most likely to draw the majority of its prospective tenants or homebuyers. (126) Supportive Housing--A residential rental Development and Target Population meeting the requirements of subparagraphs (A) - (F) of this paragraph:(A) Be intended for and targeting occupancy for households in need of specialized and specific non-medical services in order to maintain housing or transition into independent living;(B) Be owned and operated by an Applicant or General Partner that must:(i) have supportive services provided by the Applicant, an Affiliate of the Applicant, or a Third Party provider if the service provider is able to demonstrate a record of providing substantive services similar to those proposed in the Application in residential settings for at least three years prior to the beginning of the Application Acceptance Period, or Application Acceptance Date for Multifamily Direct Loan Applications;(ii) provide no less than 30 square feet of Common Area space per Unit that is specifically used for the delivery of supportive services or an amenity for the residents;(iii) secure sufficient funds necessary to maintain the Supportive Housing Development's operations throughout the entire Affordability Period;(iv) provide evidence of a history of fundraising activities reasonably deemed to be sufficient to address any unanticipated operating losses;(v) provide a fully executed guaranty agreement whereby the Applicant or its Affiliate assume financial responsibility of any outstanding operating deficits, as they arise, and throughout the entire Affordability Period; and(vi) have Tenant Selection Criteria that fully comply with §10.802 of this title (regarding Written Policies and Procedures), which require a process for evaluation of prospective residents against a clear set of credit, criminal conviction, and prior eviction history that may disqualify a potential resident. This process must also follow §1.204 of this title (regarding Reasonable Accommodations), and:(I) The criminal screening criteria must not allow residents to reside in the Development who are subject to a lifetime sex offender registration requirement; and provide at least, for:(-a-) Temporary denial for a minimum of seven years from the date of conviction based on criminal history at application or recertification of any felony conviction for murder related offense, sexual assault, kidnapping, arson, or manufacture of a controlled substance as defined in §102 of the Controlled Substances Act (21 U.S.C. 802); and(-b-) Temporary denial for a minimum of three years from the date of conviction based on criminal history at application or recertification of any felony conviction for aggravated assault, robbery, drug possession, or drug distribution;(II) The criminal screening criteria must include provisions for approving applications and recertification despite the tenant's criminal history on the basis of mitigation evidence. Applicants/tenants must be provided written notice of their ability to provide materials that support mitigation. Mitigation may be provided during initial tenant application or upon appeal after denial. Mitigation may include personal statements/certifications, documented drug/alcohol treatment, participation in case management, letters of recommendation from mental health professionals, employers, case managers, or others with personal knowledge of the tenant. In addition, the criteria must include provision for individual review of permanent or temporary denials if the conviction is more than 7 years old, or if the applicant/resident is over 50 years of age, and the prospective resident has no additional felony convictions in the last 7 years. The criteria must prohibit consideration of any previously accepted criminal history or mitigation at recertification, unless new information becomes available. Criminal screening criteria and mitigation must conform to federal regulations and official guidance, including HUD's 2016 Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records; and(III) Disqualifications in a Development's Tenant Selection Criteria cannot be a total prohibition, unless such a prohibition is required by federal statute or regulation (i.e. the Development must have an appeal process for other required criteria). As part of the appeal process the prospective resident must be allowed to demonstrate that information in a third party database is incorrect;(C) Where supportive services are tailored for members of a household with specific needs, such as:(i) homeless or persons at-risk of homelessness;(ii) persons with physical, intellectual, or developmental disabilities;(iii) youth aging out of foster care;(iv) persons eligible to receive primarily non-medical home or community-based services;(v) persons transitioning out of institutionalized care;(vi) persons unable to secure permanent housing elsewhere due to specific, non-medical, or other high barriers to access and maintain housing;(vii) Persons with Special Housing Needs including households where one or more individuals have alcohol or drug addictions, Violence Against Women Act Protections (domestic violence, dating violence, sexual assault, and stalking), HIV/AIDS, or is a veteran with a disability; or(viii) other target populations that are served by a federal or state housing program in need of the type and frequency of supportive services characterized herein, as represented in the Application and determined by the Department on a case-by-case basis;(D) Supportive services must meet the minimum requirements provided in clauses (i) - (iv) of this subparagraph:(i) regularly and frequently offered to all residents, primarily on-site;(ii) easily accessible and offered at times that residents are able to use them;(iii) must include readily available resident services or service coordination that either aid in addressing debilitating conditions, or assist residents in securing the skills, assets, and connections needed for independent living; and(iv) a resident may not be required to access supportive services in order to qualify for or maintain tenancy in a rent restricted Unit that the household otherwise qualifies for; and(E) Supportive Housing Developments must meet the criteria of either clause (i) or (ii) of this subparagraph:(i) not financed with any debt containing foreclosure provisions or debt that contains scheduled or periodic repayment provisions, except for the following:(I) Construction financing;(II) A direct Loan from the Department;(III) A permanent foreclosable loan from a local, state, or federal government or instrumentality thereof if the loan is deferred-forgivable, deferred payable, or cash-flow contingent, the foreclosure provisions are triggered only by default on non-monetary default provisions, and the maturity date is after the end of the Affordability Period; (IV) A permanent foreclosable loan from an Affiliate if the funds are originally sourced from charitable contributions, nonprofit equity, the Federal Home Loan Bank's Affordable Housing Program, Capital Magnet Fund, or pass-through government funds, if the loan is deferred-forgivable, deferred-payable, or cash-flow contingent, and if the foreclosure provisions are triggered only by default on non-monetary default provisions, and the maturity date is after the end of the Affordability Period;(V) For tax credit applications only, permanent foreclosable debt that contains scheduled or periodic repayment provisions (including payments subject to available cash-flow) is permissible if sourced by federal funds and otherwise structured to meet valid debt requirements for tax credit eligible basis considerations.(VI) Any amendment to an Application or Underwriting Report resulting in the addition of debt prohibited under this definition will result in the revocation of IRS Form(s) 8609, and may not be made for Developments that have Direct Loans after a LURA is executed, except as a part of Work Out Development approved by the Asset Management Division.(ii) financed with debt that meets feasibility requirements under Subchapter D of this chapter without exemptions and must also be supported by project-based rental or project-based operating subsidies for 25% of the Units evidenced by an executed agreement with an unaffiliated or governmental third party able to make that commitment, and meet all of the criteria in subclauses (I) - (VI) of this clause:(I) the Application includes documentation of how resident feedback has been incorporated into design of the proposed Development;(II) the Development is located less than 1/2 mile from regularly-scheduled public transportation, including evenings and weekends;(III) at least 10% of the Units in the proposed Development meet the 2010 ADA standards with the exceptions listed in "Nondiscrimination on the Basis of Disability in Federally Assisted Programs and Activities" 79 Federal Register 29671 for persons with mobility impairments;(IV) multiple systems will be in place for residents to provide feedback to Development staff;(V) the Development will have a comprehensive written eviction prevention policy that includes an appeal process; and(VI) the Development will have a comprehensive written services plan that describes the available services, identifying whether they are provided directly or through referral linkages, by whom, and in what location and during what days and hours. A copy of the services plan will be readily accessible to residents.(F) Supportive housing Units included in an otherwise non-Supportive Housing Development do not meet the requirements of this definition.(127) Target Population--The designation of types of housing populations shall include Elderly Developments and those that are Supportive Housing. All others will be considered to serve general populations without regard to any subpopulations, although the Application may request that any other populations required for targeting, preference, or limitation by a federal or state fund source are identified.(128) Tax-Exempt Bond Development--A Development requesting or having been issued a Determination Notice for Housing Tax Credits and which receives a portion of its financing from the proceeds of Tax-Exempt Bonds which are subject to the state volume cap as described in Code, §42(h)(4).(129) Tax-Exempt Bond Process Manual--The manual produced and amended from time to time by the Department which explains the process and provides guidance for the filing of a Housing Tax Credit Application utilizing Tax-Exempt Bonds.(130) TDHCA Operating Database--Sometimes referred to as "TDHCA Database." A consolidation of recent actual income and operating expense information collected through the Department's Annual Owner Financial Certification process, as required and described in Chapter 10, Subchapter F of this title (relating to Compliance Monitoring), and published on the Department's website (www.tdhca.state.tx.us). (131) Third Party--A Person who is not:(A) An Applicant, General Partner, Developer, or General Contractor;(B) An Affiliate to the Applicant, General Partner, Developer, or General Contractor;(C) Anyone receiving any portion of the administration, contractor, or Developer Fee from the Development; or(D) In Control with respect to the Development Owner.(132) Total Housing Development Cost--The sum total of the acquisition cost, Hard Costs, soft costs, Developer Fee, and General Contractor fee incurred or to be incurred through lease-up by the Development Owner in the acquisition, construction, rehabilitation, and financing of the Development.(133) Transitional Housing--A Supportive Housing Development funded with HOME, NSP, HOME-ARP or TCAP RF, and not layered with Housing Tax Credits that includes living Units with more limited individual kitchen facilities and is:(A) Used exclusively to facilitate the transition of homeless individuals and those at-risk of becoming homeless to independent living within 24 months; and(B) Is owned by a Development Owner that includes a Governmental Entity or a nonprofit which provides temporary housing and supportive services to assist such individuals in, among other things, locating and retaining permanent housing. The limited kitchen facilities in individual Units must be appropriately augmented by suitable, accessible shared or common kitchen facilities.(134) Underwriter--The author(s) of the Underwriting Report.(135) Underwriting Report--Sometimes referred to as the Report. A decision making tool prepared by the Department's Real Estate Analysis Division that contains a synopsis of the proposed Development and that reconciles the Application information, including its financials and market analysis, with the underwriter's analysis. The Report allows the Department and Board to determine whether the Development will be financially feasible as required by Code §42(m), or other federal or state regulations.(136) Uniform Multifamily Application Templates--The collection of sample resolutions and form letters, produced by the Department, as may be required under this chapter or Chapters 12 and 13 of this title (relating to Multifamily Housing Bond Rules and Multifamily Direct Loan Rule, respectively) that may, but are not required to, be used to satisfy the requirements of the applicable rule.(137) Unit--Any residential rental Unit in a Development consisting of an accommodation, including a single room used as an accommodation on a non-transient basis, that contains complete physical facilities and fixtures for living, sleeping, eating, cooking, and sanitation.(138) Unit Type--Units will be considered different Unit Types if there is any variation in the number of Bedrooms, bathrooms, features, or a square footage difference equal to or more than 120 square feet.(139) U.S. Department of Agriculture (USDA)--Texas Rural Development Office (TRDO) serving the State of Texas.(140) U.S. Department of Housing and Urban Development (HUD)-regulated Building--A building for which the rents and utility allowances of the building are reviewed by HUD.(141) Unstabilized Development--A Development with Comparable Units that has been approved for funding by the Department's Board of Directors or is currently under construction or has not maintained a 90% occupancy level for at least 90 days following construction completion. A development may be deemed stabilized by the Underwriter based on factors relating to a development's lease-up velocity, Sub-Market rents, Sub-Market occupancy trends, and other information available to the Underwriter. The Market Analyst may not consider such development stabilized in the Market Study.(142) Urban Area--A Place that is located within the boundaries of a primary metropolitan statistical area or a metropolitan statistical area other than a Place described in paragraph (117)(A) of this subsection, definition of Rural Area. For areas not meeting the definition of a Place, the designation as a Rural Area or Urban Area is assigned in accordance with §11.204(5) of this chapter.(143) Utility Allowance--The estimate of tenant-paid utilities made in accordance with Treasury Regulation, §1.42-10 and §10.614 of this title (relating to Utility Allowances).(144) Work Out Development--A financially distressed Development for which the Owner or a primary financing participant is seeking a change in the terms of Department funding or program restrictions.(e) Data. Where this chapter requires the use of American Community Survey or Housing & Urban Development data, the Department shall use the most current data available as of August 1 of the year prior to Application, unless specifically otherwise provided in federal or state law or in the rules, with the exception of census tract boundaries for which 2020 Census boundaries will be used, unless otherwise noted. All references to census tracts throughout this chapter will mean the 2020 Census tracts, unless otherwise noted. Applicants may need to provide Census tract information based on the 2020 boundaries as well as the ones defined by 2010 boundaries, if data based on 2020 tract boundaries are not available as of August 1, 2025 for the specific item in question. All American Community Survey (ACS) data must be 5-year estimates, unless otherwise specified and it is the ACS data that will be used for population determination. The availability of more current data shall be disregarded. Where other data sources are specifically required, such as NeighborhoodScout, the data available after August 1, but before Full Application Final Delivery Date, will be permissible. The NeighborhoodScout report submitted in the Application must include the report date. All references to QCTs throughout this chapter mean the 2026 QCTs designated by HUD to be effective in 2026. Where this chapter requires the division of Census tracts into quartiles, if the number of tracts is not evenly divisible by four, the Department shall divide the quartiles in the following manner:(1) If the division of the tracts into quartiles leaves one excess tract, then the first quartile shall contain the excess tract.(2) If the division of the tracts into quartiles leaves two excess tracts, then the first and second quartiles shall contain an excess tract each.(3) If the division of the tracts into quartiles leaves three excess tracts, then the first, second, and third quartiles shall contain one excess tract each.(f) Deadlines. Where a specific date or deadline is identified in this chapter, the information or documentation subject to the deadline must be received by the Department on or before 5:00 p.m. Austin local time on the day of the deadline. If the deadline falls on a weekend or holiday, the deadline is 5:00 p.m. Austin local time on the next day which is not a weekend or holiday and on which the Department is open for general operation. Unless otherwise noted or provided in statute, deadlines are based on calendar days. Deadlines, with respect to both date and time, cannot be waived except where authorized and for truly extraordinary circumstances, such as the occurrence of a significant natural disaster that could not have been anticipated and makes timely adherence impossible. Applicants should further ensure that all required documents are included, legible, properly organized, and tabbed, and that materials in required formats involving digital media are complete and fully readable. Applicants are strongly encouraged to submit the required items well in advance of established deadlines.(g) Documentation to Substantiate Items and Representations in a Competitive HTC Application. In order to ensure the appropriate level of transparency in this highly competitive program, Applications and all correspondence and other information relating to each Application are posted on the Department's website and updated on a regular basis. Applicants must use the Application form posted online to provide appropriate support for each item substantiating a claim or representation, such as claims for points, qualification for set-asides, meeting of threshold requirements, or timely requesting a waiver or determination. Any Application that staff identifies as having insufficient support information will be directed to cure the matter via the Deficiency process. Applicants are reminded that this process may not be used to increase a scoring item's points or to change any aspect of the proposed Development, financing structure, or other element of the Application. Although a responsive narrative will be created after Application submission, all facts and materials to substantiate any item in response to such an Administrative Deficiency must have been clearly established at the time of submission of the Application.(h) Board Standards for Review. Some issues may require or benefit from Board review. The Board is not constrained to a particular standard, and while its actions on one matter are not binding as to how it will address another matter, the Board does seek to promote consistency with its policies, including the policies set forth in this chapter.(i) Scattered Site Applications. As it relates to calculating any distances (tie determinations, proximity to features, etc.), year of initial construction, or determining satisfaction of scoring, the site that scores or ranks the lowest will be the site used for that analysis. There is no opportunity for higher scoring or performing sites to elevate the score or performance of other sites in the scattered site Application.(j) Public Information Requests. Pursuant to Tex. Gov't Code §2306.6717, any pre-application and any full Application, including all supporting documents and exhibits, must be made available to the public, in their entirety, on the Department's website. The filing of a pre-application or Application with the Department shall be deemed as consent to the release of any and all information contained therein, including supporting documents and exhibits. As part of its certifications, the Applicant shall certify that the authors of the reports and other information and documents submitted with the Application have given their consent to the Applicant to submit all reports and other information and documents to the Department, and for the Department to publish anything submitted with the Application on its website and use such information and documents for authorized purposes.(k) Responsibilities of Municipalities and Counties. In considering resolutions regarding housing de-concentration issues, threshold requirements, or scoring criteria, municipalities and counties should consult their own staff and legal counsel as to whether their handling of actions regarding such resolution(s) are consistent with Fair Housing laws as they may apply, including, as applicable, consistency with any Fair Housing Activity Statement-Texas (FHAST) form on file, any current Analysis of Impediments to Fair Housing Choice, any current Assessment of Fair Housing, or any current plans such as one year action plans or five year consolidated plans for HUD block grant funds, such as HOME or CDBG funds.(l) Request for Staff Determinations. Where the requirements of this chapter do not readily align with the activities proposed in an Application, an Applicant may request and Department staff may provide a determination to an Applicant explaining how staff will review an Application in relation to the applicable rules. In no instance will staff provide a determination regarding a scoring item. Any such request must be received by the Department prior to submission of the pre-application (if applicable to the program) or Application (if no pre-application was submitted). Staff may, in its sole discretion, provide the request to the Board for it to make the determination. Staff's determination may take into account the articulated purpose of or policies addressed by a particular rule or requirement, materiality of elements, substantive elements of the development plan that relate to a term or definition, a common usage of the particular term, or other issues relevant to a rule or requirement. All such requests and determinations will be conveyed in writing. If the determination is finalized after submission of the pre-application or Application, the Department may allow corrections to the pre-application or the Application that are directly related to the issues in the determination. It is an Applicant's sole responsibility to request a determination and an Applicant may not rely on any determination for another Application regardless of similarities in a particular fact pattern. For any Application that does not request and subsequently receive a determination, the definitions and applicable rules will be applied as used and defined herein. An Applicant may appeal a determination for their Application, using the Appeal Process provided for in §11.902 of this chapter (relating to Appeals Process), if the determination provides for a treatment that relies on factors other than the explicit definition. A Board determination may not be appealed. A staff or Executive Director determination not timely appealed cannot be further appealed or challenged.</content><note type="source"><p>Source Note: The provisions of this §11.1 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scA/s11.2"><num value="11.2">§11.2</num><heading>Program Calendar for Housing Tax Credits</heading><content>(a) Competitive HTC Deadlines. Non-statutory deadlines specifically listed in the Program Calendar may be extended by the Department for a period of not more than 5 business days provided that the Applicant has, in writing, requested an extension prior to the date of the original deadline and has established to the reasonable satisfaction of the Department that there is good cause for the extension. Attached Graphic(b) Tax-Exempt Bond and Direct Loan-only Application Dates and Deadlines. Applicants are strongly encouraged to submit the required items well in advance of published deadlines. Other deadlines may be found in Chapters 12 and 13 or a NOFA.(1) Full Application Delivery Date. The deadline by which the Application must be received by the Department. For Direct Loan Applications, deadlines including the Application Acceptance Date will be defined in the applicable NOFA and for Tax-Exempt Bond Developments, such deadlines are more fully explained in §11.201 of this chapter (relating to Procedural Requirements for Application Submission).(2) Administrative Deficiency Response Deadline. Such deadline shall be five business days after the date on the deficiency notice, unless extended as provided for in §11.201(6) of this chapter (relating to Deficiency Process).(3) Third Party Report Delivery Date (Environmental Site Assessment (ESA), Scope and Cost Review (SCR) (if applicable), Appraisal (if applicable), Market Analysis and the Feasibility Report (if applicable)). For Direct Loan Applications, the Third Party reports meeting the requirements described in §11.205 of this title (relating to Required Third Party Reports) must be submitted in order for the Application to be considered complete, unless the Application is made in conjunction with an Application for Housing Tax Credits or Tax-Exempt Bond, in which case the Delivery Date for those programs will apply. For Tax-Exempt Bond Developments, the Third Party Reports must be received by the Department pursuant to §11.201(2) of this chapter.(4) Resolutions Delivery Date. Resolutions required for Tax-Exempt Bond Developments must be received by the Department no later than 14 calendar days before the Board meeting or prior to the issuance of the Determination Notice, as applicable. If the Direct Loan Application is made in conjunction with an Application for Housing Tax Credits, or Tax-Exempt Bond Developments, the Resolution Delivery Date for those programs will apply to the Direct Loan Application.(5) Challenges to Neighborhood Organization Opposition Delivery Date. Challenges must be received by the Department no later than 45 calendar days prior to the Board meeting at which consideration of the award will occur.</content><note type="source"><p>Source Note: The provisions of this §11.2 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scA/s11.3"><num value="11.3">§11.3</num><heading>Housing De-Concentration Factors</heading><content>(a) Rules reciting statutory limitations are provided as a convenient reference only, and to the extent there is any deviation from the provisions of statute, the statutory language is controlling.(b) Two Mile Same Year Rule (Competitive HTC Only).(1) As required by Tex. Gov't Code §2306.6711(f), staff will not recommend for award, and the Board will not make an award to an Application that proposes a Development Site located in a county with a population that exceeds one million, if the proposed Development Site is also located less than two linear miles from the proposed Development Site of another Application within said county that is awarded in the same calendar year. If two or more Applications are submitted that would violate §2306.6711(f), the following priorities will be used to determine which Application is reviewed:(A) Priority will first be determined using the steps described in the Award Recommendation Methodology described in §11.6(3). (B) In the event that two Applications are considered for review during the same step of Award Recommendation Methodology, then priority will be given to the higher-scoring Application, including consideration of tie breakers. (C) Regardless of the priority established by (A) or (B), an Application that is not recommended for an award at the July Board meeting at which awards from the Application Round will be made will not be given priority over another Application that would otherwise be recommended for an award. (2) This subsection does not apply if an Application is located in an area that meets the requirements of Tex. Gov't Code §2306.6711(f-1), which excludes any municipality with a population of two million or more where a federal disaster has been declared by the Full Application Delivery Date as identified in §11.2(a) of this chapter (relating to Competitive HTC Deadlines), and the governing body of the municipality containing the Development has by vote specifically authorized the allocation of housing tax credits for the Development in a resolution submitted by the Full Application Delivery Date as identified in §11.2(a) of this chapter, and the municipality is authorized to administer disaster recovery funds as a subgrant recipient.(c) Twice the State Average Per Capita (Competitive HTC and Tax-Exempt Bond Only). As provided for in Tex. Gov't Code §2306.6703(a)(4), if a proposed Development is located in a municipality, or if located completely outside a municipality, a county, that has more than twice the state average of units per capita supported by Housing Tax Credits or private activity bonds at the time the Application Acceptance Period Begins (or for Tax-Exempt Bond Developments, Applications submitted after the Application Acceptance Period Begins), then the Applicant must obtain prior approval of the Development from the Governing Body of the appropriate municipality or county containing the Development. Such approval must include a resolution adopted by the Governing Body of the municipality or county, as applicable, setting forth a written statement of support, specifically citing Tex. Gov't Code §2306.6703(a)(4) in the text of the actual adopted resolution, and authorizing an allocation of Housing Tax Credits for the Development. An acceptable, but not required, form of resolution may be obtained in the Uniform Multifamily Application Templates. Required documentation must be submitted by the Full Application Delivery Date as identified in §11.2(a) of this chapter (relating to Competitive HTC Deadlines) or Resolutions Delivery Date in §11.2(b) of this chapter (relating to Tax-Exempt Bond and Direct Loan Only Application Dates and Deadlines), as applicable.(d) One Mile Three Year Rule (Competitive HTC and Tax-Exempt Bond Only). (§2306.6703(a)(3)).(1) An Application that proposes the New Construction or Adaptive Reuse of a Development that is located one linear mile or less (measured between closest boundaries by a straight line on a map) from another development that meets all of the criteria in subparagraphs (A) - (C) of this paragraph shall be considered ineligible. (A) A Development that serves the same Target Population as the proposed Development, regardless of whether the Development serves general, Elderly, or Supportive Housing; and(B) A Development that has received an allocation of Housing Tax Credits or private activity bonds, or a Supplemental Allocation of credits, for any New Construction at any time during the three-year period preceding the date the Application Round begins (or for Tax-Exempt Bond Developments the three-year period preceding the date the Certificate of Reservation is issued); and(C) The Development in subparagraph (B) of this paragraph has not been withdrawn or terminated from the Housing Tax Credit Program. (2) Paragraph (1) of this subsection does not apply to a proposed Development:(A) That is using federal HOPE VI (or successor program) funds received through HUD;(B) That is using locally approved funds received from a public improvement district or a tax increment financing district;(C) That is using funds provided to the state under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. §§12701 et seq.);(D) That is using funds provided to the state and participating jurisdictions under the Housing and Community Development Act of 1974 (42 U.S.C. §§5301 et seq.);(E) That is located in a county with a population of less than one million;(F) That is located outside of a metropolitan statistical area; or(G) That the Governing Body of the appropriate municipality or county where the Development is to be located has by vote specifically allowed the construction of a new Development located within one linear mile or less from a Development described under paragraph (1)(A) of this subsection. An acceptable, but not required, form of resolution may be obtained in the Uniform Multifamily Application Templates. Required documentation must be submitted by the Full Application Delivery Date as identified in §11.2(a) of this chapter, regarding Competitive HTC Deadlines, or Resolutions Delivery Date in §11.2(b) of this chapter, regarding Tax-Exempt Bond and Direct Loan Only Development Dates and Deadlines, as applicable.(3) Where a specific source of funding is referenced in paragraphs (2)(A) - (D) of this subsection, a commitment or resolution documenting a commitment of the funds must be provided in the Application. (e) Limitations on Developments in Certain Census Tracts. An Application that proposes the New Construction or Adaptive Reuse of a Development proposed to be located in a census tract that has more than 20% Housing Tax Credit Units per total households as reflected in the Department's current Site Demographic Characteristics Report shall be considered ineligible unless the Governing Body of the appropriate municipality or county containing the Development has adopted a resolution that the Governing Body of the appropriate municipality or county containing the Development has no objection to the Application. Rehabilitation Developments are not required to obtain such resolution. The resolution must be submitted by the Full Application Delivery Date as identified in §11.2(a) of this chapter or Resolutions Delivery Date in §11.2(b) of this chapter, as applicable.(f) Proximity of Development Sites. (Competitive HTC Only) In a county with a population that is less than one million, if two or more HTC Applications, regardless of the Applicant(s), are proposing Developments serving the same Target Population on sites separated by 1,000 feet or less, the lower scoring of the Application(s), including consideration of Tie Breakers, will be considered ineligible and will not be reviewed unless the higher scoring Application is terminated or withdrawn.(g) One Award per Census Tract Limitation (Competitive HTC Only). If two or more Competitive HTC Applications are proposing Developments in the same census tract in an urban subregion, the lower scoring of the Application(s), including consideration of tie breakers, will be considered ineligible and will not be reviewed unless the higher scoring Application is terminated or withdrawn. This subsection does not apply to Applications submitted under §11.5(2) of this chapter (relating to USDA Set-Aside) or §11.5(3) (relating to At-Risk Set-Aside).</content><note type="source"><p>Source Note: The provisions of this §11.3 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scA/s11.4"><num value="11.4">§11.4</num><heading>Tax Credit Request, Award Limits, and Increase in Eligible Basis</heading><content>(a) Credit Amount (Competitive HTC Only). (§2306.6711(b)) The Board may not award or allocate to an Applicant, Developer, Affiliate, or Guarantor (unless the Guarantor is also the General Contractor or provides the guaranty only during the construction period, and is not a Principal of the Applicant, Developer or Affiliate of the Development Owner) Housing Tax Credits in an aggregate amount greater than $6 million in a single Application Round. Prior to posting the agenda for the last Board meeting in June, an Applicant that has Applications pending for more than $6 million in credit may notify staff in writing or by email of the Application(s) they will not pursue in order to bring their request within the $6 million cap. Any other Applications they do not wish to pursue will remain on the waiting list if not otherwise terminated. If the Applicant has not made this self-selection by this date, staff will first select the Application(s) that will enable the Department to comply with the state and federal non-profit set-asides, and will then select the highest scoring Application, including consideration of Tie Breakers if there are tied scores. The Application(s) that does not meet Department criteria will not be reviewed unless the Applicant withdraws an Application that is eligible for an award and has been reviewed. All entities that are under common Control are Affiliates. For purposes of determining the $6 million limitation, a Person is not deemed to be an Applicant, Developer, Affiliate, or Guarantor solely because it:(1) Raises or provides equity;(2) Provides "qualified commercial financing";(3) Is a Qualified Nonprofit Organization or other not-for-profit entity that is providing solely loan funds, grant funds or social services; (4) Receives fees as a consultant or advisor that do not exceed $200,000; or(5) Is a mezzanine finance company that does not have Control.(b) Maximum Request Limit (Competitive HTC Only). For any given Development, an Applicant may not request more than 150% of the credit amount available in the subregion based on estimates released by the Department on December 1, or $2,000,000 whichever is less. In addition, for Elderly Developments in a Uniform State Service Region containing a county with a population that exceeds one million, the request may not exceed the final amount published on the Department's website after the annual release of the Internal Revenue Service notice regarding the credit ceiling (2306.6711(h)). For all Applications, the Department will consider the amount in the funding request of the pre-application and Application to be the amount of Housing Tax Credits requested and will reduce the Applicant's request to the maximum allowable under this subsection through the underwriting process. While the Housing Tax Credit request amount for an Application may be reduced through the underwriting process or at the written request of staff, the Department shall otherwise consider the request amount final. The Tax Credit request amount cannot be changed through the Administrative Deficiency process. Regardless of the credit amount requested or any subsequent changes to the request made by staff, the Board may not award to any individual Development more than $2 million in a single Application Round. (§2306.6711(b)). (c) Increase in Eligible Basis (30% Boost). Applications will be evaluated for an increase of up to 30% in Eligible Basis provided they meet any one of the criteria identified in paragraphs (1) - (4) of this subsection. Staff will recommend no increase or a partial increase in Eligible Basis if it is determined it would cause the Development to be over sourced, as determined by the Department, in which case a credit amount necessary to fill the gap in financing will be recommended. In no instance will the boost exceed more than the amount of credits required to create the HTC rent-restricted Units. The criteria in paragraph (3) of this subsection are not applicable to Tax-Exempt Bond Developments.(1) The Development is located in a Qualified Census Tract (QCT) (as determined by the Secretary of HUD) that has less than 20% Housing Tax Credit Units per total households in the tract as reflected in the Department's current Site Demographic Characteristics Report. New Construction or Adaptive Reuse Developments located in a QCT that has in excess of 20% Housing Tax Credit Units per total households are not eligible for a 30% increase in Eligible Basis, which would otherwise be available for the Development Site pursuant to §42(d)(5) of the Code, unless the Application includes a resolution acknowledging the Development is located in a census tract that has more than 20% Housing Tax Credits Units per total households and stating that the Governing Body of the appropriate municipality or county containing the Development has no objection to the Application. Rehabilitation Developments where this rule is triggered are eligible for the boost and are not required to obtain such a resolution from the Governing Body. An acceptable, but not required, form of resolution may be obtained in the Multifamily Uniform Application Templates. Required documentation must be submitted by the Full Application Delivery Date as identified in §11.2(a) of this chapter (relating to Competitive HTC Deadlines), or Resolutions Delivery Date in §11.2(b) of this chapter (relating to Tax-Exempt Bond and Direct Loan Application Dates and Deadlines), as applicable. The Application must include a census map that includes the 11-digit census tract number and clearly shows that the proposed Development is located within a QCT.(2) The Development is located in a Small Area Difficult Development Area (SADDA)) (based on Small Area Fair Market Rents as determined by the Secretary of HUD) or for Rural areas located in a Difficult Development Area (DDA) that has high construction, land and utility costs relative to the AMGI. The Application must include the SADDA or DDA map that clearly shows the proposed Development is located within the boundaries of a SADDA or DDA as applicable.(3) For Competitive HTC only, Development meets one of the criteria described in subparagraphs (A) - (F) of this paragraph pursuant to Code, §42(d)(5)(B)(v):(A) The Development is located in a Rural Area;(B) The Development is entirely Supportive Housing and is in accordance with §11.1(d) of this chapter (relating to the definition of Supportive Housing);(C) The Development meets the criteria for the Opportunity Index as defined in §11.9(c)(5) of this chapter (relating to Competitive HTC Selection Criteria);(D) The Applicant elects to restrict 10% of the proposed low income Units for households at or below 30% of AMGI. These Units may not be used to meet any scoring criteria, or used to meet any Multifamily Direct Loan program requirement;(E) The Development is in an area covered by a concerted revitalization plan, is not an Elderly Development, and is not located in a QCT. A Development will be considered to be in an area covered by a concerted revitalization plan if it is eligible for and elects points under §11.9(d)(7) of this chapter; or(F) The Development is located in a Qualified Opportunity Zone designated under the Bipartisan Budget Act of 2018 (H.R. 1892). Pursuant to Internal Revenue Service Announcement 2021-10, the boundaries of the Opportunity Zone are unaffected by 2020 Decennial Census changes.(4) For Tax-Exempt Bond Developments, as a general rule, a QCT, non-metro DDA or SADDA designation would have to coincide with the program year the Certificate of Reservation is issued in order for the Department to apply the 30% boost in its underwriting evaluation. The Department acknowledges guidance contained in the Federal Register regarding effective dates of QCT, non-metro DDA and SADDA designations. Pursuant to the Federal Register Notice, unless federal guidance states otherwise, complete Applications (including all Third Party Reports) with a corresponding Certificate of Reservation that are submitted to the Department in the year the QCT, non-metro DDA or SADDA designation is not effective may be underwritten to include the 30% boost, provided a complete application was submitted to the bond issuer in the year the QCT, non-metro DDA or SADDA designation was effective. Where this is the case, the Application must contain a certification from the issuer that speaks to the date on which such complete application (as defined in the Notice) was submitted. If the issuer is a member of the organizational structure then such certification must come from the bond counsel to the issuer.</content><note type="source"><p>Source Note: The provisions of this §11.4 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scA/s11.5"><num value="11.5">§11.5</num><heading>Competitive HTC Set-Asides. (§2306.111(d))</heading><content>This section identifies the statutorily-mandated Set-asides which the Department is required to administer. An Applicant may elect to compete in each of the Set-asides for which the proposed Development qualifies. In order to be eligible to compete in the Set-aside, the Application must meet the requirements of the Set-aside as of the Full Application Delivery Date. Election to compete in a Set-aside does not constitute eligibility to compete in the Set-aside, and Applicants who are ultimately deemed not to qualify to compete in the Set-aside will be considered not to be participating in the Set- aside for purposes of qualifying for points under §11.9(e)(3) of this chapter (related to Criteria promoting the efficient use of limited resources and applicant accountability). Commitments of Competitive HTCs issued by the Board in the current program year will be applied to each Set-aside, Rural regional allocation, Urban regional allocation, and USDA Set-aside for the current Application round as appropriate.(1) Nonprofit Set-Aside. (§2306.6729 and §2306.6706(b)). At least 10% of the State Housing Credit Ceiling for each calendar year shall be allocated to Qualified Nonprofit Developments which meet the requirements of Code, §42(h)(5) and Tex. Gov't Code §2306.6729 and §2306.6706(b). Qualified Nonprofit Organizations must have the controlling interest in the Development Owner applying for this Set-aside (i.e., greater than 50% ownership in the General Partner). If the Application is filed on behalf of a limited partnership, the Qualified Nonprofit Organization must be the manager of the Managing General Partner. If the Application is filed on behalf of a limited liability company, the Qualified Nonprofit Organization must be the Manager of the controlling Managing Member. Additionally, for Qualified Nonprofit Development in the Nonprofit Set-aside the nonprofit entity or its nonprofit Affiliate or subsidiary must be the Developer or a co-Developer as evidenced in the development agreement. An Applicant that meets the requirements to be in the Qualified Nonprofit Set-aside is deemed to be applying under that Set-aside unless their Application specifically includes an affirmative election to not be treated under that Set-aside and a certification that they do not expect to receive a benefit in the allocation of tax credits as a result of being affiliated with a nonprofit. The Department reserves the right to request a change in this election or to not recommend credits for those unwilling to change elections if insufficient Applications in the Nonprofit Set-Aside are received. Applicants may not use different organizations to satisfy the state and federal requirements of the Set-aside.(2) USDA Set-Aside. (§2306.111(d-2)). 5% of the State Housing Credit Ceiling for each calendar year shall be allocated to Rural Developments which are financed through USDA. If an Application in this Set-aside involves Rehabilitation it will be attributed to and come from the At- Risk Development Set-aside; if an Application in this set-aside involves New Construction it will be attributed to and come from the applicable Uniform State Service Region and will compete within the applicable subregion unless the Application is receiving USDA Section 514 funding. Applications must also meet all requirements of Tex. Gov't Code §2306.111(d-2).(A) Eligibility of Certain Developments to Participate in the USDA or Rural Set-asides. (§2306.111 (d-4)). A proposed or Existing Residential Development that, before September 1, 2013, has been awarded or has received federal financial assistance provided under §§514, 515, or 516 of the Housing Act of 1949 (42 U.S.C. §§1484, 1485, or 1486) may be attributed to and come from the At-Risk Development Set-aside or the Uniform State Service Region in which the Development is located, regardless of whether the Development is located in a Rural Area.(B) All Applications that are eligible to participate under the USDA Set-aside will be considered Rural for all scoring items under this chapter. If a Property receiving USDA financing is unable to participate under the USDA Set-aside and it is located in an Urban subregion, it will be scored as Urban.(3) At-Risk Set-Aside. (§2306.6714; §2306.6702). (A) At least 15% of the State Housing Credit Ceiling for each calendar year will be allocated under the At-Risk Development Set-aside and will be deducted from the State Housing Credit Ceiling prior to the application of the regional allocation formula required under §11.6 of this chapter (relating to Competitive HTC Allocation Process). Through this Set-aside, the Department, to the extent possible, shall allocate credits to Applications involving the preservation of Developments identified as At-Risk Developments. (§2306.6714) 5% of the State Housing Credit Ceiling associated with this Set-aside will be given as priority to Rehabilitation Developments under the USDA Set-aside; additional Applications that qualify under the USDA Set-Aside may compete within the At-Risk Set-Aside only if they meet the definition for an At-Risk Development, have submitted sufficient supporting documentation within the Application to demonstrate qualification as an At-Risk Development, and were not submitted under the USDA Set-Aside. Applications submitted under the USDA Set-Aside in excess of meeting the 5% priority do not qualify for the At-Risk Set-Aside. (B) An At-Risk Development qualifying under Tex. Gov't Code §2306.6702(a)(5)(A) must meet the following requirements:(i) Pursuant to Tex. Gov't Code §2306.6702(a)(5)(A)(i), a Development must have received the benefit of a subsidy in the form of a qualified below-market interest rate loan, interest rate reduction, rental subsidy, Section 8 housing assistance payment, rental supplement payment, rental assistance payment, or equity incentive from any of the programs provided in subclauses (I) to (VIII) of this clause. Applications participating in the At-Risk Set-Aside must include evidence of the qualifying subsidy.(I) Sections 221(d)(3) and (5), National Housing Act (12 U.S.C. §1715l);(II) Section 236, National Housing Act (12 U.S.C. §1715z-1); (III) Section 202, Housing Act of 1959 (1 2 U.S.C. §1701q); (IV) Section 101, Housing and Urban Development Act of 1965 (12 U.S.C. §1701s);(V) the Section 8 Additional Assistance Program for housing developments with HUD-Insured and HUD-Held Mortgages administered by the United States Department of Housing and Urban Development as specified by 24 CFR Part 886, Subpart A;(VI) the Section 8 Housing Assistance Program for the Disposition of HUD-Owned Projects administered by the United States Department of Housing and Urban Development as specified by 24 CFR Part 886, Subpart C; (VII) §§514, 515, and 516, Housing Act of 1949 (42 U.S.C. §§1484, 1485, and 1486);(VII) §§514, 515, and 516, Housing Act of 1949 (42 U.S.C. §§1484, 1485, and 1486); or(VIII) §42, Internal Revenue Code of 1986.(ii) Any stipulation to maintain affordability in the contract granting the subsidy or any HUD-insured or HUD-held mortgage as described in §2306.6702(a)(5)(A)(ii)(a) will be considered to be nearing expiration or nearing the end of its term if the contract expiration will occur or the term will end within two years after July 31 of the year the Application is submitted. Developments with HUD-insured or HUD-held mortgages qualifying as At-Risk under §2306.6702(a)(5)(A)(ii)(b) will be considered eligible if the HUD-insured or HUD-held mortgage is eligible for prepayment. (iii) Developments with existing Department LIHTC LURAs must have completed all applicable Right of First Refusal procedures prior to the pre-application Final Delivery Date.(C) An At-Risk Development qualifying under Tex. Gov't Code §2306.6702(a)(5)(B) must meet one of the requirements under clause (i), (ii) or (iii) of this subparagraph and also meet the stipulations noted in clause (iv) of this subparagraph:(i) Units to be Rehabilitated or Reconstructed must be owned by a public housing authority or a public facility corporation created by a public housing authority under Chapter 303, Local Government Code and received assistance under §9, United States Housing Act of 1937 (42 U.S.C. §1437g); or(ii) Units to be Rehabilitated or Reconstructed must have been proposed to be disposed of or demolished, or already disposed or demolished within the two-year period preceding the date the Application is submitted, by a public housing authority or public facility corporation created by a public housing authority under Chapter 303, Local Government Code and received assistance under §9, United States Housing Act of 1937 (42 U.S.C. §1437g); or(iii) To the extent that an Application is eligible under Tex. Gov't Code §2306.6702(a)(5)(B)(iii), the Development must receive assistance through the Rental Assistance Demonstration (RAD) program administered by the United States Department of Housing and Urban Development (HUD). Applications must include evidence that RAD participation is included in the applicable public housing plan that was most recently approved by HUD, and evidence that HUD has approved the Units proposed for Rehabilitation or Reconstruction for participation in the RAD program; and(iv) Notwithstanding any other provision of law, an At-Risk Development described by Tex. Gov't Code §2306.6702(a)(5)(B) that was previously allocated housing tax credits set aside under subsection (a) of this section does not lose eligibility for those credits if the portion of Units reserved for public housing as a condition of eligibility for the credits under Tex. Gov't Code §2306.6714 (a-1)(2) are later converted under RAD.(D) An Application for a Development that includes the demolition of the existing Units which have received the financial benefit described in Tex. Gov't Code §2306.6702(a)(5)(i) will not qualify as an At-Risk Development unless the redevelopment will include at least a portion of the same site. Alternatively, pursuant to Tex. Gov't Code §2306.6702(a)(5)(B), an Applicant may propose relocation of the existing Units in an otherwise qualifying At-Risk Development if:(i) the affordability restrictions and any At-Risk eligible subsidies are approved to be transferred with the units proposed for Rehabilitation or Reconstruction prior to the tax credit Carryover deadline;(ii) the Applicant seeking tax credits must propose at least the same number of restricted Units (the Applicant may, however, add market rate Units, and other rules, limitations, approvals, and potential conflicting requirements based on fund source, number and unit type may be implicated by creating more units than the original number); and(iii) the new Development Site must either:(I) qualify for points on the Opportunity Index under §11.9(c)(5) of this chapter (relating to Competitive HTC Selection Criteria); or(II) the local Governing Body of the applicable municipality or county (if completely outside of a municipality) in which that Development is located must submit a resolution confirming that the proposed Development is supported by the municipality or county in order to carry out a previously adopted plan that meets the requirements of §11.9(d)(7) of this chapter. Development Sites that cross jurisdictional boundaries must provide such resolutions from both local governing bodies.(E) If Developments at risk of losing affordability from the financial benefits available to the Development are able to retain, renew, or replace the existing financial benefits and affordability they must do so unless regulatory barriers necessitate elimination of all or a portion of that benefit for the Development.(i) Evidence of the legal requirements that will unambiguously cause the loss of affordability and that this will occur within the two calendar years of July 31 of the year the Application is submitted, and must be included with the application.(ii) For Developments qualifying under Tex. Gov't Code §2306.6702(a)(5)(B), only a portion of the subsidy must be retained for the proposed Development, but no less than 25% of the proposed Units must be public housing units supported by public housing operating subsidy. (§2306.6714(a-1). If less than 100% of the public housing benefits are transferred to the proposed Development, an explanation of the disposition of the remaining public housing benefits must be included in the Application, as well as a copy of the HUD-approved plan for demolition and disposition.(F) Nearing expiration on a requirement to maintain affordability includes Developments eligible to request a Qualified Contract under both Code, §42 and Department rules. Evidence must be provided in the form of a copy of the recorded LURA, the first year's IRS Forms 8609 for all buildings showing Part II of the form completed and, if applicable, documentation from the original application regarding the Right of First Refusal. The Application must also include evidence that any applicable Right of First Refusal procedures have been completed prior to the pre-application Final Delivery Date.(G) An amendment to any aspect of the existing tax credit property sought to enable the Development to qualify as an At-Risk Development, that is submitted to the Department after the Application has been filed and is under review will not be accepted.</content><note type="source"><p>Source Note: The provisions of this §11.5 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scA/s11.6"><num value="11.6">§11.6</num><heading>Competitive HTC Allocation Process</heading><content>This section identifies the general allocation process and the methodology by which awards during the Application Round are made.(1) Regional Allocation Formula. The Department shall initially make available in each Rural Area and Urban Area of each Uniform State Service Region (subregion) Housing Tax Credits in an amount not less than $750,000 in each Rural and Urban subregion, consistent with the Regional Allocation Formula developed in compliance with Tex. Gov't Code §2306.1115. As authorized by Tex. Gov't Code §2306.111(d-3), the Department will reserve $750,000 in housing tax credits for Applications in rural areas in each uniform state service region. The process of awarding the funds made available within each subregion shall follow the process described in this section. Where a particular situation that is not contemplated and addressed explicitly by the process described herein, Department staff shall formulate a recommendation for the Board's consideration based on the objectives of the regional allocation formula together with other policies and purposes set out in Tex. Gov't Code, Chapter 2306 and the Department shall provide the public the opportunity to comment on and propose alternatives to such a recommendation. In general, such a recommendation shall not involve broad reductions in the funding request amounts solely to accommodate regional allocation and shall not involve rearranging the competitive ranking of Applications within a particular subregion or set-aside except as described herein. If the Department determines that an allocation recommendation would cause a violation of the $6 million credit limit per Applicant, the Department will make its recommendation based on the criteria described in §11.4(a) of this chapter (relating to Tax Credit Request, Award Limits and Increase in Eligible Basis). The Department will publish on its website on or before December 1 of each year, initial estimates of Regional Allocation Formula percentages and limits of credits available, and the calculations periodically, if those calculations change, until the credits are fully allocated.(2) Credits Returned and National Pool Allocated After January 1. For any credits returned after January 1 and eligible for reallocation (not including credit returned and reallocated under force majeure provisions), the Department shall first return the credits to the subregion or set-aside from which the original allocation was made. The credits will be treated in a manner consistent with the allocation process described in this section and may ultimately flow from the subregion and be awarded in the collapse process to an Application in another region, subregion or set-aside. Consistent with the allocation process described in this section, credits that are returned to the USDA or At-Risk Set-Asides are not eligible to flow to another subregion or set-aside unless no eligible Applications remain in the Set-Aside to which the credits were returned. For any credit received from the "national pool" after the initial approval of awards in late July, the credits will be added to any remaining credits and awarded to the next Application on the waiting list for the state collapse, if sufficient credits are available to meet the requirements of the Application as may be amended after underwriting review.(3) Award Recommendation Methodology. (§2306.6710(a) - (f); §2306.111) The Department will assign, as described herein, Developments for review by the program and underwriting divisions. In general, Applications reviews will be conducted in the order described in subparagraphs (A) - (F) of this paragraph based upon the Applicant self-score and an initial program review. The procedure identified in subparagraphs (A) - (F) of this paragraph will also be used in making recommendations to the Board.(A) USDA Set-Aside Application Selection (Step 1). The first set of reviews will be those Applications with the highest scores in the USDA Set-Aside until the minimum requirements stated in §11.5(2) of this chapter (relating to Competitive HTC Set-Asides. (§2306.111(d)) are attained. The minimum requirement may be exceeded in order to award the full credit request or underwritten amount of the last Application selected to meet the USDA Set-Aside requirement.(B) At-Risk Set-Aside Application Selection (Step 2). The second set of reviews will be those Applications with the highest scores in the At-Risk Set-Aside statewide until the minimum requirements stated in §11.5(3) of this chapter (relating to At-Risk Set-Aside) are attained. This may require the minimum requirement to be exceeded to award the full credit request or underwritten amount of the last Application selected to meet the At-Risk Set-Aside requirement. This step may leave less than originally anticipated in the 26 subregions to award under the remaining steps. If all eligible Applications participating in the At-Risk Set-Aside are awarded and the minimum requirement stated in §11.5(3) has not been met, the Department will award the highest scoring Applications in the USDA Set-Aside that are otherwise eligible to participate in the At-Risk Set-Aside until that threshold is met.(C) Initial Application Selection in Each Subregion (Step 3). The highest scoring Applications within each of the 26 subregions will then be selected provided there are sufficient funds within the subregion to fully award the Application with the priorities in this subparagraph first prioritized. Applications electing the At-Risk or USDA Set-Asides will not be eligible to receive an award from funds made generally available within each of the subregions. In Urban subregions in which credits available do not allow for all of the priorities in clauses (iii) to (v) of this subparagraph to be achieved, the priorities will be followed in the order reflected in this subparagraph.(i) In Uniform State Service Regions containing a county with a population that exceeds one million, the Board may not allocate more than the maximum percentage of credits available for Elderly Developments, unless there are no other qualified Applications in the subregion. The Department will, for each such Urban subregion, calculate the maximum percentage in accordance with Tex. Gov't Code §2306.6711(h), and will publish such percentages on its website.(ii) In accordance with Tex. Gov't Code, §2306.6711(g), in Uniform State Service Regions containing a county with a population that exceeds 1.7 million, the Board shall allocate competitive tax credits to the highest scoring Development, if any, that is part of a concerted revitalization plan that meets the requirements of §11.9(d)(7) (except for §11.9(d)(7)(A)(ii)(III) and §11.9(d)(7)(B)(iii)), is located in an Urban subregion, and is within the boundaries of a municipality with a population that exceeds 500,000.(iii) In Urban subregions containing a county with a population that exceeds 750,000, the Board shall allocate competitive tax credits to the highest scoring Development, if any, that is located in a neighborhood which is a recipient of a HUD Choice Neighborhood Planning or Implementation grant in the preceding five years from the date of Application submission and funds from the HUD Choice Neighborhood awardee are reflected in the Application's Sources and Uses.(iv) In Urban subregions containing a county with a population that exceeds 1,000,000, the Board shall allocate competitive tax credits to the highest scoring Development, if any, that elects to provide a High-Quality Pre-Kindergarten (HQ Pre-K) program and associated educational space at the Development Site that meets the requirements of items (a)-(c) of subparagraph (C)(i)(I) of §11.101(b)(5)- (related to Common Amenities). Developments serving a Target Population that is Elderly or Supportive Housing are not eligible for this item. (v) In Urban and Rural subregions that do not contain a county with a population of at least 2,500,000, no more than one Application with a Supportive Housing Target Population will be awarded unless there are no other eligible Applications in the subregion. Awards made in the At-Risk Set-Aside will not count towards this limitation. (vi) In Urban subregions that contain a county with a population of at least 2,500,000, no more than two Applications with a Supportive Housing Target Population will be awarded unless there are no other eligible Applications in the subregion. Awards made in the At-Risk Set-Aside will not count towards this limitation.(D) Rural Collapse (Step 4). If there are any tax credits set-aside for Developments in a Rural Area in a specific Uniform State Service Region (Rural subregion) that remain after award under subparagraph (C) of this paragraph, those tax credits shall be combined into one "pool" and then be made available in any other Rural Area in the state to the Application in the most underserved Rural subregion as compared to the subregion's allocation, continuing with the priorities and limitations established in §11.6(3)(C). This rural redistribution will continue until all of the tax credits in the "pool" are allocated to Rural Applications and at least 20% of the funds available to the State are allocated to Applications in Rural Areas. (§2306.111(d)(3)) In the event that more than one subregion is underserved by the same percentage, the priorities described in clauses (i) - (ii) of this subparagraph will be used to select the next most underserved subregion:(i) the subregion with no recommended At-Risk Applications from the same Application Round; and(ii) the subregion that was the most underserved during the Application Round during the year immediately preceding the current Application Round.(E) Statewide Collapse (Step 5). Any credits remaining after the Rural Collapse, including those in any subregion in the State, will be combined into one "pool." The funds will be used to award the highest scoring Application, and continuing with the priorities and limitations established in §11.6(3)(C), in the most underserved subregion in the State compared to the amount originally made available in each subregion. In Uniform State Service Regions containing a county with a population that exceeds one million, the Board may not allocate more than the maximum percentage of credits available as calculated through the Regional Allocation Formula (RAF) for Elderly Developments, within an Urban subregion of that service region. Therefore, certain Applications for Elderly Developments may be excluded from receiving an award from the collapse. The Department will, for each such Urban subregion, calculate the maximum percentage in accordance with Tex. Gov't Code §2306.6711(h) and will publish such percentages on its website. This process will continue until the funds remaining are insufficient to award the next highest scoring Application that is not rendered ineligible through application of the elderly cap in the next most underserved subregion. At least seven calendar days prior to the July Board meeting of the Department at which final awards of credits are authorized, the Department will post on its website the most current 2024 State of Texas Competitive Housing Tax Credit Ceiling Accounting Summary which includes the Regional Allocation Formula percentages including the maximum funding request/award limits, the Elderly Development maximum percentages and limits of credits available, and the methodology used for the determination of the award determinations within the State Collapse. In the event that more than one subregion is underserved by the same degree, the priorities described in clauses (i) and (ii) of this subparagraph will be used to select the next most underserved subregion:(i) the subregion with no recommended At-Risk Applications from the same Application Round; and(ii) the subregion that was the most underserved during the Application Round during the year immediately preceding the current Application Round.(F) Contingent Qualified Nonprofit Set-aside Step (Step 6). If an insufficient number of Applications participating in the Nonprofit Set-Aside are selected after implementing the criteria described in subparagraphs (A) - (E) of this paragraph to meet the requirements of the 10% Nonprofit Set-Aside, action must be taken to modify the criteria described in subparagraphs (A) - (E) of this paragraph to ensure the Set-aside requirements are met. Therefore, the criteria described in subparagraphs (C) - (E) of this paragraph will be repeated after selection of the highest scoring Application(s) under the Nonprofit Set-aside statewide are selected to meet the minimum requirements of the Nonprofit Set- Aside. This step may cause some lower scoring Applications in a subregion to be selected instead of a higher scoring Application not participating in the Nonprofit Set-aside.(4) Waiting List. The Applications that do not receive an award by July 31 and remain active and eligible will be recommended for placement on the waiting list. The waiting list is not static. The allocation process will be used in determining the next Application to award. If credits are returned through any process, those credits will first be made available in the set-aside or subregion from which they were originally awarded. The first Application on the waiting list is in part contingent on the nature of the credits that became available for award. The Department shall hold all credit available after the late-July awards until September 30 in order to collect credit that may become available when tax credit Commitments are submitted. Credit confirmed to be available, as of September 30, may be awarded to Applications on the waiting list unless insufficient credits are available to fund the next Application on the waiting list. For credit returned after September 30, awards from the waiting list will be made when the remaining balance is sufficient to award the next Application as may be amended on the waiting list based on the date(s) of returned credit. Notwithstanding the foregoing, if decisions related to any returns or rescissions of tax credits are under appeal or are otherwise contested, the Department may delay awards until resolution of such issues. The Department will evaluate all waiting list awards for compliance with requested Set-asides. This may cause some lower scoring Applications to be selected instead of a higher scoring Application. Where sufficient credit becomes available to award an Application on the waiting list later in the calendar year, staff may allow flexibility in meeting the Carryover Allocation submission deadline and changes to the Application as necessary to ensure to the extent possible that available resources are allocated by December 31. (§2306.6710(a) - (f); §2306.111). (5) Credit Returns Resulting from Force Majeure Events. In the event that the Department receives a return of Competitive HTCs during the current program year from an Application that received a Competitive Housing Tax Credit award during any of the preceding three years, and the Development cannot be completed within six months of its initial deadline to place in service, such returned credit will, if the Board determines that all of the requirements of this paragraph are met to its satisfaction, be allocated separately from the current year's tax credit allocation, and not be subject to the requirements of paragraph (2) of this section. The Board determination must indicate the year of the Multifamily Rules to be applied to the Development. The Department's Governing Board may impose a deadline that is earlier than the Placed in Service Deadline and may impose conditions that were not placed on the original allocation. Requests to allocate returned credit separately where all of the requirements of this paragraph have not been met or requests for waivers of any part of this paragraph will not be considered. In addition, requests will only be presented to the Board within 180 days of the applicable Placed in Service deadline. For purposes of this paragraph, credits returned after September 30 of the preceding program year may be considered to have been returned on January 1 of the current year in accordance with the treatment described in §(b)(2)(C)(iii) of Treasury Regulation 1.42-14. The Board may approve the execution of a current program year Carryover Agreement regarding the returned credits with the Development Owner that returned such credits only if:(A) The credits were returned as a result of "Force Majeure" events that occurred before issuance of Forms 8609. Force Majeure events are the following sudden and unforeseen circumstances outside the control of the Development Owner: acts of God such as fire, tornado, flooding, significant and unusual rainfall or subfreezing temperatures, or loss of access to necessary water or utilities as a direct result of significant weather events; explosion; vandalism; orders or acts of military authority; unrelated party litigation; changes in law, rules, or regulations; national emergency or insurrection; riot; acts of terrorism; supplier failures; or materials or labor shortages. If a Force Majeure event is also a presidentially declared disaster, the Department may treat the matter under the applicable federal provisions. Force Majeure events must make construction activity impossible or materially impede its progress;(B) Acts or events caused by the negligent or willful act or omission of the Development Owner, Affiliate or a Related Party shall under no circumstance be considered to be caused by Force Majeure. In order for rainfall, material shortages, or labor shortages to constitute Force Majeure, the Development Owner must clearly explain and document how such events could not have been reasonably foreseen and mitigated through appropriate planning and risk management. Staff may use Construction Status reports for the subject or other Developments in conducting their review and forming a recommendation to the Board;(C) To be eligible for consideration, construction of the Development must have already commenced;(D) A Development Owner claiming Force Majeure must provide evidence of the type of event, as described in subparagraph (A) of this paragraph, when the event occurred, and that the loss was a direct result of the event;(E) The Development Owner must prove that reasonable steps were taken to minimize or mitigate any delay or damages, that the Development Owner substantially fulfilled all obligations not impeded by the event, including timely closing of all financing and start of construction, that the Development and Development Owner was properly insured and that the Department was timely notified of the likelihood or actual occurrence of an event described in subparagraph (A) of this paragraph;(F) The event prevents the Development Owner from meeting the placement in service requirements of the original allocation;(G) The requested current year Carryover Agreement allocates the same amount of credit as that which was returned; and(H) The Department's Real Estate Analysis Division determines that the Development continues to be financially feasible in accordance with the Department's underwriting rules after taking into account any insurance proceeds related to the event.(6) Credit Returns Due to Unforeseen Short-term Delays. In the event that the Department receives a return of Competitive HTCs during the current program year from an Application that received a Competitive Housing Tax Credit award during any of the preceding three years, and the Development is anticipated to be completed within six months of its original deadline to place in service, such returned credit will, if the staff determines that all of the requirements of this paragraph are met to its satisfaction, be allocated separately from the current year's tax credit allocation, and not be subject to the requirements of paragraph (2) of this section. The Multifamily Rules from the initial year of allocation shall be applicable to the Development, to the extent allowed by federal or state law. The new deadline to place in service will be no more than six months from the original deadline. Requests to allocate returned credit separately where all of the requirements of this paragraph have not been met or requests for waivers of any part of this paragraph will not be considered. For purposes of this paragraph, credits returned after September 30 of the preceding program year may be considered to have been returned on January 1 of the current year in accordance with the treatment described in §(b)(2)(C)(iii) of Treasury Regulation 1.42-14. Staff may issue and execute a current program year Carryover Agreement regarding the returned credits with the Development Owner that returned such credits only the following requirements are met. In the event that staff cannot reasonably conclude that all necessary conditions have been met, it may present the matter to the Board for determination:(A) The credits were returned for good cause as solely determined by staff or the Board;(B) A Development Owner claiming good cause must provide evidence of the circumstances;(C) The Development Owner must prove that reasonable steps were taken to minimize or mitigate any delay or damages, that the Development Owner substantially fulfilled all reasonable obligations, that the Development and Development Owner was properly insured and that the Department was timely notified of the likelihood of delay;(D) The good cause event prevents the Development Owner from meeting the placement in service requirements of the original allocation;(E) The requested current year Carryover Agreement allocates the same amount of credit as that which was returned;(F) If the good cause event necessitates an insurance claim, the Department's Real Estate Analysis Division determines that the Development continues to be financially feasible in accordance with the Department's underwriting rules after taking into account any insurance proceeds related to the event; and(G) The Development Owner has not previously returned the credit allocation and had it reallocated under any provision of this chapter.</content><note type="source"><p>Source Note: The provisions of this §11.6 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scA/s11.7"><num value="11.7">§11.7</num><heading>Tie Breaker Factors</heading><content>In the event there are Competitive HTC Applications that receive the same number of points in any given set-aside category, rural regional allocation or urban regional allocation, or rural or statewide collapse, the Department will utilize the factors in this section, in the order they are presented, to determine which Development will receive preference in consideration for an award. For the purposes of this section, all measurements will include ingress/egress requirements and any easements regardless of how they will be held. The tie breaker factors are not intended to specifically address a tie between equally underserved subregions in the rural or statewide collapse.(1) For Applications funded through the USDA Set-Aside:(A) Applications proposed to rehabilitate the Property with the earliest year of initial construction as a residential Development. (i) Only the year of initial construction will be taken into consideration. The specific date of construction or conversion will not affect this tie breaker. A tie will persist if two Applications have the same year. In the event that a Development was constructed over a number of years, the earliest year will be used.(ii) Year submitted must be evidenced by the initial USDA loan documentation. If such documentation does not exist or cannot be provided, the Application is ineligible for this tiebreaker. (B) Once 5% or more of the State Housing Credit Ceiling has been allocated to USDA developments, no further applications with USDA financing shall receive preference under this tie breaker but may receive preference under subsections (2) and (3) of this paragraph. (2) For all other competitive Applications:(A) Applications proposed to be located in closest proximity to the following features as of the Full Application Delivery Date. A feature will be disqualified if, as of the Full Application Delivery Date, a public announcement has been made regarding its anticipated closure:(i) A park or a parcel of land dedicated for public use by either a governmental entity or an entity authorized or created by a governmental entity that is used as parkland or for a recreational purpose. This feature must have been designated by the relevant authority and operating as a public park one year prior to the Full Application Delivery Date. Features that charge admission for the general public to access the entire property for the majority of the calendar year are not eligible for consideration. A school campus' facilities may not be used for this feature. Unimproved land that has been dedicated but that is not operating as a public park will not qualify; however, wilderness areas with an intentional recreational use (e.g., established hiking trails, bird-watching areas, community gardens, or natural retreats) may qualify so long as they meet all requirements. (ii) The closest public school campus of any grade level that is part of an independent school district. (iii) A full service grocery store of sufficient size and volume to provide for the needs of the surrounding neighborhood including the proposed Development; offering a wide variety of fresh, frozen, canned and prepared foods, including but not limited to a variety of fresh meats, poultry, and seafood; a wide selection of fresh produce including a selection of different fruits and vegetables; a selection of baked goods and a wide array of dairy products including cheeses, and a wide variety of household goods, paper goods and toiletry items.(iv) A Public Library with indoor space, physical books that can be checked out and that are of general and wide-ranging subject matter, computers and internet access, and that is: Open 35 hours or more per week in an Urban Area and 25 hours or more per week in a Rural Area. The library must not be age or subject-restricted and must be at least partially funded with government funding.(B) The linear measurement will be performed from closest parcel boundary of the Development Site to closest parcel boundary of each feature. The Department may prescribe a specific form to be used for the calculation of these distances using GPS coordinates provided by the Applicant.(C) In calculating this proximity, each feature's distance will be required for submittal, with the sum of the three closest features being used to produce the result. The Application with the lowest sum of proximity will receive preference.(D) In the event that one of the top three features is disqualified due to not conforming to the definitions provided or a substantial misrepresentation of distance from the development, the fourth will be used as an opportunity to replace the disqualified feature. If multiple features are disqualified, the Application will not receive preference. If the competing application(s) also has multiple disqualified features the tie will persist. (E) In the event that the sum proximities described under §11.7(2)(B) for two tied Applications differ by 100 or fewer feet, the tie will persist. (3) If the tie persists, preference will be given to the Application that proposes the lowest Housing Tax Credit request per Low-Income Unit. This calculation will be determined based on the initial Application, and will not be adjusted in the event that the Department's Real Estate Analysis Division recommends a lower Housing Tax Credit award than was initially requested.(4) If the tie persists, preference will be determined using this final tiebreaker. Applications proposed to be located the greatest linear distance from the nearest Housing Tax Credit assisted Development that serves the same Target Population and that was awarded 15 or fewer years ago. Years are measured in whole years, and are calculated by deducting the year of the award from the "Board Approval" column of the property inventory from the Site Demographics Characteristics report from the current year. The specific month and date of the award are disregarded for this analysis. Developments awarded Housing Tax Credits but do not yet have a Land Use Restriction Agreement in place will be considered Housing Tax Credit assisted Developments for purposes of this paragraph according to the property inventory included in the HTC Site Demographic Characteristics Report. The linear measurement will be performed from closest boundary to closest boundary of the Site presented at Pre-Application, if a pre-application is submitted, or the Site presented at full Application, whichever is closest.</content><note type="source"><p>Source Note: The provisions of this §11.7 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scA/s11.8"><num value="11.8">§11.8</num><heading>Pre-Application Requirements (Competitive HTC Only)</heading><content>(a) General Submission Requirements. The pre-application process allows Applicants interested in pursuing an Application to assess potential competition across the 13 state service regions, subregions, and set-asides. Based on an understanding of the potential competition they can make a more informed decision about whether they wish to proceed to prepare and submit an Application. A complete pre-application is a pre-application that meets all of the Department's criteria, as outlined in subsections (a) and (b) of this section.(1) The pre-application must be submitted using the URL provided by the Department, as outlined in the Multifamily Programs Procedures Manual, along with the required pre-application fee as described in §11.901 of this chapter (relating to Fee Schedule), not later than the pre-application Final Delivery Date as identified in §11.2(a) of this chapter (relating to Competitive HTC Deadlines). If the pre-application and corresponding fee is not submitted on or before this deadline the Applicant will be deemed to have not made a pre-application.(2) Only one pre-application may be submitted by an Applicant for each Development Site and for each Site Control document.(3) Department review at this stage is limited, and not all issues of eligibility and threshold are reviewed or addressed at pre-application. Acceptance by staff of a pre-application does not ensure that an Applicant satisfies all Application eligibility, threshold or documentation requirements. While the pre-application is more limited in scope than the Application, pre-applications are subject to the same limitations, restrictions, or causes for disqualification or termination as Applications, and pre-applications will thus be subject to the same consequences for violation, including but not limited to loss of points and termination of the pre-application.(4) The pre-application becomes part of the full Application if the full Application claims pre-application points.(5) Regardless of whether a Full Application is submitted, a pre-application may not be withdrawn after the Full Application Delivery Date described in §11.2(a) of this chapter.(b) Pre-Application Threshold Criteria. Pursuant to Tex. Gov't Code §2306.6704(c) pre-applications will be terminated unless they meet the threshold criteria described in subsection (a) of this section and paragraphs (1) and (2) of this subsection:(1) Submission of the Competitive HTC pre-application in the form prescribed by the Department which identifies or contains at a minimum:(A) Site Control meeting the requirements of §11.204(9) of this title (relating to Required Documentation for Application Submission). For purposes of meeting this specific requirement related to pre-application threshold criteria, proof of consideration and any documentation required for identity of interest transactions is not required at the time of pre-application submission but will be required at the time of full application submission;(B) Funding request;(C) Target Population;(D) Requested set-asides (At-Risk, USDA, Nonprofit, or Rural);(E) Total Number of Units proposed;(F) Census tract number or numbers in which the Development Site is located, and a map of the census tract(s) with an outline of the proposed Development Site;(G) Expected score for each of the scoring items identified in the pre-application materials;(H) Proposed name of ownership entity;(I) If points are to be claimed related to Underserved Area and/or Proximity to Jobs, documentation supporting those point elections;(J) The name and coordinates of the nearest park, grocery store, and library meeting the criteria established in 10 TAC §11.7(2) as well as the name and coordinates of the school to be used for the Tie Breaker;(K) For Applications funded through the USDA Set-Aside; year of initial construction as evidenced by the initial USDA loan documentation;(L) If a high-quality Pre-Kindergarten is to be provided under §11.6(3)(C)(v), the election must be made at pre-application and may not change at full Application; and(M) The name and address of the nearest Housing Tax Credit assisted Development that serves the same Target Population and was awarded 15 or fewer years ago following the calculation established in 10 TAC §11.7(3) according to the Department's property inventory tab of the Site Demographic Characteristics Report.(2) Evidence in the form of a certification provided in the pre-application, that all of the notifications required under this paragraph have been made. (§2306.6704).(A) The Applicant must list in the pre-application all Neighborhood Organizations on record with the county or state 30 days prior to the beginning of the Application Acceptance Period whose boundaries include the entire proposed Development, where a reasonable search for applicable entities has been conducted.(B) Notification Recipients. Developments located in an ETJ of a municipality are required to notify both municipal and county officials. The notifications may be sent by e-mail, fax or mail with registered return receipt or similar tracking mechanism in the format included in the Public Notification Template provided in the Uniform Multifamily Application Template or in an alternative format that meets the applicable requirements and achieves the intended purpose. The Applicant is required to retain proof of delivery in the event the Department requests proof of notification. Acceptable evidence of such delivery is demonstrated by signed receipt for mail or courier delivery and confirmation of delivery for fax and e-mail. Officials to be notified are those officials in office at the time the pre-application is submitted; however, a mailed notification that is addressed to the entity or officeholder rather than a specific person is acceptable so long as it is mailed to the correct address and otherwise meets all requirements. Between the time of pre-application (if made) and full Application, the boundaries of an official's jurisdictions may change. If there is a change in jurisdiction between pre-application and the Full Application Delivery Date that results in the Development being located in a new jurisdiction, additional notifications must be made at full Application to any entity that has not been previously notified by the Applicant. Meetings and discussions do not constitute notification. Only a timely and compliant written notification to the correct entity constitutes notification. No later than the date the pre-application is submitted, notification must be sent to all of the entities prescribed in clauses (i) - (viii) of this subparagraph:(i) Neighborhood Organizations on record with the state or county 30 days prior to the beginning of the Application Acceptance Period whose boundaries include the entire proposed Development Site;(ii) Superintendent of the school district in which the Development Site is located;(iii) Presiding officer of the board of trustees of the school district in which the Development Site is located;(iv) Mayor of the municipality (if the Development Site is within a municipality or its extraterritorial jurisdiction);(v) All elected members of the Governing Body of the municipality (if the Development Site is within a municipality or its extraterritorial jurisdiction);(vi) Presiding officer of the Governing Body of the county in which the Development Site is located;(vii) All elected members of the Governing Body of the county in which the Development Site is located; and(viii) State Senator and State Representative of the districts whose boundaries include the proposed Development Site.(C) Contents of Notification.(i) The notification must include, at a minimum, all of the information described in subclauses (I) - (IX) of this clause:(I) The Applicant's name, address, an individual contact name and phone number;(II) The Development name, address, city, and county;(III) A statement informing the entity or individual being notified that the Applicant is submitting a request for Housing Tax Credits with the Texas Department of Housing and Community Affairs;(IV) Whether the Development proposes New Construction, Reconstruction, Adaptive Reuse, or Rehabilitation;(V) The physical type of Development being proposed (e.g. single family homes, duplex, apartments, high-rise, etc.);(VI) The approximate total number of Units and approximate total number of Low-Income Units;(VII) The residential density of the Development, i.e., the number of Units per acre; (VIII) Information on how and when an interested party or Neighborhood Organization can provide input to the Department; and(IX) Information on any proposed property tax exemption.(ii) The notification may not contain any false or misleading statements. Without limiting the generality of the foregoing, the notification may not create the impression that the proposed Development will serve a population exclusively or as a preference unless such targeting or preference is documented in the Application and is in full compliance with all applicable state and federal laws, including state and federal fair housing laws.(iii) Notifications or any other communications may not contain any statement that violates Department rules, statute, code, or federal requirements.(c) Pre-Application Results. Only pre-applications which have satisfied all of the pre-application requirements, including those in §11.9(e)(3) of this chapter (relating to Criteria promoting the efficient use of limited resources and applicant accountability), will be eligible for pre-application points. The order and scores of those Developments released on the pre-application Submission Log do not represent a Commitment on the part of the Department or the Board to allocate tax credits to any Development and the Department bears no liability for decisions made by Applicants based on the results of the pre-application Submission Log. Inclusion of a pre-application on the pre-application Submission Log does not ensure that an Applicant will receive points for a pre-application.(d) Applicants that may be requesting a Multifamily Direct Loan from the Department may submit a Request for Preliminary Determination on or before February 13, 2026. The results of evaluation of the Request may be used as evidence of review of the Development and the Principals for purposes of scoring under §11.9(e)(1)(F) of this chapter. Submission of a Request for Preliminary Determination does not obligate the Applicant to request Multifamily Direct Loan funds with their full Application.</content><note type="source"><p>Source Note: The provisions of this §11.8 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scA/s11.9"><num value="11.9">§11.9</num><heading>Competitive HTC Selection Criteria</heading><content>(a) General Information. This section identifies the scoring criteria used in evaluating and ranking Applications. The criteria identified in subsections (b) - (e) of this section include those items required under Tex. Gov't Code, Chapter 2306, Code §42, and other criteria established in a manner consistent with Chapter 2306 and Code §42. (1) There is no rounding of numbers in this section for any of the calculations in order to achieve the desired requirement or limitation, unless rounding is explicitly stated as allowed for that particular calculation or criteria. The Application must include one or more maps indicating the location of the Development Site and the related distance to the applicable facility. Distances are to be measured from the nearest boundary of the Development Site to the nearest boundary of the property or easement containing the facility, unless otherwise noted. For the purposes of this section, all measurements will include ingress/egress requirements and any easements regardless of how they will be held. (2) Applications will only be reviewed for point items specifically elected in the Application. Except for scoring items that are awarded based on tiered categories, if an Application is determined to not qualify for the points elected, Department staff will not evaluate the Application to determine whether it might qualify for alternative points.(3) For scoring items that relate directly to the Application's finances, when costs or financing change after completion of underwriting or award (whichever occurs later), the points attributed to an Application will not be reassessed unless there is clear evidence that the information in the Application was intentionally misleading or incorrect.(b) Criteria promoting development of high quality housing.(1) Size and Quality of the Units. (§2306.6710(b)(1)(D); 2306.6725(b)(1); §42(m)(1)(C)(iii) and (ix)) An Application may qualify for up to fifteen (15) points under subparagraphs (A) and (B) of this paragraph.(A) Unit Sizes (6 points). The Development must meet the minimum requirements identified in this subparagraph to qualify for points. Points for this item will be automatically granted for Applications involving Rehabilitation (excluding Reconstruction), for Developments receiving funding from USDA, or for Supportive Housing Developments without meeting these square footage minimums only if requested in the Self Scoring Form. If the Development involves both Rehabilitation and Reconstruction or New Construction, the Reconstruction or New Construction Units must meet these requirements:(i) five-hundred (500) square feet for an Efficiency Unit;(ii) six-hundred (600) square feet for a one Bedroom Unit;(iii) eight-hundred fifty (850) square feet for a two Bedroom Unit;(iv) one-thousand fifty (1,050) square feet for a three Bedroom Unit; and(v) one-thousand two-hundred fifty (1,250) square feet for a four Bedroom Unit.(B) Unit, Development Construction, and Energy and Water Efficiency Features (9 points). Applicants that elect in an Application to provide specific amenity and quality features in every Unit at no extra charge to the tenant will be awarded points based on the point structure provided in §11.101(b)(6)(B) of this title (relating to Unit, Development Construction, and Energy and Water Efficiency Features) and as certified to in the Application. The amenities will be required to be identified in the LURA. Rehabilitation Developments and Supportive Housing Developments will start with a base score of five (5) points.(2) Sponsor Characteristics. (§42(m)(1)(C)(iv)) An Application may qualify to receive either one (1) or two (2) points if it meets the requirements of either subparagraphs (A), (B), (C), or (D) of this paragraph.(A) Qualified Nonprofit Organization. The ownership structure contains a Qualified Nonprofit Organization provided the Application is submitted in the Nonprofit Set-Aside. The Qualified Nonprofit Organization must have some combination of ownership interest in the General Partner of the Applicant, Cash Flow from operations, and Developer Fee which taken together equal at least 50%, and no less than 5% for any category. For HUD 202 Rehabilitation projects which prohibit for-profit ownership, ownership will not be required for a nonprofit, only for Cash Flow or Developer Fee; the total ownership percentage must still equal 50%, even if it is only attributable to one of the two categories.(i) The Qualified Nonprofit Organization must materially participate in the Development and operation of the Development throughout the Compliance Period and must have experience directly related to the housing industry, which may include experience with property management, construction, development, financing, or compliance. Material participation means that the Qualified Nonprofit Organization is regularly, continuously, and substantially involved in providing services integral to the Development Team; providing services as an independent contractor is not sufficient.(ii) A Principal of the Qualified Nonprofit Organization cannot be a Related Party to or Affiliate, including the spouse, of any other Principal of the Applicant, Developer, or Guarantor (excluding another Principal of said Qualified Nonprofit Organization). (2 points).(iii) The Qualified Nonprofit Organization must be involved with the Development Services or in the provision of on-site tenant services during the Development's Affordability Period. A Principal of the Qualified Nonprofit Organization cannot be a Related Party to or Affiliate, including the spouse of, any other Principal of the Applicant, Developer, or Guarantor (excluding another Principal of said Qualified Nonprofit Organization). (1 point).(B) Nonprofit Organization. The ownership structure contains a nonprofit organization that meets the requirements of IRC §42(h)(5)(C) on the Application Delivery Date, with at least 51% ownership in the General Partner of the Applicant. (2 points)(i) The nonprofit organization must maintain Control of the Development and materially participate in the operation of the Development throughout the Compliance Period. Nonprofit organizations that formally operate under a parent organization may assign Control of the Development to that parent organization, so long as it meets the requirements of IRC §42(h)(5)(C).(ii) The nonprofit organization, or individuals with Control of the nonprofit organization, must provide verifiable documentation of at least 10 years' experience in the continuous operation of a Development that provides services similar to those in the proposed Development.(iii) The Applicant will provide a minimum of 3 additional points under §11.101(7) of this chapter (related to Resident Supportive Services), in addition to points selected under subsection (c)(3) of this section.(C) Property Tax Status. The Application does not include any exemptions, abatements, rebates, or similar reductions related to the ad valorem taxes imposed by the taxing units in the Development Site's district. The Application must include a certification from the Development Owner that no such exemption or abatement will be sought or effected prior to the expiration of the federal Compliance period, as defined by Code, §42 (2 points).(D) Housing Authority or HFC. The ownership structure contains a Housing Finance Corporation organized under Local Government Code Chapter 394, a Housing Authority organized under Local Government Code Chapter 392 or an instrumentality thereof, and the entire Development Site is located within that entity's area of operation. (2 points)(c) Criteria to serve and support Texans most in need.(1) Income Levels of Residents. (§§2306.111(g)(3)(B) and (E); 2306.6710(b)(1)(C) and (e); and §42 (m)(1)(B)(ii)(I)) An Application may qualify for up to sixteen (16) points for rent and income restricting a Development for the entire Affordability Period at the levels identified in subparagraph (A), (B), (C), or (D) of this paragraph.(A) For any Development located within a non-Rural Area of the Dallas, Fort Worth, Houston, San Antonio, or Austin MSAs that propose to use either the 20-50 or 40-60 election under §42(g)(1)(A) or §42(g)(1)(B) of the Code, respectively:(i) At least 60% of all Low-Income Units at 50% or less of AMGI in a Supportive Housing Development proposed by a Qualified Nonprofit (16 points);(ii) At least 40 % of all Low-Income Units at 50% or less of AMGI (15 points);(iii) At least 30% of all Low-Income Units at 50% or less of AMGI (13 points); or(iv) At least 20% of all Low-Income Units at 50 %or less of AMGI (11 points).(B) For Developments proposed to be located in areas other than those listed in subparagraph (A) of this paragraph and that propose to use either the 20-50 or 40-60 election under §42(g)(1)(A) or §42(g)(1)(B) of the Code, respectively:(i) At least 60% of all Low-Income Units at 50% or less of AMGI in a Supportive Housing Development proposed by a Qualified Nonprofit (16 points);(ii) At least 20% of all Low-Income Units at 50% or less of AMGI (15 points);(iii) At least 15% of all Low-Income Units at 50% or less of AMGI (13 points); or(iv) At least 10% of all Low-Income Units at 50% or less of AMGI (11 points).(C) For any Development located within a non-Rural Area of the Dallas, Fort Worth, Houston, San Antonio, or Austin MSAs that propose to use the Average Income election under §42(g)(1)(C) of the Code:(i) The Average Income and Rent restriction for all Low-Income Units for the proposed Development will be 54% or lower (15 points);(ii) The Average Income and Rent restriction for all Low-Income Units for the proposed Development will be 55% or lower (13 points); or(iii) The average income and Rent restriction for all Low-Income Units for the proposed Development will be 56% or lower (11 points).(D) For Developments proposed to be located in the areas other than those listed in subparagraph (C) of this paragraph and that propose to use the Average Income election under §42(g)(1)(C) of the Code:(i) The Average Income and Rent restriction for all Low-Income Units for the proposed Development will be 55% or lower (15 points);(ii) The Average Income and Rent restriction for all Low-Income Units for the proposed Development will be 56% or lower (13 points); or(iii) The Average Income and Rent restriction for all Low-Income Units for the proposed Development will be 57% or lower (11 points).(2) Rent Levels of Tenants. (§2306.6710(b)(1)(E)) An Application may qualify to receive up to thirteen (13) points for rent and income restricting a Development for the entire Affordability Period. If selecting points from paragraph (1)(A) or paragraph (1)(B) of this subsection, these levels are in addition to those committed under paragraph (1) of this subsection. If selecting points from paragraph (1)(C) or paragraph (1)(D) of this subsection, these levels are included in the income average calculation under paragraph (1) of this subsection. These units must be maintained at this rent level throughout the Affordability Period regardless of the Average Income calculation. Scoring options include:(A) At least 20% of all Low-Income Units at 30% or less of AMGI for Supportive Housing Developments proposed by a Qualified Nonprofit (13 points);(B) At least 10% of all Low-Income Units at 30% or less of AMGI or, for a Development located in a Rural Area, 7.5% of all Low-Income Units at 30% or less of AMGI (11 points); or(C) At least 5% of all Low-Income Units at 30% or less of AMGI (7 points).(3) Resident Supportive Services. (§2306.6710(b)(3) and (1)(G), and §2306.6725(a)(1)) A Development may qualify to receive up to eleven (11) points.(A) The Applicant certifies that the Development will provide a combination of resident supportive services equaling at least ten points, which are listed in §11.101(b)(7) of this chapter (relating to Development Requirements and Restrictions) and meet the requirements of that section. (10 points).(B) The Applicant certifies that the Development will contact local nonprofit and governmental providers of services that would support the health and well-being of the Department's residents, and will make Development community space available to them on a regularly-scheduled basis to provide outreach services and education to the tenants. Applicants may contact service providers on the Department list, or contact other providers that serve the general area in which the Development is located. (1 point).(4) Section 811 Project Rental Assistance Program (811 PRA) and Residents with Special Housing Needs. (§2306.6710(b)(4); §42(m)(1)(C)(v)) An Application may qualify to receive up to four (4) points by serving Residents with Special Housing Needs. Only Applications that are unable to meet the requirements of subparagraph (A) of this paragraph may qualify for points under subparagraphs (B) or (C) of this paragraph relating to Residents with Special Housing Needs. The point available under subparagraph (D) of this paragraph is available to all Applications that qualify. The Units identified for this scoring item may not be the same Units identified previously for the Section 811 PRA Program. Due to the complexity of determining a Development's eligibility for 811 PRA, the Department will work with Applicants to resolve any errors made in good faith pertaining to this scoring item to allow the Application to maintain the requested points.(A) Section 811 Project Rental Assistance Program (811 PRA). An Application may qualify to receive three (3) points by serving tenants with special housing needs through participation in the 811 PRA Program. Points will be awarded as described in clauses (i) through (ii) of this subparagraph. (i) An Applicant or Affiliate that Owns or Controls an Existing Development that is eligible to participate in the Section 811 PRA Program, as referenced in 10 TAC §8.4, Qualification Requirements for Existing Developments. In order to qualify for points, the Existing Development must commit to the Section 811 PRA Program at minimum 5% of the total Units, unless the Integrated Housing Rule, 10 TAC §1.15, or the 811 Project Rental Assistance Rule (811 Rule), 10 TAC Chapter 8, limits the Existing Development to fewer Section 811 PRA Program Units. The same Section 811 PRA Program Units cannot be used to qualify for points in more than one HTC Application. The Applicant or Affiliate will comply with the requirements of 10 TAC Chapter 8. (3 points) (ii) In order to be eligible for points, Applicants must commit at least 5% of the total Units in the proposed Development for participation in the Section 811 PRA Program unless the Integrated Housing Rule, 10 TAC §1.15, or the 811 Rule, 10 TAC Chapter 8, limits the Development to fewer Section 811 PRA Program Units. The Applicant will comply with the requirements of 10 TAC Chapter 8. (3 points)(B) The Development must commit at least 5% of the total Units to Persons with Special Housing Needs. For purposes of this subparagraph, Persons with Special Housing Needs is defined as a household where one or more individuals have alcohol or drug addictions, is a Colonia resident, a Person with a Disability, has Violence Against Women Act Protections (domestic violence, dating violence, sexual assault, and stalking), HIV/AIDS, homeless, veterans, and farmworkers. Throughout the Compliance Period, unless otherwise permitted by the Department, the Development Owner agrees to specifically market Units to Persons with Special Housing Needs. In addition, the Department will require an initial minimum twelve-month period during which Units must either be occupied by Persons with Special Housing Needs or held vacant, unless the Units receive HOME funds from any source. After the initial twelve-month period, the Development Owner will no longer be required to hold Units vacant for Persons with Special Housing Needs, but will be required to continue to specifically market Units to Persons with Special Housing Needs. (2 points)(C) If the Development has committed Units under subparagraph (B) of this paragraph, the Development must commit at least an additional 2% of the total Units to Persons referred from the Continuum of Care or local homeless service providers to be made available for those experiencing homelessness. Rejection of an applicant's tenancy for those referred may not be for reasons of credit history or prior rental payment history. Throughout the Compliance Period, unless otherwise permitted by the Department, the Development Owner agrees to specifically market the 2% of Units through the Continuum of Care and other homelessness providers local to the Development Site. In addition, the Department will require an initial minimum six-month period in Urban subregions, and an initial three-month period in Rural subregions, during which Units must either be occupied by Persons referred from the Continuum of Care or local homeless service providers, or held vacant, unless the Units receive HOME funds from any source. After the initial six-month or three-month period, the Development Owner will no longer be required to hold Units vacant but will be required to continue to provide quarterly notifications to the Continuum of Care and other homeless service providers local to the Development Site on the availability of Units at the Development Site. A Development is not eligible under this paragraph unless points have also been selected under subparagraph (B) of this paragraph. (1 point)(D) If the Development is Supportive Housing and has a proposed occupancy preference or limitation for Veterans or a subgroup of only Veterans that is required or allowed by other federal or state financing by the Full Application Delivery Date. These points are only available to Developments that are proposed to be located on sites owned by the United States Department of Veterans Affairs (1 point).(5) Opportunity Index. (42(m)(1)(C)(i)) The Department may refer to locations qualifying for points under this scoring item as high opportunity areas in some materials. Based on the American Community Survey (ACS) data, a Development is eligible for a maximum of seven (7) opportunity index points from subparagraphs (A) and (B) of this paragraph.(A) A proposed Development is eligible for up to two (2) opportunity index points if it is located entirely within a census tract with a poverty rate less than 20% or the median poverty rate among tracts for the region, whichever is greater, and meets the requirements in clause (i),(ii), or (iii) of this subparagraph:(i) The Development Site is located entirely within a census tract that has:(I) a poverty rate less than 20% or the median poverty rate among Census tracts for the region whichever is greater; and(II) a median household income in the two highest quartiles among Census tracts within the uniform service region (2 points); or(ii) The Development Site is located entirely within a census tract that has:(I) a poverty rate less than 20% or the median poverty rate among Census tracts for the region, whichever is greater, and(II) a median household income in the third quartile among Census tracts within the region, and(III) is contiguous to a census tract that is in the first or second quartile among tracts for median household income in the region, and has a poverty rate less than 20% or the median poverty rate among tracts for the region, whichever is greater, and the Development Site is no more than 2 miles from the boundary between the census tracts (1 point); or(iii) The Development Site is located in a Rural Area and: (I) is located entirely located within a Census tract that has a poverty rate less than 20% or the median poverty rate among Census tracts for the region, whichever is greater, and(II) is located in a Place which experienced an increase in population since the 2010 Decennial Census according to the Site Demographics Characteristics Report; (1 point). (B) An Application that meets one of the foregoing criteria in subparagraph (A) of this paragraph may qualify for additional points for any one or more of the factors in clause (i) or (ii) of this subparagraph. Each amenity may be used only once for scoring purposes, unless allowed within the scoring item, regardless of the number of categories it fits. All members of the Applicant or Affiliates cannot have had an ownership position in the amenity or served on the board or staff of a nonprofit that owned or managed that amenity within the year preceding the Pre-Application Final Delivery Date. All amenities must be operational or have started Site Work at the Pre-Application Final Delivery Date. Any age restrictions associated with an amenity must positively correspond to the Target Population of the proposed Development.(i) For Developments located in an Urban Area (other than Applicants competing in the USDA Set- Aside), an Application may qualify to receive points through a combination of requirements in subclauses (I) - (XVI) of this clause.(I) The Development Site is located on a route, with sidewalks for pedestrians, that is 1/2 mile or less from the entrance to a public park with a playground or from a multiuse hike-bike trail. The entirety of the sidewalk route must consist of smooth hard surfaces, curb ramps, and marked pedestrian crossings when traversing a street. (1 point).(II) The Development Site is located on a route, with sidewalks for pedestrians, that is within a specified distance from the entrance of a public transportation stop or station with a route schedule that provides regular service to employment and basic services. The entirety of the sidewalk route must consist of smooth hard surfaces, curb ramps, and marked pedestrian crossings when traversing a street. Only one of the following may be selected:(-a-) The Development Site is 1/2 mile or less from the stop or station and the scheduled service is beyond 8 a.m. to 5 p.m., plus weekend service (both Saturday and Sunday) (1 point); or(-b-) The Development Site is 1/2 mile or less from the stop or station and the scheduled service arrives every 15 minutes, on average, between 6 a.m. and 8 p.m., every day of the week (2 points).(III) The Development Site is located within 2 miles of a full-service grocery store. A full service grocery store is a store of sufficient size and volume to provide for the needs of the surrounding neighborhood including the proposed Development; offering a wide variety of fresh, frozen, canned and prepared foods, including but not limited to a variety of fresh meats, poultry, and seafood; a wide selection of fresh produce including a selection of different fruits and vegetables; a selection of baked goods and a wide array of dairy products including cheeses, and a wide variety of household goods, paper goods and toiletry items. (2 point).(IV) The Development Site is located within 2 miles of a pharmacy. For the purposes of this menu item only, the pharmacy may be claimed if it is within the same building as a grocery store. (2 point).(V) The Development Site is located within 4 miles of a health-related facility, such as a full service hospital, community health center, minor emergency center, emergency room or urgent care facility. Physician offices and physician specialty offices are not considered in this category. (1 point).(VI) The Development Site is within 3 miles of a center that is licensed by the Department of Family and Protective Services (DFPS) specifically to provide a school-age program or to provide a child care program for infants, toddlers, or pre-kindergarten. The Application must include evidence from DFPS that the center meets the above requirements. (1 point)(VII) The Development Site is located in a census tract with a property crime rate of 26 per 1,000 persons or less as defined by neighborhoodscout.com, or local law enforcement data sources. If employing the latter source, the formula for determining the crime rate will include only data relevant to the census tract in which the Development Site is located. (1 point)(VIII) The Development Site is located within 2 miles of a public library that has indoor meeting space, physical books that can be checked out and that are of a general and wide-ranging subject matter, computers and internet access, and that is open 50 hours or more per week. The library must not be age or subject-restricted and must be at least partially funded with government funding. (1 point)(IX) The Development Site is located within 6 miles of an accredited university or community college, as confirmed by the Texas Higher Education Coordination Board (THECB). To be considered a university for these purposes, the provider of higher education must have the authority to confer bachelor's degrees. Two-year colleges are considered community colleges, and to be considered for these purposes must confer at least associate's degrees. The university or community college must have a physical campus, where classes are regularly held for students pursuing their degrees, within the required distance; online-only institutions do not qualify under this item. (1 point)(X) Development Site is located in a census tract where 27% or more of adults age 25 and older has an Associate's Degree or higher as tabulated by the American Community Survey 5-year Estimate. (1 point)(XI) Development Site is within 2 miles of an indoor recreation facility available to the public. Examples include, but are not limited to, a gym, health club, a bowling alley, a theater, or a municipal or county community center. A facility that is primarily a restaurant or bar with recreational facilities is not eligible. (1 point)(XII) Development Site is within 2 miles of an outdoor, dedicated, and permanent recreation facility available to the public. Examples include, but are not limited to, swimming pools or splash pads, tennis courts, golf courses, softball fields, or basketball courts. (1 point).(XIII) Development Site is within 2 miles of community, civic or service organizations that provide regular and recurring substantive services, beyond exclusively congregational or member-affiliated activities, available to the entire community (this could include religious organizations or organizations like the Kiwanis or Rotary Club as long as they make services available without regard to affiliation or membership). (1 point).(XIV) Development Site is in the current service area of Meals on Wheels or similar nonprofit service that provides regular visits and meals to individuals in their homes. (1 point).(XV) (§2306.6710(b)(4)) If at Application, the Development is located in a county with a population of 1.2 million or more, but less than 4 million, and is located not more than two miles from a veteran's hospital, veteran's affairs medical center, or veteran's affairs health care center, (which include all providers listed under the Veteran's Health Administration categories, excluding Benefits Administration offices, listed at this link https://www.va.gov/directory/guide/fac_list_by_state.cfm?State=TX&dnum=ALL), and has federal or state financing that requires or allows preference for leasing units in the Development to low income veterans, and agrees to provide that preference. (1 point).(ii) For Developments located in a Rural Area and any Application qualifying under the USDA set- aside, an Application may qualify to receive points through a combination of requirements in subclauses (I) - (XIV) of this clause.(I) The Development Site is located within 5 miles of a full-service grocery store. A full service grocery store is a store of sufficient size and volume to provide for the needs of the surrounding neighborhood including the proposed Development; offering a wide variety of fresh, frozen, canned and prepared foods, including but not limited to a variety of fresh meats, poultry, and seafood; a wide selection of fresh produce including a selection of different fruits and vegetables; a selection of baked goods and a wide array of dairy products including cheeses, and a wide variety of household goods, paper goods and toiletry items. (2 point).(II) The Development Site is located within 5 miles of a pharmacy. For the purposes of this menu item only, the pharmacy may be claimed if it is within the same building as a grocery store. (2 point).(III) The Development Site is located within 5 miles of health-related facility, such as a full service hospital, community health center, minor emergency center, or a doctor with a general practice that takes walk-in patients. Physician specialty offices are not considered in this category. (1 point).(IV) The Development Site is located within 5 miles of a center that is licensed by the Department of Family and Protective Services (DFPS) specifically to provide a school-age program or to provide a child care program for infants, toddlers, or pre-kindergarten. The Application must include evidence from DFPS that the center meets the above requirements. (1 point).(V) The Development Site is located in a census tract with a property crime rate 26 per 1,000 or less, as defined by neighborhoodscout.com, or local law enforcement data sources. If employing the latter source, the formula for determining the crime rate will include only data relevant to the census tract in which the Development Site is located. (1 point).(VI) The Development Site is located within 5 miles of a public library that has indoor meeting space, physical books that can be checked out and that are of a general and wide-ranging subject matter, computers and internet access, and that is open 40 hours or more per week. The library must not be age or subject-restricted and must be at least partially funded with government funding. (1 point).(VII) The Development Site is located within 5 miles of a public park with a playground. (1 point).(VIII) The Development Site is located within 15 miles of an accredited university or community college, as confirmed by the Texas Higher Education Coordination Board (THECB). To be considered a university for these purposes, the provider of higher education must have the authority to confer bachelor's degrees. Two-year colleges are considered community colleges, and to be considered for these purposes must confer at least associate's degrees. The university or community college must have a physical campus, where classes are regularly held for students pursuing their degrees, within the required distance; online-only institutions do not qualify under this item. (1 point).(IX) Development Site is located in a census tract where 27% or more of adults age 25 and older has an Associate's Degree or higher as tabulated by the American Community Survey 5-year Estimate. (1 point).(X) Development Site is within 4 miles of an indoor recreation facility available to the public. Examples include, but are not limited to, a gym, health club, a bowling alley, a theater, or a municipal or county community center. A facility that is primarily a restaurant or bar with recreational facilities is not eligible. (1 point).(XI) Development Site is within 4 miles of an outdoor, dedicated, and permanent recreation facility available to the public. Examples include, but are not limited to, swimming pools or splash pads, tennis courts, golf courses, softball fields, or basketball courts. (1 point).(XII) Development Site is within 4 miles of community, civic or service organizations that provide regular and recurring substantive services, beyond exclusively congregational or member-affiliated activities, available to the entire community (this could include religious organizations or organizations like the Kiwanis or Rotary Club as long as they make services available without regard to affiliation or membership). (1 point).(XIII) Development Site is in the current service area of Meals on Wheels or similar nonprofit service that provides regular visits and meals to individuals in their homes. (1 point).(6) Underserved Area. (§§2306.6725(a)(4) and (b)(2); 2306.127(3), 42(m)(1)(C)(i) and (ii)). Points are not cumulative and an Applicant is therefore limited to selecting one subparagraph. If an Application qualifies for points under paragraph (5) of this subsection, then the Application is not eligible for points under subparagraphs (A) and (B) of this paragraph. Years are measured in whole years, and are calculated by deducting the year of the award from the "Board Approval" column of the property inventory of the Site Demographic Characteristics Report from the current year. The specific month and date of the award are disregarded for this analysis. The Application must include evidence that the Development Site meets the requirements. An Application may qualify to receive up to five (5) points if the Development Site meets any one of the criteria described in subparagraphs (A) - (G) of this paragraph:(A) (§2306.127(3)). The Development Site is located wholly or partially within the boundaries of a colonia as such boundaries are determined by the Office of the Attorney General and within 150 miles of the Rio Grande River border (5 points);(B) (§2306.127(3)). The Development Site is located entirely within the boundaries of an Economically Distressed Area that has been awarded funds by the Texas Water Development Board in the previous five years ending at the beginning of the Application Acceptance Period (1 point);(C) (§2306.6725(b)(2)). The Development Site is located entirely within a census tract that does not have another Development that was awarded 20 or fewer years ago that serves the same Target Population as the proposed Development. Applications proposing Rehabilitation shall not consider the Development's prior allocation(s) as another development for the purposes of this scoring item (5 points);(D) For areas not scoring points for subparagraph (C), the Development Site is located entirely within a census tract that does not have another Development that was awarded 15 or fewer years ago according to the Department's property inventory tab of the Site Demographic Characteristics Report (4 points);(E) For areas not scoring points for subparagraphs (C) or (D) of this paragraph, the Development Site is located entirely within a census tract that does not have another Development that was awarded 10 or fewer years ago according to the Department's property inventory in the Site Demographic Characteristics Report (3 points);(F) The Development Site is located within a census tract and the census tract itself and all of its contiguous census tracts do not have another Development that was awarded 10 or fewer years ago that serves the same Target Population as the proposed Development. Applications proposing Rehabilitation shall not consider the Development's prior allocation(s) as another development for the purposes of this scoring item. This item will apply to Development Sites located entirely in a Place, or its ETJ, with a population of 50,000 or more for Urban subregions and 10,000 or more for Rural subregions, and will not apply in the At-Risk or USDA Set-Asides; (5 points)(i) The Development Site may intersect the boundaries of multiple Places so long as each has a population of at least 50,000 for Urban subregions, and 10,000 for Rural subregions.(ii) Contiguous census tracts include those that touch at a point.(G) An At-risk or USDA Development placed in service 25 or more years ago, that is still occupied, and that has not yet received federal funding, or LIHTC equity, for the purposes of Rehabilitation for the Development. If the Application involves multiple sites, the age of all sites will be averaged for the purposes of this scoring item. (3 points).(H) The Development Site is located entirely within a Census tract with a median household income in the highest quartile among Census tracts within the uniform service region according to the Site Demographics Characteristics Report (5 points).(7) Proximity to Job Areas. (§42(m)(1)(C)(i)) An Application may qualify to receive up to four (4) points if the Development Site is located in one of the areas described in subparagraphs (A), (B), or (C) of this paragraph, and the Application contains evidence substantiating qualification for the points. The data used will be based solely on that available through US Census' OnTheMap tool. Jobs counted are limited to those based on the work area, all workers, and all primary jobs. This determination will be based on the latest data set posted to the US Census website on or before August 1, 2025. The Development will use OnTheMap's function to import GPS coordinates that clearly fall within the Development Site, and the OnTheMap chart/map report submitted in the Application must include the report date. This scoring item will not apply to Applications under the At-Risk or USDA Set-Aside.(A) Proximity to Jobs. For Development Sites in Urban subregions a Development may qualify for points under this subparagraph if it meets one of the criteria in clauses (i) - (iv) of this subparagraph. (i) The Development is located within 5 miles of 10,000 jobs. (4 points)(ii) The Development is located within 5 miles of 8,000 jobs. (3 points)(iii) The Development is located within 5 miles of 6,500 jobs. (2 points)(iv) The Development is located within 5 miles of 4,500 jobs. (1 points)(B) Proximity to Jobs. For Development Sites in Rural subregions a Development may qualify for points under this subparagraph if it meets one of the criteria in clauses (i) - (iv) of this subparagraph. (i) The Development is located within 5 miles of 6,000 jobs. (4 points)(ii) The Development is located within 5 miles of 4,500 jobs. (3 points)(iii) The Development is located within 5 miles of 3,000 jobs. (2 points)(iv) The Development is located within 5 miles of 1,500 jobs. (1 points)(C) Access to Jobs. A Development site which qualifies for at least 2 points under subparagraph (A) or (B) may qualify for up to 2 additional points under this subparagraph if the Development Site is located on a route, with sidewalks for pedestrians, that is within one half-mile from the entrance of a public transportation stop or station with a route schedule that provides regularly scheduled service to employment and basic services. The entirety of the sidewalk route must consist of smooth hard surfaces, curb ramps, and marked pedestrian crossings when traversing a street. (2 points)(d) Criteria promoting community support and engagement.(1) Local Government Support. (§2306.6710(b)(1)(B)) An Application may qualify for up to seventeen (17) points for a resolution or resolutions voted on and adopted by the bodies reflected in subparagraphs (A) - (C) of this paragraph, as applicable. The resolution(s) must be dated prior to Final Input from Elected Officials Delivery Date and must be submitted to the Department no later than the Final Input from Elected Officials Delivery Date as identified in §11.2(a) of this chapter, relating to Competitive HTC Deadlines. Such resolution(s) must specifically identify the Development whether by legal description, address, Development name, Application number or other verifiable method. Resolutions received by the Department setting forth that the municipality and/or county objects to or opposes the Application or Development will result in zero points awarded to the Application for that Governing Body. If a Development site is located partially within a municipality and partially within a county or extraterritorial jurisdiction, positive points will only be awarded if a resolution is obtained from both entities. Such resolutions will be added to the Application posted on the Department's website. Once a resolution is submitted to the Department it may not be changed or withdrawn. For an Application with a proposed Development Site that, at the time of the initial filing of the Application, is:(A) Within a municipality, the Application will receive points from either:(i) Seventeen (17) points for a resolution from the Governing Body of that municipality expressly setting forth that the municipality supports the Application or Development; or(ii) Fourteen (14) points for a resolution from the Governing Body of that municipality expressly setting forth that the municipality has no objection to the Application or Development.(B) Within the extraterritorial jurisdiction of a municipality, the Application may receive points under clause (i) or (ii) of this subparagraph and under clause (iii) or (iv) of this subparagraph.(i) Eight and one-half (8.5) points for a resolution from the Governing Body of that municipality expressly setting forth that the municipality supports the Application or Development.(ii) Seven (7) points for a resolution from the Governing Body of that municipality expressly setting forth that the municipality has no objection to the Application or Development.(iii) Eight and one-half (8.5) points for a resolution from the Governing Body of that county expressly setting forth that the county supports the Application or Development.(iv) Seven (7) points for a resolution from the Governing Body of that county expressly setting forth that the county has no objection to the Application or Development.(C) Within a county and not within a municipality or the extraterritorial jurisdiction of a municipality, the Application will receive points from either:(i) Seventeen (17) points for a resolution from the Governing Body of that county expressly setting forth that the county supports the Application or Development; or(ii) Fourteen (14) points for a resolution from the Governing Body of that county expressly setting forth that the county has no objection to the Application or Development.(2) Commitment of Development Funding by Local Political Subdivision. (§2306.6725(a)(5)) The source of the funding cannot be the Applicant, Developer, or an Affiliate of the Applicant. The commitment of Development funding must be reflected in the Application as a financial benefit to the Development, i.e. reported as a source of funds on the Sources and Uses Form or reflected in a lower cost in the Development Cost Schedule, such as notation of a reduction in building permits and related costs. Documentation must include a letter from an official of the municipality, county, or other instrumentality with jurisdiction over the proposed Development stating they will provide a loan, grant, reduced fees or contribution of other value that equals $500 or more for Applications located in Urban subregions or $250 or more for Applications located in Rural subregions for the benefit of the Development. The letter must describe the value of the contribution, the form of the contribution, e.g. reduced fees or gap funding, and any caveats to delivering the contribution. Once a letter is submitted to the Department it may not be changed or withdrawn. (1 point)(3) Declared Disaster Area. (§2306.6710(b)(1)(H); §42(m)(1)(C)(i)) An Application may receive ten (10) points if at the time of Application submission or at any time within the two-year period preceding the date of submission, the Development Site is located in an area declared to be a disaster area under the Tex. Gov't Code §418.014.(4) Quantifiable Community Participation. (§2306.6710(b)(1)(I); §2306.6725(a)(2)) An Application may qualify for up to nine (9) points for written statements from a Neighborhood Organization. In order for the statement to qualify for review, the Neighborhood Organization must have been in current, valid existence with boundaries that contain the entire Development Site. In addition, the Neighborhood Organization must be on record 30 days prior to the beginning of the Application Acceptance period with the Secretary of State or county in which the Development Site is located as of the beginning of the Application Acceptance Period. Once a letter is submitted to the Department it may not be changed or withdrawn. The written statement must meet all of the requirements in subparagraph (A) of this paragraph. Letters received by the Department setting forth that the eligible Neighborhood Organization objects to or opposes the Application or Development will be added to the Application posted on the Department's website. Written statements from the Neighborhood Organizations included in an Application and not received by the Department from the Neighborhood Organization will not be scored but will be counted as public comment.(A) Statement Requirements. If an organization cannot make the following affirmative certifications or statements then the organization will not be considered a Neighborhood Organization for purposes of this paragraph:(i) the Neighborhood Organization's name, a written description and map of the organization's boundaries, signatures and contact information (phone, email and mailing address) of at least two individual members with authority to sign on behalf of the organization; (ii) certification that the boundaries of the Neighborhood Organization contain the entire Development Site and that the Neighborhood Organization meets the definition pursuant to Tex. Gov't Code §2306.004(23-a) and includes at least two separate residential households;(iii) certification that no person required to be listed in accordance with Tex. Gov't Code §2306.6707 with respect to the Development to which the Application requiring their listing relates participated in any way in the deliberations of the Neighborhood Organization, including any votes taken;(iv) certification that at least 80% of the current membership of the Neighborhood Organization consists of homeowners and/or tenants living within the boundaries of the Neighborhood Organization; and(v) an explicit expression of support, opposition, or neutrality. Any expression of opposition must be accompanied with at least one reason forming the basis of that opposition. A Neighborhood Organization should be prepared to provide additional information with regard to opposition.(B) Technical Assistance. For purposes of this paragraph, if and only if there is no Neighborhood Organization already in existence or on record, the Applicant, Development Owner, or Developer is allowed to provide technical assistance in the creation of or placing on record of a Neighborhood Organization. Technical assistance is limited to:(i) the use of a facsimile, copy machine/copying, email and accommodations at public meetings;(ii) assistance in completing the QCP Neighborhood Information Packet, providing boundary maps and assisting in the Administrative Deficiency process;(iii) presentation of information and response to questions at duly held meetings where such matter is considered; and(iv) notification regarding deadlines for submission of responses to Administrative Deficiencies.(C) Point Values for Quantifiable Community Participation. An Application may receive points based on the values in only one of the clauses (i) - (vi) of this subparagraph. Points will not be cumulative. Where more than one written statement is received for an Application, the average of all statements received in accordance with this subparagraph will be assessed and awarded.(i) Nine (9) points for explicit support from a Neighborhood Organization that, during at least one of the three prior Application Rounds, provided a written statement that qualified as Quantifiable Community Participation opposing any Competitive Housing Tax Credit Application and whose boundaries remain unchanged.(ii) Eight (8) points for explicitly stated support from a Neighborhood Organization.(iii) Six (6) points for explicit neutrality from a Neighborhood Organization that, during at least one of the three prior Application Rounds provided a written statement, that qualified as Quantifiable Community Participation opposing any Competitive Housing Tax Credit Application and whose boundaries remain unchanged.(iv) Four (4) points for statements of neutrality from a Neighborhood Organization or statements not explicitly stating support or opposition, or an existing Neighborhood Organization provides no statement of either support, opposition or neutrality, which will be viewed as the equivalent of neutrality or lack of objection.(v) Four (4) points for areas where no Neighborhood Organization is in existence, equating to neutrality or lack of objection, or where the Neighborhood Organization did not meet the explicit requirements of this section.(vi) Zero (0) points for statements of opposition meeting the requirements of this subsection.(D) Challenges to opposition. Any written statement from a Neighborhood Organization expressing opposition to an Application may be challenged if it is contrary to findings or determinations, including zoning determinations, of a municipality, county, school district, or other local Governmental Entity having jurisdiction or oversight over the finding or determination. If any such statement is challenged, the challenger must declare the basis for the challenge and submit such challenge by the Challenges to Neighborhood Organization Opposition Delivery Date May 1, 2026. The Neighborhood Organization expressing opposition will be given seven calendar days to provide any information related to the issue of whether their assertions are contrary to the findings or determinations of a local Governmental Entity. All such materials and the analysis of the Department's staff will be provided to a fact finder, chosen by the Department, for review and a determination of the issue presented by this subsection. The fact finder will not make determinations as to the accuracy of the statements presented, but only with regard to whether the statements are contrary to findings or determinations of a local Governmental Entity. The fact finder's determination will be final and may not be waived or appealed. Should the Neighborhood Organization's statements be found to be contrary to findings or determinations of a local Government Entity, or should the Neighborhood Organization not respond in seven calendar days, then the Application shall be eligible for four (4) points under subparagraph (C)(v) of this subsection. (5) Community Support from State Representative. (§2306.6710(b)(1)(J); §2306.6725(a)(2); §2306.6710(f) and (g)) Applications may receive up to eight (8) points for express support, zero points for neutral statements, or have deducted up to eight (8) points for express opposition.(A) Letter from a State Representative. To qualify under this subparagraph, letters must be on the State Representative's letterhead or submitted in such a manner as to verify the sender, be signed by the State Representative, identify the specific Development and express whether the letter conveys support, neutrality, or opposition. This documentation will be accepted with the Application or through delivery to the Department from the Applicant or the State Representative and must be submitted no later than the Final Input from Elected Officials Delivery Date as identified in §11.2(a) of this chapter (relating to Competitive HTC Deadlines). Letters received by the Department from State Representatives will be added to the Application posted on the Department's website. Once a letter is submitted to the Department it may not be changed or withdrawn. Therefore, it is encouraged that letters not be submitted well in advance of the specified deadline in order to facilitate consideration of all constituent comment and other relevant input on the proposed Development. State Representatives to be considered are those in office at the time the letter is submitted and whose district boundaries include the Development Site. If the office is vacant, the Application will be considered to have received a neutral letter. Neutral letters or letters that do not specifically refer to the Development will receive zero (0) points. A letter from a state representative expressing the level of community support may be expressly based on the representative's understanding or assessments of indications of support by others, such as local government officials, constituents, or other applicable representatives of the community. In providing this letter, pursuant to Tex. Gov't Code §2306.6710(b)(1)(J), a representative may either express their position of support, opposition, or neutrality regarding the Application, which shall be presumed to reflect their assessment of the views of their constituents, or they may provide a statement of the support, opposition, or neutrality of their constituents regarding the Application without expressing their personal views on the matter.(B) No Letter from a State Representative. To qualify under this subparagraph, no written statement can be received for an Application from the State Representative who represents the geographic area in which the proposed Development is located, unless the sole content of the written statement is to convey to the Department that no written statement will be provided by the State Representative for a particular Development. Points available under this subparagraph will be based on how an Application scores under paragraph (1) of this subsection (relating to Local Government Support). If a Development site is located partially within a municipality and partially within a county or extraterritorial jurisdiction, positive points will only be awarded if a resolution is obtained from both entities. For an Application with a proposed Development Site that, at the time of the initial filing of the Application, is:(i) Within a municipality, the Application will receive:(I) Eight (8) points for a resolution from the Governing Body of that municipality expressly setting forth that the municipality supports the Application or Development; or(II) Zero (0) points for no resolution or a resolution from the Governing Body of that municipality expressly setting forth that the municipality has no objection to the Application or Development; or(III) Negative eight (-8) points for a resolution from the Governing Body of that municipality expressly setting forth that the municipality opposes the Application or Development.(ii) Within the extraterritorial jurisdiction of a municipality, the Application will receive points under subclause (I) or (II) or (III) of this subparagraph, and under subclause (IV) or (V) or (VI) of this subparagraph.(I) Four (4) points for a resolution from the Governing Body of that municipality expressly setting forth that the municipality supports the Application or Development.(II) Zero (0) points for no resolution or a resolution from the Governing Body of that municipality expressly setting forth that the municipality has no objection to the Application or Development. (III) Negative four (-4) points for a resolution from the Governing Body of that municipality expressly setting forth that the municipality opposes the Application or Development.(IV) Four (4) points for a resolution from the Governing Body of that county expressly setting forth that the county supports the Application or Development.(V) Zero (0) points for no resolution or a resolution from the Governing Body of that county expressly setting forth that the county has no objection to the Application or Development.(VI) Negative four (-4) points for a resolution from the Governing Body of that county expressly setting forth that the county opposes the Application or Development.(iii) Within a county and not within a municipality or the extraterritorial jurisdiction of a municipality:(I) Eight (8) points for a resolution from the Governing Body of that county expressly setting forth that the county supports the Application or Development; or(II) Zero (0) points for no resolution or a resolution from the Governing Body of that county expressly setting forth that the county has no objection to the Application or Development; or(III) Negative eight (-8) points for a resolution from the Governing Body of that county expressly setting forth that the county opposes the Application or Development.(6) Input from Community Organizations. (§2306.6725(a)(2)) Where, at the time of Application, the Development Site does not fall within the boundaries of any qualifying Neighborhood Organization or there is a qualifying Neighborhood Organization that has given no statement or a statement of neutrality (as described in subparagraph B(4)(C)(iv) or (v) of this subsection), then, in order to ascertain if there is community support, an Application may receive up to four (4) points for letters that qualify for points under subparagraphs (A), (B), or (C) of this paragraph. No more than four (4) points will be awarded under this point item under any circumstances. All letters of support must be submitted within the Application. Once a letter is submitted to the Department it may not be changed or withdrawn. Should an Applicant elect this option and the Application receives letters in opposition, then one (1) point will be subtracted from the score under this paragraph for each letter in opposition, provided that the letter is from an organization that would otherwise qualify under this paragraph. However, at no time will the Application receive a score lower than zero (0) for this item. Letters received by the Department setting forth that the community organization objects to or opposes the Application or Development will be added to the Application posted on the Department's website.(A) An Application may receive two (2) points for each letter of support submitted from a community or civic organization that serves the community in which the Development Site is located. Letters of support must identify the specific Development and must state support of the specific Development at the proposed location. To qualify, the organization must be qualified as tax exempt and have as a primary (not ancillary or secondary) purpose the overall betterment, development, or improvement of the community as a whole or of a major aspect of the community such as improvement of schools, fire protection, law enforcement, city-wide transit, flood mitigation, or the like. The Applicant must provide evidence that the community or civic organization remains in good standing by providing evidence from a federal or state government database confirming that the exempt status continues. An Organization must also provide evidence of its participation in the community in which the Development Site is located including, but not limited to, a listing of services or members, brochures, annual reports, etc. Letters of support from organizations that cannot provide reasonable evidence that they are active in the area that includes the location of the Development Site will not be awarded points. For purposes of this subparagraph, community and civic organizations do not include neighborhood organizations, governmental entities (excluding Special Management Districts as described in subparagraph C), or taxing entities.(B) An Application may receive two (2) points for a letter of support from a property owners association created for a master planned community whose boundaries include the Development Site and that does not meet the requirements of a Neighborhood Organization for the purpose of awarding points under paragraph (4) of this subsection. (C) An Application may receive two (2) points for a letter of support from a Special Management District formed under Tex. Local Gov't Code chapter 375 whose boundaries, as of the Full Application Delivery Date as identified in §11.2(a) of this chapter, (relating to Competitive HTC Deadlines, Program Calendar for Competitive Housing Tax Credits), include the Development Site.(D) Input that evidences unlawful discrimination against classes of persons protected by Fair Housing law or the scoring of which the Department determines to be contrary to the Department's efforts to affirmatively further fair housing will not be considered. If the Department receives input that could reasonably be suspected to implicate issues of non-compliance under the Fair Housing Act, staff will refer the matter to the Texas Workforce Commission for investigation, but such referral will not, standing alone, cause staff or the Department to terminate the Application. Staff will report all such referrals to the Board and summarize the status of any such referrals in any recommendations.(7) Concerted Revitalization Plan or Opportunity Zone. (§42(m)(1)(B)(ii)(III) and (C)(iii)). An Application may qualify for up to seven (7) points under this paragraph only if no points are elected under subsection (c)(5) of this section, related to Opportunity Index.(A) Concerted Revitalization Plans for Developments located in an Urban Area:(i) An Application may qualify to receive points if the Development Site is geographically located within an area for which a concerted revitalization plan (plan or CRP) has been developed and published by the municipality.(ii) A plan may consist of one or two complementary local planning documents that together have been approved by the municipality as a plan to revitalize the specific area. The plan and supporting documentation must be submitted using the CRP Application Packet. No more than two local plans may be submitted for each proposed Development. The concerted revitalization plan may be a Tax Increment Reinvestment Zone (TIRZ) or Tax Increment Finance (TIF) or similar plan. A city- or county-wide comprehensive plan, including a consolidated plan or one-year action plan required to receive HUD funds does not equate to a concerted revitalization plan. However, a comprehensive plan may include plans for specific areas targeted for revitalization that would qualify so long as that plan meets all requirements of this section.(iii) The proposed Development must be entirely located within the targeted revitalization area.(iv) The Application must include a copy of the plan or a link to the online plan and a description of where specific information required below can be found in the plan. The plan must meet the criteria described in subclauses (I) and (II) of this clause:(I) The concerted revitalization plan, or each of the local planning documents that compose the plan, must have been published by the municipality or county in which the Development Site is located.(II) The plan must be current at the time of Application. (v) If the Application includes an acceptable Concerted Revitalization Plan, up to seven (7) points will be awarded as follows:(I) the proposed Development Site is located within a Qualified Census Tract and has submitted a letter from the appropriate local official for the municipality (or county if the Development Site is completely outside of a municipality) that explicitly identifies the proposed Development as contributing to the concerted revitalization efforts of the municipality or county (as applicable) (7 points); or(II) the proposed Development Site is not located within a Qualified Census Tract and has submitted a letter from the appropriate local official for the municipality (or county if the Development Site is completely outside of a municipality) that explicitly identifies the proposed Development as contributing to the concerted revitalization efforts of the municipality or county (as applicable) (7 points); or(III) the proposed Development Site does not have a letter described in items (I) and (II) of this subclause (5 points).(B) For Developments located in a Rural Area, the Rehabilitation or demolition and Reconstruction of a Development that has been leased and occupied at 85% or greater for the six months preceding Application by low income households and which was initially constructed 25 or more years prior to Application submission as either public housing or as affordable housing with support from USDA, HUD, the HOME program, or the CDBG program. The occupancy percentage will not include Units that cannot be occupied due to needed repairs, as confirmed by the SCR or CNA. Demolition and relocation of units must be determined locally to be necessary to comply with the Affirmatively Furthering Fair Housing Rule, or if necessary to create an acceptable distance from Undesirable Site Features or Neighborhood Risk Factors. (7 points)(C) Opportunity Zones For Developments located in either an Urban or Rural Area. The Development Site is located entirely within a Federal Opportunity Zone as designed by the Governor no later than the Full Application Delivery Date (7 points).(e) Criteria promoting the efficient use of limited resources and Applicant accountability.(1) Financial Feasibility. (§2306.6710(b)(1)(A)) All eligible Applications are awarded twenty-six (26) points, conditioned upon the successful completion of underwriting in accordance with this chapter.(2) Cost of Development per Square Foot. (§2306.6710(b)(1)(F) and (§2306.67022(b)-(c)); §42(m)(1)(C)(iii)) For the purposes of this scoring item, Eligible Building Costs will be defined as Building Costs voluntarily included in Eligible Basis for the purposes of determining a Housing Credit Allocation. Eligible Building Costs will exclude structured parking or commercial space that is not included in Eligible Basis, and voluntary Eligible Hard Costs will include general contractor overhead, profit, and general requirements. The square footage used will be the Net Rentable Area (NRA). The calculations will be based on the cost listed in the Development Cost Schedule and NRA shown in the Rent Schedule. If the proposed Development is a Supportive Housing Development, the NRA will include Common Area up to 75 square feet per Unit, of which at least 50 square feet will be conditioned. The Department will annually compare the increase in the Consumer Price Indexes for All Urban Consumers between the two most recently available full years and adjust the square foot cost targets in this item by that same percentage.(A) Applications proposing New Construction or Reconstruction or Adaptive Reuse will be eligible for twelve (12) points if one of the following conditions is met:(i) the voluntary Eligible Building Cost per square foot is less than or equal to $155.12 per square foot; or(ii) the voluntary Eligible Hard Cost per square foot is less than or equal to $207.21 per square foot.(B) Applications proposing New Construction or Reconstruction will be eligible for eleven (11) points if one of the following conditions is met:(i) the voluntary Eligible Building Cost per square foot is less than or equal to $165.54 per square foot; or(ii) the voluntary Eligible Hard Cost per square foot is less than or equal to $217.63 per square foot.(C) Applications proposing Rehabilitation (excluding Reconstruction) will be eligible for points if one of the following conditions is met:(i) Twelve (12) points for Applications which include voluntary Eligible Hard Costs plus acquisition costs included in Eligible Basis that are less than or equal to $207.21 per square foot; or(ii) Twelve (12) points for Applications which include voluntary Eligible Hard Costs plus acquisition costs included in Eligible Basis that are less than or equal to $268.57 per square foot, located in an Urban Area, and that qualify for 5 or more points under subsection (c)(5)(A) and (B) of this section, related to Opportunity Index; or(iii) Eleven (11) points for Applications which include voluntary Eligible Hard Costs plus acquisition costs included in Eligible Basis that are less than or equal to $268.57 per square foot.(3) Pre-application Participation. (§2306.6704) An Application may qualify to receive up to six (6) points provided a pre-application was submitted by the Pre-Application Final Delivery Date. Applications that meet all of the requirements described in subparagraphs (A) - (K) of this paragraph will qualify for six (6) points:(A) The total number of Units does not increase by more than 10% from pre-application to Application;(B) The designation of the proposed Development as Rural or Urban remains the same;(C) The proposed Development serves the same Target Population;(D) The pre-application and Application are participating in the same set-asides (At-Risk, USDA, Non-Profit, or Rural);(E) The Application final score (inclusive of only scoring items reflected on the self-score form) does not vary by more than four (4) points from what was reflected in the pre-application self-score;(F) If points are claimed related to Underserved Area and/or Proximity to Jobs, the point elections may not change from what was reflected in the pre-application self-score and the supporting documentation for these points must be substantially similar to what was submitted with the Pre-Application;(G) The Development Site at Application is at least in part the Development Site at pre-application, and the census tract number or numbers listed at pre-application is the same at Application. The site at full Application may not require notification to any person or entity not required to have been notified at pre-application;(H) The distance used to determine the Tie Breaker established in 10 TAC §11.7(2) remains the same or does not decrease between pre-application and full Application. If closer features to the Development Site are identified that could potentially result in a lower distance used for the Tie Breaker, Applicants may elect to continue using the higher distance submitted with the Pre-Application in order to not be disqualified from pre-application points;(I) For Applications funded through the USDA Set-Aside; year of initial construction as a residential Development remains the same or is not earlier;(J) If a high quality Pre-Kindergarten is to be provided under §11.6(3)(C)(v), the election must be made at pre-application and may not change at full Application;(K) The pre-application met all applicable requirements.(4) Leveraging of Private, State, and Federal Resources. (§2306.6725(a)(3))(A) An Application may qualify to receive up to three (3) points if at least 5% of the total Units are restricted to serve households at or below 30% of AMGI (restrictions elected under other point items may count) and the Housing Tax Credit funding request for the proposed Development meet one of the levels described in clauses (i) - (iv) of this subparagraph:(i) the Development leverages CDBG Disaster Recovery, HOPE VI, RAD, or Choice Neighborhoods funding and the Housing Tax Credit Funding Request is less than 10% of the Total Housing Development Cost (3 points). The Application must include a commitment of such funding; or(ii) if the Housing Tax Credit funding request is less than 10% of the Total Housing Development Cost (3 points); or(iii) if the Housing Tax Credit funding request is less than 11% of the Total Housing Development Cost (2 points); or(iv) if the Housing Tax Credit funding request is less than 12% of the Total Housing Development Cost (1 point).(B) The calculation of the percentages stated in subparagraph (A) of this paragraph will be based strictly on the figures listed in the Funding Request and Development Cost Schedule. Should staff issue an Administrative Deficiency that requires a change in either form, then the calculation will be performed again and the score adjusted, as necessary. However, points may not increase based on changes to the Application. In order to be eligible for points, no more than 50% of the Developer Fee can be deferred. (5) Extended Affordability. (§§2306.6725(a)(5) and (7); 2306.111(g)(3)(C); 2306.185(a)(1) and (c); 2306.6710(e)(2); and 42(m)(1)(B)(ii)(II)) An Application may qualify to receive up to four (4) points for this item.(A) Development Owners that agree to extend the Affordability Period for a Development to 45 years total. (4 points)(B) Development Owners that agree to extend the Affordability Period for a Development to 40 years total. (3 points)(C) Development Owners that agree to extend the Affordability Period for a Development to 35 years total. (2 points)(6) Historic Preservation. (§2306.6725(a)(6); §42(m)(1)(C)(x)). (A) An Application may qualify to receive two (2) points if: (i) For Developments with under 100 total Units at least 55% of the residential Units shall be constructed fully or partially within the Certified Historic Structure. (ii) For Developments with 100 total Units or more, at least 55 of the residential Units shall be constructed fully or partially within the Certified Historic Structure.(B) To qualify for points, the Development must receive historic tax credits before or by the issuance of Forms 8609. The Application must include either documentation from the Texas Historical Commission that the Property is currently a Certified Historic Structure, or documentation determining preliminary eligibility for Certified Historic Structure status and evidence that the Texas Historic Commission received the request for determination of preliminary eligibility and supporting information on or before February 1 of the current year.(C) Each Development may qualify for these points only once. An Application may not receive these points if it involves a Development that was previously awarded Competitive Housing Tax Credits through an Application that earned points based on eligibility of a Certified Historic Structure (2 points).(7) Right of First Refusal. (§2306.6725(b)(1); §42(m)(1)(C)(viii)). An Application may receive points under subparagraphs (A) or (B) of this paragraph.(A) An Application may qualify to receive (1 point) for Development Owners that will agree to provide a right of first refusal to purchase the Development upon or following the end of the Compliance Period in accordance with Tex. Gov't Code, §2306.6726 and the Department's rules including §10.407 of this title (relating to Right of First Refusal) and §10.408 of this title (relating to Qualified Contract Requirements).(B) The Development at the time of LURA execution is single family detached homes on separate lots or is organized as condominiums under Chapter 81 or 82 of the Texas Property Code and commits to offer a right of first refusal to tenants of the property to purchase the dwelling at a selected term but no earlier than the end of the Compliance Period and no later than the Extended Use Period. A de minimis amount of a participating tenant's rent may be attributed to the purchase of a Unit. Such commitment will be reflected in the LURA for the Development. The Applicant must provide a description of how they will implement the 'rent-to-own' activity, how they will make tenants aware of the opportunity, and how they will implement the right at the end of the selected term. If a Development is layered with National Housing Trust Funds, HOME-ARP, or another MFDL source where homeownership is not an eligible activity, the right of first refusal may not be earlier than the end of the Federal Affordability Period. §42(m)(1)(C)(viii). (1 point)(8) Readiness to Proceed. The Application includes a certification that site acquisition and building construction permit submission will occur on or before the last day of March of the following year or as otherwise permitted under subparagraph (B) of this paragraph. These points are not available in the At-Risk or USDA Set-Asides. (1 point)(A) The Board cannot and will not waive the deadline and will not consider waiver under its general rule regarding waivers. Failure to acquire the site and submit construction permits by the March deadline will result in penalty under 10 TAC §11.9(f), as determined solely by the Board.(B) Applications that remain on the waiting list after awards are made in late July that ultimately receive an award will receive an extension of the March deadline equivalent to the period of time between the late July meeting and the date that the Commitment Notice for the Application is issued.(f) Factors Affecting Scoring and Eligibility in current and future Application Rounds. Staff may recommend to the Board and the Board may find that an Applicant or Affiliate should be ineligible to compete in the following year's competitive Application Round or that it should be assigned a penalty deduction in the following year's competitive Application Round of no more than two points for each submitted Application (Tex. Gov't Code §2306.6710(b)(2)) because it meets the conditions for any of the items listed in paragraphs (1) - (4) of this subsection. For those items pertaining to non-statutory deadlines, an exception to the penalty may be made if the Board or Executive Director, as applicable, makes an affirmative finding setting forth that the need for an extension of the deadline was beyond the reasonable control of the Applicant and could not have been reasonably anticipated. Any such matter to be presented for final determination of deduction by the Board must include notice from the Department to the affected party not less than 14 days prior to the scheduled Board meeting. The Executive Director may, but is not required, to issue a formal notice after disclosure if it is determined that the matter does not warrant point deductions. The Executive Director may make a determination that the matter does not warrant point deduction only for paragraph (1) of this subsection. (§2306.6710(b)(2)) Any deductions assessed by the Board for paragraph (1), (2), (3), or (4) of this subsection based on a Housing Tax Credit Commitment from a preceding Application round will be attributable to the Applicant or Affiliate of an Application submitted in the Application round referenced above.(1) If the Applicant or Affiliate failed to meet the original Carryover submission or 10% Test deadline(s) or has requested an extension of the Carryover submission deadline or the 10% Test deadline (relating to either submission or expenditure).(2) If the Applicant or Affiliate failed to meet the federal commitment or expenditure requirements, deadlines to enter into a Contract or close a Direct Loan, or did not meet benchmarks of their Contract with the Department.(3) If the Applicant or Affiliate, in the Competitive HTC round immediately preceding the current round, failed to meet the deadline to both close financing and provide evidence of an executed construction contract under subsection (c)(9) of this section (related to Readiness to Proceed).(4) If the Developer or Principal of the Applicant has violated or violates the Adherence to Obligations.</content><note type="source"><p>Source Note: The provisions of this §11.9 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scA/s11.10"><num value="11.10">§11.10</num><heading>Third Party Request for Administrative Deficiency for Competitive HTC Applications</heading><content>(a) The purpose of the Third Party Request for Administrative Deficiency (RFAD) process is to allow an unrelated person or entity to bring new, material information about an Application to staff's attention. Such Person may request staff to consider whether a matter in an Application in which the Person has no involvement should be the subject of an Administrative Deficiency. While an Administrative Deficiency may be issued as the result of an RFAD, not all RFADs will result in an Administrative Deficiency being issued.(b) Staff will consider each RFAD received and proceed as it deems appropriate under the applicable rules including, if the Application in question has a noncompetitive score relative to other Applications in the same Set-Aside or subregion or will not be eligible for an award through the award recommendation methodology as outlined in §11.6(3) of this chapter (related to Competitive HTC Allocation Process), not reviewing the matter further.(c) If the assertion(s) in the RFAD describe matters that are part of the Application review process, and the RFAD does not contain information not present in the Application, staff will not review or act on it.(d) The RFAD and any testimony presented to the Board regarding the result of an RFAD may not be used to appeal staff decisions regarding competing Applications (§2306.6715(b)). Any RFAD that questions a staff decision regarding staff's scoring of an Application filed by another Applicant will be disregarded.(e) Requestors must provide, at the time of filing the request all information that the requestor offers in support of the deficiency. A copy of the request and supporting information must be provided by the requestor directly to the Applicant at the same time it is provided to the Department. Requestors must provide sufficient credible evidence that, if confirmed, would substantiate the deficiency request. Assertions not accompanied by supporting documentation susceptible to confirmation will not be considered. An RFAD that expresses the requestor's opinion will not be considered.(f) Staff shall provide to the Board a written report summarizing each third party request for administrative deficiency and the manner in which it was addressed. Interested persons may provide testimony on this report before the Board takes any formal action to accept the report. When the Board receives a report on the disposition of RFADs it may, for any staff disposition contained in the report, change the conclusion if it believes the change is necessary to bring the result into compliance with applicable laws and rules as construed by the Board; or if based on public testimony, it believes staff's conclusion should be revisited, it may remand the RFAD to staff for further consideration, which may result in a reaffirmation, reversal, or modification.(g) The results of a RFAD may not be appealed by the requestor, and testimony to the Board arguing staff's determination will not be considered unless the requestor can show that staff failed to follow the applicable rule.(h) A scoring notice or termination notice that results from a RFAD may be appealed by the Applicant as further described in §11.902 of this chapter, relating to Appeals Process.(i) Information received after the RFAD deadline will not be considered by staff or presented to the Board unless the information is of such a matter as to warrant a termination notice.</content><note type="source"><p>Source Note: The provisions of this §11.10 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c11/scB"><num value="B">SUBCHAPTER B</num><heading>SITE AND DEVELOPMENT REQUIREMENTS AND RESTRICTIONS</heading><section identifier="/us/state/tx/tac/t10/p1/c11/scB/s11.101"><num value="11.101">§11.101</num><heading>Site and Development Requirements and Restrictions</heading><content>(a) Site Requirements and Restrictions. The purpose of this section is to identify specific requirements and restrictions related to a Development Site seeking multifamily funding or assistance from the Department.(1) Floodplain. New Construction or Reconstruction Developments located within a 100 year floodplain as identified by the Federal Emergency Management Agency (FEMA) Flood Insurance Rate Maps must develop the site in full compliance with the National Flood Protection Act and all applicable federal and state statutory and regulatory requirements. The Applicant will have to use floodplain maps and comply with regulation as they exist at the time of commencement of construction. Even if not required by such provisions, the Site must be developed so that all finished ground floor elevations are at least one foot above the floodplain and parking and drive areas are no lower than six inches below the floodplain. If there are more stringent federal or local requirements they must also be met. Applicants requesting NHTF funds from the Department must also meet the federal environmental provisions under 24 CFR §93.301(f)(1)(vi). Applicants requesting HOME, HOME-ARP, or NSP PI funds from the Department must meet the federal environmental provisions under 24 CFR Part 58, as in effect at the time of execution of the Contract between the Department and the Owner. If no FEMA Flood Insurance Rate Maps are available for the proposed Development Site, flood zone documentation must be provided from the local government with jurisdiction identifying the 100 year floodplain. Rehabilitation (excluding Reconstruction) Developments with existing and ongoing federal funding assistance from HUD or USDA are exempt from this requirement, to the extent NHTF is not being requested from the Department. All Developments located within a 100 year floodplain must state in the Tenant Rights and Resource Guide that part or all of the Development Site is located in a floodplain, and that it is encouraged that they consider getting appropriate insurance or take necessary precautions. However, where existing and ongoing federal assistance is not applicable such Rehabilitation (excluding Reconstruction) Developments will be allowed in the 100 year floodplain provided the local government has undertaken and can substantiate sufficient mitigation efforts and such documentation is submitted in the Application or the existing structures meet the requirements that are applicable for New Construction or Reconstruction Developments, as certified to by a Third Party engineer.(2) Undesirable Site Features. (A) An Undesirable Site Feature will render an Application ineligible unless acceptable mitigation as determined by staff or the Board is undertaken. For Competitive HTC Applications, if staff identifies an undesirable site feature reflected in clause (i) - (x) of subparagraph (E) and it was not disclosed, the Application shall be terminated by staff. If Department staff identifies what it believes would constitute an undesirable site feature not listed in this paragraph or covered under clause (xi) of subparagraph (E), staff may issue an Administrative Deficiency. In the event that staff cannot reasonably conclude whether a feature is considered undesirable, it may defer to the Board for decision.(B) Rehabilitation (excluding Reconstruction) Developments with ongoing and existing federal assistance from HUD, USDA, or Veterans Affairs (VA) and Developments encumbered by a TDHCA LURA the earlier of the first day of the Application Acceptance Period for HTC, Application Acceptance Date for Direct Loan, or date the pre-application is submitted (if applicable) may be granted an exemption by staff; however, depending on the undesirable site feature(s) staff may recommend mitigation still be provided as appropriate. Such an exemption must be requested at the time of or prior to the filing of an Application. Historic Developments that would otherwise qualify under §11.9(e)(6) of this chapter (related to Criteria promoting the efficient use of limited resources and applicant accountability) may be granted an exemption, and such exemption must be requested at the time of or prior to the filing of an Application. (C) Requests for pre-determinations of Site eligibility prior to pre-application or Application submission will not be binding on full Applications submitted at a later date. For Tax-Exempt Bond Developments where the Department is the Issuer, the Applicant may submit a request for pre-determination at pre-application or for Tax-Exempt Bond Developments utilizing a local issuer a request for a pre-determination may be submitted prior to Application submission. An Applicant should understand that any determination made by staff or the Board at that point in time regarding Site eligibility based on the documentation presented, is preliminary in nature. Should additional information related to any of the Undesirable Site Features become available while the Application is under review, or the information by which the original determination was made changes in a way that could affect eligibility, then such information will be re-evaluated by staff and may result in an Administrative Deficiency or re-evaluation. (D) If a state or federal cognizant agency would require a new facility under its jurisdiction to have a minimum separation from housing, the Department will defer to that agency and require the same separation for a new housing facility near an existing regulated or registered facility. In addition to these limitations, a Development Owner must ensure that the proposed Development Site and all construction thereon comply with all applicable state and federal requirements regarding separation for safety purposes. (E) The Undesirable Site Features include those described in clauses (i) - (xi) of this subparagraph. The distances are to be measured from the nearest boundary of the Development Site to the nearest boundary of the property or easement containing the undesirable feature, unless otherwise noted below. Where there is a local ordinance that specifies the proximity of such undesirable feature to a multifamily development that has smaller distances than the minimum distances noted below, then such smaller distances may be used and documentation such as a copy of the local ordinance identifying such distances relative to the Development Site must be included in the Application. Pre-existing zoning does not meet the requirement for a local ordinance.(i) Development Sites located within 300 feet of junkyards. For purposes of this paragraph, a junkyard shall be defined as stated in Texas Transportation Code §396.001;(ii) Development Sites located within 300 feet of an active solid waste facility, sanitary landfill facility, waste transfer station, or illegal dumping sites (as such dumping sites are identified by the local municipality);(iii) Development Sites located within 300 feet of a sexually-oriented business. For purposes of this paragraph, a sexually-oriented business shall be defined in Local Government Code §243.002, or as zoned, licensed and regulated as such by the local municipality;(iv) Development Sites located within 500 feet of active railroad tracks, measured from the closest rail to the boundary of the Development Site, unless:(I) the Applicant provides evidence that the city/community has adopted a Railroad Quiet Zone covering the area within 500 feet of the Development Site;(II) the Applicant has engaged a qualified Third Party to perform a noise assessment and the Applicant commits to perform sound mitigation in accordance with HUD standards as if they were directly applicable to the Development; or(III) the railroad in question is commuter or light rail;(v) Development Sites located within 500 feet of heavy industry (i.e. facilities that require extensive use of land and machinery, produce high levels of external noise such as manufacturing plants, or that maintain fuel storage facilities, to the extent that these qualifying items are consistent with the general characteristics of heavy industry. Gas stations and other similar facilities that are not consistent with the characteristics of heavy industry are not considered an undesirable site feature;(vi) Development Sites located within 10 miles of a nuclear plant;(vii) Development Sites in which the buildings are located within the accident potential zones or the runway clear zones of any airport;(viii) Development Sites that contain one or more pipelines, situated underground or aboveground, which carry highly volatile liquids or Development Sites located adjacent to a pipeline easement (for a pipeline carrying highly volatile liquids), the Application must include a plan for developing near the pipeline(s) and mitigation, if any, in accordance with a report conforming to the Pipelines and Informed Planning Alliance (PIPA);(ix) Development Sites located within 2 miles of refineries capable of refining more than 100,000 barrels of oil daily;(x) Development Sites that are located in a Clear Zone, any Accident Potential Zone, or within any Noise Contour of 65 decibels or greater, as reflected in a Joint Land Use Study for any military Installation, except that if the Development Site is located in a Noise Contour between 65 and 70 decibels, the Development Site will not be considered to have an Undesirable Site Feature if the Applicant has engaged a qualified Third Party to perform a noise assessment and the Applicant commits to perform sound mitigation in accordance with HUD standards as if they were directly applicable to the Development; or(xi) Any Site deemed unacceptable, which would include, without limitation, those with exposure to an environmental factor that may adversely affect the health and safety of the residents or render the Site inappropriate for housing use and which cannot be adequately mitigated. If staff believe that a Site should be deemed unacceptable under this provision due to information that was not included in the Application, it will provide the Applicant with written notice and an opportunity to respond.(3) Neighborhood Risk Factors.(A) A Neighborhood Risk Factor will render an application ineligible unless acceptable mitigation as determined by staff or the board is undertaken. If the Development Site has any of the characteristics described in subparagraph (D) of this paragraph, the Applicant must disclose the presence of such characteristics in the Application submitted to the Department. For Competitive HTC Applications, should staff determine that the Development Site has any of the characteristics described in subparagraph (D) of this paragraph and such characteristics were not disclosed, the Application shall be terminated by staff. (B) Requests for pre-determinations of Site eligibility prior to pre-application or Application submission will not be binding on full Applications submitted at a later date. For Tax-Exempt Bond Developments where the Department is the Issuer, the Applicant may submit the documentation described under subparagraph (E) of this paragraph at pre-application or for Tax-Exempt Bond Developments utilizing a local issuer a request for a pre-determination may be submitted prior to Application submission. An Applicant should understand that any determination made by staff or the Board at that point in time regarding Site eligibility based on the documentation presented, is preliminary in nature. Should additional information related to any of the Neighborhood Risk Factors become available while the Tax-Exempt Bond Development or Direct Loan only Application is under review, or the information by which the original determination was made changes in a way that could affect eligibility, then such information will be re-evaluated by staff and staff may issue an Administrative Deficiency. (C) The presence of any characteristics listed in subparagraph (D) of this paragraph will prompt staff to perform an assessment of the Development Site and neighborhood, which may include a site visit. Mitigation to be considered by staff is identified in subparagraph (E) of this paragraph. Preservation of affordable units alone does not present a compelling reason to support a conclusion of eligibility.(D) The Neighborhood Risk Factors include those noted in clauses (i) - (ii) of this subparagraph and additional information as applicable to the neighborhood risk factor(s) disclosed as provided in subparagraph (E) of this paragraph must be submitted in the Application. In order to be considered an eligible Site despite the presence of Neighborhood Risk Factors, an Applicant must demonstrate actions being taken that would lead staff to conclude that there is a high probability and reasonable expectation the risk factor will be sufficiently mitigated or significantly improved prior to placement in service and that the risk factor demonstrates a positive trend and continued improvement. Conclusions for such reasonable expectation may need to be affirmed by an industry professional, as appropriate, and may be dependent upon the severity of the Neighborhood Risk Factor disclosed.(i) The Development Site is located within a census tract that has a poverty rate above 40% for individuals (or 55% for Developments in regions 11 and 13). Rehabilitation Developments with ongoing and existing federal assistance from HUD, USDA, or Veterans Affairs (VA), and Developments encumbered by a TDHCA LURA re exempt from this Neighborhood Risk Factor.(ii) The Development Site is New Construction or Reconstruction and is located in a census tract (or for any adjacent census tract with a boundary less than 500 feet from the proposed Development Site that is not separated from the Development Site by a natural barrier such as a river or lake, or an intervening restricted area, such as a military installation) in an Urban Area and the rate of Part I violent crime is greater than 18 per 1,000 persons (annually) as reported on neighborhoodscout.com. Rehabilitation developments with ongoing and existing federal assistance from HUD, USDA, or Veterans Affairs (VA), and Developments encumbered by a TDHCA LURA are exempt from this Neighborhood Risk Factor.(E) Information regarding mitigation of neighborhood risk factors should be relevant to the risk factors that are present in the neighborhood. Mitigation must include documentation of efforts underway at the time of Application, and should include the measures described in clauses (i) - (ii) of this subparagraph or such other mitigation as the Applicant determines appropriate to support a finding of eligibility. If staff determines that the Development Site cannot be found eligible and the Applicant appeals that decision to the Board, the Applicant may not present new information at the Board meeting.(i) Mitigation for Developments in a census tract that has a poverty rate that exceeds 40% may include a resolution from the Governing Body of the appropriate municipality or county containing the Development, acknowledging the high poverty rate and authorizing the Development to move forward. If the Development is located in the ETJ, the resolution would need to come from the county.(ii) Evidence by the most qualified person that the data and evidence establish that there is a reasonable basis to proceed on the belief that the crime data shows, or will show, a favorable trend such that within the next two years Part I violent crime for that location is expected to be less than 18 per 1,000 persons or the data and evidence reveal that the data reported on neighborhoodscout.com does not accurately reflect the true nature of what is occurring and what is actually occurring does not rise to the level to cause a concern to the Board over the level of Part I violent crime for the location. The data and evidence may be based on violent crime data from the city's police department or county sheriff's department, as applicable based on the location of the Development, for the police beat or patrol area within which the Development Site is located, based on the population of the police beat or patrol area that yields a crime rate below the threshold indicated in this section or that would yield a crime rate below the threshold indicated in this section by the time the Development is placed into service. The instances of violent crimes within the police beat or patrol area that encompass the census tract, calculated based on the population of the census tract, may also be used. The data must include incidents reported during the entire calendar year previous to the year of Application. Violent crimes reported through the date of Application submission may be requested by staff as part of the assessment performed under subparagraph (C) of this paragraph. A written statement from the most qualified person (i.e. Chief of Police or Sheriff (as applicable) or the police officer/detective for the police beat or patrol area containing the proposed Development Site), including a description of efforts by such enforcement agency addressing issues of crime and the results of their efforts may be provided, and depending on the data provided by the Applicant, such written statement may be required, as determined by staff. It is expected that such written statement would also speak to whether there is a reasonable expectation that based on the efforts underway there is crime data that reflects a favorable downward trend in crime rates.(F) In order for the Development Site to be found eligible, including when mitigation described in subparagraph (E) of this paragraph is not provided in the Application, despite the existence of one or more Neighborhood Risk Factors, the Applicant must explain how the use of Department funds at the Development Site is consistent with the goals in clauses (i) - (iii) of this subparagraph. If the Board grants an Appeal of staff's determination of Site eligibility, the Board shall document the reasons for a determination of eligibility.(i) Preservation of existing occupied affordable housing units to ensure they are safe and suitable or the new construction of high quality affordable housing units that are subject to federal rent or income restrictions.(ii) Determination that the risk factor(s) that has been disclosed are not of such a nature or severity that should render the Development Site ineligible based on the assessment and mitigation provided under subparagraphs (C) and (D) of this paragraph.(iii) No mitigation was provided, or in staff's determination the mitigation was considered unsatisfactory and the Applicant has requested a waiver of the presence of Neighborhood Risk Factors on the basis that the Development is necessary to enable the state, a participating jurisdiction, or an entitlement community to comply with its obligation to affirmatively further fair housing, a HUD approved Conciliation Agreement, or a final and non-appealable court order and such documentation is submitted with the disclosure.(4) Site and Neighborhood Standards (Direct Loan and HOME-ARP only). A New Construction Development, as defined by the applicable federal fund source, requesting federal funds must meet the Site and Neighborhood Standards in 24 CFR §983.57(e)(2) or (3). A Development requesting NHTF funds that meets the federal definition of reconstruction in 24 CFR §93.2 must also meet these standards.(b) Development Requirements and Restrictions. The purpose of this subsection is to identify specific restrictions on a proposed Development requesting multifamily funding by the Department.(1) Ineligible Developments. A Development shall be ineligible if any of the criteria in subparagraphs (A) - (C) of this paragraph apply.(A) General Ineligibility Criteria include:(i) Developments such as hospitals, nursing homes, trailer parks, dormitories (or other buildings that will be predominantly occupied by students) or other facilities that are usually classified as transient housing (as provided in Code §42(i)(3)(B)(iii) and (iv));(ii) any Development with any building(s) with four or more stories that does not include an elevator. Developments where topography or other characteristics of the Site require basement splits such that a tenant will not have to walk more than two stories to fully utilize their Unit and all Development amenities, will not require an elevator;(iii) a Housing Tax Credit Development that provides on-site continual or frequent nursing, medical, or psychiatric services. Refer to IRS Revenue Ruling 98-47 for clarification of assisted living;(iv) a Development that proposes population limitations that violate §1.15 of this title (relating to Integrated Housing Rule);(v) a Development seeking Housing Tax Credits that will not meet the general public use requirement under Treasury Regulation, §1.42-9 or a documented exception thereto;(vi) a Development utilizing a Direct Loan that is subject to the Housing and Community Development Act, 104(d) requirements and proposing Rehabilitation or Reconstruction, if the Applicant is not proposing at least the one-for-one replacement of the existing Unit mix. Adding additional units would not violate this provision; or(vii) any New Construction or Reconstruction proposing more than 35.00% efficiency and/or one-Bedroom Units. This requirement will not apply to Elderly or Supportive Housing Developments. For Historic Developments, this requirement will not apply to any units constructed within the Historic structure. For any New Construction or Reconstruction undertaken as part of a Historic Application, those newly constructed or reconstructed Units must meet this standard. The Units that are part of the Historic structure will not be included in the total when determining if the Application meets this requirement. (viii) Competitive Housing Tax Credit Applications that involve any existing Housing Tax Credit Development that has any building that placed in service on or after January 1, 2006, for its most recent award of Housing Tax Credits.(ix) Applications that represent a Total Housing Development Cost of $500,000 or more per Unit.(x) Competitive Housing Tax Credit Applications that scores fewer than 120 total points, inclusive of any scoring reductions. (B) Ineligibility of Elderly Developments include:(i) any Elderly Development of two stories or more that does not include elevator service for any Units or Common Areas above the ground floor;(ii) any Elderly Development with any Units having more than two Bedrooms with the exception of up to three employee Units reserved for the use of the manager, maintenance, or security officer. These employee Units must be specifically designated as such; or(iii) any New Construction, Reconstruction, or Adaptive Reuse Elderly Development (including Elderly in a Rural Area) proposing more than 70% two-Bedroom Units.(C) Ineligibility of Developments within Areas of High Crime. Any Development involving New Construction or Adaptive Reuse located in an area described in (a)(3)(D)(ii) of this subsection and for which mitigation submitted under subparagraph (D)(ii) of this paragraph still yields a Part I violent crime rate greater than 18 per 1,000 persons (annually) is ineligible with no opportunity for mitigation. If the Board grants an Appeal of staff's determination of Site eligibility, the Board shall document the reasons for a determination of eligibility.(2) Development Size Limitations. The minimum Development size is 16 Units. Competitive Housing Tax Credit or Multifamily Direct Loan-only Developments involving New Construction or Adaptive Reuse in Rural Areas are limited to a maximum of 80 total Units. Tax-Exempt Bond Developments involving New Construction or Adaptive Reuse in a Rural Area must meet the Development size limitation and corresponding capture rate requirements in §11.302(i)(1)(C) of this chapter (related to Feasibility Conclusion). Rehabilitation Developments do not have a limitation as to the maximum number of Units.(3) Rehabilitation Costs. Developments involving Rehabilitation must establish a scope of work that will substantially improve the interiors of all units and exterior deferred maintenance, and meet the minimum Rehabilitation amounts identified in subparagraphs (A) - (C) of this paragraph. Such amounts must be maintained through the issuance of IRS Forms 8609. For Developments with multiple buildings that have varying placed in service dates, the earliest date will be used for purposes of establishing the minimum Rehabilitation amounts. Applications must meet the Rehabilitation amounts identified in subparagraphs (A), (B) or (C) of this paragraph. For Tax-Exempt Bond Developments that include existing USDA funding that is continuing or new USDA funding, staff may consider the cost standard under subparagraph (A) of this paragraph on a case-by-case basis.(A) For Housing Tax Credit Developments with USDA financing the Rehabilitation will involve at least $25,000 per Unit in Building Costs and Site Work.(B) For Tax-Exempt Bond Developments, less than 20 years old, based on the placed in service date, the Rehabilitation will involve at least $25,000 per Unit in Building Costs and Site Work. If such Developments are greater than or equal to 20 years old, based on the placed in service date, the Rehabilitation will involve at least $35,000 per Unit in Building Costs and Site Work.(C) For all other Developments, the Rehabilitation will involve at least $35,000 per Unit in Building Costs and Site Work.(4) Mandatory Development Amenities. (§2306.187) New Construction, Reconstruction or Adaptive Reuse Units must include all of the amenities in subparagraphs (A) - (O) of this paragraph. Rehabilitation (excluding Reconstruction) Developments must provide the amenities in subparagraphs (D) - (L), (N), and (O) of this paragraph unless stated otherwise. Supportive Housing Developments are not required to provide the amenities in subparagraph (B), (E), (F), (G), (H) or (N) of this paragraph; however, access must be provided to a comparable amenity in a Common Area. All amenities listed below must be at no charge to the residents. Residents must be provided written notice of the applicable required amenities for the Development. The Board may waive one or more of the requirements of this paragraph for Developments that will include Historic Tax Credits, with evidence submitted with the request for amendment that the amenity has not been approved by the Texas Historical Commission or National Park Service, as applicable. Applicants for Multifamily Direct Loans should be aware that certain amenities are not eligible for Direct Loan funding, including without limitation, detached community spaces, furnishings, swimming pools, athletic courts, and playgrounds, as more fully described at §13.3 of this title (relating to General Loan Requirements). Amenities include: (A) All Units must have connections available using current technology for data and phone;(B) Laundry connections;(C) Exhaust/vent fans (vented to the outside) in the bathrooms;(D) Screens on all operable windows;(E) Disposal (not required for USDA Rehabilitation);(F) Energy-Star or equivalently rated dishwasher; Rehabilitation Developments exempt from dishwasher if one was not originally in the Unit;(G) Energy-Star or equivalently rated refrigerator;(H) Oven/Range;(I) Blinds or window coverings for all windows;(J) At least one Energy-Star or equivalently rated ceiling fan per Unit;(K) Energy-Star or equivalently rated lighting in all Units;(L) All areas of the Unit (excluding exterior storage space on an outdoor patio/balcony) must have heating and air-conditioning; (M) Adequate parking spaces consistent with local code, unless there is no local code, in which case the requirement would be one and a half spaces per Unit for non-Elderly Developments and one space per Unit for Elderly Developments. The minimum number of required spaces must be available to the tenants at no cost. If parking requirements under local code rely on car sharing or similar arrangements, the LURA will require the Owner to provide the service at no cost to the tenants throughout the Affordability Period. If a waiver or variance of local code parking requirements has been requested then evidence to that effect must be included in the Application;(N) Energy-Star or equivalently rated windows (for Rehabilitation Developments, only if windows are planned to be replaced as part of the scope of work); and(O) Adequate accessible parking spaces consistent with the requirements of the 2010 ADA Standards with the exceptions listed in "Nondiscrimination on the Basis of Disability in Federally Assisted Programs and Activities" 79 FR 29671, the Texas Accessibility Standards, and if covered by the Fair Housing Act, HUD's Fair Housing Act Design Manual.(5) Common Amenities.(A) All Developments must include sufficient common amenities as described in subparagraph (C) of this paragraph to qualify for at least the minimum number of points required in accordance with clauses (i) - (vi) of this subparagraph:(i) Developments with 16 to 40 Units must qualify for two (2) points;(ii) Developments with 41 to 76 Units must qualify for four (4) points;(iii) Developments with 77 to 99 Units must qualify for seven (7) points;(iv) Developments with 100 to 149 Units must qualify for ten (10) points;(v) Developments with 150 to 199 Units must qualify for fourteen (14) points; or(vi) Developments with 200 or more Units must qualify for eighteen (18) points.(B) These points are not associated with any selection criteria points. The amenities must be for the benefit of all residents and made available throughout normal business hours and maintained throughout the Affordability Period. Residents must be provided written notice of the elections made by the Development Owner. If fees or deposits in addition to rent are charged for amenities, then the amenity may not be included among those provided to satisfy the requirement. All amenities must meet all applicable accessibility standards, including those adopted by the Department, and where a specific space or size requirement for a listed amenity is not specified then the amenity must be reasonably adequate based on the Development size. Applications for non-contiguous scattered site housing, excluding non-contiguous single family sites, will have the test applied based on the number of Units per individual site and the amenities selected must be distributed proportionately across all sites. A Development composed of non-contiguous single family sites must provide a combination of unit and common amenities to equal the appropriate points under subparagraph (A) of this paragraph for the Development size. In the case of additional phases of a Development any amenities that are anticipated to be shared with the first phase development cannot be claimed for purposes of meeting this requirement for the second phase. The second phase must include enough points to meet this requirement that are provided on the Development Site, regardless of resident access to the amenity in another phase. All amenities must be available to all Units via an accessible route.(C) The common amenities and respective point values are set out in clauses (i) - (v) of this subparagraph, which are grouped primarily for organizational purposes. Applicants are not required to select a specific number of amenities from each section. An Applicant can only count an amenity once; therefore combined functions (a library which is part of a community room) will only qualify for points under one category:(i) Community Space for Resident Supportive Services includes:(I) Except in Applications where more than 10% of the Units in the proposed Development are Supportive Housing SRO Units, an Application may qualify to receive half of the points required under §11.101(b)(5)(A)(i) - (vi) by electing to provide a High Quality Pre-Kindergarten (HQ Pre-K) program and associated educational space at the Development Site. To receive the points the Applicant must commit to all of items (-a-) - (-c-) of this subclause.(-a-) Space and Design. The educational space for the HQ Pre-K program must be provided on the Development Site and must be a suitable and appropriately designed space for educating children that an independent school district or open-enrollment charter school can utilize to establish and operate a HQ Pre-K program. This space includes at a minimum a bathroom and large closet in the classroom space; appropriate design considerations made for the safety and security of the students; including limited and secure ingress and egress to the classroom space; and satisfaction of the requirements of all applicable building codes for school facilities. The Applicant must provide in the Application a copy of the current school facility code requirements applicable to the Development Site and Owner and Architect certifications that they understand the associated space and design requirements reflected in those code requirements. The Application must also include acknowledgement by all lenders, equity providers and partners that the Application includes election of these points.(-b-) Educational Provider Agreement. The Applicant must enter into an agreement, addressing all items as described in subitems (-1-) - (-5-) of this item, and provide evidence of such agreement to the Department on or before submission of the Cost Certification. Lack of evidence of such agreement by the deadline will be cause for rescission of the Carryover Agreement for Competitive HTC Applications.(-1-) The agreement must be between the Owner and an Educational Provider. (-2-) The agreement must reflect that at the Development Site the Educational Provider will provide a HQ Pre-K program, in accordance with Texas Education Code Chapter 29, Subchapter E-1, at no cost to residents of the proposed Development and that is available for general public use, meaning students other than those residing at the Development may attend.(-3-) Such agreement must reflect a provision that the option to operate the HQ Pre-K program in the space at the Development Site will continue to be made available to the school or provider until such time as the school or provider wishes to withdraw from the location. This provision will not limit the Owner's right to terminate the agreement for good cause.(-4-) Such agreement must set forth the responsibility of each party regarding payment of costs to use the space, utility charges, insurance costs, damage to the space or any other part of the Development, and any other costs that may arise as the result of the operation of the HQ Pre-K program.(-5-) The agreement must include provision for annual renewal, unless terminated under the provisions of item (-c-) of this subclause.(-c-) If an Educational Provider who has entered into an agreement becomes defunct or elects to withdraw from the agreement and provision of services at the location, as provided for in subitem (-b-)(-3-) of this subclause, the Owner must notify the Texas Commissioner of Education at least 30 days prior to ending the agreement to seek out any other eligible parties listed in subitem (-b-)(-1-) of this subclause above. If another interested open-enrollment charter school or school district is identified by the Texas Commissioner of Education or the Owner, the Owner must enter into a subsequent agreement with the interested open-enrollment charter school or school district and continue to offer HQ Pre-K services. If another interested provider cannot be identified, and the withdrawing provider certifies to the Department that their reason for ending the agreement is not due to actions of the Owner, the Owner will not be considered to be in violation of its commitment to the Department. If the Owner is not able to find a provider, they must notify the Commissioner annually of the availability of the space.(II) Multifunctional learning and care center(s) or conference room(s) with the appropriate furnishings to deliver the Resident Supportive Services pertaining to classes or care for children and selected by the Development Owner. The room(s) devoted to meeting this requirement must equal 15 square feet times the total number of Units, but need not exceed 2,000 square feet in total. This space must be separate from any other community space but may include a full kitchen. The room(s) must include storage space, such as closets or cabinetry (4 points).(III) Multifunctional learning and care center(s) or conference room(s) with the appropriate furnishings to deliver the Resident Supportive Services pertaining to classes or care for adults and selected by the Development Owner. The room(s) devoted to meeting this requirement must equal 10 square feet times the total number of Units, but need not exceed 1,000 square feet in total. This space must be separate from any other community space but may include a full kitchen. The room(s) must include storage space, such as closets or cabinetry (2 points).(IV) Service provider office in addition to leasing offices (1 point).(ii) Safety amenities include:(I) Controlled gate access for entrance and exit areas, intended to provide access that is limited to the Development's tenancy (1 point).(II) Secured Entry (applicable only if all Unit entries are within the building's interior) (1 point).(III) Twenty-four hour, seven days a week monitored camera/security system in each building. Monitoring may be on-site or off-site (2 points).(IV) Twenty-four hour, seven days a week recorded camera / security system in each building (1 point).(V) The provision of a courtesy patrol service that, at a minimum, answers after-hour resident phone calls regarding noise and crime concerns or apartment rules violations and that can dispatch to the apartment community a courtesy patrol officer in a timely manner (3 points).(iii) Health/Fitness/Play amenities include:(I) Accessible walking/jogging path, equivalent to the perimeter of the Development or a length that reasonably achieves the same result, separate from a sidewalk and in addition to required accessible routes to Units or other amenities (1 point).(II) Furnished fitness center. Equipped with a variety of fitness equipment (at least one item for every 40 Units). Choose from the following: stationary bicycle, elliptical trainer, treadmill, rowing machine, universal gym, multi-functional weight bench, stair-climber, dumbbell set, or other similar equipment. Equipment shall be commercial use grade or quality. Fitness center must be located indoors or be a designated room with climate control and allow for after-hours access. (1 point).(III) Furnished fitness center. Equipped with a variety of fitness equipment (at least one item for every 20 Units). Choose from the following: stationary bicycle, elliptical trainer, treadmill, rowing machine, universal gym, multi-functional weight bench, stair-climber, dumbbell set, or other similar equipment. Equipment shall be commercial use grade or quality. Fitness center must be located indoors or be a designated room with climate control and allow for after-hours access. (2 points).(IV) One Children's Playscape Equipped for five to 12 year olds, or one Tot Lot (2 points). Must be covered with a shade canopy or awning, intended to keep equipment cool, and provide shade and ultraviolet protection. This item can only be selected if subclause (V) of this clause is not selected.(V) Two Children's Playscapes Equipped for five to 12 year olds, two Tot Lots, or one of each (4 points). Must be covered with a shade canopy or awning, intended to keep equipment cool, and provide shade and ultraviolet protection. This item can only be selected if subclause (IV) of this clause is not selected.(VI) Horseshoe pit; putting green; shuffleboard court; pool table; ping pong table; or similar equipment in a dedicated location accessible to all residents to play such games (1 point).(VII) Swimming pool with after-hours access (5 points).(VIII) Splash pad/water feature play area (3 points).(IX) Sport Court or field (including, but not limited to, Tennis, Basketball, Volleyball, Pickleball, Soccer, or Baseball Field) (2 points).(iv) Design / Landscaping amenities include:(I) Full perimeter fencing that contains the parking areas and all amenities (excludes guest or general public parking areas) (2 points).(II) Enclosed community sun porch or covered community porch/patio (1 point).(III) Dog Park area that is fully enclosed (the perimeter fencing may be used for part of the enclosure) and intended for tenant owned dogs to run off leash (requires that the Development allow dogs) (2 points).(IV) Shaded rooftop or structural viewing deck of at least 500 square feet (2 points).(V) Porte-cochere (1 point).(VI) Lighted pathways along all accessible routes (1 point).(VII) a resident-run community garden with annual soil preparation and mulch provided by the Owner and access to water (which may be subject to local water usage restrictions) (1 point).(v) Community Resources amenities include:(I) Community laundry room with at least one washer and dryer for every 40 Units (2 points).(II) Barbecue grill and picnic table with at least one of each for every 50 Units (1 point). Grill must be permanently installed (no portable grills).(III) Business center with workstations and seating internet access, 1 printer and at least one scanner which may be integrated with the printer, and either 2 desktop computers or laptops available to check-out upon request (2 points).(IV) Furnished Community room (2 points).(V) Library with an accessible sitting area (separate from the community room) (1 point).(VI) Activity Room stocked with supplies (Arts and Crafts, board games, etc.) (2 points).(VII) Community Dining Room with full or warming kitchen furnished with adequate tables and seating (3 points).(VIII) Community Theater Room equipped with a 52 inch or larger screen or projection with surround sound equipment; DVD player or a streaming service at no cost to residents; and seating (3 points).(IX) High-speed Wi-Fi with advanced telecommunications capacity as determined under 47 U.S.C. 1302 or more with coverage throughout the clubhouse or community building (1 point).(X) High-speed Wi-Fi with advanced telecommunications capacity as determined under 47 U.S.C. 1302 with coverage throughout the Development (2 points).(XI) Bicycle parking that allows for, at a minimum, one bicycle for every five Units, within reasonable proximity to each residential building that allows for bicycles to be secured with lock (lock not required to be provided to tenant) (1 point).(XII) Package Lockers or secure package room. Automated Package Lockers or secure package room provided at a location within the complex that can be accessed by residents 24/7 and at no charge to the resident. To qualify, there would need to be at least one locker for every eight residential units (2 points).(XIII) Recycling Service (includes providing a storage location and service for pick-up) (1 point).(XIV) Community car vacuum station (1 point).(XV) Access to onsite bike sharing services, provided tenants have short-term, autonomous access to community-owned bicycles, with at least one bicycle per 25 Units (1 point).(XVI) A covered outdoor area with seating to be used as a waiting area for public transportation or a school bus (1 point). (6) Unit Requirements.(A) Unit Sizes. Developments proposing New Construction or Reconstruction will be required to meet the minimum sizes of Units as provided in clauses (i) - (v) of this subparagraph. These minimum requirements are not associated with any selection criteria. Developments proposing Rehabilitation (excluding Reconstruction) or Supportive Housing Developments will not be subject to the requirements of this subparagraph. If the Development involves both Rehabilitation and Reconstruction or New Construction, the Reconstruction or New Construction Units must meet these requirements. The requirements are:(i) four hundred fifty (450) square feet for an Efficiency Unit;(ii) five hundred fifty (550) square feet for a one Bedroom Unit;(iii) eight hundred (800) square feet for a two Bedroom Unit;(iv) one thousand (1,000) square feet for a three Bedroom Unit; and(v) one thousand, two-hundred (1,200) square feet for a four Bedroom Unit.(B) Unit, Development Construction, and Energy and Water Efficiency Features. Housing Tax Credit Applicants may select amenities for the score of an Application under this section, but must maintain the points associated with those amenities by maintaining the amenity selected or providing substitute amenities with equal or higher point values. Tax-Exempt Bond Developments must include enough amenities to meet a minimum of nine (9) points. Direct Loan Applications not layered with Housing Tax Credits must include enough amenities to meet a minimum of five (5) points. The amenity shall be for every Unit at no extra charge to the tenant. The points selected at Application and corresponding list of amenities will be required to be identified in the LURA, and the points selected at Application must be maintained throughout the Affordability Period. Applications involving scattered site Developments must have a specific amenity located within each Unit to count for points. Rehabilitation Developments and Supportive Housing Developments will start with a base score of five (5) points. Rehabilitation Developments that also include New Construction will not start with a base score, and must include enough amenities to meet a minimum of nine (9) points. At least two (2) points must be selected from clause (iii), Energy and Water Efficiency Features, of this subparagraph. (i) Unit Features include:(I) Covered entries (0.5 point);(II) Nine foot ceilings in living room and all Bedrooms (at minimum) (1 point);(III) Microwave ovens (0.5 point);(IV) Self-cleaning or continuous cleaning ovens (0.5 point);(V) Storage room or closet, of approximately 9 square feet or greater, separate from and in addition to Bedroom, entryway or linen closets and which does not need to be in the Unit but must be on the Property site (0.5 point);(VI) Covered patios or covered balconies (0.5 point);(VII) High Speed Internet service to all Units (can be wired or wireless; required equipment for either must be provided) (1 point);(VIII) Built-in (recessed into the wall) shelving unit (0.5 point);(IX) Breakfast Bar (a space, generally between the kitchen and dining area, that includes an area for seating although actual seating such as bar stools does not have to be provided) (0.5 point);(X) Walk-in closet in at least one Bedroom (0.5 point);(XI) 48-inch upper kitchen cabinets (1 point);(XII) Kitchen island (0.5 points);(XIII) Kitchen pantry with shelving (may include the washer/dryer unit for Rehabilitation Developments only) (0.5 point);(XIV) Natural stone or quartz countertops in kitchen and bath (1 point);(XV) Double vanity in at least one bathroom (0.5 point); and(XVI) Hard floor surfaces in over 50% of unit NRA (0.5 point).(ii) Development Construction Features include:(I) Covered parking (may be garages or carports, attached or freestanding) and include at least one covered space per Unit (1.5 points);(II) Thirty year roof (0.5 point);(III) Greater than 30% stucco or masonry (includes stone, cultured stone, and brick but excludes cementitious and metal siding) on all building exteriors; the percentage calculation may exclude exterior glass entirely (2 points);(IV) Electric Vehicle Charging Station (0.5 points);(V) An Impact Isolation Class (IIC) rating of at least 55 and a Sound Transmission Class (STC) rating of 60 or higher in all Units, as certified by the architect or engineer of record (3 points); and(VI) Green Building Features. Points under this item are intended to promote energy and water conservation, operational savings and sustainable building practices. Four (4) points may be selected from only one of the categories described in items (-a-) - (-d-) of this subclause. If the Development involves scattered sites, there must be green building features incorporated into each site in order to qualify for these points.(-a-) Enterprise Green Communities. The Development must incorporate, at a minimum, all items necessary to obtain Enterprise Green Communities certification applicable to the construction type (i.e. New Construction, Rehabilitation, etc.) as provided in the most recent version of the Enterprise Green Communities Criteria found at http://www.greencommunitiesonline.org.(-b-) Leadership in Energy and Environmental Design (LEED). The Development must incorporate, at a minimum, all of the applicable criteria necessary to obtain a LEED Certification, regardless of the rating level achieved (i.e., Certified, Silver, Gold or Platinum). (-c-) ICC/ASHRAE - 700 National Green Building Standard (NGBS). The Development must incorporate, at a minimum, all of the applicable criteria necessary to obtain a NGBS Green Certification, regardless of the rating level achieved (i.e. Bronze, Silver, Gold, or Emerald).(-d-) 2018 International Green Construction Code.(iii) Energy and Water Efficiency Features include:(I) Energy-Star or equivalently rated refrigerator with icemaker (0.5 point);(II) Energy-Star or equivalently rated laundry equipment (washers and dryers) for each individual Unit; must be front loading washer and dryer in required accessible Units (2 points);(III) Recessed LED lighting or LED lighting fixtures in kitchen and living areas (1 point);(IV) Energy-Star or equivalently rated ceiling fans in all Bedrooms (0.5 point);(V) EPA WaterSense or equivalent qualified toilets in all bathrooms (0.5 point);(VI) EPA WaterSense or equivalent qualified showerheads and faucets in all bathrooms (0.5 point);(VII) 15.2 SEER2 HVAC, or in Region 13, an efficient evaporative cooling system. For Rehabilitation (excluding Reconstruction) where such systems are not being replaced as part of the scope of work, a radiant barrier in the attic is provided, (1 point);(VIII) 16.0 SEER2 HVAC, for New Construction or Rehabilitation (1.5 points);(IX) A rainwater harvesting/collection system or locally approved greywater collection system (0.5 points);(X) Wi-Fi enabled, Energy-Star or equivalently rated "smart" thermostats installed in all units (1 point); and(XI) Solar panels installed, with a sufficient number of panels to reach a rated power output of at least 300 watts for each Low-Income Unit. (2 points).(7) Resident Supportive Services. The resident supportive services include those listed in subparagraphs (A) - (E) of this paragraph, which are grouped primarily for organizational purposes. Applicants are not required to select a specific number of services from each section. Tax Exempt Bond Developments must select a minimum of eight points; Direct Loan Applications not layered with Housing Tax Credits must include enough services to meet a minimum of four points. The points selected and complete list of supportive services will be included in the LURA and the timeframe by which services are offered must be in accordance with §10.619 of this title (relating to Monitoring for Social Services) and maintained throughout the Affordability Period. The Owner may change, from time to time, the services offered; however, the overall points as selected at Application must remain the same. A Development Owner may be required to substantiate such service(s) if requested by staff. Should the QAP in subsequent years provide different services than those listed in subparagraphs (A) - (E) of this paragraph, the Development Owner may request an Amendment as provided in §10.405(a)(2) of this chapter (relating to Amendments and Extensions). The services provided should be those that will directly benefit the Target Population of the Development. Residents must be provided written notice of the elections made by the Development Owner. No fees may be charged to the residents for any of the services, there must be adequate space for the intended services and services offered should be accessible to all (e.g. exercises classes must be offered in a manner that would enable a person with a disability to participate). Unless otherwise specified, services must be provided on-site or transportation to those off-site services identified on the list must be provided. The same service may not be used for more than one scoring item. These services are intended to be provided by a qualified and reputable provider in the specified industry such that the experience and background of the provider demonstrates sufficient knowledge to be providing the service. In general, on-site leasing staff or property maintenance staff would not be considered a qualified provider. Where applicable, the services must be documented by a written agreement with the provider. Unless otherwise noted in a particular clause, courses and services must be offered by an onsite instructor(s).(A) Transportation Supportive Services include:(i) shuttle, at least three days a week, to a grocery store and pharmacy or a major, big-box retailer that includes a grocery store and pharmacy, OR a daily shuttle, during the school year, to and from nearby schools not served by a school bus system for children who live at the Development (3.5 points); and(ii) monthly transportation to community/social events such as mall trips, community theatre, bowling, organized tours, etc. (1 point).(B) Children Supportive Services include:(i) provide a High Quality Pre-Kindergarten (HQ Pre-K) program and associated educational space at the Development Site meeting the requirements of paragraph (5)(C)(i)(I) of this subsection. (Half of the points required under this paragraph); and(ii) Twelve hours of weekly, organized, on-site services provided to K-12 children by a dedicated service coordinator or third-party entity. Services include after-school and summer care and tutoring, recreational activities, character building programs, mentee opportunities, test preparation, and similar activities that promote the betterment and growth of children and young adults (3.5 points).(C) Adult Supportive Services include:(i) Four hours of weekly, organized, in-person, hybrid, or virtual classes accessible to participants from a Common Area on site to an adult audience by persons skilled or trained in the subject matter being presented, such as English as a second language classes, computer training, financial literacy courses, homebuyer counseling, health education courses, certification courses, GED preparation classes, resume and interview preparatory classes, general presentations about community services and resources, and any other course, class, or presentation that may equip residents with new skills that they may wish to develop (3.5 points);(ii) annual income tax preparation (offered by an income tax prep service) or IRS-certified VITA (Volunteer Income Tax Assistance) program (offered by a qualified individual) that also emphasizes how to claim the Earned Income Tax Credit (1 point);(iii) contracted career training and placement partnerships with local worksource offices, culinary programs, or vocational counseling services; may include resident training programs that train and hire residents for job opportunities inside the development in areas like leasing, tenant services, maintenance, landscaping, or food and beverage operation (2 points);(iv) external partnerships for provision of weekly substance abuse meetings at the Development Site (1 point); (v) reporting rent payments to credit bureaus for any resident who affirmatively elects to participate, which will be a requirement of the LURA for the duration of the Affordability Period (2 points); and(vi) participating in a non-profit healthcare job training and placement service that includes case management support and other need-based wraparound services to reduce barriers to employment and support Texas healthcare institution workforce needs (2 points).(vii) An eviction prevention program operated by a case manager. The case manager may be an employee of the owner or a third-party social service provider and shall be responsible for no more than 50 cases at a time. On at least a monthly basis, the case manager will obtain contact information and past due balances for households that are at risk of eviction for nonpayment of rent. For households that voluntarily choose to participate, the case manager shall offer an eviction holdoff agreement providing a minimum of 6 months for the household to resolve the past due balance and forgiving any late fees associated with that balance, regardless of whether they have been paid, should the agreement be fulfilled. During the eviction holdoff period, the case manager will offer to meet with the household at least once every other week. The case manager will identify resources in the community that provide emergency rental assistance and other financial support and assist the household in applying for these programs (5 points).(D) Health Supportive Services include:(i) food pantry consisting of an assortment of non-perishable food items and common household items (i.e. laundry detergent, toiletries, etc.) accessible to residents at least on a monthly basis or upon request by a resident. While it is possible that transportation may be provided to a local food bank to meet the requirement of this resident service, the resident must not be required to pay for the items they receive at the food bank (2 points);(ii) annual health fair provided by a health care professional (1 point);(iii) weekly exercise classes (offered at times when most residents would be likely to attend) (2 points); and(iv) contracted onsite occupational or physical therapy services for Elderly Developments or Developments where the service is provided for Persons with Disabilities and documentation to that effect can be provided for monitoring purposes (2 points).(E) Community Supportive Services include:(i) partnership with local law enforcement or local first responders to provide quarterly on-site social and interactive activities intended to foster relationships with residents (such activities could include playing sports, having a cook-out, swimming, card games, etc.) (2 points);(ii) Notary Services during regular business hours (§2306.6710(b)(3)) (1 point);(iii) twice monthly arts, crafts, and other recreational activities (e.g. Book Clubs and creative writing classes) (1 point);(iv) twice monthly on-site social events (i.e. potluck dinners, game night, sing-a-longs, movie nights, birthday parties, holiday celebrations, etc.) (1 point);(v) specific service coordination services offered by a qualified Owner or Developer, qualified provider or through external, contracted parties for seniors, Persons with Disabilities or Supportive Housing (3 points);(vi) weekly home chore services (such as valet trash removal, assistance with recycling, furniture movement, etc., and quarterly preventative maintenance including light bulb replacement) for Elderly Developments or Developments where the service is provided for Persons with Disabilities and documentation to that effect can be provided for monitoring purposes (2 points);(vii) any of the programs described under Title IV-A of the Social Security Act (42 U.S.C. §§601, et seq.) which enables children to be cared for in their homes or the homes of relatives; ends the dependence of needy families on government benefits by promoting job preparation, work and marriage; prevents and reduces the incidence of unplanned pregnancies; and encourages the formation and maintenance of two-parent families (1 point);(viii) a part-time resident services coordinator with a dedicated office space at the Development or a contract with a third-party to provide the equivalent of 15 hours or more of weekly resident supportive services at the Development (2 points); and(ix) provision, by either the Development Owner or a community partner, of an education tuition- or savings-match program or scholarships to residents who may attend college (2 points).(8) Development Accessibility Requirements. All Developments must meet all specifications and accessibility requirements as identified in subparagraphs (A) - (F) of this paragraph and any other applicable state or federal rules and requirements. The accessibility requirements are further identified in the Certification of Development Owner as provided in the Application.(A) The Development shall comply with the accessibility requirements under Federal law and as further defined in Chapter 1, Subchapter B of this title (relating to Accessibility Requirements). (§§2306.6722; 2306.6730).(B) Regardless of building type, all Units accessed by the ground floor or by elevator (affected units) must comply with the visitability requirements in clauses (i) - (iii) of this subparagraph. Design specifications for each item must comply with the standards of the Fair Housing Act Design Manual. Buildings occupied for residential use on or before March 13, 1991 are exempt from this requirement. If the townhome Units of a Rehabilitation Development do not have a bathroom on the ground floor, the Applicant will not be required to add a bathroom to meet the requirements of clause (iii) of this subparagraph. Visitability requirements include:(i) All common use facilities must be in compliance with the Fair Housing Design Act Manual;(ii) To the extent required by the Fair Housing Design Act Manual, there must be an accessible or exempt route from common use facilities to the affected units; and(iii) Each affected unit must include the features in subclauses (I) - (V) of this clause:(I) At least one zero-step, accessible entrance;(II) At least one bathroom or half-bath with toilet and sink on the entry level. The layout of this bathroom or half-bath must comply with one of the specifications set forth in the Fair Housing Act Design Manual;(III) The bathroom or half-bath must have the appropriate blocking relative to the toilet for the later installation of a grab bar, if ever requested by the tenant of that Unit;(IV) There must be an accessible route from the entrance to the bathroom or half-bath, and the entrance and bathroom must provide usable width; and(V) Light switches, electrical outlets, and thermostats on the entry level must be at accessible heights.(C) The Development Owner is and will remain in compliance with state and federal laws, including but not limited to, fair housing laws, including Chapter 301, Property Code, Title VIII of the Civil Rights Act of 1968 (42 U.S.C. §§3601 et seq.), the Fair Housing Amendments Act of 1988 (42 U.S.C. §§3601 et seq.); the Civil Rights Act of 1964 (42 U.S.C. §§2000a et seq.); the Americans with Disabilities Act of 1990 (42 U.S.C. §§12101 et seq.); the Rehabilitation Act of 1973 (29 U.S.C. §§701 et seq.); Fair Housing Accessibility; the Texas Fair Housing Act; and that the Development is designed consistent with the Fair Housing Act Design Manual produced by HUD, and the Texas Accessibility Standards. (§2306.257; §2306.6705(7))(D) All Applications proposing Rehabilitation (including Reconstruction) will be treated as substantial alteration, in accordance with Chapter 1, Subchapter B of this title (relating to Section 504 of the Rehabilitation Act of 1973 and the Fair Housing Act).(E) For all Developments other than Direct Loan Developments, for the purposes of determining the appropriate distribution of accessible Units across Unit Types, assuming all the Units have similar features only the number of Bedrooms and Full Bathrooms will be used to define the Unit Type, but accessible Units must have an equal or greater square footage than the square footage offered in the smallest non-accessible Unit with the same number of Bedrooms and Full Bathrooms. For Direct Loan Developments, for purposes of determining the appropriate distribution of accessible Units across Unit Types, the definition of Unit Type will be used. However, a single story Unit may be substituted for a townhome Unit, if the single story Unit contains the same number of Bedrooms and Full Bathrooms/Half Bathrooms (as applicable), and has an equal or greater square footage.(F) Alternative methods of calculating the number of accessible Units required in a Development must be approved by the Department prior to award or allocation.</content><note type="source"><p>Source Note: The provisions of this §11.101 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c11/scC"><num value="C">SUBCHAPTER C</num><heading>APPLICATION SUBMISSION REQUIREMENTS, INELIGIBILITY CRITERIA, BOARD DECISIONS AND WAIVER OF RULES</heading><section identifier="/us/state/tx/tac/t10/p1/c11/scC/s11.201"><num value="11.201">§11.201</num><heading>Procedural Requirements for Application Submission</heading><content>This subchapter establishes the procedural requirements for Application submission. Only one Application may be submitted for a Development Site in an Application Round. While the Application Acceptance Period is open or prior to the Application deadline, an Applicant may withdraw an Application and subsequently file a new Application utilizing the original pre-application fee (as applicable) that was paid as long as no substantive evaluation was performed by the Department and the re-submitted Application relates to the same Development Site, consistent with §11.9(e)(3) of this chapter (relating to Criteria promoting the efficient use of limited resources and applicant accountability). Withdrawal of an Application is permanent. Applicants are subject to the schedule of fees as set forth in §11.901 of this chapter (relating to Fee Schedule).(1) General Requirements.(A) An Applicant requesting funding from the Department must submit an Application in order to be considered for an award. An Application must be complete (including all required exhibits and supporting materials) and submitted by the required program deadline. If an Application, including the corresponding Application fee as described in §11.901 of this chapter, is not submitted to the Department on or before the applicable deadline, the Applicant will be deemed not to have made an Application; provided, however, that errors in the calculation of applicable fees may be cured via an Administrative Deficiency. The deficiency period for curing fee errors will be 5:00 p.m. on the third business day following the date of the deficiency notice and may not be extended. Failure to cure such an error timely will be grounds for termination.(B) Applying for multifamily funds from the Department is a technical process that must be followed completely. As a result of the competitive nature of some funding sources, an Applicant should proceed on the assumption that deadlines are fixed and firm with respect to both date and time and cannot be waived except where authorized and for truly extraordinary circumstances, such as the occurrence of a significant natural disaster that makes timely adherence impossible. If checks or original Carryover Allocation Agreements are physically delivered to the Department, it is the Applicant's responsibility to be within the Department's doors by the appointed deadline. All Applications and all related materials are to be delivered electronically pursuant to the Multifamily Programs Procedures Manual. Applicants are strongly encouraged to submit the required items well in advance of established deadlines. Applicants must ensure that all documents are legible, properly organized and tabbed, and that materials are fully readable by the Department.(C) The Applicant must timely upload a PDF copy and Excel copy of the complete Application to the Department's secure web transfer server. The PDF copy and Excel copy of the Application must match. If variations exist between the two copies, an Administrative Deficiency will be issued for the Applicant to identify which document to rely on. Each copy must be in a single file and individually bookmarked as further described in the Multifamily Programs Procedures Manual. Additional files required for Application submission outside the Uniform Application must also be uploaded to the secure web transfer server. It is the responsibility of the Applicant to confirm the upload to the Department's secure web transfer server was successful and to do so in advance of the deadline. If an Applicant can view the files that were uploaded, then that shall serve as an indication that the Application was uploaded and received by the Department. Staff, may, as a courtesy, confirm that the Application files were uploaded, but shall not be obligated or required to confirm such submission. Where there are instances of computer problems, mystery glitches, etc. that prevent the Application from being received by the Department prior to the deadline, the Application may be terminated.(D) Applications must include materials addressing all of the items enumerated in this chapter and other chapters as applicable. If an Applicant does not believe that a specific item should be applied, the Applicant must include, in its place, a statement identifying the required item, stating that it is not being supplied, and a statement as to why the Applicant does not believe it should be required.(2) Filing of Application for Tax-Exempt Bond Developments. Applications must be submitted to the Department as described in either subparagraph (A) or (B) of this paragraph. Applications will be required to satisfy the requirements of this chapter and applicable Department rules that coincide with the year the Certificate of Reservation is issued. Those Applications that receive a Traditional Carryforward Designation will be subject to the QAP and applicable Department rules in place at the time the Application is received by the Department, unless determined otherwise by staff. Regardless of the timing associated with notification by the TBRB that an application is next in line to receive a Certificate of Reservation and the corresponding deadline to submit the Application pursuant to 34 TAC §190.3(b)(13), it is the Department's expectation that the requirements in this chapter are adhered to, and that care and attention are given to the compilation of the Application, or the Application may be terminated. Depending on the timing associated with the release of the online Multifamily Management System, in lieu of submitting the Application as described herein for Priority 1 and 2 applications, staff may allow an Applicant to submit an Intent to Apply for 4% Housing Tax Credits form, and the required Application Fee, to meet the requirement to have the Certificate of Reservation issued by the TBRB. (A) Lottery Applications. At the option of the bond issuer, an Applicant may participate in the TBRB lottery for private activity bond volume cap. Applicants should refer to the TBRB website or discuss with their issuer or TBRB staff, the deadlines regarding lottery participation and the timing for the issuance of the Certificate of Reservation based on lottery results. Depending on the Priority designation of the application filed with TBRB, the Application submission requirements to the Department under clauses (i) - (iii) of this subparagraph must be met. For those that participate in the Lottery but are not successful (i.e. a Certificate of Reservation will not be issued in January, but at some other time), the Application may not be submitted until a Certificate of Reservation has been issued (i.e. Priority 3 applications) or TBRB has sent an email stating the application is next in line (i.e. Priority 0, Priority 1 or Priority 2), but the Certificate of Reservation cannot be issued until the Application is submitted.(i) Priority 0 applications for supplemental bond allocations: If an Applicant is seeking additional private activity bond volume cap pursuant to Tex. Gov't Code §1372.0321(a), upon notice from the TBRB that the Application is next in line to receive a Certificate of Reservation, a complete Application will not be required to be submitted and staff will notify TBRB accordingly. However, if there are changes to the Development that are different from what the Department originally approved that would constitute an amendment under §10.405 of this title (relating to Amendments and Extensions) a request for an Amendment must be submitted to the Department. Staff will not re-issue the Determination Notice associated with supplemental bond allocations. (ii) Priority 1 or 2 applications: If the Certificate of Reservation will be issued in January, the Applicant may submit the complete Application, including all required Third Party Reports, accompanied by the Application Fee described in §11.901 of this chapter, within the timeframe allowed under the TBRB notice. Alternatively, upon notification from TBRB that an Applicant is next in line to receive a Reservation the Applicant may choose to only submit the complete Application (excluding all required Third Party Reports), for purposes of meeting TBRB requirements to have the Certificate of Reservation issued. In this case, the Application will not be scheduled for a Board meeting or target date for the issuance of the Determination Notice, as applicable, until such time the Third Party Reports have been submitted, which should be on the fifth of the month. The Application may be scheduled for a Board meeting at which the decision to have the Determination Notice issued would be made, or the target date for the issuance of the Determination Notice, as applicable, approximately 90 days following the submission of such Third Party Reports. If the fifth day falls on a weekend or holiday, the submission deadline shall be on the next business day. For Third Party Reports that are submitted after the fifth of the month, it will be staff's discretion as to which Board meeting the Application will be presented, or target date for the issuance of the Determination Notice, as applicable. The Application must be submitted using the Uniform Application released by the Department for the upcoming program year.(iii) Priority 3 applications: Once the Certificate of Reservation has been issued, the same Application submission requirements as indicated in clause (ii) of this subparagraph apply. Specifically, an Applicant may submit the Application including or excluding the Third Party Reports, however, only after the Application is considered complete (i.e. Application Fee and all Third Party Reports) will staff schedule the Application for a Board meeting or target date for the issuance of the Determination Notice. The timing of when a Priority 3 Application is submitted to the Department is up to the Applicant and if not submitted on the fifth of the month, it will be staff's discretion as to which Board meeting the Application will be presented, or target date for the administrative issuance of the Determination Notice, as applicable.(B) Non-Lottery Applications or Applications Not Successful in Lottery.(i) Applications designated as Priority 1 or 2 by the TBRB must submit the Application Fee described in §11.901 of this chapter and the complete Application, with the exception of the Third Party Reports, before the Certificate of Reservation can be issued by the TBRB. The Third Party Reports, if not submitted with the Application to meet the TBRB submission requirement, must then be submitted on the fifth day of the month and the Application may be scheduled for a Board meeting at which the decision to have the Determination Notice issued would be made, or the target date for the administrative issuance of the Determination Notice, as applicable, approximately 90 days following such submission deadline. If the fifth day falls on a weekend or holiday, the submission deadline shall be on the next business day. If the Third Party Reports are submitted on a date other than the fifth of the month, it will be at staff's discretion as to which Board meeting the Application will be presented, or what will be the target date for the administrative issuance of the Determination Notice, as applicable. Applicants may not submit the Application until staff receives notice from TBRB that the application is next in line to receive a Certificate of Reservation; or(ii) An Application designated as Priority 3 will not be accepted until after the TBRB has issued a Certificate of Reservation and may be submitted on the fifth day of the month. Priority 3 Application submissions must be complete, including all Third Party Reports and the required Application Fee described in §11.901 of this chapter, before they will be considered accepted by the Department and meeting the submission deadline for the applicable Board meeting date or administrative issuance of the Determination Notice, as applicable.(C) Generally, the Department will require at least 90 days to review an Application unless staff can complete its evaluation in sufficient time for earlier consideration. If the Application is layered with other Department funds the Department will require at least 120 days to complete its evaluation. If, at the time of Application submission, other Department funding is over-subscribed, the submitted Application cannot include a request for such funds. An Applicant should expect this timeline to apply regardless of whether the Board will need to approve the issuance of the Determination Notice or it is determined that staff can issue the Determination Notice administratively for a particular Application. Applicants should be aware that unusual financing structures, portfolio transactions, the need to resolve Administrative Deficiencies and changes made by an Applicant after the Application has been reviewed by staff may require additional time to review. In instances where an Application necessitates more staff time to review than normal, where an Application is suspended due to the inability to resolve Administrative Deficiencies by the original deadline, or an extension to respond to an Administrative Deficiency is requested, staff is not obligated to ensure the Application meets the original target date for a Board Meeting or administrative issuance of a Determination Notice, as applicable. Moreover, such review period may be longer depending on the volume of Applications under review and statutory program timing constraints associated with such Applications. The prioritization of Applications will be subject to the review priority established in paragraph (5) of this section. (D) Withdrawal of Certificate of Reservation. Applications under review by the Department that have the Certificate of Reservation withdrawn and for which a new Certificate of Reservation is not expected to be issued within a reasonable amount of time, as determined by staff, the Department will consider the Application withdrawn and the Applicant will be provided notice to that effect. Once a new Certificate of Reservation is issued, it will be at the Department's discretion to determine whether the existing Application can still be utilized for purposes of review or if a new Application, including payment of another Application Fee, must be submitted. The Department will not prioritize the processing of the new Application over other Applications under review once a new Certificate of Reservation is issued, regardless of the stage of review the Application was in prior to the withdrawal of the Certificate of Reservation, or that it maintain the originally selected Board meeting or targeted administrative issuance date for the Determination Notice, as applicable.(E) Direct Loan Applications must be submitted in accordance with the requirements in this chapter, §13.5 (relating to the Application and Award Process), and the applicable Notice of Funding Availability (NOFA). (F) The Department has contracted with a third party for the development of an online Multifamily Management System (MMS), which may enable for the online submission of Applications. The Department may invite a limited number of Applicants to submit Applications through that system. Should that occur, staff may provide reasonable relief from non-statutory deadlines and other requirements of this chapter to facilitate that testing. No advantage will be provided to Applicants that participate in this testing. (3) Withdrawal of Application. An Applicant may withdraw an Application prior to or after receiving an award of funding by submitting to the Department written notice of the withdrawal. To the extent a Direct Loan award is returned after Board approval, penalties may be imposed on the Applicant and Affiliates in accordance with §13.11(a) of this title (relating to Post Award Requirements).(4) Competitive Evaluation Process. Applications believed likely to be competitive will undergo a program review for compliance with submission requirements and selection criteria, as applicable. In general, Application reviews by the Department shall be conducted based upon the likelihood that an Application will be competitive for an award based upon the region, set-aside, self score, received date, or other ranking factors. Thus, non-competitive or lower scoring Applications may never be reviewed. The Director of Multifamily Finance will identify those Applications that will receive a full program review based upon a reasonable assessment of each Application and its relative position to other Applications, but no Application with a competitive ranking shall be skipped or otherwise overlooked. This initial assessment may be a high level assessment, not a full assessment. The Real Estate Analysis division shall underwrite Applications that received a full program review and remain competitive to determine financial feasibility and an appropriate funding amount. In making this determination, the Department will use §11.302 of this chapter (relating to Underwriting Rules and Guidelines) and §13.6 of this title (relating to Multifamily Direct Loan Rule) as applicable. The Department may have an external party perform all or part of the underwriting evaluation and components thereof to the extent it determines appropriate. The expense of any external underwriting shall be paid by the Applicant prior to the commencement of the aforementioned evaluation pursuant to §11.901(5) of this chapter (relating to Fee Schedule, Appeals and other Provisions). The reviews by the Multifamily Finance Division and the Real Estate Analysis Division will be conducted to meet the requirements of the Program or NOFA under which the Application was submitted. Applications will undergo a previous participation review in accordance with Chapter 1, Subchapter C of this title (relating to Previous Participation) and a Development Site may be evaluated by the Department or its agents through a physical site inspection or site visit, (which may include neighboring areas), independent of or concurrent with a site visit that may be performed in conjunction with §11.101(a)(3) (relating to Neighborhood Risk Factors). The Department may provide a scoring notice reflecting such score to the Applicant which will trigger appeal rights and corresponding deadlines pursuant to Tex. Gov't Code §2306.6715 and §11.902 of this chapter (relating to Appeals Process). For an Application for which the selection criteria are reviewed, the scoring notice for the Application will be sent to the Applicant no later than 21 days prior to the final Board approval of awards.(5) Order of review of Applications under various Programs. This paragraph identifies how ties or other matters will be handled when dealing with de-concentration requirements, capture rate calculations, and general order of review of Applications submitted under different programs.(A) De-concentration. Priority will be established based on the earlier date associated with an Application. The dates that will be used to establish priority are as follows:(i) for Tax-Exempt Bond Developments, the issuance date of the Certificate of Reservation issued by the TBRB; or in instances where there is a Traditional Carryforward Designation associated with an Application the Department will utilize the date the complete HTC Application associated with the Traditional Carryforward Designation is submitted to the Department;(ii) for all other Developments, the date the Application is considered received by the Department; and(iii) notwithstanding the foregoing, after July 31 of the current program year, a Tax-Exempt Bond Development with a Certificate of Reservation from the TBRB will take precedence over any Housing Tax Credit Application from the current Application Round on the waiting list.(B) General Review Priority. Order of reviews of Applications under various multifamily programs will be established based on Department staff's consideration of any statutory timeframes associated with a program or Application in relation to the volume of Applications being processed.(6) Deficiency Process. The purpose of the deficiency process is to allow an Applicant to provide clarification, explanation, or non-material missing information to resolve inconsistencies in the original Application or to assist staff in an efficient and effective review of the Application. The deficiency process does not require staff to request information from the Applicant in order to complete the Application. Applicants are encouraged to utilize manuals or other materials produced by staff, as additional guidance in conjunction with the rules to provide appropriate support for each item substantiating a claim or representation, such as claims for points, qualification for set-asides, or meeting of threshold and eligibility requirements. Because the review of an Application occurs in several phases, deficiency notices may be issued during any of these phases. Staff will send the deficiency notice via an e-mail to the Applicant and one other contact party if identified in the Application. It is the Applicant's responsibility to ensure that e-mails sent from TDHCA staff to the Applicant or contact are not electronically blocked or redirected by a security feature as they will be considered to be received once they are sent. The time period for responding to a deficiency notice commences on the first business day following the deficiency notice date. Deficiency notices may be sent to an Applicant prior to or after the end of the Application Acceptance Period and may also be sent in response to reviews on post-award submissions. Responses are required to be submitted electronically as a PDF or multiple PDF files and must be uploaded to the Application's ServU http file. Emailed responses will not be accepted. A review of the response provided by the Applicant may reveal that issues initially identified as an Administrative Deficiency are actually determined to be beyond the scope of an Administrative Deficiency process, meaning they are Material Deficiencies not susceptible to being resolved. Department staff may in good faith provide an Applicant confirmation that an Administrative Deficiency response has been received or that such response is satisfactory. Communications from staff that the response was satisfactory do not establish any entitlement to points, eligibility status, or to any presumption of having fulfilled any requirements. Final determinations regarding the sufficiency of documentation submitted to cure a Deficiency as well as the distinction between material and non-material missing information are reserved for the Department staff and Board.(A) It is critical that the use of the deficiency process not unduly slow the review process, and since the process is intended to clarify or explain matters or obtain at the Department's request missing information, there is an expectation that a party responding to an Administrative Deficiency will be able to respond immediately. It is the responsibility of a person who receives a deficiency to address the matter in a timely manner so that staff has the ability to review the response by the close of business on the date by which resolution must be complete and the deficiency fully resolved. Merely submitting materials prior to that time places the responsibility on the responding party that if the materials do not fully resolve the matter there may be adverse consequences such as point deductions, suspension, or termination. Extensions relating to Administrative Deficiency deadlines may only be extended up to five days if documentation needed to resolve the item is needed from a Third Party, the documentation involves Third Party signatures needed on certifications in the Application, or an extension is requested as a reasonable accommodation. A Deficiency response may not contain documentation that did not exist prior to submission of the pre-application or Full Application, as applicable, except as specifically allowed by 10 TAC §11.1(d)(2).(B) Deficiencies for Competitive HTC Applications. Unless an extension has been timely requested and granted prior to the deadline, if a deficiency is not fully resolved to the satisfaction of the Department by 5:00 p.m. on the fifth business day following the date of the deficiency notice, then five (5) points shall be deducted from the selection criteria score for each additional day the deficiency remains unresolved. Points deducted for failure to timely respond to a deficiency will not impact the Pre-Application score. If deficiencies are not resolved by 5:00 p.m. on the seventh business day following the date of the deficiency notice, then the Application shall be terminated, subject to the Applicant's right to appeal. An Applicant may not change or supplement any part of an Application in any manner after the filing deadline or while the Application is under consideration for an award, and may not add any set-asides, increase the requested credit amount, revise the Unit mix (both income levels and Bedroom mixes), or adjust their self-score except in response to a direct request from the Department to do so as a result of an Administrative Deficiency. (§2306.6708(b); §2306.6708) Applicants may not use the Deficiency Process to increase a scoring item's points or to change any aspect of the proposed Development, financing structure, or other element of the Application. To the extent that the review of deficiency documentation or the imposing of point reductions for late responses alters the score assigned to the Application, such score will be reflected in the updated application log published on the Department's website or a Scoring Notice may be issued.(C) Deficiencies for Tax-Exempt Bond Developments. Unless an extension has been requested prior to the deadline, deficiencies must be resolved to the satisfaction of the Department by 5:00 p.m. on the fifth business day following the date of the deficiency notice. Applications with unresolved deficiencies after 5:00 p.m. on the fifth business day following the date of the deficiency notice will be suspended from further processing and the Applicant will be provided with notice to that effect. If, on the fifth business day following the date of the suspension notice, there are deficiencies that remain unresolved, the Application will be terminated and the Applicant will be provided notice to that effect. If an Applicant appeals a staff termination to the Board, Board decisions on terminations are final and an Applicant will not be allowed to re-apply under the same Certificate of Reservation due to the limited timeframe allowed under the existing Reservation.(D) Deficiencies for Direct Loan-only Applications. Deficiencies must be resolved to the satisfaction of the Department by 5:00 p.m. on the fifth business day following the date of the deficiency notice. Applications with unresolved deficiencies after 5:00 p.m. on the fifth business day following the date of the deficiency notice will be suspended from further processing and the Applicant will be provided with notice to that effect. If, on the fifth business day following the date of the suspension notice, there are deficiencies that remain unresolved, the Application may be terminated and the Applicant will be provided notice to that effect. For purposes of priority under the Direct Loan set-asides, if the outstanding item(s) are resolved during the suspension period, the date by which the final deficient item is submitted shall be the new Application Acceptance Date pursuant to §13.5(c) of this title (relating to Multifamily Direct Loan Rule). Applicants should be prepared for additional time needed for completion of staff reviews as described in paragraph (2)(B) of this section. Should an Applicant still desire to move forward with the Development after Termination, a completely new Application must be submitted, along with a new Application Fee, as applicable, pursuant to rule. All of the deficiencies noted in the original deficiency notice must be incorporated into the re-submitted Application, which will have a new Application Acceptance Date.(7) Limited Reviews. If, after the submission of the Application, an Applicant identifies an error in the Application that could likely be the subject of a Deficiency, the Applicant may request a limited review of the specific and limited issues in need of clarification or correction. The issue may not relate to the score of an Application. This limited review may only cover the specific issue and not the entire Application. If the limited review results in the identification of an issue that requires correction or clarification, staff will request such through the Deficiency process as stated in paragraph (6) of this section, if deemed appropriate. A limited review is intended to address:(A) Clarification of issues that Department staff would have difficulty identifying due to the omission of information that the Department may have access to only through Applicant disclosure, such as a prior removal from a tax credit transaction or participation in a Development that is not identified in the previous participation portion of the Application; or(B) Technical correction of non-material information that would cause an Application deemed non- competitive to be deemed competitive and, therefore, subject to a staff review. For example, failure to mark the Nonprofit Set-Aside in an Application that otherwise included complete submission of documentation for participation in the Nonprofit Set-Aside.(8) Challenges to Opposition. Any written statement from a Neighborhood Organization expressing opposition to an Application may be challenged if it is contrary to findings or determinations, including zoning determinations, of a municipality, county, school district, or other local Governmental Entity having jurisdiction or oversight over the finding or determination. If any such comment is challenged, the challenger must declare the basis for the challenge and submit such challenge by the Challenges to Neighborhood Organization Opposition Delivery Date as identified in §11.2 of this chapter and no later than May 1 of the current year for Competitive HTC Applications. The Neighborhood Organization expressing opposition will be given seven calendar days to provide any information related to the issue of whether their assertions are contrary to the findings or determinations of a local Governmental Entity. All such materials and the analysis by staff will be provided to a fact finder, chosen by the Department, for review and a determination. The fact finder will not make determinations as to the accuracy of the statements presented, but only regarding whether the statements are contrary to findings or determinations of a local Governmental Entity. The fact finder's determination will be final and may not be waived or appealed.</content><note type="source"><p>Source Note: The provisions of this §11.201 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scC/s11.202"><num value="11.202">§11.202</num><heading>Ineligible Applicants and Applications</heading><content>The purpose of this section is to identify those situations in which an Application or Applicant may be considered ineligible for Department funding and subsequently terminated. Such matters may be brought to the attention of staff by anyone, including members of the general public. The items listed in this section include those requirements in Code, §42, Tex. Gov't Code, Chapter 2306, and other criteria considered important by the Department, and does not represent an exhaustive list of ineligibility criteria that may otherwise be identified in applicable rules, federal statutes or regulations, or a specific program NOFA. The Application may include, or Department staff may request, documentation or verification of compliance with any requirements related to the eligibility of an Applicant, Application, Development Site, or Development. One or more of the matters enumerated in paragraph (1) of this section may also serve as a basis for debarment, or the assessment of administrative penalties, and nothing herein shall limit the Department's ability to pursue any such matter. Failure to provide disclosure may be cause for termination.(1) Applicants. An Applicant may be considered ineligible if any of the criteria in subparagraphs (A) - (N) of this paragraph apply to those identified on the organizational chart for the Applicant, Developer and Guarantor. An Applicant is ineligible if the Applicant, Developer, or Guarantor:(A) Has been or is barred, suspended, or terminated from participation in a state or Federal program, including those listed in the U.S. government's System for Award Management (SAM); (§2306.0504)(B) Has been convicted of a state or federal felony crime involving fraud, bribery, theft, misrepresentation of material fact, misappropriation of funds, or other similar criminal offenses within 15 years preceding the received date of Application or Pre-Application submission (if applicable);(C) Is, at the time of Application, subject to an order in connection with an enforcement or disciplinary action under state or federal securities law or by FINRA; subject to a federal tax lien (other than a contested lien for which provision has been made); or the subject of a proceeding in which a Governmental Entity has issued an order to impose penalties, suspend funding, or take adverse action based on an allegation of financial misconduct or uncured violation of material laws, rules, or other legal requirements governing activities considered relevant by the Governmental Entity;(D) Has materially breached a contract with a public agency, and, if such breach is permitted to be cured under the contract, has been given notice of the breach and a reasonable opportunity to cure, and failed to cure that breach within the time specified in the notice of breach;(E) Has misrepresented to a subcontractor the extent to which the Developer has benefited from contracts or financial assistance that has been awarded by a public agency, including the scope of the Developer's participation in contracts with the agency, and the amount of financial assistance awarded to the Developer by the agency;(F) Has been found by the Board to be ineligible based on a previous participation review performed in accordance with Chapter 1 Subchapter C of this title (relating to Previous Participation Review );(G) Is delinquent in any loan, fee, or escrow payments to the Department in accordance with the terms of the loan, as amended, or is otherwise in default with any provisions of such loans, and for which no repayment plan has been approved by the Department;(H) Has failed to cure any past due fees owed to the Department within the time frame provided by notice from the Department and at least 10 days prior to the Board meeting at which the decision for an award is to be made;(I) Would be prohibited by a state or federal revolving door or other standard of conduct or conflict of interest statute, including Tex. Gov't Code §2306.6733, or a provision of Tex. Gov't Code, Chapter 572, from participating in the Application in the manner and capacity they are participating;(J) Has, without prior approval from the Department, had previous Contracts or Commitments that have been partially or fully Deobligated during the 12 months prior to the submission of the Application, and through the date of final allocation due to a failure to meet contractual obligations, and the Person is on notice that such Deobligation results in ineligibility under this chapter;(K) Has provided false or misleading documentation or made other intentional or negligent material misrepresentations or omissions in or in connection with an Application (and certifications contained therein), Commitment or Determination Notice, or Direct Loan Contract for a Development;(L) Was the Owner or Affiliate of the Owner of a Department assisted rental Development for which the federal affordability requirements were prematurely terminated and the affordability requirements have not been re-affirmed or Department funds repaid;(M) Fails to disclose, in the Application, any Principal or any entity or Person in the Development ownership structure who was or is involved as a Principal in any other affordable housing transaction, that has terminated voluntarily or involuntarily within the past 10 years, or plans to or is negotiating to terminate, their relationship with any other affordable housing development. The disclosure must identify the person or persons and development involved, the identity of each other development, and contact information for the other Principals of each such development, a narrative description of the facts and circumstances of the termination or proposed termination, and any appropriate supporting documents. An Application may be referred to the Board for a determination of a person's fitness to be involved as a Principal with respect to an Application, which may include a staff recommendation, using the factors described in clauses (i) - (v) of this subparagraph as considerations:(i) the amount of resources in a Development and the amount of the benefit received from the Development;(ii) the legal and practical ability to address issues that may have precipitated the termination or proposed termination of the relationship;(iii) the role of the person in causing or materially contributing to any problems with the success of the development;(iv) the person's compliance history, including compliance history on other developments; and(v) any other facts or circumstances that have a material bearing on the question of the person's ability to be a compliant and effective participant in their proposed role as described in the Application; (N) Fails to disclose in the Application any voluntary compliance agreement or similar agreement with any governmental agency that is the result of negotiation regarding noncompliance of any affordable housing Development with any requirements. Any such agreement impacting the proposed Development or any other affordable housing Development controlled by the Applicant must be disclosed; or(O) Controls an existing Housing Tax Credit Development that has been approved by staff or the Governing Board for return and reallocation of tax credits under any option established at 10 TAC §11.6 two or more times and that has not yet commenced construction. Controlling multiple existing Housing Tax Credits Developments that have been approved under 10 TAC §11.6 one time each will not trigger this ineligibility criteria. For Applications that are only requesting Competitive Housing Tax Credits, an ineligible Applicant under this subparagraph may submit an Application by the Full Application Delivery Date and be considered eligible if the disqualifying Development has commenced construction as of the May meeting of the Governing Board or May 31st, whichever is sooner. Any ineligible Applicant under this subparagraph that chooses to submit a Competitive Housing Tax Credit Application assumes the risk of doing so, and staff will not recommend to the Board any waiver in the event that the disqualifying Development does not commence construction in time for the Applicant to become eligible.(2) Applications. An Application shall be ineligible if any of the criteria in subparagraphs (A) - (C) of this paragraph apply to the Application:(A) A violation of Tex. Gov't Code §2306.1113, exists relating to Ex Parte Communication. An ex parte communication occurs when an Applicant or Person representing an Applicant initiates substantive contact (i.e. any contact other than permitted social contact) with a board member, or vice versa, in a setting other than a duly posted and convened public meeting, in any manner not specifically permitted by Tex. Gov't Code §2306.1113(b). Such action is prohibited. For Applicants seeking funding after initial awards have been made, such as waiting list Applicants, the ex parte communication prohibition remains in effect so long as the Application remains eligible for funding. The ex parte provision does not prohibit the Board from participating in social events at which a Person with whom communications are prohibited may, or will be present; provided that no matters related to any Application being considered by the Board may be discussed;(B) The Application is submitted after the Application submission deadline (time or date); is missing multiple parts of the Application; or has a Material Deficiency; or(C) For any Development utilizing Housing Tax Credits or Tax-Exempt Bonds:(i) at the time of Application or at any time during the two-year period preceding the date the Application Round begins (or for Tax-Exempt Bond Developments any time during the two-year period preceding the date the Application is submitted to the Department), the Applicant or a Related Party is or has been a person covered by Tex. Gov't Code §2306.6703(a)(1);(ii) if the Application is represented or communicated about by a Person that would prompt the violations covered by Tex. Gov't Code §2306.6733; or(iii) the Applicant proposes to replace in less than 15 years any private activity bond financing of the Development described by the Application, unless the exceptions in Tex. Gov't Code §2306.6703(a)(2) are met.</content><note type="source"><p>Source Note: The provisions of this §11.202 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scC/s11.203"><num value="11.203">§11.203</num><heading>Public Notifications. (§2306.6705(9))</heading><content>A certification, as provided in the Application, that the Applicant met the requirements and deadlines identified in paragraphs (1) - (3) of this section must be submitted with the Application. For Applications utilizing Competitive Housing Tax Credits, notifications generally must not be older than three months from the first day of the Application Acceptance Period. For Tax-Exempt Bond Developments and Direct Loan Applications, notifications generally must not be older than three months prior to the date the complete Application is submitted. If notifications were made in order to satisfy requirements of pre-application submission (if applicable to the program) for the same Application, then no additional notification is required at Application. Should the jurisdiction of the official holding any position or role described in paragraph (2) of this section change between the submission of a pre-application and the submission of an Application in a manner that results in the Development being within a new jurisdiction, Applicants are required to notify the new entity no later than the Full Application Delivery Date.(1) Neighborhood Organization Notifications.(A) The Applicant must identify and notify all Neighborhood Organizations on record with the county or the state as of 30 days prior to the beginning of the Application Acceptance Period and whose boundaries include the entire proposed Development Site. As used in this section, "on record with the state" means on record with the Secretary of State.(B) The Applicant must list, in the certification form provided in the pre-application and Application, all Neighborhood Organizations on record with the county or state as of 30 days prior to the beginning of the Application Acceptance Period and whose boundaries include the proposed Development Site.(2) Notification Recipients. No later than the date the Application is submitted, notification must be sent to all of the entities identified in subparagraphs (A) - (H) of this paragraph. Developments located in an Extra Territorial Jurisdiction (ETJ) of a city are required to notify both city and county officials. The notifications may be sent by e-mail, fax or mail with return receipt requested or similar tracking mechanism. A template for the notification is included in the Application Notification Template provided in the Application. Evidence of notification is required in the form of a certification provided in the Application. The Applicant is required to retain proof of delivery in the event it is requested by the Department. Evidence of proof of delivery is demonstrated by a signed receipt for mail or courier delivery and confirmation of receipt by recipient for fax and e-mail. Officials to be notified are those in office at the time the Application is submitted; however, a mailed notification that is addressed to the entity or officeholder rather than a specific person is acceptable so long as it is mailed to the correct address and otherwise meets all requirements. Note that between the time of pre-application (if made) and full Application, the boundaries of their jurisdictions may change. Meetings and discussions do not constitute notification. Recipients include:(A) Neighborhood Organizations on record with the state or county as of 30 days prior to the beginning of the Application Acceptance Period whose boundaries include the entire Development Site;(B) Superintendent of the school district in which the Development Site is located;(C) Presiding officer of the board of trustees of the school district in which the Development Site is located;(D) Mayor of the municipality (if the Development Site is within a municipality or its extraterritorial jurisdiction);(E) All elected members of the Governing Body of the municipality (if the Development Site is within a municipality or its extraterritorial jurisdiction);(F) Presiding officer of the Governing Body of the county in which the Development Site is located;(G) All elected members of the Governing Body of the county in which the Development Site is located; and(H) State Senator and State Representative of the districts whose boundaries include the Development Site.(3) Contents of Notification.(A) The notification must include, at a minimum, all information described in clauses (i) - (ix) of this subparagraph:(i) the Applicant's name, address, individual contact name, and phone number;(ii) the Development name, address, city and county;(iii) a statement indicating the program(s) to which the Applicant is applying with the Texas Department of Housing and Community Affairs;(iv) whether the Development proposes New Construction, Reconstruction, Adaptive Reuse or Rehabilitation;(v) the physical type of Development being proposed (e.g. single family homes, duplex, apartments, high-rise etc.);(vi) the total number of Units proposed and total number of Low-Income Units proposed;(vii) the residential density of the Development, i.e., the number of Units per acre;(viii) information on how and when an interested party or Neighborhood Organization can provide input to the Department; and(ix) Information on any proposed property tax exemption.(B) The notification may not contain any false or misleading statements. Without limiting the generality of the foregoing, the notification may not create the impression that the proposed Development will target, provide a preference, or serve a Target Population exclusively, unless such population limitation, targeting, or preference is documented in the Application, and is or will be in full compliance with all applicable state and federal laws, including state and federal fair housing laws; and(C) Notifications or any other communications may not contain any statement that violates Department rules, statute, code, or federal requirements.</content><note type="source"><p>Source Note: The provisions of this §11.203 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scC/s11.204"><num value="11.204">§11.204</num><heading>Required Documentation for Application Submission</heading><content>The purpose of this section is to identify the threshold documentation that is required at the time of Application submission, unless specifically indicated or otherwise required by Department rule. Unless stated otherwise, all documentation identified in this section must not be dated more than six (6) months prior to the close of the Application Acceptance Period or the date of Application submission as applicable to the program.(1) Certification, Acknowledgement, and Consent of Development Owner. A certification of the information in this subchapter as well as Subchapter B of this chapter must be executed by the Development Owner and addresses the specific requirements associated with the Development. The Person executing the certification is responsible for ensuring all individuals referenced therein are in compliance with the certification and that they have given it with all required authority and with actual knowledge of the matters certified.(A) The Development will adhere to the Texas Property Code relating to security devices and other applicable requirements for residential tenancies, and will adhere to local building codes or, if no local building codes are in place, then to the most recent version of the International Building Code.(B) This Application and all materials submitted to the Department constitute records of the Department subject to Tex. Gov't Code, Chapter 552. Any person signing the Certification acknowledges that they have the authority to release all materials for publication on the Department's website, that the Department may publish them on the Department's website and release them in response to a request for public information, and make other use of the information as authorized by law.(C) All representations, undertakings and commitments made by Applicant in the Application process expressly constitute conditions to any Commitment, Determination Notice, Carryover Allocation, or Direct Loan Commitment for such Development which the Department may issue or award, and the violation of any such condition shall be sufficient cause for the cancellation and rescission of such Commitment, Determination Notice, Carryover Allocation, or Direct Loan Commitment by the Department. If any such representations, undertakings and commitments concern or relate to the ongoing features or operation of the Development, they shall be enforceable even if not reflected in the Land Use Restriction Agreement. All such representations, undertakings and commitments are also enforceable by the Department and the residents of the Development, including enforcement by administrative penalties for failure to perform (consistent with Chapter 2, Subchapter C of this title, relating to Administrative Penalties), in accordance with the Land Use Restriction Agreement.(D) The Development Owner has read and understands the Department's fair housing educational materials posted on the Department's website as of the beginning of the Application Acceptance Period.(E) The Applicant will attempt to ensure that at least 30% of the construction and management businesses with which the Applicant contracts in connection with the Development are Minority Owned Businesses as further described in Tex. Gov't Code §2306.6734.(F) The Development Owner will specifically market to veterans through direct marketing or contracts with veteran's organizations and will specifically market to the public housing authority (PHA) waitlists for any PHA in the city and/or county the Development is located within and the PHA of any City within 5 miles of the Development. The Development Owner will be required to identify how they will specifically market to veterans and the PHA waiting lists and report to the Department in the annual housing report on the results of the marketing efforts to veterans and PHA waiting lists. Exceptions to this requirement must be approved by the Department.(G) The Development Owner will comply with any and all notices required by the Department.(H) If the Development has an existing LURA with the Department, the Development Owner will comply with the existing restrictions. (I) The Development Owner acknowledges that all Applications are subject to a review for compliance with applicable accessibility standards, including those proposing the Rehabilitation of an existing Development.(2) Applicant Eligibility Certification. A certification of the information in this subchapter as well as Subchapter B of this chapter must be executed by any individuals required to be listed on the organizational chart and also meeting the definition of Control. The certification must identify the various criteria relating to eligibility requirements associated with multifamily funding from the Department, including but not limited to the criteria identified under §11.202 of this chapter (relating to Ineligible Applicants and Applications).(3) Engineer/Architect Certification Form. The certification, addressing all of the accessibility requirements applicable to the Development Site, must be executed by the Development engineer or accredited architect after careful review of the Department's accessibility requirements, and including Tex. Gov't Code §2306.6722 and §2306.6730.(4) Notice, Hearing, and Resolution for Tax-Exempt Bond Developments. In accordance with Tex. Gov't Code, §2306.67071, the following actions must take place with respect to the filing of an Application and any Department consideration for a Tax-Exempt Bond Development.(A) Prior to submission of an Application to the Department, an Applicant must provide notice of the intent to file the Application in accordance with §11.203 of this chapter (relating to Public Notifications (§2306.6705(9)).(B) The Governing Body of a municipality must hold a hearing if the Development Site is located within a municipality or the extra territorial jurisdiction (ETJ) of a municipality. The Governing Body of a county must hold a hearing unless the Development Site is located within a municipality. For Development Sites located in an ETJ the county and municipality must hold hearings; however, the county and municipality may arrange for a joint hearing. The purpose of the hearing(s) must be to solicit public input concerning the Application or Development and the hearing(s) must provide the public with such an opportunity. The Applicant may be asked to substantively address the concerns of the public or local government officials.(C) An Applicant must submit to the Department a resolution of no objection from the applicable Governing Body. Such resolution(s) must specifically identify the Development whether by legal description, address, Development name, Application number or other verifiable method. For an Application with a Development Site that is:(i) within a municipality, the Applicant must submit a resolution from the Governing Body of that municipality;(ii) within the ETJ of a municipality, the Applicant must submit both:(I) A resolution from the Governing Body of that municipality; and(II) A resolution from the Governing Body of the county; or(iii) within a county and not within a municipality or the ETJ of a municipality, a resolution from the Governing Body of the county.(D) For purposes of meeting the requirements of subparagraph (C) of this paragraph, the resolution(s) must be submitted no later than the Resolutions Delivery Date described in §11.2(b) of this chapter (relating to Tax-Exempt Bond Dates and Deadlines). An acceptable, but not required, form of resolution may be obtained in the Multifamily Programs Procedures Manual. Applicants should ensure that the resolutions all have the appropriate references and certifications or the resolution may be determined by staff to be invalid. The representations regarding the Development made to the applicable Governing Body to obtain the resolution must remain accurate, as reflected in the submitted Application. If material aspects of the Development have changed from when the Governing Body adopted the resolution, it is incumbent upon the Applicant to obtain a new resolution in order to satisfy this requirement. No resolutions older than four years will be accepted. The resolution(s) must certify that:(i) notice has been provided to the Governing Body in accordance with Tex. Gov't Code §2306.67071(a);(ii) the Governing Body has had sufficient opportunity to obtain a response from the Applicant regarding any questions or concerns about the proposed Development;(iii) the Governing Body has held a hearing at which public comment may be made on the proposed Development in accordance with Tex. Gov't Code §2306.67071(b); and(iv) after due consideration of the information provided by the Applicant and public comment, the Governing Body does not object to the proposed Application.(5) Designation as Rural or Urban.(A) Each Application must identify whether the Development Site is located in an Urban Area or Rural Area of a Uniform State Service Region. The Department shall make available a list of Places meeting the requirements of Tex. Gov't Code §2306.004(28-a)(A) and (B), for designation as a Rural Area and those that are an Urban Area in the Site Demographics Characteristics Report. Some Places are municipalities. For any Development Site located in the ETJ of a municipality and not in a Place, the Application shall have the Rural Area or Urban Area designation of the municipality whose ETJ within which the Development Site is located. For any Development Site not located within the boundaries of a Place or the ETJ of a municipality, the applicable designation is that of the closest Place.(B) Certain areas located within the boundaries of a primary metropolitan statistical area or a metropolitan statistical area can request a Rural designation from the Department for purposes of receiving an allocation Housing Tax Credits (§2306.6740). In order to apply for such a designation, a letter must be submitted from a duly authorized official of the political subdivision or census designated place addressing the factors outlined in clauses (i) - (vi) of this subparagraph. Photographs and other supporting documentation are strongly encouraged. In order for the area to be designated Rural by the Department for the current Application Round, such requests must be made no later than December 15 of the previous year. If staff is able to confirm the findings outlined in the request, the Rural designation will be granted without further action and will remain in effect until such time that the population as described in clause (i) of this subparagraph exceeds 25,000. In the event that staff is unable to confirm the information contained in the request, the Applicant will be given an opportunity to supplement their case. If, after receiving any supplemental information, staff still cannot confirm the rural nature of the Application, a recommendation for denial will be presented to the Board. The factors include:(i) the population of the political subdivision or census designated place does not exceed 25,000;(ii) the characteristics of the political subdivision or census designated place and how those differ from the characteristics of the area(s) with which it shares a contiguous boundary;(iii) the percentage of the total border of the political subdivision or census designated place that is contiguous with other political subdivisions or census designated places designated as urban. For purposes of this assessment, less than 50% contiguity with urban designated places is presumptively rural in nature;(iv) the political subdivision or census designated place contains a significant number of unimproved roads or relies on unimproved roads to connect it to other places;(v) the political subdivision or census designated place lacks major amenities commonly associated with urban or suburban areas; and(vi) the boundaries of the political subdivision or census designated place contain, or are surrounded by, significant areas of undeveloped or agricultural land. For purposes of this assessment, significant being more than one-third of the total surface area of political subdivision/census designated place, or a minimum of 1,000 acres immediately contiguous to the border.(6) Financing Requirements.(A) Non-Department Debt Financing. Interim and permanent financing sufficient to fund the proposed Total Housing Development Cost less any other funds requested from the Department must be included in the Application. For any Development that is a part of a larger development plan on the same site, the Department may request and evaluate information related to the other components of the development plan in instances in which the financial viability of the Development is in whole or in part dependent upon the other portions of the development plan. Any local, state or federal financing identified in this section which restricts household incomes at any level that is lower than restrictions required or elected in accordance with this Chapter or Chapter 13 of this title (relating to Multifamily Direct Loan) must be identified in the rent schedule and the local, state or federal income restrictions must include corresponding rent levels in accordance with Code §42(g) if the Development will receive housing tax credits. Financing amounts must be consistent throughout the Application and acceptable documentation shall include those described in clauses (i) - (iv) of this subparagraph.(i) Financing is in place as evidenced by:(I) a valid and binding loan agreement; and(II) a valid recorded deed(s) of trust lien on the Development in the name of the Development Owner as grantor in favor of the party providing such financing.(ii) Term sheets for interim and permanent loans issued by a lending institution or mortgage company must:(I) be current, non-expired, and have been signed or otherwise acknowledged by the lender;(II) be addressed to the Development Owner or Affiliate;(III) for a permanent loan, include a minimum loan term of 15 years with at least a 30 year amortization or for non-amortizing loan structures a term of not less than 30 years;(IV) include either a committed and locked interest rate, or the lender estimated underwritten interest rate;(V) include the "up to" principal amount of the loan; and(VI) include and address any other material terms and conditions applicable to the financing. The term sheet may be conditional upon the completion of specified due diligence by the lender and upon the award of tax credits, if applicable;(iii) For Developments proposing to refinance an existing USDA Section 514, 515, or 516 loan, a letter from the USDA confirming the outstanding loan balance on a specified date and confirming that the Preliminary Assessment Tool has been submitted by the Applicant to USDA. The loan amount that is reported on the Schedule of Sources (tab 31 in the MF Uniform Application) and that is used to determine the acquisition cost must be the Applicant's estimate of the projected outstanding loan balance at the time of closing as calculated on the USDA Principal Balance Amortization exhibit.(iv) For Direct Loan Applications or Tax-Exempt Bond Developments with TDHCA as the issuer that utilize FHA financing, the Application shall include the applicable pages from the HUD Application for Multifamily Housing Project. If the HUD Application has not been submitted at the time the Application is submitted then a statement to that effect should be included in the Application along with an estimated date for submission. Applicants should be aware that staff's underwriting of an Application will not be finalized and presented to the Board until staff has evaluated the HUD Application relative to the Application.(B) Gap Financing. Any anticipated federal, state, local or private gap financing, whether soft or hard debt, must be identified and described in the Application. Applicants must provide evidence that an application for such gap financing has been made to an available fund source. Acceptable documentation may include a letter from the funding entity confirming receipt of an application or a term sheet from the lending agency which clearly describes the amount and terms of the financing. Other Department funding requested with Housing Tax Credit Applications must be on a concurrent funding period with the Housing Tax Credit Application, and no term sheet is required for such a request. A term loan request must comply with the applicable terms of the NOFA under which an Applicant is applying.(C) Owner Contributions. If the Development will be financed in part with a capital contribution or debt by the General Partner, Managing General Partner, any other partner or investor that is not a partner providing the syndication equity, a Guarantor or a Principal in an amount that exceeds 5% of the Total Housing Development Cost, a letter from a Third Party CPA must be submitted that verifies the capacity of the contributor to provide the capital from funds that are not otherwise committed or pledged. Additionally, a letter from the contributor's bank(s) or depository(ies) must be submitted confirming sufficient funds are readily available to the contributor. The contributor must certify that the funds are and will remain readily available at Commitment and until the required investment is completed. Regardless of the amount, all capital contributions other than syndication equity will be deemed to be a part of, and therefore added to, the Deferred Developer Fee for feasibility purposes under §11.302(i)(2) of this chapter (relating to Underwriting Rules and Guidelines) or where scoring is concerned, unless the contribution is a seller note equal to or less than the acquisition price of the subject Development, the Development is a Supportive Housing Development, the Development is not supported with Housing Tax Credits, or the ownership structure includes a nonprofit organization with a documented history of fundraising sufficient to support the development of affordable housing.(D) Equity Financing. (§2306.6705(2) and (3)) If applicable to the program, the Application must include a term sheet from a syndicator that, at a minimum, includes:(i) an estimate of the amount of equity dollars expected to be raised for the Development;(ii) the amount of Housing Tax Credits requested for allocation to the Development Owner;(iii) pay-in schedules;(iv) syndicator consulting fees and other syndication costs. No syndication costs should be included in the Eligible Basis; and(E) Financing Narrative. (§2306.6705(1)) A narrative should be submitted that describes any special, complex, or unique aspects of the financing plan for the Development, including as applicable any operating subsidies, project-based assistance, replacement reserves, or interest rate swaps; and the status (dates and deadlines) for applications, approvals and closings, etc. associated with the term sheets for soft or other government sources, including the funding source; and any refinancing or loan assumptions for USDA loans, etc. For Applicants requesting Direct Loan funds and 9% LIHTC, Match, as applicable, must be documented with a letter from the anticipated provider of Match indicating the provider's willingness and ability to make a financial commitment should the Development receive an award of Direct Loan funds. (7) Operating and Development Cost Documentation.(A) Fifteen-year Pro forma. All Applications must include a 15-year pro forma estimate of operating expenses (or longer, if required by the NOFA), in the form provided by the Department. Any "other" debt service included in the pro forma must include a description. (B) Utility Allowances. This exhibit, as provided in the Application, must be submitted along with documentation from the source of the utility allowance estimate used in completing the Rent Schedule provided in the Application. This exhibit must clearly indicate which utility costs are included in the estimate and must comply with the requirements of §10.614 of this title (relating to Utility Allowances), including deadlines for submission. Where the Applicant uses any method that requires Department review, documentation indicating that the requested method has been granted by the Department must be included in the Application. Applicants that are uncertain about the applicability of a Utility Allowance to the proposed Development are encouraged to contact the Department as early as possible prior to submitting the Application for guidance. (C) Operating Expenses. This exhibit, as provided in the Application, must be submitted indicating the anticipated operating expenses associated with the Development. Any expenses noted as "other" in any of the categories must include a description. "Miscellaneous" or other nondescript designations are not acceptable.(D) Rent Schedule. This exhibit, as provided in the Application, must meet the requirements of clauses (i) - (vi) of this subparagraph. The income and corresponding rent restrictions will be reflected in the LURA for the duration of the Affordability Period and for Tax-Exempt Bond Developments, in accordance with the Applicant's election under Tex. Gov't Code §1372.0321. The requirements are:(i) indicate the type of Unit restriction based on the Unit's rent and income restrictions;(ii) reflect the rent and utility limits available at the time the Application is submitted;(iii) reflect gross rents that cannot exceed the maximum rent limits unless documentation of project-based rental assistance is provided and rents are consistent with such assistance and applicable legal requirements;(iv) have a Unit mix and net rentable square footages that are consistent with the site plan and architectural drawings;(v) if applying for Direct Loan funds:(I) Direct Loan-restricted Units will generally be designated "floating" unless specifically disallowed under the program specific rules or as specifically allowed in a NOFA;(II) if HOME, TCAP RF, and/or NSP PI are the anticipated fund source, the Application must have at least 90% of the Direct Loan-restricted Units be available to households or families whose incomes do not exceed 60% of the Area Median Income;(III) in which HOME or TCAP RF are the anticipated fund source have at least 20% of the Direct Loan-restricted Units available to households or families whose incomes do not exceed 50% of the Area Median Income;(IV) in which NHTF is the anticipated fund source, have 100% of the Direct Loan-restricted Units available to households or families whose incomes do not exceed the greater of 30% of the Area Median Income or whose income is at or below the poverty line;(V) in which NSP PI is the anticipated fund source, have at least 25% of the Direct Loan-restricted Units available to households or families whose incomes do not exceed 50% of the Area Median Income;(VI) in which HOME-ARP is the anticipated fund source, during the State Affordability Period have at least 20% of the Direct Loan-restricted Units for households and families whose incomes do not exceed 60% of the Area Median Income and 100% of the Direct Loan-restricted Units for households and families whose incomes do not exceed 80% of the Area Median Income; and(vi) if proposing to elect income averaging, Units restricted by any fund source other than housing tax credits must be specifically identified, and all restricted Units, regardless of fund source, must be included in the average calculation.(E) Development Costs. This exhibit, as provided in the Application, must include the contact information for the person providing the cost estimate and must meet the requirements of clauses (i) and (ii) of this subparagraph. For Applications that include a scope of work that contains a combination of new construction and rehabilitation activities, the Application must include a separate development cost schedule exhibit for only the costs attributed to the portion of rehabilitation activities.(i) Applicants must provide a detailed cost breakdown of projected Site Work costs (excluding site amenities), if any, prepared by a Third Party engineer. If Site Work costs (excluding site amenities) exceed $20,000 per Unit and are included in Eligible Basis, a letter must be provided from a certified public accountant allocating which portions of those site costs should be included in Eligible Basis.(ii) If costs for Off-Site Construction are included in the budget as a line item, or embedded in the site acquisition contract, or referenced in the utility provider letters, then an Off-Site Cost Breakdown prepared by a Third Party engineer must be provided. The certification from a Third Party engineer must describe the necessity of the off-site improvements, including the relevant requirements of the local jurisdiction with authority over building codes and the source of their cost estimate. If any Off-Site Construction costs are included in Eligible Basis, a letter must be provided from a certified public accountant allocating which portions of those costs should be included in Eligible Basis. If off-site costs are included in Eligible Basis based on PLR 200916007, a statement of findings from a CPA must be provided which describes the facts relevant to the Development and affirmatively certifies that the fact pattern of the Development matches the fact pattern in PLR 200916007.(F) Rental Assistance/Subsidy. (§2306.6705(4)) If rental assistance, an operating subsidy, an annuity, or an interest rate reduction payment is proposed to exist or continue for the Development, any related contract or other agreement securing those funds. Such documentation shall, at a minimum, identify the source and annual amount of the funds, the number of units receiving the funds, and the term and expiration date of the contract or other agreement.(G) Occupied Developments. The items identified in clauses (i) - (vi) of this subparagraph must be submitted with any Application where any structure on the Development Site is occupied at any time after the Application Acceptance Period begins or if the Application proposes the demolition of any housing occupied at any time after the Application Acceptance Period begins. If the Application includes a request for Direct Loan funds, Applicants must follow the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) and other HUD requirements including Section 104(d) of the Housing and Community Development Act. HUD Handbook 1378 provides guidance and template documents. Failure to follow URA or 104(d) requirements will make the proposed Development ineligible for Direct Loan funds and may lead to penalty under §13.11(b) of this title (relating to Multifamily Direct Loan Rule). If one or more of the items described in clauses (i) - (vi) of this subparagraph is not applicable based upon the type of occupied structures on the Development Site, the Applicant must provide an explanation of such non- applicability. Applicant must submit:(i) The items identified in subclause (I) below. If (I) cannot be submitted, explain the reason and submit (II). Proceed in this manner through subclause (IV):(I) Historical monthly operating statements of the Existing Residential Development for 12 consecutive months ending not more than three months from the first day of the Application Acceptance Period; or(II) The two most recent consecutive annual operating statement summaries; or(III) The most recent consecutive six months of operating statements and the most recent available annual operating summary; or(IV) All monthly or annual operating summaries available; and(ii) a rent roll not more than six months old as of the first day the Application Acceptance Period that discloses the terms and rate of the lease, rental rates offered at the date of the rent roll, Unit mix, and any vacant units;(iii) a written explanation of the process used to notify and consult with the tenants in preparing the Application; (§2306.6705(6))(iv) a relocation plan outlining relocation requirements and a budget with an identified funding source; (§2306.6705(6))(v) any documentation necessary for the Department to facilitate, or advise an Applicant with respect to or to ensure compliance with the URA and any other relocation laws or regulations as may be applicable; and(vi) if applicable, evidence that the relocation plan has been submitted to all appropriate legal or governmental agencies or bodies. (§2306.6705(6))(8) Architectural Drawings. All Applications must include the items identified in subparagraphs (A) - (D) of this paragraph, unless specifically stated otherwise, and must be consistent with all applicable exhibits throughout the Application. The drawings must have a legible scale and show the dimensions of each perimeter wall and floor heights.(A) For all Developments a site plan must be submitted that includes the items identified in clauses (i) - (xii) of this subparagraph:(i) states the size of the site on its face;(ii) includes a Unit and building type table matrix that is consistent with the Rent Schedule and Building/Unit Configuration forms provided in the Application;(iii) includes a table matrix specifying the square footage of Common Area space on a building by building basis;(iv) identifies all residential and common buildings in place on the Development Site and labels them consistently with the Rent Schedule and Building/Unit Type Configuration forms provided in the Application;(v) shows the locations (by Unit and floor) of mobility and hearing/visual accessible Units (unless included in residential building floor plans);(vi) clearly delineates the flood plain boundary lines or states there is no floodplain;(vii) indicates placement of detention/retention pond(s) or states there are no detention ponds;(viii) describes, if applicable, how flood mitigation or other required mitigation will be accomplished;(ix) indicates the location and number of parking spaces, garages, and carports;(x) indicates the location and number of accessible parking spaces, garages, and carports, including van accessible spaces;(xi) includes information regarding local parking requirements; and(xii) indicates compliant accessible routes or if a route is not accessible a cite to the provision in the Fair Housing Design Manual providing for its exemption.(B) Building floor plans must be submitted for each building type. Building floor plans must include the locations of the accessible Units and must also include square footage calculations for balconies, breezeways, corridors and any other areas not included in net rentable area.(C) Unit floor plans for each Unit Type must be included in the Application and must include the square footage. Unit floor plans must be submitted for the accessible Units. Applications for Adaptive Reuse are only required to include Unit floor plans for each distinct floor plan such as one-Bedroom, or two-Bedroom, and for all floor plans that vary in Net Rentable Area by 10% from the typical floor plan.(D) Elevations must be submitted for each side of each building type (or include a statement that all other sides are of similar composition as the front) and include a percentage estimate of the exterior composition and proposed roof pitch. Applications for Rehabilitation may submit photographs if the Unit configurations are not being altered and post-renovation drawings must be submitted if Unit configurations are proposed to be altered.(9) Site Control.(A) Evidence that the Development Owner has Site Control must be submitted. If the evidence is not in the name of the Development Owner, then an Affiliate of the Development Owner must have Site Control that allows for an ability to assign the Site Control to the Development Owner. All of the sellers of the proposed Property for the 36 month period prior to the first day of the Application Acceptance Period and their relationship, if any, to members of the Development Team must be identified at the time of Application. The Department may request documentation at any time after submission of an Application of the Development Owner's ability to compel title of any Affiliated property acquisition(s) and the Development Owner must be able to promptly provide such documentation or the Application, award, or Commitment may be terminated. The Department acknowledges and understands that the Property may have one or more encumbrances at the time of Application submission and the Department will take into account whether any such encumbrance is reasonable within the legal and financial ability of the Development Owner to address without delaying development on the timeline contemplated in the Application. To meet the requirements of subparagraph (B) of this paragraph, Tax-Exempt Bond Developments that do not include a request for Direct Loan or include the Department as the bond issuer, must certify in the Application that the Site Control submitted with the TBRB application for the Certificate of Reservation to be issued is still valid. Tax-Exempt Bond Developments involving Acquisition and Rehabilitation or identity of interest land acquisitions must submit Site Control documents in order to verify the site acquisition cost as required in §11.302 of this chapter.(B) In order to establish Site Control, one of the items described in clauses (i) - (iii) of this subparagraph must be provided. In the case of land donations, Applicants must demonstrate that the entity donating the land has Site Control as evidenced through one of the items described in clauses (i) - (iii) of this subparagraph or other documentation acceptable to the Department. Site Control items include:(i) a recorded warranty deed vesting indefeasible title in the Development Owner or, if transferrable to the Development Owner, an Affiliate of the Owner, with corresponding executed settlement statement (or functional equivalent for an existing lease with at least 45 years remaining); or(ii) a contract or option for lease with a minimum term of 45 years that includes a price; address or legal description; proof of consideration in the form specified in the contract; and expiration date; or(iii) a contract for sale or an option to purchase that includes a price; address or legal description; proof of consideration in the form specified in the contract; and expiration date.(C) If the acquisition can be characterized as an identity of interest transaction, as described in §11.302 of this chapter (relating to Underwriting Rules and Guidelines), then the documentation required as further described therein must be submitted in addition to that of subparagraph (B) of this paragraph.(D) If ingress and egress to a public right of way are not part of the Property described in the site control documentation, the Applicant must provide evidence of an easement, leasehold, or similar documented access, along with evidence that the fee title owner of the property agrees that the LURA may extend to the access easement by the time of Commitment, Determination Notice or Contract (as applicable).(E) If control of the entire proposed Development Site requires that a plat or right of way be vacated to remove a right of way or similar dedication, evidence that the vacation/re-platting process has started must be included in the Application, and evidence of control of the entire Development Site must be provided by the time of Commitment or Contract (as applicable).(10) Zoning. (§2306.6705(5)) Acceptable evidence of zoning for all Developments must include one of subparagraphs (A) - (D) of this paragraph. In instances where annexation of a Development Site occurs while the Application is under review, the Applicant must submit evidence of appropriate zoning with the Commitment or Determination Notice. Letters evidencing zoning status must be no more than 6 months old at Application submission, except where such evidence is for an area where there is no zoning and such letters must be updated annually by the political subdivision.(A) No Zoning Ordinance in Effect. The Application must include a letter from a local government official with appropriate jurisdiction stating that the Development is located within the boundaries of a political subdivision that has no zoning. This requirement does not apply to a Development Site located entirely in the unincorporated area of a county, and not within the ETJ of a municipality.(B) Zoning Ordinance in Effect. The Application must include a letter from a local government official with appropriate jurisdiction stating the Development is permitted under the provisions of the zoning ordinance that applies to the location of the Development.(C) Requesting a Zoning Change, or a Specific or Special Use Permit. The Application must include evidence in the form of a letter from a local government official with jurisdiction over zoning matters that the Applicant or Affiliate has made formal application for a required zoning change and that the jurisdiction has received a release whereby the Applicant has agreed to hold the political subdivision and all other parties harmless in the event the appropriate zoning is not granted. Documentation of final approval of appropriate zoning, including any necessary specific or special use permits,must be submitted to the Department with the Commitment or Determination Notice.(D) Zoning for Rehabilitation Developments. In an area with zoning, the Application must include documentation of current zoning. If the Property is currently conforming but with an overlay that would make it a non-conforming use as presently zoned, the Application must include a letter from a local government official with appropriate jurisdiction which addresses the items in clauses (i) - (v) of this subparagraph:(i) a detailed narrative of the nature of non-conformance; (ii) the applicable destruction threshold;(iii) that it will allow the non-conformance;(iv) Owner's rights to reconstruct in the event of damage; and(v) penalties for noncompliance.(11) Title Commitment/Policy. A title commitment or title policy must be submitted that includes a legal description that is consistent with the Site Control. If the title commitment or policy is dated more than six months prior to the date of Application submission or the first day of the Application Acceptance Period for Competitive HTC Applications, then a letter from the title company indicating that nothing further has transpired during the six-month period on the commitment or policy must be submitted. Tax-Exempt Bond Developments that do not include a request for Direct Loan or include the Department as the bond issuer are exempt from this requirement.(A) The title commitment must list the name of the Development Owner as the proposed insured and list the seller or lessor as the current owner of the Development Site.(B) The title policy must show that the ownership (or leasehold) of the Development Site is vested in the name of the Development Owner.(12) Ownership Structure and Previous Participation.(A) The Department assumes that the Applicant will be able to form any one or more business entities, such as a limited partnership, that are to be engaged in the ownership of a Development as represented in the Application, and that all necessary rights, powers, and privileges including, but not limited to, Site Control will be transferable to that entity. The formation of the ownership entity, qualification to do business (if needed), and transfer of any such rights, powers, and privileges must be accomplished as required in this chapter and Chapters 12 and 13, as applicable.(B) Organizational Charts. A chart must be submitted that clearly illustrates the organizational structure of the proposed Development Owner and of any Developer and Guarantor, identifying all Principals thereof and providing the names and ownership percentages of all Persons having an ownership interest in the Development Owner, Developer and Guarantor, as applicable, whether directly or through one or more subsidiaries, whether or not they have Control. Persons having Control over the Development should be specifically identified on the chart. Individual board members and executive directors of nonprofit entities, governmental bodies, and corporations, as applicable, must be included in this exhibit and trusts must list all beneficiaries that have the legal ability to control or direct activities of the trust and are not just financial beneficiaries. Notwithstanding the foregoing, in the case of Housing Tax Credit Applications only if the entity is owned by a fund regulated by the U.S. Securities and Exchange Commission, no Natural Person is required to be listed or sign any applications The List of Organizations form, as provided in the Application, must include all Persons identified on the organizational charts, and further identify which of those Persons listed exercise Control of the Development.(C) Previous Participation. Evidence must be submitted that each entity shown on the organizational charts described in subparagraph (B) of this paragraph and each individual who exercises Control over the Development has provided a copy of the completed previous participation information to the Department. Individual Principals of such entities identified on the organizational chart and on the List of Organizations form, must provide the previous participation information, unless excluded from such requirement pursuant to Chapter 1 Subchapter C of this title (relating to Previous Participation Review). The information must include a list of all Developments that are, or were, previously under ownership or Control of the Applicant or each Principal, including any Person providing the required experience. All participation in any Department funded or monitored activity, including non-housing activities, as well as Housing Tax Credit developments or other programs administered by other states using state or federal programs must be disclosed. The individuals providing previous participation information must authorize the parties overseeing such assistance to release compliance histories to the Department.(D) Direct Loan and 811 PRA. In addition to the information required in (B) and (C) of this subparagraph, if the Applicant is applying for Direct Loan funds or claiming points for serving tenants with special housing needs through participation in 811 PRA then the Applicant must also include the definitions of Person, Affiliate, Principal, and Control found in 2 CFR Part 180 and 2424, when completing the organizational chart and the Previous Participation information. In addition, for 811 PRA, if claiming points for an Existing Development(s) the organizational chart for the Existing Development(s) must also be included in the Application. (13) Nonprofit Ownership. Applications that involve a §501(c)(3) or (4) nonprofit, housing finance corporation or public facility corporation as the General Partner or Owner shall submit the documentation identified in subparagraph (A) or (B) of this paragraph, as applicable. Additionally, a resolution approved at a regular meeting of the majority of the board of directors of the nonprofit, indicating their awareness of the organization's participation in each specific Application, and naming all members of the board and employees who may act on its behalf, must be provided. For Tax-Exempt Bond Developments, if the bond issuer is the sole member of the General Partner, a copy of the executed inducement resolution will meet the resolution requirement in this paragraph.(A) Competitive HTC Applications for the Nonprofit Set-Aside. Applications for Competitive Housing Tax Credits involving a §501(c)(3) or (4) nonprofit General Partner and which meet the Nonprofit Set-Aside requirements, must submit all of the documents described in clauses (i) to (v) of this subparagraph and indicate the nonprofit status on the carryover documentation and IRS Forms 8609. (§2306.6706) Applications that include an affirmative election to not be treated under the Nonprofit Set-Aside and a certification that they do not expect to receive a benefit in the allocation of tax credits as a result of being Affiliated with a nonprofit, only need to submit the documentation in subparagraph (B) of this paragraph. Required documents include:(i) An IRS determination letter which states that the nonprofit organization has been determined by the Internal Revenue Service to be tax-exempt under §501(c)(3) or (4) of the Code;(ii) The Nonprofit Participation exhibit as provided in the Application, including a list of the names and contact information for all board members, directors, and officers;(iii) A Third Party legal opinion stating:(I) That the nonprofit organization is not Affiliated with or Controlled by a for-profit organization and the basis for that opinion;(II) That the nonprofit organization is eligible, as further described, for a Housing Credit Allocation from the Nonprofit Set-Aside pursuant to Code, §42(h)(5) and the basis for that opinion;(III) That one of the exempt purposes of the nonprofit organization is to provide low-income housing;(IV) That the nonprofit organization prohibits a member of its board of directors, other than a chief staff member serving concurrently as a member of the board, from receiving material compensation for service on the board. If the Application includes a request for Community Housing Development Corporation (CHDO) funds, no member of the board may receive compensation, including the chief staff member;(V) That the Qualified Nonprofit Development will have the nonprofit entity or its nonprofit Affiliate or subsidiary be the Developer or co-Developer as evidenced in the development agreement; and(VI) That the nonprofit organization has the ability to do business as a nonprofit in Texas;(iv) a copy of the nonprofit organization's most recent financial statement as prepared by a Certified Public Accountant; and(v) evidence in the form of a certification that a majority of the members of the nonprofit organization's board of directors principally reside:(I) in this state, if the Development is located in a Rural Area; or(II) not more than ninety (90) miles from the Development, if the Development is not located in a Rural Area.(B) All Other Applications. Applications that involve a §501(c)(3) or (4) nonprofit, housing finance corporation or public facility corporation as the General Partner or Owner must submit an IRS determination letter which states that the nonprofit organization has been determined by the Internal Revenue Service to be tax-exempt under §501(c)(3) or (4) of the Code; and the Nonprofit Participation exhibit as provided in the Application. If the Application involves a nonprofit that is not exempt from taxation under §501(c)(3) or (4) of the Code, then they must disclose in the Application the basis of their nonprofit status. Housing finance corporations or public facility corporations that do not have such IRS determination letter shall submit documentation evidencing creation under their respective chapters of the Texas Local Government Code and corresponding citation for an exemption from taxation.(14) Feasibility Report. This report, compiled by the Applicant or Third Party Consultant, and prepared in accordance with this paragraph, which reviews site conditions and development requirements of the Development and Development Site, is required and must meet all of the criteria provided in subparagraphs (A) to (F) of this paragraph. For Acquisition and Rehabilitation Applications that are only requesting 9% Housing Tax Credits, or 4% Housing Tax Credits for which the Department is not the bond issuer, only subparagraph (D) of this paragraph is required to be submitted. If an Application involves Acquisition and Rehabilitation along with other activities, the Feasibility Report is required for the entire Development. Tax-Exempt Bond Developments where the Department is the bond issuer, or Direct Loan Applications, a report that meets all of the criteria provided in subparagraphs (A) to (F) of this paragraph must be submitted. (A) For all Applications, careful focus and attention should be made regarding any atypical items materially impacting costs or the successful and timely execution of the Development plan. The report must also include the following statement, "any person signing this Report acknowledges that the Department may publish the full report on the Department's website, release the report in response to a request for public information and make other use of the report as authorized by law."(B) An Executive Summary must provide a narrative overview of the Development in sufficient detail that would help a reviewer of the Application better understand the site, the site plan, off site requirements (including discussion of any seller contributions or reimbursements), any other unique development requirements, and their impact on Site Work and Off- Site Construction costs. It should specifically describe any atypical or unusual factors that will impact site design or costs, including but not limited to: Critical Water Quality Zones, habitat protection requirements, construction for environmental conditions (wind, hurricane, flood), and local design restrictions.(C) The Report should contain a general statement regarding the level of due diligence that has been done relating to site development (including discussions with local government development offices). Where ordinances or similar information is required, provide website links rather than copies of the ordinance. Additionally, it should contain:(i) a summary of zoning requirements;(ii) subdivision requirements;(iii) property identification number(s) and millage rates for all taxing jurisdictions;(iv) development ordinances;(v) fire department requirements;(vi) site ingress and egress requirements; and(vii) building codes, and local design requirements impacting the Development.(D) Survey as defined by the Texas Society of Professional Surveyors in their Manual of Practice for Land Surveying in Texas (Category 1A - Land Title Survey or Category 1B - Standard Land Boundary Survey). Surveys (excluding those for Rehabilitation Developments) may not be older than 24 months from the beginning of the Application Acceptance Period.(E) Preliminary site plan for New Construction or Adaptive Reuse Developments prepared by the civil engineer with a statement that the plan materially adheres to all applicable zoning, site development, and building code ordinances. The site plan must identify all structures, site amenities, parking spaces and driveways, topography (using either existing seller topographic survey or U.S. Geological Survey (USGS)/other database topography), site drainage and detention, water and waste water utility tie-ins, general placement of retaining walls, set- back requirements, and any other typical or locally required items. Off-site improvements required for utilities, detention, access or other requirement must be shown on the site plan or ancillary drawings.(F) Architect or civil engineer prepared statement describing the entitlement, site development permitting process and timing, building permitting process and timing, and an itemization specific to the Development of total anticipated impact, site development permit, building permit, and other required fees.</content><note type="source"><p>Source Note: The provisions of this §11.204 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scC/s11.205"><num value="11.205">§11.205</num><heading>Required Third Party Reports</heading><content>The Environmental Site Assessment, Scope and Cost Review, Appraisal (if applicable), and the Market Analysis must be submitted no later than the Third Party Report Delivery Date as identified in §11.2(b) of this chapter (relating to Tax-Exempt Bond and Direct Loan Development Dates and Deadlines). For Competitive HTC Applications, the Environmental Site Assessment, Scope and Cost Review, Appraisal (if applicable), and the Primary Market Area map (with definition based on census tracts, and site coordinates in decimal degrees, area of PMA in square miles, and list of census tracts included) must be submitted no later than the Full Application Delivery Date as identified in §11.2(a) of this chapter (relating to Competitive HTC Deadlines Program Calendar) and the Market Analysis must be submitted no later than the Market Analysis Delivery Date as identified in §11.2(a) of this chapter. For Competitive HTC Applications, if the reports, in their entirety, are not received by the deadline, the Application may be terminated. An electronic copy of the report in the format of a single file containing all information and exhibits clearly labeled with the report type, Development name and Development location are required. All Third Party reports must be prepared in accordance with Subchapter D of this chapter (relating to Underwriting and Loan Policy). The Department may request additional information from the report provider or revisions to the report as needed. In instances of non-response by the report provider, the Department may substitute in-house analysis. The Department is not bound by any opinions expressed in the report.(1) Environmental Site Assessment. This report, required for all Developments and prepared in accordance with the requirements of §11.305 of this chapter (relating to Environmental Site Assessment Rules and Guidelines), must not be dated more than 12 months prior to the date of Application submission for non-Competitive Applications, or the first day of the Application Acceptance Period for Competitive HTC Applications. If this timeframe is exceeded, then a letter or updated report must be submitted, dated not more than six months prior to the date of Application submission or the first day of the Application Acceptance Period for Competitive HTC Applications from the Person or organization which prepared the initial assessment confirming that the site has been re-inspected and reaffirming the conclusions of the initial report or identifying the changes since the initial report.(A) Existing Developments funded by USDA will not be required to supply this information; however, it is the Applicant's responsibility to ensure that the Development is maintained in compliance with all state and federal environmental hazard requirements.(B) If the report includes a recommendation that an additional assessment be performed, then a statement from the Applicant must be submitted with the Application indicating that those additional assessments and recommendations will be performed prior to closing. If the assessments require further mitigating recommendations, then evidence indicating that the mitigating recommendations have been carried out must be submitted at cost certification.(2) Market Analysis. The Market Analysis, required for all Developments and prepared in accordance with the requirements of §11.303 of this chapter (relating to Market Analysis Rules and Guidelines), must not be dated more than six months prior to the date of Application submission or the first day of the Application Acceptance Period for Competitive HTC Applications. If the report is older than six months, but not more than 12 months prior to the date of Application submission or the first day of the Application Acceptance Period for Competitive HTC Applications, the Qualified Market Analyst that prepared the report may provide a statement that reaffirms the findings of the original Market Analysis. The statement may not be dated more than six months prior to the date of Application submission, or Application Acceptance Date for Direct Loan Applications, or the first day of the Application Acceptance Period for Competitive HTC Applications and must be accompanied by the original Market Analysis. (A) For Acquisition/Rehabilitation or Reconstruction projects that meet the following criteria, a comprehensive market study as outlined in IRS Section 42(m)(1)(A)(iii) shall mean a location map and a written statement by a disinterested Qualified Market Analyst certifying that the project meets these criteria:(i) All of the Units in the project contain existing project based rental assistance that will continue for at least the Compliance Period, an existing Department LURA, or the subject rents are at or below 50% AMGI rents;(ii) The Units are at least 80% occupied at time of Application; and(iii) Existing tenants have a leasing preference or right to return to the Development as stated in a relocation plan.(B) The report must be prepared by a disinterested Qualified Market Analyst approved by the Department in accordance with the approval process outlined in §11.303 of this chapter.(C) Applications with USDA financing proposing Rehabilitation with residential structures at or above 80% occupancy at the time of Application submission, the appraisal, required for Rehabilitation Developments and Identity of Interest transactions prepared in accordance with §11.304 of this chapter (relating to Appraisal Rules and Guidelines), will satisfy the requirement for a Market Analysis; however, the Department may request additional information as needed. (§2306.67055; §42(m)(1)(A)(iii))(D). It is the responsibility of the Applicant to ensure that this analysis forms a sufficient basis for the Applicant to be able to use the information obtained to ensure that the Development will comply with fair housing laws.(3) Scope and Cost Review (SCR). This report, required for Rehabilitation (excluding Reconstruction) and Adaptive Reuse Developments and prepared in accordance with the requirements of §11.306 of this chapter (relating to Scope and Cost Review Guidelines), must not be dated more than six months prior to the date of Application submission or the first day of the Application Acceptance Period for Competitive HTC Applications. If the report is older than six months, but not more than 12 months prior to the date of Application submission or the first day of the Application Acceptance Period for Competitive HTC Applications, the report provider may provide a statement that reaffirms the findings of the original SCR. The statement may not be dated more than six months prior to the date of Application submission or the first day of the Application Acceptance Period for Competitive HTC Applications and must be accompanied by the original SCR. For Developments which require a capital needs assessment from USDA the capital needs assessment may be substituted for the SCR and may be more than six months old, as long as USDA has confirmed in writing that the existing capital needs assessment is still acceptable and it meets the requirements of §11.306 of this chapter. All Rehabilitation Developments financed with Direct Loans must also submit a capital needs assessment estimating the useful life of each major system. This assessment must include a comparison between the local building code and the International Existing Building Code of the International Code Council. The report must be accompanied by the Department's SCR Supplement in the form of an excel workbook as published on the Department's website. For Rehabilitation (excluding Reconstruction) and Adaptive Reuse Tax-Exempt Bond Developments that do not include a request for Direct Loan or where the Department is not the bond issuer, a Scope and Cost Review prepared by a Third Party is not required. The application must include a Scope of Work Narrative as described in §11.306(j) of this chapter (relating to Scope and Cost Review Guidelines).(4) Appraisal. This report prepared in accordance with the requirements of §11.304 of this chapter (relating to Appraisal Rules and Guidelines), is required for any Application claiming any portion of the building acquisition in Eligible Basis, and Identity of Interest transactions pursuant to Subchapter D of this chapter. The Appraisal must not be dated more than six months prior to the date of Application submission, the Application Acceptance Date for Direct Loan Applications, or the first day of the Application Acceptance Period for Competitive HTC Applications. For Developments that require an appraisal from USDA, the appraisal may be more than six months old, as long as USDA has confirmed in writing that the existing appraisal is still acceptable. Notwithstanding the foregoing, if the Application contains a Market Analysis and the appraisal is not required to fulfill purposes other than establishing the value of land or buildings, an appraisal is not required if no acquisition costs are entered in the development cost schedule.</content><note type="source"><p>Source Note: The provisions of this §11.205 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scC/s11.206"><num value="11.206">§11.206</num><heading>Board Decisions (§§2306.6725(c);2306.6731; and 42(m)(1)(A)(iv)).</heading><content>The Board's decisions regarding awards or the issuance of Determination Notices, if applicable, shall be based upon the Department's staff and the Board's evaluation of the proposed Developments' consistency with, and fulfillment of, the criteria and requirements set forth in this chapter, Chapter 13 of this title (relating to the Multifamily Direct Loan Rule) and other applicable Department rules and other applicable state, federal and local legal requirements, whether established in statute, rule, ordinance, NOFA, official finding, or court order. The Board shall document the reasons for each Application's selection, including any discretionary factors used in making its determination, including good cause, and the reasons for any decision that conflicts with the recommendations made by Department staff. Good cause includes the Board's decision to apply discretionary factors where authorized. The Department reserves the right to reduce the amount of funds requested in an Application, condition the Housing Tax Credit or Direct Loan recommendation, or terminate the Application based on the Applicant's inability to demonstrate compliance with program requirements.</content><note type="source"><p>Source Note: The provisions of this §11.206 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scC/s11.207"><num value="11.207">§11.207</num><heading>Waiver of Rules</heading><content>An Applicant may request a waiver from the Board in writing at or prior to the submission of the pre-application (if applicable) or the Application or subsequent to an award. Waiver requests on Competitive HTC Applications will not be accepted between submission of the Application and any award for the Application. Staff may identify and initiate a waiver request to remedy an error in the QAP or other Multifamily rules, provide necessary relief in response to a natural disaster, or address facets of an Application or Development that have not been contemplated. The Applicant must submit plans for mitigation or alternative solutions with the waiver request. Any such request for waiver submitted by an Applicant must be specific to an actual proposed Development and must be submitted to the Department in the format required in the Multifamily Programs Procedures Manual. Any waiver, if granted, shall apply solely to the Application and shall not constitute a general modification or waiver of the rule involved. All waiver requests must meet the requirements of paragraphs (1) and (2) of this section.(1) A waiver request made at or prior to pre-application or Application must establish that the need for the waiver is not within the control of the Applicant or is due to an overwhelming need. A recommendation for a waiver may be subject to the Applicant's provision of alternative design elements or amenities of a similar nature or that serve a similar purpose. Waiver requests for items that were elected to meet scoring criteria or where the Applicant was provided a menu of options to meet the requirement will not be considered to satisfy this paragraph, unless the Applicant demonstrates that all potential options have been exhausted.(2) The waiver request must establish how, by granting the waiver, it better serves the policies and purposes articulated in Tex. Gov't Code §§2306.001, 2306.002, 2306.359, and 2306.6701, (which are general in nature and apply to the role of the Department and its programs, including the Housing Tax Credit program) than not granting the waiver.(3) The Board may not grant a waiver to provide directly or implicitly any Forward Commitments, unless due to extenuating and unforeseen circumstances as determined by the Board. The Board may not waive any requirement contained in statute. The Board may grant a waiver that is in response to a natural, federally declared disaster that occurs after the adoption of the Qualified Allocation Plan to the extent authorized by a governor declared disaster proclamation suspending statutory or regulatory requirements.</content><note type="source"><p>Source Note: The provisions of this §11.207 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c11/scD"><num value="D">SUBCHAPTER D</num><heading>UNDERWRITING AND LOAN POLICY</heading><section identifier="/us/state/tx/tac/t10/p1/c11/scD/s11.301"><num value="11.301">§11.301</num><heading>General Provisions</heading><content>This subchapter applies to the underwriting, Market Analysis, appraisal, Environmental Site Assessment, Direct Loan, and Scope and Cost Review standards employed by the Department. This subchapter provides rules for the underwriting review of an affordable housing Development's financial feasibility and economic viability that ensures the most efficient allocation of resources while promoting and preserving the public interest in ensuring the long-term health of an awarded Application and the Department's portfolio. In addition, this subchapter guides staff in making recommendations to the Executive Director and the Board to help ensure procedural consistency in the determination of Development feasibility (Texas Government Code §§2306.081(c), 2306.185, and 2306.6710(d)). Due to the unique characteristics of each Development, the interpretation of the rules and guidelines described in this subchapter is subject to the discretion of the Department and final determination by the Board.</content><note type="source"><p>Source Note: The provisions of this §11.301 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scD/s11.302"><num value="11.302">§11.302</num><heading>Underwriting Rules and Guidelines</heading><content>(a) General Provisions.(1) Pursuant to Tex. Gov't Code §2306.148 and §2306.185(b), the Board is authorized to adopt underwriting standards as set forth in this section. Furthermore, for Housing Credit Allocation, Code §42(m)(2), requires the tax credits allocated to a Development not to exceed the amount necessary to assure feasibility. Additionally, 24 CFR Parts 92 and 93, as further described in CPD Notices 15-11 and 21-10 require the Department to adopt rules and standards to determine the appropriate Multifamily Direct Loan feasibility. The rules adopted pursuant to the Tex. Gov't Code and the Code are developed to result in an Underwriting Report (Report) used by the Board in decision making with the goal of assisting as many Texans as possible by providing no more financing than necessary based on an independent analysis of Development feasibility. The Report generated in no way guarantees or purports to warrant the actual performance, feasibility, or viability of the Development.(2) Oversourcing of Funds. The total amount of Department-allocated funds combined with any additional soft funds that are specifically provided for the financing of affordable housing from other units of government may not exceed the total cost of all non-market Units at the development, calculated on a per-unit basis. For purposes of this subsection, soft funds include any grants, below-market interest rate loans, or similar funds with a total cost to the Applicant that is below commercial-rate financing, but does not include payable loans provided at commercial rates with deferred payments. If the Department determines that a Development is oversourced in accordance with this subsection, the Applicant will be required to reduce the soft funds provided by other units of government so as to no longer be oversourced.(b) Report Contents. The Report provides a synopsis and reconciliation of the Application information submitted by the Applicant. For the purpose of this subchapter the term Application includes additional documentation submitted after the initial award of funds that is relevant to any subsequent reevaluation. The Report contents will be based upon information that is provided in accordance with and within the timeframes set forth in this chapter, Chapters 11, 12, or 13, or in a Notice of Funds Availability (NOFA), as applicable. (c) Recommendations in the Report. The conclusion of the Report, if being recommended, includes a recommended award of funds or Housing Credit Allocation Amount and states any feasibility or other conditions to be placed on the award. The award amount is based on the lesser of the amounts determined using the methods in paragraphs (1) - (3) of this subsection:(1) Program Limit Method. For Housing Credit Allocations, this method is based upon calculation of Eligible Basis after applying all cost verification measures and program limits as described in this section. The Applicable Percentage used is defined in §11.1(d) of this chapter (relating to Definitions). For Department programs other than Housing Tax Credits, this method is based upon calculation of the funding limit in current program rules or NOFA at the time of underwriting.(2) Gap Method. This method evaluates the amount of funds needed to fill the gap created by Total Housing Development Cost less total non-Department-sourced funds or Housing Tax Credits. In making this determination, the Underwriter resizes any anticipated Deferred Developer Fee downward (but not less than zero) before reducing the amount of Department funds or Housing Tax Credits. In the case of Housing Tax Credits, the syndication proceeds needed to fill the gap in permanent funds are divided by the syndication rate to determine the amount of Housing Tax Credits. In making this determination and based upon specific conditions set forth in the Report, the Underwriter may assume adjustments to the financing structure (including treatment of a Cash Flow loan as if fully amortizing over its term) or make adjustments to any Department financing, such that the cumulative Debt Coverage Ratio (DCR) conforms to the standards described in this section. For Housing Tax Credit Developments at cost certification, timing adjusters may be considered as a reduction to equity proceeds for this purpose. Timing adjusters must be consistent with and documented in the original partnership agreement (at admission of the equity partner) but relating to causes outside of the Developer's or Owner's control. The equity partner must provide a calculation of the amount of the adjuster to be used by the Underwriter.(3) The Amount Requested. The amount of funds that is requested by the Applicant. For Housing Tax Credit Developments (exclusive of Tax-Exempt Bond Developments) this amount is limited to the amount requested in the original Application documentation.(d) Operating Feasibility. The operating feasibility of a Development funded by the Department is tested by analyzing its Net Operating Income (NOI) to determine the Development's ability to pay debt service and meet other financial obligations throughout the Affordability Period. NOI is determined by subtracting operating expenses, including replacement reserves and taxes, from rental and other income sources.(1) Income. In determining the first year stabilized pro forma, the Underwriter evaluates the reasonableness of the Applicant's income pro forma by determining the appropriate rental rate per unit based on subsidy contracts, program limitations including but not limited to Utility Allowances, actual rents supported by rent rolls and Market Rents and other market conditions. Miscellaneous income, vacancy and collection loss limits as set forth in subparagraphs (B) and (C) of this paragraph, respectively, are used unless well-documented support is provided and independently verified by the Underwriter.(A) Rental Income. The Underwriter will review the Applicant's proposed rent schedule and determine if it is consistent with the representations made throughout the Application. The Underwriter will independently calculate a Pro Forma Rent for comparison to the Applicant's estimate in the Application.(i) Market Rents. The Underwriter will use the Market Analyst's conclusion of Market Rent if reasonably justified and supported by the attribute adjustment matrix of Comparable Units as described in §11.303 of this chapter (relating to Market Analysis Rules and Guidelines). Independently determined Market Rents by the Underwriter may be used based on rent information gained from direct contact with comparable properties, whether or not used by the Market Analyst and other market data sources. For a Development that contains less than 15% unrestricted units, the Underwriter will limit the Pro Forma Rents to the lesser of Market Rent or the Gross Program Rent at 80% AMI.(ii) Gross Program Rent. The Underwriter will use the Gross Program Rents for the year that is most current at the time the underwriting begins. When underwriting for a simultaneously funded competitive round, all Applications are underwritten with the Gross Program Rents for the same year. If Gross Program Rents are adjusted by the Department after the close of the Application Acceptance Period, but prior to publication of the Report, the Underwriter may adjust the Effective Gross Income (EGI) to account for any increase or decrease in Gross Program Rents for the purposes of determining the reasonableness of the Applicant's EGI.(iii) Contract Rents. The Underwriter will review rental assistance contracts to determine the Contract Rents currently applicable to the Development. Documentation supporting the likelihood of continued rental assistance is also reviewed. The Underwriter will take into consideration the Applicant's intent to request a Contract Rent increase. At the discretion of the Underwriter, the Applicant's proposed rents may be used as the Pro Forma Rent, with the recommendations of the Report conditioned upon receipt of final approval of such an increase. Tenant-based vouchers or tenant-based rental assistance are not included as Income.(iv) Utility Allowances. The Utility Allowances used in underwriting must be in compliance with all applicable federal guidance, and §10.614 of this title (relating to Utility Allowances). Utility Allowances must be calculated for individually metered tenant paid utilities.(v) Net Program Rents. Gross Program Rent less Utility Allowance.(vi) Actual Rents for existing Developments will be reviewed as supported by a current rent roll. For Unstabilized Developments, actual rents will be based on the most recent units leased with occupancy and leasing velocity considered. Actual rents may be adjusted by the Underwriter to reflect lease-up concessions and other market considerations. (vii) Collected Rent. Represents the monthly rent amount collected for each Unit Type. For rent- assisted units, the Contract Rent is used. In absence of a Contract Rent, the lesser of the Net Program Rent, Market Rent or actual rent is used.(B) Miscellaneous Income. All ancillary fees and miscellaneous secondary income, including but not limited to, late fees, storage fees, laundry income, interest on deposits, carport and garage rent, washer and dryer rent, telecommunications fees, and other miscellaneous income, are anticipated to be included in a $5 to $30 per Unit per month range. Projected income from tenant-based rental assistance will not be considered. Exceptions may be made at the discretion of the Underwriter and must be supported by either the normalized operating history of the Development or other existing comparable properties within the same market area.(i) The Applicant must show that a tenant will not be required to pay the additional fee or charge as a condition of renting a Unit and must show that the tenant has a reasonable alternative. (ii) The Applicant's operating expense schedule should reflect an itemized offsetting line-item associated with miscellaneous income derived from pass-through utility payments, pass-through water, sewer and trash payments, and cable fees.(iii) Collection rates of exceptional fee items will generally be heavily discounted.(iv) If an additional fee is charged for the optional use of an amenity, any cost associated with the construction, acquisition, or development of the hard assets needed to produce the amenity must be excluded from Eligible Basis.(C) Vacancy and Collection Loss. The Underwriter uses a normalized vacancy rate of 7.5% (5% vacancy plus 2.5% for collection loss). 100% project-based rental subsidy developments (not including employee-occupied units) may be underwritten at a combined 5% vacancy rate.(D) Effective Gross Income (EGI). EGI is the total of Collected Rent for all Units plus Miscellaneous Income less Vacancy and Collection Loss. If the Applicant's pro forma EGI is within 5% of the EGI independently calculated by the Underwriter, the Applicant's EGI is characterized as reasonable in the Report; however, for purposes of calculating the underwritten DCR the Underwriter's pro forma will be used unless the Applicant's pro forma meets the requirements of paragraph (3) of this subsection.(2) Expenses. In determining the first year stabilized operating expense pro forma, the Underwriter evaluates the reasonableness of the Applicant's expense estimate based upon the characteristics of each Development, including the location, utility structure, type, the size and number of Units, and the Applicant's management plan. Historical, stabilized and certified financial statements of an existing Development or Third Party quotes specific to a Development will reflect the strongest data points to predict future performance. The Underwriter may review actual operations on the Applicant's other properties monitored by the Department, if any, or review the proposed management company's comparable properties. The Department's database of properties located in the same market area or region as the proposed Development also provides data points; expense data from the Department's database is available on the Department's website. Data from the Institute of Real Estate Management's (IREM) most recent Conventional Apartments-Income/Expense Analysis book for the proposed Development's property type and specific location or region may be referenced. In some cases local or project-specific data such as PHA Utility Allowances and property tax rates are also given significant weight in determining the appropriate line item expense estimate. Estimates of utility savings from green building components, including on-site renewable energy, must be documented by an unrelated contractor or component vendor.(A) General and Administrative Expense. (G&A)--Accounting fees, legal fees, advertising and marketing expenses, office operation, supplies, and equipment expenses. G&A does not include partnership related expenses such as asset management, accounting or audit fees. Costs of tenant services are not included in G&A.(B) Management Fee. Fee paid to the property management company to oversee the operation of the Property and is most often based upon a percentage of EGI as documented in an existing property management agreement or proposal. The Underwriter will use the Applicant's proposed Management Fee if it is within the range of 4% to 6% of EGI. A proposed fee outside of this range must be documented.(C) Payroll Expense. Compensation, insurance benefits, and payroll taxes for on-site office, leasing and maintenance staff. Payroll does not include Third-Party security or tenant services contracts. Staffing specific to tenant services, security or other staffing not related to customary property operations should be itemized and included in other expenses or tenant services expense.(D) Repairs and Maintenance Expense. Materials and supplies for the repairs and maintenance of the Development including Third-Party maintenance contracts. This line-item does not include costs that are customarily capitalized that would result from major replacements or renovations.(E) Utilities Expense. Gas and electric energy expenses paid by the Development. Estimates of utility savings from green building components, including on-site renewable energy, must be documented by an unrelated contractor or component vendor.(F) Water, Sewer, and Trash Expense (WST). Includes all water, sewer and trash expenses paid by the Development.(G) Insurance Expense. Cost of Insurance coverage for the buildings, contents, and general liability, but not health or workman's compensation insurance.(H) Property Tax. Includes real property and personal property taxes but not payroll taxes.(i) An assessed value will be calculated based on the capitalization rate published by the county taxing authority. If the county taxing authority does not publish a capitalization rate, a capitalization rate of 10% or a comparable assessed value may be used.(ii) Other assessed values or property tax estimates may be used based on development specific factors as determined by the Underwriter.(iii) If the Applicant proposes a property tax exemption or Payment in Lieu of Taxes (PILOT) agreement the Applicant must provide documentation in accordance with §10.402(d) of this title (relating to Documentation Submission Requirements at Commitment of Funds). At the underwriter's discretion, such documentation may be required prior to Commitment or Determination Notice if deemed necessary.(I) Replacement Reserves. Periodic deposits to a reserve account to pay for the future replacement or major repair of building systems and components (generally items considered capitalized costs). The Underwriter will use a minimum reserve of $250 per Unit for New Construction and Reconstruction Developments and $300 per Unit for all other Developments. The Underwriter may require an amount above $300 for the Development based on information provided in the Scope and Cost Review (SCR) or, for existing USDA developments, an amount approved by USDA. The Applicant's assumption for reserves may be adjusted by the Underwriter if the amount provided by the Applicant is insufficient to fund capital needs as documented by the SCR during the first fifteen (15) years of the long term pro forma. Higher reserves may be used if documented by a primary lender or syndicator.(J) Other Operating Expenses. The Underwriter will include other reasonable, customary and documented property-level operating expenses such as audit fees, security expense, telecommunication expenses (tenant reimbursements must be reflected in EGI) and TDHCA's compliance fees. For Developments financed by USDA, a Return to Owner (RTO) may be included as an operating expense in an amount consistent with the maximum approved by USDA or an amount determined by the Underwriter. This category does not include depreciation, interest expense, lender or syndicator's asset management fees, or other ongoing partnership fees.(K) Resident Services. Resident services are not included as an operating expense or included in the DCR calculation unless:(i) There is a documented financial obligation on behalf of the Owner with a unit of state or local government to provide resident supportive services at a specified dollar amount. The state or local government documentation must be provided in the Application and the dollar amount of the financial obligation must be included in the DCR calculation on the 15-year pro forma at Application. ; or(ii) The Applicant demonstrates a history of providing comparable supportive services and expenses at existing affiliated properties within the local area.; and(iii) On-site staffing or pro ration of staffing for coordination of services only, and not the provision of services, can be included as a supportive services expense.(L) Total Operating Expenses. The total of expense items described in subparagraphs (A) - (K) of this paragraph (relating to Operating Feasibility). If the Applicant's total expense estimate is within 5% of the final total expense figure calculated by the Underwriter, the Applicant's figure is characterized as reasonable in the Report; however, for purposes of calculating DCR, the Underwriter's independent calculation will be used unless the Applicant's first year stabilized pro forma meets the requirements of paragraph (3) of this subsection.(3) Net Operating Income (NOI). The difference between the EGI and total operating expenses. If the Applicant's first year stabilized NOI figure is within 5% of the NOI calculated by the Underwriter, the Applicant's NOI is characterized as reasonable in the Report; however, for purposes of calculating the first year stabilized pro forma DCR, the Underwriter's calculation of NOI will be used unless the Applicant's first year stabilized EGI, total operating expenses, and NOI are each within 5% of the Underwriter's estimates. For Housing Tax Credit Developments at cost certification, actual NOI will be used as adjusted for stabilization of rents and extraordinary lease-up expenses. Permanent lender and equity partner stabilization requirements documented in the loan and partnership agreements will be considered in determining the appropriate adjustments and the NOI used by the Underwriter. For Tax-Exempt Bond Developments that do not include a request for Direct Loan or where the Department is not the bond issuer, the Underwriter will not develop independent estimates of EGI, Total Operating Expenses, or NOI. The Applicant's NOI will generally be characterized as reasonable, subject to review for compliance with Underwriting Rules and Guidelines.(4) Debt Coverage Ratio. DCR is calculated by dividing NOI by the sum of the debt service payments on all permanent or foreclosable lien(s) with scheduled and periodic payment requirements, including any required debt service on a Direct Loan subject to the applicable Notice of Funding Availability (NOFA) or other program requirements, and any on-going loan related fees such as credit enhancement fees or loan servicing fees. If executed loan documents do not exist, loan terms including principal and interest payments are calculated based on the terms indicated in the most current term sheet(s). Otherwise, actual terms indicated in the executed loan documents will be used. Unusual or non-traditional financing structures may also be considered.(A) Interest Rate. The rate documented in the term sheet(s) or loan document(s) will be used for debt service calculations. Term sheets indicating a variable interest rate must provide the base rate index or methodology for determining the variable rate index and any component rates comprising an all-in interest rate. The term sheet(s) must state the lender's underwriting interest rate assumption, or the Applicant must submit a separate statement from the lender with an estimate of the interest rate as of the date of such statement. At initial underwriting, the Underwriter may adjust the underwritten interest rate assumption based on market data collected on similarly structured transactions or rate index history. Private Mortgage Insurance premiums and similar fees are not included in the interest rate but calculated on outstanding principal balance and added to the total debt service payment. (B) Amortization Period. For purposes of calculating DCR, the permanent lender's amortization period will be used if not less than 30 years and not more than 40 years. Up to 50 years may be used for federally sourced or insured loans. For permanent lender debt with amortization periods less than 30 years, 30 years will be used. For permanent lender debt with amortization periods greater than 40 years, 40 years will be used. For non-Housing Tax Credit transactions a lesser amortization period may be used if the Direct Loans will be fully amortized over the same period as the permanent lender debt.(C) Repayment Period. For purposes of projecting the DCR over a 30 year period for Developments with permanent financing structures with balloon payments in less than 30 years, the Underwriter will carry forward debt service based on a full amortization at the interest rate stated in the term sheet(s).(D) Acceptable Debt Coverage Ratio Range. Except as set forth in clauses (i) or (ii) of this subparagraph, the acceptable first year stabilized pro forma DCR must be between a minimum of 1.15 and a maximum of 1.35 (maximum of 1.50 for Housing Tax Credit Developments at cost certification).(i) If the DCR is less than the minimum, the recommendations of the Report may be based on a reduction to debt service and the Underwriter will make adjustments to the financing structure in the priority order presented in subclauses (I) - (IV) of this clause subject to Direct Loan NOFA requirements and program rules:(I) A reduction to the interest rate of a Direct Loan;(II) An increase in the amortization period of a Direct Loan;(III) A reduction in the principal amount of a Direct Loan; and(IV) An assumed reduction in the permanent loan amount for non-Department funded loans based upon the rates and terms in the permanent loan term sheet(s) as long as they are within the ranges in subparagraphs (A) and (B) of this paragraph.(ii) If the DCR is greater than the maximum, the recommendations of the Report may be based on an increase to debt service and the Underwriter will make adjustments to the assumed financing structure in the priority order presented in subclauses (I) - (III) of this clause subject to Direct Loan NOFA requirements and program rules:(I) an increase to the interest rate of a Direct Loan up to the lesser of the maximum interest rate pursuant to a Direct Loan NOFA or the interest rate on any senior permanent debt or if no senior permanent debt a market rate determined by the Underwriter based on current market interest rates;(II) or a decrease in the amortization period on a Direct Loan but not less than 30 years; and(III) an assumed increase in the permanent loan amount for non-Department proposed financing based upon the rates and terms in the permanent loan term sheet as long as they are within the ranges in subparagraphs (A) and (B) of this paragraph.(iii) For Housing Tax Credit Developments, a reduction in the recommended Housing Credit Allocation Amount may be made based on the Gap Method described in subsection (c)(2) of this section as a result of an increased debt assumption, if any.(iv) In order to comply with TDHCA's agreement with HUD, Developments financed with a Direct Loan subordinate to FHA financing will have to meet a combined DCR of 1.0 using 75% of surplus cash after the senior debt service is deducted from Net Operating Income (NOI). To calculate the combined DCR: (FHA senior debt service + ((1st year NOI - FHA senior debt service)*75%))) / (FHA senior debt service + amortized MDL debt service)A mathematical example is provided in the Multifamily Procedures Manual.(v) The Underwriter may limit total debt service that is senior to a Direct Loan to produce an acceptable DCR on the Direct Loan and may limit total debt service if the Direct Loan is the senior primary debt.(5) Long Term Pro forma. The Underwriter will create a 30-year operating pro forma using the criteria provided in subparagraphs (A) to (C) of this paragraph:(A) The Underwriter's or Applicant's first year stabilized pro forma as determined by paragraph (3) of this subsection. (B) A 2% annual growth factor is utilized for income and a 3% annual growth factor is utilized for operating expenses except for management fees that are calculated based on a percentage of each year's EGI.(C) Adjustments may be made to the long term pro forma if satisfactory support documentation is provided by the Applicant or as independently determined by the Underwriter.(e) Total Housing Development Costs. The Department's estimate of the Total Housing Development Cost will be based on the Applicant's Development cost schedule to the extent that costs can be verified to a reasonable degree of certainty with documentation from the Applicant and tools available to the Underwriter. For New Construction Developments, the Underwriter's total cost estimate will be used unless the Applicant's Total Housing Development Cost is within 5% of the Underwriter's estimate. The Department's estimate of the Total Housing Development Cost for Rehabilitation Developments or Adaptive Reuse Developments will be based on the estimated cost provided in the SCR for the scope of work as defined by the Applicant and §11.306(a)(5) of this chapter (relating to SCR Guidelines); the Underwriter may make adjustments to the SCR estimated costs. If the Applicant's cost estimate is utilized and the Applicant's line item costs are inconsistent with documentation provided in the Application or program rules, the Underwriter may make adjustments to the Applicant's Total Housing Development Cost. For Competitive Housing Tax Credit Applications, the Underwriter will adjust an Applicant's cost schedule line item to meet program rules. Underwriter will not make subsequent adjustments to the application to meet feasibility requirements as a result of the initial adjustment required to meet program rules.(1) Acquisition Costs. All appraised values must be based on as-is values at the time of Application as further stated in §11.304 of this chapter (relating to Appraisal Rules and Guidelines). (A) Land, Acquisition and Rehabilitation, Reconstruction, and Adaptive Reuse Acquisition.(i) For a non-identity of interest acquisition with no building acquisition cost in basis or when the acquisition is not part of the Direct Loan eligible cost and not subject to the appraisal requirements in the Uniform Relocation Assistance and Act of 1970, the underwritten acquisition cost will be the amount(s) reflected in the Site Control document(s) for the Property. At Cost Certification, the acquisition cost used will be the actual amount paid as verified by the settlement statement.(ii) For an identity of interest acquisition or when required by the Uniform Relocation Assistance and Acquisition Act of 1970 the underwritten acquisition cost will be the lesser of the amount reflected in the Site Control documents for the property or the appraised value as determined by an appraisal that meets the requirements of §11.304 of this chapter (relating to Appraisal Rules and Guidelines). An appraisal is not required if the land or buildings are donated to the proposed Development, and no costs of acquisition appear on the Development Cost Schedule. For an identity of interest transaction where the most recent arms-length transaction occurred within five years of the application submission date, the settlement statement for the most recent third party acquisition must be included with the site control documents. An acquisition will be considered an identity of interest transaction when an Affiliate of the seller is an Affiliate of, or a Related Party to, any Owner at any level of the Development Team or a Related Party lender; and(I) is the current owner in whole or in part of the Property as of the first date of the Application Acceptance Period or the Application Acceptance Date for Direct Loans; or(II) has or had within the prior 36 months the legal or beneficial ownership of the property or any portion thereof or interest therein regardless of ownership percentage, control or profit participation prior to the first day of the Application Acceptance Period or in the case of a tax-exempt bond or 4% tax credit application the Application Date.(iii) TDHCA prohibits cash-out to a related-party seller in an identity of interest transaction for Competitive Housing Tax Credit Applications (This section does not apply to Existing Developments funded by USDA, or those that include a Non-Profit, a Housing Authority, or an instrumentality of a Housing Authority in the ownership structure). For purposes of this paragraph, cash-out is defined as the lesser of the amount reflected in the Site Control documents for the property or the as-is restricted appraised value as determined by an appraisal that meets the requirements of §11.304 of this chapter, minus the payoff of any third-party debt unrelated to the seller, related-party notes that are in place specifically for substantiated capital expenditures or acquisition costs, and the principal balance of any seller note to remain in place post-acquisition. Holding costs and operating expenses, such as broker fees, property taxes, deferred maintenance, or deferred management fees, shall not be considered in calculating or justifying seller cash-out.At Application, amortization schedules and projected loan balances at closing for all existing unrelated third-party debt are required to substantiate the calculation of cash-out and to support Department underwriting. All seller notes in identity of interest transactions must comply with the following requirements:(I) The term sheet and note must be cash-flow contingent, with no required payments unless surplus cash is available;(II) The term sheet and note must have no debt coverage ratio (DCR) requirements for payment eligibility;(III) The term sheet and LPA must state that the seller note is paid after deferred developer fee.(iv) For all identity of interest acquisitions, the cost used at cost certification will be limited to the acquisition cost underwritten in the initial Underwriting of the Application.(v) In cases where more land will be acquired (by the Applicant or a Related Party) than will be utilized as the Development Site and the remainder acreage is not accessible for use by tenants or dedicated as permanent and maintained green space, the value ascribed to the proposed Development Site will be prorated based on acreage from the total cost reflected in the Site Control document(s) or the appraisal, if an appraisal is required. An appraisal containing segregated values for the total acreage to be acquired, the acreage for the Development Site and the remainder acreage may be used by the Underwriter in making a proration determination based on relative value. The Underwriter will not utilize a prorated value greater than the total amount in the Site Control document(s).(B) USDA Rehabilitation Developments. The underwritten acquisition cost for developments financed by USDA will be the transfer value approved by USDA.(C) Eligible Basis on Acquisition of Buildings. Building acquisition cost included in Eligible Basis is limited to the appraised value of the buildings, exclusive of land value, as determined by an appraisal that meets the requirements of §11.304 of this chapter (relating to Appraisal Rules and Guidelines). If the acquisition cost in the Site Control documents is less than the appraised value, Underwriter will utilize the land value from the appraisal and adjust the building acquisition cost accordingly.(2) Off-Site Costs. The Underwriter will only consider costs of Off-Site Construction that are well documented and certified to by a Third Party engineer on the required Application forms with supporting documentation.(3) Site Work Costs. The Underwriter will only consider costs of Site Work, including site amenities, that are well documented and certified to by a Third Party engineer on the required Application forms with supporting documentation.(4) Building Costs.(A) New Construction and Reconstruction. The Underwriter will use the Marshall and Swift Residential Cost Handbook, other comparable published Third-Party cost estimating data sources, historical final cost certifications of previous Housing Tax Credit developments and other acceptable cost data available to the Underwriter to estimate Building Cost. Generally, the "Average Quality" multiple, townhouse, or single family costs, as appropriate, from the Marshall and Swift Residential Cost Handbook or other comparable published Third-Party data source, will be used based upon details provided in the Application and particularly building plans and elevations. Costs for multi- level parking structures must be supported by a cost estimate from a Third Party contractor with demonstrated experience in structured parking construction. The Underwriter will consider amenities, specifications and development types not included in the Average Quality standard. The Underwriter may consider a sales tax exemption for nonprofit General Contractors.(B) Rehabilitation and Adaptive Reuse.(i) The Applicant must provide a scope of work and narrative description of the work to be completed. The narrative should speak to all Off-Site Construction, Site Work, and building components including finishes and equipment, and development amenities. The narrative should be in sufficient detail so that the reader can understand the work and it must generally be arranged consistent with the line- items on the SCR Supplement and must also be consistent with the Development Cost Schedule of the Application.(ii) The Underwriter will use cost data provided on the SCR Supplement if adequately described and substantiated in the SCR report as the basis for estimating Total Housing Development Costs.(5) Contingency. Total contingency, including any soft cost contingency, will be limited to a maximum of 7% of Building Cost plus Site Work and Off-Site Construction for New Construction and Reconstruction Developments, and 10% of Building Cost plus Site Work and Off-Site Construction for Rehabilitation and Adaptive Reuse Developments. For Housing Tax Credit Developments, the percentage is applied to the sum of the eligible Building Cost, eligible Site Work costs and eligible Off-Site Construction costs in calculating the eligible contingency cost.(6) General Contractor Fee. General Contractor fees include general requirements, contractor overhead, and contractor profit. General requirements include, but are not limited to, on-site supervision or construction management, off-site supervision and overhead, jobsite security, equipment rental, storage, temporary utilities, and other indirect costs. General Contractor fees are limited to a total of 14% on Developments with Hard Costs of $3 million or greater, the lesser of $420,000 or 16% on Developments with Hard Costs less than $3 million and greater than $2 million, and the lesser of $320,000 or 18% on Developments with Hard Costs at $2 million or less. Any contractor fees to Affiliates or Related Party subcontractors regardless of the percentage of the contract sum in the construction contract (s) will be treated collectively with the General Contractor Fee limitations. Any fees paid to an organization to achieve a sales tax exemption will be included in the General Contactor Fee. Any General Contractor fees above this limit will be excluded from Total Housing Development Costs. For Housing Tax Credit Developments, the percentages are applied to the sum of the Eligible Hard Costs in calculating the eligible contractor fees. For Developments also receiving financing from USDA, the combination of builder's general requirements, builder's overhead, and builder's profit should not exceed the lower of TDHCA or USDA requirements. Additional fees for ineligible costs will be limited to the same percentage of ineligible Hard Costs but will not be included in Eligible Basis.(7) Developer Fee.(A) For Housing Tax Credit Developments, the Developer Fee included in Eligible Basis cannot exceed 15% of the project's eligible costs, less Developer Fee, for Developments proposing 50 Units or more and 20% of the project's eligible costs, less Developer Fee, for Developments proposing 49 Units or less. If the Development is an additional phase, proposed by any Principal of the existing tax credit Development, the Developer Fee may not exceed 15%, regardless of the number of Units.(B) For Housing Tax Credit Developments, any additional Developer Fee claimed for ineligible costs will be limited to the same percentage but applied only to ineligible Hard Costs. Any Developer Fee above this limit will be excluded from Total Housing Development Costs. All fees to Affiliates or Related Parties for work or guarantees determined by the Underwriter to be typically completed or provided by the Developer or Principal(s) of the Developer will be considered part of Developer Fee. All costs for general and administrative expenses for the Developer, including, but not limited to, travel, dining, and courier fees will be considered part of the Developer Fee. (C) For Housing Tax Credit Developments, Eligible Developer Fee is multiplied by the appropriate Applicable Percentage depending on whether it is attributable to acquisition or rehabilitation basis.(D) For non-Housing Tax Credit Developments, the percentage can be up to 7.5%, but is based upon Total Housing Development Cost less the sum of the fee itself, land costs, the costs of permanent financing, excessive construction period financing described in paragraph (8) of this subsection, reserves, and any identity of interest acquisition cost.(8) Financing Costs. All fees required by the construction lender, permanent lender and equity partner must be indicated in the term sheets. Eligible construction period interest is limited to the lesser of actual eligible construction period interest, or the interest on one year's fully drawn construction period loan funds at the construction period interest rate indicated in the term sheet(s). For tax-exempt bond transactions up to 24 months of interest may be included. Any excess over this amount will not be included in Eligible Basis. Construction period interest on Related Party or Affiliate construction loans is only included in Eligible Basis with documentation satisfactory to the Underwriter that the loan will be at a market interest rate, fees and loan terms and the Related Party lender can demonstrate that it is routinely engaged in construction financing to unrelated parties.(9) Reserves. Except for the underwriting of a Housing Tax Credit Development at cost certification, the Underwriter will utilize the amount presented in the Applicant's Development Cost Schedule up to twelve months of stabilized operating expenses plus debt service (up to twenty-four months for USDA or HUD-financed rehabilitation transactions). Reserve amounts exceeding these limits will be excluded from Total Housing Development Costs. Pursuant to §10.404(c) of this title (relating to Operative Reserve Accounts), and for the underwriting of a Housing Tax Credit Development at cost certification, operating reserves that will be maintained for a minimum period of five years and documented in the Owner's partnership agreement or the permanent lender's loan documents will be included as a development cost.(10) Soft Costs. Eligible soft costs are generally costs that can be capitalized in the basis of the Development for tax purposes. The Underwriter will evaluate and apply the allocation of these soft costs in accordance with the Department's prevailing interpretation of the Code. Generally, the Applicant's costs are used; however the Underwriter will use comparative data and Third Party CPA certification as to the capitalization of the costs to determine the reasonableness of all soft costs. This includes any one-time fees or payments, excluding any upfront ground lease payments, to a Housing Finance Corporation, Public Finance Corporation, Housing Authority, or Non-Profit that is part of the project ownership structure or is otherwise involved in the project to qualify for a property tax exemption. For Tax-Exempt Bond Developments that do not include a request for Direct Loan or where the Department is not the bond issuer, the Underwriter will not develop independent estimates for Building Cost or Soft Costs. The Applicant's Total Housing Development Cost and Total Eligible Cost will generally be characterized as reasonable, subject to review for compliance with Underwriting Rules and Guidelines. (11) Additional Tenant Amenities. For Housing Tax Credit Developments and after submission of the cost certification package, the Underwriter may consider costs of additional building and site amenities (suitable for the Target Population being served) proposed by the Owner in an amount not to exceed 1.5% of the originally underwritten Hard Costs. The additional amenities must be included in the LURA.(f) Development Team Capacity and Development Plan.(1) The Underwriter will evaluate and report on the overall capacity of the Development Team by reviewing aspects, including but not limited to those identified in subparagraphs (A) - (D) of this paragraph:(A) Personal credit reports for development sponsors, Developer Fee recipients and those individuals anticipated to provide guarantee(s) in cases when warranted. The Underwriter may evaluate the credit report and identify any bankruptcy, state or federal tax liens or other relevant credit risks for compliance with eligibility and debarment requirements as found in Chapter 2 of this title (relating to Enforcement);(B) Quality of construction, Rehabilitation, and ongoing maintenance of previously awarded housing developments by review of construction inspection reports, compliance on-site visits, findings of NSPIRE violations and other information available to the Underwriter;(C) For Housing Tax Credit Developments, repeated or ongoing failure to timely submit cost certifications, requests for and clearance of final inspections, and timely response to deficiencies in the cost certification process; and(D) Adherence to obligations on existing or prior Department funded developments with respect to program rules and documentation.(2) While all components of the Development plan may technically meet the other individual requirements of this section, a confluence of serious concerns and unmitigated risks identified during the underwriting process may result in an Application being determined to be infeasible by the Underwriter. Any recommendation made under this subsection to deny an Application for a Grant, Direct Loan or Housing Credit Allocation is subject to Appeal as further provided for in §11.902 of this chapter (relating to Appeals).(g) Other Underwriting Considerations. The Underwriter will evaluate additional feasibility elements as described in paragraphs (1) - (4) of this subsection.(1) Interim Operating Income. Interim operating income listed as a source of funds must be supported by a detailed lease-up schedule and analysis.(2) Floodplains. The Underwriter evaluates the site plan, floodplain map, survey and other information provided to determine if any of the buildings, drives, or parking areas reside within the 100-year floodplain. If such a determination is made by the Underwriter, the Report will include a condition that:(A) The Applicant must pursue and receive a Letter of Map Amendment (LOMA) or Letter of Map Revision (LOMR-F); or(B) The Applicant must identify the cost of flood insurance for the buildings within the 100-year floodplain and certify that the flood insurance will be obtained; and(C) The Development must be proposed to be designed to comply with the QAP, Program Rules and NOFA, and applicable Federal or state requirements.(3) Proximity to Other Developments. The Underwriter will identify in the Report any Developments funded or known and anticipated to be eligible for funding within one linear mile of the subject. Distance is measured in a straight line from nearest boundary point to nearest boundary point.(4) Direct Loans. In accordance with the requirements of 24 CFR §§92.250 and 93.300(b), a request for a Direct Loan will not be recommended for approval if the DCR exceeds 1.50 any year during the longer of the term of the Direct Loan or the Federal Affordability Period, unless the Applicant elects to commit 25% of annual Cash Flow to a special reserve account, in accordance with §10.404(d) of this title, for any year the DCR is over 1.50. Annual Cash Flow will be calculated after deducting any payment due to the Developer on a deferred developer fee loan and any scheduled payments on cash flow loans. The Department will calculate the total special reserve amount based on the Cash Flow at Direct Loan Closing underwriting. The deposits into the special reserve account must be made annually from 25% of remaining annual cash flow until the total special reserve amount is reached. Alternatively, Applicant may request the Direct Loan interest rate be increased by Underwriter at Direct Loan Closing underwriting if financially feasibility is still met. If the Direct Loan is not recommended for approval, the remaining feasibility considerations under this section will be based on a revised sources schedule that does not contain the Direct Loan. This standard will also be used when the Development Owner is seeking approval for a request for a subordination agreement or a refinance, except the total special reserve amount will be based on the Cash Flow reflected in the underwriting at that time. A special reserve account is not eligible for Developments layered with FHA financing that is subject to HUD's Multifamily Accelerated Processing Guide.(h) Work Out Development. Developments that are underwritten subsequent to Board approval in order to refinance or gain relief from restrictions may be considered infeasible based on the guidelines in this section, but may be characterized as "the best available option" or "acceptable available option" depending on the circumstances and subject to the discretion of the Underwriter as long as the option analyzed and recommended is more likely to achieve a better financial outcome for the property and the Department than the status quo.(i) Feasibility Conclusion. A Development will be characterized as infeasible if paragraph (1) or (2) of this subsection applies. The Development will be characterized as infeasible if one or more of paragraphs (3) or (4) of this subsection, applies unless paragraph (5)(B) of this subsection also applies.(1) Gross Capture Rate, AMGI Band Capture Rates, and Individual Unit Capture Rate. The method for determining capture rates for a Development is defined in §11.303 of this chapter (relating to Market Analysis Rules and Guidelines). The Underwriter will verify the conclusions of the capture rates and may, at their discretion, use independently acquired demographic data to calculate demand and may make a determination of the capture rates based upon an analysis of the Sub-market. The Development:(A) Is characterized as an Elderly Development and the Gross Capture Rate or any AMGI bad capture rate exceeds 10%; or(B) Is outside a Rural Area and targets the general population, and the Gross Capture Rate or any AMGI band capture rate exceeds 10% (or 15% for Tax-Exempt Bond Developments located in an MSA (as defined in the HTC Site Demographics Characteristics Report) with a population greater than one million if the average physical occupancy is 92.5% or greater for all stabilized affordable housing developments located within a 20 minute drive time, as supported by the Market Analyst, from the subject Development); or(C) Is in a Rural Area and targets the general population, and:(i) contains Housing Tax Credit Units of 120 or less, and the Gross Capture Rate or any AMGI band capture rate exceeds 30%; or(ii) contains more than 120 Housing Tax Credit Units, and the Gross Capture Rate or any AMGI band capture rate exceeds 10%; or(D) Is Supportive Housing and the Gross Capture Rate or any AMGI band capture rate exceeds 30%; or(E) Has an Individual Unit Capture Rate for any Unit Type greater than 65%; and(F) Developments meeting the requirements of subparagraph (A), (B), (C), (D) or (E) of this paragraph may avoid being characterized as infeasible if clause (i) or (ii) of this subparagraph apply:(i) Replacement Housing. The proposed Development is comprised of affordable housing which replaces previously existing affordable housing within the Primary Market Area as defined in §11.303 of this chapter (relating to Market Analysis Rules and Guidelines) on a Unit for Unit basis, and gives the displaced tenants of the previously existing affordable housing a leasing preference; or(ii) Existing Housing. The proposed Development is comprised of existing affordable housing, whether defined by an existing land use and rent restriction agreement or if the subject rents are at or below 50% AMGI rents, which is at least 50% occupied and gives displaced existing tenants a leasing preference as stated in a relocation plan.(2) Deferred Developer Fee. Applicants requesting an allocation of tax credits where the estimated Deferred Developer Fee, based on the underwritten capitalization structure, is not repayable from Cash Flow within the first 15 years of the long term pro forma as described in subsection (d)(5) of this section.(3) Initial Feasibility.(A) Except when underwritten at cost certification, the first year stabilized pro forma operating expense divided by the first year stabilized pro forma Effective Gross Income is greater than 68% for Rural Developments 36 Units or less, and 65% for all other Developments.(B) The first year DCR is below 1.15 (1.00 for USDA Developments).(4) Long Term Feasibility. The Long Term Pro forma reflects:(A) A Debt Coverage Ratio below 1.15 at any time during years two through fifteen; or(B) Negative Cash Flow at any time throughout the term of a Direct Loan, or at any time during years two through fifteen for applications that do not include a request for a Direct Loan.(5) Exceptions. The infeasibility conclusions will not apply if:(A) The Executive Director of the Department finds that documentation submitted by the Applicant at the request of the Underwriter will support unique circumstances that will provide mitigation. (B) Developments not meeting the requirements of one or more of paragraphs (3)(A) or (4) of this subsection will be re-characterized as feasible if one or more of clauses (i) - (v) of this subparagraph apply. A Development financed with a Direct Loan, including a Supportive Housing Development, will not be re-characterized as feasible with respect to paragraph (4)(B) of this subsection. The Development:(i) will receive Project-based Section 8 Rental Assistance or the HUD Rental Assistance Demonstration Program for at least 50% of the Units and a firm commitment, with terms including Contract Rent and number of Units, is submitted at Application;(ii) will receive rental assistance for at least 50% of the Units in association with USDA financing;(iii) will be characterized as public housing as defined by HUD for at least 50% of the Units;(iv) meets the requirements under §11.1(d)(124)(E)(i) of this chapter (relating to the Definition of Supportive Housing); or(v) has other long term project based restrictions on rents for at least 50% of the Units that allow rents to increase based upon expenses and the Applicant's proposed rents are at least 10% lower than both the Net Program Rent and Market Rent.</content><note type="source"><p>Source Note: The provisions of this §11.302 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scD/s11.303"><num value="11.303">§11.303</num><heading>Market Analysis Rules and Guidelines</heading><content>(a) General Provision. A Market Analysis prepared for the Department must evaluate the need for decent, safe, and sanitary housing at rental rates or sales prices that eligible tenants can afford. The analysis must determine the feasibility of the subject Development rental rates or sales price, and state conclusions as to the impact of the Development with respect to the determined housing needs. The Market Analysis must include a statement that the report preparer has read and understood the requirements of this section. The Market Analysis must also include a statement that the person or company preparing the Market Analysis is a disinterested party and will not materially benefit from the Development in any other way than receiving a fee for performing the Market Analysis, and that the fee is in no way contingent upon the outcome of the Market Analysis. The report must also include the following statement, "any person signing this Report acknowledges that the Department may publish the full report on the Department's website, release the report in response to a request for public information and make other use of the report as authorized by law."(b) Self-Contained. A Market Analysis prepared for the Department must allow the reader to understand the market data presented, the analysis of the data, and the conclusions derived from such data. All data presented should reflect the most current information available and the report must provide a parenthetical (in-text) citation or footnote describing the data source. The analysis must clearly lead the reader to the same or similar conclusions reached by the Market Analyst. All steps leading to a calculated figure must be presented in the body of the report.(c) Market Analyst Qualifications. A Market Analysis submitted to the Department must be prepared and certified by an approved Qualified Market Analyst. (§2306.67055) The Department will maintain an approved Market Analyst list based on the guidelines set forth in paragraphs (1) - (2) of this subsection.(1) The approved Qualified Market Analyst list will be updated and published annually on or about November 1st. If not listed as an approved Qualified Market Analyst by the Department, a Market Analyst may request approval by submitting items in subparagraphs (A) - (F) of this paragraph at least 30 calendar days prior to the first day of the competitive tax credit Application Acceptance Period or 30 calendar days prior to submission of any other application for funding for which the Market Analyst must be approved. An already approved Qualified Market Analyst will remain on the list so long as at least one (1) Market Analysis has been submitted to the Department in the previous 12 months or items (A), (B), (C) and (E) are submitted prior to October 1st. Otherwise, the Market Analyst will automatically be removed from the list. Submission items include:(A) Franchise Tax Account Status from the Texas Comptroller of Public Accounts (not applicable for sole proprietorships);(B) A current organization chart or list reflecting all members of the firm who may author or sign the Market Analysis. A firm with multiple offices or locations must indicate all members expected to be providing Market Analysis;(C) Resumes for all members of the firm or subcontractors who may author or sign the Market Analysis;(D) General information regarding the firm's experience including references, the number of previous similar assignments and timeframes in which previous assignments were completed;(E) Certification from an authorized representative of the firm that the services to be provided will conform to the Department's Market Analysis Rules and Guidelines, as described in this section, in effect for the Application Round in which each Market Analysis is submitted; and(F) A sample Market Analysis that conforms to the Department's Market Analysis Rules and Guidelines, as described in this section, in effect for the year in which the sample Market Analysis is submitted.(2) During the underwriting process each Market Analysis will be reviewed and any discrepancies with the rules and guidelines set forth in this section may be identified and require timely correction. Subsequent to the completion of the Application Round and as time permits, staff or a review appraiser will re-review a sample set of submitted market analyses to ensure that the Department's Market Analysis Rules and Guidelines are met. If it is found that a Market Analyst has not conformed to the Department's Market Analysis Rules and Guidelines, as certified to, the Market Analyst will be notified of the discrepancies in the Market Analysis and will be removed from the approved Qualified Market Analyst list.(A) In and of itself, removal from the list of approved Market Analysts will not invalidate a Market Analysis commissioned prior to the removal date and at least 90 days prior to the first day of the applicable Application Acceptance Period.(B) To be reinstated as an approved Qualified Market Analyst, the Market Analyst must amend the previous report to remove all discrepancies or submit a new sample Market Analysis that conforms to the Department's Market Analysis Rules and Guidelines, as described in this section, in effect for the year in which the updated or new sample Market Analysis is submitted.(d) Market Analysis Contents. A Market Analysis for a rental Development prepared for the Department must be organized in a format that follows a logical progression and must include, at minimum, items addressed in paragraphs (1) - (13) of this subsection.(1) Title Page. Include Development address or location, effective date of analysis, date report completed, name and address of person authorizing report, and name and address of Market Analyst.(2) Letter of Transmittal. The date of the letter must be the date the report was completed. Include Development's address or location, description of Development, statement as to purpose and scope of analysis, reference to accompanying Market Analysis report with effective date of analysis and summary of conclusions, date of Property inspection, name of persons inspecting subject Property, and signatures of all Market Analysts authorized to work on the assignment. Include a statement that the report preparer has read and understood the requirements of this section.(3) Table of Contents. Number the exhibits included with the report for easy reference.(4) Market Analysis Summary. Include the Department's Market Analysis Summary exhibit.(5) Assumptions and Limiting Conditions. Include a description of all assumptions, both general and specific, made by the Market Analyst concerning the Property.(6) Identification of the Real Estate. Provide a statement to acquaint the reader with the Development. Such information includes street address, tax assessor's parcel number(s), and Development characteristics.(7) Statement of Ownership. Disclose the current owners of record and provide a three year history of ownership for the subject Development.(8) Primary Market Area. A limited geographic area from which the Development is expected to draw most of its demand. The size and shape of the PMA should be reflective of proximity to employment centers, services and amenities and contain the most significant areas from which to draw demand. All of the Market Analyst's conclusions specific to the subject Development must be based on only one PMA definition. The Market Analyst must adhere to the methodology described in this paragraph when determining the market area. (§2306.67055) (A) The PMA will be defined by the Market Analyst as:(i) geographic size based on a base year population no larger than necessary to provide sufficient demand but no more than 100,000 people;(ii) boundaries based on U.S. census tracts; and(iii) the population of the PMA may exceed 100,000 if the amount over the limit is contained within a single census tract.(B) The Market Analyst's definition of the PMA must include:(i) a detailed narrative specific to the PMA explaining:(I) How the boundaries of the PMA were determined with respect to census tracts chosen and factors for including or excluding certain census tracts in proximity to the Development;(II) Whether a more logical market area within the PMA exists but is not definable by census tracts and how this subsection of the PMA supports the rationale for the defined PMA;(III) What are the specific attributes of the Development's location within the PMA that would draw prospective tenants from other areas of the PMA to relocate to the Development;(IV) What are the specific attributes, if known, of the Development itself that would draw prospective tenants currently residing in other areas of the PMA to relocate to the Development;(V) If the PMA crosses county lines, discuss the different income and rent limits in each county and how these differing amounts would affect the demand for the Development;(VI) For rural Developments, discuss the relative draw (services, jobs, medical facilities, recreation, schools, etc.) of the Development's immediate local area (city or populous area if no city) in comparison to its neighboring local areas (cities, or populous areas if no cities), in and around the PMA. A rural PMA should not include significantly larger more populous areas unless the analyst can provide substantiation and rationale that the tenants would migrate to the Development's location from the larger cities;(VII) Discuss and quantify current and planned single-family and non-residential construction (include permit data if available); and(VIII) Other housing issues in general, if pertinent;(ii) a complete demographic report for the defined PMA;(iii) a scaled distance map indicating the PMA boundaries showing relevant U.S. census tracts with complete 11-digit identification numbers in numerical order with labels as well as the location of the subject Development and all comparable Developments. The map must indicate the total square miles of PMA; and(iv) a proximity table indicating distance from the Development to employment centers, medical facilities, schools, entertainment and any other amenities relevant to the potential residents and include drive time estimates.(C) Comparable Units. Identify developments in the PMA with Comparable Units. In PMAs lacking sufficient rent comparables, it may be necessary for the Market Analyst to collect data from markets with similar characteristics and make quantifiable and qualitative location adjustments. Provide a data sheet for each comparable development consisting of:(i) development name;(ii) address;(iii) year of construction and year of Rehabilitation, if applicable;(iv) property condition;(v) Target Population;(vi) unit mix specifying number of Bedrooms, number of baths, Net Rentable Area including:(I) monthly rent and Utility Allowance; or(II) sales price with terms, marketing period and date of sale;(vii) description of concessions;(viii) list of unit amenities;(ix) utility structure;(x) list of common amenities;(xi) narrative comparison of its proximity to employment centers and services relative to targeted tenant population of the subject property; and(xii) for rental developments only, the occupancy and turnover.(9) Market Information.(A) Identify the number of units for each of the categories in clauses (i) - (vi) of this subparagraph, if applicable:(i) total housing;(ii) all multi-family rental developments, including unrestricted and market-rate developments, whether existing, under construction or proposed;(iii) Affordable housing;(iv) Comparable Units;(v) Unstabilized Comparable Units; and(vi) proposed Comparable Units.(B) Occupancy. The occupancy rate indicated in the Market Analysis may be used to support the overall demand conclusion for the proposed Development. State the overall physical occupancy rate for the proposed housing tenure (renter or owner) within the defined market areas by:(i) number of Bedrooms;(ii) quality of construction (class);(iii) Target Population; and(iv) Comparable Units.(C) Absorption. State the absorption trends by quality of construction (class) and absorption rates for Comparable Units.(D) Demographic Reports must include:(i) All demographic reports must include population and household data for a five year period with the year of Application submission as the base year;(ii) All demographic reports must provide sufficient data to enable calculation of income-eligible, age-, size-, and tenure-appropriate household populations;(iii) For Elderly Developments, all demographic reports must provide a detailed breakdown of households by age and by income; and(iv) A complete copy of all demographic reports relied upon for the demand analysis, including the reference index that indicates the census tracts on which the report is based.(E) Demand. Provide a comprehensive evaluation of the need for the proposed housing for the Development as a whole and each Unit Type by number of Bedrooms proposed and rent restriction category within the defined market areas using the most current census and demographic data available.(i) Demographics. The Market Analyst should use demographic data specific to the characteristics of the households that will be living in the proposed Development. For example, the Market Analyst should use demographic data specific to the elderly populations (and any other qualifying residents for Elderly Developments) to be served by an Elderly Development, if available, and should avoid making adjustments from more general demographic data. For HOME-ARP, demand for Qualifying Populations must be identified in accordance with Section VI B.10.a.ii of CPD Notice 21-10. If adjustment rates are used based on more general data for any of the criteria described in subclauses (I) - (V) of this clause, they should be clearly identified and documented as to their source in the report.(I) Population. Provide population and household figures, supported by actual demographics, for a five year period with the year of Application submission as the base year.(II) Target. If applicable, adjust the household projections for the qualifying demographic characteristics such as the minimum age of the population to be served by the proposed Development.(III) Household Size-Appropriate. Adjust the household projections or target household projections, as applicable, for the appropriate household size for the proposed Unit Type by number of Bedrooms proposed and rent restriction category based on 2 persons per Bedroom or one person for Efficiency Units.(IV) Income Eligible. Adjust the household size appropriate projections for income eligibility based on the income bands for the proposed Unit Type by number of Bedrooms proposed and rent restriction category with:(-a-) the lower end of each income band calculated based on the lowest gross rent proposed divided by 40% for the general population and 50% for elderly households; and(-b-) the upper end of each income band equal to the applicable gross median income limit for the largest appropriate household size based on 2 persons per Bedroom (round up) or one person for Efficiency Units.(V) Tenure-Appropriate. Adjust the income-eligible household projections for tenure (renter or owner). If tenure appropriate income eligible target household data is available, a tenure appropriate adjustment is not necessary.(ii) Gross Demand. Gross Demand is defined as the sum of Potential Demand from the PMA, Demand from Other Sources, and External Demand.(iii) Potential Demand. Potential Demand is defined as the number of income-eligible, age-, size-, and tenure-appropriate target households in the designated market area at the proposed placed in service date.(I) Maximum eligible income is equal to the applicable gross median income limit for the largest appropriate household size.(II) For Developments targeting the general population:(-a-) minimum eligible income is based on a 40% rent to income ratio;(-b-) appropriate household size is defined as two persons per Bedroom (rounded up); and(-c-) the tenure-appropriate population for a rental Development is limited to the population of renter households.(III) For Developments consisting solely of single family residences on separate lots with all Units having three or more Bedrooms:(-a-) minimum eligible income is based on a 40% rent to income ratio;(-b-) appropriate household size is defined as two persons per Bedroom (rounded up); and(-c-) Gross Demand includes both renter and owner households. (IV) For Elderly Developments:(-a-) minimum eligible income is based on a 50% rent to income ratio; and(-b-) Gross Demand includes all household sizes and both renter and owner households within the age range (and any other qualifying characteristics) to be served by the Elderly Development.(V) For Supportive Housing:(-a-) minimum eligible income is $1; and(-b-) households meeting the occupancy qualifications of the Development (data to quantify this demand may be based on statistics beyond the defined PMA but not outside the historical service area of the Applicant).(VI) For Developments with rent assisted units (Project Based Vouchers, Project-Based Rental Assistance, Public Housing Units):(-a-) minimum eligible income for the assisted units is $1; and(-b-) maximum eligible income for the assisted units is the minimum eligible income of the corresponding affordable unit.(iv) For External Demand, assume an additional 10% of Potential Demand from the PMA to represent demand coming from outside the PMA.(v) For Demand from Other Sources:(I) the source of additional demand and the methodology used to calculate the additional demand must be clearly stated;(II) consideration of Demand from Other Sources is at the discretion of the Underwriter;(III) Demand from Other Sources must be limited to households that are not included in Potential Demand; and(IV) if households with Section 8 vouchers are identified as a source of demand, the Market Study must include:(-a-) documentation of the number of vouchers administered by the local Housing Authority; and(-b-) a complete demographic report for the area in which the vouchers are distributed.(F) Employment. Provide a comprehensive analysis of employment trends and forecasts in the Primary Market Area. Analysis must discuss existing or planned employment opportunities with qualifying income ranges.(10) Conclusions. Include a comprehensive evaluation of the subject Property, separately addressing each housing type and specific population to be served by the Development in terms of items in subparagraphs (A) - (J) of this paragraph. All conclusions must be consistent with the data and analysis presented throughout the Market Analysis.(A) Unit Mix. Provide a best possible unit mix conclusion based on the occupancy rates by Bedroom type within the PMA and target, income-eligible, size-appropriate and tenure-appropriate household demand by Unit Type and income type within the PMA.(B) Rents. Provide a separate Market Rent conclusion for each proposed Unit Type by number of Bedrooms and rent restriction category. Conclusions of Market Rent below the maximum Net Program Rent limit must be well documented as the conclusions may impact the feasibility of the Development under §11.302(i) of this chapter (relating to Feasibility Conclusion). In support of the Market Rent conclusions, provide a separate attribute adjustment matrix for each proposed Unit Type by number of Bedrooms and rental restriction category. For HOME-ARP, Units for Qualified Populations will be underwritten at $0 income, unless the Unit has project-based rental assistance or subsidy, or is supported by a capitalized operating reserve agreement. (i) The Department recommends use of HUD Form 92273.(ii) A minimum of three developments must be represented on each attribute adjustment matrix.(iii) Adjustments for concessions must be included, if applicable.(iv) Adjustments for proximity and drive times to employment centers and services narrated in the Comparable Unit description, and the rationale for the amount of the adjustments must be included.(v) Total adjustments in excess of 15% must be supported with additional narrative.(vi) Total adjustments in excess of 25% indicate the Units are not comparable for the purposes of determining Market Rent conclusions.(C) Effective Gross Income. Provide rental income, secondary income, and vacancy and collection loss projections for the subject derived independent of the Applicant's estimates.(D) For Demand:(i) state the Gross Demand for each Unit Type by number of Bedrooms proposed and rent restriction category (e.g. one-Bedroom Units restricted at 50% of AMGI; two-Bedroom Units restricted at 60% of AMGI);(ii) state the Gross Demand for the proposed Development as a whole. If some households are eligible for more than one Unit Type due to overlapping eligible ranges for income or household size, Gross Demand should be adjusted to avoid including households more than once; and(iii) state the Gross Demand generated from each AMGI band. If some household incomes are included in more than one AMGI band, Gross Demand should be adjusted to avoid including households more than once.(E) Relevant Supply. The Relevant Supply of proposed and Unstabilized Comparable Units includes:(i) the proposed subject Units to be absorbed;(ii) Comparable Units in previously approved Developments in the PMA that have not achieved 90% occupancy for a minimum of 90 days. Approved Developments should be determined by:(I) the HTC Property Inventory that is published on the Department's website as of December 31, 2024, for competitive housing tax credit Applications;(II) the most recent HTC Property Inventory that is published on the Department's website one month prior to the Application date of non-competitive housing tax credit and Direct Loan Applications.(iii) Unstabilized Comparable Units that are located in close proximity to the subject PMA if they are likely to share eligible demand or if the PMAs have overlapping census tracts. Underwriter may require Market Analyst to run a combined PMA including eligible demand and Relevant Supply from the combined census tracts; the Gross Capture Rate generated from the combined PMA must meet the feasibility criteria as defined in §11.302(i) (relating to Feasibility Conclusion). (F) Gross Capture Rate. The Gross Capture Rate is defined as the Relevant Supply divided by the Gross Demand. Refer to §11.302(i) of this chapter (relating to Feasibility Conclusion).(G) Individual Unit Capture Rate. For each Unit Type by number of Bedrooms and rent restriction categories, the individual unit capture rate is defined as the Relevant Supply of proposed and Unstabilized Comparable Units divided by the eligible demand for that Unit. Some households are eligible for multiple Unit Types. In order to calculate individual unit capture rates, each household is included in the capture rate for only one Unit Type.(H) Capture Rate by AMGI Band. For each AMGI band (30%, 40%, 50%, 60%, and also 20%, 70%, and 80% if the Applicant will make the Income Average election), the capture rate by AMGI band is defined as Relevant Supply of proposed and Unstabilized Comparable Units divided by the eligible demand from that AMGI band. Some households are qualified for multiple income bands. In order to calculate AMGI band rates, each household is included in the capture rate for only one AMGI band.(I) Absorption. Project an absorption period for the subject Development to achieve Breakeven Occupancy. State the absorption rate.(J) Market Impact. Provide an assessment of the impact the subject Development, as completed, will have on existing Developments supported by Housing Tax Credits in the Primary Market. (§2306.67055) (11) Photographs. Provide labeled color photographs of the subject Property, the neighborhood, street scenes, and comparables. An aerial photograph is desirable but not mandatory.(12) Appendices. Any Third Party reports including demographics relied upon by the Market Analyst must be provided in appendix form. A list of works cited including personal communications also must be provided, and the Modern Language Association (MLA) format is suggested.(13) Qualifications. Current Franchise Tax Account Status from the Texas Comptroller of Public Accounts (not applicable for sole proprietorships) and any changes to items listed in subsection (c)(1)(B) and (C) of this section (relating to Market Analyst Qualifications). (e) The Department reserves the right to require the Market Analyst to address such other issues as may be relevant to the Department's evaluation of the need for the subject Development and the provisions of the particular program guidelines.(f) In the event that the PMA for a subject Development overlaps the PMA's of other proposed or Unstabilized comparable Developments, the Underwriter may perform an extended Sub-Market Analysis considering the combined PMA's and all proposed and Unstabilized Units in the extended Sub-Market Area; the Gross Capture Rate from such an extended Sub-Market Area analysis may be used by the Underwriter as the basis for a feasibility conclusion.(g) All Applicants shall acknowledge, by virtue of filing an Application, that the Department shall not be bound by any such opinion or Market Analysis, and may substitute its own analysis and underwriting conclusions for those submitted by the Market Analyst.</content><note type="source"><p>Source Note: The provisions of this §11.303 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scD/s11.304"><num value="11.304">§11.304</num><heading>Appraisal Rules and Guidelines</heading><content>(a) General Provision.(1) An appraisal prepared for the Department must conform to the Uniform Standards of Professional Appraisal Practice (USPAP) as adopted by the Appraisal Standards Board of the Appraisal Foundation. The appraisal must be prepared by a general certified appraiser by the Texas Appraisal Licensing and Certification Board. The appraisal must include a statement that the report preparer has read and understood the requirements of this section. The appraisal must include a statement that the person or company preparing the appraisal, or reviewing the appraisal, is a disinterested party and will not materially benefit from the Development in any other way than receiving a fee for performing the appraisal and that the fee is in no way contingent upon the outcome of the appraisal.(2) If an appraisal is required by the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, the appraisal must also meet the requirements of 49 CFR Part 24 and HUD Handbook 1378. (b) Self-Contained. An appraisal prepared for the Department must describe sufficient and adequate data and analyses to support the final opinion of value. The final value(s) must be reasonable, based on the information included. Any Third Party reports relied upon by the appraiser must be verified by the appraiser as to the validity of the data and the conclusions.(b) Appraiser Qualifications. The appraiser must be appropriately certified or licensed by the Texas Appraiser Licensing and Certification Board.(c) Appraisal Contents. An appraisal prepared for the Department must be organized in a format that follows a logical progression. In addition to the contents described in USPAP Standards Rule 2, the appraisal must include items addressed in paragraphs (1) - (12) of this subsection.(1) Title Page. Include a statement identifying the Department as the client, acknowledging that the Department is granted full authority to rely on the findings of the report, and name and address of person authorizing report. The title page must also include the following statement, "any person signing this Report acknowledges that the Department may publish the full report on the Department's website, release the report in response to a request for public information and make other use of the report as authorized by law."(2) Letter of Transmittal. Include reference to accompanying appraisal report, reference to all person(s) that provided significant assistance in the preparation of the report, date of report, effective date of appraisal, date of property inspection, name of person(s) inspecting the property, tax assessor's parcel number(s) of the site, estimate of marketing period, and signatures of all appraisers authorized to work on the assignment including the appraiser who inspected the property. Include a statement indicating the report preparer has read and understood the requirements of this section.(3) Table of Contents. Number the exhibits included with the report for easy reference.(4) Disclosure of Competency. Include appraiser's qualifications, detailing education and experience.(5) Statement of Ownership of the Subject Property. Discuss all prior sales of the subject Property which occurred within the past three years. Any pending agreements of sale, options to buy, or listing of the subject Property must be disclosed in the appraisal report.(6) Property Rights Appraised. Include a statement as to the property rights (e.g., fee simple interest, leased fee interest, leasehold, etc.) being considered. The appropriate interest must be defined in terms of current appraisal terminology with the source cited.(7) Site/Improvement Description. Discuss the site characteristics including subparagraphs (A) - (E) of this paragraph.(A) Physical Site Characteristics. Describe dimensions, size (square footage, acreage, etc.), shape, topography, corner influence, frontage, access, ingress-egress, etc. associated with the Development Site. Include a plat map or survey.(B) Floodplain. Discuss floodplain (including flood map panel number) and include a floodplain map with the subject Property clearly identified.(C) Zoning. Report the current zoning and description of the zoning restrictions and any deed restrictions, where applicable, and type of Development permitted. Any probability of change in zoning should be discussed. A statement as to whether or not the improvements conform to the current zoning should be included. A statement addressing whether or not the improvements could be rebuilt if damaged or destroyed, should be included. If current zoning is not consistent with the highest and best use, and zoning changes are reasonable to expect, time and expense associated with the proposed zoning change should be considered and documented. A zoning map should be included.(D) Description of Improvements. Provide a thorough description and analysis of the improvements including size (Net Rentable Area, gross building area, etc.), use (whether vacant, occupied by owner, or being rented), number of residents, number of stories, number of buildings, type/quality of construction, condition, actual age, effective age, exterior and interior amenities, items of deferred maintenance, energy efficiency measures, etc. All applicable forms of depreciation should be addressed along with the remaining economic life.(E) Environmental Hazards. It is recognized appraisers are not experts in such matters and the impact of such deficiencies may not be quantified; however, the report should disclose any potential environmental hazards (such as discolored vegetation, oil residue, asbestos-containing materials, lead- based paint etc.) noted during the inspection.(8) Highest and Best Use. Market Analysis and feasibility study is required as part of the highest and best use. The highest and best use analysis should consider paragraph (7)(A) - (E) of this subsection as well as a supply and demand analysis.(A) The appraisal must inform the reader of any positive or negative market trends which could influence the value of the appraised Property. Detailed data must be included to support the appraiser's estimate of stabilized income, absorption, and occupancy.(B) The highest and best use section must contain a separate analysis "as if vacant" and "as improved" (or "as proposed to be improved/renovated"). All four elements (legally permissible, physically possible, feasible, and maximally productive) must be considered. (9) Appraisal Process. It is mandatory that all three approaches, Cost Approach, Sales Comparison Approach and Income Approach, are considered in valuing the Property. If an approach is not applicable to a particular property an adequate explanation must be provided. A land value estimate must be provided if the Cost Approach is not applicable.(A) Cost Approach. This approach should give a clear and concise estimate of the cost to construct the subject improvements. The source(s) of the cost data should be reported.(i) Cost comparables are desirable; however, alternative cost information may be obtained from Marshall & Swift Valuation Service or similar publications. The section, class, page, etc. should be referenced. All soft costs and entrepreneurial profit must be addressed and documented.(ii) All applicable forms of depreciation must be discussed and analyzed. Such discussion must be consistent with the description of the improvements.(iii) The land value estimate should include a sufficient number of sales which are current, comparable, and similar to the subject in terms of highest and best use. Comparable sales information should include address, legal description, tax assessor's parcel number(s), sales price, date of sale, grantor, grantee, three year sales history, and adequate description of property transferred. The final value estimate should fall within the adjusted and unadjusted value ranges. Consideration and appropriate cash equivalent adjustments to the comparable sales price for subclauses (I) - (VII) of this clause should be made when applicable:(I) Property rights conveyed;(II) Financing terms;(III) Conditions of sale;(IV) Location;(V) Highest and best use;(VI) Physical characteristics (e.g., topography, size, shape, etc.); and(VII) Other characteristics (e.g., existing/proposed entitlements, special assessments, etc.).(B) Sales Comparison Approach. This section should contain an adequate number of sales to provide the Underwriter with a description of the current market conditions concerning this property type. Sales data should be recent and specific for the property type being appraised. The sales must be confirmed with buyer, seller, or an individual knowledgeable of the transaction.(i) Sales information should include address, legal description, tax assessor's parcel number(s), sales price, financing considerations and adjustment for cash equivalency, date of sale, recordation of the instrument, parties to the transaction, three year sale history, complete description of the Property and property rights conveyed, and discussion of marketing time. A scaled distance map clearly identifying the subject and the comparable sales must be included. (ii) The method(s) used in the Sales Comparison Approach must be reflective of actual market activity and market participants.(I) Sale Price/Unit of Comparison. The analysis of the sale comparables must identify, relate, and evaluate the individual adjustments applicable for property rights, terms of sale, conditions of sale, market conditions, and physical features. Sufficient narrative must be included to permit the reader to understand the direction and magnitude of the individual adjustments, as well as a unit of comparison value indicator for each comparable.(II) Net Operating Income/Unit of Comparison. The Net Operating Income statistics for the comparables must be calculated in the same manner. It should be disclosed if reserves for replacement have been included in this method of analysis. At least one other method should accompany this method of analysis.(C) Income Approach. This section must contain an analysis of both the actual historical and projected income and expense aspects of the subject Property.(i) Market Rent Estimate/Comparable Rental Analysis. This section of the report should include an adequate number of actual market transactions to inform the reader of current market conditions concerning rental Units. The comparables must indicate current research for this specific property type. The comparables must be confirmed with the landlord, tenant or agent and individual data sheets must be included. The individual data sheets should include property address, lease terms, description of the property (e.g., Unit Type, unit size, unit mix, interior amenities, exterior amenities, etc.), physical characteristics of the property, and location of the comparables. Analysis of the Market Rents should be sufficiently detailed to permit the reader to understand the appraiser's logic and rationale. Adjustment for lease rights, condition of the lease, location, physical characteristics of the property, etc. must be considered.(ii) Comparison of Market Rent to Contract Rent. Actual income for the subject along with the owner's current budget projections must be reported, summarized, and analyzed. If such data is unavailable, a statement to this effect is required and appropriate assumptions and limiting conditions should be made. The Contract Rents should be compared to the market-derived rents. A determination should be made as to whether the Contract Rents are below, equal to, or in excess of market rates. If there is a difference, its impact on value must be qualified.(iii) Vacancy/Collection Loss. Historical occupancy data and current occupancy level for the subject should be reported and compared to occupancy data from the rental comparables and overall occupancy data for the subject's Primary Market.(iv) Expense Analysis. Actual expenses for the subject, along with the owner's projected budget, must be reported, summarized, and analyzed. If such data is unavailable, a statement to this effect is required and appropriate assumptions and limiting conditions should be made. Historical expenses should be compared to comparables expenses of similar property types or published survey data (such as IREM, BOMA, etc.). Any expense differences should be reconciled. Include historical data regarding the subject's assessment and tax rates and a statement as to whether or not any delinquent taxes exist.(v) Capitalization. The appraiser should present the capitalization method(s) reflective of the subject market and explain the omission of any method not considered in the report.(I) Direct Capitalization. The primary method of deriving an overall rate is through market extraction. If a band of investment or mortgage equity technique is utilized, the assumptions must be fully disclosed and discussed.(II) Yield Capitalization (Discounted Cash Flow Analysis). This method of analysis should include a detailed and supportive discussion of the projected holding/investment period, income and income growth projections, occupancy projections, expense and expense growth projections, reversionary value and support for the discount rate.(10) Value Estimates. All appraised values must be based on as-is values at the time of Application. Reconciliation of final value estimates is required. The Underwriter may request additional valuation information based on unique existing circumstances that are relevant for deriving the market value of the Property.(A) All appraisals shall contain a separate estimate of the "as vacant" market value of the underlying land, based upon current sales comparables. The "as vacant" value assumes that there are no improvements on the property and therefore demolition costs should not be considered. The appraiser should consider the fee simple or leased fee interest as appropriate.(B) For existing Developments with any project-based rental assistance that will remain with the property after the acquisition, the appraisal must include an "as-is as-currently-restricted value at current contract rents." For public housing converting to project-based rental assistance, the appraiser must provide a value based on the future restricted rents. The value used in the analysis may be based on the unrestricted market rents if supported by the appraisal. Regardless of the rents used in the valuation, the appraiser must consider any other on-going restrictions that will remain in place even if not affecting rents. If the rental assistance has an impact on the value, such as use of a lower capitalization rate due to the lower risk associated with rental rates or occupancy rates on project-based developments, this must be fully explained and supported to the satisfaction of the Underwriter.(C) For existing Developments with rent restrictions, the appraisal must include the "as-is as-restricted" value. In particular, the value must be based on the current restricted rents when deriving the value based on the income approach.(D) For all other existing Developments, the appraisal must include the "as-is" value.(E) For any Development with favorable financing from a government entity (generally below market debt) that will remain in place and transfer to the new owner, the appraisal must include a separate value for the existing favorable financing with supporting information. 25% of the appraised favorable financing value will be allocated to land value and 75% will be allocated to building value, unless the below market financing was used for rehabilitation only, in which case the favorable financing will be attributed 100% to the building. Applicant's allocation of favorable financing should be clearly explained.(F) If required the appraiser must include a separate assessment of personal property, furniture, fixtures, and equipment (FF&E) or intangible items. If personal property, FF&E, or intangible items are not part of the transaction or value estimate, a statement to such effect should be included.(11) Marketing Time. Given property characteristics and current market conditions, the appraiser(s) should employ a reasonable marketing period. The report should detail existing market conditions and assumptions considered relevant.(12) Photographs. Provide good quality color photographs of the subject Property (front, rear, and side elevations, on-site amenities, interior of typical Units if available). Photographs should be properly labeled. Photographs of the neighborhood, street scenes, and comparables should be included. An aerial photograph is desirable but not mandatory.(d) Additional Appraisal Concerns. The appraiser(s) must be aware of the Department program rules and guidelines and the appraisal must include analysis of any impact to the subject's value.</content><note type="source"><p>Source Note: The provisions of this §11.304 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scD/s11.305"><num value="11.305">§11.305</num><heading>Environmental Site Assessment Rules and Guidelines</heading><content>(a) General Provisions. The Environmental Site Assessments (ESA) prepared for the Department must be conducted and reported in conformity with the standards of the American Society for Testing and Materials (ASTM). The initial report must conform with the Standard Practice for Environmental Site Assessments: Phase I Assessment Process (ASTM Standard Designation: E1527-13 or any subsequent standards as published). Any subsequent reports should also conform to ASTM standards and such other recognized industry standards as a reasonable person would deem relevant in view of the Property's anticipated use for human habitation. The ESA shall be conducted by a Third Party environmental professional at the expense of the Applicant, and addressed to the Department as a User of the report (as defined by ASTM standards). Copies of reports provided to the Department which were commissioned by other financial institutions must either address Texas Department of Housing and Community Affairs as a co-recipient of the report or letters from both the provider and the recipient of the report may be submitted extending reliance on the report to the Department. The ESA report must also include a statement that the person or company preparing the ESA report will not materially benefit from the Development in any other way than receiving a fee for performing the ESA, and that the fee is in no way contingent upon the outcome of the assessment. The report must also include the following statement, "any person signing this Report acknowledges that the Department may publish the full report on the Department's website, release the report in response to a request for public information and make other use of the report as authorized by law." The ESA report must contain a statement indicating the report preparer has read and understood the requirements of this section.(b) In addition to ASTM requirements, the report must:(1) State if a noise study is recommended for a property in accordance with current HUD guidelines and identify its proximity to industrial zones, major highways, active rail lines, civil and military airfields, or other potential sources of excessive noise;(2) Provide a copy of a current survey, if available, or other drawing of the site reflecting the boundaries and adjacent streets, all improvements on the site, and any items of concern described in the body of the ESA or identified during the physical inspection;(3) Provide a copy of the current FEMA Flood Insurance Rate Map showing the panel number and encompassing the site with the site boundaries precisely identified and superimposed on the map;(4) If the subject Development Site includes any improvements or debris from pre-existing improvements, state if testing for Lead Based Paint or asbestos containing materials would be required pursuant to local, state, and federal laws, or recommended due to any other consideration;(5) State if testing for lead in the drinking water would be required pursuant to local, state, and federal laws, or recommended due to any other consideration such as the age of pipes and solder in existing improvements. For all Rehabilitation Developments, the ESA provider must state whether the on-site plumbing is a potential source of lead in drinking water;(6) Assess the potential for the presence of Radon on the Development Site, and recommend specific testing if necessary;(7) Identify and assess the presence of oil, gas or chemical pipelines, processing facilities, storage facilities or other potentially hazardous explosive activities (does not include liquified petroleum gas containers with a capacity of less than 125 gallons on-site or within 0.25 miles of the site that could potentially adversely impact the Development. Location of these items must be shown on a drawing or map in relation to the Development Site and all existing or future improvements. The drawing must depict any blast zones (in accordance with HUD guidelines) and include HUD blast zone calculations; and(8) Include a vapor encroachment screening in accordance with the ASTM "Standard Guide for Vapor Encroachment Screening on Property Involved in Real Estate Transactions" (E2600-10 or any subsequent standards as published).(c) If the report recommends further studies or establishes that environmental hazards currently exist on the Property, or are originating off-site, but would nonetheless affect the Property, the Development Owner must act on such a recommendation, or provide a plan for either the abatement or elimination of the hazard. Evidence of action or a plan for the abatement or elimination of the hazard must be presented upon Application submittal.(d) For Developments in programs that allow a waiver of the Phase I ESA such as an existing USDA funded Development, the Development Owners are hereby notified that it is their responsibility to ensure that the Development is maintained in compliance with all state and federal environmental hazard requirements.(e) Those Developments which have or are to receive first lien financing from HUD may submit HUD's environmental assessment report, provided that it conforms to the requirements of this section.</content><note type="source"><p>Source Note: The provisions of this §11.305 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scD/s11.306"><num value="11.306">§11.306</num><heading>Scope and Cost Review Guidelines</heading><content>(a) General Provisions. The objective of the Scope and Cost Review Report (SCR) required for Rehabilitation Developments (excluding Reconstruction) and Adaptive Reuse Developments is to provide a self-contained report that provides a comprehensive description and evaluation of the current conditions of the Development and identifies a scope of work for the proposed repairs, replacements and improvements to an existing multifamily property or identifies a scope of work for the conversion of a non-multifamily property to multifamily use. The SCR author must evaluate the sufficiency of the Applicant's scope of work and provide an independent review of the Applicant's proposed costs. The report must be in sufficient detail for the Underwriter to fully understand all current conditions, scope of work and cost estimates. It is the responsibility of the Applicant to ensure that the scope of work and cost estimates submitted in the Application is provided to the author. The SCR must include a copy of the Development Cost Schedule submitted in the Application. The report must also include the following statement, "any person signing this Report acknowledges that the Department may publish the full report on the Department's website, release the report in response to a request for public information and make other use of the report as authorized by law."(b) For Rehabilitation Developments, the SCR must include analysis in conformity with the ASTM "Standard Guide for Property Condition Assessments. Baseline Property Condition Assessment Process (ASTM Standard Designation: E 2018, or any subsequent standards as published)" except as provided for in subsections (f) and (g) of this section.(c) The SCR must include good quality color photographs of the subject Real Estate (front, rear, and side elevations, on-site amenities, interior of the structure). Photographs should be properly labeled.(d) The SCR must also include discussion and analysis of:(1) Description of Current Conditions. For both Rehabilitation and Adaptive Reuse, the SCR must contain a detailed description with good quality photographs of the current conditions of all major systems and components of the Development regardless of whether the system or component will be removed, repaired or replaced. For historic structures, the SCR must contain a description with photographs of each aspect of the building(s) that qualifies it as historic and must include a narrative explaining how the scope of work relates to maintaining the historic designation of the Development. Replacement or relocation of systems and components must be described;(2) Description of Scope of Work. The SCR must provide a narrative of the consolidated scope of work either as a stand-alone section of the report or included with the description of the current conditions for each major system and components. Any New Construction must be described. Plans or drawings (that are in addition to any plans or drawings otherwise required by rule) and that relate to any part of the scope of work should be included, if available;(3) Useful Life Estimates. For each system and component of the property the SCR must estimate its remaining useful life, citing the basis or the source from which such estimate is derived;(4) Code Compliance. The SCR must document any known violations of any applicable federal, state, or local codes. In developing the cost estimates specified herein, it is the responsibility of the Applicant to ensure that the SCR adequately considers any and all applicable federal, state, and local laws and regulations which are applicable and govern any work and potentially impact costs. For Applications requesting Direct Loan funding from the Department, the SCR author must include a comparison between the local building code and the International Existing Building Code of the International Code Council;(5) Program Rules. The SCR must assess the extent to which any systems or components must be modified, repaired, or replaced in order to comply with any specific requirements of the housing program under which the Development is proposed to be financed, the Department's Uniform Physical Condition Standards, and any scoring criteria including amenities for which the Applicant may claim points. It is the responsibility of the Applicant to inform the report author of those requirements in the scope of work; for Direct Loan Developments this includes, but is not limited to the requirements in the Lead-Based Paint Poisoning Prevention Act (42 USC §§4821-4846), the Residential Lead- Based Paint Hazard Reduction Act of 1992 (42 USC §§4851-4856), and implementing regulations, Title X of the 1992 Housing and Community Development Act at 24 CFR Part 35 (including subparts A, B, J, K, and R), and the Lead: Renovation, Repair, and Painting Program Final Rule and Response to Children with Environmental Intervention Blood Lead Levels (40 CFR Part 745);(6) Accessibility Requirements. The SCR report must include an analysis of compliance with the Department's accessibility requirements pursuant to Chapter 1, Subchapter B and §11.101(b)(8) of this title (relating to Site and Development Requirements and Restrictions) and identify the specific items in the scope of work and costs needed to ensure that the Development will meet these requirements upon Rehabilitation (including conversion and Adaptive Reuse);(7) Reconciliation of Scope of Work and Costs. The SCR report must include the Department's Scope and Cost Review Supplement (SCR Supplement) with the signature of the SCR author. The SCR Supplement must reconcile the scope of work and costs of the immediate physical needs identified by the SCR author with the Applicant's scope of work and costs. The costs presented on the SCR Supplement must be consistent with both the scope of work and immediate costs identified in the body of the SCR report and the Applicant's scope of work and costs as presented in the Application. Variations between the costs listed on the SCR Supplement and the costs listed in the body of the SCR report or on the Applicant's Development Cost Schedule must be reconciled in a narrative analysis from the SCR provider. The consolidated scope of work and costs shown on the SCR Supplement will be used by the Underwriter in the analysis to the extent adequately supported in the report; and(8) Cost Estimates. The Development Cost Schedule and SCR Supplement must include all costs identified below:(A) Immediately Necessary Repairs and Replacement. For all Rehabilitation developments, and Adaptive Reuse developments if applicable, immediately necessary repair and replacement should be identified for systems or components which are expected to have a remaining useful life of less than one year, which are found to be in violation of any applicable codes, which must be modified, repaired or replaced in order to satisfy program rules, or which are otherwise in a state of deferred maintenance or pose health and safety hazards. The SCR must provide a separate estimate of the costs associated with the repair, replacement, or maintenance of each system or component which is identified as being an immediate need, citing the basis or the source from which such cost estimate is derived.(B) Proposed Repair, Replacement, or New Construction. If the development plan calls for additional scope of work above and beyond the immediate repair and replacement items described in subparagraph (A) of this paragraph, the additional scope of work must be evaluated and either the nature or source of obsolescence to be cured or improvement to the operations of the Property discussed. The SCR must provide a separate estimate of the costs associated with the additional scope of work, citing the basis or the source from which such cost estimate is derived.(C) Reconciliation of Costs. The combined costs described in subparagraphs (A) and (B) of this paragraph should be consistent with the costs presented on the Applicant's Development Cost Schedule and the SCR Supplement.(D) Expected Repair and Replacement Over Time. The term during which the SCR should estimate the cost of expected repair and replacement over time must equal the lesser of 30 years or the longest term of any land use or regulatory restrictions which are, or will be, associated with the provision of housing on the Property. The SCR must estimate the periodic costs which are expected to arise for repairing or replacing each system or component or the property, based on the estimated remaining useful life of such system or component as described in paragraph (1) of this subsection adjusted for completion of repair and replacement immediately necessary and proposed as described in subparagraphs (A) and (B) of this paragraph. The SCR must include a separate table of the estimated long term costs which identifies in each line the individual component of the property being examined, and in each column the year during the term in which the costs are estimated to be incurred for a period and no less than 30 years. The estimated costs for future years should be given in both present dollar values and anticipated future dollar values assuming a reasonable inflation factor of not less than 2.5% per annum.(e) Any costs not identified and discussed in sufficient detail in the SCR as part of subsection (d)(6), and (8)(A) and (B) of this section will not be included in the underwritten Total Development Cost in the Report.(f) If a copy of such standards or a sample report have been provided for the Department's review, if such standards are widely used, and if all other criteria and requirements described in this section are satisfied, the Department will also accept copies of reports commissioned or required by the primary lender for a proposed transaction, which have been prepared in accordance with:(1) Fannie Mae's criteria for Physical Needs Assessments; (2) Federal Housing Administration's criteria for Project Capital Needs Assessments;(3) Freddie Mac's guidelines for Engineering and Property Condition Reports; and(4) USDA guidelines for Capital Needs Assessment.(g) The Department may consider for acceptance reports prepared according to other standards which are not specifically named in this section, if a copy of such standards or a sample report have been provided for the Department's review, if such standards are widely used, and if all other criteria and requirements described in this section are satisfied.(h) The SCR shall be conducted by a Third Party at the expense of the Applicant, and addressed to Texas Department of Housing and Community Affairs as the client. Copies of reports provided to the Department which were commissioned by other financial institutions should address Texas Department of Housing and Community Affairs as a co-recipient of the report, or letters from both the provider and the recipient of the report should be submitted extending reliance on the report to Texas Department of Housing and Community Affairs.(i) The SCR report must include a statement that the individual or company preparing the SCR report will not materially benefit from the Development in any other way than receiving a fee for performing the SCR. Because of the Department's heavy reliance on the independent cost information, the provider must not be a Related Party to or an Affiliate of any other Development Team member. The SCR report must contain a statement indicating the report preparer has read and understood the requirements of this section.(j) Scope of Work Narrative. For Tax-Exempt Bond Developments that do not include a request for Direct Loan or where the Department is not the bond issuer, a Scope and Cost Review prepared by a Third Party is not required. The application must provide a Scope of Work Narrative, consisting of:(1) A detailed description of the current conditions of all major systems and components of the Development regardless of whether the system or component will be removed, repaired or replaced; (2) For historic structures, a description of each aspect of the building(s) that qualifies it as historic, including a narrative explaining how the scope of work relates to maintaining the historic designation of the Development; and(3) a narrative of the consolidated scope of work for the proposed rehabilitation for each major system and components.</content><note type="source"><p>Source Note: The provisions of this §11.306 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c11/scE"><num value="E">SUBCHAPTER E</num><heading>FEE SCHEDULE, APPEALS, AND OTHER PROVISIONS</heading><section identifier="/us/state/tx/tac/t10/p1/c11/scE/s11.901"><num value="11.901">§11.901</num><heading>Fee Schedule</heading><content>Any unpaid fees, as stated in this section, will cause an Applicant to be ineligible to apply for Department funding, ineligible to receive additional Department funding associated with a Commitment, Determination Notice or Contract, and ineligible to submit extension requests, ownership transfers, and Application amendments until such time the Department receives payment. Payments of the fees shall be in the form of a check and to the extent there are insufficient funds available, it may cause the Application, Commitment, Determination Notice or Contract to be terminated or Allocation rescinded. Other forms of payment may be considered on a case-by-case basis. Applicants will be required to pay any insufficient payment fees charged to the Department by the State Comptroller. The Executive Director may extend the deadline for specific extenuating and extraordinary circumstances, unless prohibited by other parts of this chapter, provided the Applicant submits a written request for an extension to a fee deadline no later than five business days prior to the deadline associated with the particular fee. For any payment that must be submitted in accordance with this chapter, staff may grant relief of the associated deadline for that payment for unusual or unpredictable circumstances that are outside of the Applicant's control such as inclement weather or failed deliveries. Applicants must submit any payment due under this chapter and operate under the assumption that the deadline for such payment is final.(1) Competitive Housing Tax Credit Pre-Application Fee. A pre-application fee, in the amount of $10 per Unit, based on the total number of Units reflected in the pre-application, must be submitted with the pre-application in order for the pre-application to be considered accepted by the Department. Pre-applications in which a Community Housing Development Corporation (CHDO) or a private Qualified Nonprofit Organization intends to serve as the Managing General Partner of the Development Owner, or Control the Managing General Partner of the Development Owner, may be eligible to receive a discount of 10% off the calculated pre-application fee provided such documentation is submitted with the fee. (§2306.6716(d))(2) Refunds of Competitive HTC Pre-application Fees. (§2306.6716(c)) Upon written request from the Applicant, the Department shall refund the balance of the pre-application fee for a Competitive HTC pre-application that is withdrawn by the Applicant and that is not fully processed by the Department. The amount of refund will be commensurate with the level of review completed. Initial processing will constitute 50% of the review, threshold review prior to a deficiency being issued will constitute 30% of the review, and review after deficiencies are submitted and reviewed will constitute 20% of the review. In no instance will a refund of the pre-application fee be made after the Full Application Delivery Date for a pre-application that was fully submitted.(3) Application Fee. Each Application must be accompanied by an Application fee.(A) Housing Tax Credit Applications. For Applicants having submitted a Competitive Housing Tax Credit pre-application which met the pre-application threshold requirements, and for which a pre-application fee was paid, the Application fee will be $20 per Unit based on the total number of Units in the full Application. Otherwise, the Application fee will be $30 per Unit based on the total number of Units in the full Application. Applications in which a CHDO or Qualified Nonprofit Organization intends to serve as the Managing General Partner of the Development Owner, or Control the Managing General Partner of the Development Owner, may be eligible to receive a discount of 10% off the calculated Application fee, provided such documentation is submitted with the fee. (§2306.6716(d))(B) Direct Loan Applications. The fee will be $1,000 per Application except for those Applications that are layered with Housing Tax Credits and submitted simultaneously with the Housing Tax Credit Application. Pursuant to Tex. Gov't Code §2306.147(b), the Department is required to waive Application fees for private nonprofit organizations that offer expanded services such as child care, nutrition programs, job training assistance, health services, or human services and if Direct Loan funds are awarded. In lieu of the Application fee, these organizations must include proof of their exempt status and a description of their supportive services as part of the Application. The Application fee is not a reimbursable cost under the Direct Loan Program.(4) Refunds of Application Fees. Upon written request from the Applicant, the Department shall refund the balance of the Application fee for an Application that is withdrawn by the Applicant and that is not fully processed by the Department. The withdrawal must occur prior to any Board action regarding eligibility or appeal. The amount of refund will be commensurate with the level of review completed. Initial processing will constitute 10% of the review, the site visit will constitute 10% of the review, program evaluation review will constitute 40% of the review, and the underwriting review will constitute 40% of the review. For Competitive HTC Applications, in no instance will a refund of the Application fee be made after final awards are made in July.(5) Third Party Underwriting Fee. Applicants will be notified in writing prior to the evaluation in whole or in part of a Development by an independent external underwriter if such a review is required. The fee must be received by the Department prior to the engagement of the underwriter. The fees paid by the Development Owner to the Department for the external underwriting will be credited against the Commitment or Determination Notice Fee, as applicable, established in paragraphs (6) and (7) of this section, in the event that a Commitment or Determination Notice is issued by the Department to the Development Owner.(6) Housing Tax Credit Commitment Fee. No later than the expiration date in the Commitment, a fee equal to 4% of the annual Housing Credit Allocation amount must be submitted. If the Development Owner has paid the fee and returns the credits by November 1 of the current Application Round, then a refund of 50% of the Commitment Fee may be issued upon request.(7) Tax Exempt Bond Development Determination Notice Fee. No later than the expiration date in the Determination Notice, unless an extension was requested, a fee equal to 4% of the annual Housing Credit Allocation amount must be submitted. If the Development Owner has paid the fee and is not able close on the bonds, then a refund of 50% of the Determination Notice Fee may be issued upon request, but generally no later than 90 days after the Certificate of Reservation deadline. (8) Tax-Exempt Bond Credit Increase Request Fee. Requests for increases to the credit amounts to be issued on IRS Forms 8609 than what was reflected in the Determination Notice for Tax-Exempt Bond Developments must be submitted with a fee equal to 4% of the amount of the credit increase for one year.(9) Extension Fees. All extension requests for deadlines relating to the Carryover, 10% Test (submission and expenditure), Construction Status Reports, or Cost Certification requirements submitted at least 30 calendar days in advance of the applicable original deadline will not be required to submit an extension fee. Any extension request submitted fewer than 30 days in advance or after the original deadline must be accompanied by an extension fee of $2,500. Fees for each subsequent extension request on the same activity will increase by increments of $500, regardless of whether the first request was submitted thirty (30) calendar days in advance of the applicable deadline. An extension fee will not be required for extensions requested on Developments that involve Rehabilitation when the Department or U.S. Department of Agriculture (USDA) is the primary lender, if USDA or the Department is the cause for the Applicant not meeting the deadline. For each Construction Status Report received after the applicable deadline, extension fees will be automatically due (regardless of whether an extension request is submitted). Unpaid extension fees related to Construction Status Reports will be accrued and must be paid prior to issuance of IRS Forms 8609. For purposes of Construction Status Reports, each report will be considered a separate activity. An extension fee of the deadline to submit the Determination Notice and associated documents will not be required, provided a written request was submitted to the Department.(10) Amendment Fees. An amendment request for a non-material change that has not been implemented will not be required to pay an amendment fee. Material amendment requests (whether implemented or not), or non-material amendment requests that have already been implemented will be required to submit an amendment fee of $2,500 in order for the request to be processed. Fees for each subsequent amendment request related to the same Application will increase by increments of $500. A subsequent request, related to the same Application, regardless of whether the first request was non-material and did not require a fee, must include a fee of $3,000. Amendment fees and fee increases are not required for the Direct Loan programs during the Federal Affordability Period.(11) Right of First Refusal Fee. Requests for approval of the satisfaction of the Right of First Refusal provision of the Land Use Restriction Agreement (LURA) must be accompanied by a non-refundable fee of $2,500.(12) Qualified Contract Pre-Request Fee. A Development Owner must file a preliminary Qualified Contract Request to confirm eligibility to submit a Qualified Contract request. The Pre-Request must be accompanied by a non-refundable processing fee of $250.(13) Qualified Contract Fee. Upon eligibility approval of the Qualified Contract Pre-Request, the Development Owner may file a Qualified Contract Request. Such request must be accompanied by a non-refundable processing fee of $3,000.(14) Ownership Transfer Fee. Requests to approve an ownership transfer must be accompanied by a non-refundable processing fee of $1,000. Ownership Transfer fees are not required for Direct Loan only Developments during the Federal Affordability Period. For Developments that were previously issued bonds by the Department and for which an Assignment, Assumption, and Consent Agreement will need to be executed, the ownership transfer must be accompanied by a written acknowledgement that the requestor will be responsible for the costs incurred by TDHCA for preparation of documents by outside bond counsel. (15) Unused Credit or Penalty Fee for Competitive HTC Applications. Development Owners who have more tax credits allocated to them than they can substantiate through Cost Certification will return those excess tax credits prior to issuance of IRS Form 8609. A penalty fee equal to the one year credit amount of the lost credits (10% of the total unused tax credit amount) will be required to be paid by the Owner prior to the issuance of IRS Form 8609 if the tax credits are not returned, and 8609's issued, within 180 days of the end of the first year of the credit period. This penalty fee may be waived without further Board action if the Department recaptures and re-issues the returned tax credits in accordance with Code, §42. If an Applicant returns a full credit allocation after the Carryover Allocation deadline required for that allocation, the Executive Director may recommend to the Board the imposition of a penalty on the score for any Competitive Housing Tax Credit Applications submitted by that Applicant or any Affiliate for any Application in an Application Round occurring concurrent to the return of credits as further provided for in §11.9(f) of this chapter (relating to Factors Affecting Scoring and Eligibility in current and future Application Rounds), or if no Application Round is pending, the Application Round immediately following the return of credits. If any such point penalty is recommended to be assessed and presented for final determination by the Board, it must include notice from the Department to the affected party not less than 14 calendar days prior to the scheduled Board meeting. The Executive Director may, but is not required to, issue a formal notice after disclosure if it is determined that the matter does not warrant point penalties.(16) Compliance Monitoring Fee. Upon receipt of the cost certification for HTC Developments, HTC Developments that are layered with Direct Loan funds, or upon the completion of the Development Period and the beginning of the repayment period for Direct Loan only Developments, the Department will invoice the Development Owner for compliance monitoring fees. For HTC only the amount due will equal $40 per low-income unit. For Direct Loan Only Developments the fee will be $34 per Direct Loan Units, including HOME Match Eligible Units. Developments with both HTCs and Direct Loan, including HOME Match Eligible Units, will only pay one fee equal to $40 per low income unit. Existing HTC developments with a Land Use Restriction Agreement that require payment of a compliance monitoring fee that receive a second allocation of credit will pay only one fee; the fee required by the original Land Use Restriction Agreement will be disregarded. For HTC Developments, the fee will be collected, retroactively if applicable, beginning with the first year of the credit period. For Direct Loan only Developments, the fee will be collected beginning with the first year of after Project Completion. The invoice must be paid prior to the issuance of IRS Form 8609 for HTC properties. For Direct Loan only Developments, the fee must be paid prior to the release of final retainage. Subsequent anniversary dates on which the compliance monitoring fee payments are due shall be determined by the month the first building is placed in service. Compliance fees may be adjusted from time to time by the Department.(17) Public Information Request Fee. Public information requests are processed by the Department in accordance with the provisions of Tex. Gov't Code, Chapter 552. The Department uses the guidelines promulgated by the Office of the Attorney General to determine the cost of copying and other costs of production.(18) Adjustment of Fees by the Department and Notification of Fees. (§2306.6716(b)) All fees charged by the Department in the administration of the Housing Tax Credit and Direct Loan programs may be revised by the Department from time to time as necessary to ensure that such fees compensate the Department for its administrative costs and expenses. Unless otherwise determined by the Department, all revised fees shall apply to all Applications in process and all Developments in operation at the time of such revisions.</content><note type="source"><p>Source Note: The provisions of this §11.901 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scE/s11.902"><num value="11.902">§11.902</num><heading>Appeals Process</heading><content>(a) For Competitive HTC Applications, an Applicant or Development Owner may appeal decisions made by the Department pursuant to Tex. Gov't Code §2306.0321 and §2306.6715 using the process identified in this section. For Tax-Exempt Bond Developments and Direct Loan Developments (not layered with a Competitive HTC Application), an Applicant or Development Owner may appeal decisions made by the Department pursuant to §1.7 of this title (relating to Appeals). Matters that can be appealed include:(1) A determination regarding the Application's satisfaction of applicable requirements, Subchapter B of this chapter (relating to Site and Development Requirements and Restrictions) and Subchapter C of this chapter (relating to Application Submission Requirements, Ineligibility Criteria, Board Decisions and Waiver of Rules for Applications), pre-application threshold criteria, and underwriting criteria;(2) The scoring of the Application under the applicable selection criteria;(3) A recommendation as to the amount of Department funding to be allocated to the Application;(4) Misplacement of an Application or parts of an Application, mathematical errors in scoring an Application, or procedural errors resulting in unequal consideration of the Applicant's proposal;(5) Denial of a requested change to a Commitment or Determination Notice;(6) Denial of a requested change to a loan agreement;(7) Denial of a requested change to a LURA;(8) Any Department decision that results in the termination or change in set-aside of an Application; and(9) Any other matter for which an appeal is permitted under this chapter.(b) An Applicant or Development Owner may not appeal a decision made regarding an Application filed by or an issue related to another Applicant or Development Owner.(c) An Applicant or Development Owner must file its appeal in writing with the Department not later than the seventh calendar day after the date the Department publishes the results of any stage of the Application evaluation or otherwise notifies the Applicant or Development Owner of a decision subject to appeal. The appeal must be made by a Person designated to act on behalf of the Applicant or an attorney that represents the Applicant. For Application related appeals, the Applicant must specifically identify the Applicant's grounds for appeal, based on the original Application and additional documentation filed with the original Application as supplemented in accordance with the limitations and requirements of this chapter.(d) The Executive Director may respond in writing not later than 14 calendar days after the date of actual receipt of the appeal by the Department. If the Applicant is not satisfied with the Executive Director's response to the appeal or the Executive Director does not respond, the Applicant may appeal directly in writing to the Board. While information can be provided in accordance with any rules related to public comment before the Board, full and complete explanation of the grounds for appeal and circumstances warranting the granting of an appeal must be disclosed in the appeal documentation filed with the Executive Director.(e) An appeal filed with the Board must be received in accordance with Tex. Gov't Code §2306.6715(d).(f) If there is insufficient time for the Executive Director to respond to a Competitive Housing Tax Credit Application appeal prior to the agenda being posted for the July Board meeting at which awards from the Application Round will be made, the appeal may be posted to the Board agenda prior to the Executive Director's issuance of a response.(g) Board review of an Application related appeal will be based on the original Application. A witness in an appeal may not present or refer to any document, instrument, or writing not already contained within the Application as reflected in the Department's records.(h) The decision of the Board regarding an appeal is the final decision of the Department.(i) The Department will post to its website an appeal filed with the Department or Board and any other document relating to the processing of an Application related appeal. (§2306.6717(a)(5))</content><note type="source"><p>Source Note: The provisions of this §11.902 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scE/s11.903"><num value="11.903">§11.903</num><heading>Adherence to Obligations. (§2306.6720)</heading><content>Any Applicant, Development Owner, or other Person that fails to adhere to its obligations with regard to the programs of the Department, whether contractual or otherwise, made false or misleading representations to the Department with regard to an Application, request for funding, or compliance requirements, or otherwise violated a provision of Tex. Gov't Code, Chapter 2306 or a rule adopted under that chapter, may be subject to:(1) Assessment of administrative penalties in accordance with Chapter 2, Subchapter C of this title (relating to Administrative Penalties) the Department's rules regarding the assessment of such penalties. Each day the violation continues or occurs is a separate violation for purposes of imposing a penalty; or(2) In the case of the competitive Low Income Housing Tax Credit Program, a point reduction for any Application involving that Applicant over the next two Application Rounds succeeding the date on which the Department first gives written notice of any such failure to adhere to obligations or false or misleading representations. Point reductions under this section may be appealed to the Board.</content><note type="source"><p>Source Note: The provisions of this §11.903 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scE/s11.904"><num value="11.904">§11.904</num><heading>Alternative Dispute Resolution (ADR) Policy</heading><content>In accordance with Tex. Gov't Code §2306.082, it is the Department's policy to encourage the use of appropriate ADR procedures under the Governmental Dispute Resolution Act, Tex. Gov't Code, Chapter 2010, to assist in resolving disputes under the Department's jurisdiction, as provided for in §1.17 of this title (relating to Alternative Dispute Resolution).</content><note type="source"><p>Source Note: The provisions of this §11.904 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scE/s11.905"><num value="11.905">§11.905</num><heading>General Information for Commitments or Determination Notices</heading><content>(a) A Commitment or Determination Notice shall not be issued with respect to any Development for an unnecessary amount in accordance with §42(m)(2)(A) or where the cost for the total development, acquisition, construction or rehabilitation exceeds the limitations established by the Department and the Board.(b) All Commitments or Determination Notices, whether reflected in the Commitment or Determination Notice or not, are made subject to full compliance with all applicable provisions of law and the Department's rules, all provisions of Commitment, Determination Notice, and Contract, satisfactory completion of underwriting, and satisfactory resolution of any conditions of underwriting, award, and administrative deficiencies.(c) The Department shall notify, in writing, the mayor, county judge, or other appropriate official of the municipality or county, as applicable, in which the Development is located informing him/her of the Board's issuance of a Commitment Notice, as applicable. (d) The Department may cancel a Commitment, Determination Notice or Carryover Allocation prior to the issuance of IRS Form(s) 8609 (for Housing Tax Credits) or completion of construction with respect to a Development and/or apply administrative penalties if:(1) The Applicant, Development Owner, or the Development, as applicable, fails after written notice and a reasonable opportunity to cure, to meet any of the conditions of such Commitment, Determination Notice or Carryover Allocation or any of the undertakings and commitments made by the Development Owner in the Application process for the Development; (2) Any material statement or representation made by the Development Owner or made with respect to the Development Owner or the Development is untrue or misleading;(3) An event occurs with respect to the Applicant or the Development Owner which would have made the Application ineligible for funding pursuant to Subchapter C of Chapter 11 of this title (relating to Application Submission Requirements, Ineligibility Criteria, Board Decisions and Waiver of Rules) if such event had occurred prior to issuance of the Commitment, Determination Notice or Carryover Allocation; or(4) The Applicant, Development Owner, or the Development, as applicable, fails after written notice and a reasonable opportunity to cure, to comply with this chapter or other applicable Department rules, procedures, or requirements of the Department.</content><note type="source"><p>Source Note: The provisions of this §11.905 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scE/s11.906"><num value="11.906">§11.906</num><heading>Commitment and Determination Notice General Requirements and Required Documentation</heading><content>(a) Commitment. For Competitive HTC Developments, the Department shall issue a Commitment to the Development Owner which shall confirm that the Board has approved the Application and state the Department's commitment to make a Housing Credit Allocation to the Development Owner in a specified amount, subject to the feasibility determination described in Chapter 11, Subchapter D of this title (relating to Underwriting and Loan Policy) and the determination that the Development satisfies the requirements of this chapter and other applicable Department rules. The Commitment shall expire on the date specified therein, which shall be 30 calendar days from the effective date, unless the Development Owner indicates acceptance by executing the Commitment, pays the required fee specified in §11.901 of this chapter (relating to Fee Schedule), and satisfies any conditions set forth therein by the Department. The Commitment expiration date may not be extended.(b) Determination Notices. For Tax Exempt Bond Developments, the Department shall issue a Determination Notice which shall confirm that the Development satisfies the requirements of this chapter as applicable and other applicable Department rules in accordance with the §42(m)(1)(D) of the Internal Revenue Code (the Code). The Determination Notice shall state the Department's determination of a specific amount of housing tax credits that the Development may be eligible for, subject to the requirements set forth in the Department's rules, as applicable. The Determination Notice shall expire on the date specified therein, which shall be 30 calendar days from the effective date, unless the Development Owner indicates acceptance by executing the Determination Notice, pays the required fee specified in Chapter 11, Subchapter E of this title, and satisfies any conditions set forth therein by the Department. For Tax-Exempt Bond Developments utilizing a local issuer, the Determination Notice expiration date may be extended for a period not to exceed 5 calendar days, upon request. For Tax-Exempt Bond Developments utilizing TDHCA as the bond issuer, the expiration date may be extended to coincide with the closing date. If the requirements of the Determination Notice, and any conditions of the Determination Notice are met, the Determination Notice shall be valid for a period of one year from the effective date of the Determination Notice, without distinction between a Certificate of Reservation or Traditional Carryforward Reservation. The one-year period may be extended for a period not to exceed 6 months, upon request. Should an Applicant desire to have a new Determination Notice issued that reflects a different recommended credit amount, then a new Application must be submitted that meets the requirements of §11.201(2) of this chapter.(c) Documentation Submission Requirements at Commitment of Funds. No later than the expiration date of the Commitment (or no later than December 31 for Competitive HTC Applications, whichever is earlier) or Determination Notice, the documentation described in paragraphs (1) - (7) of this subsection must be provided. Failure to provide these documents may cause the Commitment or Determination Notice to be rescinded.(1) For entities formed outside the state of Texas, evidence that the entity filed a Certificate of Application for foreign qualification in Texas, a Franchise Tax Account Status from the Texas Comptroller of Public Accounts, and a Certificate of Fact from the Office of the Secretary of State. If the entity is newly registered in Texas and the Franchise Tax Account Status or Certificate of Fact are not available, a statement can be provided to that effect.(2) For Texas entities, a copy of the Certificate of Filing for the Certificate of Formation from the Office of the Secretary of State; a Certificate of Fact from the Secretary of State, and a Franchise Tax Account Status from the Texas Comptroller of Public Accounts. If the entity is newly registered and the Certificate of Fact and the Franchise Tax Account Status are not available, a statement can be provided to that effect.(3) Evidence that the signer(s) of the Commitment or Determination Notice have sufficient authority to sign on behalf of the Applicant in the form of a corporate resolution which indicates the sub-entity in Control consistent with the entity contemplated and described in the Application.(4) Evidence of final zoning that was proposed or needed to be changed pursuant to the Development plan.(5) Evidence of satisfaction of any conditions identified in the Credit Underwriting Analysis Report, any conditions provided for in Chapter 1, Subchapter C of this title (relating to the Previous Participation Review, or any other conditions of the award required to be met at Commitment or Determination Notice.(6) Documentation of any changes to representations made in the Application subject to §10.405 of this title (relating to Amendments and Extensions).(7) For Applications underwritten with a property tax exemption, documentation must be submitted in the form of a letter from an attorney identifying the statutory basis for the exemption and indicating that the exemption is reasonably achievable, subject to appraisal district review. Additionally, any Development with a proposed Payment in Lieu of Taxes (PILOT) agreement must provide evidence regarding the statutory basis for the PILOT and its terms.(8) For Competitive HTC Applications, for any documentation that must be submitted in accordance with this section, staff may grant relief of the associated deadline, for unusual or unpredictable circumstances that are outside of the Applicant's control such as inclement weather or failed deliveries. Applicants must submit any payment due under this chapter and operate under the assumption that the deadline for such payment is final. (d) Post Bond Closing Documentation Requirements. Regardless of the issuer of the bonds, no later than 60 calendar days following closing on the bonds, the Development Owner must submit the documentation in paragraphs (1) - (6) of this subsection. (1) Training certificate(s) from a Department approved "property owner and manager Fair Housing trainer" showing that the Development Owner and on-site or regional property manager has attended and passed at least five hours of Fair Housing training. The certificate(s) must not be older than three years from the date of submission and must verify that all parts or phases of the offered training have been completed; two certificates supplied for the same part or phase of an offered training will not be counted towards the five hour required minimum, even if they were attended on different dates. The Development Owner individual reflected on the certificate must be identified on the organizational chart as having Control.(2) A training certificate from a Department approved "architect and engineer Fair Housing trainer" showing that the lead architect or engineer responsible for certifying compliance with the Department's accessibility and construction standards has attended and passed at least five hours of Fair Housing training. The certificate must not be older than three years from the date of submission and must verify that all parts or phases of the offered training have been completed; two certificates supplied for the same part or phase of an offered training will not be counted towards the five hour required minimum, even if they were attended on different dates.(3) Evidence that the financing has closed, such as an executed settlement statement.(4) A confirmation from the Compliance Division evidencing receipt of the CMTS Filing Agreement form pursuant to §10.607(a) of this title (relating to Reporting Requirements).(5) An initial construction status report consisting of items from §10.401(b)(1)-(6) of this title (relating to Construction Status Reports).(6) A current survey or plat of the Development Site prepared and certified by a duly licensed Texas Registered Professional Land Surveyor. The survey or plat must clearly delineate the floodplain areas and show all easements recorded against the Property and encroachments.</content><note type="source"><p>Source Note: The provisions of this §11.906 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scE/s11.907"><num value="11.907">§11.907</num><heading>Carryover Agreement General Requirements and Required Documentation</heading><content>Carryover (Competitive HTC Only). All Developments that received a Commitment, and will not be placed in service and receive IRS Form(s) 8609 in the year the Commitment was issued, must submit the Carryover documentation, in the form prescribed by the Department in the Carryover Manual, no later than the Carryover Documentation Delivery Date as identified in §11.2 of this title (relating to Program Calendar for Competitive Housing Tax Credits) of the year in which the Commitment is issued pursuant to §42(h)(1)(C) of the Code.(1) Commitments for credits will be terminated if the Carryover documentation has not been received by this deadline, unless an extension has been approved. This termination is subject to right of appeal directly to the Board, and if so determined by the Board, immediately upon final termination by the Board, staff is directed to award the credits to other qualified Applicants on the approved waiting list.(2) If the interim or permanent financing structure, syndication rate, amount of debt or syndication proceeds are finalized but different at the time of Carryover from what was proposed in the original Application, applicable documentation of such changes must be provided and the Development may be re-evaluated by the Department for a reduction of credit or change in conditions.(3) All Carryover Allocations will be contingent upon the Development Owner providing evidence that they have and will maintain Site Control through the 10% Test or through the anticipated closing date, whichever is earlier. For purposes of this paragraph, any changes to the Development Site acreage between Application and Carryover must be addressed by written explanation or, as appropriate, in accordance with §10.405 of this title (relating to Amendments and Extensions).(4) Confirmation of the right to transact business in Texas, as evidenced by the Franchise Tax Account Status (the equivalent of the prior Certificate of Account Status) from the Texas Comptroller of Public Accounts and a Certificate of Fact from the Office of the Secretary of State must be submitted with the Carryover Allocation.</content><note type="source"><p>Source Note: The provisions of this §11.907 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c11/scF"><num value="F">SUBCHAPTER F</num><heading>STATE HOUSING TAX CREDITS</heading><section identifier="/us/state/tx/tac/t10/p1/c11/scF/s11.1001"><num value="11.1001">§11.1001</num><heading>General</heading><content>(a) This subchapter applies only to 2026 State Housing Tax Credits to supplement Competitive HTC awards during the July Board meeting of the Department at which final awards of credits are authorized or to supplement Tax-Exempt Bond Developments.(b) For Competitive HTC Applications, submissions required to make a request for State Housing Tax Credits are considered a supplement to the original Application. Requests for State Housing Tax Credits are not considered Applications under the 2026 HTC Competitive Cycle nor are they part of the 2026 Application Round.(c) For Competitive HTC Applications, an allocation of State Housing Tax Credits will be processed as a Material Amendment to the Application under §10.405 of this title (relating to Amendments and Extensions). No fee shall be charged for this Material Amendment.(d) For Competitive HTC Applications, revisions to costs included in a request for State Housing Tax Credits will not have an impact on points originally awarded under §11.9(e)(2) and (4) of this title(relating to Costs of Development per Square Foot or Leveraging respectively).(e) Tax-Exempt Bond Developments shall meet the requirements of §11.1009 of this chapter (relating to State Housing Tax Credits for Tax-Exempt Bond Developments).(f) Developments with HOME funds from the Department or another Participating Jurisdiction, will enter into a Contract and a LURA for HOME Match Eligible Units.</content><note type="source"><p>Source Note: The provisions of this §11.1001 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scF/s11.1002"><num value="11.1002">§11.1002</num><heading>Program Calendar for State Housing Tax Credits Associated with Competitive HTC Applications</heading><content>Competitive HTC Deadlines. Non-statutory deadlines specifically listed in the Program Calendar may be extended by the Department for a period of not more than 5 business days provided that the Applicant has, in writing, requested an extension prior to the date of the original deadline and has established to the reasonable satisfaction of the Department that there is good cause for the extension.Attached Graphic</content><note type="source"><p>Source Note: The provisions of this §11.1002 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scF/s11.1003"><num value="11.1003">§11.1003</num><heading>State Housing Tax Credit Allocation Process Associated with Competitive HTC Applications</heading><content>(a) Intent to Request State Housing Tax Credit Allocation. Only those Applicants that elect to request an allocation of State Housing Tax Credits from the Department by the Full Application Delivery Date specified in §11.2(a) or (b) of this chapter (relating to Program Calendar) are eligible to submit a Request for State Housing Tax Credits. (b) Requests for State Housing Tax Credits must be received by the deadline specified in §11.1002 of this subchapter (relating to Program Calendar for State Housing Tax Credits) in the format required by the Department.(c) Minimum Request Amount. The minimum request amount is $3,000,000.(d) Third Party Requests for Administrative Deficiency. Due to the nature of the State Housing Tax Credit process and reliance on the Original Application and scores, the Third Party Request for Administrative Deficiency process will not be utilized during the State Housing Tax Credit process under this subchapter.</content><note type="source"><p>Source Note: The provisions of this §11.1003 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scF/s11.1004"><num value="11.1004">§11.1004</num><heading>Procedural Requirements for Requests for State Housing Tax Credits Associated with Competitive HTC Applications</heading><content>(a) The procedures and requirements of §11.201 of this chapter (relating to Procedural Requirements for Application Submission) will generally apply to Requests for State Housing Tax Credits, unless otherwise specified in this Subchapter.(b) The Original Application will be relied upon, as deemed final and reviewed by staff as part of the original award; the request for State Housing Tax Credits must only include the items authorized in this subchapter. Architectural drawings, or other documents that relate to changes to the Application other than revisions to the financing structure may not be submitted. The Applicant must submit the required documents as a single PDF document and all spreadsheet exhibits must also be provided in a usable spreadsheet format as further specified in the Department's released materials, which will be incorporated into the Original Application by staff, and become the full Request for State Housing Tax Credits.</content><note type="source"><p>Source Note: The provisions of this §11.1004 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scF/s11.1005"><num value="11.1005">§11.1005</num><heading>Required Documentation for State Housing Tax Credit Request Submission Associated with Competitive HTC Applications</heading><content>(a) The purpose of this section is to identify the threshold documentation that is specific to the Request for State Housing Tax Credits submission, unless specifically indicated or otherwise required by Department rule. Only those documents listed herein may be submitted.(b) Certification, Acknowledgement, and Consent of Development Owner. A certification of the information in this subchapter as well as Subchapter B of this chapter must be executed by the Development Owner and addresses the specific requirements associated with the Development. The Person executing the certification is responsible for ensuring all individuals referenced therein are in compliance with the certification and that they have given it with all required authority and with actual knowledge of the matters certified. Applicants must certify that there has been no change to the Applicant Eligibility or Original Owner Certification since the Original Application was submitted.(c) Site Requirements and Restrictions. The Applicant must certify that there have been no changes from the Original Application that would require additional disclosure or mitigation, or render the proposed Development Site ineligible. Any change must be addressed under the requirements of §10.405 of this title (relating to Amendments and Extensions).(d) Site Control. Applicants must certify that there has been no change to Site Control, other than extensions or purchase by the Applicant, since the Original Application was submitted. If the nature of Site Control has changed, State Housing Tax Credit Request must submit the appropriate documentation as described in §11.204(9) of this chapter (relating to Site Control).(e) Zoning. (§2306.6705(5)) If the zoning status of the Development has changed since theOriginal Application, the Request for State Housing Tax Credits must include all requirements of§11.204(10) of this chapter (relating to Zoning).(f) Applicants who elect to request an allocation of State Housing Tax Credits must include a term sheet from a syndicator that, at a minimum, includes:(1) An estimate of the amount of equity dollars expected to be raised for the Development;(2) The amount of State Housing Tax Credits requested for allocation to the Development Owner;(3) Pay-in schedules;(4) Syndicator consulting fees and other syndication costs; and (5) An acknowledgement of the amounts and terms of all other anticipated sources of funds and if the Application reflects an intent to elect income averaging there must be an acknowledgement to that effect in the term sheet.</content><note type="source"><p>Source Note: The provisions of this §11.1005 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scF/s11.1006"><num value="11.1006">§11.1006</num><heading>State Housing Tax Credits Underwriting and Loan Policy Associated with Competitive HTC</heading><content>Requests for State Housing Tax Credits will only be reviewed for items addressed in this subchapter. In requests for State Housing Tax Credits the Total Developer Fee and Developer Fee included in Eligible Basis cannot exceed the Developer Fee amounts in the most recently published Real Estate Analysis report for the Application. The Real Estate Analysis Division will publish a memo for the State Housing Tax Credit allocation serving as a supplement to the report for the Original Application.</content><note type="source"><p>Source Note: The provisions of this §11.1006 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scF/s11.1007"><num value="11.1007">§11.1007</num><heading>State Housing Tax Credits Selection Criteria Associated with Competitive HTC Applications</heading><content>For Qualified Developments not financed through tax exempt bonds, for years in which the Department receives requests for more State Housing Tax Credits than are available, the Department shall prioritize applications proposing the most additional low income Units for households at or below 30% of AMGI relative to the State Housing Tax Credit Request. Units for households at or below 30% of AMGI proposed in the original application shall not be considered. The Department will award based solely upon new Units proposed in exchange for tax credit equity. The initial State Housing Tax Credit award shall be made to the Applicant with the lowest request amount per additional Units provided. Subsequent awards shall be made using the same metric until the Department can no longer fund a full credit request. In the case of a tie, preference shall be determined based upon the Original Application scores under §11.9 of this chapter (relating to Competitive HTC Selection Criteria) and, if applicable, the tie breaker factors established under §11.7 of this chapter (relating to Tie Breaker Factors).</content><note type="source"><p>Source Note: The provisions of this §11.1007 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c11/scF/s11.1008"><num value="11.1008">§11.1008</num><heading>State Housing Tax Credits for Tax-Exempt Bond Developments</heading><content>(a) The request for State Housing Tax Credits shall be reflected in the Uniform Multifamily Application, as prescribed by the Department and further explained in the Multifamily Programs Procedures Manual, and shall include a term sheet from a syndicator that includes the amount of State Housing Tax Credits requested and pricing information.(b) For Applications that will receive a Certificate of Reservation from the Texas Bond Review Board in January, an Applicant may submit the complete Application (which may or may not include Third Party Reports, as more fully described under §11.201(2) of this chapter (relating to Procedural Requirements for Application Submission)), from January 2 through January 31. The Department shall utilize a first-come, first-served system for establishing priority of requests for the portion of the State Housing Tax Credit available for Tax-Exempt Bond Developments. (c) Once the number of Applications submitted exceed the amount of State Housing Tax Credits for Tax-Exempt Bond Developments the Department can allocate, Applicants for those Applications will be provided notice to that effect and be given the opportunity to modify their Application through the Administrative Deficiency process to exclude the request for the State Housing Tax Credit.(d) Should there be an amount of State Housing Tax Credits to allocate to an Application and that Application is withdrawn or terminated, or the Certificate of Reservation is withdrawn from the Bond Review Board, the next Application in line, based on the received date will be notified that their Application will be underwritten with the State Housing Tax Credit. Alternatively, in cases where staff can make seamless adjustments to other line items to account for the lack of State HTC, staff may make such adjustments automatically and notify the Applicant accordingly. (e) Applications submitted after January 31 and for which a Certificate of Reservation has been issued, may include a request for State Housing Tax Credits only if the Department has not reached the maximum amount of State Housing Tax Credits to allocate for Tax-Exempt Bond Developments.(f) Qualified Developments will be issued an Allocation Certificate, pursuant to Texas Insurance Code Chapters 171 and 233 that will reflect the State Housing Tax Credit Amount recommended by the Department.</content><note type="source"><p>Source Note: The provisions of this §11.1008 adopted to be effective December 28, 2025, 50 TexReg 8191.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c12"><num value="12">CHAPTER 12</num><heading>MULTIFAMILY HOUSING REVENUE BOND RULES</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c12/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p1/c12/sc/s12.1"><num value="12.1">§12.1</num><heading>General</heading><content>(a) Authority. The rules in this chapter apply to the issuance of multifamily housing revenue bonds, notes, or other evidences of indebtedness (Bonds) by the Texas Department of Housing and Community Affairs (Department). The Department is authorized to issue Bonds, including Qualified 501(c)(3) Bonds and Taxable Bonds, pursuant to Tex. Gov't Code, Chapter 2306. Notwithstanding anything in this chapter to the contrary, Bonds which are issued to finance the Development of multifamily rental housing are subject to the applicable requirements of the laws of the State of Texas, including but not limited to Tex. Gov't Code, Chapters 1372 and 2306, and federal law pursuant to the requirements of Internal Revenue Code (Code), §§141 through 150, as applicable.(b) General. The purpose of this chapter is to state the Department's requirements for issuing Bonds, the procedures for applying for Bonds and the regulatory and land use restrictions imposed upon Bond financed Developments. The provisions contained in this chapter are separate from the rules relating to the Department's administration of the Housing Tax Credit program. Applicants seeking a Housing Tax Credit Allocation should consult Chapter 11 of this title (relating to the Housing Tax Credit Program Qualified Allocation Plan) for the current program year. In general, the Applicant will be required to satisfy the eligibility and threshold requirements of the Qualified Allocation Plan (QAP) in effect at the time the Certificate of Reservation is issued by the Texas Bond Review Board (TBRB). If the applicable QAP contradicts rules set forth in this chapter, the applicable QAP will take precedence over the rules in this chapter except in an instance of a conflicting statutory requirement, which shall always take precedence. To the extent applicable to each specific Bond issuance, the Department's conduit multifamily Bond transactions will be processed in accordance with 34 TAC Part 9, Chapter 181, Subchapter A (relating to Bond Review Board Rules) and Tex. Gov't Code, Chapter 1372.(c) Costs of Issuance. The Applicant shall be responsible for payment of all costs related to the preparation and submission of the pre-application and Application, including but not limited to, costs associated with the publication and posting of required public notices and all costs and expenses associated with the issuance of the Bonds, regardless of whether the Application is ultimately approved or whether Bonds are ultimately issued. At any point during the process, the Applicant is solely responsible for determining whether to proceed with the Application and the Department disclaims any and all responsibility and liability in this regard.(d) Waivers and Appeals. Requests for any permitted waivers of program rules must be made in accordance with §11.207 of this title (relating to Waiver of Rules). The process for appeals and grounds for appeals may be found under §1.7 of this title (relating to Appeals Process).</content><note type="source"><p>Source Note: The provisions of this §12.1 adopted to be effective February 4, 2026, 51 TexReg 564.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c12/sc/s12.2"><num value="12.2">§12.2</num><heading>Definitions</heading><content>The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Any capitalized terms not specifically mentioned in this section shall have the meaning as defined in Tex. Gov't Code, Chapter 2306, §§141 through 150 of the Code, Chapter 10 of this title (relating to Uniform Multifamily Rules), and Chapter 11 of this title (relating to Housing Tax Credit Program Qualified Allocation Plan).(1) Bond Trustee--A financial institution, usually a trust company or the trust department in a commercial bank, that holds collateral for the benefit of the holders of municipal securities. The Bond Trustee's obligations and responsibilities are set forth in the Indenture.(2) Institutional Buyer--Shall have the meaning prescribed under 17 CFR §230.501(a), but excluding any natural person or any director or executive officer of the Department (17 CFR §230.501(a)(4) - (6)), or as defined by 17 CFR §230.144(a), promulgated under the Securities Act of 1933, as amended.(3) Persons with Special Needs--Shall have the meaning prescribed under Tex. Gov't Code §2306.511.(4) Qualified 501(c)(3) Bonds--Any Bonds described by Section 145 of the Code to provide residential rental property.</content><note type="source"><p>Source Note: The provisions of this §12.2 adopted to be effective February 4, 2026, 51 TexReg 564.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c12/sc/s12.3"><num value="12.3">§12.3</num><heading>Bond Rating and Investment Letter</heading><content>(a) Bond Ratings. All publicly offered Bonds issued by the Department to finance Developments shall have a debt rating the equivalent of at least an "A" rating assigned to long-term obligations by Standard & Poor's Ratings Services, or Moody's Investors Service, Inc. If such rating is based upon credit enhancement provided by an institution other than the Applicant or Development Owner, the form and substance of such credit enhancement shall be subject to approval by the Department's Board (Board), evidenced by a resolution authorizing the issuance of the credit enhanced Bonds.(b) Investment Letters. Bonds rated less than "A" or Bonds which are unrated must be placed with one or more Institutional Buyers and must be accompanied by an investor letter acceptable to the Department. Subsequent purchasers of such Bonds must also be qualified as Institutional Buyers and must execute and deliver to the Department an investor letter in a form satisfactory to the Department. Bonds rated less than "A" and Bonds which are unrated shall be issued in physical form, in minimum denominations of one hundred thousand dollars ($100,000), and must carry a legend requiring any purchasers of the Bonds to be Institutional Buyers and sign and deliver to the Department an investor letter in a form acceptable to the Department.</content><note type="source"><p>Source Note: The provisions of this §12.3 adopted to be effective February 4, 2026, 51 TexReg 564.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c12/sc/s12.4"><num value="12.4">§12.4</num><heading>Pre-Application Process and Evaluation</heading><content>(a) Pre-Inducement Questionnaire. Prior to the filing of a pre-application, including an application for Qualified 501(c)(3) Bonds, the Applicant shall submit the Pre-Inducement Questionnaire, in the form prescribed by the Department, so the Department can have a preliminary understanding of the proposed Development plan before a pre-application and corresponding fees are submitted. After reviewing the pre-inducement questionnaire, Department staff will follow-up with the Applicant to discuss the next steps in the process and may schedule a pre-inducement conference call. Prior to the submission of a pre-application, it is essential that the Department and Applicant communicate regarding the Department's objectives and policies in the development of affordable housing throughout the State using Bond financing. The acceptance of the questionnaire by the Department does not constitute a pre-application or Application and does not bind the Department to any formal action regarding an inducement resolution. (b) Neighborhood Risk Factors. If the Development Site has any of the characteristics described in §11.101(a)(3)(D) of this title (relating to Neighborhood Risk Factors), the Applicant must disclose the presence of such characteristics to the Department. Disclosure may be done at time of pre-application and handled in connection with the inducement or it can be addressed at the time of Application submission. The Applicant understands that any determination made by staff or the Board at the time of bond inducement regarding Site eligibility based on the documentation presented, is preliminary in nature. Should additional information related to any of the Neighborhood Risk Factors become available while the Tax-Exempt Bond Development Application is under review, or the information by which the original determination was made changes in a way that could affect eligibility, then such information will be re-evaluated and presented to the Board.(c) Pre-Application Process. An Applicant who intends to pursue Bond financing from the Department, including Qualified 501(c)(3) Bonds, shall submit a pre-application by the corresponding pre-application submission deadline, as set forth by the Department. The required pre-application fee as described in §12.10 of this chapter (relating to Fees) or §12.11 of this chapter (relating to Qualified 501(c)(3) Bonds), as applicable, must be submitted with the pre-application in order for the pre-application to be considered accepted by the Department. Department review at the time of the pre-application is limited and not all issues of eligibility, fulfillment of threshold requirements in connection with the full Application, and documentation submission requirements pursuant to Chapter 11 of this title (relating to Housing Tax Credit Program Qualified Allocation Plan) are reviewed. The Department is not responsible for notifying an Applicant of potential areas of ineligibility or other deficiencies at the time of pre-application. If the Development meets the criteria as described in §12.5 of this chapter (relating to Pre-Application Threshold Requirements), the pre-application will be scored and ranked according to the applicable selection criteria as described in §12.6 of this chapter (relating to Pre-Application Scoring Criteria), recognizing that pre-applications for Qualified 501(c)(3) Bond financing will be scored and ranked separately from bond pre-applications associated with Housing Tax Credits. The selection criteria, as further described in §12.6 of this chapter, reflects a structure that gives priority consideration to specific criteria as outlined in Tex. Gov't Code, §2306.359, as well as other important criteria. To the extent applicable, should two or more pre-applications receive the same score, the Department will utilize the tie breaker factors in this paragraph, which will be considered in the order they are presented herein, to determine which pre-application will receive preference in consideration of a Certificate of Reservation: (1) To the pre-application that was on the waiting list with the TBRB but did not have an active Certificate of Reservation at the time of the TBRB lottery and achieved the maximum number of points under §12.6(12) of this chapter; and(2) To the pre-application with the highest number of positive points achieved under §12.6(9) of this chapter.(d) Inducement Resolution. After the pre-applications have been scored and ranked, the pre-application will be presented to the Board for consideration of an inducement resolution declaring the Department's initial intent to issue Bonds with respect to the Development. Approval of the inducement resolution does not guarantee final Board approval of the Bond Application. Department staff may recommend that the Board not approve an inducement resolution for a pre-application. Notwithstanding the foregoing, Department staff may, but is not required to, recommend that an inducement resolution be approved despite the presence of neighborhood risk factors, undesirable site features, or requirements that may necessitate a waiver, that have not fully been evaluated by staff at pre-application. The Applicant recognizes the risk involved in moving forward should this be the case and the Department assumes no responsibility or liability in that regard. Each Development is unique, and therefore, making the final determination to issue Bonds is often dependent on the issues presented at the time the full Application is considered by the Board.</content><note type="source"><p>Source Note: The provisions of this §12.4 adopted to be effective February 4, 2026, 51 TexReg 564.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c12/sc/s12.5"><num value="12.5">§12.5</num><heading>Pre-Application Threshold Requirements</heading><content>The threshold requirements of a pre-application include the criteria listed in paragraphs (1) - (7) of this section. As the Department reviews the pre-application the assumptions as reflected in Chapter 11, Subchapter D of this title (relating to Underwriting and Loan Policy) will be utilized, as applicable, even if not reflected by the Applicant in the pre-application. The threshold requirements of a pre-application include:(1) Submission of the Multifamily Bond Pre-application as prescribed by the Department in the Multifamily Bond Pre-Application Procedures Manual;(2) Completed Bond Review Board Residential Rental Attachment for the current program year; provided this paragraph shall not be required for Qualified 501(c)(3) Bonds;(3) Site Control, evidenced by the documentation required under §11.204(10) of this title (relating to Required Documentation for Application Submission). The Site Control must be valid through the date of both the Board meeting at which the inducement resolution is considered and, if applicable, subsequent submission of the application to the TBRB. For Lottery applications, Site Control must meet the requirements of 34 TAC §190.3(b)(13) (relating to Filing Requirements for Applications for Reservation);(4) Boundary survey or plat clearly identifying the location and boundaries of the subject Property;(5) Organizational Chart showing the structure of the Development Owner and of any Developer and Guarantor, providing the names and ownership percentages of all Persons having an ownership interest in the Development Owner, Developer and Guarantor, as applicable, and completed List of Organizations form, as provided in the pre-application. The List of Organizations form must include all Persons identified on the organizational charts, and further identify which of those Persons listed exercise Control of the Development;(6) Evidence of Entity Registration or Reservation with the Texas Office of the Secretary of State; and(7) A certification, as provided in the pre-application, that the Applicant met the requirements and deadlines for public notifications as identified in §11.203 of this title (relating to Public Notifications (§2306.6705(9)). In general, notifications should not be older than three months prior to the date of Application submission. In addition, should the jurisdiction of the official holding any position or role described in §11.203 of this title change between the submission of a pre-application and the submission of an Application in a manner that results in the Development being within a new jurisdiction, Applicants are required to notify the new entity no later than the Full Application Delivery Date.</content><note type="source"><p>Source Note: The provisions of this §12.5 adopted to be effective February 4, 2026, 51 TexReg 564.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c12/sc/s12.6"><num value="12.6">§12.6</num><heading>Pre-Application Scoring Criteria</heading><content>This section identifies the scoring criteria used in evaluating and ranking pre-applications, including pre-applications requesting Qualified 501(c)(3) Bonds to the extent applicable. Any scoring items that require supplemental information to substantiate points must be submitted in the pre-application, as further outlined in the Multifamily Bond Pre-Application Procedures Manual. Applicants proposing multiple sites will be required to submit a separate pre-application for each Development Site, unless staff determines that one pre-application is more appropriate based on the specifics of the transaction. Each individual pre-application will be scored on its own merits and the final score will be determined based on an average of all of the individual scores. Ongoing requirements, as selected in the pre-application, will be reflected in the Bond Regulatory and Land Use Restriction Agreement and must be maintained throughout the State Restrictive Period, unless otherwise stated or required in such Agreement.(1) Income and Rent Levels of the Tenants. Pre-applications may qualify for up to ten (10 points) for this item.(A) Priority 1 designation includes one of clauses (i) - (iii) of this subparagraph. (10 points)(i) set aside 50% of Units rent capped at 50% AMGI and the remaining 50% of Units rent capped at 60% AMGI; or(ii) set aside 15% of Units rent capped at 30% AMGI and the remaining 85% of Units rent capped at 60% AMGI; or(iii) set aside 100% of Units rent capped at 60% AMGI for Developments located in a census tract with a median income that is higher than the median income of the county, MSA, or PMSA in which the census tract is located.(B) Priority 2 designation requires the set aside of at least 80% of the Units rent capped at 60% AMGI (7 points).(C) Priority 3 designation. Includes any qualified residential rental development. Market rate Units can be included under this priority (5 points).(2) Cost of Development per Square Foot. (1 point) For this item, costs shall be defined as the Building Cost as represented in the Development Cost Schedule, as originally provided in the pre-application. This calculation does not include indirect construction costs or site work. Pre-applications that do not exceed $160 per square foot of Net Rentable Area will receive one (1) point. Rehabilitation Developments will automatically receive this point.(3) Unit Sizes. (6 points) The Development must meet the minimum requirements identified in this subparagraph to qualify for points. Points for this item will be automatically granted for Applications involving Rehabilitation (excluding Reconstruction).(A) Five-hundred (500) square feet for an Efficiency Unit;(B) Six-hundred (600) square feet for a one Bedroom Unit;(C) Eight-hundred-fifty (850) square feet for a two Bedroom Unit;(D) One-thousand-fifty (1,050) square feet for a three Bedroom Unit; and(E) One-thousand, two-hundred-fifty (1,250) square feet for a four Bedroom Unit.(4) Extended Affordability. A pre-application may qualify for up to three (3) points under this item.(A) Development Owners that agree to extend the State Restrictive Period for a Development to a total of 40 years (3 points).(B) Development Owners that agree to extend the State Restrictive Period for a Development to a total of 35 years (2 points).(5) Unit and Development Construction Features. A pre-application may qualify for nine (9) points, as certified in the pre-application, for providing specific amenity and quality features in every Unit at no extra charge to the tenant. The amenities and corresponding point structure is provided in §11.101(b)(6)(B) of this title (relating to Unit, Development Construction, and Energy and Water Efficiency Features), which includes a minimum number of points that must come from Energy and Water Efficiency Features. Applications involving scattered site Developments must have a specific amenity located within each Unit to count for points. Rehabilitation Developments will start with a base score of (5 points).(6) Common Amenities. All Developments must provide at least the minimum threshold of points for common amenities based on the total number of Units in the Development as provided in subparagraphs (A) - (F) of this paragraph. An Applicant may choose to exceed the minimum number of points necessary based on Development size; however, the maximum number of points under this item which a Development may be awarded shall not exceed 22 points. The common amenities include those listed in §11.101(b)(5) of this title and must meet the requirements as stated therein. (A) Developments with 16 to 40 Units must qualify for (2 points);(B) Developments with 41 to 76 Units must qualify for (4 points);(C) Developments with 77 to 99 Units must qualify for (7 points);(D) Developments with 100 to 149 Units must qualify for (10 points);(E) Developments with 150 to 199 Units must qualify for (14 points); or(F) Developments with 200 or more Units must qualify for (18 points).(7) Resident Supportive Services. A pre-application may qualify for up to ten (10) points for this item. By electing points, the Applicant certifies that the Development will provide supportive services, which are listed in §11.101(b)(7) of this title, appropriate for the residents and that there will be adequate space for the intended services. The Owner may change, from time to time, the services offered; however, the overall points as selected at pre-application must remain the same. Should the QAP in subsequent years provide different services than those listed in §11.101(b)(7)(A) - (E) of this title, the Development Owner may be allowed to select services as listed therein upon written consent from the Department and any services selected must be of similar value to the service it is intending to replace. The Development Owner will be required to substantiate such service(s) at the time of compliance monitoring, if requested by staff. The services provided should be those that will directly benefit the Target Population of the Development and be accessible to all. No fees may be charged to the residents for any of the services. Unless otherwise specified, services must be provided on-site or transportation to those off-site services identified on the list must be provided. The same service may not be used for more than one scoring item. These services are intended to be provided by a qualified and reputable provider in the specified industry such that the experience and background of the provider demonstrates sufficient knowledge to be providing the service. In general, on-site leasing staff or property maintenance staff would not be considered a qualified provider. Where applicable, the services must be documented by a written agreement with the provider. Unless otherwise noted in a particular clause, courses and services must be offered by an onsite instructor(s).(A) The Development Owner shall provide resident services sufficient to substantiate ten (10) points; or(B) The Development Owner shall provide resident services sufficient to substantiate eight (8) points.(8) Underserved Area. An Application may qualify to receive up to four (4) points if the Development Site meets the criteria described in §11.9(c)(6)(A) - (E), or (H) of this title. The pre-application must include evidence that the Development Site meets this requirement. Regardless of the varying point options listed under §11.9(c)(6) of this title, the number of points attributed to this scoring item shall be four (4) points.(9) Development Support/Opposition. (Maximum +24 to -24 points) Each letter will receive a maximum of +3 to -3 points and shall be received 10 business days prior to the Board's consideration of the pre-application. Letters must clearly state support or opposition to the specific Development. State Representatives or Senators as well as local elected officials must be in office when the pre-application is submitted and represent the district containing the proposed Development Site. Letters of support from State or local elected officials that do not represent the district containing the proposed Development Site will not qualify for points. Neutral letters that do not specifically refer to the Development or do not explicitly state support will receive (zero points). A letter that does not directly express support but expresses it indirectly by inference (i.e., "the local jurisdiction supports the Development and I support the local jurisdiction") counts as a neutral letter except in the case of State elected officials. A letter from a State elected official that does not directly indicate support by the official, but expresses support on behalf of the official's constituents or community (i.e., "My constituents support the Development and I am relaying their support") counts as a support letter. A resolution specifically expressing support that is adopted by the applicable Governing Body will count as support under this scoring item for a maximum of 3 points.(A) State Senator and State Representative of the districts whose boundaries include the proposed Development Site;(B) Mayor of the municipality (if the Development is within a municipality or its extraterritorial jurisdiction);(C) Elected member of the Governing Body of the municipality (if the Development is within a municipality or its extraterritorial jurisdiction) who represents the district in which the Development Site is located;(D) Presiding officer of the Governing Body of the county in which the Development Site is located;(E) Elected member of the Governing Body of the county who represents the district in which the Development Site is located;(F) Superintendent of the school district in which the Development Site is located; and(G) Presiding officer of the board of trustees of the school district in which the Development Site is located.(10) Preservation Initiative. (2 points) Preservation Developments, including Rehabilitation proposals on Properties which are nearing expiration of an existing affordability requirement within the next two years or for which there has been a rent restriction requirement in the past 10 years may qualify for points under this item. Evidence must be submitted in the pre-application.(11) Declared Disaster Areas. (7 points) A pre-application may receive points if the Development Site is located in an area declared a disaster area under Tex. Gov't Code §418.014 at the time of submission, or at any time within the two-year period preceding the date of submission.(12) Waiting List. (5 points) A pre-application that is on the Department's waiting list with the TBRB and does not have an active Certificate of Reservation at the time of the Private Activity Bond Lottery may receive points under this item if participating in the Lottery for the upcoming program year. These points will be added by staff once all of the scores for Lottery applications have been finalized. A pre-application for Qualified 501(c)(3) Bonds is not eligible for these points. (A) For pre-applications that participated in the prior year Private Activity Bond Lottery (5 points); or(B) For pre-applications that had an Inducement Resolution adoption date of November of the prior calendar year through March of the current calendar year (3 points); or(C) For pre-applications that had an Inducement Resolution adoption date of April through July of the current calendar year (1 point).(13) Assisting Households with Children. (42(m)(1)(C)(vii)) A pre-application may receive one point under this item if at least 15% of the Units in the Development contain three or more bedrooms. The specific number of three or more bedrooms may change from pre-application to full Application, but the minimum percentage must still be met. Applications proposing Rehabilitation (excluding Reconstruction) and Elderly Developments will automatically receive this point.(14) Sponsor Contribution. This scoring item is only applicable to pre-applications requesting an issuance of Qualified 501(c)(3) Bonds. A pre-application may qualify for up to ten (10) points for this item based on the amount of sponsor contribution as reflected in the pre-application. The contribution shall be in the form of cash or land contribution or other contribution acceptable to the Department. A contribution in the form of deferred developer fee will not qualify for points.(A) A contribution of at least 10% will qualify for 10 points; or(B) A contribution of at least 5% will qualify for 7 points.</content><note type="source"><p>Source Note: The provisions of this §12.6 adopted to be effective February 4, 2026, 51 TexReg 564.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c12/sc/s12.7"><num value="12.7">§12.7</num><heading>Full Application Process</heading><content>(a) Application Submission. Once the inducement resolution has been approved by the Board, an Applicant who elects to proceed with submitting a full Application to the Department must submit the complete tax credit Application pursuant to §11.201 of this title (relating to Procedural Requirements for Application Submission). While a Certificate of Reservation is required under §11.201 of this title prior to submission of the complete tax credit Application, staff may allow the Application to be submitted prior to the issuance of a Certificate of Reservation depending on circumstances associated with the Development Site, structure of the transaction, volume cap environment, or other factors in the Department's sole discretion. An Applicant who intends to pursue Qualified 501(c)(3) Bond financing shall submit a full Application that complies with §12.11 of this chapter at least 90 days prior to the date by which consideration by the Board for the issuance of the bonds would occur. (b) Eligibility Criteria. The Department will evaluate the Application for eligibility and threshold at the time of full Application pursuant to this Chapter and Chapter 11 of this title (relating to Housing Tax Credit Program Qualified Allocation Plan), as applicable. If there are changes to the Application at any point prior to closing that have an adverse effect on the score and ranking order and that would have resulted in the pre-application being placed below another pre-application in the ranking, the Department may terminate the Application and withdraw the Certificate of Reservation from the Bond Review Board (with the exception of changes to deferred developer's fees and support or opposition points). The Development and the Applicant must satisfy the applicable requirements set forth in Chapter 11 of this title in addition to Tex. Gov't Code, Chapter 1372, the requirements of Tex. Gov't Code Chapter 2306, and the Code. The Applicant will also be required to select a Bond Trustee from the Department's approved list as published on its website.(c) Bond Documents. Once the Application has been submitted and the Applicant has deposited funds to pay initial costs, the Department's bond counsel shall draft Bond documents.(d) Public Hearings. The Department will hold a public hearing to receive comments pertaining to the Development and the issuance of the Bonds. A representative of the Applicant or member of the Development Team must be present at the public hearing and will be responsible for conducting a brief presentation on the proposed Development and providing handouts at the hearing that should include at minimum, a description of the Development, maximum rents and income restrictions. If the proposed Development is Rehabilitation, the presentation should include the proposed scope of work that is planned for the Development. The handouts must be submitted to the Department for review at least two days prior to the public hearing. Publication of all notices required for the public hearing shall be at the sole expense of the Applicant, as well as any facility rental fees or required deposits, if applicable.(e) Approval of the Bonds. Subject to the timely receipt and approval of commitments for financing, an acceptable evaluation for eligibility, financial feasibility, the satisfactory negotiation of Bond documents, and the completion of a public hearing, the Board will consider the approval of the final Bond resolution relating to the issuance, substantially final Bond documents and in the instance of privately placed Bonds, the pricing, terms and interest rate of the Bonds, or the formula thereof that is used to determine such factors. For Applications that include local funding, Department staff may choose to delay Board consideration of the Bond issuance until such time it has been confirmed that the amount or terms associated with such local funding will not change and remain consistent with what was represented in the Department's underwriting analysis.(f) Local Permits. Prior to closing on the Bond financing, all necessary approvals, including building permits from local municipalities, counties, or other jurisdictions with authority over the Development Site must have been obtained or evidence that the permits are obtainable subject only to payment of certain fees. In instances where such permits will be not received prior to bond closing, the Department may, on a limited and case-by-case basis allow for the closing to occur, subject to receipt of confirmation, acceptable to the Department, by the lender and/or equity investor that they are comfortable proceeding with closing.</content><note type="source"><p>Source Note: The provisions of this §12.7 adopted to be effective February 4, 2026, 51 TexReg 564.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c12/sc/s12.8"><num value="12.8">§12.8</num><heading>Refunding Application Process</heading><content>(a) Application Submission. Owners who wish to refund or modify tax-exempt bonds, including Qualified 501(c)(3) Bonds, that were previously issued by the Department must submit to the Department a summary of the proposed refunding plan or modifications. To the extent such modifications constitute a re-issuance under state law the Applicant shall then be required to submit a refunding Application in the form prescribed by the Department pursuant to the Bond Refunding Application Procedures Manual.(b) Bond Documents. Once the Department has received the refunding Application and the Applicant has deposited funds to pay initial costs, the Department's bond counsel will draft the necessary Bond documents.(c) Public Hearings. Depending on the proposed modifications to existing Bond covenants a public hearing may be required. Such hearing must take place prior to obtaining Board approval and must meet the requirements pursuant to §12.7(d) of this chapter (relating to Full Application Process) regarding the presence of a member of the Development Team and providing a summary of proposed Development changes.(d) Rule Applicability. Refunding Applications must meet the applicable requirements pursuant to Chapter 11 of this title (relating to Housing Tax Credit Program Qualified Allocation Plan). At the time of the original award the Application would have been subject to eligibility and threshold requirements under the QAP in effect the year the Application was awarded. Therefore, it is anticipated the Refunding Application would not be subject to the site and development requirements and restrictions pursuant to §11.101 of this title (relating to Site and Development Requirements and Restrictions). The circumstances surrounding a refunding Application are unique to each Development; therefore, upon evaluation of the refunding Application, the Department is authorized to utilize its discretion in the applicability of the Department's rules as it deems appropriate.</content><note type="source"><p>Source Note: The provisions of this §12.8 adopted to be effective February 4, 2026, 51 TexReg 564.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c12/sc/s12.9"><num value="12.9">§12.9</num><heading>Occupancy Requirements</heading><content>(a) Filing and Term of Regulatory Agreement. A Bond Regulatory and Land Use Restriction Agreement will be filed in the property records of the county in which the Development is located for each Development financed from the proceeds of Bonds issued by the Department, including Qualified 501(c)(3) Bonds. Such Regulatory and Land Use Restriction Agreement shall include provisions relating to the Qualified Project Period, if applicable, and the State Restrictive Period, along with points claimed for other provisions that will be required to be monitored throughout the State Restrictive Period, and shall also include provisions relating to Persons with Special Needs. The minimum term of the Regulatory Agreement will be based on the criteria as described in paragraphs (1) - (3) of this subsection, as applicable:(1) 30 years, or such longer period as elected under §12.6(4) of this chapter (relating to Pre-Application Scoring Criteria), from the date the Development Owner takes legal possession of the Development; (2) The end of the remaining term of the existing federal government assistance pursuant to Tex. Gov't Code, §2306.185; or(3) The period required by the Code.(b) Federal Set Aside Requirements.(1) Developments which are financed from the proceeds of Private Activity Bonds, excluding Qualified 501(c)(3) Bonds, must be restricted under one of the two minimum set-asides as described in subparagraphs (A) and (B) of this paragraph. Regardless of an election that may be made under Section 42 of the Code relating to income averaging, a Development will be required under the Bond Regulatory and Land Use Restriction Agreement to meet one of the two minimum set-asides described in subparagraphs (A) and (B) of this paragraph. Any proposed market rate Units shall be limited to 140% of the area median income and be considered restricted units under the Bond Regulatory and Land Use Restriction Agreement for purposes of using Bond proceeds to construct such Units.(A) At least 20% of the Units within the Development shall be occupied or held vacant and available for occupancy at all times by persons or families whose income does not exceed 50% of the area median income; or(B) At least 40% of the Units within the Development shall be occupied or held vacant and available for occupancy at all times by persons or families whose income does not exceed 60% of the area median income.(2) The Development Owner must, at the time of Application, indicate which of the two federal set-asides will apply to the Development and must also designate the selected priority for the Development in accordance with Tex. Gov't Code, §1372.0321. Units intended to satisfy set-aside requirements must be distributed equally throughout the Development, and must include a reasonably proportionate amount of each type of Unit available in the Development.(3) No tenant qualifying under either of the minimum federal set-asides shall be denied continued occupancy of a Unit in the Development because, after commencement of such occupancy, such tenant's income increases to exceed the qualifying limit. However, should a tenant's income, as of the most recent determination thereof, exceed 140% of the applicable federal set-aside income limit and such tenant constitutes a portion of the set-aside requirement of this section, then such tenant shall only continue to qualify for so long as no Unit of comparable or smaller size is rented to a tenant that does not qualify as a Low-Income Tenant.</content><note type="source"><p>Source Note: The provisions of this §12.9 adopted to be effective February 4, 2026, 51 TexReg 564.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c12/sc/s12.10"><num value="12.10">§12.10</num><heading>Fees</heading><content>(a) The fees noted in subparagraphs (b) through (g) of this paragraph will be required as part of a Bond issuance by the Department, excluding Qualified 501(c)(3) Bond issuances. (b) Pre-Application Fees. The Applicant is required to submit, at the time of pre-application, a pre-application fee of $1,000, along with the fees noted on the Schedule of Fees posted on the Department's website specific to the Department's bond counsel and the Texas Bond Review Board (TBRB) pursuant to Tex. Gov't Code, §1372.006(a)). These fees cover the costs of pre-application review by the Department and its bond counsel and filing fees associated with application submission for the Certificate of Reservation to the TBRB.(c) Application Fees. At the time of Application the Applicant is required to submit a tax credit application fee of $30 per Unit based on the total number of Units and a bond application fee of $20 per Unit based on the total number of Units. Such fees cover the costs associated with Application review and the Department's expenses in connection with providing financing for a Development. For Developments proposed to be structured as a portfolio the bond application fees may be reduced by the Executive Director to reflect the Department's projected costs. (d) Closing Fees. The origination fee for Bonds, other than refunding Bonds, is equal to 50 basis points of the issued principal amount of the Bonds, unless otherwise modified by the Executive Director. The Applicant will also be required to pay at closing of the Bonds the first two years of the administration fee equal to 20 basis points of the issued principal amount of the Bonds, with the first year prorated based on the actual closing date, and a Bond compliance fee equal to $25/Unit (excludes market rate Units as defined in the Regulatory Agreement). Such compliance fee shall be applied to the third year following closing.(e) Application and Issuance Fees for Refunding Applications. For refunding an Application the application fee will be $10,000 unless the refunding is not required to have a public hearing, in which case the fee will be $5,000. The closing fee for refunding Bonds is equal to 25 basis points of the issued principal amount of the refunding Bonds. If applicable, administration and compliance fees due at closing may be prorated based on the current billing period of such fees. If additional volume cap is being requested other fees may be required as further described in the Bond Refunding Applications Procedures Manual. Transactions previously issued that involved a financing structure that would constitute a re-issuance under state law, but do not fit under §12.8 of this chapter (relating to Refunding Application Process), will be required to pay a closing fee that shall not exceed 25 basis points of the re-issued principal amount of the bonds which may be reduced in the sole determination of the Department as commensurate with the review by staff in obtaining Board approval at the time of conversion.(f) Ongoing Administration Fee. The annual administration fee is equal to 10 basis points of the outstanding bond amount at the inception of each payment period and is paid as long as the Bonds are outstanding.(g) Ongoing Bond Compliance Fee. The Bond compliance monitoring fee is equal to $25/Unit (excludes market rate Units as defined in the Regulatory Agreement), and is paid for the duration of the State Restrictive Period under the Regulatory Agreement, regardless of whether the Bonds have been paid off and are no longer outstanding. For Developments for which (1) the Department's Bonds are no longer outstanding and (2) new bonds or notes have been issued and delivered by the Department, the bond compliance monitoring fee may be reduced on a case by case basis at the discretion of Department staff.</content><note type="source"><p>Source Note: The provisions of this §12.10 adopted to be effective February 4, 2026, 51 TexReg 564.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c12/sc/s12.11"><num value="12.11">§12.11</num><heading>Qualified 501(c)(3) Bonds</heading><content>(a) General. The Department may issue Qualified 501(c)(3) Bonds under §145 of the Code to provide residential rental property. Such Bonds are not eligible for an allocation of Housing Tax Credits. (b) Rule Applicability. Qualified 501(c)(3) Bond Developments shall meet the applicable requirements of Chapter 1 of this title (relating to Administration), Chapter 2 (relating to Enforcement), Chapter 10 (relating to Uniform Multifamily Rules), Chapter 11 Subchapter B of this title (except for §11.101(b)(3) (relating to Rehabilitation Costs), Chapter 11 Subchapter C of this title, and this Chapter (except for §12.9(b) (relating to Federal Set-Asides) and §12.10 (relating to Fees)). (c) Maximum Amount to be Issued. The annual amount of Qualified 501(c)(3) Bonds to be issued shall be in accordance with Tex. Gov't Code §2306.358(b) pursuant to a Memorandum of Understanding with the Bond Review Board and further subject to §2306.358(a) whereby not more than 25% of the total annual issuance amount specified in the Memorandum of Understanding will be used for projects in any one metropolitan area and at least 15% of the total annual issuance amount specified in the Memorandum of Understanding is reserved for projects in rural areas, as both metropolitan and rural area is defined in the Memorandum of Understanding.(d) Borrower Eligibility. A borrower must be an organization exempt from federal income tax by virtue of being described in §501(c)(3) of the Code. In addition to having a "determination letter" issued by the Internal Revenue Service confirming the borrower's Section 501(c)(3) status, an "unqualified" legal opinion from a practitioner experienced in tax-exempt organizations must be delivered in connection with a financing. The ownership of the multifamily Development financed with proceeds from Qualified 501(c)(3) Bonds must further the organization's exempt purposes, which shall include providing affordable housing pursuant to standards promulgated by the Internal Revenue Service and the Safe Harbor for Relieving the Poor and Distressed under Revenue Procedure 96-32. The borrower or its nonprofit parent organization shall have at least five years in operation with demonstrated experience in affordable housing development and management and/or ownership of other similar projects. The Borrower must maintain its Section 501(c)(3) status while the bonds are outstanding. Borrower must be registered with the Texas Secretary of State throughout the term of the Regulatory Agreement.(e) Minimum Set-Asides and Rent and Income Requirements (§2306.358). The federal Safe Harbor for Relieving the Poor and Distressed requires that at least 75% of the units must be at or below 80% of Area Median Gross Income. The state law requirements, as identified in subparagraphs (1) and (2) below, may alternatively be elected for a Development, regardless of whether New Construction or Rehabilitation. Units intended to satisfy set-aside requirements must be distributed proportionally throughout the Development.(1) At least 60% of the units serve individuals and families at 80% of the Area Median Gross Income and below (§2306.358(c)(2)); AND (A) At least 20% of the Units are both rent restricted and occupied by individuals whose income is 50% or less of the Area Median Gross Income, adjusted for family size; OR(B) At least 40% of the Units are both rent restricted and occupied by individuals whose income is 60% or less of the Area Median Gross Income, adjusted for family size; AND(2) 100% of the Units must be occupied by individuals whose income does not exceed 140% of the Area Median Gross Income such that all tenants are eligible tenants.(f) Mandatory Development Amenities (§2306.187). The Development must include those amenities identified under §11.101(b)(4) of this title (relating to Mandatory Development Amenities). (g) Accessibility Requirements. New Construction, Reconstruction, and Adaptive Reuse Developments shall be subject to 10 TAC §11.101(b)(8) (relating to Development Accessibility Requirements).Rehabilitation (excluding Reconstruction) Developments shall be exempt from the construction standards of Section 504 of the Rehabilitation Act of 1973, as further detailed in §8.23 unless the Development is required to follow §11.101(b)(8)(D) by another source in the transaction, or there is or will be another use agreement requiring the Development to follow the construction standards of Section 504 of the Rehabilitation Act of 1973. (h) Minimum Rehabilitation Costs. In the case of Rehabilitation Developments, a Scope and Cost Report or Capital Needs Assessment must be submitted. Any health and safety findings identified must be corrected as part of the acquisition and rehabilitation following closing, and a timeline of the repairs must be included in the Application. For deferred maintenance indicated in such report as needing to be remedied within the first three years, the Department will require an adequate reserve account to be funded at closing. Alternatively, the Department may rely on reserve amounts required by the senior lender. (i) Underwriting Standards (§2306.358(c)). In addition to meeting the requirements of §§141 through 150 of the Code, the borrower must demonstrate to the Department that the Development is carefully and conservatively underwritten to ensure that the project is well run, well maintained, financially viable, and will minimize the risk of the Borrower's default. Developments financed by Qualified 501(c)(3) Bonds shall generally be underwritten pursuant to §11.302 of the QAP, except that for Developments that do not have any other Department funding or an ongoing Department use agreement, in recognition of differences in financing structures, the Executive Director or authorized designee may approve minor deviations where consistent with prudent industry standards or senior lender requirements, provided they do not jeopardize the financial viability of the Development, are determined by Real Estate Analysis to be necessary to maintain financial feasibility, and if such deviation is requested as part of the application process. (j) Fees. The fees noted in paragraphs (1) - (5) of this subsection will be required as part of a Qualified 501(c)(3) Bond issuance by the Department. (1) Pre-Application/Inducement Fee. A pre-application fee of $1,000 shall be submitted, payable to the Department and an Inducement Fee as noted on the Schedule of Fees posted on the Department's website specific to the Department's bond counsel. These fees cover the costs of pre-application review by the Department and its bond counsel. For Developments proposed to be structured as a portfolio, either or both fees may be reduced on a case-by-case basis at the discretion of the Executive Director.(2) Application Fee. An application fee of $20 per Unit based on the total number of Units must be submitted, with an allowable 10% discount off the calculated Application fee. For Developments proposed to be structured as a portfolio, the bond Application fee may be reduced by the Executive Director to reflect the Department's projected costs. (3) Closing Fees. The origination fee shall be equal to 25 basis points of the issued principal amount of the Bonds, unless otherwise modified by the Executive Director. The Applicant will also be required to pay at closing of the Bonds the first two years of the administration fee equal to 20 basis points of the issued principal amount of the Bonds, with the first year prorated based on the actual closing date, and a Bond compliance fee equal to $25 per Unit (excluding market rate Units as defined in the Regulatory Agreement). Such compliance fee shall be applied to the third year following closing.(4) Ongoing Administration Fee. The annual administration fee is equal to 10 basis points of the outstanding bond amount at the inception of each payment period and is paid as long as the bonds are outstanding. (5) Ongoing Bond Compliance Fee. The compliance monitoring fee is equal to $25 per Unit (excluding market rate Units as defined in the Regulatory Agreement) and is paid for the duration of the State Restrictive Period under the Regulatory Agreement, regardless of whether the Bonds have been paid off and are no longer outstanding. For Developments for which (1) the Department's Bonds are no longer outstanding and (2) new bonds or notes have been issued and delivered by the Department, the bond compliance monitoring fee may be reduced on a case-by-case basis at the discretion of Department staff. (6) Professional Fees. The Department engages outside firms to provide professional services with respect to its multifamily bond program. These firms include bond counsel, financial advisor and disclosure counsel. Applicants are encouraged to review the Department's Schedule of Fees on its website for more details regarding these fees.</content><note type="source"><p>Source Note: The provisions of this §12.11 adopted to be effective February 4, 2026, 51 TexReg 564.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c13"><num value="13">CHAPTER 13</num><heading>MULTIFAMILY DIRECT LOAN RULE</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c13/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p1/c13/sc/s13.1"><num value="13.1">§13.1</num><heading>Purpose</heading><content>(a) Authority. The rules in this chapter apply to the funds provided to Multifamily Developments through the Multifamily Direct Loan Program (MFDL or Direct Loan Program) by the Texas Department of Housing and Community Affairs (the Department). Notwithstanding anything in this chapter to the contrary, loans and grants issued to finance the development of multifamily rental housing are subject to the requirements of the laws of the State of Texas, including but not limited to Tex. Gov't Code, Chapter 2306, and federal law pursuant to the requirements of Title II of the Cranston-Gonzalez National Affordable Housing Act, Division B, Title III of the Housing and Economic Recovery Act (HERA) of 2008 - Emergency Assistance for the Redevelopment of Abandoned and Foreclosed Homes, Section 1497 of the Dodd-Frank Wall Street Reform and Consumer Protection Act: Additional Assistance for Neighborhood Stabilization Programs, Title I of the Housing and Economic Recovery Act of 2008, Section 1131 (Public Law 110-289), and the implementing regulations 24 CFR Parts 91, 92, 93, and 570 as they may be applicable to a specific fund source. The Department is authorized to administer Direct Loan Program funds pursuant to Tex. Gov't Code, Chapter 2306.(b) General. This chapter applies to Applications submitted for, and award of, MFDL funds by the Department and establishes the general requirements associated with the application and award process for such funds. Applicants pursuing MFDL assistance from the Department are required to certify, among other things, that they have familiarized themselves with all applicable rules that govern that specific program including, but not limited to this chapter, Chapter 1 of this title (relating to Administration), Chapter 2 of this title (relating to Enforcement), Chapter 10 of this title (relating to Uniform Multifamily Rules), Chapter 11 of this title (relating to Qualified Allocation Plan (QAP)), and Chapter 12 of this title (relating to Multifamily Housing Revenue Bond Rules) as applicable. The Applicant is also required to certify that it is familiar with the requirements of any other federal, state, or local financing sources that it identifies in its Application. Any conflict with rules, regulations, or statutes will be resolved on a case by case basis that allows for compliance with all requirements. Conflicts that cannot be resolved may result in Application ineligibility, with the right to an Appeal as provided in 10 TAC §1.7 of this title (relating to Appeals Process) or 10 TAC §11.902 of this title (relating to Appeals Process for the Housing Tax Credit program), as applicable.(c) Waivers. Requests for waivers of any program rules or requirements must be made in accordance with 10 TAC §11.207 of this title (relating to Waiver of Rules), as limited by the rules in this chapter. Waiver requirements are provided in paragraphs (1) - (3) of this subsection:(1) Rule Waivers and NOFA Amendments prior to Construction Completion. For Direct Loan Developments, an Applicant may request, at the latest at Application submission, that the Department amend its NOFA, amend its Consolidated Plan or One Year Action Plan, or ask HUD to grant a waiver of its regulations, if such request will not impact the timing of the Application's review, nor alter the scoring or satisfaction of threshold requirements for the Housing Tax Credits or other Department resources. Such requests will be presented to the Department's Board. The Board may not waive rules that are federally required, or that have been incorporated as a required part of the Department's Consolidated Plan or One Year Action Plan (OYAP) to the U.S. Department of Housing and Urban Development (HUD), unless those Plans are so amended by the earlier of a date the NOFA is closed or by an earlier date that is identified by the Board. Such items include §13.8 of this chapter, relating to Loan Structure and Underwriting Requirements, the interest rate published in the NOFA, the maximum subsidy limits as published in the NOFA, the priorities listed in the NOFA, the eligibility requirements of applicants describe in rule or the NOFA, scoring, and the tiebreaker procedure. Prior to Contract, except as otherwise described in rule, the Application Acceptance Date will then be the date the Department completes the amendment process or receives a waiver from HUD, if funds are still available in the NOFA. After Contract, but prior to Construction Completion staff will not recommend a waiver or NOFA Amendment;(2) Utility Allowance Waivers with Project-Based Vouchers. Upon request before or with the submittal of the Application or at the time the Application is amended to reflect the vouchers, for Developments that are layered with Project-Based Vouchers awarded under 24 CFR Part 983 from a Housing Authority that is not Moving to Work Housing Authority, Department staff will submit a waiver to the Office of Community Planning and Development at HUD to allow the Development to use the Public Housing Utility Allowance. For Project-Based Vouchers from a Housing Authority that is a Moving to Work Housing Authority, the Applicant must have the Moving to Work Housing Authority obtain this waiver from the appropriate HUD office or agree that the Development will be all bills-paid before Contract Execution. These waivers, if granted by HUD, will not require the Development to receive a new Application Acceptance Date; and(3) Waivers under Closed NOFAs. The Board may not waive any portion of a closed NOFA prior to Construction Completion. Thereafter, the Board may only waive any portion of a closed NOFA as part of an approved Asset Management Division work out. Allowable Post-Closing Amendments are described in 10 TAC §13.13 of this chapter (relating to Post-Closing Amendments to Direct Loan Terms).(d) Eligibility and Threshold Requirements. Applications for Multifamily Direct Loan funds must meet all applicable eligibility and threshold requirements of Chapter 11 of this title (relating to the Qualified Allocation Plan (QAP)), unless otherwise excepted in this rule or NOFA.</content><note type="source"><p>Source Note: The provisions of this §13.1 adopted to be effective January 2, 2024, 48 TexReg 8334.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c13/sc/s13.2"><num value="13.2">§13.2</num><heading>Definitions</heading><content>The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Any capitalized terms not specifically mentioned in this section shall have the meaning as defined in Tex. Gov't Code, Chapter 2306; §§141, 142, and 145 of the Internal Revenue Code; 24 CFR Parts 91, 92, and 93; 2 CFR Part 200; and 10 TAC Chapters 1 of this title regarding Administration, 2 of this title regarding Enforcement, 10 of this title regarding Uniform Multifamily Rules, and 11 of this title regarding the Qualified Allocation Plan.(1) Application Acceptance Date--The date the MFDL Application is considered received by the Department as described in this chapter, chapter 11 of this title, or in the NOFA.(2) Community Housing Development Organization (CHDO)--A private nonprofit organization with experience developing or owning affordable rental housing that meets the requirements in 24 CFR Part 92 for purposes of receiving HOME Investment Partnerships Program (HOME) funds under the CHDO Set-Aside. A member of a CHDO's board cannot be a Principal of the Development beyond their role as a board member of the CHDO or be an employee of the development team, and may not receive financial benefit other than reimbursement of expenses from the CHDO (e.g., a voting board member cannot also be a paid executive).(3) Construction Completion or Development Period--The Development Period is the time allowed to complete construction, which includes, without limitation, that necessary title transfer requirements and construction work has been fully performed, the certificate(s) of occupancy (if New Construction or reconstruction), Certificate of Substantial Completion (AIA Form G704), Form HUD-92485 (for instances in which a federally insured HUD loan is utilized), or equivalent notice has been issued.(4) Deobligated Funds--The funds released by the Development Owner or recovered by the Department canceling a Contract or award involving some or all of a contractual financial obligation between the Department and a Development Owner or Applicant.(5) Federal Affordability Period--The period commencing on the later of the date after Construction Completion and after all Direct Loan funds have been disbursed for the project, or the date of Project Completion as defined in 24 CFR §92.2 or §93.3, as applicable, and ending on the date which is the required number of years as defined by the federal program.(6) HOME--The HOME Investment Partnership Program, authorized by Title II of the Cranston-Gonzalez National Affordable Housing Act.(7) HOME Match-Eligible Unit--A Unit in the Development that is not assisted with HOME Program funds, but would qualify as eligible for Match under 24 CFR Part 92. Unless otherwise identified by the provisions in the NOFA, TCAP RF and matching contribution on NSP and NHTF Developments must meet all criteria to be classified as HOME-Match Eligible Units.(8) Housing Contract System (HCS)--The electronic information system established by the Department for tracking, funding, and reporting Department Contracts and Developments. The HCS is primarily used by the Department for Direct Loan Programs administered by the Department.(9) Land Use Restriction Agreement (LURA) Term--The period commencing on the effective date of the LURA and ending on the date which, at a minimum, is the greater of the loan term or 30 years. The LURA may include the Federal Affordability Period, in addition to the State Affordability Period requirements and State restrictive criteria.(10) Matching Contribution (Match)--A contribution to a Development from nonfederal sources that may be in one or more of the forms provided in subparagraphs (A) through (E) of this paragraph:(A) Cash contribution (grant), except for cash contributions made by investors in a limited partnership or other business entity subject to pass through tax benefits in a tax credit transaction or owner equity (including Deferred Developer Fee and General Partner advances);(B) Reduced fees or donated labor from certain eligible contractors, subcontractors, architects, attorneys, engineers, excluding any contributions from a party related to the Developer or Owner;(C) Net present value of yield foregone from a below market interest rate loan as described in HUD Community Planning and Development (CPD) Notice 97-03;(D) Waived or reduced fees or taxes from cities or counties not related to the Applicant in connection with the proposed Development; or(E) Donated land or land sold by an unrelated third party at a price below market value, as evidenced by a third party appraisal.(11) NHTF--National Housing Trust Fund.(12) NOFA--Notice of Funding Availability.(13) NSP--Neighborhood Stabilization Program.(14) Qualifying Unit--Means a Unit designated for Multifamily Direct Loan use and occupancy in compliance with State and federal regulations, as set forth in the Contract. Except if the Development is all-bills paid, Qualifying Units may not also have a Project-Based Voucher issued under 24 CFR Part 983, unless the Application contains permission from the Public and Indian Housing Division of HUD for the layered units to use a utility allowance that is not the Public Housing Utility Allowance, or the Applicant has received permission from the Community Planning and Development Division of HUD for the layered units to use the Public Housing Utility Allowance.(15) Relocation Plan--A residential anti-displacement and relocation assistance plan and budget in an Application that addresses residential and non-residential displacement and complies with the Uniform Relocation Assistance and Real Property Act as implemented at 49 CFR Part 24, HUD Handbook 1378, and the TDHCA Relocation Handbook. Additionally, some HOME and NSP funded Developments must comply with Section 104(d) of the Housing and Community Development Act of 1974 (as amended), and 24 CFR Part 42 (as modified for NSP and HOME American Rescue Plan (ARP) funds), which requires a one-for-one replacement of occupied and vacant, occupiable low- and moderate-income dwelling units demolished or converted. Guidance is on the Department's website at https://www.tdhca.state.tx.us/multifamily/home/index.htm. The Relocation Plan must be in form and substance consistent with requirements of the Department.(16) Section 234 Condominium Housing Basic Mortgage Limits (Section 234 Condo Limits)--The per-unit subsidy limits for all MFDL funding. These limits take into account whether or not a Development is elevator served and any local conditions that may make development of multifamily housing more or less expensive in a given metropolitan statistical area. If the high cost percentage adjustment applicable to the Section 234 Condo Limits for HUD's Fort Worth Multifamily Hub is applicable for all Developments that TDHCA finances through the MFDL Program, then confirmation of that applicability will be included in the applicable NOFA.(17) Site and Neighborhood Standards--HUD requirements for New Construction or reconstruction Developments funded by NHTF (24 CFR §93.150) or New Construction Developments funded by HOME (24 CFR §92.202). Proposed Developments must provide evidence that the Development will comply with these federal regulations in the Application. Guidance for successful submissions is provided on the Department website at https://www.tdhca.state.tx.us/multifamily/apply-for-funds.htm. Applications that are unable to comply with requirements in 24 CFR §983.57(e)(2) and (3) will not be eligible for HOME or NHTF.(18) State Affordability Period--The LURA Term as described in the MFDL contract and loan documents and as required by the Department in accordance with the Chapter 2306, Texas Gov't Code which may be an additional period after the Federal Affordability Period.(19) Surplus Cash--Except when the first lien mortgage is a federally insured HUD mortgage that is subject to HUD's surplus cash definition, Surplus Cash is any cash remaining:(A) After the payment of:(i) All sums due or currently required to be paid under the terms of any superior lien;(ii) All amounts required to be deposited in the reserve funds for replacement;(iii) Operating expenses actually incurred by the borrower for the Development during the period with an appropriate adjustment for an allocable share of property taxes and insurance premiums;(iv) Recurring maintenance expenses actually incurred by the borrower for the Development during the period; and(v) All other obligations of the Development approved by the Department; and(B) After the segregation of an amount equal to the aggregate of all special funds required to be maintained for the Development; and(C) Excluding payment of:(i) All sums due or currently required to be paid under the terms of any subordinate liens against the property;(ii) Any development fees that are deferred including those in eligible basis; and(iii) Any payments or obligations to the borrower, ownership entities of the borrower, related party entities; any payment to the management company exceeding 5% of the effective gross income; incentive management fee; asset management fees; or any other expenses or payments that shall be negotiated between the Department and borrower.(20) TCAP Repayment Funds--(TCAP RF) the Tax Credit Assistance Payment program funds.</content><note type="source"><p>Source Note: The provisions of this §13.2 adopted to be effective January 2, 2024, 48 TexReg 8334.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c13/sc/s13.3"><num value="13.3">§13.3</num><heading>General Loan Requirements</heading><content>(a) Funding Availability. Direct Loan funds may be made available through a NOFA or other similar governing document that includes the method for applying for funds and funding requirements.(b) Oversourced Developments. A Direct Loan request may be reduced or not recommended if the Department's Underwriting Report concludes the Development does not need all or part of the MFDL funds requested in the Application because it is oversourced, and for which a timely appeal has been completed, as provided in 10 TAC §1.7 of this title (relating to Appeals Process) or 10 TAC §11.902 of this title (relating to Appeals Process for Competitive HTC Applications), as applicable.(c) Funding Sources. Direct Loan funds are composed of annual HOME and National Housing Trust Fund (NHTF) allocations from HUD and associated Program Income, repayment of TCAP or TCAP RF loans, HOME Program Income, NSP Program Income (NSP PI or NSP), and any other similarly encumbered funding that may become available, except as otherwise noted in this chapter. Similar funds include any funds that are identified by the Board to be loaned or granted for the development of multifamily property and are not governed by another chapter in this title, with the exception of State funds appropriated for a specific purpose.(d) Eligible and Ineligible Activities.(1) Eligible Activities. Direct Loan funds may be used for the predevelopment, acquisition, New Construction, reconstruction, Adaptive Reuse, rehabilitation, or preservation of affordable housing with suitable amenities, including real property acquisition, site improvements, conversion, demolition, or operating cost reserves, subject to applicable HUD guidance. Other expenses, such as financing costs, relocation expenses of any displaced persons, families, businesses, or organizations may be included. MFDL funds may be used to assist Developments previously awarded by the Department when approved by specific action of the Board. Eligible Activities may have fund source restrictions or may be restricted by a NOFA.(2) Ineligible Activities. Direct Loan funds may not be awarded to a Development:(A) Layered with Housing Tax Credits that have elected the income averaging election under Section 42(g)(1)(C) of the Internal Revenue Code that have more than 15% of the Units designated as Market Rate Units;(B) In which the Applicant will not be directly leasing Units to residents, except as specifically described in the NOFA;(C) Applicants applying for HOME or NSP funds may not commit any choice limiting activities as defined by HUD in 24 CFR Part 58 prior to obtaining environmental clearance, and will be subject to termination of the Direct Loan award if such action is undertaken. For an Applicant applying for NHTF funds, choice limiting activities prior to full execution of a Contract with the Department are not prohibited, unless the Development also has sources requiring environmental review under 24 CFR Part 50 or Part 58, but the eligibility of costs associated with these activities will be impacted in keeping with 24 CFR §93.201(h) and all applicable federal regulations. Furthermore, certain activities which prohibit environmental mitigation may cause the Development to be ineligible and will cause the termination of the Direct Loan award.(e) Ineligible Costs. All costs associated with the Development and known by the Applicant must be disclosed as part of the Application. Other federal funds will be included in the Final Direct Loan Eligible Costs located in Table 1 of the Direct Loan Calculator as part of the required per-unit subsidy limit calculation. Costs ineligible for reimbursement with Direct Loan funds in accordance with 24 CFR Parts 91, 92, 93, and 570, and 2 CFR Part 200, as federally required or identified in the NOFA, include but are not limited to:(1) Offsite costs;(2) Stored Materials;(3) Site Amenities, such as swimming pools and decking, landscaping, playgrounds, and athletic courts;(4) The purchase of equipment required for construction;(5) Furnishings and Furniture, Fixtures and Equipment (FF&E) required for the Development;(6) Detached Community Buildings;(7) Carports and/or parking garages, unless attached as a feature of the Unit;(8) Commercial Space costs;(9) Personal Property Taxes;(10) TDHCA fees;(11) Syndication and organizational costs;(12) Reserve Accounts, except Initial Operating Deficit Reserve Accounts;(13) Delinquent fees, taxes, or charges;(14) Costs incurred more than 24 months prior to the effective date of the Direct Loan Contract, unless the Application is awarded TCAP RF, and if specifically allowed by the Board;(15) Costs that have been allocated to or paid by another fund source (except for soft costs that are attributable to the entire project as specifically identified in the applicable federal rule, or for TCAP RF if specifically allowed by the NOFA), including but not limited to, contingency, including soft cost contingency, and general partner loans and advances;(16) Deferred Developer Fee;(17) Texas Bond Review Board (BRB) fees;(18) Community Facility spaces that are not for the exclusive use of tenants and their guests;(19) The portion of soft costs that are allocated to support ineligible hard costs;(20) Other costs limited by Award or NOFA, or as established by the Board;(21) Interest on Construction Loans; and(22) Acquisition that occurred before the Application Acceptance Date and environmental clearance for HOME and NSP projects. For NHTF, acquisition that occurred prior to Contract signing.</content><note type="source"><p>Source Note: The provisions of this §13.3 adopted to be effective January 2, 2024, 48 TexReg 8334.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c13/sc/s13.4"><num value="13.4">§13.4</num><heading>Set-Asides, Regional Allocation, and NOFA Priorities</heading><content>(a) Set-Asides. Specific types of Activities or Developments for which a portion of MFDL funds may be reserved in a NOFA will be grouped in categories called Set-Asides. Not all Set-Asides will be available in every NOFA, and the Board may approve Set-Asides not described in this section. The amount of a single award may be credited to multiple Set-Asides, in which case the credited portion of funds may be repositioned into an oversubscribed Set-Aside prior to a defined collapse deadline.(1) General / Soft Repayment Set-Aside.(A) Applicants seeking to qualify for NHTF under this set-aside must propose Developments in which all Units assisted with MFDL funds are available for households earning the greater of the poverty rate or 30% AMI, and have rents no higher than the rent limits for extremely low-income tenants in 24 CFR §93.302(b).(B) Applicants seeking to qualify for HOME under this set-aside must propose Developments in which all Units assisted with MFDL funds are available to households earning no more than 80% AMI and have rents no higher than the rent limits 24 CFR §92.2.(C) A portion of the General / Soft Repayment Set-Aside may be reallocated into the CHDO Set-Aside in order to fully fund a CHDO award that exceeds the remaining amount in the CHDO Set-Aside.(2) CHDO Set-Aside. Unless waived or reduced by HUD, a portion of the Department's annual HOME allocation will be set aside for eligible CHDOs meeting the requirements of the definition of Community Housing Development Organization in 24 CFR §92.2 and 10 TAC §13.2(2) of this chapter. Applicants under the CHDO Set-Aside must be proposing to develop housing on Development Sites located outside Participating Jurisdictions (PJ), unless the award is made within a Persons with Disabilities (PWD) Set-Aside, or the requirement under Tex. Gov't Code §2306.111(c)(1) has been waived by the Governor. A grant for CHDO operating expenses may be awarded in conjunction with an award of MFDL funds under this Set-Aside, if no other CHDO operating grants have been awarded to the Applicant in the same Calendar year, in accordance with 24 CFR §92.208. Applications under the CHDO Set-Aside may not have a for profit special limited partner within the ownership organization chart.(b) Regional Allocation and Collapse. All funds subject to Tex. Gov't Code §2306.111 or as described to HUD in planning documents will be allocated to regions and potentially subregions based on a Regional Allocation Formula (RAF) within the applicable Set-Asides (unless the funds have already been through a RAF of the annual NOFA and/or Special Purpose NOFA). The RAF methodology may differ by fund source. HOME funds will be allocated in accordance with Tex. Gov't Code Chapter 2306. The end date and Application Acceptance Date for the regionally allocated funds will be identified in the NOFA but in no instance shall it be less than 30 days from the date a link to the Board approved NOFA or NOFA Amendment is published on the Department's website.(1) After funds have been made available regionally and the period for regional allocation has expired, remaining funds within each respective Set-Aside may collapse and be pooled together on a date identified in the NOFA. All Applications received prior to these collapse dates will continue to hold their priority unless they are withdrawn, terminated, suspended, or funded.(2) Funds remaining after expiration of the Set-Asides on the end date identified in the NOFA, which have not been requested in the form of a complete Application, may be collapsed and pooled together to be made available statewide on a first-come first-served basis to Applications submitted after the collapse dates, as further described in the NOFA.(3) In instances where the RAF would result in regional or subregional allocations insufficient to fund an Application, the Department may use an alternative method of distribution, including an early collapse, revised formula or other methods as approved by the Board, and reflected in the NOFA.(c) Notice of Funding Availability (NOFA). MFDL funds will be distributed pursuant to the terms of a published NOFA that provides the specific collapse dates and deadlines as well as Set-Aside and RAF amounts applicable to each NOFA, along with scoring criteria, priorities, award limits, and other Application information. Set-asides, RAFs, and total funding amounts may increase or decrease in accordance with the provisions herein without further Board action as authorized by the Board.</content><note type="source"><p>Source Note: The provisions of this §13.4 adopted to be effective January 2, 2024, 48 TexReg 8334.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c13/sc/s13.5"><num value="13.5">§13.5</num><heading>Application and Award Process</heading><content>(a) Applications. MFDL Applicants must follow the applicable requirements in 10 TAC Chapter 11, Subchapter C (relating to Application Submission Requirements, Ineligibility Criteria, Board Decisions and Waiver of Rules) and the Notice of Funding Availability for which the Application is submitted.(b) Application Acceptance Date. Applications will be considered received on the business day of receipt, unless a different time period is described in the Department's rules or NOFA. If an Application is received after 5:00 p.m., Austin local time, it will be determined to have been received on the following business day. Applications received on a non-business day will be considered received on the next day the Department is open. Applications will be considered complete at the time all Application materials, required third party reports and application fee(s) are received by the Department. Within certain Set-Asides or priorities, the date of receipt may be fixed, regardless of the earlier actual date a complete Application is received, if so specified in the Department's rules or NOFA. If multiple Applications have the same Application Acceptance Date, in the same region or subregion (as applicable), within the same Set-Aside, and for 9% then score and tiebreaker factors, as described 10 TAC §11.7 of this title (relating to Tie Breaker Factors) will be used to determine the Application's rank.(c) Market Analysis. Applications proposing Rehabilitation that request MFDL as the only source of Department funding may be exempted from the Market Analysis requirement in 10 TAC §11.205(2) (relating to Required Third Party Reports) if the Development's rent rolls for the most recent six months reflect occupancy of at least 80% of all Units.(d) Required Site Control Agreement Provisions. All Applicants for MFDL funds where the Development is subject to environmental review under 24 CFR Part 50 and Part 58 must include the following provisions in the purchase contract or site control agreement if the subject property is not already owned by the Applicant:(1) "Notwithstanding any other provision of this Contract, Purchaser shall have no obligation to purchase the Property, and no transfer of title to the Purchaser may occur, unless and until the Department has provided Purchaser and/or Seller with a written notification that:(A) It has completed a federally required environmental review and its request for release of federal funds has been approved and, subject to any other Contingencies in this Contract,(i) the purchase may proceed, or(ii) the purchase may proceed only if certain conditions to address issues in the environmental review shall be satisfied before or after the purchase of the property; or(B) It has determined that the purchase is exempt from federal environmental review and a request for release of funds is not required."; and for all Developments using federal funding(2) "The Buyer does not have the power of eminent domain relating to the purchase and acquisition of the Property. The Buyer may use federal funds from the U.S. Department of Housing and Urban Development (HUD) to complete this purchase. HUD will not use eminent domain authority to condemn the Property. All parties entered this transaction voluntarily and the Buyer has notified the Seller of what it believes the value of the Property to be in accordance with 49 CFR Part 24 Appendix A. If negotiations between both parties fail, Buyer will not take further action to acquire the Property."(e) Oversubscribed Funds for Competitive HTC-Layered Applications. Should MFDL funds be oversubscribed in a Set-Aside or for a fund source that has geographic limitations within a Set-Aside, Applications concurrently requesting Competitive HTC will be notified and may amend their Application to accommodate another fund source and make changes that still meet threshold requirements in 10 TAC Chapters 11 and 13 of this title, if such changes do not impact scoring under 10 TAC §11.9 (relating to Competitive HTC Selection Criteria). The Department will provide notice to all impacted Applicants in the case of over-subscription, which will include a deadline by which the Applicant must respond to the Department. Multiple Applications from a single or affiliated Applicants do not constitute oversubscription, and the Applicant(s) will not be able to amend their Applications as described in this subsection. If MFDL funds become available between the Market Analysis Delivery Date, and the date of the Department's Board meeting at which final Competitive HTC awards are made, the MFDL funds will not be reserved for Competitive HTC-layered Applications, unless the reservation is described in the NOFA.(f) Availability of funds for Non-Competitive HTC-layered Applications. If an Application requesting layered Non-Competitive HTC and Direct Loan funds is terminated under 10 TAC §11.201(2)(E) (relating to Withdrawal of Certificate of Reservation), the Application will receive a new Application Acceptance Date for purposes of Direct Loan funds upon submission to the Department of the new Certificate of Reservation if the Board has not made an award. Direct Loan funds will not be reserved for terminated Applications, and may not be available for the Application with a new Reservation.(g) Eligibility Criteria and Determinations.(1) The Department will evaluate Applications received under a NOFA for eligibility and threshold pursuant to the requirements of this chapter and Chapter 11 of this title (relating to the Qualified Allocation Plan). The Department may terminate the Application if there are changes at any point prior to MFDL loan closing that would have had an adverse effect on the score and ranking order of the Application that would have resulted in the Application not being recommended for an award or being ranked below another Application received prior to the subject Application.(2) Applicants requesting MFDL as the only source of Department funds must be able to demonstrate that a Principal of the Developer, Development Owner, or General Partner has previously developed and placed into service a minimum of 50 multifamily housing units. It is the Applicant's responsibility to identify and submit sufficient evidence of this experience in the Application. If the Department determines that the evidence submitted is not substantial, additional evidence may be submitted through the Administrative Deficiency process, if it is available. If the Applicant is unable to provide satisfactory evidence, the Applicant will be ineligible for funding.(h) Effective rules and contractual terms. The contractual terms of an award will be governed by and reflect the rules in effect at the time of Application; however, any changes in federal requirements will be reflected in the contractual terms. Further provided, that if after award, but prior to execution of such Contract, there are new rules in effect, the Direct Loan awardee may elect to be governed by the new rules, provided the Application would continue to have been eligible for award under the rules and NOFA in effect at the time of Application.</content><note type="source"><p>Source Note: The provisions of this §13.5 adopted to be effective January 2, 2024, 48 TexReg 8334.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c13/sc/s13.6"><num value="13.6">§13.6</num><heading>Scoring Criteria and Tie Breaker Factors</heading><content>(a) Scoring. The scoring items used to calculate the score for a Competitive HTC-Layered Application will be utilized for scoring for an MFDL Application, and evaluated in the same manner. For all other Applications, the Tie Breaker described below will be utilized to determine which Applications to recommend for an award if multiple Applications are given the same Application Acceptance Date within the same Set-Aside and with the same Priority as described in the NOFA.(b) Tie Breaker. In the event that two or more Applications receive the same Application Acceptance Date, within the same Set-Aside and having the same Priority, staff will utilize the Tie Breaker Factors established in §11.7.</content><note type="source"><p>Source Note: The provisions of this §13.6 adopted to be effective January 2, 2024, 48 TexReg 8334.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c13/sc/s13.7"><num value="13.7">§13.7</num><heading>Maximum Funding Requests and Minimum Number of MFDL Units</heading><content>(a) Maximum Funding Request. The maximum funding request for an Application will be identified in the NOFA, and may vary by development type, set-aside, Priority, or fund source.(b) Maximum New Construction or Reconstruction Per-Unit Subsidy Limits. The per-Unit subsidy limit for a Development will be determined by the Department as the Section 234 Condo limits with the applicable high cost percentage adjustment in effect at the start date of the NOFA, which are the maximum MFDL eligible cost per-Unit subsidy limits that an Applicant may use to determine the amount of MFDL funds combined with other federal funds that may subsidize a Unit.(c) Maximum Rehabilitation Per-Unit Subsidy Limits. The MFDL eligible cost per-Unit to rehabilitate a Development may not exceed the HUD 221(d)(4) statutory limits, subject to high cost factors as published in the NOFA.(d) Minimum Number of MFDL Units. The minimum required number of MFDL Units will be determined by the MFDL per-Unit subsidy limits and the cost allocation analysis, which will ensure that the amount of MFDL Units as a percentage of total Units is equal to or greater than the percentage of MFDL funds requested as a percentage of total eligible MFDL Development costs.</content><note type="source"><p>Source Note: The provisions of this §13.7 adopted to be effective January 2, 2024, 48 TexReg 8334.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c13/sc/s13.8"><num value="13.8">§13.8</num><heading>Loan Structure and Underwriting Requirements</heading><content>(a) Loan Structures. Loan structures must meet the criteria described in this section and as further described in a NOFA. The interest rate, amortization period, ad term for the loan will be approved by the Board at the time of award, and can only be amended prior to loan closing by the process in 10 TAC §13.12 (relating to Pre-Closing Amendments to Direct Loan Terms).(b) Criteria for Construction-to-Permanent Loans. Direct Loans awarded through the Department must adhere to the criteria as identified in paragraphs (1) - (7) of this subsection if being requested as construction-to-permanent loans, for which the interest rate will be specified in the NOFA and approved by the Board:(1) The construction term for MFDL loans shall generally be coterminous with any superior construction loan(s), but no greater than 36 months. In the event the MFDL loan is the only loan with a construction term or is the superior construction loan, the construction term may be up to 36 months. Shorter timeframes may be required to meet federal project completion or expenditure deadlines;(2) No interest will accrue during the construction term;(3) The loan term shall be no less than 15 years and no greater than 40 years, and the amortization period shall be between 30 to 40 years. The Department's loan must mature at the same time or within six months of the shortest term of any senior debt, so long as neither exceeds 40 years. The loan term commences following the end of the construction term;(4) Loans shall be secured with a deed of trust with a permanent lien position that is superior to any other sources for financing including hard repayment debt that is in an amount less than or equal to the Direct Loan amount and superior to any other sources that have soft repayment structures, non-amortizing notes, have deferred forgivable provisions, or in which the lender has an identity of interest with any member of the Development Team. Parity liens may only be considered with federal loan funds from USDA Rural Development;(5) In general, up to 50% of the MFDL loan may be advanced at loan closing, should there be sufficient eligible costs to reimburse that amount; however, this amount may be proportionally exceeded for a Development being awarded additional MFDL funds, if the Development is past 50% at loan closing, so long as the required Mid-Construction Inspection has been completed. In all cases, at least 10% of the funds will be reserved for the final Draw.(c) Criteria for Construction Only Loans. MFDL Loans through the Department must adhere to the following criteria as identified in this paragraph, if being requested as construction only loans. The term of the construction loan shall generally be coterminous with any superior construction loan(s), but no greater than 36 months. In the event that the MFDL loan is the only construction loan or is the superior construction loan, the term may not exceed 36 months. Shorter timeframes may be required to meet federal project completion or expenditure deadlines.(d) Criteria for Permanent Refinance Loans. If 90% of the Department's loan will repay existing debt, the first payment will be due the month after the month of loan closing; 90% of the loan may be advanced at loan closing, unless the Board approves another date.(e) Evaluations. All Direct Loan Applicants in which third-party financing entities are part of the sources of funding must include a pro forma and lender approval letter evidencing review of the Development and the Principals, as described in 10 TAC §11.9(f)(1) of this title (relating to Competitive HTC Selection Criteria). Where no third-party financing exists, the Department reserves the right to procure a third-party evaluation which will be required to be prepaid by the Applicant.(f) Pass-Through Loans. Department funds may not be used as pass-through financing. The Department's Borrower must be the Development Owner.</content><note type="source"><p>Source Note: The provisions of this §13.8 adopted to be effective January 2, 2024, 48 TexReg 8334.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c13/sc/s13.9"><num value="13.9">§13.9</num><heading>Construction Standards</heading><content>All Developments financed with Direct Loans will be required to meet at a minimum the applicable requirements in Chapter 11 of this title (relating to the Qualified Allocation Plan). In addition, Developments must meet all applicable state and local codes, ordinances, and standards; the 2021 International Existing Building Code (IEBC) or International Building Code (IBC), as applicable. Should IEBC be more restrictive than local codes, or should local codes not exist, then the Development must meet the requirements imposed by IEBC or IBC, as applicable. Developments must also meet the requirements in paragraphs (1) - (5) of this section:(1) Third-Party Recommendations. Recommendations made in the Environmental Site Assessment (§11.305 of this title) and any Scope of Work and Cost Review (§11.306 of this title) with respect to health and safety issues, life expectancy of major systems (structural support; roofing; cladding and weatherproofing; plumbing; electrical; and heating, ventilation, and air conditioning) must be implemented;(2) Lead and Asbestos Testing. For properties originally constructed prior to 1978, the Scope of Work and Cost Review must be provided to the party conducting the lead-based paint and/or asbestos testing, and the Development Owner must implement the mitigation recommendations of the testing report;(3) Broadband Infrastructure. The broadband infrastructure requirements described in 24 CFR §92.251(a)(2)(vi) or (b)(1)(x) for HOME, NSP, or TCAP RF; or 24 CFR §93.301(a)(2)(vi) or 24 CFR §93.301(b)(2)(vi) for NHTF, as applicable;(4) Properties in Catastrophe Areas. Developments located in the designated catastrophe areas specified in 28 TAC §5.4008 must comply with 28 TAC §5.4012 (relating to Applicable Building Code Standards in Designated Catastrophe Areas for Structures Constructed, Repaired or to Which Additions Are Made On and After April 1, 2020); and(5) Minimum Construction Standards. Rehabilitation Developments funded with federal sources may also be required to meet Minimum Rehabilitation Standards, as required by HUD. Rehabilitation Developments funded by the national Housing Trust Fund are required to meet the Multifamily Minimum Rehabilitation Standards approved by HUD, as posted on the Department's website at https://www.tdhca.state.tx.us/multifamily/home/index.htm, in addition to the Department's rules and NOFA requirements.</content><note type="source"><p>Source Note: The provisions of this §13.9 adopted to be effective January 2, 2024, 48 TexReg 8334.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c13/sc/s13.10"><num value="13.10">§13.10</num><heading>Development and Unit Requirements</heading><content>(a) Proportionality. The bedroom/bathroom/amenities and square footages for Direct Loan Units must be comparable to the bedroom/bathroom/amenities and square footages for the total number of Units in the Development based on the amount of Direct Loan funds requested as a percentage of total MFDL eligible costs. As a result of this requirement, the Department will use the Proration Method as the Cost Allocation Method in accordance with HUD CPD Notice 16-15, except as described in subsection (b) of this section. Additionally, the amount of Direct Loan funds requested cannot exceed the per-unit subsidy limit described in this chapter or in the applicable NOFA. Direct Loan Units must be provided as a percentage of each Unit Type, in proportion to the percentage of total costs included in the Direct Loan.(b) Floating Units. Floating Direct Loan Units may only float among the Units as described in the Direct Loan Contract and Direct Loan LURA.(1) For HOME, NSP, and TCAP RF, Direct Loan Units must float throughout the Development unless the Development also contains public housing Units that will receive Operating Fund or Capital Fund assistance under Section 9 of the 1937 Act as defined in 24 CFR §5.100.(2) For NHTF, Direct Loan Units must float throughout the Development, except as prohibited by 24 CFR §93.203, concerning public housing units.(c) Unit Match Requirements.(1) For a Development funded with NSP and/or NHTF, a required matching contribution will result in at least one HOME Match-Eligible Unit, in addition to the NSP and/or NHTF Units.(2) For a Development funded with HOME, a required matching contribution may or may not result in a HOME Match-Eligible Unit, beyond the Department's HOME assisted Units.(3) For a Development funded with TCAP RF in the annual NOFA, a matching contribution in addition to the Match that the Department counts from the TCAP RF investment will result in some amount of TCAP RF assisted Units being considered HOME Match-Eligible Units.(d) Minimum Affordability Period. The minimum affordability period for all Direct Loan Units awarded under a NOFA will match the greater of the term of the loan, or 30 years unless a lesser period is approved by the Board. The Department reserves the right to extend the Affordability Period for Developments that fail to meet Program requirements.(e) Restricted Units. If the Department is the only source of permanent funding for the Development by virtue of equity from HTC and MFDL funding, all Units must be income and rent restricted under a combination of HTC and Direct Loan LURAs, regardless of the amount of deferred Developer Fee as a permanent source. If the MFDL funding is the only source of permanent funding for the Development, all Units must be income and rent restricted by the Direct Loan LURA, and all costs must be MFDL eligible, regardless of the amount of deferred Developer Fee as a permanent source.(f) Income Levels Committed at Time of Application. If the Direct Loan funds are used in a Competitive or non-Competitive HTC-Layered Development that is electing Income Averaging to qualify under IRC §42, the Direct Loan Units required by the LURA must continue to be provided at the income levels committed at the time of Application. Direct Loan Unit designations may not change to meet Income Averaging requirements.(g) Mandatory Development Features. Development features described under 10 TAC §11.101(b)(4) (relating to Mandatory Development Amenities) may be selected to meet federal or state requirements, without a change to the number or description of features (e.g. selection of Broadband).</content><note type="source"><p>Source Note: The provisions of this §13.10 adopted to be effective January 2, 2024, 48 TexReg 8334.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c13/sc/s13.11"><num value="13.11">§13.11</num><heading>Post-Award Requirements</heading><content>(a) Direct Loan awardees must satisfactorily complete the Post-Award Requirements identified in this section after the Board approval date.(b) If a Direct Loan award is declined by the Direct Loan awardee and returned after Board approval, or if the Direct Loan awardee or Affiliates fail to timely enter into the Contract, close the loan, begin and complete construction, or leave a portion of the Direct Loan award unexpended, penalties may apply under 10 TAC §11.9(f) (relating to Competitive HTC Selection Criteria), and/or the Department may prohibit the Applicant and all Affiliates from applying for MFDL funds for a period of two years.(c) Benchmarks. Extensions to the benchmarks in paragraphs (1) - (8) of this subsection may only be approved by the Executive Director or authorized designee in accordance with §13.12 or §13.13 of this chapter (relating to Pre-Closing and Post-Closing Amendments), as applicable.(1) Environmental Clearance. In order to obtain environmental clearance required by the National Environmental Policy Act (NEPA) and other related Federal and state environmental laws (if applicable), Direct Loan Applicants, including those previously awarded HTC, must submit a fully completed environmental review, including any applicable reports to the Department within 90 days of the Application Acceptance Date.(2) Contract Execution. After a Development receives environmental clearance (if applicable), the Department will draft a Contract to be emailed to the Direct Loan awardee. Direct Loan awardees must execute and return a Contract to the Department within 30 calendar days after receipt of the Contract.(3) Loan Closing and Construction Commencement. Loan closing must occur and construction must begin on or before the dates described in the Contract. If construction has not commenced within 12 months of the Contract Effective Date, the award may be terminated.(4) Loan Closing. In preparation for closing any Direct Loan, the Development Owner must submit the items described in subparagraphs (A) - (F) of this paragraph. Providing incomplete documents, or not responding timely to subsequent Department requests for materials needed to facilitate closing, may significantly delay closing. Any request to change the financing structure of the Development, or the ownership structure, will in most cases extend the amount of time it will take for the Department to meet closing timelines, and may move prioritization of the closing below that of other Developments.(A) Documentation of the prior closing or concurrent closing with all sources of funds necessary for the long-term financial feasibility of the Development.(B) Due diligence items determined by the Department to be prudent and necessary to meet the Department's rules and to secure the interests of the Department, as requested by Staff.(C) When Department funds have a first lien position during the construction term, or if the Development is a public work under state law, assurance of completion of the Development in the form of payment and performance bonds in the full amount of the construction contract or equivalent guarantee as allowable under state law in the sole determination of the Department is required. Development Owners utilizing the USDA §515 program for a Development that is not a public work are exempt from this requirement, but must meet the alternative requirements set forth by USDA.(D) Documentation required for preparation of closing loan documents includes, but is not limited to:(i) Substantially final information necessary for REA staff to reevaluate the transaction prior to loan closing, including but not limited to a substantially final development cost schedule, sources and uses, operating pro forma, annual operating expenses, rent schedule, updated written financial commitments or term sheets, and any additional financing exhibits that have changed since the time of Application;(ii) Substantially final Draft Owner/General Contractor agreement and draft Owner/Architect agreement prior to closing with final executed copies required by the day of closing;(iii) Survey of the Property that includes a certification to the Department, Development Owner, Title Company, and other lenders;(iv) Plans and specifications for review by the Department's inspection staff. Inspection staff will issue a plan review letter that is intended to assist in identifying early concerns associated with the Department's final construction requirements; and(v) If layered with Housing Tax Credits, a substantially final draft limited partnership agreement between the General Partner and the tax credit investor entity.(E) If required by the fund source, prior to Contract Execution unless an earlier period is described in Chapters 10, 11, or 12 of this title, the Development Owner must provide verification of:(i) Environmental clearance from the Department or HUD, as applicable;(ii) Site and Neighborhood clearance from the Department;(iii) Documentation necessary to show compliance with the Uniform Relocation Assistance and Property Act and any other relocation requirements that may apply;(iv) Title Insurance Commitment or Policy showing the Department as Lender, with copies of all Schedule B documents; and(v) Any other documentation that is necessary or prudent to meet program requirements or state or federal law in the sole determination of the Department.(F) The Direct Loan Contract as executed, which will be drafted by the Department's counsel or its designee for the Department. No changes proposed by the Developer or Developer's counsel will be accepted unless approved by the Department's Legal Division or its designee.(6) Loan Documents. The Development Owner is required to execute all loan closing documents required by and in the form and substance acceptable to the Department's Legal Division.(A) Loan closing documents include but are not limited to a promissory note, deed of trust, construction loan agreement (if the proceeds of the loan are to be used for construction), LURA, Architect and/or licensed engineer certification of understanding to complete environmental mitigation if such mitigation is identified in HUD's environmental clearance or the Underwriting Report and assignment and security instruments whereby the Developer, the Development Owner, and/or any Affiliates (if applicable) grants the Department their respective right, title, and interest in and to other collateral, including without limitation the Owner/Architect agreement and the Owner/General Contractor agreement, to secure the payment and performance of the Development Owner's obligations under the loan documents. Additional loan terms and conditions may be imposed by the loan closing documents.(B) Loan terms and conditions may vary based on the type of Development, Real Estate Analysis Underwriting Report, and the Set-Aside under which the award was made.(7) Quarterly Construction Status Reports. The Development Owner is required to submit quarterly Construction Status Reports to the Asset Management Division as described and by the deadlines specified in 10 TAC §10.401(e) of this title (relating to Construction Status Report).(8) Mid-Construction Development Inspection Letter. In addition to any other obligations required as the result of any other Department funding sources, the Development Owner must submit a Mid-Construction Development Inspection Request once the Development has met at least 25% construction completion as indicated on the G703 Continuation Sheet or HUD equivalent form. Department inspection staff will issue a Mid-Construction Development Inspection Letter that confirms work is being done in accordance with the applicable codes, the construction contract, and construction documents.(9) Construction Completion. Construction must be completed, as reflected by the Development's certificate(s) of occupancy (if new construction and/or reconstruction) and Certificate of Substantial Completion (AIA Form G704) or Form HUD-92485 for instances in which a federally insured HUD loan is being utilized, within the construction term of any superior construction loan(s) or up to 36 months of the actual loan closing date if no superior construction loan(s) exists, unless a shorter timeline is necessitated by the federal funding source.(10) Closed Final Development Inspection Letter. The Closed Final Development Inspection Letter must be issued by the Department within 36 months of loan closing. This letter will verify committed amenities have been provided and confirm compliance with all applicable accessibility requirements; this letter may include deficiencies that require resolution. The Closed Final Development Inspection may be conducted concurrently with a NSPIRE inspection. However, any letters associated with a NSPIRE inspection will not satisfy the Closed Final Development Inspection Letter required by this subsection.(11) Initial Occupancy. Initial occupancy of all MFDL assisted Units by eligible households shall occur within six months of the final Direct Loan draw. Requests to extend the initial occupancy period must be accompanied by documentation of marketing efforts and a marketing plan. The marketing plan may be submitted to HUD for final approval, if required by the MFDL fund source.(12) Per Unit Repayment. Repayment may be required on a per Unit basis for Units that have not been rented to eligible households within 6-18 months of the final Direct Loan draw, depending on the fund source.(13) Termination and Repayment for Failure to Complete. Termination of the Direct Loan award and repayment of all disbursed funds will be required for any Development that is not completed within four years of the effective date of a Direct Loan Contract.(14) Disbursement of Funds. The Borrower must comply with the requirements in subparagraphs (A) - (K) of this paragraph in order to receive a disbursement of funds to reimburse eligible costs incurred. Submission of documentation related to the Borrower's compliance with these requirements is required with a request for disbursement:(A) All requests for disbursement must be submitted using the MFDL draw workbook or such other format as the Department may require;(B) Documentation of the total construction costs incurred and costs incurred since the last disbursement of funds must be submitted. Such documentation must be signed by the General Contractor and certified by the Development architect and is generally in the form of an AIA Form G702/ G703 or HUD equivalent form;(C) Disbursement requests must include a down-date endorsement to the Direct Loan (mortgagee) title policy or Nothing Further Certificate that includes a title search through the date of the Architect's signature on AIA form G702 or HUD equivalent form. For release of retainage, the down-date endorsement to the Direct Loan title policy or Nothing Further Certificate must be dated at least 30 calendar days after the date of the completion as certified on the Certificate of Substantial Completion (AIA Form G704) with $0 as the work remaining to be completed. If AIA Form G704 or HUD equivalent form indicates an amount of work remaining to be completed, the Architect must provide confirmation that all work has been completed. Disbursement requests for acquisition and closing costs are exempt from this requirement;(D) Table Funding (the wiring of Direct Loan funds to the title company at loan closing) may be permitted at the time of closing, for disbursement of funds related to eligible acquisition costs and eligible softs costs incurred, and in an amount not to exceed 50% of the total funds. Table Funding must be requested in writing at least 30 calendar days prior to the anticipated closing date, and will not be considered unless the Direct Loan Contract has been executed and all necessary documentation has been submitted to and accepted by the Department at least 10 calendar days prior to the anticipated closing date;(E) At least 50% of Direct Loan funds (except as otherwise allowed for Permanent Refinance Loans described in 10 TAC §13.8(e)) will be withheld from the initial disbursement of loan funds to allow for periodic disbursements;(F) The initial draw request for the Development (excluding Table Funding) must be entered into the Department's Housing Contract System no later than 180 days after loan closing, and may not be submitted prior to submission of all architectural drawings;(G) Developer Fee disbursement shall be limited by subparagraph (I) of this paragraph and is further conditioned upon clauses (i) - (iii), as applicable:(i) For Developments in which the loan is secured by a first lien deed of trust against the Property, 75% shall be disbursed in accordance with percent of construction completed. 75% of the total allowable fee will be multiplied by the percent completion, as documented by the construction contract and as may be verified by an inspection by the Department. The remaining 25% shall be disbursed at the time of release of retainage; or(ii) For Developments in which the loan is not secured by a first lien deed of trust or the Development is also utilizing Housing Tax Credits, Developer Fees will not be reimbursed by the Department, except as follows. If all other lenders and syndicator in a Housing Tax Credit Development (if applicable) provide written confirmation that they do not have an existing or planned agreement to govern the disbursement of Developer Fees and expect that Department funds shall be used to fund Developer Fees, they shall be reimbursed in the same manner as described in subparagraph (A) of this paragraph; and(iii) The Department may reasonably withhold any disbursement in accordance with the Loan Documents and if it is determined that the Development is not progressing as reasonably necessary to meet the benchmarks for the timely completion of construction of the Development as set forth in the loan documents, or that cost overruns have put the Development Owner's ability to repay its Direct Loan or complete the construction at risk in accordance with the terms of the loan documents and within budget. If disbursement has been withheld under this subsection, the Development Owner must provide evidence to the satisfaction of the Department that the Development will be timely completed and occupied in order to continue receiving funds. If disbursement is withheld for any reason, disbursement of any remaining Developer Fee will be made only after construction of the Development has been completed, and all requirements for expenditure and occupancy have been met;(H) Expenditures must be allowable and reasonable in accordance with federal and state rules and regulations. The Department shall review each expenditure requested for reasonableness. The Department may request the Development Owner make modifications to the disbursement request and is authorized to modify the disbursement procedures set forth herein and to establish such additional requirements for payment of Department funds to Development Owner as may be necessary or advisable for compliance with all program requirements;(I) Following 50% construction completion, any funds will be released in accordance with the percentage of construction completion as documented on AIA Form G702/703 or HUD equivalent form. 10% of requested Hard Costs will be retained and will not be released until the final draw request. If the Development is receiving funds from more than one MFDL source, the retainage requirement will apply to each fund source individually. All of the items described in clauses (i) - (viii) of this subparagraph are required in order to approve the final draw request:(i) Fully executed Certificate of Substantial Completion (AIA Form G704) or Form HUD-92485 (for instances in which a federally insured HUD loan is being utilized) with $0 as the cost estimate of work that is incomplete. If AIA Form G704 or Form HUD-92485 indicates an amount of work remaining to be completed, the Architect must provide confirmation that all work has been completed;(ii) A down date endorsement to the Direct Loan title policy or Nothing Further Certificate dated at least 30 calendar days after the date of completion as certified on the Certificate of Substantial Completion (AIA Form G704) or Form HUD-92485;(iii) For Developments not layered with Housing Tax Credits, a Closed Final Development Inspection Letter from the Department;(iv) For NHTF Developments layered with HTCs, a separate, additional cost certification form completed by an independent, licensed, certified public accountant of all Development costs (including project costs), subject to the conditions and limitations set forth in the executed Direct Loan Contract, commonly known as a cost certification;(v) For Developments subject to the Davis-Bacon Act, written documentation from the Department that the Department's Notice to Proceed that serves to lock in the Department of Labor's worker prevailing wage mandates at the development and authorizes start of construction was sent and final wage compliance report was received and approved or confirmation that HUD or other entity maintains Davis-Bacon oversight;(vi) Certificate(s) of Occupancy (for New Construction or Reconstruction Units);(vii) Development completion reports, which includes, but is not limited to, documentation of full compliance with the Uniform Relocation Act/104(d), Match Documentation requirements, and Section 3 of the Housing and Urban Development Act of 1968, as applicable to the Development, and any other applicable requirement;(viii) If applicable to the Development, certification from Architect or a licensed engineer that all HUD environmental mitigation conditions have been met; and(ix) evidence of Match being credited to the Development.(J) No disbursement of funds will be approved without receipt of all closing documents in the form and substance required by the Department's Legal Division;(K) The final draw request must be submitted within the construction term as determined in accordance with 10 TAC §13.8(c)(1) or (d)(1) as applicable, unless the construction term has been extended in accordance with 10 TAC §13.12 or 10 TAC §13.13 of this chapter, as applicable; and(L) Annually, Borrowers must submit at least one draw, and may not submit more than four draws, unless previously approved by the Executive Director or designee.(15) Annual Audits and Cost Certifications under 24 CFR §93.406(b).(A) Annual Audits under 24 CFR §93.406(b). Unless otherwise directed by the Department, the Development Owner shall arrange for the performance of an annual financial and compliance audit of funds received and performances rendered under the Direct Loan Contract, subject to the conditions and limitations set forth in the executed Direct Loan Contract. All approved audit reports will be made available for public inspection within 30 days after completion of the audit.(B) Cost Certifications under 24 CFR §93.406(b).(i) Non-HTC-Layered Developments. Within 180 calendar days of the later of all title transfer requirements and construction work having been performed, as reflected by the Development's Certificate(s) of Occupancy (if New Construction) or Certificate of Substantial Completion (AIA Form G704 or HUD equivalent form), or when all modifications required as a result of the Department's Final Construction Inspection are cleared as evidenced by receipt of the Closed Final Development Inspection Letter, the Development Owner will submit to the Department a cost certification done by an independent licensed certified public accountant of all Development costs (including project NHTF eligible costs), subject to the conditions and limitations set forth in the executed Direct Loan Contract.(ii) HTC-Layered Developments. With the Cost Certification required by the Low Income Housing Tax Credit Program, the Development Owner must submit to the Department a cost certification completed by an independent licensed certified public accountant of all Development costs (including NHTF project eligible costs), subject to the conditions and limitations set forth in the executed Direct Loan Contract.</content><note type="source"><p>Source Note: The provisions of this §13.11 adopted to be effective January 2, 2024, 48 TexReg 8334.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c13/sc/s13.12"><num value="13.12">§13.12</num><heading>Pre-Closing Amendments to Direct Loan Terms</heading><content>(a) Closing Memo to Underwriting Report. Any changes to the total development cost, expenses, income, and/or other sources of funds from time of the publication of the initial Underwriting Report at the time of award to the time of loan closing, if the type or amount of the sources and uses have changed must be reevaluated by the Real Estate Analysis division, which will typically publish a Closing Memo to the Underwriting Report. The Report may recommend changes to the principal amount and/or the repayment structure for the Multifamily Direct Loan pursuant to §11.302 of this title (relating to Underwriting Rules and Guidelines), except that the change must have been an available option in the rule or NOFA (as applicable), and may not be made to awards that were competitively scored to the extent that change would have caused the Development to lose points. This will allow the Department to uphold the competitive process, mitigate any increased risk, and to ensure that the Development is not oversubsidized. Where the Department determines such risk is not adequately mitigated, the award may be terminated or reconsidered by the Board. If the changes cause the total Debt Coverage Ratio (DCR) to no longer comply with 10 TAC §11.302 of this title (relating to Underwriting Rules and Guidelines), the award may be subject to termination. The Department may require the Closing Memo to be completed before providing a Contract to the Development Owner.(b) Executive Approval Required Pre-Closing. The Executive Director or authorized designee may approve amendments to loan terms prior to closing as described in paragraphs (1) - (6) of this subsection. Under no circumstances may an amendment cause the Department to violate or be at risk of violating a federal requirement or deadline.(1) Extensions to the loan closing date required in 10 TAC §13.11(c)(4) of this chapter (relating to Post-Award Requirements) may be approved prior to closing. An Applicant must submit sufficient evidence documenting good cause, including but not limited to, documented delays caused by circumstances outside the control of the applicant or constraints in arranging a multiple fund source closing.(2) Changes to the construction term and/or loan maturity date to accommodate the requirements of other lenders or to maintain parity of term may be approved prior to closing.(3) Extensions to the Construction Completion date or date of receipt of a Closed Final Development Inspection Letter required in 10 TAC §13.11(c)(8) of this chapter may be requested but generally are not approved prior to initial loan closing. Extensions under this paragraph are determined based on documentation that the extension is necessary to complete construction and that there is good cause for the extension.(4) Only to the extent determined necessary by Real Estate Analysis to maintain financial feasibility, changes to the amortization period (not to exceed 40 years) or interest rate (to not less than the minimum specified in rule or NOFA) may be approved if such changes continue to meet all requirements of Chapter 11, Chapter 13, and the NOFA.(5) Decreases in the Direct Loan amount, provided the decrease does not jeopardize the financial viability of the Development in the determination of Real Estate Analysis may be approved prior to closing, though the Development Owner may be subject to penalties as further described in 10 TAC §13.11 of this chapter (relating to Post-Award Requirements). Increases will not be approved unless the Applicant applies for the additional funding under an open NOFA.(6) Changes to other loan terms or requirements that would not require a waiver, as necessary to facilitate the loan closing without exposing the Department to undue financial risk.(c) Board Approval Required Pre-Closing. Board approval is necessary for any other changes prior to closing.</content><note type="source"><p>Source Note: The provisions of this §13.12 adopted to be effective January 2, 2024, 48 TexReg 8334.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c13/sc/s13.13"><num value="13.13">§13.13</num><heading>Post-Closing Amendments to Direct Loan Terms</heading><content>(a) Good Cause Extensions. The Executive Director or authorized designee may approve extensions of up to 12 months under 10 TAC §13.11(c)(7) - (8) or (14)(L) of this chapter (relating to Post-Award Requirements) based on documentation that there is good cause for the extension and cause the Department to violate or be at risk of violating a federal requirement or deadline.(b) Amendments to MFDL Awards. Except in cases of Force Majeure, changes to terms of awards subject to mandatory HUD reporting requirements will only be processed after the Construction Completion is reported to the federal oversight entity as completed, and the last of the MFDL funds have been drawn.(c) Executive Amendments. The Executive Director or authorized designee may approve amendments to loan terms post-closing as described in paragraphs (1) - (3) of this subsection. Board approval is necessary for any other changes post-closing.(1) Changes in Terms. Changes to the amortization or maturity date to accommodate the requirements of other lenders or maintain parity of term may be approved post-closing, provided the changes result in the Direct Loan continuing to meet the requirements of 10 TAC §13.8(c)(1) and (3) of this chapter (relating to Loan Structure and Underwriting Requirements), and NOFA requirements.(2) Post-Closing Subordinations or Re-subordinations of MFDL Liens. Re-subordination of the Direct Loan in conjunction with refinancing may be approved post-closing, provided the conditions in subparagraphs (A) - (E) of this paragraph are met:(A) The Borrower is current with loan payments to the Department, and no notice has been given of any Event of Default on any MFDL loan. Histories of late or non-payment on any other MFDL loan may result in denial of the request;(B) The refinance does not propose payment to any of the Development Owner or Developer parties (including the Limited Partners);(C) A proposal for partial repayment of the MFDL lien is made with the request;(D) The new superior lien is in an amount that is equal to or less than the original senior lien and does not negatively affect the financial feasibility of the Development.(i) For purposes of this section, a negative effect on the financial feasibility of the Development shall mean a reduction in the total Debt Coverage Ratio (DCR) of more than 0.05, or if the DCR no longer meets the requirements of 10 TAC §11.302 of this title; and(ii) Changes to accommodate refinancing with a new superior lien that is in an amount that exceeds the original senior lien and which will be directly applied to property improvements, as evidenced by the loan or security agreements (exclusive of fees associated with the refinance and any required reserves), will be considered on a case by case basis; and(E) The subordination or re-subordination request does not include a request to subordinate or resubordinate any MFDL LURA, with the exception of partial subordination or re-subordination of receivership rights (subject to the prosed receiver entity or Affiliate not having been Debarred by the Department or on the Federal Suspended or Debarred Listing).(3) Workout Arrangements. Changes required to the Department's loan terms or amounts that are part of an approved Asset Management Division work out arrangement may be approved after Construction Completion.(d) Contract Assignments and Assumptions of MFDL Liens. The Executive Director or authorized designee may approve the Contract Assignment and Assumption of MFDL Liens following approval of an Ownership Transfer request if the conditions in paragraphs (1) - (3) of this subsection are met:(1) The assignment or assumption is not prohibited by the Contract, Loan Documents, or regulations;(2) The assignment or assumption request is based on either subparagraph (A) or (B) of this paragraph:(A) There are insufficient funds available in the transaction to fully repay the Direct Loan at the time of acquisition, for which Deferred Developer Fee, Development Owner or Affiliate Contributions, or other similar liabilities will not be considered in determining whether the Direct Loan could be repaid at the time of acquisition; or(B) The new superior lien will be directly applied to property improvements as evidenced by the loan or security agreements, exclusive of fees association with the new financing and any required reserves; and(3) The corresponding Ownership Transfer has been approved in accordance with all requirements in 10 TAC §10.406 of this title (relating to Ownership Transfers), and no prospective Owner including person, or affiliate, as those terms are defined in 2 CFR Part 180 and 2 CFR Part 2424, Subpart I, has been subject to state Debarment or are on the Federal Suspended or Debarred Listing. This includes Board Members and Limited Partners.</content><note type="source"><p>Source Note: The provisions of this §13.13 adopted to be effective January 2, 2024, 48 TexReg 8334.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c20"><num value="20">CHAPTER 20</num><heading>SINGLE FAMILY PROGRAMS UMBRELLA RULE</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c20/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.1"><num value="20.1">§20.1</num><heading>Purpose</heading><content>This chapter sets forth the common elements of the Texas Department of Housing and Community Affairs' (the Department) single family Programs, which include the Department's HOME Investment Partnerships Program (HOME), Texas Housing Trust Fund (Texas HTF), Texas Neighborhood Stabilization Program (NSP), and Office of Colonia Initiatives (OCI) Programs and other single family Programs as developed by the Department. Single family Programs are designed to improve and provide affordable housing opportunities to low-income individuals and families in Texas and in accordance with Chapter 2306 of the Tex. Gov't Code and any applicable statutes and federal regulations.</content><note type="source"><p>Source Note: The provisions of this §20.1 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.2"><num value="20.2">§20.2</num><heading>Applicability</heading><content>(a) This chapter only applies to single family Programs. Program Rules may impose additional requirements related to any provision of this chapter. Where a Program Rule is less restrictive and federal law does not preempt the item, the provisions of this chapter will govern Program decisions.(b) Activities performed under Chapter 27 (relating to Texas First Time Homebuyer Program Rule) and Chapter 28 (related to Taxable Mortgage Program) of this title are excluded from this chapter.</content><note type="source"><p>Source Note: The provisions of this §20.2 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.3"><num value="20.3">§20.3</num><heading>Definitions</heading><content>The following words and terms, when used in this chapter, shall have the following meanings unless the context indicates otherwise. Any capitalized terms not specifically defined in this section or any section referenced in this chapter shall have the meaning as defined in Chapter 2306 of the Tex. Gov't Code, the Program Rules, the Texas Administrative Code (TAC), or applicable federal regulations.(1) Activity--The assistance provided to a specific Household or Administrator by which funds are used for acquisition, new construction, reconstruction, rehabilitation, refinance of an existing Mortgage, tenant-based rental assistance, or other Department approved Expenditure under a single family housing Program.(2) Administrator--A unit of local government, Nonprofit Organization or other entity acting as a subrecipient, Developer, or similar organization that has an executed written Agreement with the Department.(3) Affiliate--If, directly or indirectly, either one Controls or has the power to Control the other or a third person Controls or has the power to Control both. The Department may determine Control to include, but not be limited to:(A) Interlocking management or ownership;(B) Identity of interests among family members;(C) Shared facilities and equipment;(D) Common use of employees; or(E) A business entity which has been organized following the exclusion of a person which has the same or similar management, ownership, or principal employees as the excluded person.(4) Affiliated Party--A person or entity with a contractual relationship with the Administrator as it relates to a Program, the form of assistance under a Program, or an Activity.(5) Affirmative Marketing Plan--HUD Form 935.2B or equivalent plan created in accordance with HUD requirements to direct specific marketing and outreach to potential tenants and homebuyers who are considered "least likely" to know about or apply for housing based on an evaluation of market area data. May be referred to as "Affirmative Fair Housing Marketing Plan" (AFHMP).(6) Agreement--Same as "Contract." May be referred to as a "Reservation System Agreement" or "Reservation Agreement" when providing access to the Department's Reservation System as defined in this chapter.(7) Amy Young Barrier Removal Program--A program designed to remove barriers and address immediate health and safety issues for Persons with Disabilities as outlined in the Program Rule.(8) Annual Income--The definition of Annual Income and the methods utilized to establish eligibility for housing or other types of assistance as defined under the Program Rule.(9) Applicant--An individual, unit of local government, nonprofit corporation or other entity, as applicable, who has submitted to the Department or to an Administrator an Application for Department funds or other assistance.(10) Application--A request for a Contract award or a request to participate in a Reservation System submitted by an Applicant to the Department in a form prescribed by the Department, including any exhibits or other supporting material.(11) Area Median Family Income (AMFI)--The income limits published annually by the U.S. Department of Housing and Urban Development (HUD) for the Housing Choice Voucher Program that is used by the Department to determine the income eligibility of Households to participate in Single Family Programs.(12) Borrower--a Household that is borrowing funds from or through the Department for the acquisition, new construction and/or rehabilitation of the Household's Principal Residence.(13) Certificate of Occupancy--Document issued by a local authority to the owner of premises attesting that the structure has been built in accordance with building ordinances.(14) CFR--Code of Federal Regulations.(15) Combined Loan to Value (CLTV)--The aggregate principal balance of all the Mortgage Loans, including Forgivable Loans, divided by the appraised value.(16) Competitive Application Cycle--A defined period of time that Applications may be submitted according to a published Notice of Funding Availability (NOFA) that will include a submission deadline and selection or scoring criteria.(17) Concern--A policy, practice or procedure that has not yet resulted in a Finding, but if not changed will or may result in a Finding, or disallowed costs.(18) Contract--The executed written agreement between the Department and an Administrator performing an Activity related to a single family Program that describes performance requirements and responsibilities. May also be referred to as "Agreement."(19) Contract Term--The timeframe in which funds may be expended under the Contract or Agreement for certain administrative costs and for all the hard and soft costs of Activities, as further described in the Contract or Agreement.(20) Control--The possession, directly or indirectly, of the power to direct or cause the direction of the management, operations or policies of any person or entity, whether through the ownership of voting securities, ownership interests, or by contract or otherwise.(21) Debt--A duty or obligation to pay money to a creditor, lender, or person which can include car payments, credit card bills, loans, child support payments, and student loans.(22) Debt-to-Income Ratio--The percentage of gross monthly income from Qualifying Income that goes towards paying off Debts and is calculated by dividing total recurring monthly Debt by gross monthly income expressed as a percentage.(23) Deobligate--The cancellation of or release of funds under a Contract or Agreement as a result of expiration of, termination of, or reduction of funds under a Contract or Agreement.(24) Developer--Any person, general partner, Affiliate, or Affiliated Party or affiliate of a person who owns or proposes a Development or expects to acquire control of a Development and is the person responsible for performing under the Contract with the Department.(25) Development--A residential housing project for homeownership that consists of one or more units owned by the Developer during the development period and financed under a common plan which has applied for Department funds. This includes a project consisting of multiple units of housing that are located on scattered sites.(26) Domestic Farm Laborer--Individuals (and the Household) who receive a substantial portion of their income from the production or handling of agricultural or aquacultural products.(27) Draw Request--A request submitted to the Department, by an Administrator, seeking reimbursement of Program funds for completing an expenditure relating to the Program.(28) Enforcement Committee--The Committee as defined in Chapter 2 of this title (relating to Enforcement).(29) Finding--An Administrator's material failure to comply with rules, regulations, the terms of the Contract, or to provide services under a Program to meet appropriate standards, goals, and other requirements established by the Department or funding source (including performance objectives). A Finding impacts the organization's ability to achieve the goals of the program and may jeopardize continued operations of the Administrator. A Finding includes the identification of an action or failure to act that results or may result in disallowed costs.(30) Forgivable Loan--Financial assistance in the form of a Mortgage Loan that is not required to be repaid if the terms of the Mortgage Loan are met.(31) HOME Program--A HUD funded Program authorized under the HOME Investment Partnerships Program at 42 U.S.C. §§12701 - 12839.(32) Household--One or more persons occupying a rental unit or owner-occupied Single Family Housing Unit as their primary residence. May also be referred to as a "family" or "beneficiary."(33) Housing Contract System (HCS)--The electronic information system or systems that are part of the "central database" established by the Department to be used for tracking, funding, and reporting single family Contracts and Activities. May also be known as Contract System.(34) HUD--The United States Department of Housing and Urban Development or its successor.(35) Improvement Survey--A boundary survey plus land improvements by a Texas surveyor with a surveyor's seal, license number, and signature, meeting the requirements of the Texas Board of Professional Land Surveying under Chapter 663, Part 29, Title 2 of the TAC, showing (at a minimum) the accompanying legal description; all boundaries clearly labeled with calls and distance found on the ground and per the legal description; the location of all improvements, structures, visible utilities, fences, or walls; any boundary or visible encroachments; all adjoinders and recording information; location of all easements, setback lines, and utilities; or other recorded matters affecting the use of the property.(36) Life-of-Loan Flood Certification--Tracks the flood zone of the Single Family Housing Unit for the life of the Mortgage Loan.(37) Limited English Proficiency (LEP)--Refers to persons who do not speak English as their primary language and who have a limited ability to read, speak, write, or understand English.(38) Loan Assumption--An agreement between the buyer and seller of Single Family Housing Unit that the buyer will make remaining payments and adhere to terms and conditions of an existing Mortgage Loan on the Single Family Housing Unit and Program requirements. A Mortgage Loan assumption requires written Department approval.(39) Manufactured Housing Unit (MHU)--A structure that meets the requirements of Texas Manufactured Housing Standards Act, Chapter 1201 of the Texas Occupations Code or Federal Housing Administration (FHA) guidelines as required by the Department.(40) Mortgage--Has the same meaning as defined in §2306.004 of the Tex. Gov't Code.(41) Mortgage Loan--Has the same meaning as defined in §2306.004 of the Tex. Gov't Code.(42) Neighborhood Stabilization Program (NSP)--A HUD-funded program authorized by HR3221, the "Housing and Economic Recovery Act of 2008" (HERA) and Section 1497 of the Wall Street Reform and Consumer Protection Act of 2010, as a supplemental allocation to the CDBG Program.(43) NOFA--Notice of Funding Availability or announcement of funding published by the Department notifying the public of available funds for a particular Program with certain requirements.(44) Nonprofit Organization--An organization in which no part of its income is distributable to its members, directors or officers of the organization and has a current tax exemption classification status from the Internal Revenue Service in accordance with the Internal Revenue Code.(45) Office of Colonia Initiatives--A division of the Department authorized under Chapter 2306 of Tex. Gov't Code, which acts as a liaison to the colonias and manages some Programs in the colonias.(46) Parity Lien--A lien position whereby two or more lenders share a security interest of equal priority in the collateral.(47) Persons with Disabilities--Any person who has a physical or mental impairment that substantially limits one or more major life activities; or has a record of such an impairment; or is being regarded as having such impairment. Included in this meaning is the term handicap as defined in the Fair Housing Act, and disability as defined by other applicable federal or state law.(48) Principal Residence--The primary Single Family Housing Unit that a Household inhabits. May also be referred to as "primary residence."(49) Program--The specific fund source from which single family funds are applied for and used.(50) Program Income--Gross income received by the Administrator or Affiliate directly generated from the use of single family funds, including, but not limited to gross income received from matching contributions under the HOME Program.(51) Program Manual--A set of guidelines designed to be an implementation tool for a single family Program. A Program Manual is developed by the Department and amended or supplemented from time to time.(52) Program Rule--Chapters of Part 1 of this title which pertain to specific single family Program requirements.(53) Qualifying Income--The income used to calculate the Borrower's debt-to-income ratio and excludes the total of any income not received consistently for the past 12 months from the date of Application including, but not limited to, income from a full or part time job that lacks a stable job history, potential bonuses, commissions, and child support. Income received for less than 12 months such as retirement annuity or court ordered payments will be considered only if it is expected to continue at least 24 months in the foreseeable future.(54) Reservation--Funds set-aside for a Household submitted through the Department's Reservation System.(55) Reservation System--The Department's online tracking system that allows Administrators to reserve funds for a specific Household.(56) Resolution--Formal action by a corporate board of directors or other corporate body authorizing a particular act, transaction, or appointment. Resolutions must be in writing and state the specific action that was approved and adopted, the date the action was approved and adopted, and the signature of person or persons authorized to sign resolutions. Resolutions must be approved and adopted in accordance with the corporate bylaws of the issuing organization.(57) Reverse Mortgage--A Home Equity Conversion Mortgage insured by the FHA.(58) Self-Help--Housing Programs that allow low-income families to build or rehabilitate their Single Family Housing Units through their own labor or volunteers.(59) Service-Area--The geographical area where an Administrator conducts Activities under a Contract.(60) Single Family Housing Unit--A residential dwelling designed and built for a Household to occupy as its primary residence where single family Program funds are used for rental, acquisition, construction, reconstruction or rehabilitation Activities of an attached or detached housing unit, including Manufactured Housing Units after installation. May be referred to as a single family "home," "housing," "property," "structure," or "unit."(61) State Median Family Income (SMI)--The median income for the state adjusted for household size and published annually by the U.S. Department of Housing and Urban Development (HUD).(62) TAC--Texas Administrative Code.(63) Texas Housing Trust Fund (Texas HTF)--Funding source for state-funded Programs authorized under Chapter 2306 of Tex. Gov't Code.(64) TMCS--Texas Minimum Construction Standards.</content><note type="source"><p>Source Note: The provisions of this §20.3 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.4"><num value="20.4">§20.4</num><heading>Eligible Single Family Activities</heading><content>(a) Availability of funding for and specific Program requirements related to the Activities described in subsection (b)(1) - (7) of this section are defined in each Program's Rules.(b) Activity Types for eligible single family housing Activities include the following, as allowed by the Program Rule or NOFA:(1) Rehabilitation or new construction of Single Family Housing Units;(2) Reconstruction of an existing Single Family Housing Unit on the same site;(3) Replacement of existing owner-occupied housing with a new MHU;(4) Acquisition of Single Family Housing Units, including acquisition with rehabilitation and accessibility modifications;(5) Refinance of an existing Mortgage or Contract for Deed mortgage;(6) Tenant-based rental assistance; and(7) Any other single family Activity as determined by the Department.</content><note type="source"><p>Source Note: The provisions of this §20.4 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.5"><num value="20.5">§20.5</num><heading>Funding Notices</heading><content>(a) The Department will make funds available for eligible Administrators for single family activities through NOFAs, requests for qualifications (RFQs), request for proposals (RFPs), or other methods describing submission and eligibility guidelines and requirements.(b) Funds may be allocated through Contract awards by the Department or by Department authority to submit Reservations.(c) Funds may be subject to regional allocation in accordance with Chapter 2306 of the Tex. Gov't Code.(d) Eligible Applicants must comply with the provisions of the Application materials and funding notice and are responsible for the accuracy and timely submission of all Applications and timely correction of all deficiencies.</content><note type="source"><p>Source Note: The provisions of this §20.5 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.6"><num value="20.6">§20.6</num><heading>Administrator Applicant Eligibility</heading><content>(a) Eligible Applicants seeking to administer a single family Program are limited to entities described in the Program Rule and/or NOFA; and(1) Shall be in good standing with the Department, Texas Secretary of State, Texas Comptroller of Public Accounts and HUD, as applicable.(2) Shall comply with all applicable state and federal rules, statutes, or regulations including those administrative requirements in Chapters 1 and 2 of this title (relating to Administration and Enforcement).(3) Must provide Resolutions in accordance with the applicable Program Rule.(b) The actions described in the following paragraphs (1) - (3) of this subsection may cause an Applicant and any Applications they have submitted to administer a Single Family Program to be ineligible:(1) Applicant did not satisfy all eligibility and/or threshold requirements described in the applicable Program Rule and NOFA;(2) Applicant is debarred by HUD or the Department; or(3) Applicant is currently noncompliant or has a history of noncompliance with any Department Program. Each Applicant will be reviewed by the Executive Award and Review Advisory Committee (EARAC) for its compliance history by the Department, as provided in §1.302 (relating to Previous Participation Reviews for Department Program Awards Not Covered by §1.301 of this Subchapter) and §1.303 (relating to Executive Award and Review Advisory Committee (EARAC)) of this title. An Application submitted by an Applicant found to be in noncompliance or otherwise violating the rules of the Department may be recommended with conditions or not recommended for funding by EARAC.(c) The Department reserves the right to adjust the amount awarded based on the Application's feasibility, underwriting analysis, the availability of funds, or other similar factors as deemed appropriate by the Department.(d) The Department may decline to fund any Application to administer a Single Family Program if the proposed Activities do not, in the Department's sole determination, represent a prudent use of the Department's funds. The Department is not obligated to proceed with any action pertaining to any Applications received, and may decide it is in the Department's best interest to refrain from pursuing any selection process. The Department reserves the right to negotiate individual components of any Application.(e) If an Applicant/Administrator is originating or servicing a Mortgage Loan, the Applicant/Administrator must possess all licenses required under state or federal law for taking the Application of and/or servicing a residential mortgage loan and must be in good standing with respect thereto, unless Applicant/Administrator is specifically exempted from such licensure pursuant to the applicable state and federal laws and regulations regarding residential mortgage loans.</content><note type="source"><p>Source Note: The provisions of this §20.6 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.7"><num value="20.7">§20.7</num><heading>Single Family Housing Unit Eligibility Requirements</heading><content>(a) A Single Family Housing Unit must be located in the State of Texas.(b) Real property taxes assessed on an owner-occupied Single Family Housing Unit must be current prior to the date of Mortgage Loan closing or effective date of the grant agreement. Delinquent property taxes will result in disapproval of the Activity unless one or more of the following conditions are satisfied:(1) Household must be satisfactorily participating in an approved installment agreement in accordance with Texas Tax Code §33.02 with the taxing authority, and must be current for at least three consecutive months prior to the date of Application;(2) Household must have qualified for an approved tax deferral plan agreement in accordance with Texas Tax Code §§33.06 or 33.065; or(3) Household must have entered into an installment agreement under Texas Tax Code §§31.031 or 31.032, have made at least one payment under the agreement, and be current on the installment plan.(c) A Single Family Housing Unit must not be encumbered with any liens which impair the good and marketable title as of the date of the Mortgage Loan closing or effective date of the grant agreement.(d) Prior to any Department assistance, the owner must be current on any existing Mortgage Loans or home equity loans.(e) Housing that is built through new construction or reconstruction must meet the requirements of Texas Gov't Code §2306.514 (relating to accessibility), 10 TAC Chapter 21 (relating to Energy Efficiency), and applicable building codes. Plans submitted for housing under new construction or reconstruction must be prepared or certified by an architect or engineer licensed by the state of Texas.</content><note type="source"><p>Source Note: The provisions of this §20.7 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.8"><num value="20.8">§20.8</num><heading>Fair Housing, Waitlist Policy, Affirmative Marketing and Procedures, Housing Counseling, Denials, Notice to Applicants, Reasonable Accommodations, and Limited English Proficiency</heading><content>(a) Fair Housing. In addition to Chapter 1, Subchapter B of this title (relating to Accessibility and Reasonable Accommodations), an Administrator must comply with all applicable state and federal rules, statutes, or regulations, involving accessibility including the Fair Housing Act, Section 504 of the Rehabilitation Act of 1973, Title II of the Americans with Disabilities Act, and the Architectural Barriers Act as well as state and local building codes that contain accessibility requirements; where local, state, or federal rules are more stringent, the most stringent rules shall apply. Administrators receiving Federal or state funds must comply with the Age Discrimination Act of 1975.(b) Preferences. Administrators of the Amy Young Barrier Removal Program may have a preference prioritizing Households to prevent displacement from permanent housing, or to foster returning to permanent housing related to inaccessible features of the unit.(c) Waitlist Policy. An Administrator receiving Federal funds must have a Waitlist Policy. The Waitlist Policy must be submitted to the Department each time the Administrator applies for a new contract or a new type of activity. The Administrator may submit a previously approved Waitlist Policy if no changes need to be made. The Waitlist Policy must be submitted at a minimum of every three years if the Administrator continues to accept new Applications. An Administrator receiving Federal funds must submit a Waitlist Policy with an Affirmative Fair Housing Marketing Plan as described in subsection (d) of this section, relating to Affirmative Marketing and Procedures.(1) A Waitlist Policy must include any Department approved preferences used in selecting Applicants from the list. An Administrator that has defined preferences in its written waitlist procedures or tenant selection plans, as applicable, will employ preferences first and select Applicants from the waiting list that meet the defined preference, still using the neutral random selection process. An Administrator of a federally funded Program may only request to establish preferences that are included in Department planning documents, specifically the One Year Action Plan or Consolidated Plan, or as otherwise allowed for CDBG funded Activities.(2) An Administrator must accept Applications from possible eligible Applicants for a minimum of a 21 calendar day period. A first-come, first-served basis may not be implemented during initial selection. At the close of the minimum 21 calendar day Application acceptance period, an Administrator must select Applications through a neutral random selection process that the Administrator described in its written policies and procedures. After the Administrator has allowed for the minimum 21 calendar day period to accept Applications and has used a neutral random selection process to assist Households, the Administrator may accept Applications on a first-come, first-served basis if funds remain in the current contract or Activity type. The Director of Programs, or designee, may approve an exemption from the 21 calendar day period and the neutral random selection process for Administrators of HOME disaster set-aside Tenant Based Rental Assistance, as necessary to respond to the disaster.(d) Affirmative Marketing and Procedures. An Administrator receiving Federal funds must have an Affirmative Fair Housing Marketing Plan (AFHMP) and satisfy the requirements of this subsection. The AFHMP must be submitted to the Department each time the Administrator applies for a new contract or a new type of activity, and reflect marketing activities specific to the activity type. The Administrator may submit a previously approved AFHMP if no changes need to be made. The plan must be submitted at least one time in any three-year period if the Administrator continues to accept new Applications.(1) Administrators must use the AFHMP form on the Department's website, HUD Form 935.2B, or create an equivalent AFHMP that includes:(A) Identification of the population "least likely to apply" for the Administrator's Program(s) without special outreach efforts. Administrators may use the Department's single family affirmative marketing tool to determine populations "least likely to apply." If Administrators use another method to determine the populations "least likely to apply" the AFHMP must provide a detailed explanation of the methodology used. Persons with Disabilities must always be included as a population least likely to apply.(B) Identification of the methods of outreach that will be used to attract persons identified as least likely to apply. Outreach methods must include identification of a minimum of three organizations with whom the Administrator plans to conduct outreach, and whose membership or clientele consists primarily of protected class members in the groups least likely to apply. If the Administrator is unable to locate three such groups, the reason must be documented in the file.(C) Identification of the methods to be used for collection of data and periodic evaluation to determine the success of the outreach efforts. If efforts have been unsuccessful, the Administrator's AFHMP should be revised to include new or improved outreach efforts.(D) Description of the fair housing trainings required for Administrator staff, including delivery method, training provider and frequency. For programs involved in homebuyer transactions, training must include requirements of the Fair Housing Act relating to financing and advertising, expected real estate broker conduct, as well as redlining and zoning for all programs, and discriminatory appraisal practices.(E) A description of applicable housing counseling programs and educational materials that will be offered to Applicants. An Administrator offering any TDHCA Mortgage Loan must require that Households receive housing counseling prior to the date of the Mortgage Loan closing. Housing counseling may take place in-person or by telephone. Counseling may be provided online only if it is customized to the individual Household. Counseling must address pre- and/or post-purchase topics, as applicable to the Borrower's needs. A certificate of completion of counseling must be dated not more than 12 months prior to the date of submission of Mortgage Loan Application. Housing counseling must be provided by HUD-certified counselors working for agencies participating in HUD's Housing Counseling Program.(2) Applicability.(A) Affirmative marketing is required as long as an Administrator of federal funds is accepting Applications or until all dwelling units are sold in the case of single family homeownership programs.(B) An Administrator that currently has an existing list of Applicants and is not accepting new Applications is not required to affirmatively market until preparing to accept new Applications, but must develop a plan as described in this subsection.(C) An Administrator providing assistance in more than one Service Area must provide a separate plan for each market area in which the housing assistance will be provided.(D) Administrators must include the Equal Housing Opportunity logo and slogan on any commercial and other media used in marketing outreach.(E) Copies of all outreach and media ads must be kept and made available to the Department upon request.(e) Mobility Counseling. An Administrator offering homeownership or rental assistance that allows the Household to relocate from their current residence must provide the Household access to mobility counseling. For homeownership, mobility counseling may be included in housing counseling and education trainings, and must cover the criteria noted in paragraphs (1) - (3) of this subsection.(1) Mobility counseling must, at a minimum, include easily understandable information that the Household can use in determining areas of opportunity within a Service Area, which must at minimum include the following: which areas have lower poverty rates, average income information of different areas, school ratings, crime statistics, available area services, public transit, and other items the Administrator deems appropriate in helping the Household make informed choices when identifying housing.(2) Mobility counseling may be offered online or in-person, and must be customized for the Household.(3) An Administrator must collect signed certifications from Applicants acknowledging they have received mobility counseling.(f) Denials. In the case of any Applicant's denial from a program, a letter providing the specific reason for the denial must be provided to the Applicant within fourteen calendar days of the denial. Administrators must keep a record of all denied Applicants including the basis for denial. Such records must be retained for the record retention period described by the Agreement or other sources.(g) Notice to Applicants. Administrator must provide Applicants with eligibility criteria, which shall include the procedures for requesting a reasonable accommodation to the Administrator's rules, policies, practices, and services, including but not limited to, as it relates to the Application process.(h) A copy of all Reasonable Accommodation requests and the Administrator's compliant responses to such requests, in accordance with §1.204 of this title (relating to Reasonable Accommodations), must be kept as stated in §1.409 of this title (relating to Records Retention).(i) Provisions Related to Limited English Proficiency.(1) Administrator must have a Language Access Plan that ensures persons with Limited English Proficiency (LEP) have meaningful access and an equal opportunity to participate in services, activities, programs, and other benefits.(2) Materials that are critical for ensuring meaningful access to an Administrator's major activities and programs, including but not limited to Applications, mortgage loan Applications, consent forms and notices of rights, should be translated for any population considered least likely to apply that meets the threshold requirements of Safe Harbor LEP provisions as provided by HUD and published on the Department's website. Materials considered critical for ensuring meaningful access should be outlined in the Administrator's Language Access Plan.(3) The Administrator is required to translate Vital Documents under Safe Harbor guidelines, they must include in their Language Access Plan how such translation services will be provided (e.g., whether the Administrator will use voluntary or contracted qualified translation services, telephonic services, or will identify bilingual staff that will be available to assist Applicants in completing vital documents and/or accessing vital services). If the Administrator plans to use bilingual staff in its translation services, contact information for bilingual staff members must be provided.(4) The Language Access Plan must be submitted to the Department upon request and be available for review during monitoring visits. HUD and the Department of Justice have issued requirements to ensure meaningful and appropriate access to programs for LEP individuals.(5) Administrators must offer reasonable accommodations information and Fair Housing rights information in both English and Spanish, and other languages as required by the inclusion of "least likely to apply" groups to reach populations identified as least likely to apply.(j) The Waitlist Policy and AFHMP, any documentation supporting the plans, and any changes made to the plans, must be kept in accordance with recordkeeping requirements for the specific Program, and in accordance with 10 TAC §1.409 (relating to Record Retention).</content><note type="source"><p>Source Note: The provisions of this §20.8 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.9"><num value="20.9">§20.9</num><heading>Inspection Requirements for Construction Activities</heading><content>(a) The inspection requirements in this section are applicable to all construction activities, except for the Amy Young Barrier Removal Program, to the extent funded with Texas HTF.(b) Interim inspections of construction progress are required for a Draw Request.(c) Final inspections are required for all single family construction Activities. The inspection must document that the Activity is complete; meets all applicable codes, requirements, zoning ordinances; and has no known deficiencies related to health and safety standards. A copy of the final inspection report must be provided to the Department and to the Household.(d) New construction requirements.(1) A Certificate of Occupancy shall be issued prior to final payment for construction, as applicable. In instances where the local jurisdiction does not issue a Certificate of Occupancy for the Activity undertaken, the Administrator must provide to the Department documentation evidencing that the Single Family Housing Unit complies with subsection (c) of this section.(2) Applicant must demonstrate compliance with Tex. Gov't Code §2306.514, "Construction Requirements for Single Family Affordable Housing," and applicable Program Rules.(e) Reconstruction requirements.(1) The initial inspection must identify substandard conditions listed in TMCS along with any other health or safety concerns, unless the unit has been condemned or in the case of a HOME and CSHC Activity, the unit to be reconstructed is an MHU.(A) A copy of the initial inspection report must be provided to the Department and to the Household as applicable. The initial inspection may be waived if the local building official certifies that the extent of the subject property's substandard conditions is beyond repair, or the property has been condemned.(B) Substandard conditions identified in the initial inspection report must provide adequate detail to evidence the need for reconstruction.(2) A Certificate of Occupancy shall be issued prior to final payment for construction, as applicable. In instances where the local jurisdiction does not issue a Certificate of Occupancy for the Activity undertaken, the Administrator must provide to the Department documentation evidencing that the Single Family Housing Unit complies with subsection (c) of this section.(3) Applicant must demonstrate compliance with Tex. Gov't Code §2306.514, "Construction Requirements for Single Family Affordable Housing," and applicable Program Rules.(f) Rehabilitation requirements.(1) Single Family Housing Units that have been condemned by the Municipality, County, or the State are not eligible for rehabilitation.(2) The initial inspection must identify all substandard conditions listed in TMCS, along with any other health and safety concerns(A) A copy of the initial inspection report must be provided to the Department and to the Household.(B) All substandard conditions identified in the initial inspection report shall be addressed in the work write-up and cost-estimate.(3) Final inspections must document that all substandard and health and safety issues identified in the initial inspection have been corrected. All deficient items noted on the final inspection report must be corrected prior to approval of the final Draw Request.(4) Administrator shall meet the applicable requirements of the TMCS. Exceptions to specific provisions of TMCS may be granted in accordance with the TMCS exception request process.(5) Correction of cosmetic issues, such as paint, wall texture, etc., will not be required if acceptable to the Program as outlined in the Program Rule, or if utilizing a Self-Help Construction Program.(g) Inspector Requirements.(1) Inspectors selected by the Administrator to verify compliance with this chapter must be certified by the Administrator to have sufficient professional certifications, relevant education or experience in a field directly related to home inspection, which may include but is not limited to installing, servicing, repairing or maintaining the structural, mechanical, plumbing and electrical systems found in Single Family Housing Units.(2) Inspectors shall utilize Department-approved inspection forms, checklists, and standards when conducting inspections.(h) The Department reserves the right to reject any inspection report if, in its sole and reasonable determination, the report does not accurately represent the property conditions or if the inspector does not meet Program requirements. All related construction costs in a rejected inspection report may be disallowed until the deficiencies are adequately cured.</content><note type="source"><p>Source Note: The provisions of this §20.9 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.10"><num value="20.10">§20.10</num><heading>Survey Requirements</heading><content>(a) The Amy Young Barrier Removal Program is excluded from the survey requirements, to the extent funded with the Texas HTF.(b) When Program funds are used for acquisition or construction, an Improvement Survey showing the (2) The Activity is reconstruction, new construction, or acquisition of an existing improvements on the site at the time of Activity submission is required. An updated improvement survey may be required at construction completion at the discretion of the Department.(c) If allowed by the Program Rules or NOFA, existing surveys for acquisition only activities may be used if the owner certifies that no changes were made to the footprint of any building or structure, or to any improvement on the Single Family Housing Unit, and the title company accepts the certification and survey.(d) The Department reserves the right to determine the survey requirements on a per Activity basis if additional survey requirements would, at the sole discretion of the Department, benefit the Activity.</content><note type="source"><p>Source Note: The provisions of this §20.10 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.11"><num value="20.11">§20.11</num><heading>Insurance and Title Requirements</heading><content>(a) The Amy Young Barrier Removal Program is excluded from this section, to the extent funded with the Texas HTF.(b) Title Insurance Requirements. A "Mortgagee's Title Insurance Policy" is required for all Department Mortgage Loans, exclusive of subordinate lien Mortgage Loans for down payment assistance and closing costs.(1) The title insurance policy shall be issued by an entity that is licensed and in good standing with the Texas Department of Insurance.(2) The policy must be in the amount of the Mortgage Loan. The mortgagee named shall be: "Texas Department of Housing and Community Affairs."(3) The policy must include survey deletion coverage.(c) Title Reports.(1) Title reports are acceptable only for grants.(2) Title reports must disclose the current ownership, easements, restrictions, and liens relating to the property, and include a search for judgements, mortgages or liens, affidavits, deed restrictions, building setback and easements, and any other factors which may impair the good and marketable title to the property.(3) The preliminary title report may not be older than six months from the date of submission of the Activity to the Department.(d) Builder's Risk. Builder's Risk (non-reporting form only) is required when the Department provides construction funds for a Single Family Housing Unit. At the end of the construction period, the binder must be endorsed to remove the "pending disbursements" clause.(e) Hazard Insurance. If Department funds are provided in an amount that exceeds $20,000, then:(1) The Department requires property insurance for fire and extended coverage;(2) Homeowner's policies or package policies that provide property and liability coverage are acceptable. All risk policies are acceptable;(3) The amount of hazard insurance coverage should be no less than 100% of the current insurable value of improvements as of the date of Mortgage Loan closing or effective date of the grant agreement; and(4) The Department must be named as a loss payee and mortgagee on the hazard insurance policy for any Activity receiving a Mortgage Loan from the Department.(f) Flood Insurance. Flood insurance must be maintained for all structures located in special flood hazard areas as determined by the U.S. Federal Emergency Management Agency (FEMA).(1) A Household may elect to obtain flood insurance even though flood insurance is not required. However, the Household may not be coerced or required to obtain flood insurance unless it is required in accordance with this section.(2) Evidence of insurance, as required in this chapter, must be obtained prior to Mortgage Loan funding for acquisition only projects. For activities involving construction, evidence of hazard insurance must be submitted prior to Mortgage Loan funding, and evidence of flood insurance, if required, must be provided prior to payment of retainage. A one year insurance policy must be paid. For Amortizing Mortgage Loans, a minimum of two months of reserves must be collected at the closing of the Mortgage Loan. The Department must be named as the loss payee on the policy.</content><note type="source"><p>Source Note: The provisions of this §20.11 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.12"><num value="20.12">§20.12</num><heading>Loan, Lien and Mortgage Requirements for Activities</heading><content>(a) The fees to be paid by the Department or Borrower upfront or through the closing must be reasonable for the service rendered, in accordance with the typical fees paid in the market place for such activities and:(1) Fees charged by third party Mortgage lenders are limited to the greater of 2% of the Mortgage Loan amount or $3,500, including but not limited to origination, loan application, and/or underwriting fees, and(2) Fees paid to other parties that are supported by an invoice and/or reflected on the Closing Disclosure will not be included in the limit in paragraph (1) of this subsection.(b) A Loan made by a third-party lender in conjunction with a Mortgage Loan from a federal source must be fixed-rate and may not include pre-payment penalties, balloon payments, negative amortization, or interest-only periods.(c) Mortgage Loan Underwriting Requirements. The requirements in this subsection shall apply to all non-forgivable amortizing Mortgage Loans.(1) Debt-to-Income Ratio. The Household's total Debt-to-Income Ratio shall not exceed 45% of Qualifying Income (unless otherwise allowed or dictated by a participating lender providing a fixed rate Mortgage Loan that is insured or guaranteed by the federal government or a conventional Mortgage Loan that adheres to the guidelines set by Fannie Mae and Freddie Mac.) A potential Borrower's spouse who does not apply for the Mortgage Loan will be required to execute the information disclosure form(s) and the deed of trust as a non-purchasing spouse. The non-purchasing spouse will not be required to execute the note. For credit underwriting purposes all debts and obligations of the primary potential Borrower(s) and the non-purchasing spouse will be considered in the potential Borrower's total Debt-to-Income Ratio.(2) Credit Qualifications.(A) The Department may utilize credit reports submitted by the Administrator that are not more than 90 days old as part of the Mortgage Loan Application or may obtain tri-merge credit reports on all potential Borrowers submitted to the Department for approval at the time of Mortgage Loan Application. In addition to the initial credit report, the Department may, at its discretion, obtain one or more additional credit reports before Mortgage Loan closing to ensure the potential Borrower still meets Program requirements. Acceptable outstanding debt means that all accounts are paid as agreed and are current.(B) Unacceptable Credit. Applicants meeting one or more of the following criteria will not be qualified to receive a single family Mortgage Program Loan from the Department:(i) A credit history reflecting payments on any open consumer, retail and/or installment account (e.g., auto loans, signature loans, payday loans, credit cards or any other type of retail and/or installment loan, with the exception of a medical account) which have been delinquent for more than 30 days on two or more occasions within the last 12 months and must be current for the six months immediately preceding the date of the Mortgage Loan Application;(ii) A foreclosure or deed-in-lieu of foreclosure or a potential Borrower in default on a mortgage at the time of the short sale any of which had occurred or been completed within the last 24 months prior to the date of Mortgage Loan Application;(iii) An outstanding Internal Revenue Service tax lien or any other outstanding tax liens where the potential Borrower has not entered into a satisfactory repayment arrangement and been current for at least 12 months prior to the date of Mortgage Loan Application;(iv) A court-created or court-affirmed obligation or judgment caused by nonpayment that is outstanding at the date of Mortgage Loan Application or any time prior to closing of the Mortgage Loan;(v) Any account (with the exception of a medical account that is delinquent or has been placed for collection) that has been placed for collection, profit and loss, charged off, or repossession within the last 24 months prior to the date of Mortgage Loan Application;(vi) Any reported delinquency on any government debt at the date of Mortgage Loan Application;(vii) A bankruptcy that has been filed within the past 24 months prior to the date of the Mortgage Loan; or(viii) Any reported child support payments in arrears unless the potential Borrower has evidence of having met satisfactory payment arrangements for at least 12 months prior to the date of the Mortgage Loan.(C) Mitigation for Unacceptable Credit. The following exceptions will be considered as mitigation to the unacceptable credit criteria in subparagraph (B) of this paragraph.(i) The potential Borrower is a Domestic Farm Laborer and receives a substantial portion of his/her income from the production or handling of agriculture or aquacultural products, and has demonstrated the ability and willingness to meet debt obligations as determined by the Department.(ii) The potential Borrower provides documentation to evidence that the outstanding delinquency or unpaid account has been paid or settled or the potential Borrower has entered into a satisfactory repayment arrangement or debt management plan and been current for at least 12 consecutive months prior to the date of Mortgage Loan.(iii) The potential Borrower submits to the Department a written explanation of the cause for the previous delinquency, which has since been brought current and is acceptable to the Executive Director or his or her designee.(iv) Any and all outstanding judgments must be released prior to closing of Mortgaged Loan.(v) If a potential Borrower is currently participating in a debt management plan, and the trustee or assignee provides a letter to the Department stating they are aware and agree with the potential borrower applying for a Mortgage Loan. If a potential Borrower filed a bankruptcy, the bankruptcy must have been discharged or dismissed more than 12 months prior to the date of Mortgage Loan Application and the potential Borrower has re-established good credit with at least one existing or new active consumer account or credit account that is in good standing with no delinquencies for at least 12 months prior to the date of Mortgage Loan Application.(vi) If a Chapter 13 Bankruptcy was filed, a potential Borrower must have satisfactorily made 12 consecutive payments and obtain court trustee's written approval to enter into Mortgage Loan.(D) Liabilities.(i) The potential Borrower's liabilities include all revolving charge accounts, real estate loans, alimony, child support, installment loans, and all other debts of a continuing nature with more than 10 monthly payments remaining. Debts for which the potential borrower is a co-signer will be included in the total monthly obligations. For payments with 10 or fewer monthly payments remaining, there shall be no late payments within the past 12 months or the debt will be included into the Debt-to-Income Ratio calculation. Payments on installment debts which are paid in full prior to the date of closing are not included for qualification purposes. Payments on all revolving debts, including credit cards, payday loans, lines of credit, unsecured loans, and installment loans that have been opened within three months of closing a prior account with the same lender will be included in the Debt-to-Income Ratio calculation, even if the potential Borrower intends to pay off the accounts, unless the account is paid in full and closed. Any revolving account with an outstanding balance but no specific minimum payment reflected on the credit report and no monthly statement showing the required monthly payment will include a payment amount calculated as the greater of 5% of the outstanding balance or $10.(ii) if a potential Borrower provides written evidence that a debt will be deferred at least 12 months from the date of closing, the debt will not be included in the Debt-to-Income Ratio calculation. Payments on any type of loan that have been deferred or have not yet commenced, including student loans and accounts in forbearance, will be calculated using .5% of the outstanding balance or monthly payment reported on the potential Borrower's credit report, whichever is less. Other types of loans with deferred payment will be calculated using the monthly payment shown on the potential Borrower's credit report. If the credit report does not include a monthly payment for the loan, the monthly payment shown in the loan agreement or payment statement will be utilized.(E) Equal Credit Opportunity Act. The Department and/or the Administrator on behalf of the Department will comply with all federal and state laws and regulations relating to the extension of credit, including the Equal Credit Opportunity Act (ECOA) (15 U.S.C. 1691 et seq.) and its implementing regulation at 12 CFR Part 1002 (Regulation B) when qualifying potential Borrower(s) to receive a single family Mortgage Loan from the Department.(d) The Department reserves the right to deny assistance in the event that the senior lien conditions are not to the satisfaction of the Department, as outlined in the Program Rules.(e) Lien Position Requirements.(1) A Mortgage Loan made by the Department shall be secured by a first lien on the real property if the Department's Mortgage Loan is the largest Mortgage Loan secured by the real property; or(2) The Department may accept a Parity Lien position if the original principal amount of the leveraged Mortgage Loan is equal to or greater than the Department's Mortgage Loan; or(3) The Department may accept a subordinate lien position if the original principal amount of the leveraged Mortgage Loan is at least 55% of the combined repayable or amortized loans; however, liens related to other subsidized funds provided in the form of grants and non-amortizing Mortgage Loans, such as deferred payment or Forgivable Loans, must be subordinate to the Department's payable Mortgage Loan.(f) Loan Terms. All Mortgage Loan terms must meet all of the following criteria:(1) May not exceed a term of 30 years;(2) May not be for a term of less than five years; and(3) Interest rate may be as low as 0% as provided in the Program Rules.(g) Loan Assumption. A Mortgage Loan may be assumable if the Department determines the potential Borrower assuming the Mortgage Loan is eligible according to the underwriting criteria of this section and complies with all Program requirements in effect at the time of the assumption.(h) Cash Assets. An Applicant with unrestricted cash assets in excess of $25,000 must use such excess funds towards the acquisition of the property in lieu of loan proceeds. Unrestricted cash assets for this purpose are Net Family Assets defined in 24 CFR §5.603.(i) Appraisals.(1) An appraisal is required by the Department on each property that is part of an acquisition Activity, except for down payment assistance only, prior to closing to determine the current market value.(2) The appraisal must conform to the Uniform Standards of Professional Appraisal Practice (USPAP) as adopted by the Appraisal Standards Board of the Appraisal Foundation.(3) The Appraiser must have an active and current license by the Texas Appraisal Licensing and Certification Board.(j) Combined Loan to Value. The Combined Loan to Value ratio of the property may not exceed 100% of the cost to acquire the property. The lien amounts of Forgivable Loans shall be included when determining the Combined Loan to Value ratio. The cost to acquire the property may exceed the appraised value only for an amount not to exceed the closing costs but in no case may result in cash back to the Borrower or exceed the limits under subsection (a) of this section.(k) Escrow Accounts.(1) An escrow account for real estate taxes, hazard and flood insurance premiums, and other related costs must be established if:(A) The Department holds a first lien Mortgage Loan which is due and payable on a monthly basis to the Department; or(B) The Department holds a subordinate Mortgage Loan and the first lien lender does not require an escrow account.(2) If an escrow account held by the Department is required under one of the provisions described in this subsection, then the following provisions described in subparagraphs (A) - (G) of this paragraph are applicable:(A) The Borrower must contribute monthly payments to cover the anticipated costs, as calculated by the Department, of real estate taxes, hazard and flood insurance premiums, and other related costs as applicable;(B) Escrow reserves shall be calculated based on land and completed improvement values;(C) The Department may require up to two months of payment reserves for hazard and/or flood insurance, and property taxes to be collected at the time of closing to establish the required amounts in the escrow account;(D) In addition, the Department may also require that the property taxes be prorated at the time of closing and those funds be deposited with the Department;(E) The Borrower will be required to deposit monthly funds to an escrow account managed by the Mortgage Loan servicer for payment of the taxes and insurance on the property. This will ensure that funds are available to pay for the cost of real estate taxes, insurance premiums, and other assessments when they come due;(F) These funds are included in the Borrower's monthly loan payment to the Department or to the Mortgage Loan servicer; and(G) The Department will establish and administer the escrow accounts in accordance with the Real Estate Settlement and Procedures Act of 1974 (RESPA) under 12 U.S.C. §2601 and its implementing regulations at 12 CFR Part 1024 (Regulation X), as applicable.(l) Requirements for Originating Mortgage Loans for the Department.(1) Any person or organization originating Mortgage Loans for the Department must be properly licensed and registered as a residential mortgage loan originator in accordance with Chapters 157 and 180 of the Texas Finance Code and its implementing regulations at Chapter 81, Part 4 of Title 7 of the TAC, unless exempt from licensure or registration pursuant to the applicable state and federal laws and regulations regarding residential mortgage loans.(A) The Department reserves the right to reject any Mortgage Loan Application originated by an Administrator or individual that is not properly licensed or registered.(B) The Department will not reimburse any expenses related to a Mortgage Loan Application received from an Administrator or individual that is not properly licensed or registered.(2) The Department will not allow disbursement of any portion of the Department's Mortgage Loan for acquisition until seller delivers to the Borrower a fully executed deed to the property. After execution of the deed, the deed must be recorded in the records of the county where the property is located.(3) The first monthly mortgage payment upon closing of the Mortgage Loan with monthly scheduled payments will be due one full month after the last day of the month in which the Mortgage Loan closed.(m) Principal Residence. Loans are only permitted for potential Borrowers who will occupy the property as their Principal Residence. The property must be occupied by the potential Borrower within the later of 60 days after Mortgage Loan closing or construction completion, whichever occurs last. It must remain the Household's Principal Residence as defined in the Mortgage Loan documents or in the case of Forgivable Loans, until the forgiveness period has concluded in accordance with the Mortgage documents.(n) Life-of-Loan Flood Certifications will be required to monitor for FEMA flood map revisions and community participation status changes for the term of the Mortgage Loan.(o) Requirements for Subordinating to a Refinanced Loan. The Department may consent to the refinancing of the Household's superior third-party lender mortgage and execute a subordination agreement when the following conditions are met:(1) Borrower is not refinancing into an adjustable rate mortgage;(2) Combined loan balances do not exceed 100% of appraised value;(3) There is no increase in principal or interest payments, with the exception made for Borrowers refinancing from a 30-year term to a shorter loan term;(4) The Borrower will not receive any proceeds from the transaction unless it is for overpayment of Borrower's costs;(5) All lienholders have consented to the refinancing; and(6) In the case of Reverse Mortgages insured by the federal government (e.g. Home Equity Conversion Mortgage insured by the Federal Housing Administration), all other requirements are met.</content><note type="source"><p>Source Note: The provisions of this §20.12 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.13"><num value="20.13">§20.13</num><heading>Amendments to Written Agreements and Contracts</heading><content>(a) The Department, acting by and through its Executive Director or his/her designee, may authorize, execute, and deliver amendments to any written Agreement or Contract that is not a Household commitment contract, provided that the requirements of this section are met unless otherwise indicated in the Program Rules.(1) Time extensions. The Executive Director or his/her designee may grant up to a cumulative 12 months extension to the end date of any Contract unless otherwise indicated in the Program Rules. Any additional time extension beyond a cumulative 12 months granted by the Executive Director shall include a statement by the Executive Director identifying the unusual, non-foreseeable or extenuating circumstances justifying the extension. If more than a cumulative 12 months of extension is requested and the Department determines there are no unusual, non-foreseeable, or extenuating circumstances, it will be presented to the Board for approval, approval with revisions, or denial of the requested extension.(2) Award or Contract Reductions. The Department may decrease an award for any good cause including but not limited to the request of the Administrator, insufficient eligible costs to support the award, or failure to meet deadlines or benchmarks.(3) Changes in Households Served. Reductions in Contractual deliverables and the number of Households to be served shall require an amendment to the Contract. If such amendment is not approved, the Applicant will have the right to appeal in accordance with §1.7 of this title (relating to Appeals Process).(4) Increases in Award and Contract Amounts.(A) Requests for increases in funding will be evaluated by the Department on a first-come, first-served basis to assess the capacity to manage additional funding, the demonstrated need for additional funding and the ability to expend the increase in funding within the Contract Term.(B) The considerations to approve an increase in funding shall include, at a minimum, fund availability, and Administrator's ability to continue to meet existing deadlines, benchmarks, and reporting requirements.(C) Increases in funds may come from Program funds, Deobligated funds, or Program Income.(D) Qualifying requests will be recommended to the Executive Director or his/her designee for approval.(E) The Board must approve requests for increases in Program funds in excess of 25% of the original Contract amount.(5) The Division Director may approve Contract budget amendments that move unexpended funds from one eligible cost category to another if the amendment would not have impacted the award of funds(6) The Division Director may approve other amendments to a Contract or an Agreement, including amendments to the Administrator's Service Area, benchmarks, or selection of Activities administered under a Contract or an Agreement, provided that the amendment would not have negatively impacted the priority of Board approved Applications.(b) The Department may terminate a Contract in whole or in part if the Administrator does not achieve performance benchmarks as outlined in the Program Rule and/or Contract, or for any other reason in the Department's reasonable discretion.(c) In all instances noted in this section, where an expected Mortgage Loan transaction is involved, Mortgage Loan documents will be modified accordingly at the expense of the Administrator/borrower.</content><note type="source"><p>Source Note: The provisions of this §20.13 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.14"><num value="20.14">§20.14</num><heading>Compliance and Monitoring</heading><content>(a) The Department will perform monitoring of single family Program Contracts and Activities in order to ensure that applicable requirements of federal laws and regulations, and state laws and rules have been met, and to provide Administrators with clear communication regarding the condition and operation of these Contracts and Activities so they understand clearly, with a documented record, how they are performing in meeting obligations.(1) The physical condition of assisted properties and Administrator's documented compliance with contractual and Program requirements may be subject to monitoring.(2) The Department may contract with an independent third party to monitor an Activity for compliance with any conditions imposed by the Department in connection with the award of any Department funds, and appropriate state and federal laws.(b) If an Administrator has Contracts for more than one single family Program, or other programs through the Department or the State, the Department may, at its discretion, coordinate monitoring of those programs with monitoring of single family Contracts under this chapter.(c) In general, Administrators will be scheduled for monitoring based on federal or state monitoring requirements, or a risk assessment process including but not limited to: the number of Contracts administered by the Administrator, the amount of funds awarded and expended, the length of time since the last monitoring, Findings identified during previous monitoring, issues identified through the submission or lack of submission of a Single Audit, complaints, and reports of fraud, waste and/or abuse. The risk assessment will also be used to determine which Administrators will have an onsite review, and which may have a desk review.(d) The Department will provide an Administrator with written notice of any upcoming onsite or desk monitoring review, and such notice will be given to the Administrator by email to the Administrator's chief executive officer at the email address most recently provided to the Department by the Administrator. In general, a 30 calendar day notice will be provided. However, if a credible complaint of fraud is received, the Department reserves the right to conduct unannounced monitoring visits, or provide a shorter notice period. If the Department receives a complaint under §1.2 of this title (relating to Department Complaint System to the Department), it will follow the procedures outlined therein instead of this section. It is the responsibility of the Administrator to maintain current contact information with the Department for the organization, key staff members, and governing body in accordance with §1.22 of this title (relating to Providing Contact Information to the Department).(e) Upon request, an Administrator must make available to the Department all books and records that the Department determines are reasonably relevant to the scope of the Department's review, along with access to assisted properties.(f) Post Monitoring Procedures. After the review, a written monitoring report will be prepared for the Administrator describing the monitoring assessment and any corrective actions, if applicable. The monitoring report will be emailed to the Administrator. Issues of concern over which there is uncertainty or ambiguity may be discussed by the Department with the staff of cognizant agencies overseeing federal funding.(g) Administrator Response. If there are any Findings and/or Concerns of noncompliance requiring corrective action, the Administrator will be provided a 30 day corrective action period, which may be extended for good cause. In order to receive an extension, the Administrator must submit a written request to the Compliance Division within the corrective action period, stating the basis for good cause that the Administrator believes justifies the extension. In general, the Department will approve or deny the extension request within three business days. Failure to timely respond to a corrective action notice and/or failure to correct all Findings will be taken into consideration if the Administrator applies for additional funding and may result in suspension of the Contract, referral to the Enforcement Committee, or other action under this title.(h) Monitoring Close Out. After completion of the monitoring review, a close out letter will be issued to the Administrator. If the Administrator supplies evidence establishing continual compliance that negates the Finding of noncompliance, the issue of noncompliance will be rescinded. If the Administrator's response satisfies all Findings and Concerns noted in the monitoring letter, the issue of noncompliance will be noted as resolved. In some circumstances, the Administrator may be unable to secure documentation to resolve a Finding. In those instances, if there are mitigating circumstances, the Department may note the Finding is not resolved but may close the issue with no further action required. If the Administrator's response does not correct all Findings noted, the close out letter will identify the documentation that must be submitted to correct the issue. Results of monitoring Findings may be reported to the EARAC for consideration relating to Previous Participation.(i) Options for Review. If, following the submission of corrective action documentation, Compliance staff continues to find the Administrator in noncompliance, and the Administrator disagrees, the Administrator may request or initiate review of the matter using the following options, where applicable:(1) If the issue is related to a federal program requirement or prohibition, Administrators may contact an applicable federal program officer for guidance, or request that the Department contact applicable federal program officer for guidance without identifying the Administrator.(2) If the issue is related to a provision of the Contract or a requirement of the TAC, or a provision of TxGMS, the Administrator may submit an appeal to the Executive Director consistent with §1.7 of this title (relating to Appeals Process).(3) An Administrator may request Alternative Dispute Resolution (ADR). An Administrator must send a proposal to the Department's Dispute Resolution Coordinator to initiate ADR pursuant to §1.17 of this title (relating to Alternative Dispute Resolution).(j) If an Administrator does not respond to a monitoring letter or fails to provide acceptable evidence of timely compliance after notification of an issue, the matter will be reported to the Department's Enforcement Committee for consideration of administrative penalties, full or partial cost reimbursement, or suspension.(k) An Administrator must provide timely response to corrective action requirements imposed by other agencies. Administrator records may be reviewed during the course of monitoring or audit of the Department by HUD, the Office of the Inspector General, the State Auditor's Office, or others. If a Finding or Concern is identified during the course of a monitoring or audit by another agency, the Administrator is required to provide timely action and response within the conditions imposed by that agency's notice.</content><note type="source"><p>Source Note: The provisions of this §20.14 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c20/sc/s20.15"><num value="20.15">§20.15</num><heading>Appeals</heading><content>Appeal of Department staff decisions or actions will follow requirements in Program Rules and Chapter 1 of this title (relating to Administration).</content><note type="source"><p>Source Note: The provisions of this §20.15 adopted to be effective March 28, 2024, 49 TexReg 1899.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c21"><num value="21">CHAPTER 21</num><heading>MINIMUM ENERGY EFFICIENCY REQUIREMENTS FOR SINGLE FAMILY CONSTRUCTION ACTIVITIES</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c21/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p1/c21/sc/s21.1"><num value="21.1">§21.1</num><heading>Purpose</heading><content>(a) Tex. Gov't Code, §2306.187 requires that the Department develop and adopt rules relating to Minimum Energy Efficiency requirements for new construction, reconstruction, and rehabilitation activities in Single Family Programs.(b) This chapter describes the Minimum Energy Efficiency Requirements for all single family construction activities, which includes the Department's HOME Investments Partnership Program (HOME), Texas Housing Trust Fund (Texas HTF), Neighborhood Stabilization Program (NSP), Office of Colonia Initiatives (OCI) Programs, and other single family Programs as developed by the Department.</content><note type="source"><p>Source Note: The provisions of this §21.1 adopted to be effective January 2, 2022, 46 TexReg 9005.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c21/sc/s21.2"><num value="21.2">§21.2</num><heading>General Requirements</heading><content>Unless otherwise noted, this chapter only applies to single family Programs. Program rules may impose additional requirements related to any provision of this chapter. Elements of local residential building codes that require a greater degree of energy efficiency than this chapter, in part or in whole, shall also be followed.</content><note type="source"><p>Source Note: The provisions of this §21.2 adopted to be effective January 2, 2022, 46 TexReg 9005.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c21/sc/s21.3"><num value="21.3">§21.3</num><heading>Definitions</heading><content>(a) Any capitalized terms that are defined in Tex. Gov't Code Chapter 2306, and Chapter 1 of this title (relating to Administration), Chapter 2 of this title (relating to Enforcement), Chapter 20 of this title (relating to Single Family Programs Umbrella Rule), or other applicable Department Program Rule, have, when capitalized, the meanings ascribed to them therein.(b) The following words and terms, when used in this chapter, shall have the following meanings, unless the context or the Notice of Funding Availability (NOFA) indicates otherwise.(1) ENERGY STAR Certified Appliances, Equipment, and Products--Labeled appliances, equipment, and products that are independently certified to save energy without sacrificing features or functionality, meeting the U.S. EPA's specifications for energy efficiency and performance.(2) ENERGY STAR Certified Home--A new construction home that has earned the ENERGY STAR label and has undergone a process of inspections, testing, and verification to meet requirements set forth by the U.S. EPA.(3) ENERGY STAR Certified Manufactured Housing Unit--A manufactured home that has been designed, produced, and installed by the home manufacturer to meet ENERGY STAR requirements for energy efficiency.(4) RESNET--Residential Energy Services Network. RESNET is an independent, nonprofit organization established in 1995 to help homeowners reduce the cost of their utility bills by making their homes more energy efficient. RESNET-certified Home Energy Systems Raters are required to inspect, test, and verify homes for ENERGY STAR certification.(5) U.S. EPA--United States Environmental Protection Agency.(6) WaterSense Labeled Fixtures--Labeled products that are backed by independent, third-party testing and certification, meeting the U.S. EPA's specifications for water efficiency and performance.</content><note type="source"><p>Source Note: The provisions of this §21.3 adopted to be effective January 2, 2022, 46 TexReg 9005.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c21/sc/s21.4"><num value="21.4">§21.4</num><heading>New Construction and Reconstruction Activities</heading><content>(a) Single family residential dwellings, as defined in §388.002 of the Texas Health and Safety Code, that are newly constructed or reconstructed shall comply with the more stringent of §388 of the Health and Safety Code (Texas Building Energy Performance Standards), or the standards adopted by the local jurisdiction.(b) Effective September 1, 2016, the Texas State Energy Conservation Office adopted the 2015 International Residential Code (Chapter 11) as the state-mandated energy code for all residential construction, which includes one- and two-family residences of three stories or less above grade.(c) For federally-funded single family residential dwellings for which funds are committed on or after November 28, 2024, and that are covered under FR-6271-N-03 (inclusive of the HOME program, but excluding CDBG) housing must comply with the 2021 International Energy Conservation Code (IECC); or must comply with a federally approved alternative compliance pathway.</content><note type="source"><p>Source Note: The provisions of this §21.4 adopted to be effective January 2, 2022, 46 TexReg 9005; amended to be effective January 2, 2025, 49 TexReg 10626.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c21/sc/s21.5"><num value="21.5">§21.5</num><heading>Manufactured Housing Unit Activities</heading><content>(a) All Manufactured Housing Units installed as replacement for sub-standard housing shall be ENERGY STAR certified; or(b) In cases where the type of product is not ENERGY STAR, or if ENERGY STAR products are not reasonably available due to supply shortages or cost limitations, Administrators may select the highest rated product available, so long as the product delivers at least 10% energy savings in comparison to products meeting the minimum code.</content><note type="source"><p>Source Note: The provisions of this §21.5 adopted to be effective January 2, 2022, 46 TexReg 9005.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c21/sc/s21.6"><num value="21.6">§21.6</num><heading>Rehabilitation Activities</heading><content>(a) All Rehabilitation activities shall comply with this chapter.(b) Certifications of compliance with this chapter shall be conducted by the Administrator or a code or other qualified inspector for release of final payment from the Department as outlined in the Program Rule. Inspectors selected by the Administrator to verify compliance with this chapter must be certified by the Administrator to have sufficient professional certifications, relevant education, or experience in a field directly related to home inspection, which may include, but is not limited to, installing, servicing, repairing or maintaining the structural, mechanical, plumbing, and electrical systems found in Single Family Housing Units.(c) If the proposed scope of work or the awarded construction contract for the Rehabilitation of an existing single family residential unit includes an item described in paragraphs (1) - (10) of this subsection, the specific requirement so noted in paragraphs (1) - (10) of this subsection shall apply:(1) Replacement or installation of central heating and cooling equipment and appliances shall be installed in accordance with the manufacturer's instructions and the requirements of Chapter 14 of the 2015 International Residential Code;(2) Replacement or installation of duct systems serving heating, cooling, and ventilation equipment shall be installed in accordance with the provisions of Chapter 16 of the 2015 International Residential Code;(3) If central heating and cooling equipment is replaced or installed, attic insulation shall be installed or increased according to Chapter 11, Figure N1102.1.2 of the 2015 International Residential Code, including insulation covering the top plates of exterior walls. Eave baffles and access hatches shall be installed as specified in Chapter 11, Sections N1102.2.3- N1102.2.4 of the 2015 International Residential Code;(4) If ductless heating and cooling systems (also known as mini-split, multi-split, or variable refrigerant flow (VRF) heat pump systems) are replaced or installed, they shall be ENERGY STAR certified;(5) If exhaust fans are replaced or installed in bathrooms or kitchens, they shall be ENERGY STAR certified and installed in accordance with Chapter 15 of the 2015 International Residential Code;(6) If windows are installed, they shall be ENERGY STAR certified windows, meeting the U-factor and Solar Heat Gain Coefficient for the climate zone of the dwelling as identified in Chapter 11, Table N1102.1.2 of the 2015 International Residential Code;(7) If doors are installed, they shall be ENERGY STAR certified doors;(8) Electrical fixtures, equipment, and appliances that are replaced or installed, where applicable, shall be ENERGY STAR certified products;(9) Plumbing fixtures that are replaced or installed, where applicable, shall be WaterSense labeled products; and(10) Domestic water heaters, storage and tankless, when replaced or installed, shall meet the Federal Energy Conservation Standards required by 10 CFR §430.32, as they may be revised from time to time.</content><note type="source"><p>Source Note: The provisions of this §21.6 adopted to be effective January 2, 2022, 46 TexReg 9005.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c23"><num value="23">CHAPTER 23</num><heading>SINGLE FAMILY HOME PROGRAM</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c23/scA"><num value="A">SUBCHAPTER A</num><heading>GENERAL GUIDANCE</heading><section identifier="/us/state/tx/tac/t10/p1/c23/scA/s23.1"><num value="23.1">§23.1</num><heading>Applicability and Purpose</heading><content>(a) Applicability. This Chapter governs the use and administration of all HOME single family Activities funds provided to the Texas Department of Housing and Community Affairs (the "Department") by the U.S. Department of Housing and Urban Development (HUD) pursuant to Title II of the Cranston-Gonzalez National Affordable Housing Act of 1990 as amended (42 U.S.C. §§12701 - 12839) and HUD regulations at 24 CFR Part 92, as amended. Chapter 20 of this Title relating to Single Family Programs Umbrella Rule and Chapters 1 and 2 of this Title will apply to all single family activities, including Single Family Development. Unless otherwise noted herein or required by law, all provisions of this Chapter apply to any Application for a Contract award, or any Reservation submitted or received on or after the date of adoption of this Chapter. Existing Agreements or current pending Applications may be amended in writing at the request of the Administrator or Applicant, and with Department approval, so that all provisions of this Chapter apply to the Agreement or Application. Amendments proposing only partial adoption of this Chapter are prohibited. No amendment adopting this Chapter shall be granted if, in the discretion of the Department, any of the provisions of this Chapter conflict with the Notice of Funding Availability (NOFA) under which the existing Agreement was awarded or Application was submitted. The Governing Board may waive rules subject to this Chapter for good cause to meet the purpose of the HOME Program as described further in subsection (b) of this section, provided the waiver does not conflict with the federal regulations governing the use of these funds, or impact federally imposed obligation or expenditure deadlines governing the HOME Program.(b) Purpose. The State's HOME Program is designed to:(1) focus on the areas with the greatest housing need described in the State Consolidated Plan;(2) provide funds for home ownership and rental housing through acquisition, Reconstruction, New Construction, and Tenant-Based Rental Assistance;(3) promote partnerships among all levels of government and the private sector, including nonprofit and for-profit organizations; and(4) provide low, very low, and extremely low-income families with affordable, decent, safe, and sanitary housing.</content><note type="source"><p>Source Note: The provisions of this §23.1 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scA/s23.2"><num value="23.2">§23.2</num><heading>Definitions</heading><content>These words when used in this Chapter shall have the following meanings, unless the context clearly indicates otherwise. Additional definitions may be found in Tex. Gov't Code Chapter 2306 or Chapter 20 of this Title relating to Single Family Programs Umbrella Rule.(1) Area Median Family Income--The income limits published annually by the U.S. Department of Housing and Urban Development (HUD) for the Housing Choice Voucher Program that is used by the Department to determine the eligibility of Applicants for the HOME Program, also referred to as AMFI. All Households assisted with HOME funds must have income at or below 80% AMFI. (2) CFR--Code of Federal Regulations.(3) Commitment of Funds--Occurs when the funds are awarded to an Administrator for a specific Activity approved by the Department and set up in the Integrated Disbursement and Information System (IDIS) established by HUD.(4) Construction Completion Date--The Construction Completion Date shall be the date of completion of all improvements as stated on the affidavit of completion, provided that the affidavit is filed within ten days of the stated date of completion or the date of filing as outlined in Tex. Prop. Code §53.106.(5) Date of Assistance--The date that assistance is provided to the Household. For Tenant-Based Rental Assistance, this is the start date of the rental subsidy. For Homeowner Reconstruction Assistance and Contract for Deed, this is the date of the loan closing or date of execution of grant agreement. For Single Family Development and Homebuyer Assistance with New Construction, this is the date that the Household executes the purchase agreement.(6) Development Site--The area, or if scattered site, areas on which the development is proposed to be located.(7) Direct Activity Costs--The total costs of hard construction costs, demolition costs, aerobic septic systems, refinancing costs (as applicable), acquisition and closing costs for acquisition of real property, and rental and utility subsidy and deposits.(8) HOME Final Rule--The regulations with amendments promulgated at 24 CFR, Part 92 as published by HUD for the HOME Investment Partnerships Program at 42 U.S.C. §§12701 - 12839.(9) Homeownership--Ownership in fee simple title in a one to four unit dwelling or in a condominium unit, or equivalent form of ownership approved by the Department. Homeownership is not right to possession under a contract for deed, installment contract, or land contract that has not converted into a deed for title ownership.(10) Identity of Interest--An acquisition will be considered to be an Identity of Interest transaction when the purchaser has any financial interest whatsoever in the seller or lender or is subject to common control, or any family relationship by virtue of blood, marriage, or adoption exists between the purchaser and the seller or lender.(11) Match--Funds contributed to an Activity that meet the requirements of 24 CFR §§92.218 - 92.220. Match contributed to an Activity does not include mortgage revenue bonds, non-HOME-assisted projects, and cannot include any other sources of Department funding unless otherwise approved in writing by the Department.(12) New Construction--Construction of a new Single Family Housing Unit which involves:(A) Construction on a lot that was not the site of a Single Family Housing Unit on the date HOME assistance was requested;(B) Construction of a new Single Family Housing Unit following acquisition; or(C) Construction of a site-built Single Family Housing Unit that replaces a manufactured housing unit.(13) Person--Any individual, partnership, corporation, association, unit of government, community action agency, or public or private organization of any character.(14) Persons with Special Needs--Individuals or categories of individuals determined by the Department to have unmet housing needs as provided in the Consolidated Plan and the State's One Year Action Plan.(15) Predevelopment Costs--Costs consistent with 24 CFR §92.212 related to a specific eligible Activity including:(A) Predevelopment housing project costs that the Department determines to be customary and reasonable, including but not limited to consulting fees, costs of preliminary financial applications, legal fees, architectural fees, engineering fees, engagement of a development team, and site control;(B) Pre-construction housing project costs that the Department determines to be customary and reasonable, including but not limited to, the costs of obtaining firm construction loan commitments, architectural plans and specifications, zoning approvals, engineering studies and legal fees; and(C) Predevelopment costs do not include general operational or administrative costs.(16) Principal--A Person, or Persons, that will exercise Control over a partnership, corporation, limited liability company, trust, or any other private entity. In the case of:(A) Partnerships: Principals include all General Partners, special limited partners, and Principals with ownership interest;(B) Corporations: Principals include any officer authorized by the board of directors to act on behalf of the corporation, including the president, vice president, secretary, treasurer, and all other executive officers, and each stock holder having a ten percent or more interest in the corporation; and(C) Limited liability companies: Principals include all managing members, members having a ten percent or more interest in the limited liability company or any officer authorized to act on behalf of the limited liability company.(17) Reconstruction--Has the same meaning as the defined term in 24 CFR §92.2.(18) Reservation System Participant (RSP)--Administrator who has executed a written Agreement with the Department that allows for participation in the Reservation System.(19) Service Area--The city(ies), county(ies) and/or place(s) identified in the Application and/or Agreement that the Administrator will serve.(20) Third Party--A Person who is not:(A) An Applicant, Administrator, Borrower, General Partner, Developer, Development Owner, or General Contractor; or(B) An Affiliate, Affiliated Party to the Applicant, Administrator, Borrower, General Partner, Developer, Development Owner, or General Contractor; or(C) A Person receiving any portion of the administration, contractor fee, or developer fee.</content><note type="source"><p>Source Note: The provisions of this §23.2 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c23/scB"><num value="B">SUBCHAPTER B</num><heading>AVAILABILITY OF FUNDS, APPLICATION REQUIREMENTS, REVIEW AND AWARD PROCEDURES, GENERAL ADMINISTRATIVE REQUIREMENTS, AND RESALE AND RECAPTURE OF FUNDS</heading><section identifier="/us/state/tx/tac/t10/p1/c23/scB/s23.20"><num value="23.20">§23.20</num><heading>Availability of Funds and Regional Allocation Formula</heading><content>Funds made available through an open Application cycle and subject to regional allocation formula shall be made available to each region and subregion for a time period to be specified in the applicable NOFA, after which the funds remaining shall collapse and be made available statewide.</content><note type="source"><p>Source Note: The provisions of this §23.20 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scB/s23.21"><num value="23.21">§23.21</num><heading>Application Forms and Materials and Deadlines</heading><content>(a) The Department will produce an Application to satisfy the Department's requirements to be qualified to administer HOME activities. The Application will be available on the Department's website.(b) The Department must receive all Applications by the deadline specified in the NOFA.</content><note type="source"><p>Source Note: The provisions of this §23.21 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scB/s23.22"><num value="23.22">§23.22</num><heading>Application Review Process</heading><content>(a) Contract award review process for open Application cycles. An Application received by the Department in response to an open Application cycle NOFA will be assigned a "Received Date." An Application will be prioritized for review based on its "Received Date." Application acceptance dates may be staggered under an open Application cycle to prioritize Applications which propose to serve areas identified in Tex. Gov't Code §2306.127 as priority for certain communities. An Application with outstanding administrative deficiencies under this section, may be suspended from further review until all administrative deficiencies have been cured or addressed to the Department's satisfaction. Applications that have completed the review process may be presented to the Board for approval with priority over Applications that continue to have administrative deficiencies at the time Board materials are prepared, regardless of "Received Date." If all funds available under a NOFA are awarded, all remaining Applicants will be notified and the remaining Applications will not be processed.(b) Reservation System Participant review process. An Application for a Reservation System Participant (RSP) Agreement shall be reviewed and if approved under Chapter 1, Subchapter C of this Title, as amended or superseded, concerning Previous Participation Review of Department Awards, and not denied under this section, will be drafted and processed in the order in which it was accepted to be executed and made effective.(c) Administrative deficiency review process. The administrative deficiency process allows staff to request that an Applicant provide clarification, correction, or non-material missing information to resolve inconsistencies in the original Application or to assist staff in evaluating the Application. Staff will request such information via a deficiency notice. Staff will send the deficiency notice via an email or if an email address is not provided in the Application, by facsimile to the Applicant. Responses must be submitted electronically to the Department. A review of the Applicant's response may reveal that issues initially identified as an administrative deficiency are actually determined to be beyond the scope of an administrative deficiency process, meaning that they are in fact matters of a material nature not susceptible to being resolved. Department staff may, in good faith, provide an Applicant confirmation that an administrative deficiency response has been received or that such response is satisfactory. Communication from staff that the response was satisfactory does not establish any entitlement to points, eligibility status, or to any presumption of having fulfilled any requirements. Final determination regarding the sufficiency of documentation submitted to cure an administrative deficiency as well as the distinction between material and non-material missing information are reserved for the Executive Director or authorized designee, and Board, as applicable.(d) An Applicant may not change or supplement any part of an Application in any manner after submission to the Department, and may not add any set-asides, except in response to a direct request from the Department to remedy an administrative deficiency or by amendment of an Application after the Board approval of a HOME award. An administrative deficiency may not be cured if it would, in the Department's determination, substantially change an Application, or if the Applicant provides any new unrequested information to cure the deficiency.(e) The time period for responding to a deficiency notice commences on the first day following the deficiency notice date. If an administrative deficiency is not resolved to the satisfaction of the Department by 5:00 p.m., central time, on the 14th day following the date of the deficiency notice, the application may be terminated. The Department may accept a corrected Board Resolution submitted after the deficiency deadline on the condition that the corrected Board Resolution resolves the deficiencies to the satisfaction of the Department, but the Board Resolution must be received and deemed satisfactory by the Department before the RSP Agreement or Contract start date. Applicants that have been terminated may reapply.</content><note type="source"><p>Source Note: The provisions of this §23.22 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scB/s23.23"><num value="23.23">§23.23</num><heading>General Threshold Criteria</heading><content>General Threshold. All Applicants and Applications to administer a HOME Program award from the Department must submit or comply with the following:(1) An Applicant certification of compliance with state rules promulgated by the Department, and federal laws, rules and guidance governing the HOME Program as provided in the Application.(2) A Resolution from the Applicant's direct governing body which includes:(A) Authorization of the submission of the Application specifying the NOFA under which funds are requested for Contract award Applications;(B) Commitment and amount of cash reserves, if applicable, for use during the Contract or RSP Agreement term;(C) Source of funds for Match obligation and Match amount to be contributed as a percentage of Direct Activity Costs, if applicable;(D) Title of the person authorized to represent the organization and who also has signature authority to execute a Contract and grant agreement or loan documents, as applicable, unless otherwise stated; and(E) Date that the resolution was passed by the governing body, which must be within six months preceding Application submission for Reservation System Participation Agreement Applications, and no earlier than the date of the Department's Governing Board approval of the NOFA for Contract award Applications.(3) An Applicant must be registered in the System for Award Management (SAM) and have a current Unique Entity Identification (UEID) number.(4) Service Area. Applicants must include the Service Area proposed for the Contract or RSP Agreement for all Activity types. Administrators must state whether the Service Area is limited to only certain cities within any county in the proposed Service Area. (A) The Service Area for TBRA must include the entire rural or urban area of a county as identified in the Application, excluding Participating Jurisdictions. However, Service Areas must include Participating Jurisdictions as applicable if the Agreement includes access to the Persons with Disabilities set-aside; or(B) The Service Area may be limited to the boundaries of the jurisdiction of the Applicant if the Applicant for TBRA is a unit of local government.(5) Match. The Department shall use population figures from the most recently available U.S. Census Bureau's American Community Survey (ACS) as of the date of submission of the Application to determine the applicable Match for cities with a population of less than 5,000 persons. The Department shall use the population figures from the most recent Population Estimates from the U.S. Census Bureau's QuickFacts for all counties and for cities with a population that exceeds 5,000 persons. The Department may incentivize or provide preference to Applicants committing to provide additional Match above the requirement of this paragraph. Such incentives may be established as selection criteria in the NOFA.(A) Excluding Applications under the disaster relief and persons with disabilities set-asides, Match shall be required for Homeowner Reconstruction Assistance (HRA) and Homebuyer Assistance with New Construction (HANC) based on the tiers described in clauses (i) and (ii) of this subparagraph:(i) Zero percent of Direct Activity Costs, exclusive of Match, is required as Match when:(I) the Service Area includes the entire unincorporated area of a county and where the population of Administrator's Service Area is less than or equal to 20,000 persons; or(II) When the Service Area does not include the entire unincorporated area of a county and the population of the Administrator's Service Area is less than or equal to 3,000 persons.(ii) One percent of Direct Activity Costs, exclusive of Match, is required as Match for every 1,000 in population to a maximum of 25 percent.(B) Applicants that charge customary fees related to the construction of single-family housing must waive all fees that otherwise apply to any HOME Activity. These fee waivers must be reported as Match, regardless of whether Match is otherwise required based on population and activity type. Applicants must submit their schedule of fees related to construction, if applicable, with their Application for a Contract or Reservation System Participation Agreement.(6) Cash Reserve Threshold Requirements. Documentation, as described in subparagraphs (A) and (B) of this paragraph, must be submitted at the time of Application that demonstrates that the Applicant has at least $80,000 in cash reserves if the Application includes construction Activities, and at least $30,000 in cash reserves if the Application is for Tenant-Based Rental Assistance only. The cash reserves may be utilized to facilitate administration of the program, and to ensure the capacity to cover costs prior to reimbursement or costs determined to be ineligible for reimbursement. The amount of the cash reserve commitment must be included in the Applicant's resolution. To meet this requirement, Applicants must submit:(A) financial statements indicating adequate local unrestricted cash or cash equivalents to utilize as cash reserves and a letter from the Applicant's bank(s) or financial institution(s) indicating that current account balances are sufficient; or(B) evidence of an available line of credit or equivalent tool in an amount equal to or exceeding the requirement in this paragraph. (7) A NOFA may include incentives or otherwise require architectural plans to incorporate "green building" elements.(8) Applications proposing development using the Community Housing Development Organization (CHDO) set-aside must submit an Application for CHDO certification. Applicants must meet the requirement for CHDO certification as defined in §13.2 of this Title (relating to the Multifamily Direct Loan Rule).(9) Other Threshold and/or Selection criteria for this Activity may be outlined in the NOFA.(10) An Application must be substantially complete when received by the Department. An Application will be terminated if an entire tab of the Application is missing; has excessive omissions of documentation from the threshold or selection criteria or uniform Application documentation; or is so unclear, disjointed, or incomplete that a thorough review cannot reasonably be performed by the Department, as determined by the Department. Such Application will be terminated without being processed as an administrative deficiency. To the extent that a review was able to be performed, specific reasons for the Department's termination will be included in the notification sent to the Applicant but, because of the suspended review, may not include an all-inclusive list of deficiencies in the Application.</content><note type="source"><p>Source Note: The provisions of this §23.23 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scB/s23.24"><num value="23.24">§23.24</num><heading>Contract Benchmarks and Limitations</heading><content>(a) Contract Award Funding Limits. Limits on the total amount of a Contract award will be established in the NOFA.(b) Contract Award Terms. Homeowner Reconstruction Assistance awards will have a Contract term of not more than 21 months, exclusive of any applicable affordability period or loan term. Single Family Development awards will have a Contract term of not more than 24 months, exclusive of any applicable affordability period or loan term. Tenant-Based Rental Assistance awards will have a Contract term of not more than 36 months.(c) Contract Award Benchmarks. Administrators must have attained environmental clearance for the contractually required number of Households served within six months of the effective date of the Contract. Contract Administrators must submit to the Department complete Activity setup information for the Commitment of Funds of all contractually required Households in accordance with the requirements herein within nine months from the effective date of the Contract. All remaining funds will be deobligated and reallocated in accordance with Chapter 1 of this Title relating to Reallocation of Financial Assistance.(d) Voluntary deobligation. The Administrator may fully deobligate funds in the form of a written request signed by the signatory, or successor thereto, of the Contract. The Administrator may partially deobligate funds under a Contract in the form of a written request from the signatory if the letter also deobligates the associated number of targeted Households, funds for administrative costs, and Match and the partial deobligation would not have impacted the award of the Contract. Voluntary deobligation of a Contract does not limit an Administrator's ability to participate in an open application cycle.(e) The Department may request information regarding the performance or status under a Contract prior to a Contract benchmark or at various times during the term of a Contract. Administrator must respond within the time limit stated in the request. Prolonged or repeated failure to respond may result in suspension of funds and ultimately in termination of the Contract by the Department.(f) Pre-Contract Costs.(1) The Administrator may be reimbursed for eligible administrative and Activity soft costs incurred before the effective date of the Contract in accordance with 24 CFR §92.212 and at the sole discretion of the Department.(2) A Community Housing Development Organization may be reimbursed for Predevelopment Costs as defined in this Chapter for an Activity funded under Single Family Development.(3) In no event will the Department reimburse expenses incurred more than six months prior to Governing Board approval of the Administrator's award.(g) Amendments to Contract awards will be processed in accordance with Chapter 20 of this Title, relating to Single Family Programs Umbrella Rule.</content><note type="source"><p>Source Note: The provisions of this §23.24 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scB/s23.25"><num value="23.25">§23.25</num><heading>Reservation System Participant (RSP) Agreement</heading><content>(a) Terms of Agreement. The term of an RSP Agreement will not exceed 36 months. Execution of an RSP Agreement does not guarantee the availability of funds under a reservation system. Reservations submitted under an RSP agreement will be subject to the provisions of this Chapter in effect as of the date of submission by the Administrator. (b) Limits on Number of Reservations. Except for Activities submitted under the Disaster set-aside, RSP Administrators may have no more than five Reservations per county within the RSP's Service Area submitted to the Department for approval at any given time, except that Tenant-Based Rental Assistance Reservations submitted for approval under an RSP Agreement is limited to 30 at any given time.(c) Extremely Low-Income Households. Except for Households submitted under the Disaster set-aside, each RSP will be required to serve at least one extremely low-income Household out of every four Households submitted and approved for assistance. For purposes of this subsection, extremely low-income is defined as families that are either at or below 30 percent AMFI for the county in which they will reside or have an income that is lower than the statewide 30 percent income limit without adjustments to HUD limits.(d) Match. Administrators must meet the Match requirement per Activity approved for assistance. Match may not be transferred from one Activity to another Activity.(e) Completion of Construction. For Activities involving construction, construction must be complete within 12 months from the Commitment of Funds for the Activity, unless amended in accordance with subsection (g) of this section.(f) Household commitment contract term. The term of a Household commitment contract may not exceed 12 months, except that the Household commitment contract term for Tenant-Based Rental Assistance may not exceed 24 months. Household commitment contracts may commence after the end date of an RSP Agreement only in cases when the Administrator has submitted a Reservation on or before the termination date of the RSP Agreement.(g) Amendments to Household commitment contracts may be considered by the Department provided the approval does not conflict with the federal regulations governing use of these funds, or impact federally imposed obligation or expenditure deadlines.(1) The Executive Director's authorized designee may approve an amendment that extends the term of a Household commitment contract by not more than six months, except that the term of a Household commitment contract for Tenant-Based Rental Assistance may not be extended to exceed a total Household commitment contract term of 24 months.(2) The Executive Director's authorized designee may approve one or more amendments to a Household commitment contract to:(A) extend the Construction Completion Date by not more than six months;(B) extend the term of rental subsidy up to a total term of 24 months;(C) extend the draw period by not more than three months after the Construction Completion Date or termination of rental subsidy; or(D) to increase Activity funds within the limitations set forth in this Chapter.(3) The Executive Director may approve amendments to a Household commitment contract, except amendments to extend the contract term of a Household Commitment contract by more than 12 months.(h) Pre-agreement costs. The Administrator may be reimbursed for eligible administrative and Activity soft costs incurred before the effective date of the RSP Agreement in accordance with 24 CFR §92.212 and at the sole discretion of the Department. In no event will the Department reimburse expenses incurred more than six months prior to the effective date of the RSP Agreement.(i) Administrator must remain in good standing with the Department, the state of Texas, and HUD. If an Administrator is not in good standing, participation in the Reservation System will be suspended and may result in termination of the RSP Agreement.</content><note type="source"><p>Source Note: The provisions of this §23.25 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scB/s23.26"><num value="23.26">§23.26</num><heading>General Administrative Requirements</heading><content>Unless otherwise provided in this Chapter, the Administrator or Developer must comply with the requirements described in paragraphs (1) - (21) of this section, for the administration and use of HOME funds:(1) Complete training, as applicable. (2) Provide all applicable Department Housing Contract System access request information and documentation requirements.(3) Establish and maintain sufficient records at its regular place of business and make available for examination by the Department, HUD, the U.S. General Accounting Office, the U.S. Comptroller, the State Auditor's Office of Texas, the Comptroller of Public Accounts, or any of their duly authorized representatives, throughout the applicable record retention period.(4) For non-Single Family Development Contracts, develop and establish written procurement procedures that comply with federal, state, and local procurement requirements including:(A) Develop and comply with written procurement selection criteria and committees, including appointment of a procurement officer to manage any bid process;(B) Develop and comply with a written code of conduct governing employees, officers, or agents engaged in administering HOME funds;(C) Ensure consultant or any procured service provider does not participate in or direct the process of procurement for services. A consultant cannot assist in their own procurement before or after an award is made;(D) Ensure that procedures established for procurement of building construction contractors do not include requirements for the provision of general liability insurance coverage in an amount to exceed the value of the contract and do not give preference for contractors in specific geographic locations;(E) Ensure that building construction contractors are procured in accordance with State and Federal regulations for single family HOME Activities;(F) To the extent that a set of architectural plans are generated and used by an Administrator for more than one Single Family Housing Unit, the Department will reimburse only for the first time a set of architectural plans is used, unless any subsequent site specific fees are paid to a Third Party architect or licensed engineer for the reuse of the plans on that subsequent specific site, as demonstrated by a contract with the third-party;(G) Ensure that professional service providers (consultants) are procured using an open competitive procedure and are not procured based solely on the lowest priced bid; and(H) Ensure that any Request for Proposals or Invitation for Bid include:(i) an equal opportunity disclosure and a notice that bidders are subject to search for listing on the Excluded Parties List;(ii) bidders' protest rights and an outline of the procedures bidders must take to address procurement related disputes; (iii) a conflict of interest disclosure;(iv) a clear and accurate description of the technical requirements for the material, product, or service to be procured. The description must include complete, adequate, and realistic specifications; (v) for sealed bid procedures, disclose the date, time and location for public opening of bids and indicate a fixed-price contract;(vi) must not have a term of services greater than five years; and(vii) for competitive proposals, disclose the specific election/evaluation criteria.(5) In instances where a potential conflict of interest exists, follow procedures to submit required documentation to the Department sufficient to submit an exception request to HUD for any conflicts prohibited by 24 CFR §92.356. The request submitted to the Department must include a disclosure of the nature of the conflict, accompanied by an assurance that there has been public disclosure of the conflict by newspaper publication, a description of how the public disclosure was made, and an attorney's opinion that the conflict does not violate state or local law. No HOME funds will be committed to or reserved to assist a Household impacted by the conflict of interest regulations until HUD has granted an exception to the conflict of interest provisions.(6) Perform environmental clearance procedures, as required, before acquiring any Property or before performing any construction activities, including demolition, or before the occurrence of the loan closing, if applicable.(7) Develop and comply with written Applicant intake and selection criteria for program eligibility that promote and comply with Fair Housing requirements and the State's One Year Action Plan.(8) Complete Applicant intake and Applicant selection. Notify each Applicant Household in writing of either acceptance or denial of HOME assistance within 60 days following receipt of the intake application.(9) Determine the income eligibility of a Household using the "Annual Income" as defined at 24 CFR §5.609, by using the list of income included in HUD Handbook 4350.3 (or most recent version), and excluding from income those items listed in HUD's Updated List of Federally Mandated Exclusions from Income. The Single Family HOME Program will implement the applicable requirements of the Housing Opportunity Through Modernization Act (HOTMA) not later than January 1, 2026. (10) Complete an updated income eligibility determination of a Household if the date of certification is more than six months prior to the Date of Assistance.(11) For single family Activities involving construction, perform initial inspection in accordance with Chapter 20 of this Title (relating to Single Family Programs Umbrella Rule). Property inspections must include photographs of the front, back, and side elevations of the housing unit and at least one picture of each of the kitchen, family room, each bedroom and each bathroom. The inspection must be signed and dated by the inspector and the Administrator. The photographs submitted with the initial inspection should evidence the deficiencies noted on the initial inspection and must clearly show the entire property, including other buildings located on the property.(12) Submit a substantially complete request for the Commitment or Reservation of Funds, loan closing preparation, and for disbursements. Administrators must upload all required information and verification documentation in the Housing Contract System. Requests determined to be substantially incomplete will not be reviewed and may be disapproved by the Department. Expenses for which reimbursement is requested must be documented as incurred. If the Department identifies administrative deficiencies during review, the Department will allow a cure period of 14 calendar days beginning at the start of the first day following the date the Administrator or Developer is notified of the deficiency. If any administrative deficiencies remain after the cure period, the Department, in its sole discretion, may disapprove the request. Disapproved requests will not be considered sufficient to meet the performance benchmark and shall not constitute a Reservation of Funds.(13) Submit signed program documents timely as may be required for the completion of a Commitment or Reservation of Funds, and for closing preparation of the loan or grant documents. Department reserves the right to cancel or terminate Activities when program documents are not executed timely, in the Department's sole and reasonable discretion.(14) Not proceed or allow a contractor to proceed with construction, including demolition, on any Activity or development without first completing the required environmental clearance procedures, preconstruction conference and receiving notice to proceed, if applicable, and execution of grant agreement or loan closing with the Department, whichever is applicable.(15) Submit any Program Income received by the Administrator or Developer to the Department within 14 days of receipt; any fund remittance to the Department, including refunds, must include a written explanation of the return of funds, the Contract number, name of Administrator or Developer, Activity address and Activity number, and must be sent to the Department's accounting division.(16) Submit required documentation for project completion reports no later than 60 days after the completion of the Activity, unless this term is extended though amendment.(17) For Contract awards, submit certificate of Contract Completion within 14 days of the Department's request.(18) Submit to the Department reports or information regarding the operations related to HOME funds provided by the Department. (19) Submit evidence with the final draw for construction related activities that the builder has provided a one-year warranty specifying at a minimum that materials and equipment used by the contractor will be new and of good quality unless otherwise required, the work will be free from defects other than those inherent in the work as specified, and the work will conform to the requirements of the contract documents.(20) Provide the Household all warranty information for work performed by the builder and any materials purchased for which a manufacturer or installer's warranty is included in the price.(21) If required by state or federal law, place the appropriate bonding requirement in any contract or subcontract entered into by the Administrator or Developer in connection with a HOME award. Failure to include the bonding requirement in subcontracts may result in termination of the RSP Agreement.</content><note type="source"><p>Source Note: The provisions of this §23.26 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scB/s23.27"><num value="23.27">§23.27</num><heading>Project Cost Limitations</heading><content>(a) Direct Activity Costs for construction, exclusive of Match funds, are limited to the amounts described in this section; however, not more than once per year, the Board in its sole discretion, may increase or decrease by up to five percent of the limitation for Direct Activity Costs. Total Activity costs may not exceed HUD Subsidy Limits. Dollar amounts in a Household commitment contract are set at the time of Contract execution and may not be adjusted through this process. Current limit amounts under this section will be reflected on the Department's website.(b) Reconstruction and New Construction of site-built housing: the lesser of $150 per square foot of conditioned space or $175,000; or for Households of five or more Persons that require a four-bedroom unit, the lesser of $150 per square foot of conditioned space, or $200,000; and(c) Direct Activity Costs for acquisition and placement of a unit of Manufactured Housing, including demolition or removal of existing housing and exclusive of Match funds, is limited to $125,000. (d) Direct Activity Costs for conversion of a Contract for Deed, including closing costs paid from HOME funds, is limited to $40,000. (e) In addition to the Direct Activity Costs allowable under subsections (b) and (c) of this section, additional funds in the amount of $15,000 may be used to pay for each of the following, as applicable:(1) Necessary environmental mitigation as identified during the Environmental review process;(2) Installation of an aerobic septic system; and(3) Homeowner requests for accessibility features.(f) Activity soft costs eligible for reimbursement for Activities of the following types are limited to:(1) Acquisition or refinance in conjunction with New Construction of site-built housing or placement of an MHU: no more than $2,500 per housing unit; (2) Replacement with an MHU: no more than $10,000 per housing unit; (3) Reconstruction or New Construction of site-built housing: $15,000 per housing unit; and(4) Reasonable and necessary third-party costs incurred in connection with required housing counseling, appraisals, title reports or insurance, tax certificates, recording fees, surveys, and first year hazard and flood insurance.(g) Project Cost Limitations for Tenant-Based Rental Assistance Activities are limited as described in Subchapter E of this Chapter. (h) Projects Costs must not exceed the federal subsidy limit, unless waived by HUD. (i) Unless waived by HUD, the purchase price of acquired property and the post-improvement value of the unit may not exceed the limitations set forth in 24 CFR §92.254. Compliance with the purchase price limitation must be evidenced prior to loan closing with an as-built appraisal. (j) Administrative Cost Limitations. (1) Funds for administrative costs are limited to no more than five percent of the Direct Activity Costs, exclusive of Match funds, for HRA.(2) Funds for administrative costs are limited to no more than eight percent of the Direct Activity Costs, exclusive of Match funds, for CFD and HANC.(3) For TBRA, Administrators must select one method under which funds for administrative costs and Activity soft costs may be reimbursed prior to execution of an RSP agreement or at Application for an award of funds. All costs must be reasonable and customary for the Administrator's Service Area. Applicants and Administrators may choose from one of the following options, and in any case funds for Administrative costs may be increased by an additional one percent of Direct Activity Costs if Match is provided in an amount equal to five percent or more of Direct Activity Costs:(A) Funds for Administrative costs are limited to four percent of Direct Activity Costs, excluding Match funds, and Activity soft costs are limited to $1,200 per Household assisted. Activity soft costs may reimburse expenses for costs related to determining Household income eligibility, including recertification, and conducting Housing Quality Standards (HQS) inspections. All costs must be reasonable and customary for the Administrator's Service Area; or(B) Funds for Administrative costs are limited to ten percent of Direct Activity Costs, excluding Match funds, and Administrator may not be reimbursed for Activity soft costs.</content><note type="source"><p>Source Note: The provisions of this §23.27 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scB/s23.28"><num value="23.28">§23.28</num><heading>Design and Quality Requirements</heading><content>(a) Each Single Family Housing Unit constructed with HOME funds must meet the design and quality requirements as described in paragraphs (1)- (6) of this subsection, and plans must be certified by a licensed architect or engineer:(1) Current applicable International Residential Code, local codes, ordinances, and zoning ordinances in accordance with 24 CFR §92.251(a);(2) Requirements in Chapters 20 and 21 of this Title;(3) Units must Include the following amenities: Wired with RG-6 COAX or better and CAT3 phone cable or better to each bedroom and living room; Blinds or window coverings for all windows; Disposal and Energy-Star or equivalently rated dishwasher (must only be provided as an option to each Household); Oven/Range; Exhaust/vent fans (vented to the outside) in bathrooms; Energy-Star or equivalently rated lighting in all rooms, which may include LED bulbs. The living room and each bedroom must contain at least one ceiling lighting fixture and wiring must be capable of supporting ceiling fans; and Paved off-street parking for each unit to accommodate at least one mid-sized car and access to on-street parking for a second car;(4) Units must contain no less than two bedrooms. Each Single Family Housing Unit must contain complete physical facilities and fixtures for living, sleeping, eating, cooking, and sanitation;(5) Each bedroom must be no less than 100 square feet; have a length or width no less than 8 feet; be self-contained with a door; have at least one window that provides exterior access; and have at least one closet that is not less than two feet deep and three feet wide and high enough to contain at least five feet of hanging space; and(6) Units must be no less than 800 total net square feet for a two bedroom Single Family Housing Unit; no less than 1,000 total net square feet for a three bedroom and two bathroom Single Family Housing Unit; and no less than 1,200 total net square feet for a four bedroom and two bathroom Single Family Housing Unit.(7) An exception to paragraphs (2) - (6) may be requested by the Household and approved by the Division Director prior to submission of the Activity. A request for an exception must include the specific feature or design requirement for which the exception is requested, and must include justification for the exception. (b) Units selected by Households assisted under the Tenant-Based Rental Assistance Program must meet the applicable federal requirements for the HOME Program as of the date of initial occupancy and any subsequent inspection.</content><note type="source"><p>Source Note: The provisions of this §23.28 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scB/s23.29"><num value="23.29">§23.29</num><heading>Resale and Recapture Provisions</heading><content>(a) Recapture is the primary method the Department will use to recoup HOME funds under 24 CFR §92.254(a)(5)(ii).(b) To ensure continued affordability, the Department has established the recapture provisions described in paragraphs (1) - (4) of this subsection and further defined in 24 CFR §92.254(a)(5)(ii). (1) In the event that a federal affordability period is required and the assisted property is rented, leased, or no member of the Household has it as the Principal Residence, the entire HOME investment is subject to recapture. The Department will include any loan payments previously made when calculating the amount subject to recapture. Loan forgiveness is not the same thing as loan payments for purposes of this subsection.(2) In the event that a federal affordability period is required and the assisted property is sold, including through a short sale, deed in lieu of foreclosure, or foreclosure, prior to the end of the affordability period, the Department will recapture the available amount of net proceeds based on the requirements of 24 CFR §92.254, and as outlined in the State's One Year Action Plan.(3) The Household can sell the unit to any willing buyer at any price. In the event of sale to a qualified low-income purchaser of a HOME-assisted unit, the qualified low-income purchaser may assume the existing HOME loan and assume the recapture obligation entered into by the original buyer if no additional HOME assistance is provided to the low-income purchaser. In cases in which the subsequent homebuyer needs HOME assistance in excess of the balance of the original HOME loan, the HOME subsidy (the direct subsidy as described in 24 CFR §92.254) to the original homebuyer must be recaptured. A separate HOME subsidy must be provided to the new homebuyer, and a new affordability period must be established based on that assistance to the buyer.(4) If there are no net proceeds from the sale, no repayment will be required of the Household and the balance of the loan shall be forgiven as outlined in the State's applicable One Year Action Plan.(c) The Department has established the resale provisions described in paragraphs (1) - (7) of this subsection, only in the event that the Department must impose the resale provisions of 24 CFR §92.254(a)(i).(1) Resale is defined as the continuation of the affordability period upon the sale or transfer, rental or lease, refinancing, and no member of the Household is occupying the property as their Principal Residence.(2) In the event that a federal affordability period is required and the assisted property is rented or leased, or no member of the Household has it as the Principal Residence, the HOME investment must be repaid.(3) In the event that a federal affordability period is required and the assisted property is sold or transferred in lieu of foreclosure to a qualified low-income buyer at an affordable price, the HOME loan balance shall be transferred to the subsequent qualified buyer and the affordability period shall remain in force to the extent allowed by law.(4) The resale provisions shall remain in force from the date of loan closing until the expiration of the required affordability period.(5) The Household is required to sell the home at an affordable price to a reasonable range of low-income homebuyers that will occupy the home as their Principal Residence. Affordable to a reasonable range of low-income buyers is defined as targeting Households that have income between 70 and 80 percent AMFI and meet all program requirements.(A) The seller will be afforded a fair return on investment defined as the sum of down payment and closing costs paid from the initial seller's cash at purchase, closing costs paid by the seller at sale, the principal payments only made by the initial homebuyer in excess of the amount required by the loan, and any documented capital improvements in excess of $500.(B) Fair return on investment is paid to the seller at sale once first mortgage debt is paid and all other conditions of the initial written agreement are met. In the event there are no funds for fair return, then fair return does not exist. In the event there are partial funds for fair return, then the appropriate partial fair return shall remain in force.(6) The appreciated value is the affordable sales price less first mortgage debt less fair return.(A) If appreciated value is zero, or less than zero, then no appreciated value exists.(B) The initial homebuyer's investment of down payment and closing costs divided by the Department's HOME investment equals the percentage of appreciated value that shall be paid to the initial homebuyer or persons as otherwise directed by law. The balance of appreciated value shall be paid to the Department.(7) The property qualified by the initial Household will be encumbered with a lien for the full affordability period.(d) In the event the housing unit transfers by devise, descent, or operation of law upon the death of the assisted homeowner, forgiveness of installment payments under the loan may continue until maturity or the penalty amount for noncompliance under the conditional grant agreement may be waived, if the new Household qualifies for assistance in accordance with this subchapter. If the new Household does not qualify for assistance in accordance with this Chapter, forgiveness of installment payments will cease and repayment of scheduled payments under the loan will commence and continue until maturity or payment of a penalty amount under the conditional grant agreement may be required in accordance with the terms of the conditional grant agreement.(e) Forgiveness of installment payments under the loan may continue until maturity or the penalty amount under conditional grant agreement may be waived by the Department if the housing unit is sold by the decedent's estate to a purchasing Household that qualifies for assistance in accordance with this Chapter.(f) Grants subject to conditional grant agreements are not subject to the entire penalty amount in the event the property is no longer the Principal Residence of any Household member.</content><note type="source"><p>Source Note: The provisions of this §23.29 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c23/scC"><num value="C">SUBCHAPTER C</num><heading>HOMEOWNER RECONSTRUCTION ASSISTANCE PROGRAM</heading><section identifier="/us/state/tx/tac/t10/p1/c23/scC/s23.30"><num value="23.30">§23.30</num><heading>Homeowner Reconstruction Assistance (HRA) General Requirements</heading><content>(a) Program funds may be used for the following under this subchapter:(1) Reconstruction of housing on the same site meeting the following conditions:(A) Replacement of an owner-occupied site-built house with either a new site-built house or a new Manufactured Housing Unit (MHU) on the same site;(B) Replacement of an owner-occupied MHU with a new MHU on the same site;(C) A unit that is not owner-occupied has been destroyed may be eligible for Reconstruction under subparagraph (A) or (B) of this paragraph if:(i) the unit was the Principal Residence of the Household as of the date of destruction where evidence of the Household's Principal Residence is established by a homestead exemption from the local taxing jurisdiction and Household certification in effect at the date of destruction; and(ii) HOME funds are committed within 12 months of the date of destruction.(2) New Construction of housing meeting the following conditions:(A) Construction of site-built housing on the same site to replace an existing owner-occupied MHU;(B) Replacement of existing owner-occupied housing with an MHU or construction of site-built housing on another site contingent upon written approval of the Department; or(C) Replacement of a housing unit determined to be uninhabitable within four years of submission of a Reservation for funds on the same site or another site when:(i) the unit has been rendered uninhabitable as a direct result of a natural or man-made disaster, a condemnation order from the unit of local government, or a determination from the unit of local government that the unit presents an imminent threat to life, health, and safety of occupants; and(ii) the Household's Principal Residence is established by a homestead exemption from the local taxing jurisdiction as of the date of the disaster, condemnation order, or determination of uninhabitably though a Certification.(b) If a housing unit has an existing mortgage loan and Department funds are provided in the form of a loan, the Department will require a first lien position if the existing mortgage loan has an outstanding balance that is less than the investment of HOME funds and any of the statements described in paragraphs (1) - (3) of this subsection are true:(1) A federal affordability period is required;(2) Any existing mortgage has been in place for less than three years from the date the Household applies for assistance; or(3) The HOME loan is structured as a repayable loan.(c) The Household must be current on any existing mortgage loans or home equity loans. If the Department's assistance is provided in the form of a loan, the property cannot have any existing home equity loan liens.(d) Total Project costs, exclusive of Match funds, are limited to the amounts described in §23.27, Project Cost Limitations. (e) For New Construction Activities, the assistance to an eligible Household shall be in the form of a loan in the amount of the Direct Activity Costs excluding Match funds. The loan will be at zero percent interest and include deferral of payment and annual pro rata forgiveness with a term based on the federal affordability requirements as defined in 24 CFR §92.254.(f) For Reconstruction Activities, the assistance to an eligible Household will be in the form of a grant agreement with a five year affordability period.(g) To ensure affordability, the Department will impose resale and recapture provisions established in this Chapter.</content><note type="source"><p>Source Note: The provisions of this §23.30 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scC/s23.31"><num value="23.31">§23.31</num><heading>Homeowner Reconstruction Assistance (HRA) Administrative Requirements.</heading><content>(a) Commitment or Reservation of Funds. The Administrator must submit the true and complete information, certified as such, with a request for the Commitment or Reservation of Funds as described in paragraphs (1) - (20) of this subsection:(1) Head of Household name and address of housing unit for which assistance is being requested;(2) A budget that includes the amount of Activity funds specifying the acquisition costs, construction costs, soft costs and administrative costs requested, a maximum of five percent of hard construction costs for contingency items, proposed Match to be provided, evidence that Direct Activity Cost and Soft Cost limitations are not exceeded, and evidence that any duplication of benefit is addressed;(3) Verification of environmental clearance;(4) A copy of the Household's intake application on a form prescribed by the Department;(5) Certification of the income eligibility of the Household signed by the Administrator and all Household members age 18 or over, and including the date of the income eligibility determination. In instances where the total Household income is within $3,000 of the 80 percent AMFI, all documentation used to determine the income of the Household;(6) Project cost estimates, construction contracts, and other construction documents necessary to ensure applicable property standard requirements will be met at completion;(7) When assistance is provided in the form of a loan, provide written consent from all Persons who have a valid lien or ownership interest in the Property;(8) In the instance of relocation from one site to another site, the Household must document Homeownership of the existing unit to be replaced and must establish Homeownership of the lot on which the replacement housing unit will be constructed. The Household must agree to the demolition of the existing housing unit. HOME Activity funds cannot be used for the demolition of the existing unit and any funding used for the demolition is not eligible Match; however, solely for a Activity under this paragraph, the Administrator Match obligation may be reduced by the cost of such demolition without any Contract amendment;(9) Identification of any Lead-Based Paint (LBP);(10) For housing units located within the 100-year floodplain or otherwise required to carry flood insurance by federal or local regulation, certification from the Household that they understand the flood insurance requirements;(11) Consent to demolish from any existing mortgage lien holders and consent to subordinate to the Department's loan, if applicable;(12) If applicable, documentation to address or resolve any potential conflict of interest, Identity of Interest, duplication of benefit, or floodplain mitigation;(13) A title commitment or policy or a down date endorsement to an existing title policy evidencing the Household's ownership of the property:(A) For New Construction Activities, a title commitment or down-date endorsement to an existing title policy the effective date title commitment must be no more than 60 days prior to of the date of Activity submission. Title commitments for loan projects that expire prior to the loan closing date must be updated and must not have any adverse changes; and(B) For Reconstruction Activities, a title report or a title commitment dated not more than six months prior to the date of Activity submission;(14) Documents evidencing ownership, such as a warranty deed, life estate, or 99-year leasehold;(15) If the housing to be replaced is an MHU, a Statement of Ownership and Location (SOL) for the MHU;(16) Tax certificate that evidences a current paid status, and in the case of delinquency, evidence of an approved payment plan with the taxing authority and evidence that the payment plan is current;(17) In the instances of replacement with an MHU, information necessary to draft loan documents or grant agreements to issue SOL;(18) Life event documentation, as applicable, and all information necessary to prepare any applicable affidavits such as marital status and heirship;(19) For disaster relief set-aside Activities, evidence that the housing unit occupied by the eligible Household was damaged as a direct result of a federal, state, or locally declared disaster that occurred less than four years prior to the submission of the Activity; and(20) Any other documentation necessary to evidence that the Activity meets the program requirements.(b) Loan closing or grant agreement. In addition to the documents required under subsection (a) of this section, the Administrator must submit the appraisal or other valuation method approved by the Department which establishes the post construction value of improvements for Activities involving construction prior to the issuance of grant or loan documents by the Department.(c) Disbursement of funds. The Administrator must comply with all of the requirements described in paragraphs (1) - (12) of this subsection, for a request for disbursement of funds to reimburse eligible costs incurred. Submission of documentation related to the Administrator's compliance with requirements described in paragraphs (1) - (12) of this subsection, may be required with a request for disbursement:(1) For construction costs associated with a loan, a down date endorsement to the title policy not older than the date of the last disbursement of funds or 45 days, whichever is later. For release of retainage the down date endorsement must be dated at least 40 days after the Construction Completion Date;(2) For construction costs associated with a grant agreement, an interim lien waiver or final lien waiver. For release of retainage the release on final payment must be dated at least 40 days after the Construction Completion Date;(3) If applicable, a maximum of 50 percent of Activity funds for an Activity may be drawn before providing evidence of Match. Thereafter, each Administrator must provide evidence of Match, including the date of provision, in accordance with the percentage of Activity funds disbursed;(4) Property inspections, including photographs of the front, back, and side elevations of the housing unit and at least one picture of the each of the kitchen, family room, each bedroom and each bathroom with date and property address reflected on each photo. The inspection must be signed and dated by the inspector and Administrator;(5) Certification that its fiscal control and fund accounting procedures are adequate to assure the proper disbursal of, and accounting for, funds provided; that no Person that would benefit from the award of HOME funds; that it has satisfied any applicable cash reserve obligation or made promises in connection therewith; that each request for disbursement of HOME funds is for the actual cost of providing a service; and that the service does not violate any conflict of interest provisions;(6) The executed grant agreement or original, executed, legally enforceable loan documents and statement of location, if applicable, for each assisted Household containing remedies adequate to enforce any applicable affordability requirements. Original documents must evidence that such agreements have been recorded in the real property records of the county in which the housing unit is located and the original documents must be returned, duly certified as to recordation by the appropriate county official;(7) Expenditures must be allowable and reasonable in accordance with federal, state, and local rules and regulations. The Department shall determine the reasonableness for expenditures submitted for reimbursement. The Department may request Administrator to make modifications to the disbursement request and is authorized to modify the disbursement procedures set forth herein and to establish such additional requirements for payment of HOME funds to Administrator as may be necessary or advisable for compliance with all program requirements; (8) The request for funds for administrative costs must be proportionate to the amount of Direct Activity Costs requested or already disbursed;(9) Include the withholding of ten percent of hard construction costs for retainage. Retainage will be held until at least 40 days after the Construction Completion Date;(10) For final disbursement requests, submission of documentation required for Activity completion reports and evidence that the demolition or, if an MHU, salvage and removal of all dilapidated housing units on the lot, certification or other evidence acceptable to Department that the replacement house, whether site-built or MHU, was constructed or placed on and within the same lot for which ownership was established and on and within the same lot secured by the loan or grant agreement, if applicable, and evidence of floodplain mitigation; (11) The final request for disbursement must be submitted to the Department with support documentation no later than 60 days after the termination date of the Contract in order to remain in compliance with Contract and eligible for future funding. The Department shall not be obligated to pay for costs incurred or performances rendered after the termination date of a Contract; and(12) For costs associated with insurance policies, including title policies and homeowner insurance policies, charged as Activity costs, evidence of payment of the cost must be submitted with the retainage request.</content><note type="source"><p>Source Note: The provisions of this §23.31 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c23/scD"><num value="D">SUBCHAPTER D</num><heading>CONTRACT FOR DEED PROGRAM</heading><section identifier="/us/state/tx/tac/t10/p1/c23/scD/s23.40"><num value="23.40">§23.40</num><heading>Contract for Deed (CFD) General Requirements</heading><content>(a) Program funds may be utilized for Acquisition or refinance, and New Construction, of single family housing units occupied by the purchaser as shown on an executory contract for conveyance.(b) The Department shall limit the availability of funds for CFD for a minimum of 60 days for Activities proposing to serve Households whose income does not exceed 60 percent AMFI, and for properties located in a Colonia as defined in Tex. Gov't Code §2306.083.(c) The Department will require a first lien position.(d) Total Project costs, exclusive of Match funds, are limited to the amounts described in §23.27, Project Cost Limitations.(e) The assistance to an eligible Household shall be in the form of a loan in the amount of the Direct Activity Costs excluding Match funds. The loan will be at zero percent interest and include deferral of payment and annual pro rata forgiveness with a term based on the federal affordability requirements as defined in 24 CFR §92.254. For refinancing activities, the minimum loan term and affordability period is 15 years, regardless of the amount of HOME assistance.(f) To ensure affordability, the Department will impose resale or recapture provisions established in this Chapter.</content><note type="source"><p>Source Note: The provisions of this §23.40 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scD/s23.41"><num value="23.41">§23.41</num><heading>Contract for Deed (CFD) Administrative Requirements</heading><content>(a) Commitment or Reservation of Funds. The Administrator must submit true and correct information, certified as such, with a request for the Commitment or Reservation of Funds as described in paragraphs (1)-(15) of this subsection:(1) Head of Household name and address of housing unit for which assistance is being requested;(2) A budget that includes the amount of Activity funds specifying the acquisition costs, construction costs, soft costs and administrative costs requested, a maximum of five percent of hard construction costs for contingency items, proposed Match to be provided, evidence that Activity and soft costs limitations are not exceeded, and evidence that any duplication of benefit is addressed;(3) Verification of environmental clearance;(4) A copy of the Household's intake application on a form prescribed by the Department;(5) Certification of the income eligibility of the Household signed by the Administrator and all Household members age 18 or over, and including the date of the income eligibility determination. In instances the total Household income is within $3,000 of the 80 percent AMFI, all documentation used to determine the income of the Household;(6) Project cost estimates, construction contracts, and other construction documents necessary to ensure applicable property standard requirements will be met at completion;(7) Identification of Lead-Based Paint (LBP);(8) For housing units located within the 100-year floodplain or otherwise required to carry flood insurance by federal or local regulation, certification from the Household that they understand the flood insurance requirements;(9) If applicable, documentation to address or resolve any potential Conflict of Interest, Identity of Interest, duplication of benefit, or floodplain mitigation;(10) Appraisal which includes post construction improvements for Activities involving construction;(11) A title commitment to issue a title policy that evidences the property will transfer with no tax lien, child support lien, mechanic's or materialman's lien or any other restrictions or encumbrances that impair the good and marketable nature of title to the ownership interest and that the definition of Homeownership will be met. The effective date of the title commitment must be no more than 60 days prior to the date of Activity submission. Commitments that expire prior to execution of closing must be updated at closing and must not have any adverse changes in order to close;(12) In the instances of replacement with an MHU, information necessary to draft loan documents and issue Statement of Ownership and Location (SOL);(13) Life event documentation, as applicable, and all information necessary to prepare any applicable affidavits such as marital status and heirship;(14) A copy of the recorded executory contact and a current payoff statement; and(15) Any other documentation necessary to evidence that the Activity meets the program requirements.(b) Disbursement of funds. The Administrator must comply all of the requirements described in paragraphs (1) - (12) of this subsection, for a request for disbursement of funds to reimburse eligible costs incurred. Submission of documentation related to the Administrator's compliance with requirements described in paragraphs (1) - (12) of this subsection may be required with a request for disbursement:(1) For construction costs, a down date endorsement to the title policy not older than the date of the last disbursement of funds or 45 days, whichever is later. For release of retainage the down date endorsement must be dated at least 40 days after the Construction Completion Date;(2) If applicable, a maximum of 50 percent of Activity funds for an Activity may be drawn before providing evidence of Match. Thereafter, each Administrator must provide evidence of Match, including the date of provision, in accordance with the percentage of Activity funds disbursed;(3) Property inspections, including photographs of the front, back, and side elevations of the housing unit and at least one picture of each of the kitchen, family room, each bedroom and each bathroom with date and property address reflected on each photo. The inspection must be signed and dated by the inspector and Administrator; (4) Certification that its fiscal control and fund accounting procedures are adequate to assure the proper disbursal of, and accounting for, funds provided, no Person that would benefit from the award of HOME funds has satisfied the Applicant's cash reserve obligation or made promises in connection therewith; that each request for disbursement of HOME funds is for the actual cost of providing a service and that the service does not violate any conflict of interest provisions;(5) Original, executed, legally enforceable loan documents, and statement of location, as applicable, for each assisted Household containing remedies adequate to enforce any applicable affordability requirements. Original documents must evidence that such agreements have been recorded in the real property records of the county in which the housing unit is located and the original documents must be returned, duly certified as to recordation by the appropriate county official. This provision is not applicable for funds made available at the loan closing;(6) Expenditures must be allowable and reasonable in accordance with federal, state, and local rules and regulations. The Department shall determine the reasonableness of each expenditure submitted for reimbursement. The Department may request Administrator or Developer to make modifications to the disbursement request and is authorized to modify the disbursement procedures set forth herein and to establish such additional requirements for payment of HOME funds to Administrator as may be necessary or advisable for compliance with all program requirements;(7) The request for funds for administrative costs must be proportionate to the amount of Direct Activity Costs requested or already disbursed;(8) Table funding requests must be submitted to the Department with complete documentation no later than 14 calendar days prior to the anticipated loan closing date. Such a request must include a draft closing disclosure, title company payee identification information, the Administrator or Developer's authorization for disbursement of funds to the title company, request letter from title company to the Comptroller of Public Accounts with bank account wiring instructions, and invoices for costs being paid at closing;(9) Include the withholding of ten percent of hard construction costs for retainage. Retainage will be held until at least 40 days after the Construction Completion Date;(10) For final disbursement requests, submission of documentation required for Activity completion reports and evidence that the demolition or, if an MHU, salvage and removal of all dilapidated housing units on the lot, certification or other evidence acceptable to Department that the replacement house, whether site-built or MHU, was constructed or placed on and within the same lot secured by the loan, and evidence of floodplain mitigation;(11) The final request for disbursement must be submitted to the Department with support documentation no later than 60 days after the termination date of the Contract in order to remain in compliance with Contract and eligible for future funding. The Department shall not be obligated to pay for costs incurred or performances rendered after the termination date of a Contract; and(12) For costs associated with insurance policies, including title policies and homeowner's insurance policies charged as Activity costs, evidence of payment of the cost must be submitted with the retainage request.</content><note type="source"><p>Source Note: The provisions of this §23.41 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c23/scE"><num value="E">SUBCHAPTER E</num><heading>TENANT-BASED RENTAL ASSISTANCE PROGRAM</heading><section identifier="/us/state/tx/tac/t10/p1/c23/scE/s23.50"><num value="23.50">§23.50</num><heading>Tenant-Based Rental Assistance (TBRA) General Requirements</heading><content>(a) Households assisted under the general set-aside must participate in a self-sufficiency program, as described in the Administrator's policies and procedures.(b) The amount of assistance will be determined using the HUD Housing Choice Voucher method.(c) Late fees are not an eligible HOME cost. Late fees incurred for the subsidy portion of rent must be paid by the Administrator from a non-HOME funding source.(d) A Household certifying to zero income must also complete a questionnaire that includes a series of questions regarding how basic hygiene, dietary, transportation, and other living needs are met.(e) The minimum Household contribution toward gross monthly rent must be ten percent of the Household's adjusted monthly income. The maximum Household contribution toward gross monthly rent at initial occupancy is limited to 40 percent of the Household's gross monthly income.(f) Activity funds are limited to:(1) Rental subsidy: Each rental subsidy term is limited to no more than 24 months. Total lifetime assistance to a Household may not exceed 36 months cumulatively, except that a maximum of 24 additional months of assistance, for a total of 60 months cumulatively may be approved if:(A) the Household has applied for a Section 8 Housing Choice Voucher, HUD Section 811 Supportive Housing for Persons with Disabilities, HUD Section 811 Project Rental Assistance Demonstration, or HUD Section 202 Supportive Housing for the Elderly Program, and is placed on a waiting list during their TBRA participation tenure; and(B) the Household has not been removed from the waiting list for the Section 8 Housing Choice Voucher, HUD Section 811 Supportive Housing for Persons with Disabilities, HUD Section 811 Project Rental Assistance Demonstration, or HUD Section 202 Supportive Housing for the Elderly Program due to failure to respond to required notices or other ineligibility factors; or(C) the Administrator submits documentation evidencing that:(i) no Public Housing Authority within a 50 mile radius of the Household's address during their participation in TBRA has opened their waitlist during the term of the Household's participation in TBRA, or has excluded the Household's application for placement on the waiting list for any reason other than eligibility or failure to respond to required notices, such as a randomized drawing of applications that may be placed on the waitlist; and(ii) no waiting list was opened during the term of the Household's participation in TBRA for any HUD Section 811 Supportive Housing for Persons with Disabilities, HUD Section 811 Project Rental Assistance Demonstration, or HUD Section 202 Supportive Housing for the Elderly Program located within a 50 mile radius of the Household's address during their participation in TBRA; or(iii) the Household is not eligible for placement on a waiting list for any HUD Section 811 Supportive Housing for Persons with Disabilities, HUD Section 811 Project Rental Assistance Demonstration, or HUD Section 202 Supportive Housing for the Elderly Program located within a 50 mile radius of the Household's address during their participation in TBRA; and(D) the Household has not been denied participation in the Section 8 Housing Choice Voucher, HUD Section 811 Supportive Housing for Persons with Disabilities, HUD Section 811 Project Rental Assistance Demonstration, or HUD Section 202 Supportive Housing for the Elderly Program while they were being assisted with HOME TBRA; and(E) the Household did not refuse to participate in the Section 8 Housing Choice Voucher, HUD Section 811 Supportive Housing for Persons with Disabilities, HUD Section 811 Project Rental Assistance Demonstration, or HUD Section 202 Supportive Housing for the Elderly Program when a voucher was made available.(2) the Executive Director or designee may grant an exception to the limitations set forth in this section related to the maximum term of assistance, if:(A) funds are available and programmed for this activity;(B) the Household meets the requirements of paragraph (1) of this subsection;(C) all adult members of the Household are Persons with Disabilities; (D) Household income from employment does not exceed the current Substantial Gainful Activity Level as defined by the Social Security Administration and greater than 50% of Household Income is comprised of benefits paid to the Household from Social Security or any other benefit payment received due to a member's status as a Person with a Disability; (E) the Household's gross monthly income does not exceed 50% AMFI; and (F) the circumstances considered for an exception are not expected to change during the term of assistance. (3) Security deposit: no more than the amount equal to two month's rent for the unit.(4) Utility deposit in conjunction with a TBRA rental subsidy.(g) The payment standard is determined at the Date of Assistance. The payment standard utilized by the Administrator must be:(1) The U.S. Department of Housing and Urban Development (HUD) published Small Area Fair Market Rent (SAFMR) for any area in which a SAFMR is available. In areas where an SAFMR is not published by HUD, the payment standard must be the HUD-published Fair Market Rent (FMR) for the county. HUD-published SAFMRs and FMRs will become effective for the HOME Program on January 1 of each year following publication;(2) For a HOME-assisted unit, the current applicable HOME rent; or(3) The Administrator may submit a written request to the Department for approval of a different payment standard. The request must be evidenced by a market study or documentation that the PHA serving the market area has adopted a different payment standard. An Administrator may request a Reasonable Accommodation as defined in §1.204 of this Title for a specific Household if the Household, because of a disability, requires the features of a specific unit, and units with such features are not available in the Service Area at the payment standard.(h) Administrator must not approve a unit if the owner is by consanguinity, affinity, or adoption the parent, child, grandparent, grandchild, sister, or brother of any member of the assisted Household, unless the Administrator determines that approving the unit would provide Reasonable Accommodation for a Household member who is a Person with Disabilities. This restriction against Administrator approval of a unit only applies at the time the Household initially receives assistance under a Contract or Agreement, but does not apply to Administrator approval of a recertification with continued tenant-based assistance in the same unit.(i) Administrators must maintain Written Policies and Procedures established for the HOME Program in accordance with §10.802 of this Title, except that where the terms Owner, Property, or Development are used Administrator or Program will be substituted, as applicable. Additionally, the procedures in subsection (j) of this section (relating to the Violence Against Women Act (if in conflict with the provisions in §10.802 of this Title) will govern).(j) Administrators serving a Household under a Reservation Agreement may not issue a Certificate of Eligibility to the Household prior to reserving funds for the Activity without prior written consent of the Department.(k) Administrators are required to comply with regulations and procedures outlined in the Violence Against Women Act (VAWA), and provide tenant protections as established in the Act.(1) An Administrator of Tenant-Based Rental Assistance must provide all Applicants (at the time of admittance or denial) and Households (before termination from the Tenant-Based Rental Assistance program or from the dwelling assisted by the Tenant-Based Rental Assistance Coupon Contract) the Department's "Notice of Occupancy Rights under the Violence Against Women Act", (based on HUD form 5380) and also provide to Households "Certification of Domestic Violence, Dating Violence, Sexual Assault, or Stalking" (HUD form 5382) prior to execution of a Rental Coupon Contract and before termination of assistance from the Tenant-Based Rental Assistance program or from the dwelling assisted by the Tenant-Based Rental Assistance coupon contract.(2) Administrator must notify the Department within three days when tenant submits a Certification of Domestic Violence, Dating Violence, Sexual Assault, or Stalking and/or alternate documentation to Administrator and must submit a plan to Department for continuation or termination of assistance to affected Household members.(3) Notwithstanding any restrictions on admission, occupancy, or terminations of occupancy or assistance, or any Federal, State or local law to the contrary, Administrator may "bifurcate" a rental coupon contract, or otherwise remove a Household member from a rental coupon contract, without regard to whether a Household member is a signatory, in order to evict, remove, terminate occupancy rights, or terminate assistance to any individual who is a recipient of TBRA and who engages in criminal acts of physical violence against family members or others. This action may be taken without terminating assistance to, or otherwise penalizing the person subject to the violence.</content><note type="source"><p>Source Note: The provisions of this §23.50 adopted to be effective February 26, 2025, 50 TexReg 976; amended to be effective July 31, 2025, 50 TexReg 4417.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scE/s23.51"><num value="23.51">§23.51</num><heading>Tenant-Based Rental Assistance (TBRA) Administrative Requirements</heading><content>(a) Commitment or Reservation of Funds. The Administrator must submit the documents described in paragraphs (1) - (10) of this subsection, with a request for the Commitment or Reservation of Funds:(1) Head of Household name and address of housing unit for which assistance is being requested;(2) A budget that includes the amount of Direct Activity Costs, Activity soft costs, administrative costs requested, Match to be provided, evidence that Direct Activity Cost limitations are not exceeded, and evidence that any duplication of benefit is addressed;(3) Verification of environmental clearance;(4) A copy of the Household's intake application on a form prescribed by the Department;(5) Certification of the income eligibility of the Household signed by the Administrator, and all Household members age 18 or over, and including the date of the income eligibility determination. Administrator must submit documentation used to determine the income and rental subsidy of the Household;(6) Identification of Lead-Based Paint (LBP);(7) If applicable, documentation to address or resolve any potential conflict of interest or duplication of benefit;(8) Project address within 90 days of preliminary set up approval, if applicable;(9) For Households assisted under the Disaster set-aside, verification that the household was displaced or is at-risk of displacement as a direct result of a Federal, State, or Locally declared disaster approved by the Department within four years of the date of Activity submission; and(10) Any other documentation necessary to evidence that the Activity meets the program requirements.(b) Disbursement of funds. The Administrator must comply with all of the requirements described in paragraphs (1) - (7) of this subsection for a request for disbursement of funds. Submission of documentation related to the Administrator compliance with requirements described in paragraphs (1) - (7) of this subsection may be required with a request for disbursement:(1) If required or applicable, a maximum of 50 percent of Direct Activity Costs for an Activity may be drawn before providing evidence of Match. Thereafter, each Administrator must provide evidence of Match, including the date of provision, in accordance with the percentage of Direct Activity Costs disbursed;(2) Certification that its fiscal control and fund accounting procedures are adequate to assure the proper disbursal of, and accounting for, funds provided, no Person that would benefit from the award of HOME funds has satisfied the Applicant's cash reserve obligation or made promises in connection therewith; that each request for disbursement of HOME funds is for the actual cost of providing a service and that the service does not violate any conflict of interest provisions;(3) Expenditures must be allowable and reasonable in accordance with federal, state, and local rules and regulations. The Department shall determine the reasonableness of each expenditure submitted for reimbursement. The Department may request Administrator to make modifications to the disbursement request and is authorized to modify the disbursement procedures set forth herein and to establish such additional requirements for payment of HOME funds to the Administrator or Developer as may be necessary or advisable for compliance with all Program Requirements;(4) With the exception of a maximum of 25 percent of the total funds available for administrative costs, the request for funds for administrative costs must be proportionate to the amount of Direct Activity Costs requested or already disbursed;(5) Monthly subsidy may not be requested earlier than the tenth day of the month prior to the upcoming subsidized month;(6) For final disbursement requests, submission of documentation required for Activity completion reports; and(7) The final request for disbursement must be submitted to the Department with support documentation no later than 60 days after the termination date of the Contract in order to remain in compliance with Contract and eligible for future funding. The Department shall not be obligated to pay for costs incurred or performances rendered after the termination date of a Contract.</content><note type="source"><p>Source Note: The provisions of this §23.51 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c23/scF"><num value="F">SUBCHAPTER F</num><heading>SINGLE FAMILY DEVELOPMENT PROGRAM</heading><section identifier="/us/state/tx/tac/t10/p1/c23/scF/s23.60"><num value="23.60">§23.60</num><heading>Single Family Development (SFD) General Requirements</heading><content>(a) Program funds under this subchapter may be used for the Development of new single family housing for homeownership that complies with affordability requirements as defined at 24 CFR §92.254. Direct Activity Costs, exclusive of Match funds, are limited to the amounts described in§ 23.27, Project Cost Limitations.(b) In addition to the requirements of Chapter 1, Subchapter B of this Title and Subchapter B of this Chapter, Applicants for an award of Single Family Development funds must submit a proposed development plan. The proposed development plan must be consistent with the requirements of this Chapter, all other federal and state rules, and include:(1) a floor plan and front exterior elevation for each proposed unit which reflects the exterior building composition;(2) a FEMA Issued Flood Map that identifies the location of the proposed site(s);(3) letters from local utility providers, on company letterhead, confirming each site has access to the following services: water and wastewater, sewer, electricity, garbage disposal and natural gas, if applicable;(4) documentation of site control of each proposed lot: A recorded warranty deed with corresponding executed settlement statement; or a contract or option for the purchase of the proposed lots that is valid for at least 180 days from the date of application submission; and(5) an "as vacant" appraisal of at least one of the proposed lots if the Applicant has an Identity of Interest with the seller or current owner of the property; or any of the proposed property is part of a newly developed or under-development subdivision in which at least three other third-party sales cannot be evidenced. The purchase price of any lot in which the current owner has an Identity of Interest must not exceed the appraised value of the vacant lot at the time of Activity submission. The appraised value of the lot may be included in the sales price for the homebuyer transaction.(6) The Department may prioritize Applications or otherwise incentivize Applications that partner with other lenders to provide permanent purchase money financing for the purchase of Single Family Housing Units developed with funds provided under this subchapter.(c) Program funds under this subchapter are only eligible to be administered by a CHDO certified as such by the Department if administered utilizing the CHDO set-aside. A separate grant for CHDO operating expenses may be awarded to CHDOs that receive a Contract award if funds are provided for this purpose in the NOFA. A CHDO may not receive more than one grant of CHDO operating funds in an amount not to exceed $50,000 within any one year period, and may not draw more than $25,000 in CHDO operating funds in any twelve month period from any source, including CHDO operating funds from other HOME Participating Jurisdictions.(d) Direct Activity Cost are limited to the costs described in § 23.27, Project Cost Limitations.(e) Developer fees (including consulting fees) are limited to 15 percent of the total hard construction costs. The developer fee will be reduced by one percent per month or partial month that the construction period exceeds the original term of the construction period financing.(f) General Contractor Fees are limited to 15 percent of the total hard construction costs. The General Contractor is defined as one who contracts for the construction of an entire development Activity, rather than a portion of the work. The General contractor hires subcontractors, such as plumbing contractors, electrical contractors, etc., coordinates all work, and is responsible for payment to the subcontractors. A prime subcontractor will also be treated as a General Contractor, and any fees payable to the prime subcontractor will be treated as fees to the General Contractor, in the scenarios described in paragraphs (1) and (2) of this subsection:(1) Any subcontractor, material supplier, or equipment lessor receiving more than 50 percent of the contract sum in the construction contract will be deemed a prime subcontractor; or(2) If more than 75 percent of the contract sum in the construction contract is subcontracted to three or fewer subcontractors, material suppliers, and equipment lessors, such parties will be deemed prime subcontractors.(g) Construction period financing for each unit shall be structured as a zero percent interest loan with a 12-month term. The maximum construction loan amount may not exceed the total development cost less developer fees/profit, closing costs associated with the permanent mortgage financing, and ineligible Activity costs. Prior to construction loan closing, a sales contract must be executed with a qualified homebuyer.(h) In the instance that the total development cost equals more than 100 percent of the appraised value, the portion of the development cost that exceeds 100 percent of the appraised value will be granted to the developer to buy down the purchase price. Reasonable and customary seller closing costs may be provided with HOME funds as a grant to the Developer.(i) Direct assistance to the buyer will be structured as a first and/or second lien loan(s):(1) A first-lien, fully amortizing, repayable loan with a 30-year term may be provided by the Department and will initially be evaluated at zero percent interest. The loan amount will not exceed the total development cost combined with reasonable and customary buyer's closing costs. Should the estimated housing payment, including all funding sources, be less than the minimum required housing payment for the minimum term, the Department may charge an interest rate to the homebuyer such that the total estimated housing payment is no less than the required minimum housing payment. In no instance shall the interest rate charged to the homebuyer exceed five percent, and such result may deem the applicant as overqualified for assistance.(A) The total Mortgage Loan may include costs incurred for the total development cost and Mortgage Loan Closing Costs, exclusive of Match funds.(B) The total Debt-to-Income Ratio shall not exceed the limitations set forth in Chapter 20 of this Title.(C) For buyers whose income is equal to or less than 50 percent AMFI, the minimum required housing payment shall be no less than 15 percent of the household's gross income. For homebuyers whose income exceeds 50 percent AMFI, the minimum required housing payment shall be no less than 20 percent of the household's gross income.(2) Downpayment and closing costs assistance is limited to the lesser of downpayment required by a third-party lender and reasonable and customary buyer's closing costs, or the amount required to ensure affordability of the HOME financing. Downpayment and closing cost assistance may not exceed ten percent of the total development cost and shall be structured as a five or ten-year deferred, forgivable loan with a subordinate lien, in accordance with the required federal affordability period.(3) A first lien conventional mortgage not provided by the Department must meet the mortgage financing requirements outlined in Chapter 20 of this Title.(j) Earnest money is limited to no more than $1,000, which may be credited to the homebuyer at closing, but may not be reimbursed as cash.(k) If a Household should become ineligible or otherwise cease participation and a replacement Household is not located within 90 days of the end of the construction period, all additional funding, closings, and draws on the award will cease and the Department will require the Applicant to repay any outstanding construction debt in full.(l) The Division Director may approve the use of alternative floor plans or lots from those included in the approved Application, provided the requirements of this section can still be met and such changes do not materially affect the total budget.(m) To ensure affordability, the Department will impose resale or recapture provisions established in this Chapter.</content><note type="source"><p>Source Note: The provisions of this §23.60 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scF/s23.61"><num value="23.61">§23.61</num><heading>Single Family Development (SFD) Administrative Requirements</heading><content>(a) Commitment or Reservation of Funds. The Administrator must submit true and correct information, certified as such, with a request for the Commitment of Funds as described in paragraphs (1) - (12) of this subsection:(1) Head of Household name and address of housing unit for which assistance is being requested;(2) A budget that includes the amount of Activity funds specifying the acquisition cost, construction costs, contractor fees, and developer fees, as applicable. A maximum of five percent of hard construction costs for contingency items, proposed Match to be provided, evidence that Activity Cost limitations are not exceeded, and evidence that any duplication of benefit is addressed;(3) Verification of environmental clearance;(4) A copy of the Household's intake application on a form prescribed by the Department;(5) Certification of the income eligibility of the Household signed by the Administrator and all Household members age 18 or over, and including the date of the income eligibility determination. All documentation used to determine the income of the Household must be provided;(6) Project cost estimates, construction contracts, and other construction documents necessary, in the Department's sole determination, to ensure applicable property standard requirements will be met at completion;(7) Identification of Lead-Based Paint (LBP) if site remediation is needed;(8) Executed sales contract and documentation that the first lien mortgage meets the eligibility requirements;(9) Evidence that the housing unit will be located outside the 100-year floodplain;(10) If applicable, documentation to address or resolve any potential conflict of interest, Identity of Interest, duplication of benefit, or floodplain mitigation;(11) Appraisal, which includes post construction improvements; and(12) Any other documentation necessary to evidence that the Activity meets the program requirements.(b) Construction Loan closing. The Administrator must submit the documents described in paragraphs (1) - (2) of this subsection, with a request for the preparation of loan closing with the request for the Commitment of Funds:(1) A title commitment to issue a title policy that evidences the property will transfer with no tax lien, child support lien, mechanic's or materialman's lien or any other restrictions or encumbrances that impair the good and marketable nature of title to the ownership interest and that the definition of Homeownership will be met. The effective date of the title commitment must be no more than 60 days prior to the date of project submission. Commitments that expire prior to execution of closing must be updated at closing and must not have any adverse changes in order to close; and(2) Within 90 days after the loan closing date, the Administrator must submit to the Department the original recorded deed of trust and transfer of lien, if applicable. Failure to submit these documents within 90 days after the loan closing date will result in the Department withholding payment for disbursement requests.(c) Disbursement of funds. The Administrator must comply with the requirements described in paragraphs (1) - (11) of this subsection, for a request for disbursement of funds to reimburse eligible costs incurred. Submission of documentation related to the Administrator compliance with requirements described in paragraphs (1) - (11) of this subsection may be required with a request for disbursement:(1) For construction costs, an interim construction binder advance endorsement not older than the date of the last disbursement of funds or 45 days, whichever is later. For release of retainage a down date endorsement to the mortgagee policy issued to the homebuyer dated at least 40 days after the Construction Completion Date;(2) If required or applicable, a maximum of 50 percent of Direct Activity Costs for an Activity may be drawn before providing evidence of Match. Thereafter, each Administrator must provide evidence of Match, including the date of provision, in accordance with the percentage of Activity funds disbursed;(3) Property inspections, including photographs of the front, back, and side elevations of the housing unit and at least one picture of each of the kitchen, family room, each bedroom and each bathroom with date and property address reflected on each photo. The inspection must be signed and dated by the inspector and Administrator or Developer;(4) Certification that its fiscal control and fund accounting procedures are adequate to assure the proper disbursal of, and accounting for, funds provided, no Person that would benefit from the award of HOME funds has provided a source of Match or has satisfied the Applicant's cash reserve obligation or made promises in connection therewith; that each request for disbursement of HOME funds is for the actual cost of providing a service and that the service does not violate any conflict of interest provisions;(5) Original, executed, legally enforceable loan documents containing remedies adequate to enforce any applicable affordability requirements. Original documents must evidence that such agreements have been recorded in the real property records of the county in which the housing unit is located and the original documents must be returned, duly certified as to recordation by the appropriate county official;(6) Expenditures must be allowable and reasonable in accordance with federal, state, and local rules and regulations. The Department shall determine the reasonableness for expenditures submitted for reimbursement. The Department may request Administrator or Developer to make modifications to the disbursement request and is authorized to modify the disbursement procedures set forth herein and to establish such additional requirements for payment of HOME funds to Administrator or Developer as may be necessary or advisable for compliance with all Program Requirements;(7) Table funding requests must be submitted to the Department with complete documentation no later than 14 days prior to the anticipated loan closing date. Such a request must include a draft settlement statement, title company payee identification information, the Administrator or Developer's authorization for disbursement of funds to the title company, request letter from title company to the Comptroller of Public Accounts with bank account wiring instructions, and invoices for costs being paid at closing;(8) Include the withholding of ten percent of hard construction costs for retainage. Retainage will be held until at least 40 days after the Construction Completion Date;(9) For final disbursement requests, submission of documentation required for Activity completion reports;(10) The final request for disbursement must be submitted to the Department with support documentation no later than 60 days after the termination date of the Contract in order to remain in compliance with Contract and eligible for future funding. The Department shall not be obligated to pay for costs incurred or performances rendered after the termination date of a Contract; and(11) For costs associated with insurance policies, including title policies and homeowner's insurance policies, charged as Activity costs, evidence of payment of the cost must be submitted with the retainage request.</content><note type="source"><p>Source Note: The provisions of this §23.61 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c23/scG"><num value="G">SUBCHAPTER G</num><heading>HOMEBUYER ASSISTANCE WITH NEW CONSTRUCTION (HANC)</heading><section identifier="/us/state/tx/tac/t10/p1/c23/scG/s23.70"><num value="23.70">§23.70</num><heading>Homebuyer Assistance with New Construction (HANC) General Requirements.</heading><content>(a) Eligible Activities must meet the ownership requirement in paragraph (1) of this subsection and an Activity described in paragraph (2) of this subsection:(1) Ownership requirement. A site must be owned by the beneficiary or the HOME Activity must include one of the two following Activities:(A) Acquisition of existing single family housing or a parcel; or(B) Refinance of non-owner occupied real property parcel not prohibited for single family housing by zoning or restrictive covenants.(2) All Activities must include New Construction of a unit of single family housing not occupied by the Household prior to assistance; New Construction described in this subsection includes the purchase and installation of a new unit of Manufactured Housing (MHU).(b) The unit of housing in any of the Activities described in subsection (a) of this section must be occupied by the assisted Household as their principal residence for a minimum of 15 years from the Construction Completion Date.(c) If the assisted property is owned by the Household prior to participation, the Household must be current on any existing Mortgage Loans and taxes, and the property cannot have any existing home equity loan liens. HOME funds may not be utilized to refinance loans made or insured by any federal program.(d) Total Project costs, exclusive of Match funds, are limited to the amounts described in §23.27, Project Cost Limitations.(e) Homebuyers may choose to obtain financing for the acquisition or construction, or any combination thereof, from a third-party lender so long as the loan meets the requirements of §20.13 of this Title (relating to Loan, Lien and Mortgage Requirements for Activities). (f) Direct assistance will be structured as a fully amortizing, repayable loan and will initially be evaluated at zero percent interest. The minimum loan term shall be equal to the required federal affordability period based on the HOME investment, and shall be calculated by setting the total estimated housing payment (including principal, interest, property taxes, insurance, and any other homebuyer assistance), equal to at least the minimum required housing payment. Should the estimated housing payment, including all funding sources, be less than the minimum required housing payment for the minimum term, the Department may charge an interest rate to the homebuyer such that the total estimated housing payment is no less than the required minimum housing payment. In no instance shall the interest rate charged to the homebuyer exceed five percent and such result may deem the applicant as overqualified for assistance. The term shall not exceed 30 years and not be less than 15 years.(1) The total Mortgage Loan may include costs incurred for Acquisition or Refinance, Mortgage Loan closing costs, and Direct Activity Costs, exclusive of Match funds.(2) The total Debt-to-Income Ratio shall not exceed the limitations set forth in Chapter 20 of this Title.(3) For buyers whose income is equal to or less than 50 percent AMFI, the minimum required housing payment shall be no less than 15 percent of the household's gross income. For homebuyers whose income exceeds 50 percent AMFI, the minimum required housing payment shall be no less than 20 percent of the household's gross income.(g) Earnest money may be credited to the homebuyer at closing, but may not be reimbursed as cash. HOME funds may be used to pay other reasonable and customary closing costs that are HOME eligible costs.(h) To ensure affordability, the Department will impose recapture provisions established in this Chapter.</content><note type="source"><p>Source Note: The provisions of this §23.70 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c23/scG/s23.71"><num value="23.71">§23.71</num><heading>Homebuyer Assistance with New Construction (HANC) Administrative Requirements</heading><content>(a) Commitment or Reservation of Funds. The Administrator must submit the true and complete information, certified as such, with a request for the Commitment or Reservation of Funds as described in paragraphs (1) - (15) of this subsection:(1) Head of Household name and address of housing unit for which assistance is being requested;(2) A budget that includes the amount of Activity funds specifying the acquisition costs, construction costs, soft costs and administrative costs requested, a maximum of five percent of hard construction costs for contingency items, proposed Match to be provided, evidence that Direct Activity Cost and Soft Cost limitations are not exceeded, and evidence that any duplication of benefit is addressed;(3) Verification of environmental clearance from the Department;(4) A copy of the Household's intake application on a form prescribed by the Department;(5) Certification of the income eligibility of the Household signed by the Administrator and all Household members age 18 or over, and including the date of the income eligibility determination. All documentation used to determine the income of the Household must be provided;(6) Project cost estimates, construction contracts, and other construction documents necessary to ensure applicable property standard requirements will be met at completion;(7) Identification of any Lead-Based Paint (LBP) if activity involves an existing unit and certification that LBP will be mitigated as required by 24 CFR §92.355;(8) Evidence that the housing unit will be located outside of the 100-year floodplain;(9) If applicable, documentation to address or resolve any potential conflict of interest, Identity of Interest, or duplication of benefit;(10) Information necessary to draft Mortgage Loan documents, including issuance of an SOL;(11) Life event documentation, as applicable, and all information necessary to prepare any applicable affidavits such as marital status and heirship;(12) Documentation of homebuyer completion of a homebuyer counseling program/class provided by a HUD certified housing counselor;(13) For Activities involving acquisition of real property: (A) A title commitment to issue a title policy that evidences that the property will transfer with no tax lien, child support lien, mechanics or materialman's lien or any other restrictions or encumbrances that impair the good and marketable nature of title to the ownership interest and that the definition of Homeownership will be met. The effective date of the title commitment must be no more than 60 days prior to the date of project submission. Commitments that expire prior to execution of closing must be updated at closing and must not have any adverse changes in order to close;(B) Executed sales contract; and(C) A loan estimate or letter from any other lender confirming that the loan terms and closing costs will be consistent with the executed sales contract, the first lien Mortgage Loan requirements, and the requirements of this Chapter;(14) For Activities that do not involve acquisition of real property:(A) A title commitment or policy, or a down date endorsement to an existing title policy, and the actual documents, or legible copies thereof, establishing the Household's ownership, such as a warranty deed or ground lease for a 99-year leasehold. The effective date of the title commitment must be no more than 60 days prior to of the date of project submission. Title commitments for loan projects that expire prior to the loan closing date must be updated and must not have any adverse changes. These documents must evidence the definition of Homeownership is met;(B) A tax certificate that evidences a current paid status;(C) Written consent from all Persons who have a valid lien or ownership interest in the Property;(D) Consent to demolish from any existing Mortgage Loan lien holders and consent to subordinate to the Department's loan, if applicable; and(15) Any other documentation necessary to evidence that the Activity meets the Program requirements.(b) Loan closing. In addition to the documents required under subsection (a) of this section, the Administrator must submit the appraisal or other valuation method approved by the Department which establishes the post construction value of improvements prior to the issuance of loan documents by the Department.(c) Disbursement of funds. The Administrator must comply with all of the requirements described in paragraphs (1) - (11) of this subsection, for a request for disbursement of funds to reimburse eligible costs incurred. Submission of additional documentation related to the Administrator's compliance with requirements described in paragraphs (1) - (11) of this subsection, may be required with a request for disbursement:(1) For construction costs that are part of a loan subject to the requirements of this subsection, a down date endorsement to the title policy not older than the date of the last disbursement of funds or 45 days, whichever is later, is required. For release of retainage, the down date endorsement must be dated at least 40 days after the Construction Completion Date;(2) If applicable, a maximum of 50 percent of Activity funds for an Activity may be drawn before providing evidence of Match. Thereafter, each Administrator must provide evidence of Match, including the date of provision, in accordance with the percentage of Activity funds disbursed;(3) Property inspections, including photographs of the front, back, and side elevations of the housing unit and at least one picture of each of the kitchen, family room, each bedroom, and each bathroom with date and property address reflected on each photo, are required to be submitted. The inspection must be signed and dated by the inspector and Administrator;(4) Certification of the following is required:(A) That its fiscal control and fund accounting procedures are adequate to assure the proper disbursal of, and accounting for, funds provided;(B) That no Person that would benefit from the award of HOME funds has satisfied the Applicant's cash reserve obligation or made promises in connection therewith;(C) That each request for disbursement of HOME funds is for the actual cost of providing a service; and(D) That the service does not violate any conflict of interest provisions;(5) Original, fully executed, legally enforceable loan documents for each assisted Household containing remedies adequate to enforce any applicable affordability requirements are required. Certified copies of fully executed, recorded loan documents that are required to be recorded in the real property records of the county in which the housing unit is located must be returned to the Department, duly certified as to recordation by the appropriate county official. This documentation prior to disbursement is not applicable for funds made available at the loan closing;(6) Expenditures must be allowable and reasonable in accordance with federal, state, and local rules and regulations. The Department shall determine the reasonableness for expenditures submitted for reimbursement. The Department may request Administrator to make modifications to the disbursement request and is authorized to modify the disbursement procedures set forth herein and to establish such additional requirements for payment of HOME funds to Administrator as may be necessary or advisable for compliance with all program requirements; (7) The request for funds for administrative costs must be proportionate to the amount of Direct Activity Costs requested or already disbursed;(8) Disbursement requests must include the withholding of ten percent of hard construction costs for retainage. Retainage will be held until at least 40 days after the Construction Completion Date;(9) For final disbursement requests, the following is required:(A) Submission of documentation required for Activity completion reports and evidence that the demolition or, if an MHU, salvage and disposal of all dilapidated housing units on the lot;(B) Certification or other evidence acceptable to Department that the replacement house, whether site-built or MHU, was constructed or placed on and within the same lot for which ownership was established and on and within the same lot secured by the loan; and(C) A final appraisal of the property after completion of improvements;(10) The final request for disbursement must be submitted to the Department with support documentation no later than 60 days after the termination date of the Contract in order to remain in compliance with the Contract and eligible for future funding. The Department shall not be obligated to pay for costs incurred or performances rendered after the termination date of a Contract; and(11) For costs associated with insurance policies, including title policies and homeowner insurance policies charged as Activity costs, evidence of payment of the cost must be submitted with the retainage request.</content><note type="source"><p>Source Note: The provisions of this §23.71 adopted to be effective February 26, 2025, 50 TexReg 976.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c24"><num value="24">CHAPTER 24</num><heading>TEXAS BOOTSTRAP LOAN PROGRAM RULE</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c24/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p1/c24/sc/s24.1"><num value="24.1">§24.1</num><heading>Purpose</heading><content>(a) This chapter clarifies the Texas Bootstrap Loan Program, administered by the Texas Department of Housing and Community Affairs (the Department), also known as the Owner-Builder Loan Program. The Texas Bootstrap Loan Program provides assistance to income-eligible individuals, families and households to purchase or refinance real property, on which to build new residential housing or improve existing residential housing. The Program is administered in accordance with Tex. Gov't Code, Chapter 2306, Subchapter FF, Chapter 1 of this title (relating to Administration), Chapter 2 of this title (relating to Enforcement), Chapter 20 of this title (relating to Single Family Programs Umbrella Rule), Chapter 21 of this title (relating to Minimum Energy Efficiency Requirements for Single Family Construction Activities), and Chapter 26 of this title (relating to Texas Housing Trust Fund Rule).(b) The Texas Bootstrap Loan Program is a self-help housing construction Program designed to provide Low Income families an opportunity to help themselves attain homeownership or repair their existing homes under applicable building codes and housing standards.</content><note type="source"><p>Source Note: The provisions of this §24.1 adopted to be effective March 28, 2024, 49 TexReg 1907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c24/sc/s24.2"><num value="24.2">§24.2</num><heading>Definitions</heading><content>The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Other definitions may be found in Tex. Gov't Code, Chapter 2306, Chapter 1 of this title (relating to Administration), Chapter 2 of this title (relating to Enforcement), Chapter 20 of this title (relating to Single Family Programs Umbrella Rule), Chapter 21 of this title (relating to Minimum Energy Efficiency Requirements for Single Family Construction Activities), and Chapter 26 of this title (relating to Texas Housing Trust Fund Rule).(1) Capital Recovery Fee--A charge or assessment imposed by a political subdivision against new development in order to generate revenue for funding or recouping the costs of capital improvements or facility expansions necessitated by and attributable to the new development. The term includes amortized charges, lump-sum charges, contributions in aid of construction, and any other fee that functions as described by this definition.(2) Loan Commitment--A written agreement between the Department and Administrator that memorializes the term of the commitment of funds for a specific Mortgage Loan to a Qualified Household.(3) Loan Origination and Reservation System Access Agreement (Reservation Agreement)--A written agreement, including all amendments thereto between the Department and the Administrator that authorizes the Administrator to originate certain loans under the Texas Bootstrap Loan Program.(4) Low Income--Household income does not exceed the greater of 80% of the Area Median Family Income or 80% of the State Median Family Income, adjusted for Household size, in accordance with the current HOME Investment Partnerships Program income limits, as defined by HUD.(5) New Construction--A Single Family Housing Unit that is newly built on a previously vacant lot that will be occupied by an Income Eligible Household.(6) Owner-Builder--A person, other than a person who owns or operates a construction business and who owns or purchases a piece of real property through a warranty deed and deed of trust; or is purchasing a piece of real property under a Contract for Deed entered into before January 1, 1999; and who undertakes to make improvements to that property.(7) Rehabilitation--The improvement, including reconstruction, or modification of an existing Single Family Housing Unit through an alteration, addition, or enhancement on the same lot.(8) Very Low Income--Household income does not exceed the greater of 60% of the Area Median Family Income or 60% of the State Median Family Income, adjusted for Household size, in accordance with the current HOME Investment Partnerships Program income limits, as defined by HUD.</content><note type="source"><p>Source Note: The provisions of this §24.2 adopted to be effective March 28, 2024, 49 TexReg 1907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c24/sc/s24.3"><num value="24.3">§24.3</num><heading>Allocation of Funds</heading><content>(a) The Department administers all Texas Bootstrap Loan Program funds provided to the Department in accordance with Tex. Gov't Code, Chapter 2306, Subchapter FF.(b) The Department may make loans for the Texas Bootstrap Loan Program from:(1) Available funds in the Texas Housing Trust Fund established under Tex. Gov't Code, §2306.201; or(2) Federal block grants that may be used for the purposes of this chapter.(c) Each state fiscal year the Department shall transfer at least $3 million (or another amount if so required by Tex. Gov't Code or the General Appropriations Act) to the Texas Bootstrap Loan Program from money received under federal block grants or from available funds in the Texas Housing Trust Fund.(d) The Department may use up to 10% of Program funds available per state fiscal year to enhance the ability of tax-exempt organizations described by Tex. Gov't Code, §2306.755(a), to increase the number of such organizations that are able to implement the Program. The Department shall use that available revenue to provide financial assistance, technical training and management support.</content><note type="source"><p>Source Note: The provisions of this §24.3 adopted to be effective March 28, 2024, 49 TexReg 1907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c24/sc/s24.4"><num value="24.4">§24.4</num><heading>Administrator Requirements</heading><content>(a) Eligible Administrators. The following organizations or entities are eligible to become Administrators of the Texas Bootstrap Loan Program:(1) Colonia Self Help Centers established under Tex. Gov't Code, Chapter 2306, Subchapter Z; or(2) Nonprofit Organizations certified by the Department pursuant to Tex. Gov't Code, §2306.755.(b) Eligibility requirements. The Administrator must enter into a Reservation Agreement with the Department in order to be eligible to submit an Activity through the Reservation System. The Administrator must have the capacity to administer and manage resources as evidenced by previous experience of managing state or federal programs.</content><note type="source"><p>Source Note: The provisions of this §24.4 adopted to be effective March 28, 2024, 49 TexReg 1907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c24/sc/s24.5"><num value="24.5">§24.5</num><heading>Program Activities</heading><content>(a) Texas Bootstrap Loan Program funds may be used to finance affordable housing and promote homeownership through acquisition, New Construction, or Rehabilitation of single family residential housing subject to Program Manual and Survey requirements. Administrators may reserve funds by submitting a loan application on behalf of an Owner-Builder Applicant for the Texas Bootstrap Loan Program.(b) Manufactured Housing Units are not eligible housing types for the Texas Bootstrap Loan Program.(c) All Texas Bootstrap Loan Program Loans will be evidenced by a promissory note and will be secured by a lien on the subject property. The following Activities are permitted by the Department under the Program:(1) Purchase Money Loans. All Program funds are used to finance the purchase of a single-family dwelling unit and/or a piece of real property. The Department makes a loan to the Owner-Builder and the Owner-Builder's repayment obligation begins immediately. In certain situations, eligible closing costs may be financed by the loan proceeds;(2) Residential Construction Loans. This transaction is treated as a purchase money loan and is a one-time closing with the Owner-Builder. Construction period may be up to 12 months;(3) Interim Construction (Closing with Administrator) Loans. Interim construction is a commercial transaction between the Administrator and the Department that is with respect to a specific Owner-Builder. The construction period may be up to 12 months. Once the construction of the home is completed, the closing with the Owner-Builder will take place as a purchase money loan; and(4) Purchase of Mortgage Loans. The Department may purchase and take assignments from Mortgage lenders of notes and other obligations evidencing loans or interest in loans for purchase money transactions as described in paragraph (1) of this subsection.</content><note type="source"><p>Source Note: The provisions of this §24.5 adopted to be effective March 28, 2024, 49 TexReg 1907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c24/sc/s24.6"><num value="24.6">§24.6</num><heading>Prohibited Fees</heading><content>The fees described in paragraphs (1) - (8) of this section are prohibited Program fees and may not be charged directly to the Owner-Builder; however, these fees may be charged as an allowable fee by a third party lender or servicer for a Texas Bootstrap Loan Program loan:(1) Payment of delinquent property taxes or related fees or charges on properties to be assisted with Texas Bootstrap Loan Program funds;(2) Loan origination fees;(3) Application fees;(4) Discount fees;(5) Underwriter fees;(6) Loan processing fees;(7) Loan servicing fees; and(8) Other fees not approved by the Department in writing prior to expenditure.</content><note type="source"><p>Source Note: The provisions of this §24.6 adopted to be effective March 28, 2024, 49 TexReg 1907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c24/sc/s24.7"><num value="24.7">§24.7</num><heading>Distribution of Funds</heading><content>(a) Set-Asides. In accordance with Tex. Gov't Code §2306.753(d), at least two-thirds of the dollar amount of Program loans made in each fiscal year must be made to Owner-Builders whose real property is located in a census tract that has a median household income that is not greater than 75% of the median state household income for the most recent year for which statistics are available.(b) Balance of State. The remaining one-third of the dollar amount of Program loans made may be made to Owner-Builders anywhere in the state.(c) Loan Priority. The Department may allow an Administrator access to the Reservation System 24 hours prior to all other Administrators for reservations for Owner-Builder Applicants that meet the following criteria:(1) Annual household income is less than $17,500; or(2) Real property is located in a county or municipality that agrees in writing to waive the Capital Recovery Fees, building permit fee or other fees related to the house(s) to be built with the loan proceeds. Owner-Builder Applicant will not receive priority if there are none of the fees described in §24.6 of this chapter (relating to Prohibited Fees) imposed by the county or municipality or water supply company.</content><note type="source"><p>Source Note: The provisions of this §24.7 adopted to be effective March 28, 2024, 49 TexReg 1907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c24/sc/s24.8"><num value="24.8">§24.8</num><heading>Criteria for Funding and Reservations</heading><content>(a) The Department will distribute Program funds in accordance with the Texas Housing Trust Fund (Texas HTF) Plan in effect at the time. The Department will publish an announcement for a NOFA in the Texas Register and post the NOFA on the Department's website. The rules referenced in §24.1 of this Chapter (relating to Purpose) and the NOFA will establish and define the terms, conditions, and maximum Reservation amounts allowed per Administrator. The Department may also set a deadline for receiving Reservations or Applications. The NOFA will indicate the approximate amount of available funds. The Department may increase the amount of funds made available through the NOFA from time to time without republishing the NOFA in the Texas Register. Such increases will be reflected on the Department's website.(b) Any Reservation containing false information will be disqualified. The Department will review and process all Reservations in the order received.(c) Reservations received by the Department in response to a NOFA will be handled as described in paragraphs (1) - (5) of this subsection.(1) The Department will accept Reservations until all funds under the NOFA have been committed. The Department may limit the eligibility of Reservations in the NOFA.(2) Each Reservation will be assigned a "received date" based on the date and time the Reservation was entered into the Texas Bootstrap Loan Program Reservation system. Each Reservation will be reviewed in accordance with the Program rules.(3) Reservations must comply with all applicable Texas Bootstrap Loan Program requirements or regulations established in this chapter. Reservations that do not comply with such requirements may be disqualified. The Administrator will be notified in writing of any cancelled or disqualified Reservations.(4) If a Reservation contains deficiencies which, in the determination of the Department, require clarification or correction of information submitted at the time of the Reservation, the Department may request clarification or correction in the form of a deficiency notice to the Administrator. If the Administrator is unable to cure any deficiencies within 14 calendar days, the Department may decline to fund the Reservation. The Department may provide one 14 calendar day extension to the curative deadline outlined in the deficiency notice.(5) Prior to issuing a Loan Commitment, the Department may decline to fund any Reservation entered into the Reservation system if the proposed housing Activities do not, in the Department's sole determination, represent a prudent use of the Department's funds. The Department is not obligated to proceed with any action pertaining to any Reservation which are entered, and may decide it is in the Department's best interest to refrain from committing the funds. If the Department has issued a Loan Commitment, but the Administrator or Owner-Builder Applicant has not complied with all the Program rules and guidelines, the Department may suspend funding until the Administrator or Owner-Builder Applicant has satisfied all requirements of the Program.</content><note type="source"><p>Source Note: The provisions of this §24.8 adopted to be effective March 28, 2024, 49 TexReg 1907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c24/sc/s24.9"><num value="24.9">§24.9</num><heading>Program Administration</heading><content>(a) Pursuant to Tex. Gov't Code §2306.754(b), the Department shall not exceed $45,000 in household assistance for any Texas Bootstrap Loan Program loan. If it is not possible for an Owner-Builder to purchase necessary real property and build or rehabilitate adequate housing for $45,000, the Owner-Builder must obtain the additional amounts necessary from other sources, which may include other types of Department funds, excluding Texas HTF.(b) The Department shall make loans for Owner-Builder Applicants to enable them to:(1) Build new residential housing, including the purchase or refinance of real property, if needed, on which to undertake such Activity; or(2) Improve existing residential housing, including the purchase or refinance of real property, if needed, on which to undertake such Activity.(c) Upon approval by the Department, the Administrator shall enter into, execute, and deliver to the Department the Reservation Agreement. The Department may terminate the Reservation Agreement in whole or in part if the Administrator has not performed as outlined in the Program Rule, NOFA, Reservation Agreement, or Program Manual.(d) If the Owner-Builder Applicant qualifies for the Program, the Department will issue a Loan Commitment which reserves up to $45,000 in funds for 12 months from the date of the Loan Commitment. The Owner-Builder Applicant will not be required to re-qualify if the Owner-Builder Applicant closes by the expiration date on the Loan Commitment. If an Owner-Builder Applicant does not close by the expiration date, the Owner-Builder Applicant must re-qualify for the Program; however, the Department may grant an extension of up to 180 days from the expiration date on the original Loan Commitment. If the Owner-Builder Applicant fails to close on the loan after the extension is granted the Reservation or loan will be cancelled.(e) Roles and responsibilities for administering the Program Contract. Administrators are required to:(1) Qualify potential Owner-Builders for loans;(2) Provide Owner-Builder homeownership education classes and ensure provision of HUD-certified housing counseling;(3) Supervise and assist Owner-Builders to build or Rehabilitate housing;(4) Facilitate loans made or purchased by the Department under the Program; and(5) Implement and administer the Program on behalf of the Department.(f) Loan Servicing Agreement. Administrators may service Program loans originated on behalf of the Department. Administrators servicing Program loans on behalf of the Department must obtain prior approval and enter into a loan servicing agreement with the Department. Administrator certification for a loan servicing agreement expires annually, after which an Administrator in good standing with the Department may apply for recertification of the loan servicing agreement utilizing the recertification application provided by the Department's Loan Servicing section. Loan servicing agreements may be reevaluated from time to time and may be terminated at the discretion of the Department.(g) First Year Consultation Agreement. If the Department notifies the Administrator that an Owner-Builder has failed to make a scheduled payment due under the Program loan, or other payments due under the Program loan documents, within the first 12 months of funding, the Administrator must meet with the Owner-Builder and provide counseling to assist in bringing the payments current. After such consultation and in the event that the Department and Administrator are not able to bring the Program loan current, the Department in accordance with its administrative rules, may apply appropriate graduated sanctions leading up to, but not limited to, deobligation of funds and future debarment from participation in the Program.(h) Administrative Fee. The Administrator will be granted a 10% administrative fee upon completion of the house and funding of each Mortgage Loan.(i) Construction Plans. If the activity is New Construction or reconstruction, Administrator must submit a legible copy of the proposed construction plans for approval by the Department prior to the Administrator accepting applications for Owner-Builder Applicants.(j) Work Write-up. If Administrator's activity is Rehabilitation, Administrator must adhere to TMCS and submit work write-ups and cost estimates for Department approval prior to construction.(k) Loan Program Requirements. The Department may purchase or originate loans that conform to the lending parameters and the specific loan Program requirements as described in paragraphs (1) - (6) of this subsection:(1) Minimum loan amount is $1,000;(2) Loan term may not exceed 30 years;(3) Loan term may not be less than five years;(4) Loan must be at zero percent (0%) interest for the entire loan term;(5) When refinancing a Contract for Deed, the Department will not disburse any portion of the Department's loan until the Owner-Builder receives a deed to the property; and(6) Owner-Builder must have resided in Texas for the preceding six months prior to the date of loan application.(l) Loan Assumption. A Program loan is assumable if the Department determines that the Owner-Builder Applicant complies with all Program requirements in effect at the time of the assumption.</content><note type="source"><p>Source Note: The provisions of this §24.9 adopted to be effective March 28, 2024, 49 TexReg 1907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c24/sc/s24.10"><num value="24.10">§24.10</num><heading>Owner-Builder Qualifications</heading><content>The Owner-Builder must:(1) Own or be purchasing a piece of real property with the conveyance of said property evidenced by a warranty deed or Contract for Deed;(2) Be qualified as Low Income. Income eligibility of a Household is determined using the "Annual Income" as defined at 24 CFR §5.609, by using the list of income included in HUD Handbook 4350.3 (or most recent version), and excluding from income those items listed in HUD's Updated List of Federally Mandated Exclusions from Income. At least two months of source documentation of earned income must be provided.(3) Execute a self-help agreement committing to specify and satisfy one of the criteria provided for in subparagraphs (A) - (D) of this paragraph:(A) Provide at least 65% of the labor necessary to build or rehabilitate the proposed housing through a state-certified Administrator;(B) Provide an amount of labor equivalent to 65% in connection with building or rehabilitating housing for others through a state-certified Administrator;(C) Provide through the noncontract labor of friends, family, or volunteers and through personal labor at least 65% of the labor necessary to build or rehabilitate the proposed housing through a state-certified Administrator; or(D) If due to a documented disability or other limiting circumstances the Owner-Builder cannot provide the amount of personal labor otherwise required, provide through the noncontract labor of friends, family or volunteers at least 65% of the labor necessary to build or rehabilitate the proposed housing through a state-certified Administrator;(4) Successfully complete an Owner-Builder homeownership education class and HUD-certified housing counseling prior to loan funding;(5) Not have any outstanding judgments or liens on the property; and(6) Occupy the residence as a Principal Residence within 30 days of the end of the construction period or the closing of the loan, whichever is later. If the Owner-Builder fails to do so, the Department may declare the loan in default and accelerate the note. Any additional habitable structures must be removed from the property prior to closing; however, a portion of the structure may be utilized as storage upon the Department's written approval prior to closing.</content><note type="source"><p>Source Note: The provisions of this §24.10 adopted to be effective March 28, 2024, 49 TexReg 1907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c24/sc/s24.11"><num value="24.11">§24.11</num><heading>Property Guidelines and Related Issues</heading><content>(a) A final appraisal is required by the Department on each property prior to loan closing.(b) Title Commitment.(1) A copy of the preliminary title report including complete legal description and copies of all schedules, covenants, conditions and restrictions, easements, and any supplements thereto is required at the time of submission, and must not be more than 90 days old.(2) Title commitments must list the Department's Loan.(3) The final title commitment or title report submitted to the Department to draft Loan documents should not be more than 30 days old at the time of the submission in order to remain valid and effective at the date of the loan closing. Title commitments older than 90 days are no longer valid and must be updated prior to the date of loan closing.(c) For acquisition of existing Single Family Housing Unit that will not be rehabilitated, a property inspection will be required to be completed by an inspector licensed by the Texas Real Estate Commission. A copy of the inspection report must be submitted and any deficiencies listed on the report must be corrected prior to closing. Cosmetic issues such as paint, wall texture, etc. may not be required to be corrected if utilizing a self-help construction Program. A copy of the inspection report must be provided to the Owner-Builder Applicant and the Department. The Administrator or the Owner-Builder Applicant will be responsible for the selection and the fee of the licensed inspector.</content><note type="source"><p>Source Note: The provisions of this §24.11 adopted to be effective March 28, 2024, 49 TexReg 1907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c24/sc/s24.12"><num value="24.12">§24.12</num><heading>Administrator Certification</heading><content>(a) An Administrator must be certified prior to execution of a Reservation Agreement. The term of the Reservation Agreement shall not exceed 36 months, after which an Administrator must reapply for certification and a new Reservation Agreement.(b) The Department will produce an Application to satisfy the Department's requirements to be certified to administer the Texas Bootstrap Loan Program. The Application will be available on the Department's website. Applications for a Reservation Agreement will include, at a minimum, criteria listed in subsections (c) - (m) of this section.(c) An Application for certification must be submitted in the format required by the Department.(d) If the Applicant is a Nonprofit Organization, Applicant must demonstrate:(1) The Applicant is registered and in good standing with Office of the Secretary of State and the State Comptroller's Office as a nonprofit corporation under the Texas Business Code or a nonprofit organization under any other state not-for-profit/nonprofit statute;(2) The net earnings of the Applicant may not inure to the benefit of any member, founder, contributor, or individual, as evidenced by charter, Bylaws, or Certificate of Formation or Articles of Incorporation, as applicable;(3) The Applicant has been granted 501(c)(3) tax-exempt status as a charitable, nonprofit corporation or as a subordinate organization of a central nonprofit corporation under §501(c)(3) of the Internal Revenue Code of 1986, as evidenced by a certificate from the IRS dated 1986 or later. The exemption ruling must be effective on the date of the Application and must continue to be effective while certified as an Administrator.(4) The Applicant have among its purposes the provision of decent housing that is affordable to low and moderate income people as evidenced by a statement in the organization's charter, Certificate of Formation, Articles of Incorporation, Resolutions, or Bylaws.(e) The Applicant must conform to the United States Generally Accepted Accounting Principles (GAAP) as evidenced by a notarized statement by the Executive Director or chief financial officer of the organization in a form prescribed by the Department or certification from a Certified Public Accountant.(f) If the Applicant proposes to provide interim or residential construction funds, it must provide an audited financial statement for the most recent fiscal year or a signed and dated financial statement for the period since last published audit. If the Applicant does not have audited financial statements or a signed and dated financial statement for the period since last published audit must provide a resolution from the Board of Directors that is signed and dated within 6 months from the date of Application and certifies that the accounting procedures used by the organization conform to the GAAP. Certified Administrators that do not have audited financial statements or a signed and dated financial statement for the period since last published audit are restricted to only originating permanent loans and will be ineligible for any interim or residential construction loans, until the Department has reviewed the most current audited financial statements.(g) The Applicant must demonstrate capacity for carrying out Mortgage Loan origination and self-help housing construction Activities, as evidenced by resumes or statements that describe the experience of key staff members who have successfully completed projects similar to those to be assisted with Texas Bootstrap Loan Program funds; or contract(s) with consultant firms or individuals who have housing experience similar to projects to be assisted with Texas Bootstrap Loan Program funds, to train appropriate key staff of the organization.(h) Religious or Faith-based Organizations (RFOs) may sponsor an Applicant if the Applicant meets all the requirements of this section. While the governing board of an Applicant sponsored by a religious or a faith-based organization remains subject to all other requirements in this section, the RFO may retain control over appointments to the board. Additionally, RFOs must comply with the following:(1) Housing developed must be made available exclusively for the residential use of Program beneficiaries, and must be made available to all persons regardless of religious affiliations or beliefs;(2) Texas Bootstrap Loan Program funds may never be used to support any explicitly religious activities such as worship, religious instruction, or proselytizing; and(3) Compliance with paragraphs (1) and (2) of this subsection must be evidenced by the Bylaws, charter or Certificate of Formation.(i) Program Design and Guidelines. The Applicant must have policies for how the Owner-Builders participating in its Program will meet the self-help requirements and guidelines related to qualifying potential Owner-Builders.(j) The Applicant must provide to the Department the number of houses they are proposing to build, type of proposed financing structure and construction timelines, to evidence its ability to carry out the Program.(k) The Applicant must provide curriculum related to homebuyer education, as well as evidence of its ability to provide HUD-certified housing counseling, which may be provided by the Administrator or another HUD-certified provider.(l) The Applicant must be in compliance with 10 TAC §1.403, (relating to Single Audit Requirements), and 10 TAC §20.8, (relating to Fair Housing, Affirmative Marketing and Reasonable Accommodations) at the time of Application.(m) The Applicant must be in compliance with any existing Contracts awarded by the Department and is subject to the Department's Previous Participation Review process provided for in 10 TAC §1.302 (relating to Previous Participation Reviews for Department Program Awards Not Covered by §1.301 of this Subchapter) and §1.303 (relating to Executive Award and Review Advisory Committee (EARAC) of this title.</content><note type="source"><p>Source Note: The provisions of this §24.12 adopted to be effective March 28, 2024, 49 TexReg 1907.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c25"><num value="25">CHAPTER 25</num><heading>COLONIA SELF-HELP CENTER PROGRAM RULE</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c25/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p1/c25/sc/s25.1"><num value="25.1">§25.1</num><heading>Purpose and Services</heading><content>The purpose of this Chapter is to establish the requirements governing the Colonia Self-Help Centers, created pursuant to Subchapter Z of Chapter 2306 of the Tex. Gov't Code, Chapter 1 of this title (relating to Administration), Chapter 2 of this title (relating to Enforcement), Chapter 20 of this title (relating to Single Family Programs Umbrella Rule), Chapter 21 of this title (relating to Minimum Energy Efficiency Requirements), and including the use and administration of all funds provided to the Texas Department of Housing and Community Affairs (the Department) by the legislature of the annual Texas Community Development Block Grant (CDBG) allocation from the U.S. Department of Housing and Urban Development (HUD). Colonia Self-Help Centers are designed to assist individuals and families of low- income and very low-income to finance, refinance, construct, improve, or maintain a safe, suitable home and otherwise improve living conditions in the designated Colonia service areas or in another area the Department has determined is suitable.</content><note type="source"><p>Source Note: The provisions of this §25.1 adopted to be effective January 2, 2022, 46 TexReg 9009.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c25/sc/s25.2"><num value="25.2">§25.2</num><heading>Definitions</heading><content>The following words and terms, when used in this Chapter, shall have the following meanings unless the context or the Notice of Funding Availability (NOFA) indicates otherwise. Other definitions may be found in Chapter 2306 of the Tex. Gov't Code, Chapter 1 of this title (relating to Administration), Chapter 2 of this title (relating to Enforcement), Chapter 20 of this title (relating to Single Family Programs Umbrella Rule), and Chapter 21 of this title (relating to Minimum Energy Efficiency Requirements). Common definitions used under the CDBG Program are incorporated herein by reference.(1) Beneficiary--A person or family benefiting from the Activities of a Colonia Self-Help Center Contract.(2) Colonia Resident Advisory Committee (C-RAC)--As established by Tex. Gov't Code §2306.584, advises the Department's Governing Board regarding the needs of Colonia residents, appropriate and effective programs that are proposed or operated through the CSHCs, and activities that may be undertaken through the CSHCs to better serve the needs of Colonia residents.(3) Colonia Self-Help Center (CSHC)--Those centers established by the Department through its authority under Tex. Gov't Code §2306.582.(4) Colonia Self-Help Center Provider--An organization with which the Administrator has an executed Contract to administer Colonia Self-Help Center Activities.(5) Community Action Agency--A political subdivision, combination of political subdivisions, or nonprofit organization that qualifies as an eligible entity under 42 U.S.C. §9902.(6) Contract Budget--An exhibit in the Contract which specifies in detail the Contract funds by budget category, which is used in the Draw process. The budget also includes all other funds involved that are necessary to complete the Performance Statement specifics of the Contract.(7) Direct Delivery Costs--Soft costs related to and identified with a specific housing unit. Eligible Direct Delivery Costs include:(A) Preparation of work write-ups, work specifications, and cost estimates;(B) Legal fees, recording fees, architectural, engineering, or professional services required to prepare plans, drawings or specifications directly attributable to a particular housing unit;(C) Home inspections, inspections for lead-based paint, asbestos, termites, and interim inspections; and(D) Other costs as approved in writing by the Department.(8) Housing Assistance Guidelines (HAG)--The guidelines provided by the Unit of General Local Government that outline the process and procedures used to administer and implement the Colonia Self-Help Center Program. These guidelines cannot conflict with state statute, program rules, regulations and/or contract requirements.(9) Implementation Manual--A set of guidelines designed by the Department as an implementation tool for the Administrator and/or Colonia Self-Help Center Subawardee that have been awarded Community Development Block Grant Funds, which provides terms, regulations, procedures, forms, and attachments.(10) Income Eligible Household--Household income does not exceed the limits established below:(A) Extremely Low Income--Households whose annual incomes do not exceed 30% of the Area Median Family Income in accordance with the current CDBG Program Income Limits, as defined by HUD;(B) Low Income--Households whose annual incomes do not exceed 50% of the Area Median Family Income in accordance with the current CDBG Program Income Limits, as defined by HUD; and(C) Moderate Income--Households whose annual incomes do not exceed 80% of the Area Median Family Income in accordance with the current CDBG Program Income Limits, as defined by HUD.(11) M Number--a several digit identification number, preceded by the letter "M" and assigned by the Texas Water Development Board to colonias that have been identified by the Office of the Attorney General of Texas.(12) New Construction--A Single Family Housing Unit that is newly built by certified Community Housing Development Organizations (CHDOs) or Community Based Development Organizations (CBDOs) on a previously vacant lot that will be occupied by an Income Eligible Household.(13) Performance Statement--An exhibit in the Contract which specifies in detail the scope of work to be performed.(14) Public Service Activities--Activities other than New Construction, Reconstruction, and Rehabilitation activities that are provided by a Colonia Self-Help Center to benefit Colonia residents. These include, but are not limited to, construction skills classes, solid waste removal, tool lending library, technology classes, home ownership classes and technology access.(15) Reconstruction--The demolition and rebuilding of a Single Family Housing Unit on the same lot in substantially the same manner. The number of housing units may not be increased or decreased; however, the number of rooms may be increased or decreased dependent on the number of Household members living in the Single Family Housing Unit at the time of Application. Reconstruction of residential structures also permits replacing an existing substandard Manufactured Housing Unit with a new, site- built housing unit or a new Manufactured Housing Unit.(16) Rehabilitation--The improvement or modification of an existing Single Family Housing Unit that is not a Manufactured Housing Unit through an alteration, addition, or enhancement on the same lot.(17) Unit of General Local Government (UGLG)--A city, town, county, or other general purpose political subdivision of the state.</content><note type="source"><p>Source Note: The provisions of this §25.2 adopted to be effective January 2, 2022, 46 TexReg 9009.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c25/sc/s25.3"><num value="25.3">§25.3</num><heading>Eligible and Ineligible Activities</heading><content>(a) A CSHC may only serve Income Eligible Households in the targeted Colonias by:(1) Providing assistance in obtaining Loans or grants to build a home;(2) Teaching construction skills necessary to repair or build a home;(3) Providing model home plans;(4) Operating a program to rent or provide tools for home construction and improvement for the benefit of property owners in Colonias who are building or repairing a residence or installing necessary residential infrastructure;(5) Assisting to obtain, construct, access, or improve the service and utility infrastructure designed to service residences in a Colonia, including potable water, wastewater disposal, drainage, streets, and utilities;(6) Surveying or platting residential property that an individual purchased without the benefit of a legal survey, plat, or record;(7) Providing Housing Counseling related to all applicable single family activities that take place on or after August 1, 2020, and that satisfies HUD Counseling Requirements in 24 CFR Part 214;(8) Applying for Grants and Loans to provide housing and other needed community improvements;(9) Providing other services that the CSHC, with the approval of the Department, determines are necessary to assist Colonia residents in improving their physical living conditions such as Rehabilitation, Reconstruction, and New Construction, including help in obtaining suitable alternative housing outside of a Colonia area;(10) Providing assistance in obtaining Loans or grants to enable an Income Eligible Household to acquire fee simple title to property that originally was purchased under a Contract for Deed, contract for sale, or other executory contract;(11) Providing title-related services for unrecorded Contracts for Deed, clouded titles, property transfers, intestate estates, and other title ownership matters;(12) Providing access to computers, the internet and computer training;(13) Providing monthly programs to educate Income Eligible Households on their rights and responsibilities as property owners;(14) Assisting with measures to secure employment;(15) Assisting with establishment or expansion of a small business;(16) Assisting with development of professional skills; and(17) Education in management of personal finances and achieving financial literacy.(b) Ineligible Activities include:(1) Rehabilitation (excluding Reconstruction) of an MHU; and(2) Any Activity not allowed by the Housing and Community Development Act of 1974 (42 U.S.C. §§5301, et seq.).(c) A CSHC will only provide grants, financing, or Mortgage Loan services for New Construction, Reconstruction, and Rehabilitation of a home in a Colonia that is connected to a Department-approved source of potable water and wastewater disposal.</content><note type="source"><p>Source Note: The provisions of this §25.3 adopted to be effective January 2, 2022, 46 TexReg 9009.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c25/sc/s25.4"><num value="25.4">§25.4</num><heading>Colonia Self-Help Centers Establishment</heading><content>(a) Pursuant to Section 2306.582 of the Tex. Gov't Code, the Department has established CSHCs in Cameron (also serves Willacy), El Paso, Hidalgo, Maverick, Nueces, Starr, Val Verde, and Webb Counties.(b) The Department has designated:(1) Appropriate staff in the Department who are designated to assist the CSHCs in understanding the requirements of the Program, provide training, and access CDBG funding to enable the CSHCs to carry out Programs;(2) Five Colonias in each service area are to be identified by the UGLG to receive concentrated attention from the CSHCs in consultation with the C-RAC; and(3) A geographic area for the services provided by each CSHC.(c) The Department shall make a reasonable effort to secure:(1) Contributions, services, facilities, or operating support from the county commissioner's court of the county in which a CSHC is located which it serves to support the operation of that CSHC; and(2) An adequate level of CDBG funds to provide each CSHC with funds for low interest Mortgage financing, Grants for Self-Help Programs, a revolving loan fund for septic tanks, a tool lending program, and other Activities the Department determines are necessary.(d) Consistent with federal rules and regulations, as provided for in the General Appropriations Act, the CSHC in El Paso shall provide technology and computer access to residents of targeted colonias. Any CSHC may establish a technology center to provide internet access to Colonia residents.</content><note type="source"><p>Source Note: The provisions of this §25.4 adopted to be effective January 2, 2022, 46 TexReg 9009.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c25/sc/s25.5"><num value="25.5">§25.5</num><heading>Allocation, Deobligation and Termination, and Reobligation</heading><content>(a) Allocation.(1) The Department distributes CSHC funds to UGLGs from the 2.5% set-aside appropriated to the Department from the annual CDBG allocation to the state of Texas.(2) The Department shall allocate no more than $1 million per CSHC award except as provided by this chapter. If there are insufficient funds available from any specific program year to fully fund an Application, the awarded Administrator may accept the amount available at that time and wait for the remaining funds to be committed upon the Department's receipt of the CDBG set-aside allocation from the next program year.(3) A baseline award will first be calculated for a CSHC beginning at $500,000 (or a lesser amount as provided for in paragraph (2) of this subsection). The Department will add to the baseline award up to an additional $100,000 for each Expenditure Threshold that has been met on the current CSHC Contract, as defined in §25.10 of this chapter (relating to Expenditure Thresholds and Closeout Requirements). An additional amount up to $100,000 may be added for an accepted Application submitted by the deadline. An Administrator may request that the Board add additional funds to a baseline award, despite the failure to meet one or more Expenditure Thresholds. To add funds to a CSHC Contract being considered for award, the Board must find that the failure to meet each Expenditure Threshold requirement was principally related to factors beyond the control of the Administrator. If the Board decides to award these additional funds in whole or in part, it must also determine that the award of these funds to the Administrator does not create a substantial risk to the State of recapture of CDBG funds by HUD.(b) Deobligation and Termination.(1) At any point in which an Administrator has missed one of the Expenditure Thresholds required in §25.10 of this chapter, the Department will send a notification of possible deobligation. An Administrator will have the opportunity to submit a mitigation plan that outlines how it will bring the Contract back into compliance, and how it will ensure that subsequent Expenditure Thresholds can be achieved. If the Department approves the mitigation plan, it will take no further action on deobligation at that time. If the Department receives no response, or if the mitigation plan is insufficient to be approved by the Department, the Department will send notice to the Administrator and the UGLG official to announce the initiation of deobligation proceedings and to identify the Administrator's rights under Tex. Gov't Code, Chapter 2105 and 10 TAC §1.411 (relating to Administration of Block Grants under Chapter 2105 of the Tex. Gov't Code). Approval of such action will be presented to the Department's Board.(2) At any point in which the Department has determined that a Contract should be terminated for violation of program requirements, the Department will send a notification of possible termination of Contract. A Subrecipient will have the opportunity to submit a mitigation plan that outlines how it will bring the Contract back into compliance. If the Department approves the mitigation plan, it will take no further action on termination at that time. If the Department receives no response, or if the mitigation plan is insufficient to be approved by the Department, the Department will send notice to the Administrator and the UGLG official to announce the initiation of deobligation proceedings and to identify the Administrator's rights under Tex. Gov't Code, Chapter 2105 and 10 TAC §1.411. Approval of such action will be presented to the Department's Board.(3) During the time that a deobligation or termination process is pending, the Department may reduce an Administrator's Contract by up to 24.99% of the Contract and may publish a Request for Administrators (RFA) to identify another UGLG to implement the CSHC Program in the affected service area. No award to a respondent of an RFA will be made in an amount greater than 24.99% of the original Administrator's Contract until the process provided by Tex. Gov't Code, Chapter 2105 has been completed. Once that process is completed, an Administrator awarded a Contract through the RFA may receive up to the maximum award available, subject to funding availability.(c) Reobligation.(1) When funds become available from the proceedings of subsection (b) of this section, they will be held for a period of at least 90 days while an RFA for the service area is initiated. Unless debarred by HUD or the Department, a prior Administrator is not precluded from applying under an RFA for this service area.(2) In all cases, funds for a given service area will continue to be allocated to that service area unless no acceptable respondents are identified. Only in such cases that no qualified provider can be identified for a given service area will funds available for that area be reissued to other CSHC Contracts for other service areas.</content><note type="source"><p>Source Note: The provisions of this §25.5 adopted to be effective January 2, 2022, 46 TexReg 9009.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c25/sc/s25.6"><num value="25.6">§25.6</num><heading>Colonia Self-Help Center Application Requirements</heading><content>(a) At least three months prior to the expiration of its current Contract, or when 90% of the funds under the current Contract have been expended, whichever comes first, the current Administrator may submit its Application to the Department.(b) The Department will prioritize funding to CSHCs whose Contracts are reaching expiration before funding CSHCs that are requesting additional funding for an existing Contract that is not nearing expiration. Among all other non-expiring Applications, the Department shall review Applications on a first-come, first-served basis. Recommendations for award will be made until all CSHC funds for the current program year and deobligated CSHC funds are committed.(c) Each Application must utilize the Department's forms and documents where applicable, and include:(1) Evidence of the submission of the Administrator's current Single Audit, if applicable;(2) A Colonia identification form and the M number assigned by the Texas Water Development Board for each Colonia to be served, including all required documentation as identified on the form;(3) A boundary map for each of the five designated Colonias;(4) A description of the method of implementation. For each Colonia to be served by the CSHC, the Administrator shall describe the services and Activities to be delivered;(5) A proposed Performance Statement which must include the number of Colonia residents estimated to be assisted from each Activity, the Activities to be performed (including all Sub-Activities under each budget line item), and the corresponding budget;(6) A proposed Contract Budget which must adhere to the following limitations:(A) The Administration line item may not exceed 15% of the total Contract;(B) The Public Services Activities line item must be at least 8% but not more than 10% of the total Contract;(C) For UGLGs self-administering the Program, Direct Delivery Costs for all New Construction and Reconstruction Activities cannot exceed 10% per unit provided by the CSHC Program. Direct Delivery Costs for Rehabilitation are limited to 15% per unit provided by the CSHC Program;(7) The CSHC's Proposed Housing Assistance Guidelines, which must include an Affirmative Fair Housing Marketing Plan as described under Chapter 20 of this title and all program parameters for Rehabilitation, Reconstruction, or New Construction;(8) Evidence of model subdivision rules adopted by the County;(9) Written policies and procedures, as applicable, for:(A) Solid waste removal;(B) Construction skill classes;(C) Homeownership classes;(D) Technology access, including any technology hardware inventory purchased with CSHC funds;(E) Homeownership assistance; and/or(F) Tool lending library, including any library inventory purchased with CSHC funds. All CSHCs are required to operate a tool lending library;(10) Authorized signatory form and direct deposit authorization;(11) UGLG resolution authorizing the submission of the Application and appointing the primary signatory for all Contract documents;(12) Acquisition report (even if there is no acquisition activity);(13) Certification of exemption for HUD funded projects;(14) Initial disclosure report for the Texas Department of Agriculture;(15) All forms required for a Previous Participation Review under §1.302 of this title (relating to Previous Participation Reviews for Department Program Awards Not Covered by §1.301 of this Subchapter); and(16) All forms required by §20.8 of this title (relating to Fair Housing, Affirmative Marketing and Reasonable Accommodations).(d) Upon receipt of the Application, the Department will perform an initial review to determine whether the Application is complete and that each Activity meets a national objective as required by §104(b)(3) of the Housing and Community Development Act of 1974 (42 U.S.C. 5304(b)(3)).(e) The Department may reduce the funding amount requested in the Application in accordance with §25.5(a) of this chapter. Should this occur, the Department shall notify the appropriate Administrator before the Application is submitted to C-RAC for review, comments and approval. The Department and the Administrator will work together to jointly agree on the performance measures and proposed funding amounts for each Activity.(f) The Department shall execute a four-year Contract with the Administrator, unless the award is for more than the Administrator's proportional allocation. If the Administrator requirements are completedprior to the end of the Contract Term, the Administrator may submit a new Application. Contract extensions may be granted for up to six months by the Department.(g) The Department may decline to fund any Application if the Activities do not, in the Department's sole determination, represent a prudent use of CSHC funds. The Department is not obligated to proceed with any action pertaining to any Application which is received, and may decide it is in the Department's best interest to refrain from pursuing any selection process.</content><note type="source"><p>Source Note: The provisions of this §25.6 adopted to be effective January 2, 2022, 46 TexReg 9009.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c25/sc/s25.7"><num value="25.7">§25.7</num><heading>Colonia Resident Advisory Committee Duties and Award of Contracts</heading><content>(a) The Board shall appoint one committee member to represent each of the counties in which a CSHC is located to serve on the C-RAC. The members of the C-RAC shall be selected from lists of candidates submitted to the Department by local nonprofit organizations and the Commissioners Court of the county in which a CSHC is located. Each committee member:(1) Must be a resident of a Colonia in the county the member represents;(2) May not be a board member, contractor, or employee of the Administrator;(3) May not have any ownership interest in an entity that is awarded a Contract under this chapter; and(4) May not be listed on the federal or state suspended or debarment list and must not be in default on any Department obligation.(b) The C-RAC members' terms will expire every four years. C-RAC members may be reappointed by the Board; however, the Board shall review and reappoint members at least once every four years. In the event that a C-RAC member is unable to complete the four-year Contract Term, Counties may propose an eligible candidate to be appointed by the Board to fulfill the remainder of the term.(c) The Department may also select to have an alternate member from the list for each county in the event that the primary member is unable to attend meetings.(d) The C-RAC shall advise the Board regarding:(1) The housing needs of Colonia residents;(2) Appropriate and effective programs that are proposed or are operated through the CSHCs; and(3) Activities that might be undertaken through the CSHCs to serve the needs of Colonia residents.(e) The C-RAC shall advise the Office of Colonia Initiatives as provided by §775.005 of the Tex. Gov't Code.(f) Award of Contracts.(1) The Department will schedule C-RAC meetings for the review of satisfactorily completed CSHC applications from Administrators. The C-RAC shall meet no less than 30 days prior to the board meeting at which the Board is scheduled to award a CSHC Contract, and may meet at other times as needed.(2) Any Administrator whose Application is being considered at the C-RAC meeting must be present to answer questions that C-RAC may have.(3) After the C-RAC makes a recommendation on an Application, the recommendation will then proceed through the Department's award process.(g) Reimbursement to C-RAC members for their reasonable travel expenses in the manner provided by §25.9(1) of this chapter (relating to Administrative Thresholds) shall be paid by the Administrator or Administrators whose Applications were considered at the meeting.</content><note type="source"><p>Source Note: The provisions of this §25.7 adopted to be effective January 2, 2022, 46 TexReg 9009.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c25/sc/s25.8"><num value="25.8">§25.8</num><heading>Colonia Self-Help Center Contract Operation and Implementation</heading><content>(a) The Department shall contract with an UGLG for the operation of a CSHC. The UGLG may subaward the activity to a Nonprofit Organization, Community Action Agency, or Housing Authority that has demonstrated the ability to carry out all or part of the functions of a CSHC. The UGLG must perform the requirements of a pass-through entity, as further described in 2 CFR §200.332 and TxGMS.(b) The Administrator is required to complete an environmental review in accordance with 24 CFR Part 58, and receive the Authority to Use Grant Funds from the Department before:(1) Any commitment of CDBG funds (i.e., execution of a legally binding Agreement and expenditure of CDBG funds) for Activities other than those that are specifically exempt from environmental review; and(2) Any commitment of non-CDBG funds associated with the scope of work in the Contract that would have an adverse environmental impact (i.e., demolition, excavating, etc.) or limit the choice of alternatives (i.e., acquisition of real property, Rehabilitation of buildings or structures, etc.).(c) Request for Payments. The Administrator shall submit a properly completed request for reimbursement, as specified by the Department, at a minimum on a quarterly basis; however, the Department reserves the right to request more frequent reimbursement requests as it deems appropriate. The Department shall determine the reasonableness of each amount requested and shall not make disbursement of any such payment request until the Department has reviewed and approved such request. Payments under the Contract are contingent upon the Administrator's full and satisfactory performance of its obligations under the Contract. The Department may reduce a request for payment if documentation is insufficient or the performance is unsatisfactory.(1) $2,500 is the minimum amount for a Draw to be processed, unless it is the final Draw request. If an Administrator fails to submit a draw for 12 consecutive months the Contract may be subject to termination for failure to meet the Contract obligations.(2) Draw requests will be reviewed to comply with all applicable laws, rules and regulations. The Administrator is responsible for maintaining a complete record of all costs incurred in carrying out the Activities of the Contract.(3) Draw requests for all housing Activities will only be reimbursed upon satisfactory completion of types of Activities (e.g., all plumbing completed, entire roof is completed, etc.), consistent with the construction contract.(4) The Administrator will be the principal contact responsible for reporting to the Department and submitting Draw requests.(d) Reporting. The Administrator shall submit to the Department reports on the operation and performance of the Contract on forms as prescribed by the Department. Quarterly Reports shall be due no later than the tenth calendar day of the month after the end of each calendar quarter. The Administrator shall maintain and submit to the Department up-to-date accomplishments in quarterly reports identifying quantity and cumulative data including the expended funds, Activities completed and total number of Beneficiaries. Processing of draws may be suspended until the Administrator's quarterly reports are submitted and approved by the Department. If an Administrator fails to submit Activity data within a 24-consecutive-month period, the Contract may be subject to termination for failure to meet the Contract obligations.(e) Amendments. The Department's executive director or its designee, may authorize, execute, and deliver amendments to any Contract.(1) One Contract Extension of no more than six months may be granted beyond the four-year Contract period.(2) Changes in Beneficiaries. Any changes to increase contractual deliverables and Beneficiaries shall require a Contract amendment.(3) The Department, at its discretion and in coordination with an Administrator, may increase a Contract Budget amount and the number of Activities and Beneficiaries to be assisted based on the availability of CSHC funds, the exemplary performance in the implementation of an Administrator's current Contract, and the time available in the four-year Contract period. Upon Board approval, the cap on the maximum Contract amount may be exceeded if the terms of this paragraph are met by the Administrator.(f) Participating Households must provide at least 15% of the labor necessary to construct or Rehabilitate the Single Family Housing Unit by contributing the labor personally and/or through non-contract labor assistance from family, friends, or volunteers. Volunteer hours at the CSHC may also fulfill the 15% labor requirement.(g) Program funds can be used for Rehabilitation, Reconstruction, or New Construction. Assistance may be provided in the form of a grant or a forgivable loan to the household. Additional funds from other sources may be leveraged with Program funds. Program funds cannot exceed the following limits:(1) Program funds for Rehabilitation cannot exceed $75,000 in Program funds per unit per Income Eligible Household.(2) Program funds for Reconstruction or New Construction cannot exceed $100,000 in Program funds per unit per Income Eligible Household.(3) An additional $5,000 in Program funds is available for properties with non-functioning and/or unpermitted cesspools or septic tanks that need replacement with an appropriately sized on-site sewage facility, or connection to a Department-approved source of potable water and wastewater disposal.(h) All Direct Delivery Costs must be eligible and based on actual expenses for the specific housing unit. Subawardees acting on behalf of an UGLG shall incorporate Direct Delivery Costs into its bid proposals.(i) Prior to Department approval of CSHC construction activity, the CSHC must document that existing on-site sewage facilities (septic systems) have been inspected by a Texas Commission on Environmental Quality-authorized agent to determine if the system is in substantial compliance with Health & Safety Code, Chapter 366 and the rules adopted under that chapter. Cesspools that have not been previously permitted are unacceptable and must be replaced by an appropriately sized on-site sewage facility or the home must be connected to a Department-approved source of potable water and wastewater disposal.(j) New Construction, Reconstruction, and Rehabilitation activities. An Administrator under the CSHC Program must adhere to the Inspection Requirements for Construction Activities under Chapter 20 of this title and the Minimum Energy Efficiency Requirements for Single Family Construction Activities under Chapter 21 of this title.(1) New Construction Requirements.(A) No initial inspection is required, however building construction plans must be submitted to the Department for approval.(B) A Certificate of Occupancy is acceptable confirmation of meeting construction requirements. If the activity occurs in a jurisdiction that does not issue Certificates of Occupancy, a Qualified Inspector shall inspect the property applying all applicable construction standards and forms prescribed by the Department.(2) Reconstruction Requirements.(A) The initial inspection must identify all substandard conditions as described by Texas Minimum Construction Standards (TMCS) and any health or safety concerns that are beyond repair; confirm that a governmental entity has condemned the unit; or identify the unit as an MHU that will not be rehabilitated. The work write-up and cost estimate shall address all substandard conditions in sufficient detail to justify the need for reconstruction.(B) A Certificate of Occupancy is acceptable confirmation of meeting construction requirements. If the activity occurs in a jurisdiction that does not issue Certificates of Occupancy, a Qualified Inspector shall inspect the property applying all applicable construction standards and forms prescribed by the Department.(C) Administrator must demonstrate compliance with §2306.514 Tex. Gov't Code, "Construction Requirements for Single Family Affordable Housing".(3) Rehabilitation Requirements.(A) The initial inspection must identify all substandard conditions as described by TMCS and any health or safety concerns. The work write-up and cost estimate shall address all substandard conditions in sufficient detail.(B) The final inspection shall document that all elements incorporated into the contracted work-write up have been addressed satisfactorily prior to the final draw request.(k) Primary residences being assisted with any construction activities (Rehabilitation, Reconstruction and New Construction) must:(1) Comply with adopted Model Subdivision Rules for the county in which assistance is being provided; and(2) Have only one Single Family Housing Unit per property that is being used as living space. If additional structures are located on the same property and utilized for living space, temporarily or otherwise, this property is not eligible. Relocation assistance is not an eligible expense under the CSHC Program.(l) The Administrator's initial HAG, as well as any amendments to the HAG, shall be approved by commissioners' court and the Department prior to implementation.(m) Residents shall have access to all Public Service Activities identified in the Contract on at least one weekday each week, for a period long enough to provide access to activities after the typical workday.(n) The purchase of new tools, new computers and computer equipment, if included in the approved budget, shall occur within the first 24 months of the Contract Term. Purchase of these items after 24 months must be approved by the Department in writing prior to purchase.</content><note type="source"><p>Source Note: The provisions of this §25.8 adopted to be effective January 2, 2022, 46 TexReg 9009.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c25/sc/s25.9"><num value="25.9">§25.9</num><heading>Administrative Thresholds</heading><content>Administrative Draw request. Administrative Draw requests are funded out of the portion of the Contract budget specified for administrative cost (administration line item of the Contract budget). These costs are not directly associated with an Activity. The administration line item will be disbursed as described in paragraphs (1) - (8) of this section:(1) Threshold 1. The initial administrative Draw request allows up to 10% of the administration line item may be drawn down prior to the start of any project Activity included in the Performance Statement of the Contract (provided that all Pre-Draw requirements, as described in the Contract, for administration have been met). Subsequent administrative funds will be reimbursed in proportion to the percentage of the work that has been completed as identified in paragraphs (2) - (8) of this section.(2) Threshold 2. Up to an additional 15% (25% of the total) of the administration line item to be drawn down after a start of project Activity has been demonstrated. For the purposes of this threshold, if Davis- Bacon labor standards are required for a given Program Activity, the "start of project Activity" is evidenced by the submission of a start of construction form. If labor standards are not required on a given project Activity that has commenced (and for which reimbursement is being sought), the submission of a Draw request that includes sufficient back-up documentation for expenses of non- administrative project Activities evidences a start of project Activity. Direct Delivery Costs charges will not constitute a start of project Activity.(3) Threshold 3. Up to an additional 25% (50% of the total) of the administration line item may be drawn down after compliance with the 20-month threshold requirement has been demonstrated as described in §25.10 of this chapter (relating to Expenditure Thresholds and Closeout Requirements).(4) Threshold 4. Up to an additional 25% (75% of the total) of the administration line item may be drawn down after compliance with the 32-month threshold requirement has been demonstrated as described in §25.10 of this chapter.(5) Threshold 5. Up to an additional 15% (90% of the total) of the administration line item may be drawn down after compliance with the 44-month threshold requirement has been demonstrated as described in §25.10 of this chapter.(6) Threshold 6. Up to an additional 5% (95% of the total) of the administration line item may be drawn down upon receipt of all required close-out documentation.(7) Threshold 7. The final 5% (100% of the total), less any administrative funds reserved for audit costs as noted on the Project Completion Report of the administration line item, may be drawn down following receipt of the programmatic close-out letter issued by Department.(8) Threshold 8. Any funds reserved for audit costs will be released upon completion and submission of an acceptable audit. Only the portion of audit expenses reasonably attributable to the Contract is eligible.</content><note type="source"><p>Source Note: The provisions of this §25.9 adopted to be effective January 2, 2022, 46 TexReg 9009.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c25/sc/s25.10"><num value="25.10">§25.10</num><heading>Expenditure Thresholds and Closeout Requirements</heading><content>(a) Administrators must meet the expenditure threshold requirements described in paragraphs (1) - (4) of this subsection. If an Administrator fails to expend and submit expenditure documentation by the due date, the deobligation process outlined in §25.5 of this chapter (relating to Allocation, Deobligation and Termination, and Reobligation) may be initiated. A Contract may also be subject to termination for failure to meet the Contract obligations, and the Department may elect not to provide future funds to the Administrator. In such cases, the Administrator will be notified in writing of the processes described in Tex. Gov't Code, Chapter 2105 and §1.411 of this title (relating to Administration of Block Grants under Chapter 2105 of the Tex. Gov't Code). These thresholds will be proportionally reduced when the Contract Term is less than four years, although if reasonable for the proposed Activities the Department may allow a longer proportional period for the Environmental Assessment and the 30% reimbursement request.(1) Six-Month Threshold. An Environmental Assessment that meets the environmental clearance requirements of the Contract must be submitted to the Department within six months from the start date of the Contract;(2) Twenty-Month Threshold. The Administrator must have expended and submitted for reimbursement to the Department at least 30% of the total CSHC funds awarded within 20 months from the start date of the Contract;(3) Thirty-two-Month Threshold. The Administrator must have expended and submitted for reimbursement to the Department at least 60% of the total CSHC funds awarded within 32 months from the start date of the Contract; and(4) Forty-four-Month Threshold. The Administrator must have expended and submitted for reimbursement to the Department at least 90% of the total CSHC funds awarded within 44 months from the start date of the Contract.(b) For purposes of meeting a threshold in this section, "expended and submitted" means that a Draw request was received by the Department, is complete, and all costs needed to meet a threshold are adequately supported. The Department will not be liable for a threshold violation if a Draw request is not received by the threshold date.(c) The final Draw Request and complete closeout documents must be submitted no later than 60 days after the end of the Contract Term. If closeout documents are not received by this deadline, the remaining Contract balance may be subject to deobligation as the Department's liability for such costs will have expired. If an Administrator has reserved funds in the project completion report for a final Draw Request, the Administrator has 90 days after the end of the Contract Term to submit the final Draw Request, with the exception of the Department's portion of audit costs which may be reimbursed upon submission of the final Single Audit, but no later than one year after the end of the Contract Term.</content><note type="source"><p>Source Note: The provisions of this §25.10 adopted to be effective January 2, 2022, 46 TexReg 9009.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c26"><num value="26">CHAPTER 26</num><heading>TEXAS HOUSING TRUST FUND RULE</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c26/scA"><num value="A">SUBCHAPTER A</num><heading>GENERAL GUIDANCE</heading><section identifier="/us/state/tx/tac/t10/p1/c26/scA/s26.1"><num value="26.1">§26.1</num><heading>Purpose</heading><content>This chapter clarifies the administration of the Texas Housing Trust Fund (Texas HTF). The Texas HTF provides loans, grants or other comparable forms of assistance to income-eligible individuals, families, and households. The Texas HTF is administered in accordance with Tex. Gov't Code, Chapter 2306, Chapter 20 of this title (relating to Single Family Programs Umbrella Rule), and Chapter 24 of this title (relating to Texas Bootstrap Loan Program Rule).</content><note type="source"><p>Source Note: The provisions of this §26.1 adopted to be effective March 28, 2024, 49 TexReg 1908.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c26/scA/s26.2"><num value="26.2">§26.2</num><heading>Definitions</heading><content>Definitions may be found in Tex. Gov't Code, Chapter 2306; Chapter 1 of this title (relating to Administration), Chapter 2 of this title (relating to Enforcement), Chapter 20 of this title (relating to Single Family Programs Umbrella Rule), Chapter 21 of this title (relating to Minimum Energy Efficiency Requirements for Single Family Construction Activities), and Chapter 24 of this title (relating to Texas Bootstrap Loan Program Rule), unless the context or the Notice of Funding Availability (NOFA) indicates otherwise.</content><note type="source"><p>Source Note: The provisions of this §26.2 adopted to be effective March 28, 2024, 49 TexReg 1908.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c26/scA/s26.3"><num value="26.3">§26.3</num><heading>Allocation of Funds</heading><content>(a) The Department administers all Texas HTF funds provided to the Department in accordance with Tex. Gov't Code, Chapter 2306. The Department may solicit gifts and grants to endow the fund.(b) Pursuant to Tex. Gov't Code §2306.202(b), use of the Texas HTF is limited to providing:(1) Assistance for individuals and families of low and very low income;(2) Technical assistance and capacity building to nonprofit organizations engaged in developing housing for individuals and families of low and very low income;(3) Security for repayment of revenue bonds issued to finance housing for individuals and families of low and very low income; and(4) Subject to the limitations in Tex. Gov't Code §2306.251(c), the Department may also use the fund to acquire property to endow the fund.(c) Set-Asides. In accordance with Tex. Gov't Code §2306.202(a) and program guidelines:(1) In each biennium, the first $2.6 million available through the Texas HTF for loans, grants, or other comparable forms of assistance shall be set aside and made available exclusively for Local Units of Government, Public Housing Authorities, and Nonprofit Organizations;(2) Any additional funds may also be made available to for-profit organizations provided that at least 45% of available funds, as determined on September 1 of each state fiscal year, in excess of the first $2.6 million shall be made available to Nonprofit Organizations for the purpose of acquiring, rehabilitating, and developing decent, safe, and sanitary housing; and(3) The remaining portion shall be distributed to Nonprofit Organizations, for-profit organizations, and other eligible entities, pursuant to Tex. Gov't Code §2306.202.</content><note type="source"><p>Source Note: The provisions of this §26.3 adopted to be effective March 28, 2024, 49 TexReg 1908.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c26/scA/s26.4"><num value="26.4">§26.4</num><heading>Use of Funds</heading><content>(a) Use of additional or Deobligated Funds. In the event the Department receives additional funds, such as loan repayments, donations, or interest earnings, the Department will redistribute the funds in accordance with the Texas HTF plan in effect at the time the additional funds become available.(b) Reprogramming of Funds. If funding for a program is undersubscribed or funds not utilized, within a timeframe as determined by the Department, remaining funds may be reprogrammed at the discretion of the Department consistent with the Texas HTF plan in effect at the time.(c) Use of excess loan repayments and interest earnings. The Texas HTF may be used to respond to unanticipated challenges that may arise in the course of implementing approved single family Program Contracts, activities, or assets that are not readily addressed with federal funds. In the event that Texas HTF loan repayments and interest earnings exceed the requirements under the Texas HTF interest earnings and loan repayments Rider in the General Appropriations Act, up to $250,000 per biennium of these excess Texas HTF loan repayments and interest earnings may be used for this purpose. If a balance exists from the previous biennium, the Department shall transfer only the necessary amount to replenish this fund to a maximum balance of $250,000 at the start of the biennium. These funds may be used as described in this subsection.(1) Funds are to be used for internal disposition.(2) Neither Households nor Program Administrators are eligible to apply for these funds.(3) Any funds used under this subsection requires authorization of the Executive Director.(4) Uses for the funds must meet at least one of the following criteria:(A) For Households previously assisted by the Department with Department funds, for which the Department has confirmed that further work is still required, and for which the original source of funds is no longer able to be used; or(B) Properties previously owned by Households assisted by the Department, having been foreclosed upon by the Department, and requiring additional carrying costs or improvements to sell the property or transfer the property for an affordable purpose.</content><note type="source"><p>Source Note: The provisions of this §26.4 adopted to be effective March 28, 2024, 49 TexReg 1908.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c26/scA/s26.5"><num value="26.5">§26.5</num><heading>Prohibited Activities</heading><content>(a) Persons receiving or benefiting from Texas HTF funds, as determined by the Department, may not be currently delinquent or in default with child support, government loans, or any other debt owed to the State of Texas.(b) The activities described in paragraphs (1) - (8) of this subsection are prohibited in relation to the origination of a Texas HTF loan, but may be charged as an allowable cost by a third party lender for the origination of all other loans originated in connection with a Texas HTF loan:(1) Payment of delinquent property taxes or related fees or charges on properties to be assisted with Texas HTF funds;(2) Loan origination fees;(3) Application fees;(4) Discount fees;(5) Underwriter fees;(6) Loan processing fees;(7) Loan servicing fees; and(8) Other fees not approved by the Department in writing prior to expenditure.</content><note type="source"><p>Source Note: The provisions of this §26.5 adopted to be effective March 28, 2024, 49 TexReg 1908.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c26/scA/s26.6"><num value="26.6">§26.6</num><heading>Administrator Eligibility and Requirements</heading><content>Administrator must enter into a written Agreement with the Department in order to be eligible to access the Texas Housing Trust Fund.</content><note type="source"><p>Source Note: The provisions of this §26.6 adopted to be effective March 28, 2024, 49 TexReg 1908.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c26/scA/s26.7"><num value="26.7">§26.7</num><heading>Conflict of Interest</heading><content>In addition to the conflict of interest requirements in Uniform Grants Management Standards (UGMS) or Texas Grants Management Standards (TXGMS) (as applicable to the Contract), no person who is an employee, agent, consultant, officer, trustee, director, member of a governing board or other oversight body, elected official or appointed official of the Administrator who exercises or has exercised any functions or responsibilities with respect to Texas HTF activities under the State Act, or who is in a position to participate in a decision making process or gain inside information with regard to such activities, may obtain a personal or financial interest or benefit from a Texas HTF assisted activity, or have an interest in any Texas HTF Contract, subcontract, or agreement, or the proceeds hereunder, either for themselves or those with whom they have family or business ties, during their tenure or for one year thereafter.</content><note type="source"><p>Source Note: The provisions of this §26.7 adopted to be effective March 28, 2024, 49 TexReg 1908.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c26/scB"><num value="B">SUBCHAPTER B</num><heading>AMY YOUNG BARRIER REMOVAL PROGRAM</heading><section identifier="/us/state/tx/tac/t10/p1/c26/scB/s26.20"><num value="26.20">§26.20</num><heading>Amy Young Barrier Removal Program Purpose</heading><content>The Amy Young Barrier Removal Program (the Program or AYBRP) provides one-time grants in combined Hard and Soft Costs to Persons with Disabilities in a Household qualified as Low-Income. Grant limits per household will be identified in the Notice of Funding Availability (NOFA). Grants are for home modifications that increase accessibility and eliminate substandard conditions.</content><note type="source"><p>Source Note: The provisions of this §26.20 adopted to be effective July 4, 2024, 49 TexReg 4760.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c26/scB/s26.21"><num value="26.21">§26.21</num><heading>Amy Young Barrier Removal Program Definitions</heading><content>The following words and terms used in this subchapter shall have the following meanings, unless the context clearly indicates otherwise. Other definitions are found in Tex. Gov't Code, Chapter 2306, Chapter 1 of this title (relating to Administration), Chapter 2 of this title (relating to Enforcement), Chapter 20 of this title (relating to Single Family Programs Umbrella Rule), Chapter 21 of this title (relating to Minimum Energy Efficiency Requirements for Single Family Construction Activities), and Chapter 26, Subchapter A of this title (relating to General Guidance).(1) Administrative Fee--Funds equal to 10% of the Project Costs (combined Hard and Soft Costs) paid to an Administrator upon completion of a project.(2) Hard Costs--Site-specific costs incurred during construction, including, but not limited to: general requirements, building permits, jobsite toilet rental, dumpster fees, site preparation, demolition, construction materials, labor, installation equipment expenses, etc.(3) Household Assistance Contract--A written agreement between the Department and Administrator that memorializes the term of the commitment of funds for a specific activity.(4) Low-Income--Household income calculated in accordance with the Program Manual that does not exceed the greater of 80% of the Area Median Family Income or 80% of the State Median Family Income, adjusted for Household size, in accordance with the current HOME Investment Partnerships Program income limits, as defined by HUD.(5) Project Costs--Program funds (combined Hard and Soft Costs) that directly assist a Household.(6) Reservation System Participant (RSP)--Administrator who has executed a written Agreement with the Department that allows for participation in the Reservation System.(7) Soft Costs--Costs related to and identified with a specific Single Family Housing Unit other than construction costs.</content><note type="source"><p>Source Note: The provisions of this §26.21 adopted to be effective July 4, 2024, 49 TexReg 4760.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c26/scB/s26.22"><num value="26.22">§26.22</num><heading>Amy Young Barrier Removal Program Geographic Dispersion</heading><content>(a) The process to promote geographic dispersion of program funds is as described in this subsection:(1) For a published period not less than 30 days and in accordance with the NOFA, each state region will be allocated funding amounts for its rural and urban subregions. During this initial period, these funds may be reserved only for Households located in these rural and urban subregions;(2) After the initial release of funds under paragraph (1) of this subsection, each state region will combine any remaining funds from its rural and urban subregions into one regional balance for a second published period not to exceed 90 calendar days. During this second period, these funds may be reserved only for Households located in that state region; and(3) After no more than 180 calendar days following the initial release date, any funds remaining across all state regions will collapse into one statewide pool. For as long as funds are available, these funds may be reserved for any Households anywhere in the state on a first-come, first-served basis.(b) If any additional funds beyond the original program allocations that derive from Texas HTF loan repayments, interest earnings, deobligations, and/or other Texas HTF funds in excess of those funds required under Rider 8 or the Department's appropriation made under the General Appropriations Act may be reprogrammed at the discretion of the Department.</content><note type="source"><p>Source Note: The provisions of this §26.22 adopted to be effective July 4, 2024, 49 TexReg 4760.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c26/scB/s26.23"><num value="26.23">§26.23</num><heading>Amy Young Barrier Removal Program Administrative Requirements</heading><content>(a) To participate in the Program, an eligible participant must first be approved as an Administrator by the Department through the submission of a Reservation System Access Application. Eligible participants include, but are not limited to: Colonia Self-Help Centers established under Tex. Gov't Code, Chapter 2306, Subchapter Z; Councils of Government; Units of Local Government; Nonprofit Organizations; Local Mental Health Authorities; and Public Housing Authorities. An eligible participant may be further limited by NOFA.(b) The Department will produce an Application to satisfy the requirements for an eligible participant to apply to become an AYBR Administrator. The application will be available on the Department's website. Applications to access the Reservation System will include, at a minimum, criteria listed in paragraphs (1)-(7) of this subsection.(1) A Nonprofit Organization must submit a current letter of determination from the Internal Revenue Service (IRS) under §501(c)(3), a charitable, nonprofit corporation, of the Internal Revenue Code of 1986, as evidenced by a certificate from the IRS that is dated 1986 or later. The exemption ruling must be effective throughout the term of the RSP Agreement to access the Reservation System.(2) A private Nonprofit Organization must be registered and in good standing with the Office of the Secretary of State and the State Comptroller's Office to do business in the State of Texas.(3) The Applicant must demonstrate at least two years of capacity and experience in housing rehabilitation in Texas. The Applicant will be required to provide a summary of experience that must describe the capacity of key staff members and their skills and experience in client intake, records management, and managing housing rehabilitation. It must also describe organizational knowledge and experience in serving Persons with Disabilities.(4) The Applicant must provide evidence of adherence to applicable financial accountability standards, demonstrated by an audited financial statement by a Certified Public Accountant for the most recent fiscal year. For a Nonprofit Organizations that does not yet have audited financial statements, the Department may accept a resolution from the Board of Directors that is signed and dated within the six months preceding the Application and that certifies that the procedures used by the organization conform to the requirements in 10 TAC §1.402 (relating to Cost Principles and Administrative Requirements), and that the organization has adopted generally accepted accounting procedures that conform to Governmental Accounting Standards Board (GASB) or the Financial Accounting Standards Board (FASB), as applicable.(5) The Applicant must submit a resolution from the Applicant's direct governing body that authorizes the submission of the Application and is signed and dated within the six months preceding the date of application submission. The resolution must include the name and title of the individual authorized to execute an RSP Agreement.(6) The Applicant's history will be evaluated in accordance with 10 TAC Chapter 1, Subchapter A, §1.302 and §1.303, (relating to Previous Participation Reviews for Department Program Awards Not Covered by §1.301 of this Subchapter, and Executive Director Review, respectively). Access to funds may be subject to terms and conditions.(7) If applicable, the Applicant must submit copies of executed contracts with consultants or other organizations that are assisting in the implementation of the applicant's AYBR Program activities. The Applicant must provide a summary of the consultant or other organization's experience in housing rehabilitation and/or serving Persons with Disabilities.(c) Administrators must follow the processes and procedures as required by the Department through its governing statute (Chapter 2306 of the Government Code), Administrative Rules (Texas Administrative Code, Title 10, Part 1), Reservation Agreement, Program Manual, forms, and NOFA.</content><note type="source"><p>Source Note: The provisions of this §26.23 adopted to be effective July 4, 2024, 49 TexReg 4760.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c26/scB/s26.24"><num value="26.24">§26.24</num><heading>Amy Young Barrier Removal Program Reservation System Requirements</heading><content>(a) Terms of Agreement. The term of an RSP Agreement will not exceed the lesser of 36 months, or the term limitation defined in the NOFA. Execution of an RSP Agreement does not guarantee the availability of funds under a reservation system. Reservations submitted under an RSP agreement will be subject to the provisions of this chapter in effect as of the date of submission by the Administrator.(b) Limit on Number of Reservations. The limitation on the number of Reservations will be established in the NOFA.(c) Administrator must remain in good standing with the Department and the state of Texas. If an Administrator is not in good standing, participation in the Reservation System will be suspended and may result in termination of the RSP Agreement.(d) Reservations will be processed in the order submitted on the Reservation System. Submission of a Reservation consisting of support documentation on behalf of a Household does not guarantee funding.(e) Reservations may be submitted in stages, and shall be processed through each stage as outlined in the Program Manual. All stages must be completed on or before the expiration of the Household Assistance Contract.(f) Administrator must submit a substantially complete request for each stage of the Reservation as outlined in the Program Manual. Administrators must upload all required information and verification documentation in the Contract System. Requests determined to be substantially incomplete will not be reviewed and may be disapproved by the Department. If the Department identifies administrative deficiencies during review, the Department will allow a cure period of 14 calendar days beginning at the start of the first day following the date the Administrator is notified of the deficiency. If any administrative deficiencies remain after the cure period, the Department, in its sole discretion, may disapprove the request. Disapproved requests shall not constitute a Reservation of Funds.(g) If a Household is determined to be eligible for assistance from the Department, the Department will issue a Household Assistance Contract reflecting the maximum award amount permitted under the NOFA in Project Costs and an Administrative Fee equal to 10% of the combined Hard and Soft costs in the Contract System on behalf of the Household, funding permitting. The term of the Household Assistance Contract may not exceed 12 months unless amended in accordance with this Subchapter.(h) Amendments to Household Assistance Contracts may be considered by the Department provided the approval does not conflict with the state regulations governing use of these funds, or impact obligation or expenditure deadlines. The Executive Director's authorized designee may approve an amendment that:(1) extends the term of a Household Assistance by not more than three months;(2) extends the draw period by not more than three months after the expiration of the Household Assistance Contract; or(3) increases Project funds within the limitations set forth in this Chapter.(i) The Executive Director may approve amendments to a Household commitment contract, except amendments to extend the contract term of a Household Assistance contract by more than 12 months.</content><note type="source"><p>Source Note: The provisions of this §26.24 adopted to be effective July 4, 2024, 49 TexReg 4760.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c26/scB/s26.25"><num value="26.25">§26.25</num><heading>Amy Young Barrier Removal Program Household Eligibility Requirements</heading><content>(a) At least one Household member shall meet the definition of Persons with Disabilities.(b) The assisted Household must be qualified as Low-Income.(c) The assisted Household's liquid assets shall not exceed $25,000. Liquid assets are considered to be cash deposited in checking or savings accounts, money markets, certificates of deposit, mutual funds, or brokerage accounts; the net value of stocks or bonds that may be easily converted to cash; and the net cash value calculated utilizing the appraisal district's market value for any real property that is not a principal residence. Funds in tax deferred accounts for retirement or education savings, including but not limited to Individual Retirement Accounts, 401(k)s, 529 plans, and whole life insurance policies are excluded from the liquid assets calculation.(d) The Household may be ineligible for the program if there is debt owed to the State of Texas, including a tax delinquency; a child support delinquency; a student loan default; or any other delinquent debt owed to the State of Texas.</content><note type="source"><p>Source Note: The provisions of this §26.25 adopted to be effective July 4, 2024, 49 TexReg 4760.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c26/scB/s26.26"><num value="26.26">§26.26</num><heading>Amy Young Barrier Removal Program Property Eligibility Requirements</heading><content>(a) Owner-occupied homes are eligible for Program assistance. In owner-occupied homes, the owner of record must reside in the home as their permanent residence unless otherwise approved by the Department. If the property is family-owned and the owner of record is deceased or not a Household member, the Department may deem the property renter-occupied unless satisfactory documentation is provided to the Department that confirms otherwise.(b) Certain rental units are eligible for Program assistance and must meet the following requirements:(1) In rental units, all Household occupants, including the Person with Disability, must be named on the Program intake application and household income certification.(2) The owner of record for the property shall provide a statement allowing accessibility modifications to be made to the property.(c) The following rental properties are ineligible for Program assistance:(1) Property that is or has been developed, owned, or managed by that Administrator or an Affiliate;(2) Rental units in properties that are financed with any federal funds or that are subject to 10 TAC Chapter 1, Subchapter B, §1.206 (relating to Applicability of the Construction Standards for Compliance with §504 of the Rehabilitation Act of 1973);(3) Rental units that have substandard and unsafe conditions identified in the initial inspection. Program funds may not be used to correct substandard or unsafe conditions in rental units, but may be used for accessibility modifications only after the substandard and unsafe conditions have been corrected at the property owner's expense; or(4) Rental units owned by a property owner who is delinquent on property taxes associated with the property occupied by the Household.</content><note type="source"><p>Source Note: The provisions of this §26.26 adopted to be effective July 4, 2024, 49 TexReg 4760.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c26/scB/s26.27"><num value="26.27">§26.27</num><heading>Amy Young Barrier Removal Program Construction Requirements</heading><content>(a) Inspections.(1) Initial inspection arranged by the Administrator is required and must identify the accessibility modifications needed by the Person with Disability; assess and document the condition of the property; and identify all deficiencies that constitute life-threatening hazards and unsafe conditions.(2) Final inspection arranged by the Administrator is required and must verify, assess, and document that all construction activities have been repaired, replaced, and/or installed in a professional manner consistent with all applicable building codes and Program requirements, and as required in the Work Write-Up as described in subsection (e) of this section.(b) A Manufactured Housing Unit may be eligible for Program assistance if it was constructed on or after January 1, 1995. The Department may allow Manufactured Housing Units older than January 1, 1995, to receive only exterior accessibility modifications (i.e., ramps, handrails, concrete flatwork) as long as the Administrator can verify that the unit itself will be free of hazardous and unsafe conditions.(c) Construction standards.(1) Administrator must follow all applicable sections of local building codes and ordinances, pursuant to Section 214.212 of the Local Government Code. Where local codes do not exist, the 2015 International Residential Code (IRC), including Appendix J for Existing Buildings and Structures, is the applicable code for the Program.(2) Accessibility modifications shall be made with consideration to 2010 American Disability Act (ADA) Standards, but may vary from the ADA Standards in order to meet specific accessibility needs of the household as requested and agreed to by the assisted household.(3) Administrators must adhere to Chapter 21 of this title, (relating to Minimum Energy Efficiency Requirements for Single Family Construction Activities).(4) Administrators and subcontractors must honor a twelve-month warranty on all completed items in their scope of work.(d) Life-threatening hazards and unsafe conditions.(1) Administrators may make repairs to eliminate life-threatening hazards and correct unsafe conditions in the Single-Family Housing as long as no more than 25% of the Project Hard Costs budget is utilized for this purpose, unless otherwise approved by the Department.(2) Life-threatening hazards and unsafe conditions include, but are not limited to: faulty or damaged electrical systems; faulty or damaged gas-fueled systems; faulty, damaged or absent heating and cooling systems; faulty or damaged plumbing systems, including sanitary sewer systems; faulty, damaged or absent smoke, fire and carbon monoxide detection/alarm systems; structural systems on the verge of collapse or failure; environmental hazards such as mold, lead-based paint, asbestos or radon; serious pest infestation; absence of adequate emergency escape and rescue openings and fire egress; and the absence of ground fault circuit interrupters (GFCI) and arc fault circuit interrupters (AFCI) in applicable locations.(3) If the work write-up addresses any of the following line items, the percentage of Project Hard Costs devoted to eliminating substandard, unsafe conditions may only exceed 25% by the amount of the following line item's cost: emergency escape, rescue openings and fire egress; ground fault circuit interrupters (GFCI); arc fault circuit interrupters (AFCI); and smoke, fire, and carbon monoxide detection/alarm systems. The combination of these line items plus the correction of any other unsafe conditions cannot exceed 40% of Project Hard Costs budget.(4) All areas and components of the Single-Family Housing Unit must be free of life-threatening hazards and unsafe conditions at project completion.(e) Work-Write Ups. The Department shall review work-write ups (also referred to as "scope of work") and cost estimates prior to the Administrator soliciting bids.(f) Bids. The Department shall review all line item bids Administrator selects for award prior to the commencement of construction. Lump sum bids will not be accepted.(g) Change orders. An Administrator seeking a change order must obtain written Department approval prior to the commencement of any work related to the proposed change. Failure to get prior Departmental approval may result in disallowed costs.</content><note type="source"><p>Source Note: The provisions of this §26.27 adopted to be effective July 4, 2024, 49 TexReg 4760.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c26/scB/s26.28"><num value="26.28">§26.28</num><heading>Amy Young Barrier Removal Program Project Completion Requirements</heading><content>(a) The Administrator must complete all construction activities prior to the expiration of the Household Assistance Contract and the Administrator must submit the Project and Administrative Draw Request, with required supporting documentation, in the Housing Contract System for reimbursement by the Department not more than 60 calendar days after expiration of the Household Assistance Contract.(b) The Administrator must submit evidence with the final Draw that the builder has provided a one-year warranty specifying at a minimum that materials and equipment used by the contractor will be new and of good quality unless otherwise required, the work will be free from defects other than those inherent in the work as specified, and the work will conform to the requirements of the contract documents.(c) The Administrator must provide the Household all warranty information for work performed by the builder and any materials purchased for which a manufacturer or installer's warranty is included in the price.(d) The Department will reimburse the Administrator in one, single payment after the Administrator's successful submission of the Project and Administrative Draw Request per Department instructions. Interim Draws may not be permitted. The Department reserves the right to delay Draw approval in the event that the Household expresses dissatisfaction with the work completed in order to resolve any outstanding conflicts between the Household and the Administrator and its subcontractors.</content><note type="source"><p>Source Note: The provisions of this §26.28 adopted to be effective July 4, 2024, 49 TexReg 4760.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c27"><num value="27">CHAPTER 27</num><heading>TEXAS FIRST TIME HOMEBUYER PROGRAM RULE</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c27/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p1/c27/sc/s27.1"><num value="27.1">§27.1</num><heading>Purpose</heading><content>(a) The purpose of the Texas First Time Homebuyer Program is to facilitate the origination of single-family Mortgage Loans for eligible first time Homebuyers, and to make available down payment and closing cost assistance to eligible Homebuyers. The Texas First Time Homebuyer Program is administered in accordance with Texas Government Code, Chapter 2306. Chapter 20 of this title (relating to the Single Family Programs Umbrella Rule) does not apply to the activities under this chapter, except if these activities are combined with activities subject to Chapter 20 of this title.(b) Assistance under this Program is dependent, in part, on the availability of funds. The Department may cease offering all or a part of the assistance available under the program at any time and in its sole discretion.</content><note type="source"><p>Source Note: The provisions of this §27.1 adopted to be effective March 3, 2022, 47 TexReg 906.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c27/sc/s27.2"><num value="27.2">§27.2</num><heading>Definitions</heading><content>The following words and terms, when used in this chapter, shall have the following meanings unless the context or the Participation Packet indicates otherwise. Other definitions may be found in Texas Government Code, Chapter 2306; Chapter 1 of this title (relating to Administration); and Chapter 2 of this title (relating to Enforcement).(1) Applicable Median Family Income--The Department's determination, as permitted by Texas Government Code, §2306.123, of the median income of an individual or family for an area using a source or methodology acceptable under federal law or rule. The Applicable Median Family Income, as updated from time to time, may be found on the Department's website in the "Combined Income and Purchase Price Limits Table."(2) Applicant--A person or persons applying for financing of a Mortgage Loan under the Program.(3) Areas of Chronic Economic Distress--Those areas in the state, whether one or more, designated from time to time as areas of chronic economic distress by the state and approved by the U.S. Secretaries of Treasury and Housing and Urban Development, respectively, pursuant to §143(j) of the Code.(4) Average Area Purchase Price--With respect to a Residence financed under the Program, the average purchase price of single-family residences in the statistical area in which the Residence is located which were purchased during the most recent twelve (12) month period for which statistical information is available, as determined in accordance with §143(e) of the Code.(5) Code--The Internal Revenue Code of 1986, as amended from time to time.(6) Contract for Deed Exception--The exception for certain Mortgage Loan eligibility requirements, as provided in the Master Mortgage Origination Agreement, available with respect to a principal residence owned under a contract for deed by a person whose family income is not more than 50% of the area's Applicable Median Family Income.(7) Federal Housing Administration--A division of the U.S. Department of Housing and Urban Development, also known as FHA.(8) First Time Homebuyer--A person who has not owned a home during the three (3) years preceding the date on which an application under this program is filed. A person will be considered to have owned a home if the person had a present ownership interest in a home during the three (3) years preceding the date on which the application was filed. In the event there is more than one person applying with respect to a home, each Applicant must separately meet this three year requirement.(9) Homebuyer--An Applicant that is approved by the Program and purchases a Residence.(10) Master Mortgage Origination Agreement--The contract between the Department and a Mortgage Lender, together with any amendments thereto, setting forth certain terms and conditions relating to the origination and sale of Mortgage Loans by the Mortgage Lender and the financing of such Mortgage Loans by the Department.(11) Mortgage Lender--the entity, as defined in §2306.004 of the Tex. Gov't Code, that is participating in the Program and signatory to the Master Mortgage Origination Agreement.(12) Participation Packet--The application submitted to the Department by the proposed Mortgage Lender to participate in the Program.(13) Program--The Texas First Time Homebuyer Program.(14) Purchase Price Limit--The Purchase Price Limits published and updated from time to time in the "Combined Income and Purchase Price Limits Table" found on the Department's website equal to 90% of the Average Area Purchase Price, subject to certain exceptions for Targeted Area Loans.(15) Qualified Veteran Exemption to First Time Homebuyer Requirement--A qualified veteran who has not previously received financing as a First Time Homebuyer through a single family mortgage revenue bond program is exempt from the requirement to be a First Time Homebuyer. The veteran must certify that he or she has not previously obtained a Mortgage Loan financed by single family mortgage revenue bonds, and is utilizing the veteran exception set forth in §143(d)(2)(D) of the IRS Code. Qualified veterans must also complete a worksheet evidencing qualification as a veteran and provide copies of discharge papers.(16) Regulations--The applicable proposed, temporary or final Treasury Regulations promulgated under the Code or, to the extent applicable to the Code, under the Internal Revenue Code of 1954, as such regulations may be amended or supplemented from time to time.(17) Residence--A dwelling in Texas in which an Applicant intends to reside as the Applicant's principal living space. This is intended to have the same meaning as Home as defined in §2306.1071 of the Tex. Gov't Code.(18) Rural Housing Service--A division of the United States Department of Agriculture, also known as RHS.(19) Targeted Area--A qualified census tract, as determined in accordance with §6(a)103A-(2)(b)(4) of the Regulations or any successor regulations thereto, or an Area of Chronic Economic Distress. Applicants purchasing in Targeted Areas may have higher income and purchase price limits as set forth in the "Combined Income and Purchase Price Limits Table" found on the Department's website.(20) Targeted area exemption to First time Homebuyer Requirement--Applicants purchasing homes in targeted areas financed through the program are exempt from the requirement to be a First Time Homebuyer and income and purchase price limits may be higher as found in the "Combined Income and Purchase Price Limits Table" located on the Department's website.(21) United States Department of Veterans Affairs--Also known as VA.</content><note type="source"><p>Source Note: The provisions of this §27.2 adopted to be effective March 3, 2022, 47 TexReg 906.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c27/sc/s27.3"><num value="27.3">§27.3</num><heading>Restrictions on Residences Financed and Applicant</heading><content>(a) Type of Residence and Number of Units. To be eligible for assistance under the Program an Applicant must apply with respect to a Residence that is either a new or existing single family residence, new or existing condominium or townhome, or manufactured housing that has been converted to real property in accordance with the Texas Occupations Code, Chapter 1201 or FHA guidelines, as required by the Department. A duplex may be financed under the Program as long as one unit of the duplex is occupied by the Applicant as his or her Residence, and the duplex was first occupied for residential purposes at least five years prior to the closing of the Mortgage Loan.(b) Homebuyer Education. Each Applicant must complete a Department approved pre-purchase homebuyer education course.(c) Income Limits. An Applicant applying for a Mortgage Loan must meet Applicable Median Family Income requirements.(d) Down Payment Assistance. An Applicant meeting the Applicable Median Family Income requirements in subsection (c) of this section may qualify for down payment and closing cost assistance in connection with the Mortgage Loan on a first come, first served basis, subject to availability of funds.(e) Residential Property Standards. The Residence must meet all standards required by the State of Texas, local jurisdiction, and as required by the Federal Mortgage Lender.</content><note type="source"><p>Source Note: The provisions of this §27.3 adopted to be effective March 3, 2022, 47 TexReg 906.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c27/sc/s27.4"><num value="27.4">§27.4</num><heading>Occupancy and Use Requirements</heading><content>(a) Occupancy requirement. The Homebuyer must occupy the property within a reasonable time (not to exceed 60 days) after the date of closing as his or her Residence.(b) Use for a business. Homebuyer may not use more than 15% of the Residence in a trade or business (including childcare services) on a regular basis for compensation. If the Residence is to be used, in part, for a trade or business, a schematic drawing from an appraiser must be provided.(c) Homebuyer may not use the Residence, or any part thereof, as an investment property, rental property, vacation or second home, or recreational home, and shall continue to occupy the Residence as Homebuyer's principal living space, unless waived by the Executive Director or their designee, which consent shall not be unreasonably withheld, or unless extenuating circumstances exist which are beyond Homebuyer's control.</content><note type="source"><p>Source Note: The provisions of this §27.4 adopted to be effective March 3, 2022, 47 TexReg 906.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c27/sc/s27.5"><num value="27.5">§27.5</num><heading>Application Procedure and Requirements for Commitments by Mortgage Lenders</heading><content>(a) An Applicant seeking assistance under the Program must first contact a participating Mortgage Lender. A list of participating Mortgage Lenders may be obtained on the Department's website or by contacting the Department.(b) Applicant shall complete an application with a participating Mortgage Lender.(c) Application Fees. Fees that may be collected by the Mortgage Lender from the Applicant relating to a Mortgage Loan include:(1) an appropriate, as determined by the Department, origination fee and/or buyer/seller points; and(2) all usual and reasonable settlement or financing costs that are permitted to be so collected by FHA , RHS, VA, Freddie Mac or Fannie Mae, as applicable, and other applicable laws, but only to the extent such charges do not exceed the usual and reasonable amounts charged in the area in which the Residence is located. Such usual and reasonable settlement or financing costs shall include an application fee as determined by the Department, the total estimated costs of a credit report on the Applicants and an appraisal of the property to be financed with the Mortgage Loan, title insurance, survey fees, credit reference fees, legal fees, appraisal fees and expenses, credit report fees, FHA insurance premiums, private Mortgage guaranty insurance premiums, VA guaranty fees, VA funding fees, RHS guaranty fees, hazard or flood insurance premiums, abstract fees, tax service fees, recording or registration fees, escrow fees, and file preparation fees.(d) The Department will determine from time to time, a schedule of fees and charges necessary for expenses and reserves of the housing finance division as set forth in a Board resolution.(e) The Mortgage Lender must register the Mortgage Loan in accordance with the Department's published procedures.</content><note type="source"><p>Source Note: The provisions of this §27.5 adopted to be effective March 3, 2022, 47 TexReg 906.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c27/sc/s27.6"><num value="27.6">§27.6</num><heading>Criteria for Approving Participating Mortgage Lenders</heading><content>(a) To be approved by the Department for participation in the program, a Mortgage Lender must meet the requirements in the Participation Packet to be a qualified Mortgage Lender as specified by:(1) FHA;(2) RHS;(3) VA; or(4) be a lender currently participating in the conventional home lending market for loans originated in accordance with Fannie Mae's and/or Freddie Mac's requirements.(b) As a condition for participation in the Program, a qualified Mortgage Lender must:(1) agree to originate Mortgage Loans and assign those loans and related Mortgages and servicing to the Department's master servicer;(2) originate, process, underwrite, close and fund originated loans; and(3) be an approved Mortgage Lender with the Program's master servicer.</content><note type="source"><p>Source Note: The provisions of this §27.6 adopted to be effective March 3, 2022, 47 TexReg 906.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c27/sc/s27.7"><num value="27.7">§27.7</num><heading>Resale of the Residence</heading><content>Mortgage Loans that are financed with the proceeds of tax-exempt bonds, or for which a Mortgage Credit Certificate has been or will be issued, will be subject to federal income tax recapture provisions. Assumption of a Mortgage Loan is allowed under the Program if the new owner meets the Program requirements at the time of the sale of the Residence.</content><note type="source"><p>Source Note: The provisions of this §27.7 adopted to be effective March 3, 2022, 47 TexReg 906.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c27/sc/s27.8"><num value="27.8">§27.8</num><heading>Conflicts with Bond Indentures and Applicable Law</heading><content>All assistance provided under the Program is funded through or facilitated by the Department's mortgage revenue bond indentures and is subject to changes in the mortgage revenue bond indentures and applicable law. If there is a conflict between this chapter and any bond indenture or applicable law regarding the use of the funds from mortgage revenue bonds, the mortgage revenue bond indenture or applicable law shall control.</content><note type="source"><p>Source Note: The provisions of this §27.8 adopted to be effective March 3, 2022, 47 TexReg 906.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c27/sc/s27.9"><num value="27.9">§27.9</num><heading>Waiver</heading><content>The Board, in its discretion and within the limits of federal and state law, may waive any one or more of the rules governing this Program, except 10 TAC §27.8, if the Board finds that waiver is appropriate to fulfill the purposes or polices of Texas Government Code, Chapter 2306.</content><note type="source"><p>Source Note: The provisions of this §27.9 adopted to be effective March 3, 2022, 47 TexReg 906.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c28"><num value="28">CHAPTER 28</num><heading>TAXABLE MORTGAGE PROGRAM</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c28/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p1/c28/sc/s28.1"><num value="28.1">§28.1</num><heading>Purpose</heading><content>(a) The purpose of the Taxable Mortgage Program is to facilitate the origination of single-family mortgage loans and to refinance existing Mortgage Loans for eligible Homebuyers and in both cases to make down payment and closing cost assistance available to eligible Homebuyers. Chapter 20 of this title (relating to the Single Family Programs Umbrella Rule) does not apply to the activities under this chapter, except if these activities are combined with activities subject to Chapter 20 of this title.(b) Assistance under this program is dependent, in part, on the availability of funds. The Department may cease offering all or a part of the assistance available under the program at any time and in its sole discretion.</content><note type="source"><p>Source Note: The provisions of this §28.1 adopted to be effective March 3, 2022, 47 TexReg 907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c28/sc/s28.2"><num value="28.2">§28.2</num><heading>Definitions</heading><content>The following words and terms, when used in this chapter, shall have the following meanings unless the context or the Participation Packet indicates otherwise. Other definitions may be found in Texas Government Code, Chapter 2306; Chapter 1 of this title (relating to Administration); and Chapter 2 of this title (relating to Enforcement).(1) Applicable Median Family Income--The Department's determination, as permitted by Texas Government Code, §2306.123, of the median income of an individual or family for an area using a source or methodology acceptable under federal law or rule. The Applicable Median Family Income, as updated from time to time, may be found on the Department's website in the "Combined Income and Purchase Price Limits Table."(2) Applicant--A person or persons applying for financing of a Mortgage Loan under the Program.(3) Areas of Chronic Economic Distress--Those areas in the state, whether one or more, designated from time to time as areas of chronic economic distress by the state and approved by the U.S. Secretaries of Treasury and Housing and Urban Development, respectively, pursuant to §143(j) of the Code.(4) Code--The Internal Revenue Code of 1986, as amended from time to time.(5) Department Designated Areas of Special Need--Geographic areas designated by the Department from time to time as areas of special need.(6) Federal Housing Administration--A division of the U.S. Department of Housing and Urban Development, also known as FHA.(7) Homebuyer--An Applicant that is approved by the Program and purchases a Residence.(8) Master Mortgage Origination Agreement--The contract between the Department and a Mortgage Lender, together with any amendments thereto, setting forth certain terms and conditions relating to the origination and sale of Mortgage Loans by the Mortgage Lender and the financing of such Mortgage Loans by the Department.(9) Mortgage Lender--The entity, as defined in §2306.004 of the Texas Government Code, participating in the Program and signatory to the Master Mortgage Origination Agreement.(10) Participation Packet--The application submitted to the Department by the proposed Mortgage Lender to participate in the Program.(11) Program--The Taxable Mortgage Program.(12) Regulations--The applicable proposed, temporary or final Treasury Regulations promulgated under the Code or, to the extent applicable to the Code, under the Internal Revenue Code of 1954, as such regulations may be amended or supplemented from time to time.(13) Residence--A dwelling in Texas in which an Applicant intends to reside as the Applicant's principal living space. Has the same meaning as Home in Chapter 2306 of the Texas Government Code.(14) Rural Housing Service--A division of the United States Department of Agriculture, also known as RHS.(15) Targeted Area--A qualified census tract, as determined in accordance with §6(a)103A-(2)(b)(4) of the Regulations or any successor regulations thereto, or an Area of Chronic Economic Distress, or a Department Designated Area of Special Need. Applicants purchasing in Targeted Areas may have higher income limits as set forth in the "Combined Income and Purchase Price Limits Table" found on the Department's website.(16) United States Department of Veterans Affairs--Also known as VA.</content><note type="source"><p>Source Note: The provisions of this §28.2 adopted to be effective March 3, 2022, 47 TexReg 907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c28/sc/s28.3"><num value="28.3">§28.3</num><heading>Restrictions on Residences Financed and Applicant</heading><content>(a) Type of Residence and Number of Units. To be eligible for assistance under the Program an Applicant must apply with respect to a Residence that is either a new or existing single family residence, new or existing condominium or townhome, or manufactured housing that has been converted to real property in accordance with the Texas Occupations Code, Chapter 1201 or FHA guidelines, as required by the Department. A duplex may be financed under the Program as long as one unit of the duplex is occupied by the Applicant as his or her Residence, and the duplex was first occupied for residential purposes at least five years prior to the closing of the Mortgage Loan.(b) Homebuyer Education. Each Applicant must complete a Department approved pre-purchase homebuyer education course.(c) Income Limits. An Applicant applying for a Mortgage Loan must meet Applicable Median Family Income requirements.(d) Down Payment Assistance. An Applicant meeting the Applicable Median Family Income requirements in subsection (c) of this section may qualify for down payment and closing cost assistance in connection with the Mortgage Loan on a first come, first served basis, subject to availability of funds.(e) Residential Property Standards. The Residence must meet all standards required by the State of Texas, local jurisdiction, and as required by the Mortgage Lender.</content><note type="source"><p>Source Note: The provisions of this §28.3 adopted to be effective March 3, 2022, 47 TexReg 907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c28/sc/s28.4"><num value="28.4">§28.4</num><heading>Occupancy and Use Requirements</heading><content>(a) Occupancy requirement. The Homebuyer must occupy the property within a reasonable time (not to exceed 60 days) after the date of closing as his or her Residence.(b) Use for a business. Homebuyer may not use more than 15% of the Residence in a trade or business (including childcare services) on a regular basis for compensation. If the Residence is to be used, in part, for a trade or business, a schematic drawing from an appraiser must be provided.(c) Homebuyer may not use the Residence, or any part thereof, as an investment property, rental property, vacation or second home, or recreational home, and shall continue to occupy the Residence as Homebuyer's principal living space, unless waived by the Executive Director or their designee, which consent shall not be unreasonably withheld, or unless extenuating circumstances exist which are beyond Homebuyer's control.</content><note type="source"><p>Source Note: The provisions of this §28.4 adopted to be effective March 3, 2022, 47 TexReg 907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c28/sc/s28.5"><num value="28.5">§28.5</num><heading>Application Procedure and Requirements for Commitments by Mortgage Lenders</heading><content>(a) An Applicant seeking assistance under the Program must first contact a participating Mortgage Lender. A list of participating Mortgage Lenders may be obtained on the Department's website or by contacting the Department.(b) Applicant shall complete an application with a participating Mortgage Lender.(c) Application Fees. Fees that may be collected by the Mortgage Lender from the Applicant relating to a Mortgage Loan include:(1) an appropriate, as determined by the Department, origination fee and/or buyer/seller points; and(2) all usual and reasonable settlement or financing costs that are permitted to be so collected by FHA, RHS, VA, Freddie Mac or Fannie Mae, as applicable, and other applicable laws, but only to the extent such charges do not exceed the usual and reasonable amounts charged in the area in which the Residence is located. Such usual and reasonable settlement or financing costs shall include an application fee as determined by the Department, the total estimated costs of a credit report on the Applicants and an appraisal of the property to be financed with the Mortgage Loan, title insurance, survey fees, credit reference fees, legal fees, appraisal fees and expenses, credit report fees, FHA insurance premiums, private Mortgage guaranty insurance premiums, VA guaranty fees, VA funding fees, RHS guaranty fees, hazard or flood insurance premiums, abstract fees, tax service fees, recording or registration fees, escrow fees, and file preparation fees.(d) The Department will determine from time to time a schedule of fees and charges necessary for expenses and reserves of the housing finance division as set forth in a Board resolution.(e) The Mortgage Lender must register the Mortgage Loan in accordance with the Department's published procedures.</content><note type="source"><p>Source Note: The provisions of this §28.5 adopted to be effective March 3, 2022, 47 TexReg 907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c28/sc/s28.6"><num value="28.6">§28.6</num><heading>Criteria for Approving Participating Mortgage Lenders</heading><content>(a) To be approved by the Department for participation in the program, a Mortgage Lender must meet the requirements in the Participation Packet to be a qualified Mortgage Lender as specified by:(1) FHA;(2) RHS;(3) VA; or(4) be a lender currently participating in the conventional home lending market for loans originated in accordance with Fannie Mae's and/or Freddie Mac's requirements.(b) As a condition for participation in the Program, a qualified Mortgage Lender must:(1) agree to originate Mortgage Loans and assign those loans and related Mortgages and servicing to the Department's master servicer;(2) originate, process, underwrite, close and fund originated loans; and(3) be an approved Mortgage Lender with the Program's master servicer.</content><note type="source"><p>Source Note: The provisions of this §28.6 adopted to be effective March 3, 2022, 47 TexReg 907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c28/sc/s28.7"><num value="28.7">§28.7</num><heading>Resale of the Residence</heading><content>Mortgage Loans that are financed with the proceeds of tax-exempt bonds, or for which a Mortgage Credit Certificate has been or will be issued, will be subject to federal income tax recapture provisions. Assumption of a Mortgage Loan is allowed under the Program if the new owner meets the Program requirements at the time of the sale of the Residence.</content><note type="source"><p>Source Note: The provisions of this §28.7 adopted to be effective March 3, 2022, 47 TexReg 907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c28/sc/s28.8"><num value="28.8">§28.8</num><heading>Conflicts with Bond Indentures and Applicable Law</heading><content>All assistance provided under the Program is funded through or facilitated by the Department's mortgage revenue bond indentures and is subject to changes in the mortgage revenue bond indentures and applicable law. If there is a conflict between this chapter and any bond indenture or applicable law regarding the use of the funds from mortgage revenue bonds, the mortgage revenue bond indenture or applicable law shall control.</content><note type="source"><p>Source Note: The provisions of this §28.8 adopted to be effective March 3, 2022, 47 TexReg 907.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c28/sc/s28.9"><num value="28.9">§28.9</num><heading>Waiver</heading><content>The Board, in its discretion and within the limits of federal and state law, may waive any one or more of the rules governing this Program, except 10 TAC §28.8 of this chapter, if the Board finds that waiver is appropriate to fulfill the purposes or polices of Texas Government Code, Chapter 2306, or for good cause, as determined by the Board.</content><note type="source"><p>Source Note: The provisions of this §28.9 adopted to be effective March 3, 2022, 47 TexReg 907.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c29"><num value="29">CHAPTER 29</num><heading>TEXAS SINGLE FAMILY NEIGHBORHOOD STABILIZATION PROGRAM RULE</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c29/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p1/c29/sc/s29.1"><num value="29.1">§29.1</num><heading>Purpose</heading><content>This chapter clarifies the administration of the Texas Single Family Neighborhood Stabilization Program ("Texas SFNSP"). Texas SFNSP funds are administered by the Department. The Texas SFNSP awards funding to Subgrantees to acquire foreclosed, abandoned, or vacant property in order to redevelop it and prevent it from becoming a source of blight which could contribute to declining property values.</content><note type="source"><p>Source Note: The provisions of this §29.1 adopted to be effective December 30, 2018, 43 TexReg 8427.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c29/sc/s29.2"><num value="29.2">§29.2</num><heading>Definitions</heading><content>The following words and terms, when used in this chapter, shall have the following meanings unless the context or the Notice of Funding Availability ("NOFA") indicates otherwise. Lack of capitalization of a term or word in this chapter does not indicate that the term is undefined. Other definitions may be found in Tex. Gov''t Code, Chapter 2306; Chapter 1 of this title (relating to Administration); and Chapter 20 of this title (relating to Single Family Programs Umbrella Rule).(1) Developer--A nonprofit entity that receives Texas SFNSP assistance for the purpose of:(A) Acquiring homes and residential properties to rehabilitate for residential purposes; and(B) Constructing new housing in connection with the redevelopment of demolished or vacant properties.(2) Expended--For the purposes of contract milestones and thresholds, "Expended" means that a complete draw request is submitted with adequate back-up documentation; it is not necessary for staff to have processed a draw to meet a benchmark. For all other purposes, "Expended" means that an eligible cost was incurred and staff has processed a draw to reimburse the expense with Texas SFNSP funds.(3) Land Bank--A governmental or nongovernmental nonprofit organization established, at least in part, to assemble, temporarily manage and dispose of vacant land for the purposes of stabilizing neighborhoods and encouraging re-use or redevelopment of urban property.(4) Obligated--When Texas SFNSP funding has been encumbered through contracts for goods, services or acquisition of property, or other forms of similar transactions requiring payment that have been determined by the Department to meet Texas SFNSP requirements.(5) Subgrantee--A Subrecipient or a Developer.(6) Subrecipient--Units of General Local Government and nonprofit organizations with whom the Department contracts and provides funding in order to undertake activities eligible for such assistance.(7) Texas SFNSP--Texas Single Family Neighborhood Stabilization Program.</content><note type="source"><p>Source Note: The provisions of this §29.2 adopted to be effective December 30, 2018, 43 TexReg 8427.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c29/sc/s29.3"><num value="29.3">§29.3</num><heading>General Provisions</heading><content>(a) All assisted properties must be located in eligible areas as defined by HUD and by the applicable NOFA. (b) The Contract term is based upon varying types of activities included in the Contract between the Department and the Department's Subgrantee. Exhibit C, Project Implementation Schedule, of the Contract, provides an outline of specific timelines, milestones and thresholds. Performance under the Contract will be evaluated according to the benchmarks described in each Contract. (c) Administrative Threshold. Administrative draw requests are funded from the administration or developer fee line item in Exhibit B, Budget, of the Contract. Reimbursement of eligible administrative expenses is regulated as described in paragraphs (1) - (3) of this subsection: (1) Threshold 1. Cumulative administrative draw requests may allow up to 10 percent of the administration or developer fee line item to be drawn prior to the start of any project activity included in the performance statement of the Contract (provided that all pre-draw requirements, as described in the Contract, for administration have been met). This draw may be limited by NOFA, underwriting report, or by Contract. Subsequent administrative expenditures will be reimbursed in the percentage amounts indicated, provided that all Contract benchmark requirements have been met, as identified in Exhibit C, Project Implementation Schedule, described in subsection (b) of this section; (2) Threshold 2. Subsequent administrative draw requests are allowed in proportion to the direct project funds drawn on the Contract, up to 90 percent of the total administration or developer fee line item. The cumulative total percentage of administrative funds requested may not exceed the cumulative total percentage of project funds expended for hard and/or soft costs directly attributable to activities under the Contract; (3) Threshold 3. The final 10 percent of the administration or developer fee line item is the administrative retainage. The final 10 percent may be drawn after the final loan closing or upon Contract close-out. (d) Forbearances. Contract expenditure thresholds and milestones are included in Exhibit C, Project Implementation Schedule, of the Contract; violations of which will subject the Subgrantee to the requirements found in this chapter. At the Department's discretion, forbearances of thresholds and milestones may be granted upon request and documentation of extenuating circumstances. (e) Waivers. Program administrative regulations set forth in any Texas SFNSP NOFA by the Department's Governing Board or terms in the Contract may be waived by the Department, acting by and through its Executive Director or his/her designee, up to the limits of Texas SFNSP regulations and guidance as previously established, periodically updated, or updated in the future by HUD. The Executive Director or his/her designee may waive the Texas SFNSP purchase discount to the limits of the purchase discount as allowed by the NSP Bridge Notice. The Texas NSP NOFA and the NSP Federal Register Notice (Docket No. FR-5255-N-01) published in the Federal Register (73 FR 58330), require a minimum discount of five percent for any individual property and 15 percent for a portfolio of properties to be acquired utilizing Texas SFNSP funds. (If only acquiring one property, the one property constitutes a portfolio.) The NSP Bridge Notice allows for up to a one percent discount for individual properties and portfolios.</content><note type="source"><p>Source Note: The provisions of this §29.3 adopted to be effective December 30, 2018, 43 TexReg 8427.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c29/sc/s29.4"><num value="29.4">§29.4</num><heading>Reassignment of Funds</heading><content>Deobligated funds may either be reassigned utilizing the amendment process described 10 TAC §20.14 of this title (relating to Single Family Programs Umbrella Rule), or be subject to redistribution through a methodology to be approved by the Board.</content><note type="source"><p>Source Note: The provisions of this §29.4 adopted to be effective December 30, 2018, 43 TexReg 8427.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c80"><num value="80">CHAPTER 80</num><heading>MANUFACTURED HOUSING</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c80/scA"><num value="A">SUBCHAPTER A</num><heading>CODES, STANDARDS, TERMS, FEES AND ADMINISTRATION</heading><section identifier="/us/state/tx/tac/t10/p1/c80/scA/s80.1"><num value="80.1">§80.1</num><heading>Texas Manufactured Housing Standards Code</heading><content>The standards and requirements for the installation and construction of manufactured housing adopted by the board in accordance with §1201.251(a)(1) of the Texas Manufactured Housing Standards Act (Standards Act) are as follows:(1) The construction standards set out in Chapter VI of the Housing and Community Development Act of 1974, as the same may be amended from time to time, or under any official rule, official interpretation, or adopted standard issued or adopted by the Department of Housing and Urban Development under such law;(2) The installation standards set forth in this chapter; and(3) Applicable standards for installation components established by(A) Chapter 43 of the latest edition of the International Residential Code;(B) The stabilizing component destruction test failure criteria of the FMHCSS, as implemented by 24 CFR, Part 3280 and the latest edition of the International Residential Code, Appendix E; and(C) The American Wood Preserver's Association and referenced by the latest edition of the International Residential Code Preservation for treated (PT) wood components.(4) Collectively, the foregoing, together with the Standards Act and these rules, are referred to as the Texas Manufactured Housing Standards Code ("the Code").</content><note type="source"><p>Source Note: The provisions of this §80.1 adopted to be effective December 30, 2007, 32 TexReg 8790.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scA/s80.2"><num value="80.2">§80.2</num><heading>Definitions</heading><content>Terms used herein that are defined in the Code and the Standards Act have the meanings ascribed to them therein. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:(1) APA--Administrative Procedure Act, Texas Government Code, Chapter 2001.(2) Business days--Includes every day on the calendar except Saturday, Sunday, and federal and state holidays. If there is a time limitation of five (5) days or less, within the Standards Act, it is business days unless specified otherwise.(3) Chattel Mortgage--Any loan that is not subject to the Real Estate Settlement Procedures Act (RESPA).(4) Coastline--The shoreline that forms the boundary between the land and the Gulf of Mexico or a bay or estuary connecting to the Gulf of Mexico that is more than five miles wide.(5) Cosmetic--Matters of flaws and finish, appearance, materials or workmanship not covered by 24 CFR Part 3280.(6) Credit document--Any executed written agreements between the consumer and creditor that describe or are required in connection with an actual credit transaction.(7) Creditor--A person involved in a credit transaction who:(A) extends or arranges the extension of credit; or(B) is a retailer or broker as defined in the Standards Act and participates in arranging for the extension of credit.(8) Custom designed stabilization system--An anchoring and support system that is not an approved method as prescribed by the state generic standards, manufacturer's installation instructions, or other systems pre-approved by the Department.(9) Dangerous conditions--Any condition which, if present, would constitute an imminent threat to health or safety.(10) DAPIA--The Design Approval Primary Inspection Agency.(11) Department or TDHCA--The Manufactured Housing Division of the Texas Department of Housing and Community Affairs (TDHCA).(12) Deposits--Money or other consideration given by a consumer to a retailer, salesperson, or agent of a retailer to hold a manufactured home in inventory for subsequent purchase or to confirm the agreed price on a home to be specially ordered.(13) Down Payment--An amount, including the value of any property used as a trade-in, paid to a retailer to be applied to the purchase price of a manufactured home, including any goods or services that are a part of that transaction.(14) Dwelling unit--One or more habitable rooms which are designed to be occupied for living.(15) FMHCSS--Federal Manufactured Home Construction and Safety Standards that implement the National Manufactured Home Construction and Safety Standards Act of 1974, 42 USC 5401, et seq., as amended from time to time.(16) Frost Line Zone--An area in Texas designated by the Department, as having a frost line depth to consider when conforming with federal rules.(17) Independent testing laboratory--An agency or firm that tests products for conformance to standards and employs at least one engineer or architect licensed in at least one state.(18) Inventory Lender--A person that is involved in extending credit for inventory financing secured by manufactured housing.(19) IPIA--The Production Inspection Primary Inspection Agency which evaluates the ability of manufactured home manufacturing plants to follow approved quality control procedures and/or provides ongoing surveillance of the manufacturing process.(20) Long-Term Lease--For the purpose of determining whether or not the owner of a manufactured home may elect to treat the home as real property, is a lease on land to which the manufactured home has been attached and which:(A) has been approved by each lienholder for the manufactured home by placing on file with the Department written consent to have the home treated as real property; or(B) is for at least five years if the home is not financed.(21) Main frame--A chassis or structure serving a similar purpose.(22) Manufactured home identification numbers--HUD label number, serial number, or Texas seal number. For the purpose of maintaining ownership and location records, including the perfection of liens, the numbers shall include the HUD label number(s) and the serial number(s) imprinted or stamped on the home in accordance with HUD departmental regulations. For homes manufactured prior to June 15, 1976, the Texas seal number, as issued by the Department, shall be used instead of the HUD label number. If a home manufactured prior to June 15, 1976, does not have a Texas seal, or if a home manufactured after June 15, 1976, does not have a HUD label, a Texas seal shall be purchased from the Department and attached to the home in upper left corner on the end opposite the tongue end and used for identification in lieu of the HUD label number.(23) Manufactured home site--That area of a lot or tract of land on which a manufactured home is or will be installed.(24) Permanent foundation--A foundation which meets the requirements of §80.21 of this chapter (relating to Requirements for the Installation of Manufactured Homes) and was constructed according to drawings, as required by that section, which state that the foundation is a permanent foundation for a manufactured home.(25) Promptly--Means within the time prescribed by the Standards Act, these Rules, and any administrative order (including any properly granted extension) or, in the case of a matter that constitutes an imminent threat to health or safety, as quickly as reasonably possible.(26) Seriousness of Violation--Pursuant to Section 1201.605(c)(1) of the Texas Occupations Code the Department shall assess a higher administrative penalty if the consumer harm or burden is great, as a result of the violation.(27) Stabilization systems--A combination of the anchoring and support system. It includes, but is not limited to the following components:(A) Anchoring components--Any component which is attached to the manufactured home and is designed to resist the horizontal and vertical forces imposed on the manufactured home as a result of wind loading. These components include, but are not limited to auger anchors, rock anchors, slab anchors, ground anchors, stabilizing devices, connection bolts, j-hooks, buckles, and split bolts.(B) Anchoring equipment--Straps, cables, turnbuckles, tubes, and chains, including tensioning devices, which are used with ties to secure a manufactured home to anchoring components or other devices.(C) Anchoring systems--Combination of ties, anchoring components, and anchoring equipment that will resist overturning and lateral movement of the manufactured home from wind forces.(D) Diagonal tie--A tie intended to primarily resist horizontal forces, but which may also be used to resist vertical forces.(E) Footing--That portion of the support system that transmits loads directly to the soil.(F) Ground anchor--Any device at the manufactured home site designed to transfer manufactured home anchoring loads to the ground.(G) Longitudinal ties--Designed to prevent lateral movement along the length of the home.(H) Shim--A wedge-shaped piece of hardwood or other registered component not to exceed one (1) inch vertical (actual) height.(I) Stabilizing components--All components of the anchoring and support system such as piers, footings, ties, anchoring equipment, ground anchors and any other equipment, which supports the manufactured home and secures it to the ground.(J) Support system--A combination of footings, piers, caps and shims that support the manufactured home.(K) Vertical tie--A tie intended primarily to resist the uplifting and overturning forces.</content><note type="source"><p>Source Note: The provisions of this §80.2 adopted to be effective December 30, 2007, 32 TexReg 8790; amended to be effective June 21, 2009, 34 TexReg 3254; amended to be effective January 7, 2018, 42 TexReg 6921; amended to be effective December 8, 2019, 44 TexReg 6870.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scA/s80.3"><num value="80.3">§80.3</num><heading>Fees</heading><content>(a) License Fees and Renewal Fees:(1) $850 for each manufacturer's plant license;(2) $550 for each retailer's sales license;(3) $350 for each broker's license;(4) $350 for each installer's license;(5) $200 for each salesperson's license; and(6) $25.00 for each reprint of a license.(b) Installation Fees:(1) There is a reporting fee of $75 for the installation of a single section manufactured home and $25 for each additional section.(2) The reporting fee must be submitted to the Department with the completed Notice of Installation (Form T) no later than seven (7) days after which the installation is completed, but not later than three (3) days for installers with a provisional license.(3) Fee distributions to local governmental entities performing inspection functions pursuant to contract with the Department shall be made in accordance with Department procedures and the provisions of the contract.(c) Seal Fee: Except for an application by a tax appraiser or a tax assessor-collector, for which there is no fee, there is a fee of $35 for the issuance of a Texas Seal for one manufactured home section. Any person who sells, exchanges, or offers for sale or exchange one or more sections of used HUD-Code manufactured homes manufactured after June 15, 1976, that do not each have a HUD label affixed, or one or more sections of a used mobile home manufactured prior to June 15, 1976, that do not each have a Texas Seal affixed shall file an Application for Statement of Ownership to the Department for a Texas Seal and issuance of an updated Statement of Ownership. The application shall be accompanied by the seal fee of $35 per section made payable to the Department.(d) Education Fee:(1) Core Education Fee: Each attendee at the regularly offered course of initial instruction in the law and consumer protection regulations for license applicants shall be assessed a fee of $150. Subject to availability of staff, the Department may provide additional initial instruction courses upon request for a fee of $150 per attendee plus reimbursement to the Department for the actual costs of the training session and any related costs, such as travel, meal, and lodging.(2) Retailer Education Fee: $50 for each attendee.(3) Installer Education Fee: $50 for each attendee.(e) There is a fee of $300 to process an application for a contract to be approved to provide a continuing education program under §1201.113 of the Standards Act.(f) Industry Request. The manufacturer, retailer, or installer may request a consumer complaint home inspection. The request must be accompanied by the required fee of $150.00.(g) There is a fee of $150 for the inspection of a manufactured home which is to be designated for residential use and is elected as personal property after having been designated as real property. The purpose of the inspection is to determine if the home is habitable. The fee must accompany a written request for inspection and must be submitted either prior to or in connection with the submission of an Application for Statement of Ownership.(h) There is a fee of $200 for the plan review and inspection of a salvaged manufactured home which is to be rebuilt. The purpose of the inspection is to determine if the home is habitable as defined by §1201.453 of the Standards Act so that it may be designated for residential use.(1) The fee and required notification shall be submitted in accordance with §80.36 of this chapter (relating to Retailer's Rebuilding Responsibilities and Requirements).(2) The retailer shall also be charged for mileage and per diem incurred by Department personnel traveling to and from the location of the home.(3) The Department shall invoice the retailer for the charges incurred, and no Statement of Ownership shall be issued until all charges and fees have been paid.(i) There is no fee for an initial inspection relating to a complaint. If a re-inspection is requested by a consumer or a licensee, a fee of $150 will be assessed against any licensee found, by final order, to have violated any warranty or any other requirements of the Standards Act or these rules made the subject of the complaint.(j) Fees Relating to Statements of Ownership. Each fee shall accompany the required documents delivered or mailed to the Department at its principal office in Austin.(1) A fee of $55 will be required for the issuance of a Statement of Ownership.(2) If a correction of a document is required as a result of a mistake by the Department, there is no fee for the issuance of corrected document. However, if the error was not made by the Department, a request for correction of the error must be made on a completed Application for Statement of Ownership and submitted to the Department along with the required fee of $55 and any necessary supporting documentation.(3) When multiple applications are submitted, the Form M set forth on the Department's website must be completed and attached to the front of the applications to identify each application and reconcile the fee for each application with the total amount of the payment. Failure to provide this form, properly completed, will delay the application's being deemed complete for processing.(4) A priority handling service may be offered by the Department for an additional fee of $55, for each review of an application, whether the application is complete or incomplete.(k) Method of Payment.(1) All checks shall be made payable to the Texas Department of Housing and Community Affairs or TDHCA.(2) All fees for available electronic transactions may also be paid by credit card or ACH, if submitted through Texas Online.(l) Loss of Check Writing Privileges. Any person who has more than one (1) time paid for anything requiring a fee under these rules with a check that is returned uncollectible, whether "NSF," closed account, refer to maker, or for any similar reason, is required to make all future payments, if any, by means of money order or cashier's check.(m) The director may approve a refund of all or a portion of any fee collected if he or she makes a documented determination showing that:(1) The fee was for a service applied for in error based on incorrect advice from the Department;(2) The fee represented a duplicate payment for a service for which money had already been collected by the Department or a licensee; or(3) A refund is justified and warranted.</content><note type="source"><p>Source Note: The provisions of this §80.3 adopted to be effective December 30, 2007, 32 TexReg 8790; amended to be effective August 3, 2008, 33 TexReg 5297; amended to be effective December 20, 2009, 34 TexReg 8312; amended to be effective April 25, 2010, 35 TexReg 2550; amended to be effective November 6, 2011, 36 TexReg 6724; amended to be effective March 25, 2012, 37 TexReg 1307; amended to be effective November 23, 2014, 39 TexReg 8386; amended to be effective May 15, 2016, 41 TexReg 2743; amended to be effective January 7, 2018, 42 TexReg 6921; amended to be effective October 23, 2022, 47 TexReg 6196.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scA/s80.4"><num value="80.4">§80.4</num><heading>Advisory Committee</heading><content>The Board shall designate the membership of an advisory committee of not more than 24 members, that meets the requirements of §1201.251(d) of the Standards Act, and the committee shall report as specified §1201.251(e) of the Standards Act.</content><note type="source"><p>Source Note: The provisions of this §80.4 adopted to be effective December 30, 2007, 32 TexReg 8790; amended to be effective November 6, 2011, 36 TexReg 6724.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c80/scB"><num value="B">SUBCHAPTER B</num><heading>INSTALLATION STANDARDS AND DEVICE APPROVALS</heading><section identifier="/us/state/tx/tac/t10/p1/c80/scB/s80.20"><num value="80.20">§80.20</num><heading>Requirements for Manufacturer's Designs and Installation Instructions</heading><content>(a) With each new home, the manufacturer shall provide printed instructions which at a minimum must:(1) specify the location, orientation and required capacity of stabilizing components on which the design is based;(2) be filed with the Department;(3) be approved by the manufacturer's DAPIA; and(4) contain DAPIA approval stamps, engineer or architect approval stamps, and the installation manual effective date on each page of the installation instructions or on the cover pages of bound installation manuals, unless an equivalent method of authentication is used for electronically filed documents.(b) For used manufactured homes, if a manufacturer determines that one or more of its homes requires a deviation from the generic standards to protect the structural integrity of the home, the manufacturer must include instructions for the necessary deviation in the manufacturer's DAPIA-approved installation instructions and provide a list of all homes affected. The manufacturer must provide a copy to the Department along with a letter informing the Department of the required deviation included in the instructions and giving the Department permission to reproduce and release copies of such instructions upon request. On the Department's website, the Department will maintain a current list of all required deviations from generic standards and will provide a copy to anyone who requests it.(c) At least thirty (30) calendar days prior to the effective date of any change, modification, or update to the manufacturer's installation instructions or any appendix, the manufacturer shall file such change, modification, or update with the Department and mail a copy(s) to all the manufacturer's retailers. Links to appendix are posted on the Department's website.(d) The manufacturer shall file with the Department additional copies of manufacturer's installation instructions for each model in the number specified by the Department. If no number is specified, one copy of each such set of instructions will suffice.</content><note type="source"><p>Source Note: The provisions of this §80.20 adopted to be effective January 29, 2008, 32 TexReg 8790; amended to be effective July 21, 2009, 34 TexReg 3254.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scB/s80.21"><num value="80.21">§80.21</num><heading>Requirements for the Installation of Manufactured Homes</heading><content>(a) All new manufactured homes shall be installed by a licensed installer and in accordance with the home manufacturer's DAPIA-approved installation instructions.(b) All used manufactured homes shall be installed by a licensed installer to resist overturning and lateral movement of the home, and the installation must be completed in accordance with instructions appropriate for the Wind Zone where the home is to be installed as per one of the following:(1) the home manufacturer's DAPIA-approved installation instructions;(2) the state's generic standards set forth in §§80.22, 80.23, 80.24, and 80.25 of this subchapter (relating to Installation Standards and Device Approvals);(3) the instructions for a stabilization system registered with the Department in accordance with §80.26 of this subchapter (relating to Registration of Stabilizing Components and Systems); or(4) the instructions for a special stabilization system which:(A) may or may not be a permanent foundation;(B) is for a particular manufactured home or an identified class of manufactured homes to be installed at a particular area with similar soil properties according to county soil survey or other geotechnical reports; and(C) is either:(i) a pre-existing foundation for which a professional engineer or architect licensed in Texas has issued written approval for the installation of a particular home, and the written approval shall be submitted to the Department with the installation report; or(ii) installed in accordance with a custom designed stabilization system drawing that is stamped by a Texas licensed professional engineer or architect. A copy of the stabilization system drawing must be forwarded to the Department along with the installation report.(c) When a home is installed on a stabilization system registered with the Department or a special stabilization system, the installer must follow the home manufacturer's DAPIA-approved installation instructions for any aspect of the installation that is not covered by the system's installation instructions or drawings.(d) The installer must use stabilizing components that have the required capacity and install them according to the anchor or stabilizing component manufacturer's current installation instructions. All stabilizing components must be resistant to all effects of weathering including that encountered along the Texas gulf coast. Anchors must be made resistant to corrosion. Nonconcrete stabilizing components and systems for use within 1500 feet of the coastline shall be specifically certified for this use. Preservative treated (PT) wood components shall conform to the applicable standards issued by the American Wood Preserver's Association and referenced by the latest edition of the International Residential Code. The use of re-conditioned equipment (i.e. anchor, strap, and clip) or any anchoring component by licensed installer on the new installations is not permitted. Homeowners are exempt from this requirement provided the integrity of the component is acceptable and approved by the state and the original product number, vendor name, and/or patent number must be legible on the product.(e) Site Preparation Responsibilities and Requirements:(1) The responsible installer of a new manufactured home is responsible for the proper preparation of the site where the manufactured home will be installed.(2) A consumer acquiring a used manufactured home to be installed is responsible for the proper preparation of the site where the manufactured home will be installed except as set forth in §80.22 of this chapter (relating to Generic Standards for Moisture and Ground Vapor Controls).(3) Whenever a licensed retailer intends to sell a used manufactured home, regardless of where it is located or is to be located, the retailer is required to give the consumer the Site Preparation Notice, for signature by the consumer, in the form set forth on the Department's website PRIOR to the execution of any binding sales agreement.(4) Whenever a licensed installer proposes to move a used manufactured home, the installer is required to give the consumer the Site Preparation Notice, for signature by the consumer, in the form set forth on the Department's website PRIOR to entering into a binding agreement to move that home.(f) If at the time of installation or within 90 days thereafter as stated on the contract, the retailer or installer provides the materials for skirting or contracts for the installation of skirting, the retailer or installer is responsible for installing any required moisture and ground vapor control measures in accordance with the home installation instructions, specifications of a registered stabilization system, or the generic standards and shall provide for the proper cross ventilation of the crawl space. If the consumer contracts with a person other than the retailer or installer for the skirting, the consumer is responsible for installing the moisture and ground vapor control measures and for providing for the proper cross ventilation of the crawl space.(g) Clearance: If the manufactured home is installed according to the state's generic standards, a minimum clearance of 18 inches between the ground and the bottom of the floor joists must be maintained. In addition, the installer shall be responsible for installing the home with sufficient clearance between the I-Beams and the ground so that after the crossover duct prescribed by the manufacturer is properly installed it will not be in contact with the ground. Refer to §80.25 of this chapter (relating to Generic Standards for Multi-Section Connections Standards) for additional requirements for utility connections. The Installer must remove all debris, sod, tree stumps and other organic materials from all areas where footings are to be located.(h) Drainage: The Installer is responsible for proper site drainage where a new manufactured home is to be installed. The consumer is responsible for proper site drainage where a used manufactured home is to be installed unless the home is installed in a rental community. Drainage prevents water build-up under the home. Water build-up may cause shifting or settling of the foundation, dampness in the home, damage to siding and bottom board, buckling of walls and floors, delamination of floor decking and problems with the operation of windows and doors.(i) Frost Line Zone.(1) The following Texas counties have a 12 inch frost line depth to consider for the installation of a new manufactured home: Armstrong, Bailey, Briscoe, Carson, Castro, Childress, Cochran, Collingsworth, Cottle, Crosby, Dallam, Deaf Smith, Dickens, Donley, Floyd, Foard, Gray, Hale, Hall, Hansford, Hardeman, Hartley, Hemphill, Hockley, Hutchinson, King, Knox, Lamb, Lipscomb, Lubbock, Moore, Motley, Ochiltree, Oldham, Parmer, Potter, Randall, Roberts, Sherman, Swisher, Wheeler, and Wilbarger.(2) For a new home to be installed in a Frost Line Zone county, footings placed in freezing climates must be designed using methods and practices that prevent the effects of frost heave by one of the following methods:(A) Conventional footings. Conventional footings must be placed below the frost line depth for the site unless an insulated foundation or monolithic slab is used (refer to 24 CFR §3285.312(b)(2) and (3)).(B) This is not subject to the provisions in 24 CFR §3285.2(c) that also require review by the manufacturer and approval by its DAPIA for any variations to the manufacturer's installation instructions for support and anchoring.(C) Monolithic slab systems. A monolithic slab is permitted above the frost line when all relevant site-specific conditions, including soil characteristics, site preparation, ventilation, and insulative properties of the under floor enclosure, are considered and anchorage requirements are accommodated as set out in 24 CFR §3285.401. The monolithic slab system must be designed by a licensed professional engineer or registered architect:(i) In accordance with acceptable engineering practice to prevent the effects of frost heave; or(ii) In accordance with SEI/ASCE 32-01 as defined in 24 CFR §3285.4.(D) Insulated foundations. An insulated foundation is permitted above the frost line, when all relevant site-specific conditions, including soil characteristics, site preparation, ventilation, and insulative properties of the under floor enclosure, are considered, and the foundation is designed by a licensed professional engineer or registered architect:(i) In accordance with acceptable engineering practice to prevent the effects of frost heave; or(ii) In accordance with SEI/ASCE 32-01 as defined in 24 CFR §3285.4.(j) Electrical testing. At the time of installation, the following tests must be performed on all new manufactured homes:(1) All site installed or shipped loose fixtures shall be subjected to a polarity test to determine that the connections have been properly made;(2) All grounding and bonding conductors installed or connected during the home installation shall be tested for continuity; and(3) All electrical lights, equipment, ground fault circuit interrupters and appliances shall be subjected to an operational test to demonstrate that all equipment is connected and functioning properly.</content><note type="source"><p>Source Note: The provisions of this §80.21 adopted to be effective January 29, 2008, 32 TexReg 8790; amended to be effective July 21, 2009, 34 TexReg 3254; amended to be effective November 6, 2011, 36 TexReg 6724; amended to be effective December 25, 2012, 37 TexReg 8507; amended to be effective January 7, 2020, 44 TexReg 6870.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scB/s80.22"><num value="80.22">§80.22</num><heading>Generic Standards for Moisture and Ground Vapor Controls</heading><content>(a) If the used manufactured home is installed according to the state's generic standards and the space under the home is to be enclosed with skirting and/or other materials provided by the retailer and/or installer, the enclosure must meet the following requirements:(1) At least one access opening that does not require the use of tools to gain access shall not be less than 18 inches in any dimension and not less than three square feet in area shall be provided by the installer. The access opening shall be located so as to enable, to the extent reasonably possible, the visual inspection of water supply and sewer drain connections.(2) If a clothes dryer exhaust duct, air conditioning condensation drain, or combustion air inlet is present, the installer must pass it through the skirting to the outside. All air conditioning condensation lines must be installed in such manner that prevents ponding within 5 feet of the foundation.(3) Crawl space ventilation must be provided at the rate of minimum 1 square foot of net free area, for every 150 square feet of floor area.(4) At least six openings shall be provided, one at each end of the home and two on each side of the home. There must be a ventilation within 3 feet of each corner. The openings shall be screened or otherwise covered to prevent entrance of rodents (note: screening will reduce net free area). For example, a 16'x76' single section home has 1216 square feet of floor area. This 1216 square feet divided by 150 equals 8.1 square feet or 1166 square inches of net free area crawl space ventilation.(b) The generic ground vapor control measure shall consist of a ground vapor retarder that is minimum 6 mil polyethylene sheeting or its equivalent, installed so that the area under the home is covered with sheeting and overlapped approximately 12 inches at all joints. Any tear larger than 18 inches long or wide must be taped using a material appropriate for the sheeting used. The laps should be weighted down to prevent movement. Any small tears and/or voids around construction (footings, anchor heads, etc.) are acceptable.</content><note type="source"><p>Source Note: The provisions of this §80.22 adopted to be effective January 29, 2008, 32 TexReg 8790; amended to be effective July 21, 2009, 34 TexReg 3254.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scB/s80.23"><num value="80.23">§80.23</num><heading>Generic Standards for Footers and Piers</heading><content>(a) Proper sizing of footings depends on the load carrying capacity of both the piers and the soil. To determine the load bearing capacity of the soil, the installer may use any of the following methods: (1) Using a pocket penetrometer; (2) Soil surveys from the U.S. Department of Agriculture; (3) Values from tables of allowable or presumptive bearing capacities given in local building codes. Such tables are commonly available from the local authority having jurisdiction; or (4) Any other test data from soil analysis reports. Attached Graphic(b) The footing must be placed on firm, undisturbed soil, or fill compacted to at least 90% of its maximum relative density is required and must be verified every 6" - 8" vertically on the build-up. Installation on loose, noncompacted fill may result in settlement/movement of the home and may invalidate the home's limited warranty. (c) Footer Configurations. Attached Graphic(d) Footer sizing and capacities: The Footer Capacities table in subsection (a)(4) of this section represent maximum loads and spacings based on footer size and soil bearing capacity. Other footers may be used if equal or greater in bearing area than those footer sizes tabulated. (e) Piers and pier spacings: Spacing and location of piers shall be in accordance with the tables listed in this chapter. (1) Spacing shall be as even as practicable avoiding obstacles that are not in control of the installer along each main I-Beam. Pier spacing may exceed tabulated values up to 30% so long as the total pier count remains the same. End piers are to be located within 24 inches of the end of the main frame. (2) Piers shall extend at least 6 inches from the centerline of the I-Beam or be designed to prevent dislodgment due to horizontal movement of less than 4 inches. (3) Load bearing supports or devices shall be registered with the Department in accordance with §80.26 of this chapter (relating to Registration of Stabilizing Components and Systems). (4) Sidewall openings greater than 4 feet shall have perimeter piers located under each side of the opening, i.e. patio doors, recessed porches/entries, bay windows and porch posts. Perimeter piers for openings are not required for endwalls. (f) Pier design: Piers shall be constructed per the details in the Pier Design. Attached Graphic(1) Shimming (if needed): Shims are commonly used as a means for leveling the home and filling any voids left between the bottom flange of the I-Beam and the top of the pier cap. Wedge shaped shims must be installed from both sides of the I-Beam to provide a level bearing surface. The allowable height must not exceed 1 inch. Shims shall be a minimum of 3"x 6" nominal. All adjustment shims (marriage and perimeter) must be installed in manner which prevents dislodgement. (2) Table for pier spacing without perimeter piers. Attached Graphic(3) Table for pier spacing WITH perimeter supports and the Perimeter Pier Front and Side View. Attached Graphic(g) Typical Multi-Section Pier Layout. Attached Graphic(h) Typical Single Section Pier Layout. Attached Graphic(i) Multi-section units mating line column supports: (1) On multi-section units, openings larger than 4 feet must have piers installed at each end of the opening. And within 6 inches of each end. Attached Graphic(2) Column loads for each section may be combined when the columns are opposite each other. The footer must be sized for the combined loading. (3) Additional piers are required under marriage walls (see wall between column #3 and #4 in the Marriage Line Elevation figure in paragraph (1) of this subsection. The maximum spacing is the same as the spacing at the main I-Beams, without perimeter piers, and one half the spacing of the perimeter piers, with perimeter piers installed. (4) See the table for the mating line column loads. Attached Graphic(j) Temporary support is required to insure the structural continuity of homes placed at the retail location. Thirty (30) days after the arrival of multi-section and sixty (60) days after the arrival of single-section manufactured dwellings to the retail location, homes must be temporarily lot set. If the manufacturer has instructions for temporary blocking, home should be blocked according to the manufacturer specifications. In absence of any manufacturer instructions, State Generic requirement, either paragraph (1) or (2) of this subsection, shall be used: (1) Manufacturer dwellings supported by its running gear (left on their wheels and draw bar/hitch) shall be adequately supported under the main beam (I-beam) of within 5 feet of each end of the beam, within 5 feet of a supporting wheel and 10 feet on-center of each floor section. Any required marriage line and perimeter pier locations that are clearly marked by the manufacturer are also to be installed. Sidewall openings less than 4 feet in length do not have to be supported. Multi-section homes shall be sealed at the centerline and at all other openings to prevent exposure to the elements. (2) Manufactured dwellings not supported on their running gear shall be adequately supported under each main frame (I-beam) within 5 feet of each end of the home and 10 feet on-center along the length of the main beam. Any required marriage line and perimeter pier locations that are clearly marked by the manufacturer are also to be installed. Sidewall openings less than 4 feet in length do not have to be supported. Multi-section homes shall be sealed at the centerline and at all other openings to prevent exposure to the elements.</content><note type="source"><p>Source Note: The provisions of this §80.23 adopted to be effective January 29, 2008, 32 TexReg 8790; amended to be effective January 20, 2009, 33 TexReg 9459.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scB/s80.24"><num value="80.24">§80.24</num><heading>Generic Standards for Anchoring Systems</heading><content>(a) General Requirements: For units built on or after September 1, 1997, the installer must verify that the unit is designed for the Wind Zone in which it is to be installed and must follow all applicable installation instructions for that Wind Zone as set forth herein. Note: A Wind Zone I unit, built on or after September 1, 1997, may not be installed in a Wind Zone II area. However, a Wind Zone II unit may be installed in a Wind Zone I area. The counties are defined in the FMHCSS. (b) Material Specifications: (1) Strapping shall be Type 1, Finish B, Grade 1 steel strapping, 1.25 inches wide and 0.035 inches in thickness, certified by a licensed professional engineer or architect as conforming with the American Society for Testing and Materials (ASTM) Standard Specification D3953 91, Standard Specification for Strapping, Flat Steel, and Seals. Strapping shall be marked at least every five feet with the marking described by the certifying engineer or architect. (2) Tie materials shall be capable of resisting an allowable working load of 3,150 pounds with no more than 2% elongation and shall withstand a 50% overload (4,725 pounds total). Ties shall have a resistance to weather deterioration at least equivalent to that provided by coating of zinc on steel of not less than 0.30 ounces per square foot on each side of the surface coated (0.0005 inches thick), as determined by ASTM Standards Methods of Test for Weight of Coating on Zinc-coated (galvanized) Iron or Steel Articles (ASTM A 90-81). Slit or cut edges of zinc-coated steel strapping are not required to be zinc coated. Ties shall be designed and installed to prevent self disconnection when the ties are slack. (3) Anchor spacing ONLY applies to units with roof pitch of 20 degrees or less. For anything over 20 degrees, it must be designed by a professional engineer or architect. (c) Anchors shall be installed: (1) in direction of load. Attached Graphic(2) against direction of load (vertical and/or angled), and a stabilizer plate must be installed. See the following Placement of Stabilizing Devices. Attached Graphic(d) WIND ZONE I Installation: (1) Typical anchor layout, single and multi-section units (WIND ZONE I ONLY). Attached Graphic(2) Maximum spacing for Diagonal Ties for Wind Zone I. Attached Graphic(3) Minimum Number of Diagonal Ties for Wind Zone I. Table based on 2 feet inset of anchors at each end. Attached Graphic(4) When auger anchors cannot be inserted into a difficult soil after moistening, such as mixed soil and rock or caliche (heavily weathered limestone) that is not solid rock, cross drive rock anchors may be used in accordance with the values and notes for the table modified as follows: (A) Since the ultimate anchor pull out in the difficult soil will be reduced, the maximum spacing for diagonal ties per side is one half the spacing allowed by the table in paragraph (2) of this subsection which will require adding one additional cross drive rock anchor for each anchor specified for the sides and ends; (B) The rods of the cross drive rock anchors must be fully inserted, have at least 24 inches of the rod lengths embedded in the difficult soil, and be restrained from horizontal movement by a stabilizer device between the rods and the home; and (C) Each cross drive rock anchor is connected to one diagonal tie and is not connected to a vertical tie. (5) Where vertical tie locations are not easily discernable, the vertical ties may be connected to the main I-Beam rails and the anchor installed directly below that connection point. The diagonal tie must be connected to the opposite main I-Beam. In no case shall the distance between those ties exceed 5'-4" on-center. (e) WIND ZONE II Installation: (1) In place of the requirements as shown in subsection (d) of this section, units designed for Wind Zone I and built prior to September 1, 1997, and units designed for Wind Zone II and built prior to July 13, 1994, require diagonal ties as set forth in this paragraph when these units are installed in Wind Zone II. See also §1201.256 of the Standards Act. Items not specifically addressed in this section are the same as for Wind Zone I installations. Attached Graphic(2) Units built to Wind Zone II on or after July 13, 1994. (A) Units built to Wind Zone II on or after July 13, 1994, should have either built-in, or provisions for connecting, vertical ties along the sidewall(s) of each unit(s). A diagonal tie must be installed at each vertical tie location (except for designated shearwall tie). Built-in vertical ties shall be connected to anchors. If there are brackets or other provisions for connecting vertical ties, vertical ties shall be added at the brackets or provisions and connected to anchors. (B) Only factory installed vertical ties may be closer than 4 feet from each other. (C) Where tie locations are clearly marked as a shear wall strap, a perimeter pier must be installed at that location. Diagonal tie is not required. (D) Where the vertical tie spacing exceeds 8'-0" on-center (see also note 6 in the table in this paragraph for exception), the anchoring system must be approved by the home manufacturer's installation manual, or designed by a professional engineer or architect licensed in the state of Texas. (E) Where pier heights exceed 36 inches in height, the diagonal strap shall be connected to the opposite I-Beam. (3) Multi-section centerline anchoring requirements (Wind Zone II only): (A) Centerline anchor ties are required for ALL Wind Zone II installations, regardless of the date the unit was manufactured, when installation occurs on or after the effective date of these rules. (B) Factory installed centerline vertical ties, brackets, buckles or any other connecting devices must be connected to a ground anchor. No additional anchors as described in subparagraph (D) of this paragraph are required. (C) To avoid obstructions and/or piers and footers, the anchor may be offset up to 12 inches perpendicular to the centerline. (D) Where factory preparations do not exist, install anchors and angle iron brackets at each side of mating line openings wider than 48 inches. (i) Where equal spans exist opposite each other (i.e., each section), a double bracket assembly may be used. The maximum opening is per the table in subsection (f)(4) of this section. Total uplift load may not exceed the anchor and/or strap capacity (i.e., 3150 pounds). (ii) The angle iron bracket is minimum 1 1/2" x 1 1/2" x 11 gauge. The holes for the lag screws are a maximum of 4 inches apart and 3/4" from the edge of the bracket. (iii) Lag screws/bolts are minimum 3/8" diameter x 3 inches, full thread. Note: Pre drill pilot holes. (4) For openings separated by a wall or post 16 inches or less in width, the opening span is the total of the spans on each side of the wall/post. (f) Bracket Installation. (1) See the table in paragraph (4) of this subsection concerning the maximum centerline wall opening for column uplift brackets. (2) Use a single bracket for openings which exist on one section only. Use double bracket where openings are opposite each other on two sections of the home. (3) When only one bracket assembly is required, it may be installed on either side of the column/opening stud(s), but no more than 12 inches from the column or opening stud(s). (4) When two bracket assemblies are required, they must be installed on each side of the column/opening stud(s), but no more than 12 inches from the column/opening stud(s), and they must be angled away from each other a minimum of 12 inches. Attached Graphic(5) Example: A double section unit with each section being 14 feet wide; (A) Span "A" is 18'-0", matching span both sections; (B) Span "B" is 14'-8", matching span both sections; (C) Span "C" is 6'-8", matching span both sections; and (D) Span "D" is 13'-4", one side only. Attached Graphic(6) Longitudinal ties: (A) Longitudinal ties are required for ALL wind zone installations, regardless of the date of manufacture, when installation occurs after the effective date of these rules. (B) Longitudinal ties are designed to prevent lateral movement along the length of the home. (C) When conventional anchors and straps are used; the required number of ties must be installed as appropriate. The strap(s) may be connected or wrapped around front or rear chassis header members, around existing cross members or spring hangers. A strap must be within 3 inches of where the cross member attaches to the main I-beam. Alternatively, brackets to receive the strap(s) may be attached to the bottom flange of the main I-beams. The location of the connection points along the length of the I-beams are not critical, as long as the number of longitudinal ties required for each end of each home section are installed with their pull in opposite directions. No two anchors shall be within 4 ft of each other. No two ties shall be attached to the same structural member of the home, other than a main longitudinal frame member or a front or rear chassis header member. (D) Anchors require stabilizer plates when the anchor shaft is not in line with strap (plus or minus 10 degrees).</content><note type="source"><p>Source Note: The provisions of this §80.24 adopted to be effective January 29, 2008, 32 TexReg 8790.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scB/s80.25"><num value="80.25">§80.25</num><heading>Generic Standards for Multi-Section Connections Standards</heading><content>(a) Air infiltration and water vapor migration at mating surfaces: Before positioning additional sections, the mating line surfaces along the floor, endwall and ceiling, require material or procedures to limit air infiltration and water vapor migration.(1) Expanding Foam: Foam may be used along surfaces that are accessible after the units have been joined. Where mating line walls line up between sections, non-porous materials must be installed prior to joining the units.(2) Caulking: Caulking may be used along surfaces that are accessible after the units have been joined. Where mating line walls line up between sections, non-porous materials must be installed prior to joining the units.(3) Non-porous gasket installed along the perimeter of all mating lines.(4) Insulation, carpet, carpet pad or other porous materials are not acceptable.Attached Graphic(b) Floor Connections:(1) Gaps between floors up to 1-1/2 inches maximum which do not extend the full length of the floor may be filled with lumber, plywood or other suitable shimming materials. Fastener lengths in shimmed areas may need to be increased to provide minimum 1-1/4 inches penetration into opposite floor rim joist.(2) Gaps less than 1/2 inch width need not be shimmed.(3) The floor assemblies of multi-section units must be fastened together. Fastener options and maximum spacings are listed in the floor connections figure in paragraph (4) of this subsection.(4) Any tears or damages to the bottom board due to fastener installation must be repaired.Attached Graphic(c) Endwall Connections:(1) Endwalls must be fastened together at the mating line with minimum #8x4 inch wood screws or 16d nails at maximum 8 inches on-center or 12 inches on-center maximum for 5/16 lags; toed or driven straight; and(2) Fastener length may need to be adjusted for gaps and/or toeing, to provide minimum 1-1/2 inch penetration into opposite endwall stud.Attached Graphic(d) Roof Connection: (Note: Fasteners must not be used to pull the sections together.)(1) Roof shall be connected with the fasteners and spacings specified in the figure in paragraph (2) of this subsection.(2) Gaps between the roof sections (at ridge beam and/or open beam ledgers) of up to 1-1/2 inches wide maximum which do not extend the full length of the roof must be filled with lumber and/or plywood shims. Gaps up to 1/2 inch need not be shimmed. The fastener length used in the shimmed area may need to be increased to provide a minimum 1-1/4 inch penetration into the adjacent roof structural member.Attached Graphic(e) Exterior Roof Close Up:(1) Ensure that shingles are installed to edge of roof decking at peak. Follow nailing instructions on the shingle wrapper. Note: Wind Zone II (high wind) installations require additional fasteners. (2) Before installing ridge cap shingles, a minimum 6 inch wide piece of 30 gauge galvanized flashing must be installed the length of the roof.(3) When flashing is not continuous, lap individual pieces a minimum of 6 inches.(4) Fasten flashing into roof sheathing with minimum 16 gauge staples with 1 inch crown or roofing nails of sufficient length to penetrate roof decking. Maximum fastener spacing is 6 inches on-center each roof section. Place fasteners a minimum of 3/4 inches along edge of flashing.(5) Install ridge shingles directly on top of flashing.(6) Check and repair as necessary the remainder of roof for any damaged or loose shingles, remove any shipping plastic or netting, wind deflectors, etc. Make sure to seal any fastener holes with roofing cement.Attached Graphic(f) Exterior Endwall Close Up: Cut closure material to the shape and size required and secure in place, starting from the bottom up, i.e.: bottom starter, vertical or horizontal siding, then roof overhang, soffit and fascia. All closure material should be fitted and sealed as required to protect the structure or interior from the elements.(g) HVAC (heat/cooling) Duct Crossover:(1) Crossover duct must be listed for EXTERIOR use.(2) Duct R-value shall be a minimum of R-4.(3) The duct must be supported 48 inches on-center (maximum) and must not be allowed to touch the ground. Either strapping (minimum 1 inch wide), to hang the duct from the floor, or non-continuous pads to support it off the ground are acceptable.(4) The duct to the collar or plenum connections must be secured with bands or straps designed for such use. Keep duct as straight as possible to avoid kinks or bends that may restrict the airflow. Extra length must be cut off.(5) The installer should refer to the manufacturer's instruction for assembling the overhead duct.Attached Graphic(h) Multi-Section Water Crossover:(1) If there is water service to other sections, connect the water supply crossover lines as shown in the applicable detail.(2) If the water crossover connection is not within the insulated floor envelopes, wrap the exposed water lines in insulation and secure with a good pressure sensitive tape or nonabrasive strap, or enclose the exposed portion with an insulated box.(3) If water piping at the inlet is exposed, a heat tape should be installed to prevent freezing. A heat tape receptacle has been provided near the water inlet. When purchasing a heat tape, it must be listed for manufactured home use, and it must be installed per manufacturer's instructions.Attached Graphic(i) Drain, Waste and Vent System (DWV):(1) Portions of the DWV system which are below the floor may not have been installed, to prevent damage to the piping during transport. Typically, the DWV layout is designed to terminate at a single connection point to connect to the on-site sewer system. For a used home where on-site DWV connections are not assembled per the manufacturer's instructions, the DWV system must be assembled in accordance with Part 3280 of the FMHCSS.Attached Graphic(2) The following guidelines apply:(A) All portions of the DWV system shall be installed to provide a minimum of 1/8 inch slope per foot for a 3 inch diameter pipe or larger, in the direction of the flow. For all other pipe, a minimum of 1/4 inch is required.(B) Changes in direction from vertical to horizontal, and horizontal to horizontal, shall be made using long sweep elbows and/or tees.(C) All drain piping shall be supported at intervals not to exceed 4 feet on-center. The support may be either blocking or strapping. When strapping is used, it should be nonabrasive.(D) Piping must be assembled with the appropriate cleaners, primers and solvents (note: both ABS and PVC systems are common, but will require adhesives). Be sure to follow the instructions of the product used.(E) A cleanout must be installed at the upper (most remote) end of the floor piping system.(3) Water testing: At the time of installation the water system must be inspected and tested for leaks after completion at the site (the water heater must be disconnected when using an air-only test).(4) Drainage system testing: At the time of installation the drainage system must be inspected and tested for leaks after completion at the site.(j) Electrical Connections: Depending on the model and/or manufacturer of the home, electrical crossovers may be located in either the front end and/or rear end of the home. Check along mating line for other labeled access panels.(1) Crossover connections may be one of the following:(A) snap or plug-in type;(B) junction boxes inside floor cavity (note: crossover wiring routed outside the floor cavity must be enclosed in conduit). If the boxes and/or covers are metal, they must be grounded by the use of the ground wire; or(C) pigtail between receptacles/switches between sections (one circuit only and enclosed in a j-box according to the National Electrical Code (NEC).(2) Chassis Bonding: Each chassis shall be bonded to the adjacent chassis with a solid or stranded, green insulated or bare, number 8 copper conductor. The conductor is connected to the steel chassis with a solderless lug. Alternate bonding: A 4 inch wide by 30 gauge continuous metal strap may be used as an alternate, when attached to the chassis members with two #8x3/4 inch self tapping metal screws each end of the strap.Attached Graphic(3) Electrical Crossover.Attached Graphic(4) Shipped loose equipment:(A) Electrical equipment such as ceiling fans, chandeliers, exterior lights, etc., which may have been shipped loose, must be installed in accordance with the adopted (NEC). Connect all corresponding color coded or otherwise marked conductors per the applicable sections of the NEC.(B) Bonding strap removal: 240 volt appliances (range, dryer, etc.) shall have the bonding strap removed between the ground and the neutral conductors. Cords used to connect those appliances shall be four conductor, four prong.(5) Main panel box feeder connection: The main panel box is wired with the grounding system separated from the neutral system (4-wire feeder). The grounding bus in the panel must be connected through a properly sized green colored insulated conductor to the service entrance equipment (meter base) located on or adjacent to the home. A licensed electrician is required to run the feeder from the pole to the main panel box in the home.Attached Graphic(k) Fuel Gas Piping Systems:(1) Crossover Connections: All underfloor fuel gas pipe crossover connections shall be accessible and be made with the connectors supplied by the home manufacturer, or, if not available, with flexible connectors listed for exterior use and a listed quick disconnect (Method A), or a shut-off valve (Method B). When shut-off valve is used, it must be installed on the supply side of the gas piping system. The crossover connector must have a capacity rating (BTUH) of at least the total BTUHs of all appliances it serves.(2) Testing: The fuel gas piping system shall be subjected to an air pressure test of no less than 6 ounces and no more than 8 ounces. While the gas piping system is pressurized with air, the appliance and crossover connections shall be tested for leakage with soapy water or bubble solution. This test is required of the person connecting the gas supply to the home, but may also be performed by the gas utility or supply company.(3) The gas system must be inspected and tested for leaks after completion at the site.Attached Graphic</content><note type="source"><p>Source Note: The provisions of this §80.25 adopted to be effective January 29, 2008, 32 TexReg 8790; amended to be effective July 21, 2009, 34 TexReg 3254; amended to be effective January 19, 2010, 34 TexReg 8312; amended to be effective December 25, 2012, 37 TexReg 8507.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scB/s80.26"><num value="80.26">§80.26</num><heading>Registration of Stabilizing Components and Systems</heading><content>(a) Installers shall use only prefabricated or site built stabilizing components and systems which are:(1) registered with the Department,(2) specified by the home manufacturer's DAPIA approved installation instructions, or(3) specified for one or more homes in a particular area by a Texas licensed engineer or architect.(b) Before accepting a registration of any prefabricated stabilizing component or system that will be used for more than one home or granting renewal of such, the Department will require the component or system to be certified by an engineer, architect, or independent testing laboratory. The engineer or architect may be licensed in any state. The independent testing laboratory must have at least one engineer or architect licensed in at least one state. The producer or vendor of the component or system must send a request letter to the Department with at least two copies of the certification report. The Department may accept certification reports in electronic formats. The certification report copies must have letter size (8.5 inch by 11 inch) or smaller pages. The producer or vendor must provide written permission to the Department to reproduce the certification report. If the Department accepts the registration of the certification report, the Department shall place a registration stamp on the copies, keep one copy, and return all other stamped copies to the producer or vendor. The registration stamp will include the following information:(1) the title "Texas Department of Housing and Community Affairs" Manufactured Housing Division;(2) the phrase "Registered stabilizing component or system"; and(3) the date of registration.(c) The Department will maintain a list of stabilizing components and systems that have been registered with the Department for use in Texas and will post a current copy of the list on the Department's website.(d) A report that certifies a stabilizing component or system shall contain, at the minimum, the following:(1) the name, address, phone number, facsimile number, and trademark of the agency issuing the certification report or the name, signature, license number, state where licensed, address, phone number, facsimile number, and seal of the engineer or architect;(2) date of certification report;(3) the name, address, phone number, and facsimile number of the vendor or producer of the component or system;(4) drawing or photograph of component or system;(5) a description of the vendor's or producer's method for identifying the component or system;(6) at least a 2 inch by 4 inch blank space for the Department registration stamp on each page or the cover page of a bound document;(7) a unique number or other identification for the certification report;(8) the initial qualifying test report or information about how the report can be obtained;(9) a description of the continuing validation system and the time period of the certification;(10) detailed and specific installation instructions for the component or system, a copy of which that are shipped to each purchaser;(11) a description of the working load capacity for the component or system. If the component is a ground anchor, the anchor shall be certified by a professional engineer, architect or nationally recognized testing laboratory as to its resistance, based on the maximum angle of diagonal tie and/or vertical tie loading and angle of anchor installation, and type of soil in which the anchor is to be installed;(12) a description of all allowable conditions for use of the component or system such as (but not limited to) types of soil, weather exposure, atmospheric environment (rural, industrial, coastal), and characteristics of other associated components; and(13) a statement that the certifying independent testing laboratory, certifying engineer, or certifying architect certifies the component or system to be in conformance with all applicable standards adopted by the Department. This statement shall be on each page or shall be on the cover sheet of a bound document.(e) The Department adopts the applicable standards and publications set forth in Chapter 43 of the International Code Council, latest edition of the International Residential Code for materials used to fabricate stabilizing components and systems. The Department adopts the stabilizing component destruction test failure criteria of the FMHCSS (24 CFR, Part 3280) or latest edition of the International Residential Code, Appendix E.(f) Applicable reports of the following organizations are acceptable as certification reports: National Evaluation Service, Inc.; International Conference of Building Officials (ICBO) Evaluation Service, Inc.; Southern Building Code Congress International (SBCCI) Public Safety Testing and Evaluation Services, Inc.; Building Officials and Code Administrators International (BOCA) Evaluation Reports, Inc.; the International Code Council (ICC); or a successor of any of these organizations.(g) The Department may deny registration if the certification information:(1) is incomplete;(2) does not conform to the rules of the Department;(3) contradicts the qualifying tests; or(4) has contradictory statements.(h) Conditions that may cause the Board to issue an administrative order that withdraws registration from a stabilizing component or system may include but are not limited to:(1) the engineer, architect, or independent testing laboratory withdraws the certification;(2) the engineer, architect, or independent testing laboratory improperly certified the component or system;(3) a significant characteristic of a device or system has been changed without a revision of the original certification;(4) the producer distributes installation instructions that are substantively different from those in the certification or original qualifying tests;(5) changes in the law, rules, or standards;(6) the continuing validation system for a component has been changed without a revision of the original certification;(7) information provided by the original certification is obsolete;(8) the Department receives evidence that the component or system often fails to anchor or support the home; or(9) the producer fails to provide test results after the Department directs the producer to test the component or system. The test will be performed by a recognized independent testing laboratory under the observation of a qualified representative or designee of the Department.(i) Notice of withdrawal of registration of a component or system must be given to the producer and to all licensed installers, retailers, and manufacturers.(j) The Department's registration of a stabilizing component or system is valid for a period of ten (10) years or for the time period of certification, whichever is less. The registration expires at the end of the shorter period.(1) If the time period for certification exceeds the ten (10) year registration period, the producer of the stabilizing component or system may apply for a renewal of the registration. The renewal shall be valid for an additional period:(A) of ten (10) years; or(B) if the time period of certification expires prior to the end of the ten (10) year period, for a lesser period ending with the expiration of the time period of certification.(2) All Department approval letters issued prior to November 3, 1998, remain valid for a period of ten (10) years following the original effective date of this section and expire on November 3, 2008, or upon any previously assigned expiration date if that date is earlier.(k) A registration renewal request must be received from the vendor or producer of the component or system at least ninety (90) calendar days prior to the date the certification or registration expires. The request must supply the information necessary for the Department to issue a registration renewal.(l) Registered components and systems sold to retailers or installers prior to the expiration of the applicable registration or renewal may be used and installed for a period of not more than ninety (90) calendar days following the date of expiration of their approval, registration, or renewal.(m) Advertisements and instructions may not express or imply that the component or system has Department approval.</content><note type="source"><p>Source Note: The provisions of this §80.26 adopted to be effective January 29, 2008, 32 TexReg 8790.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c80/scC"><num value="C">SUBCHAPTER C</num><heading>LICENSEES' RESPONSIBILITIES AND REQUIREMENTS</heading><section identifier="/us/state/tx/tac/t10/p1/c80/scC/s80.30"><num value="80.30">§80.30</num><heading>All Licensees' Responsibilities</heading><content>(a) A licensee, other than a salesperson, must maintain all required records at a location that meets the requirements of §1201.103(a-1) of the Standards Act. All records required by this chapter must be maintained in the licensee's files for a period of not less than six (6) years. Unless stated otherwise, a record of any disclosure to be given shall reflect that it was properly completed, executed, and dated. Files may be maintained in an electronic format, as long as, they can be produced upon request by the Department for review.(b) A licensee must keep the Department advised in writing on a current basis of any changes in their licensing information and, where required by the Standards Act, give prior written notice.(c) If a licensee fails to provide any warranty listed in this subsection of the rules, the time limitations associated with the consumer's written notification do not start until the consumer is provided with such required warranty.(d) A license holder is prohibited from publishing or distributing any form of advertising which is false, deceptive, or misleading.(e) Any advertisement must comply with applicable federal and state legal requirements, including, but not limited to, the federal Truth in Lending Act and Federal Reserve Regulation Z.(f) Any advertisement (including social media) by a retailer, broker, or installer (other than a sign/display advertisement at a licensed location, point of sale literature, or a price tag) must conspicuously disclose the license number of the person who is advertising.(g) Any advertisement (including social media) by a salesperson must conspicuously disclose the name and license number of their sponsoring retailer identified on their valid salespersons license.(h) Where no consumer protection purposes would be served by requiring the license number to be disclosed, the Board may grant exceptions to subsections (f) and (g) of this section based on the Board's approved format. Exceptions will be posted on the Department's website.(i) Any licensee's website shall provide a conspicuously placed link to the Department's website.</content><note type="source"><p>Source Note: The provisions of this §80.30 adopted to be effective December 30, 2007, 32 TexReg 8790; amended to be effective December 21, 2008, 33 TexReg 9459; amended to be effective May 15, 2016, 41 TexReg 2743; amended to be effective October 23, 2022, 47 TexReg 6196.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scC/s80.31"><num value="80.31">§80.31</num><heading>Manufacturers' Responsibilities and Requirements</heading><content>(a) A manufacturer shall submit a monthly shipment report to the Department of all manufactured homes produced during the preceding month for shipment to any point in Texas. The report shall contain the following information:(1) the complete HUD label number(s);(2) the complete serial number(s);(3) the license number of the retailer to whom the home is sold and the location to which it is initially shipped; and(4) a designation as to single or multiple sections.(b) The manufacturer's monthly shipment report shall be filed with the Department by the 20th day of the month following the earlier of manufacture of the home and/or shipment. If a manufacturer has no sales or shipments to any person in the State of Texas during any month, the report must be filed stating such fact.(c) A manufacturer shall use the Manufacturer's Certificate of Origin (MCO) prescribed by the Department set forth on the Department's website for homes sold to retailers in Texas.(d) A manufacturer shall supply to the Department current and revised copies of approved installation manuals as required by §80.20 of this chapter (relating to Requirements for Manufacturer's Designs and Installation Instructions).(e) The term of a required warranty does not begin to run until a warranty that complies with the Standards Act is actually delivered.</content><note type="source"><p>Source Note: The provisions of this §80.31 adopted to be effective December 30, 2007, 32 TexReg 8790; amended to be effective November 6, 2011, 36 TexReg 6724; amended to be effective December 21, 2025, 50 TexReg 7543.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scC/s80.32"><num value="80.32">§80.32</num><heading>Retailers' Responsibilities and Requirements</heading><content>(a) A retailer shall retain as a record of each sale a file for that sale containing a completed Retail Monitoring Checklist on the prescribed form, together with copies of all completed, executed, and signed applicable documents specified therein.(b) At the time of signing a contract for the sale of a manufactured home, the retailer must disclose to the purchaser, a notice of the existence of a Dispute Resolution Program through HUD, either on a separate document from the sales contract or it may be incorporated clearly at the top of the sales contract. Disclosure of this requirement should be acknowledged by the consumer.(c) A retailer shall timely provide each consumer who acquires a manufactured home by sale or exchange with the applicable warranty or warranties specified in the Standards Act and any warranty regarding the home itself shall specify whether the warranty includes cosmetic items or not and, if it does include them, whether there are any limitations or special requirements, such as a walk-through punch lists, excluded items, or the like.(d) For each manufactured home taken into a retailer's inventory, a retailer shall maintain a copy of either a completed and timely submitted application for a statement of ownership to reflect the home as inventory or, once such a statement of ownership has been issued and received, a copy of that statement of ownership.(e) For each home altered or rebuilt from salvage a retailer shall retain the documentation required for rebuilding a manufactured home that is declared salvaged.(f) A retailer must provide their company name, license number, contact information on any sales agreement, and proof of purchase or confirmation of sale.(g) If a retailer relies on a third party, such as a title company or closing attorney, to file with the Department the required forms necessary to enable the Department to issue a Statement of Ownership to a consumer, the retailer must provide an instruction letter to that third party, advising them of their responsibilities to make such filings and the required timeframes therefore. This does not relieve the retailer from responsibility. The retailer must retain with their sale records a copy of that instruction letter and all documentation provided to such third party to enable them to make such filings. This optional form is available on the Department's website.(h) On a new manufactured home and on any used manufactured home where the sale or exchange includes installation, the retailer must specify in the applicable contract or an accompanying written disclosure the intended date by which installation will be complete and a designated person to contact for the current status as to the intended date for completion of installation. For new manufactured homes, the retailer is responsible for ensuring that a licensed installer warrants the proper installation of the home and performs the required site preparation.(i) If any goods or services being provided by a retailer in connection with the sale and/or installation of a manufactured home, the retailer must disclose, in writing, the goods and/or services to be provided and a good faith estimate as to when they will be provided. (j) If any goods with a retail value of more than $250 are to be provided in connection with the sale of a manufactured home and they are not specified on the data plate for the home, the retailer must describe them in the retail installment contract, purchase memorandum, or other sale document in sufficient detail to enable a third party to provide them under the responsibility of the retailer's surety bond should the retailer fail to provide them as agreed.(k) A retailer accepting a deposit must give the consumer a written statement setting forth:(1) the amount of such deposit;(2) a statement of any requirements to obtain or limitations on any such refund; and(3) the name and business address of the person receiving such deposit.(l) A retailer may not represent to a consumer that is purchasing a manufactured home with interim financing that the consumer will qualify for permanent financing if the retailer has any reason to believe that the consumer will not qualify for such permanent financing.(m) A retailer may not increase the advertised price at which a manufactured home is to be sold based on the consumer's decision to make the purchase with or without financing provided by or arranged through the retailer.(n) Notwithstanding the date of sale, transfer, or ownership change or the date of installation on the application for a Statement of Ownership, a retailer may not request or accept any document that is executed in blank or allow any alteration to a completed document without the consumer's initialing and dating such changes to indicate agreement to them. Where information is not available, a statement of that fact (e.g., TBD - to be determined, not available, N/A, not applicable, or the like) may be entered in the blank. A consumer must be provided with copies of all documents they execute.(o) A retailer may not knowingly accept or issue any check or other form of payment appearing on its face to be a bona fide payment but known not to represent good funds.(p) In order to comply with the provisions of §1201.107(d) of the Standards Act, a retailer or broker must:(1) have a current, in effect surety bond issued in the most recent form promulgated by the Department; and(2) the applicable sales agreement must identify the surety bond that applies to the transaction and contain the following statement: "The above-described surety bond applies to this transaction in the following manner: The bond is issued to the Texas Manufactured Homeowner Consumer Claims Program (the "Claims Program"), the Claims Program described in the Texas Manufactured Housing Standards Act (Tex. Occ. Code, Chapter 1201) and administered by the Department. If the Claims Program makes a payment to a consumer, the Claims Program will seek to recover under the surety bond. The obligation of the Claims Program to compensate a consumer for damages subject to reimbursement by the Claims Program is independent of the Claims Program's right or ability to recover from the above-described surety bond, but recoveries on surety bonds are an important part of the Claims Program's ability to maintain sufficient assets to compensate consumers. There can be no assurance that the Claims Program will have sufficient assets to compensate a consumer for a covered claim. Assuming it has sufficient assets to compensate a consumer for a covered claim, the liability of the Claims Program is limited to actual damages, not to exceed $35,000."(q) A retailer shall maintain on a current basis a separate file for each salesperson sponsored by that retailer reflecting: (1) that they are licensed in accordance with the Standards Act;(2) the date of the initial licensing class that they attended and a copy of their certificate of completion;(3) evidence of the successful completion of any required continuing education classes that they attended; and(4) a copy of any written notice to the Department that sponsorship was terminated and the effective date thereof.(r) At each licensed location a retailer shall display their current license for that location and the current license of each salesperson who works from that location. (s) At each licensed location a retailer shall conspicuously display the Consumer Protection Information sign as set forth on the Department's website.(t) Auction of Manufactured Housing to Texas Consumers.(1) A person selling more than one home to one or more consumers through an auction in a twelve (12) month period must be licensed as a retailer, each individual acting as their agent must be licensed as a salesperson, and each specific location at which an auction is held must be licensed and bonded in accordance with the Standards Act.(2) Acting as an auctioneer may be subject to the Texas Auctioneer Act, Occupations Code, Chapter 1802.(3) The retailer must notify this Department in writing at least thirty (30) calendar days prior to the auction with such notice to contain the date, time, and physical address and location of a proposed auction or, if they recur on a scheduled basis, of the schedule.(u) A person may exercise their right of rescission of contract for sale or exchange of home pursuant to §1201.1521 of the Standards Act within three (3) business days without penalty or charge.(v) The written warranty that the used manufactured home is habitable as per §1201.455 of the Standards Act, shall have been timely delivered if given to the homeowner at or prior to possession or at the time the applicable sales agreement is signed.(w) The written manufacturer's new home construction warranty per §1201.351 of the Standards Act, shall be timely delivered if given to the homeowner at or prior to the time of initial installation at the consumer's home site.</content><note type="source"><p>Source Note: The provisions of this §80.32 adopted to be effective December 30, 2007, 32 TexReg 8790; amended to be effective June 21, 2009, 34 TexReg 3254; amended to be effective December 20, 2009, 34 TexReg 8312; amended to be effective November 6, 2011, 36 TexReg 6724; amended to be effective November 23, 2014, 39 TexReg 8386; amended to be effective May 15, 2016, 41 TexReg 2743; amended to be effective January 7, 2018, 42 TexReg 6921; amended to be effective December 21, 2025, 50 TexReg 7543.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scC/s80.33"><num value="80.33">§80.33</num><heading>Installers' Responsibilities and Requirements</heading><content>(a) If the retailer subcontracts installation to another licensed installer, their respective responsibilities are as set forth in the Standards Act.(b) For used manufactured homes, the person contracting with the consumer for the installation of the home is the installer and must warrant the proper installation of the home. If the contracting installer subcontracts with an independent licensed installer, then the subcontractor is jointly and severally liable for that portion of the installation that the subcontractor performed.(c) A person contracting directly with the consumer for only the transportation of a manufactured home to its site is not deemed by virtue of being the transporter to also be the installer.(d) The contracting licensed installer is fully responsible for the complete installation in accordance with all applicable requirements set forth in this chapter even though the installer may subcontract certain installation functions to independent contractors pursuant to §1201.102(b) of the Standards Act. It is unlawful for a subcontractor who is acting as an agent for a licensed installer to advertise and/or offer installation services to any person unless the licensed installer's name and license number appear conspicuously in the advertisement.(e) A person contracting for the installation of a manufactured home must specify in the applicable contract or an accompanying written disclosure the intended date by which installation will be complete and a designated person to contact for the current status as to the intended date for completion of installation.(f) An installer shall provide the Department with a list of all subcontractors approved to work under the installer's license number.(g) For each installation completed, the installer must complete a Notice of Installation and submit the original, signed form with the required fee to the Department no later than seven (7) days after which the installation is completed, but not later than three (3) days for installers with a provisional license. If an installer submits multiple installation reports at one time, a single payment for the combined fees may be submitted.(1) If a contracting installer subcontracts the installation to a licensed installer, the subcontracted installer who performs the installation shall complete the Notice of Installation, and submit the original signed form to the Department no later than seven (7) days after which the installation is completed, or not later than three (3) days for installers with a provisional license. The subcontracted installer may submit the required fee with the Notice of Installation Form.(2) If a contracting installer subcontracts the installation to a licensed installer, and the subcontracted installer does not pay the fee, the contracting installer shall submit a copy of the Notice of Installation, labeled as such, with the required fee to the Department no later than seven (7) days after which the installation is completed, or not later than three (3) days for subcontracted installers with a provisional license.(3) Provisional installers that provide the installation are required to send a copy of the Notice of Installation to the Department's Field Office within three (3) days of the installation to ensure a timely inspection may be conducted.(4) The timely submittal of the Notice of Installation after completion of the installation ensures the Department inspectors may inspect the manufactured home with utilities connected, but before the home is skirted.(h) The completed Notice of Installation may, within the time frames specified in subsection (g) of this section be submitted with an application for Statement of Ownership but is not a requirement to obtain a Statement of Ownership. Copies must be labeled as such. The licensed installer who is listed on a Notice of Installation is presumed to be the installer primarily responsible for the installation and the person to whom any warranty orders, notices of inspection, or other communications from the Department regarding the installation shall be directed.(i) Electrical, fuel, mechanical, and plumbing system crossover connections for multi-section homes, and completion of drain lines underneath all homes in accordance with the requirements of this chapter and installation of steps or legally compliant ramps to any exterior door that will be 12 inches or more above ground level are installer responsibilities and cannot be excluded by wording of the installation contract when provided by or installed by the installer. The installation of air conditioning at the home site must be performed by a licensed air conditioning contractor. The installation and ventilation of skirting or other material that encloses the crawl space underneath a manufactured home is an installer responsibility, if it is part of the sales or installation contract.(j) A checklist must be maintained in the files. The checklist must consist of the following:(1) the HUD label number or Texas seal number and the serial number;(2) verification of the soil condition(s) at the installation site;(3) if installed on piers or pads, verification of the calculation of pier spacing; and(4) a list of each approved component or device used in the installation.(k) Each installer shall maintain the following books and records for each installation:(1) verification that the required site preparation notice for a used home was signed by the consumer and timely delivered to a consumer by the licensee;(2) a copy of each installation warranty provided to a consumer with evidence that the warranty was timely delivered to the consumer;(3) if the used home is to be installed on a site that has evidence of ponding, run-off, or uncompacted soil, a signed form from the consumer, acknowledging the condition and accepting the risks, such form to be as set forth on the Department's website and §1201.255 of the Standards Act;(4) a list of the components used. If reconditioned components are used the identifying numbers must be legible;(5) if installed to manufacturer's instructions, a copy of those instructions, as in effect at the time of installation (one copy on-site is sufficient; a separate copy does not need to be maintained for each installation);(6) if installed to engineer-approved plans (other than manufacturer's instructions or state generic) a copy of the actual plans, showing the Texas engineer's stamp;(7) a copy of any agreement with another party to obtain or provide some or all of the installation services; and(8) a list of all unlicensed individuals who provided installation services under the installer's license, indicating each installation on which they worked.(l) An installer shall conspicuously disclose their license number on all advertisements and contracts for installation services.</content><note type="source"><p>Source Note: The provisions of this §80.33 adopted to be effective December 30, 2007, 32 TexReg 8790; amended to be effective June 21, 2009, 34 TexReg 3254; amended to be effective December 20, 2009, 34 TexReg 8312; amended to be effective November 6, 2011, 36 TexReg 6724; amended to be effective January 7, 2018, 42 TexReg 6921.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scC/s80.34"><num value="80.34">§80.34</num><heading>Brokers' Responsibilities and Requirements</heading><content>(a) For each transaction where a broker is engaged to provide services, a broker shall retain the disclosure statement set forth on the Department's website.(b) For each home sold by a consumer in a brokered sale, the broker shall retain a file for that sale with copies of all required warranties and disclosures, other than a habitability, that would have been given if the sale was through a retailer.</content><note type="source"><p>Source Note: The provisions of this §80.34 adopted to be effective December 30, 2007, 32 TexReg 8790; amended to be effective November 6, 2011, 36 TexReg 6724.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scC/s80.35"><num value="80.35">§80.35</num><heading>Salesperson's Responsibilities and Requirements</heading><content>(a) A salesperson may not act in any capacity beyond the scope of a salesperson unless they are legally authorized to do so.(b) A salesperson may not collect any monies in connection with a manufactured home transaction except in the name of the sponsoring retailer or broker.</content><note type="source"><p>Source Note: The provisions of this §80.35 adopted to be effective December 30, 2007, 32 TexReg 8790.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scC/s80.36"><num value="80.36">§80.36</num><heading>Retailer's Rebuilding Responsibilities and Requirements</heading><content>(a) Any home that is salvaged as defined in §1201.461 of the Standards Act, may be rebuilt/repaired for purposes of issuance of a manufactured Statement of Ownership at the option of the Department after inspection in accordance with Department procedures. Notification in writing to the Department at its Austin headquarters shall be required before rebuilding/repair begins.(b) The retailer must:(1) notify the Department in writing ten (10) business days before rebuilding (or monthly for continuous activity) and provide the following, if available:(A) HUD or Texas Seal number;(B) data plate and comfort cooling certificate information (applicable wind and roof load zones, manufacturer's name and address, home model, list of appliance models, home production date, thermal zones, transmission coefficients, furnace certification temperatures, and duct capacity for cooling);(C) copy of salvage declaration report if salvaged by an insurance company;(D) description of damage;(E) description of cause of damage (water, wind, impact, fire, etc.); and(F) location of home during rebuilding.(2) provide a plan for rebuilding, sealed by a licensed professional engineer, that contains the following:(A) drawings and specifications that describe the rebuilding;(B) if more than one home is rebuilt in any one (1) month period, then a quality assurance manual that describes the following:(i) system testing;(ii) inspection process of cavities before concealment; and(iii) record keeping.(C) list of new parts and appliances;(D) list of reused or salvaged parts and appliances; and(E) rebuilder's data plate (if applicable).(3) notify the Department when concealed cavities will be exposed for Department inspectors;(4) remove damaged material and equipment;(5) add new or used materials and equipment;(6) repair all defects; and(7) repair and test all systems.(c) The Department may schedule inspections of the home during the rebuilding process.(d) A manufactured home which does not meet the definition of salvage as defined in §1201.461 of the Standards Act, may be refurbished to its original structural configuration so that it is habitable as defined by §1201.453 of the Standards Act.</content><note type="source"><p>Source Note: The provisions of this §80.36 adopted to be effective December 30, 2007, 32 TexReg 8790; amended to be effective November 23, 2014, 39 TexReg 8386; amended to be effective May 15, 2016, 41 TexReg 2743; amended to be effective January 7, 2018, 42 TexReg 6921.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scC/s80.37"><num value="80.37">§80.37</num><heading>Correction Requirements</heading><content>(a) The retailer, installer, or manufacturer shall take immediate corrective action when notification is received from a consumer and the nature of the complaint indicates an imminent safety hazard or serious defect.(b) Except as provided in subsection (a) of this section, manufacturers, retailers, and installers shall perform their obligations in accordance with their respective written warranty within a reasonable period of time. A reasonable period of time is deemed to be not more than thirty (30) calendar days following receipt of the consumer's written notification unless there is good cause requiring more time. The consumer's written notification must be given:(1) within the one (1) year manufacturer's and retailer's warranty period for new homes;(2) within two (2) years for the installer's warranty period; and(3) for used homes within sixty-five (65) calendar days after the date of the sale or installation, whichever is later.(c) The manufacturer, installer, and retailer shall make available for review by Department personnel, records relating to their respective warranty responsibilities, to assure that warranty work has been accomplished and that warranty work has been done in accordance with design or standards criteria and properly completed.</content><note type="source"><p>Source Note: The provisions of this §80.37 adopted to be effective December 30, 2007, 32 TexReg 8790; amended to be effective April 25, 2010, 35 TexReg 2550.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scC/s80.38"><num value="80.38">§80.38</num><heading>Right to Advance Copy of Certain Documents</heading><content>(a) A consumer may modify or waive the right to rescind the deadlines for disclosures before the execution of the contract if the consumer determines that the purchase transaction is needed to meet a bona fide emergency. To modify or waive the right, the consumer shall give the retailer a dated written statement that describes the emergency, specifically modifies or waives the notice periods, and bears the signature of all the consumers entitled to the disclosures and right of rescission. Printed forms for this purpose are prohibited, except as set forth on the Department's website.(b) Printed forms may be used to the rights as provided for in §1201.164 of the Standards Act only if:(1) The basic form set forth on the Department's website is used; and(2) The Director has reviewed and approved the language used to describe the specific declared emergency.(c) A retailer or manufacturer may not transfer ownership of a new or used HUD-code manufactured home or otherwise sell, assign, or convey a HUD-code manufactured home to a consumer unless the retailer or manufacturer delivers to the consumer a formaldehyde health notice.(1) The formaldehyde health notice must be delivered before the execution of a mutually binding sales agreement or retail installment sales contract.(2) The formaldehyde health notice will be provided on the Manufactured Housing Division's website. The notice must be of the type, size and format required by the director. A retailer or manufacturer may not vary the content or form of the notice. (3) The formaldehyde health notice may be combined with other disclosures, if deemed appropriate.</content><note type="source"><p>Source Note: The provisions of this §80.38 adopted to be effective December 30, 2007, 32 TexReg 8790; amended to be effective November 6, 2011, 36 TexReg 6724; amended to be effective January 7, 2018, 42 TexReg 6921; amended to be effective October 23, 2022, 47 TexReg 6196.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c80/scD"><num value="D">SUBCHAPTER D</num><heading>LICENSING</heading><section identifier="/us/state/tx/tac/t10/p1/c80/scD/s80.40"><num value="80.40">§80.40</num><heading>Security Requirements</heading><content>(a) For purposes of meeting the security requirements of §1201.105 of the Standards Act, "other security" means a deposit in a state or federally chartered bank or savings and loan association. If other security is posted, the other security must be maintained in or by a banking institution located in this state subject to a control agreement in the promulgated form set forth on the Department's website. Such deposits are hereinafter referred to as security. If such security is reduced by a claim, the license holder shall, within twenty (20) calendar days, make up the deficit as required by §1201.109(c) of the Standards Act. No advance notice is required by the Department to the license holder, but the Department shall verify the deposit.(b) Any other security provided for compliance with §1201.105 of the Standards Act, shall remain in place and subject to a control agreement in favor of the Department for two (2) years after the person ceases doing business as a manufacturer, retailer, broker, or installer, or until such later time as the director may determine that no claims exist against the other security. The Director may consent to the substitution of a bond or a different qualifying deposit for other security provided that in the event a bond is filed to replace the assigned security, the initial effective date of the bond is the same or prior to the date of the assignment of security.(c) If a required bond is canceled during the license period, the license shall be automatically suspended on the date bond coverage ceases.(d) To be exempt from the additional security as required by §1201.106(b) of the Standards Act, a manufacturer who does not have a manufacturing plant in this state must have a bona fide service facility.(1) The manufacturer shall provide the Department with the name, address and phone number of the service facility, conspicuous notice of which shall be provided to each Texas retailer who purchases homes from the manufacturer.(2) The service facility shall be capable of compliance with the provisions of Sub-part I of the Manufactured Housing Improvement Act (latest edition) and capable of providing warranty service within the reasonable time requirements set by the Department in §80.73 of this chapter (relating to Procedures for Handling Consumer Complaints), and shall be subject to periodic review and inspection by Department personnel.(3) If the Department determines that the requirements of paragraph (2) of this subsection have not been met, notice must be sent of that determination and of the requirement of an additional bond amount.(4) Unless additional security is provided as required by the Standards Act, all out of state manufacturers must disclose their in-state service facility on each renewal of their license.(e) In order for the Board to direct the Director to stop accepting bonds issued by a surety for reasons outlined in §1201.105(c) of the Standards Act, the Department experiences significant problems if:(1) the surety fails on three (3) or more occasions to make the required reimbursement payment within thirty (30) calendar days from the date of notice from the director that a consumer claim has been paid; or(2) is more than sixty (60) calendar days late in making a required reimbursement payment.(f) If the director stops accepting bonds issued by a surety for reasons set forth in subsection (e) of this section, all licensees who are bonded by the affected surety will be notified immediately so they can supply the Department with a new valid bond when they renew their license. If a licensee fails to supply the Department with a new valid bond when they renew their license, their license is automatically suspended until the licensee provides a new valid bond.</content><note type="source"><p>Source Note: The provisions of this §80.40 adopted to be effective March 25, 2012, 37 TexReg 1307; amended to be effective November 23, 2014, 39 TexReg 8386; amended to be effective January 7, 2018, 42 TexReg 6921.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scD/s80.41"><num value="80.41">§80.41</num><heading>License Requirements</heading><content>(a) General License Requirements. In order to apply to obtain a license, the promulgated form of application for such license must be fully completed and executed and submitted to the Department, accompanied by the required fee, required security, and all other required supporting documentation. The Department may request any reasonably related additional information or documentation to clarify or support any application.(1) Additional provisions applicable to salespersons.(A) A salesperson is an agent of their sponsoring retailer or broker. The sponsoring retailer or broker is liable and responsible for the acts or omissions of a salesperson in connection with any activity subject to the Standards Act or this Chapter. It is a violation of the Standards Act and this chapter for a retailer or broker of manufactured housing to employ a salesperson who is not licensed with the Department or permit them to conduct business subject to the Standards Act on their behalf.(B) If a salesperson's sponsoring retailer or broker is no longer licensed, that salesperson's ability to act and a salesperson is automatically terminated until such time as he or she is acting under a duly licensed sponsoring retailer or broker and such sponsorship is on record with the Department. A salesperson shall surrender his or her license to the Department within ten (10) calendar days of termination from his or her sponsoring retailer.(C) A sponsoring retailer or broker shall notify the Department in writing when a salesperson has been terminated or is no longer sponsored by said retailer or broker.(D) A salesperson's sponsoring retailer or broker shall be issued a license card by the Department containing effective date and license number and name and license number of the sponsor. A salesperson shall be required to present a copy of a valid license card upon request.(2) Additional provisions applicable to installers.(A) A provisional installer's license shall become a full installer's license as outlined in §1201.104(f) of the Standards Act when the Department inspects a minimum of five (5) manufactured home installations and found not to have any identified installation violations.(B) It is the responsibility of an installer who is still on a provisional status to notify the Department of each installation performed promptly. As used in this section, "promptly" means sufficiently early to enable the home to be inspected prior to any skirting being installed, in any event within three business days following the date of completion of the installation.(C) It is the responsibility of the Department's field office to notify the Department's licensing section when a provisional installer's license is eligible for upgrade to a full installer's license.(b) Applicable License Holder Ownership Changes.(1) A license holder shall not change the location of a licensed business unless the license holder first files with the Department:(A) a written notification of the address of the new location;(B) an endorsement to the bond reflecting the change of location; and(C) the original license.(2) The change of location is not effective until all requirements are received by the Department.(3) For a change in ownership of less than fifty percent (50%) of the licensed business entity, no new license is required provided that the existing bond or other security continues in effect. However, the current Articles of Incorporation or Assumed Name Certificate must accompany the request.(4) For a change in ownership of fifty percent (50%) or more, the license holder must file with the Department, along with the appropriate fee and Articles of Incorporation or Assumed Name Certificate:(A) a license addendum by the purchaser providing information as may be required by the Department; and(B) certification by the surety that the bond for the licensed business entity continues in effect after the change in ownership; or(C) an application for a new license along with a new bond or other security and proof that the education requirements of §1201.113 of the Standards Act, have been met.(c) Education.(1) The Standards Act requirement for an initial eight (8) hour course of instruction in the law, including instruction in consumer protection regulations; four (4) hour retailer education course; and/or four (4) hour installer education course shall be offered quarterly by the Department. Subject to limitations on Department resources, the Department will make special licensing classes available upon written request.(2) Each test to be administered in connection with the course(s) will consist of a representative selection of questions from an approved set of questions approved by the Director. The test(s) will be open-book. A score of 70% correct is required to pass each test.(A) Cheating on the Manufactured Housing Division licensure examinations will not be tolerated. Evidence of cheating on an examination shall be a cause for disciplinary action. The executive director shall be informed of such instances of suspected cheating at the earliest possible opportunity and will determine appropriate action.(B) If the executive director determines that an examinee cheated on the Manufactured Housing Division exam, an examinee may have exam results invalidated and may be barred from taking the Manufactured Housing Division examination in Texas for a period of up to two years. Any application for licensure pending or approved for examination may be denied and will be evaluated or re-evaluated on that basis. Any examination taken and passed while barred from taking an examination in Texas will not be acceptable for licensure purposes in Texas.(C) A licensee or applicant suspected of cheating, or a licensee assisting others with cheating may be charged with violating §1201.551 of the Act and applicable Manufactured Housing Division rules, which may result in the denial, suspension, or revocation of their license.(D) The Department may enter into an agreement with a third party to administer each test.(E) The applicant shall pay the cost of the test, if required to be taken with the assistance of a third party.(3) For initial licensing of a salesperson, if the salesperson does not attend and successfully complete the initial licensing class provided by the Department within 90 days after the date of licensure, the license will automatically be suspended until the salesperson has attended and successfully completed that class. While the license is in a suspended status the salesperson may not act as a manufactured housing salesperson.(4) All related persons added to a retailer's license are required to take the initial eight (8) hour course of instruction in the law, including instruction in consumer protection regulations and the four (4) hour retailer education course prior to being added to the retailer's license.(5) All related persons added to an installer's license are required to take the initial eight (8) hour course of instruction in the law, including instruction in consumer protection regulations and the four (4) hour installer education course prior to being added to the installer's license.(6) All related persons added to a retailer/installer license or retailer/ installer/broker license are required to take the initial eight (8) hour course of instruction in the law, including instruction in consumer protection regulations; the four (4) hour retailer education course; and the four (4) hour installer education course prior to being added to the license.(7) All related persons added to a manufacturer's license are required to take the initial eight (8) hour course of instruction in the law, including instruction in consumer protection regulations prior to being added to the manufacturer's license.(8) All related persons added to a broker's license are required to take the initial eight (8) hour course of instruction in the law, including instruction in consumer protection regulations prior to being added to the broker's license.(d) Continuing Education.(1) Continuing education program courses must total eight (8) hours and shall include:(A) Continuing education addressing the law and rules with a focus on any revisions to the Code or Rules within the preceding two years.(B) Continuing education addressing the Department's current complaint resolution process.(C) The following additional topics may be covered:(i) installation requirements;(ii) manufactured home financing;(iii) operation of manufactured home parks and communities;(iv) insurance requirements;(v) industry best practices;(vi) business ethics;(vii) topical market statistics or trends; or(viii) other subjects determined by the Department to relate directly to the lawful operation of a business subject to the Code.(2) Acceptable evidence that the requirements of §1201.113(b) of the Standards Act have been satisfied by the license holder or their related person on record with the Department, would be a certificate, letter, or similar statement provided by the approved education provider indicating that the education program was timely completed. Such evidence may be submitted by fax, mail, e-mail, or in person. All related persons listed on a license are required to complete the eight (8) hours of continuing education required every two years.(3) For license renewal, evidence of any required completion, with reference to license number, must be received by the Department before a license may be renewed.(4) Approval of courses and providers. In order to be considered for approval by the Board to provide continuing education courses, including prospective continuing education courses in accordance with paragraph (5) of this subsection, a party wishing to be considered for such approval must submit an application, accompanied by the nonrefundable processing fee, and the following:(A) A narrative overview of each course, describing subject matter to be covered;(B) Brief biographies, including credentials of each instructor demonstrating in depth knowledge of the subject matter to be taught;(C) A copy of any course materials to be used. If the course materials are deemed to be proprietary they should be placed in a separate envelope, marked confidential, and accompanied by a written statement as to why they should not be treated as open records. There is no assurance that such materials will ultimately be accorded any exemption from disclosure under the Open Records provisions of the Government Code;(D) A schedule of any fees to be charged for each course;(E) If completion of the continuing education program is limited to any particular group, a description of the limitation;(F) As such information becomes available, an indication as to the locations, times, and dates for offerings; and(G) Such other information as the Department may require.(5) Prospective continuing education programs, including all portions of education courses, must be pre-approved by the board prior to the course being held or broadcast.(6) Once the Department determines that a request for approval is complete, that request will be placed on the next regularly scheduled meeting of the Board for consideration. The Department will provide the board with a written recommendation on each such request. The staff will advise the applicant of the board's action within ten (10) business days of the date of the board meeting, including a written statement as to any limitations, conditions, or other requirements imposed.(A) Approvals shall be for a period not to exceed two years. The Department may, at no cost, attend or send a representative to attend any approved portion of the continuing education program to determine that the courses are being taught in accordance with the terms of approval.(B) Should the two-year approval time for a continuing education provider expire in between regularly scheduled board meetings, the executive director may issue approval to continue providing services until the next board meeting upon receipt of the required renewal application, fee, and necessary documentation of education material.(C) The Department may revoke or suspend approval of a continuing education program if the Department determines that any of the courses are not being taught in accordance with the terms of approval or that any of the courses are not being administered in accordance with the law or these rules. Any action to revoke or suspend such an approval is a contested matter under Chapter 2001, Government Code, and the party against whom revocation or suspension is sought may make a written request for a hearing before an Administrative Law Judge. If no such hearing is requested within thirty (30) calendar days after receipt of notice from the Department, the Department order of suspension or revocation shall become final.(e) License Application and Renewal.(1) Initial Application Processing.(A) It is the policy of the Department to issue the license within seven (7) business days after receipt of all required information and the following conditions have been met:(i) all required forms are properly executed; and(ii) all requirements of applicable statutes and this Chapter have been met.(B) License applications and accompanying documents found to be incomplete or not properly executed shall be returned to the applicant with an explanation of the specific reason and what information is required to complete license.(C) Upon request, the Department will disclose the license number assigned and the effective date for a license that has been approved but not yet delivered to the license holder.(2) License Renewal Requirements. It is the responsibility of a license holder to renew the license prior to its expiration date.(A) In order to prevent the expiration and lapse of a license, a complete application for license renewal must be received by the Department prior to the date on which the current license expires.(B) If an application for license renewal is received by the Department after the date on which the current license expires, the license will not be issued without the required late fees identified in §1201.116(d) and (e) of the Standards Act.(3) Payment of license fees.(A) All required fees must be paid in order to obtain a valid license, including a renewal license, from the Department.(B) Any license issued by the Department is void and of no effect if based upon a check or other form of payment that is later returned for insufficient funds, closed account, or other reason, regardless of whether the Department notifies the applicant of the insufficiency of payment or the invalidity of the license.(C) It is the applicant's responsibility to ensure that all licensing fees are paid in valid U.S. funds.(4) Fingerprints and Criminal History Check.(A) License applicants must submit a complete and legible set of fingerprints to a vendor approved by the Department of Public Safety, for the purpose of a criminal background check, which will be provided to the Department.(B) The license applicant shall be responsible for the cost.(f) License Application or Renewal Denial.(1) In the evaluation of an applicant for a license, the Director shall consider whether the applicant or any related person involved with the applicant has previously:(A) been found in a final order to have participated in one or more violations of the Standards Act that served as grounds for the suspension or revocation of a license;(B) been found to have engaged in activity subject to the Standards Act without possessing the required license;(C) caused the Manufactured Homeowner Consumer Claims Program to incur unreimbursed payments or claims;(D) failed to abide by the terms of a final order or agreed final order, including the payment of any assessed administrative penalties; or(E) had any state license revoked for violations of a law or rule.(2) If any of the preceding factors is present with respect to the applicant or any related person involved with the applicant, the director will further determine:(A) whether all appropriate corrective action has been taken;(B) whether the applicant has adopted policies and procedures or taken other appropriate measures to prevent recurrences; and(C) whether additional conditions or limitations on the license would be appropriate.(3) In determining whether an applicant should be issued a license if that applicant states in his/her application for said license that he/she has a criminal record, which may include a conviction, deferred adjudication, plead guilty, or nolo contendere for any felony or misdemeanor offense, other than a Class C Misdemeanor for traffic violations, within five (5) years preceding the date of the application, the Director shall consider the factors set out in Texas Occupations Code, §53.022:(A) the nature and seriousness of the crime;(B) the relationship of the crime to the intended manufactured housing business activity;(C) the extent to which a license holder might engage in further criminal activity of the same or similar type as that in which the applicant previously had been involved;(D) the relationship of the crime to the ability, capacity, or fitness required to perform the duties and discharge the functions and responsibilities of the license holder's occupation or industry; and(E) whether the offenses were defined as crimes of moral turpitude by statute or common law, from Class A misdemeanors to first, second, and third degree felonies carrying fines and/or imprisonment or both. Special emphasis shall be given to the crimes of robbery, burglary, theft, embezzlement, sexual assault, and conversion.(4) In addition to the factors that may be considered in paragraph (3) of this subsection, the Department, in determining the present fitness of a person who has a criminal record, may consider the following:(A) the extended nature of the person's past criminal activity;(B) the age of the person at the time of the commission of the crime;(C) the amount of time that has elapsed since the person's last criminal record;(D) the conduct and work activity of the person prior to and following the criminal record; and(E) evidence of the person's rehabilitation or attempted rehabilitation effort while incarcerated or following release.(5) The applicant shall furnish proof in any form, as may be required by the Department, that he/she has maintained a record of steady employment and has otherwise maintained a record of good conduct and has paid all outstanding court costs, supervision fees, fines, and restitution as may have been ordered in all criminal cases.(6) If the Department suspends or revokes a valid license, or denies a person a license or the opportunity to be considered for a license in accordance with this subsection because of the person's prior criminal record and the relationship of the crime to the license, the Department shall:(A) notify the person in writing stating reasons for the suspension, revocation, denial, or disqualification; and(B) offer the person the opportunity for a hearing on the record. If the person does not request a hearing on the matter within thirty (30) calendar days from receipt of the Department's decision, the suspension, revocation, or denial becomes final.(g) Exemption for Retailer's License Requirement.(1) Application for Exemption of Retailer's License Requirement.(A) A person requesting exemption from the Retailer's licensing requirement of §1201.101(b) of the Occupations Code, shall submit the required application outlining the circumstances under which they are requesting exemption from licensure.(B) Applications should identify the HUD label or serial number(s):(i) of up to 3 homes being sold under the exemption found in Tex. Occ. Code §1201.1025(a); or(ii) of all homes sold under the exemption Tex. Occ. Code §1201.1025(a-1).(C) Applications will be processed within seven (7) business days after receipt of all required information.(2) The circumstances under which this exemption is granted are:(A) One-time sale of up to three (3) manufactured homes in a 12-month period as personal property;(B) Non-profit entity transferring ownership of up to three (3) manufactured homes in a 12-month period;(C) No other manufactured homes have been purchased and resold in the previous twelve (12) months, even with a previous exemption; or(D) All manufactured homes for sale or offered to be sold by the person are located in a manufactured home community, and for sale or offered for sale to the same purchaser in connection with a sale of the real property of the community.(3) Letter of Exemption.(A) Once granted, a Letter of Exemption from licensure will be issued by the Executive Director to the applicant.(B) Letter of Exemption is valid only for the manufactured home(s) specified.(C) Letter of Exemption is valid only for twelve (12) months.(D) The homes may not be sold until the Letter of Exemption is granted.</content><note type="source"><p>Source Note: The provisions of this §80.41 adopted to be effective March 25, 2012, 37 TexReg 1307; amended to be effective November 25, 2012, 37 TexReg 8507; amended to be effective November 23, 2014, 39 TexReg 8386; amended to be effective May 15, 2016, 41 TexReg 2743; amended to be effective January 7, 2018, 42 TexReg 6921; amended to be effective December 8, 2019, 44 TexReg 6870; amended to be effective March 3, 2024, 49 TexReg 521; amended to be effective July 14, 2024, 49 TexReg 4429.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c80/scE"><num value="E">SUBCHAPTER E</num><heading>ENFORCEMENT</heading><section identifier="/us/state/tx/tac/t10/p1/c80/scE/s80.70"><num value="80.70">§80.70</num><heading>Enforcement</heading><content>(a) A licensee shall not obstruct or hinder any inspection, investigation, or enforcement efforts being carried out by the Department.(b) Subpoenas or any other order issued by the Director may be served by any person acting on behalf of the Director.</content><note type="source"><p>Source Note: The provisions of this §80.70 adopted to be effective March 25, 2012, 37 TexReg 1307.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scE/s80.71"><num value="80.71">§80.71</num><heading>Rules for Hearings</heading><content>(a) Unless otherwise expressly set forth in the Standards Act or this chapter, all hearings shall be held and conducted pursuant to the applicable provisions of Government Code, Chapter 2001.(b) Any party to a hearing may request that a record of the hearing be made and transcribed by an independent court reporter, other than an employee of the Department. Such request must be made not later than seven (7) calendar days prior to the hearing. The additional cost and expense of the independent court reporter may be assessed against the party making the request.(c) Notice of a hearing shall specify all state and federal laws, rules, and regulations, including but not limited to, if applicable, HUD regulations, that the Department believes are relevant to any issue to be involved in the hearing.(d) The Department may serve the notice of hearing on the respondent at his or her last known address as shown by the Department's records.(e) If, after receiving notice of a hearing, a party fails to appear in person or by representative on the day and time set for hearing or fails to appear by telephone in accordance with Government Code, Chapter 2001, also known as the Administrative Procedures Act, the hearing may proceed in that party's absence and a proposal for decision may be entered by default, accepting all facts and conclusions of law as deemed admitted.(f) If the administrative law judge grants a default but does not issue a default proposal for decision and instead issues a default order dismissing the case and returning the file to the Department for informal disposition on a default basis in accordance with §2001.056 of the Texas Government Code, the Executive Director may issue a final order deeming the allegations in the Notice of Hearing as true.(g) Pursuant to the Administrative Procedures Act, each party has the right to file exceptions to the Proposal for Decision and present a brief with respect to the exceptions. All exceptions must be filed with the Department within ten (10) business days of the Proposal for Decision, with replies to be filed ten (10) business days after the filing of exceptions.(h) When an administrative hearing is held for any matter in which the Department seeks to take action against a licensee for violating the Standards Act or these rules, whether such action is an action to assess administrative penalties, to require corrective action, to require cessation of improper activities, to suspend or revoke a license, or any combination thereof, the Department shall assess the costs of the proceeding against any party that fails to appear at a duly noticed administrative hearing. The costs assessed shall be the greater of $100 or the actual costs charged to the Department by the State Office of Administrative Hearings, the Office of the Attorney General, any court reporter, or any other third party providing services in connection with such hearing.(i) The Department will seek the recovery of its costs from any party against whom it initiates an action if that action results in the entry of a final order taking any administrative action against that party, including the assessment of administrative penalties, requiring corrective action, requiring cessation of improper activities, suspension or revocation of a license, or any combination thereof.</content><note type="source"><p>Source Note: The provisions of this §80.71 adopted to be effective March 25, 2012, 37 TexReg 1307; amended to be effective May 15, 2016, 41 TexReg 2743.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scE/s80.72"><num value="80.72">§80.72</num><heading>Sanctions and Penalties</heading><content>(a) In accordance with the provisions of §1201.605 of the Standards Act, the Director may assess and enforce penalties and sanctions against a person who violates any applicable law, rule, regulation, or administrative order of the Department.(b) The determination of any penalties or other sanctions to be assessed shall be based on the consideration of statutory factors and whether the person against whom such penalties and/or sanctions are to be assessed has timely and in good faith taken the necessary steps to achieve, to the extent feasible, full compliance with all applicable state and federal laws, rules, and regulations and taken appropriate measures to prevent future violations.(c) When a licensee first receives written notification of a claim for warranty service, the licensee must respond promptly to the request. A failure to do so shall constitute a violation of this chapter.(d) Immediate corrective action is required if the matter involves an imminent safety hazard.(e) If, after reasonable investigation, a licensee disputes whether warranty service is required and the licensee is unable to resolve the matter by agreement with the consumer, the licensee may request that the Department perform an inspection of the home. The running of the time to respond to the request for warranty service will be suspended from the time the request for inspection is received until the Department performs the inspection and issues its findings. When the Department concludes its review it will work with the affected licensee(s) and consumer(s) to agree upon a reasonable time to address its findings. In the event the parties cannot agree on a reasonable time, the Director shall issue a revised order assigning a time for compliance. An agreed or ordered time to respond to a request for warranty service may be extended by the Director in response to a request setting forth good cause for the extension. Any such request must be made to the Director prior to the expiration of the allotted time for response. Requests may be made by U.S. First Class mail, by FAX, or by e-mail, or, if followed with written confirmation sent U.S. First Class mail, or by telephone.(f) Any and all penalties are IN ADDITION to full compliance with the Standards Act and Rules (i.e., full, prompt corrective action, restitution, or whatever else the Standards Act and rules would have required in the first place). Failure to provide such compliance on a timely basis, as specified in the applicable order, will be deemed to be a violation of the order and serve as a basis for pursuing additional administrative action, including the assessing of additional penalties and the pursuit of suspension or revocation of licenses.(g) The Department offers, at no charge, alternative dispute resolution as an inexpensive and informal way of attempting to resolve any claim or dispute. Depending on the parties, this may involve informal meetings or non-binding mediation. Alternative dispute resolution is available upon request. In the event that a disputed matter cannot be resolved in this manner, the Department reserves the right to pursue all other lawful means of resolution including, but not limited to, pursuit of administrative remedies.</content><note type="source"><p>Source Note: The provisions of this §80.72 adopted to be effective March 25, 2012, 37 TexReg 1307.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scE/s80.73"><num value="80.73">§80.73</num><heading>Procedures for Handling Consumer Complaints</heading><content>(a) A complaint may be initiated by a consumer or by the Department. Unless the Department determines that it is appropriate to proceed in another manner a copy of the complaint will be provided to each person involved. The letter shall request a written response within ten (10) calendar days unless the Department determines that a longer or shorter period is warranted.(1) If the consumer has not previously notified the manufacturer, retailer or installer, the Department will forward the written notification to the manufacturer, retailer, or installer. This will constitute written notice of a request for warranty service.(2) If the consumer has previously provided written notification to the manufacturer, retailer or installer of the need for warranty service or repairs, but believes such has not been completed in a satisfactory manner, the Department shall perform a home inspection, if required. If a home inspection is performed and violations are found, the Department will assign responsibilities for repair, and notify the manufacturer, retailer, installer, and consumer of their responsibilities to complete such warranty or service repair in accordance with §1201.356(c) of the Standards Act.(b) The Department shall make a consumer complaint home inspection upon request.(1) Consumer Request. The consumer may, at any time, request that the Department perform a consumer complaint home inspection. A written complaint regarding failure to provide warranty work is deemed to be a request for a consumer complaint inspection. No written complaint form is required if a possible imminent safety hazard exists.(2) Industry Request. Manufacturer or retailer requests for a consumer complaint home inspection must be signed, shall identify the home by HUD label and serial number(s), and shall provide the necessary information for the Department to contact the consumer and determine the physical location of the home. The manufacturer or retailer may request a consumer complaint home inspection if the manufacturer or retailer:(A) believes that the consumer's complaints are not covered by the respective written warranty, or implied warranties;(B) believes that the warranty service was previously properly provided; or(C) has a dispute as to the respective responsibilities pursuant to the warranties.(3) All complaints transferred to the field shall be inspected within 30 calendar days from the date the verified complaint was received. A complaint is deemed verified once it is established that the Department has jurisdiction over the matter.(A) The consumer, manufacturer, retailer, and installer, as applicable, shall be notified of the scheduled inspection.(B) The person conducting the inspection shall inspect all matters (relating to the home and/or the installation of the home) set forth in the complaint and any other items raised at the inspection.(C) The person conducting the inspection will issue a report of inspection, completed to reflect the findings of the inspection.(c) The retailer, installer, or manufacturer shall take immediate corrective action when notification is received from a consumer and the nature of the complaint indicates an imminent safety hazard or serious defect.(d) Except as provided in subsection (c) of this section, manufacturers, retailers, and installers shall perform their obligations in accordance with any assigned order for corrective action pursuant to §1201.356(c) of the Standards Act within a reasonable period of time. A reasonable period of time is deemed to be thirty (30) calendar days following receipt of the order from the Department unless there is good cause requiring more time.(e) When service or repairs are completed following any notice or orders from the Department pursuant to §1201.356(a) of the Standards Act, the manufacturer, retailer, and/or installer shall forward to the Department copies of service or work orders reflecting the date the work was completed, or other documentation to establish that the warranty service or repairs have been completed. A consumer is not required to sign the service or work order. These service or work orders must be received by the Department no later than five (5) calendar days from the expiration of the period of time specified in the warranty order issued by the Department. Corrective action taken is subject to re-inspection.(f) If service or repairs cannot be made within the specified time frame, the license holder shall notify the Department in writing prior to the expiration of the specified time on the warranty order. The notice shall list those items which have been, or will be, completed within the time frame and shall show good cause why the remainder of the service or repairs cannot be made within the specified time frame. The license holder shall request an extension for a specific time. Original deadline to complete warranty work may apply if the request for extension is denied. If the Department fails to respond in writing to the request within five (5) business days of the date of receipt of the notice of request for extension, the extension has been granted.(g) Once the Department receives the service or work orders confirming that all assigned items have been addressed and the Department has, to the extent deemed necessary or appropriate, inspected the work, a complaint will be closed.(h) A complaint may be reopened for good cause upon the approval of the Director or his or her designee(s).(i) If a purchaser of a manufactured home for business use has proof that they disclosed to the retailer in writing at the time of purchase that the purchaser intended for a person to be present in the home for regularly scheduled work shifts of not less than eight (8) hours prior to purchasing a manufactured home for business use they may file a complaint with the Department if the manufactured home is not habitable.(1) The complaint must be filed in writing to the Department within sixty (60) days of the later of the date of sale or the date of installation.(2) The retailer is required to make the home habitable if after a Department inspection it is determined to be inhabitable and the proper evidence was submitted demonstrating the intended business use of the manufactured home.</content><note type="source"><p>Source Note: The provisions of this §80.73 adopted to be effective March 25, 2012, 37 TexReg 1307; amended to be effective May 15, 2016, 41 TexReg 2743; amended to be effective January 7, 2018, 42 TexReg 6921; amended to be effective December 8, 2019, 44 TexReg 6870.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c80/scF"><num value="F">SUBCHAPTER F</num><heading>MANUFACTURED HOMEOWNER CONSUMER CLAIMS PROGRAM</heading><section identifier="/us/state/tx/tac/t10/p1/c80/scF/s80.80"><num value="80.80">§80.80</num><heading>Administration of Claims under the Manufactured Homeowner Consumer Claims Program</heading><content>(a) The Director, before authorizing any party performing warranty work or providing other goods or services that are to be reimbursed from the Manufactured Homeowner Consumer Claims Program (the "Claims Program") to proceed, will require that an estimate be submitted on the form set forth on the Department's website properly completed and executed.(b) Re-assigned warranty work required by the Director to be performed shall, unless extended for good cause or provided otherwise in the order, be performed within thirty (30) days or such other time as the director may by order specify:(1) evidence that re-assigned warranty work was performed shall, unless extended for good cause, be supplied to the Department within ten (10) days of completion; and(2) all warranty work or other work to be reimbursed from the Claims Program, once completed, is subject to being re-inspected.(c) An order re-assigning warranty work and designating the party responsible for the re-assigned warranty work as a "consumer" under §1201.358(d) of the Standards Act becomes final if not appealed within thirty (30) days.(d) Failure to provide a required estimate in connection with an order to perform re-assigned warranty work, once that order has become final, may serve as grounds for an administrative action against the licensee.(e) When a consumer has a covered claim against a licensee and the licensee has not satisfied the claim, the Department shall take appropriate steps to make sure that the claim is proper, meeting all requirements of laws and rules, and that all reasonable steps to satisfy the claim have been exhausted. If the damages arose as a result of a violation of the Texas Deceptive Trade Practice- Consumer Protection Act, the specific violation must be adequately documented. Acceptable documentation would include a court order finding that such a violation had occurred or the establishing of confirmed facts that would specifically constitute such a violation, along with proof that the court order could not be satisfied. The specific violation must relate directly to the manufactured home or the sale transaction regarding the manufactured home.(f) Once a payment is made from the Claims Program, the Department shall file a claim under the bond of or deduct the amount paid from other security provided by the party primarily responsible for the unsatisfied claim.</content><note type="source"><p>Source Note: The provisions of this §80.80 adopted to be effective March 25, 2012, 37 TexReg 1307; amended to be effective January 7, 2018, 42 TexReg 6921.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p1/c80/scG"><num value="G">SUBCHAPTER G</num><heading>STATEMENTS OF OWNERSHIP</heading><section identifier="/us/state/tx/tac/t10/p1/c80/scG/s80.90"><num value="80.90">§80.90</num><heading>Issuance of Statements of Ownership</heading><content>(a) Application Requirements. In order to be deemed complete, an application for a Statement of Ownership must include, as applicable:(1) A completed and fully executed Application for Statement of Ownership on the Department's prescribed current form(2) The required fee;(3) If the statement of ownership is to reflect the recordation of a lien, other than a tax lien, for which the Department does not have the owner's consent, copies of documentation establishing the creation and existence of each such lien, and an affidavit of fact explaining the circumstances of the lien;(4) When one or more existing liens are to be released, assigned, or foreclosed, appropriate supporting documentation;(5) When an application for Statement of Ownership indicates a change in ownership but no change in lien, supporting documentation that clearly establishes that the lien holder consented to that change; and(6) When a manufactured home is to be designated for use as a dwelling and/or personal property after the home has been designated for business use, salvage, or as real property, evidence of a satisfactory habitability inspection by the Department.(b) Right of Survivorship: If a right of survivorship election is made, then the Department will issue a new Statement of Ownership to the surviving person(s) upon receipt of a copy of the death certificate of the deceased person(s), a properly executed application for Statement of Ownership, and the applicable fee.(c) Corrections to Statements of Ownership.(1) If a correction is required as a result of a Department error, it will be corrected at no charge.(2) If a correction is requested because of an error made by a party other than the Department, the correction will not be made until the Department receives the following:(A) A complete corrected application for Statement of Ownership, or(B) Documentation deemed appropriate and approved by the Executive Director, pursuant to §1201.207(c) of the Standards Act.(d) Upon issuance of a Statement of Ownership, the Department will mail one copy to the owner and one copy to the lienholder. If an additional copy is desired for a third party it should be noted on the application with appropriate mailing information.(e) Exchanging a Document of Title or certificate of attachment for a Statement of Ownership: The Department will issue a Statement of Ownership, with no change in status, to replace a title or certificate of attachment at no charge upon receipt of the original title or certificate of attachment and the physical location of the home. If a manufactured home title showed that it was personal property, that will be presumed to be its status until and unless a revised Statement of Ownership is applied for and issued. Likewise, if a manufactured home has had a certificate of attachment issued and had title cancelled to real property, that shall be presumed to be its status until and unless a revised Statement of Ownership is applied for and issued.(f) Updating of Statements of Ownership on Manufactured Homes Transferred as Real Property.(1) When a manufactured home has become real property because the owner completed the conversion process required by the Standards Act, the home may be sold, transferred, or encumbered as real property by the customary means used for real property transactions. As long as the home remains real property at the same location, ownership of the home is confirmed in the same manner as any other real property, rather than by verifying Department records. A new Statement of Ownership does not have to be applied for until and unless:(A) the home is moved from the location specified on the statement of ownership;(B) the current owner of the manufactured home wishes to convert it to personal property status;(C) the use of the property is changed to business use or salvaged; or(D) the manufactured home no longer meets the requirements to be classified as real property (such as the home being on property subject to a long term lease which is not assignable to the buyer or transferee).(2) To convert a manufactured home from real property to personal property, the owner of the home must submit a completed Application for Statement of Ownership to the Department with supporting documentation as follows:(A) If the applicant is not the owner of record with the Department, satisfactory proof of ownership under a complete chain of title. Acceptable evidence would include, but not be limited to, authenticated copies of all intervening transfer documents, a court order confirming ownership, or title insurance policy in such owner's name issued by a title insurance company licensed to do business in Texas.(B) Satisfactory evidence that any liens on the manufactured home have been discharged or that all lienholders have consented to the change.(C) Evidence of either a satisfactory habitability inspection by the Department or an election to convert the status of the home to business use or salvage.(D) For the purposes of subparagraph (B) of this paragraph, the Department may rely on a commitment for title insurance, a title insurance policy, or a lawyer's title opinion to determine that any liens on real property have been released.(3) To update the ownership on a manufactured home already elected and perfected as real property, and remaining in the same location as real property, the new owner of the home must submit a completed Application for Statement of Ownership to the Department with supporting documentation as follows:(A) If the applicant is not the owner of record with the Department, satisfactory proof of ownership under a complete chain of title. Acceptable evidence would include, but not be limited to, authenticated copies of all intervening transfer documents, a court order confirming ownership, or title insurance policy in such owner's name issued by a title insurance company licensed to do business in Texas.(B) Satisfactory evidence that any liens on the manufactured home have been discharged or that all lienholders have consented to the change.(C) For the purposes of subparagraph (B) of this paragraph, the Department may rely on a commitment for title insurance, a title insurance policy, or a lawyer's title opinion to determine that any liens on real property have been released.(4) When a home is being converted to real property, a copy stamped "filed" by the county must be submitted to the Department as evidence that the requirements of §1201.2055 of the Standards Act have been satisfied and the real property election has been perfected. This must be done within sixty (60) days from the issuance date reflected on the Statement of Ownership.(g) When a title company or attorney's office fails to complete the conversion of a manufactured home to real property, the holder or servicer of the loan may apply for a statement of ownership electing real property status after-the-fact, providing that evidence of notice to all parties is sent via certified mail and that proof of such efforts is provided along with an affidavit of fact describing such efforts, pursuant to §1201.2055(i)(3) of the Standards Act.(h) Submitting an application for Statement of Ownership pursuant to the abandonment provision in §1201.217 of the Standards Act, should include an affidavit of fact, on the prescribed form, attesting to that all statutory notifications have been made to the appropriate parties, including the tax assessor-collector of the county where the home is located, and evidence that all notification was sent via certified mail.(i) A Priority Handling Service may be offered by the Department for an additional fee of $55, each time an application for statement of ownership is reviewed on a priority basis, whether the application is complete or incomplete. Initial or resubmitted applications submitted with priority handling requested and including the additional fee, will be processed within five working days from the date the application is recognized as received in the Department (applications received after 3:30 p.m. become part of the following day's mail).(1) If the application is received complete, a Statement of Ownership will be issued and mailed within the established time.(2) If the application is received incomplete, a Request for Additional Information will be issued and mailed within the established time.(3) Applications requiring habitability or salvage rebuilding inspections are not eligible for the Priority Handling Service.(j) When it is deemed appropriate by the executive director, an affidavit of fact may be required as additional documentation to accompany a statement of ownership application.</content><note type="source"><p>Source Note: The provisions of this §80.90 adopted to be effective March 25, 2012, 37 TexReg 1307; amended to be effective November 23, 2014, 39 TexReg 8386; amended to be effective May 15, 2016, 41 TexReg 2743; amended to be effective January 7, 2018, 42 TexReg 6921.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scG/s80.91"><num value="80.91">§80.91</num><heading>Issuance of a Texas Seal</heading><content>(a) Issuance of a Texas Seal requires the submittal of an application for Statement of Ownership, the applicable fee and the fee for each Texas Seal issued.(b) A Texas Seal can only be issued to a home meeting the definition of a HUD Code manufactured home or a mobile home.</content><note type="source"><p>Source Note: The provisions of this §80.91 adopted to be effective March 25, 2012, 37 TexReg 1307; amended to be effective January 7, 2018, 42 TexReg 6921.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scG/s80.93"><num value="80.93">§80.93</num><heading>Recording Tax Liens on Manufactured Homes</heading><content>(a) Manually filed tax liens shall be filed with the Department using the form set forth on the Department's website. No other form will be accepted for the manual filing of tax liens. The form must be properly completed.(b) Electronically filed tax liens and tax lien releases shall be filed with the Department using the required format as provided in the Tax Lien File Layout set forth on the Department's website. No other format will be accepted for electronic filing of tax liens.(c) When releasing a tax lien recorded with the Department via a tax certificate or tax paid receipt, the documentation must demonstrate the tax lien field has been satisfied for the correct home.(d) For tax liens recorded after June 18, 2005, but prior to the rules that were effective on January 29, 2006, those tax liens relating to tax years prior to 2001 were disregarded and will not be treated as having been recorded.(e) A tax collector may file as a central tax collector under a single taxing entity ID number, in which case the liens recorded or released under that taxing entity ID number will extend to all liens created for tax obligations to the taxing entity for which the filer collects. In order, however, to file as a central collector, the filer must complete and provide to the Department the form set forth on the Department's website. A single filing for multiple taxing entities must reflect the aggregate amount of the tax liabilities to which the filing relates.</content><note type="source"><p>Source Note: The provisions of this §80.93 adopted to be effective March 25, 2012, 37 TexReg 1307; amended to be effective November 23, 2014, 39 TexReg 8386.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scG/s80.94"><num value="80.94">§80.94</num><heading>Report to County Tax Assessor-Collectors and County Appraisal Districts</heading><content>In order to comply with §1201.220 of the Standards Act, which requires the Department to provide a monthly report to each tax assessor-collector and county appraisal district in Texas, the Department will provide the required information by hardcopy or electronically, when possible. Section 1201.009 of the Standards Act, allows the Department, if feasible, to perform any action under this chapter by electronic means.</content><note type="source"><p>Source Note: The provisions of this §80.94 adopted to be effective March 25, 2012, 37 TexReg 1307.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c80/scG/s80.95"><num value="80.95">§80.95</num><heading>Recording Ownership for Emergency Housing</heading><content>(a) A federal government agency that purchases a manufactured home to provide temporary housing in response to a natural disaster or other declared emergency may apply for a statement of ownership using the Statement of Ownership Application for Federal Governmental Agency.(b) The Department may also accept a Certificate to Obtain Title signed by the federal government agency or their authorized representative in lieu of the Statement of Ownership Application for Federal Governmental Agency.(c) The Department shall apply priority and special handling when an application for emergency housing in conjunction with a natural disaster or declared emergency is received.(d) The Department may waive or refund any fees for emergency housing affiliated with a governor's executive order or proclamation that declares a state of disaster under Chapter 418 of the Government Code in the affected area.</content><note type="source"><p>Source Note: The provisions of this §80.95 adopted to be effective December 8, 2019, 44 TexReg 6870.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p1/c90"><num value="90">CHAPTER 90</num><heading>MIGRANT LABOR HOUSING FACILITIES</heading><subchapter identifier="/us/state/tx/tac/t10/p1/c90/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p1/c90/sc/s90.1"><num value="90.1">§90.1</num><heading>Purpose</heading><content>The purpose of Chapter 90 is to establish rules governing Migrant Labor Housing Facilities that are subject to being licensed under Tex. Gov't Code Chapter 2306, Subchapter LL (§§2306.921 - 2306.9340). It is recognized that aligning state requirements with the federal standards for migrant farmworker housing that must be inspected in order to participate in other state and federal programs, such as with the U.S. Department of Labor's H-2A visa program, allows for cooperative efforts between the Department and other state and federal entities to share information. This will reduce redundancies and improve the effectiveness of the required licensing.</content><note type="source"><p>Source Note: The provisions of this §90.1 adopted to be effective July 4, 2024, 49 TexReg 4761; amended to be effective February 25, 2026, 51 TexReg 1044.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c90/sc/s90.2"><num value="90.2">§90.2</num><heading>Definitions</heading><content>The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Additionally, any words and terms not defined in this section but defined or given specific meaning in Tex. Gov't Code Chapter §§2306.921 - 2306.940, are capitalized. Other terms in 29 CFR §§500.130 - 500.135, 20 CFR §§654.404 et seq., and 29 CFR §1910.142 or used in those sections and defined elsewhere in state or federal law or regulation, when used in this chapter, shall have the meanings defined therein, unless the context herein clearly indicates otherwise.(1) Act--The state law that governs the operation and licensure of Migrant Labor Housing Facilities in the state of Texas, found at Tex. Gov't Code, §§2306.921 - 2306.940.(2) Board--The governing board of the Texas Department of Housing and Community Affairs.(3) Business Day--Any day that is not a Saturday, Sunday, or a holiday observed by the State of Texas.(4) Business hours--8:00 a.m. to 5:00 p.m., local time.(5) Couple--A pair of individuals, whether legally related or not, that act as and hold themselves out to be a couple; provided, however, that nothing herein shall be construed as creating or sanctioning any unlawful relationship or arrangement.(6) Department--The Texas Department of Housing and Community Affairs.(7) Designated Representative--Means an individual or organization to whom a Migrant Agricultural Worker has given written authorization to exercise the worker's right to file a complaint under Tex. Gov't Code §2306.934.(8) Director--The Executive Director of the Department or designated staff.(9) Family--A group of people, whether legally related or not, that act as and hold themselves out to be a Family; provided, however, that nothing herein shall be construed as creating or sanctioning any unlawful relationship or arrangement such as the custody of an unemancipated minor by a person other than their legal guardian.(10) License--The document issued to a Licensee in accordance with the Act.(11) Licensee--Any Person that holds a valid License issued in accordance with the Act.(12) Occupant--Any Person, including a Worker, who uses a Migrant Labor Housing Facility for housing purposes.(13) Provider--Any Person who provides for the use of a Migrant Labor Housing Facility by Migrant Agricultural Workers, whether the Facility is owned by the Provider, or is contractually obtained (or otherwise established) by the Provider. An agricultural industry employer or a contracted or affiliated entity may be a Provider if it owns, contracts, or pays for the use of a Migrant Labor Housing Facility by Migrant Agricultural Workers, regardless of whether any rent or fee is required to be paid by a Worker. A common short-term property rental owner or operator that does not exclusively rent to Migrant Agricultural Workers is not a Provider solely because they have rented to Migrant Agricultural Workers. The Provider is the operator under Tex. Gov't Code §2306.928.(14) The State Office of Administrative Hearings (SOAH)--Is an independent and neutral agency for hearing and mediating administrative disputes and appeals in Texas in accordance with Tex. Gov't Code §2001, Tex. Gov't Code §2003, and 1 TAC §155.(15) Worker--Also known as Migrant Agricultural Worker, being an individual who is:(A) working or available for work seasonally or temporarily in primarily an agricultural or agriculturally related industry, and(B) moves one or more times from one place to another to perform seasonal or temporary employment or to be available for seasonal or temporary employment.</content><note type="source"><p>Source Note: The provisions of this §90.2 adopted to be effective July 4, 2024, 49 TexReg 4761; amended to be effective February 25, 2026, 51 TexReg 1044.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c90/sc/s90.3"><num value="90.3">§90.3</num><heading>Applicability</heading><content>(a) All Migrant Labor Housing Facilities in the state of Texas, which may include hotels and other public accommodations if owned by or contracted for by Providers must be inspected and comply with the requirements in this chapter and 29 CFR §§500.130, 500.132 - 500.135, without the exception provided in 29 CFR §500.131. (b) Where agricultural employers own, lease, rent, otherwise contract for, or obtain under other working arrangements, Facilities "used" by individuals or Families that meet the criteria described in the Act, the employer as Provider of said housing, "establishes" and becomes the "operator" of a Migrant Labor Housing Facility, and is the responsible entity for obtaining and "maintaining" the License on such Facility, as those terms are used in Tex. Gov't Code §2306.921 - 2306.922.(c) An applicant for a License must facilitate an inspection by the Department with the owner of the property(ies) at which the Migrant Labor Housing Facility is located, or the inspection will be considered failed.(d) Owners or operators of homeless shelters, public camp grounds, youth hostels, hotels and other public or private accommodations that do not contract for services with Providers to house Workers are not required to be licensed.(e) No License would be required where a Worker is housed exclusively with his/her Family using their own structure, trailer, or vehicle, but temporarily residing on the land of another.(f) A Facility may include multiple buildings on scattered or noncontiguous sites, as long as the scattered sites are in a reasonable distance from each other, and the work location and the buildings are operated as one Facility by the Provider.</content><note type="source"><p>Source Note: The provisions of this §90.3 adopted to be effective July 4, 2024, 49 TexReg 4761; amended to be effective February 25, 2026, 51 TexReg 1044.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c90/sc/s90.4"><num value="90.4">§90.4</num><heading>Standards and Inspections</heading><content>(a) Facilities must follow the appropriate housing standard as defined in 29 CFR §500.132, (the Employment and Training Administration (ETA) and Occupational Safety and Health Administrations (OSHA) housing standards also referred to as the "ETA and OSHA Housing Standards"), or if applicable the Range Housing standard as defined in 20 CFR §655.235 or Mobile Housing Standards as defined in 20 CFR §655.304. The inspection checklists setting forth those standards are available on the Department's website at https://www.tdhca.texas.gov/migrant-labor-housing-facilities. (b) Inspections of the Facilities of applicants for a License and Licensees may be conducted by the Department under the authority of Tex. Gov't Code §2306.928 upon reasonable notice and using the appropriate inspection forms noted in subsection (a) of this section. Inspections may be conducted by other State or Federal agencies, on behalf of the Department, on forms promulgated by those agencies.(c) In addition to the standards noted in subsection (a) of this section, all Facilities must comply with the following additional state standards:(1) Facilities shall be constructed in a manner to insure the protection of Occupants against the elements. Facilities shall be maintained in good repair and in a sanitary condition. All doors to the exterior shall have working locks and all windows shall have working interior latches. Each unit shall have a working smoke detector. Fire extinguishing equipment shall be provided in an accessible place located within 100 feet from each Facility. Such equipment shall provide protection equal to a 2 1/2 gallon stored pressure of five gallon pump type water extinguisher. Such equipment shall also have a service tag that indicates no more than a year has passed since last servicing if rechargeable, and that the extinguisher is no more than 12 years old and properly charged if non-rechargeable or disposable. A working carbon monoxide detector must be present in all units that use gas or other combustible fuel.(2) Combined cooking, eating, and sleeping arrangements must have at least 100 SF per person (aged 18 months and older); the portion of the Facility for sleeping areas must include at least a designated 50 square feet per person.(3) Facilities for Families with children must have a separate room or partitioned area for adult Family members.(4) In dormitory-type facilities, separate sleeping accommodations shall be provided for each sex. In Family housing units, separate sleeping accommodations shall be provided for each Family unit.(5) Facilities previously used to mix, load, or store pesticides and toxic chemicals may not be used for cooking, dishwashing, eating, sleeping, housing purposes, or other similar purposes.(6) In a central mess or multifamily feeding operation, the kitchen and mess hall shall be constructed in accordance with any applicable local or state rules on food services sanitation.(7) Beds, bunks, or cots shall have a clear space of at least 12 inches from the floor. Triple-deck bunks shall be prohibited. Single beds shall be spaced not closer than 36 inches laterally or end to end. Bunk beds shall be spaced not less than 48 inches laterally or 36 inches end to end. There shall be a clear ceiling height above a mattress of not less than 36 inches. The clear space above the lower mattress of the bunk beds and the bottom of the upper bunk shall not be less than 27 inches.(8) Bathrooms, in aggregate shall have a minimum of one showerhead per 10 persons and one lavatory sink per six persons. Showerheads shall be spaced at least three feet apart to insure a minimum of nine square feet of showering space per showerhead.(9) In all communal bathrooms separate shower stalls shall be provided.(10) Mechanical clothes washers with dryers or clothes lines shall be provided in a ratio of one per 50 persons. In lieu of mechanical clothes washers, one laundry tray (which is a fixed tub (made of slate, earthenware, soapstone, enameled iron, stainless steel, heavy duty plastic, or porcelain) with running water and drainpipe for washing clothes and other household linens) or tub per 25 persons may be provided.(11) All Facility sites shall be provided with electricity. The electrical systems shall conform to all applicable codes and shall be sufficient to provide the electricity with sufficient amperage to operate all required and available features, including but not limited to lighting, stoves, hot water heaters, heating systems, portable heaters, refrigeration, and such other devices as may be connected to wall type convenience outlets.(12) A separate bed and clean mattress must be provided for each individual Worker or Couple. If a single bed is provided to a Couple, it may not be smaller than a full size.</content><note type="source"><p>Source Note: The provisions of this §90.4 adopted to be effective July 4, 2024, 49 TexReg 4761; amended to be effective February 25, 2026, 51 TexReg 1044.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c90/sc/s90.5"><num value="90.5">§90.5</num><heading>Licensing</heading><content>(a) Tex. Gov't Code §2306.922 requires the licensing of Migrant Labor Housing Facilities.(b) Any Person who wants to apply for a License to operate a Facility may obtain the application form from the Department. The required form is available on the Department's website at https://www.tdhca.texas.gov/migrant-labor-housing-facilities.(c) An application must be submitted to the Department prior to the intended operation of the Facility, but no more than 60 days prior to said operation. Applications submitted to the Department that are not complete, due to missing items and/or information, expire 90 days from Department receipt. In this circumstance, the fees paid are ineligible for a refund.(d) The fee for a License is $250 per year, except in such cases where the Facility was previously inspected and approved to be utilized for housing under a State or Federal migrant labor housing program, and that such inspection conducted by a State or Federal agency is provided to the Department. Where a copy of such inspection conducted by a State or Federal agency is less than 90 days old, has no material deficiencies or exceptions, and is provided to the Department prior to the Department's scheduled inspection, the application fee shall be reduced to $75. However, if an inspection or re-inspection by the Department is required at the sole determination by the Department, the full application fee may apply.(e) The License is valid for one year from the date of issuance unless sooner revoked or suspended. Receipt of a renewal application that is fully processed resulting in the issuance of a renewed license shall be considered as revoking the previous license, with the effective and expiration dates reflecting the renewal. All licenses have the same effective date as their issuance.(f) Fees shall be tendered by check, money order, or via an online payment system (if provided by the Department), payable to the Texas Department of Housing and Community Affairs. If any check or other instrument given in payment of a licensing fee is returned for any reason, any License that has been issued in reliance upon such payment being made is null and void.(g) A fee, when received in connection with an application is earned and is not subject to refund. At the sole discretion of the Department, refunds may be requested provided the fee payment or portion of a payment was not used toward the issuance of a License or conducting of an inspection.(h) Upon receipt of a complete application and fee, the Department shall review the existing inspection conducted by a State or Federal agency, if applicable and/or schedule an inspection of the Facility by an authorized representative of the Department. Inspections shall be conducted during Business Hours on weekdays that the Department is open, and shall cover all units that are subject to being occupied. Inspections by other State or Federal agencies in accordance with the requirements in 29 CFR §§500.130 - 500.135 may be accepted by the Department for purposes of this License, only if notice is given to the Department prior to the inspection in order for the Department to consider the inspection as being conducted by an authorized representative of the Department in accordance with Tex. Gov't Code §2306.928. In addition, a certification of the additional state standards described in 10 TAC §90.4(c), relating to Standards and Inspections, must be provided by the applicant, along with any supplemental documentation requested by the Department, such as photographs.(i) The Person performing the inspection on behalf of the Department shall prepare a written report of findings of that inspection. The Department, when it determines it is necessary based on risk, complaint, or information needed at time of application, may conduct follow-up inspections.(1) If the Person performing the inspection finds that the Facility, based on the inspection, is in compliance with 10 TAC §90.4, relating to Standards and Inspections, and the Director finds that there is no other impediment to licensure, the License will be issued.(2) If the Person performing the inspection finds that although one or more deficiencies were noted that will require timely corrective action which may be confirmed by the Provider without need for re-inspection, and the Director finds that there is no other impediment to licensure, the License will be issued subject to such conditions as the Director may specify. The applicant may, in writing, agree to these conditions, request a re-inspection within 60 days from the date of the Director's letter advising of the conditions, provide satisfactory documentation to support the completion of the corrective action as may be required by the Department, or treat the Director's imposing of conditions as a denial of the application.(3) If the Person performing the inspection finds that one or more deficiencies were noted that will require timely corrective action and the deficiencies are of such a nature that a re-inspection is required, the applicant shall address these findings and advise the Department, within 60 days from the date of written notice of the findings, of a time when the Facility may be re-inspected. If a re-inspection is required, the License may not be eligible for the reduced fee described in subsection (d) of this section and the balance of the $250 fee must be remitted to the Department prior to the re-inspection. If Occupants are allowed to use the Facility prior to the re-inspection the applicant must acknowledge the operation of the Facility in violation of these rules, and pay a fee to the Department as laid out in §90.8 of this chapter (relating to Civil Penalties and Sanctions) through the date the Facility is approved by the inspector, and eligible for licensing. If the results of the re-inspection are satisfactory and the Director finds that there is no other impediment to licensure, the License will be issued. If it is the determination of the Director that the applicant made all reasonable efforts to complete any repairs and have the property re-inspected in a timely manner, the penalty for operating a Facility without a License may be reduced to an amount determined by the Director, but not less than $50 per person per day.(4) If the person performing the inspection finds that the Facility is in material noncompliance with §90.4 of this chapter (relating to Standards and Inspections), or that one or more imminent threats to health or safety are present, the Director may deny the application. In addition, the Department may also take action in accordance with §90.8, relating to Civil Penalties and Sanctions. (5) If access to all units subject to inspection is not provided or available at time of inspection, the inspection will automatically fail.(j) If the Director determines that an application for a License ought to be granted subject to one or more conditions, the Director shall issue an order accompanying the License, and such order shall:(1) Be clearly incorporated by reference on the face of the License;(2) Specify the conditions and the basis in law or rule for each of them; and(3) Such conditions may include limitations whereby parts of a Facility may be operated without restriction and other parts may not be operated until remedial action is completed and documented in accordance with the requirements set forth in the order.(k) Correspondence regarding an application should be addressed to: Texas Department of Housing and Community Affairs, Attention: Migrant Labor Housing Facilities, P.O. Box 12489, Austin, Texas 78711-2489 or migrantlaborhousing@tdhca.texas.gov.(l) The Department shall inform the applicant in writing, (which may be electronically) addressed to a contact provided on the most recent application, of what is needed to complete the application and/or if a deviation found during the inspection requires a correction in order to qualify for issuance of a License.(m) For Providers that are housing Workers in hotels or apartments, failing to provide beds or meals as reported during the application process will, upon the Department's confirmation, result in the finding of noncompliance of not meeting state or federal housing standards as defined in the subchapter.(n) Any changes to an issued License (such as increasing occupancy and/or adding a building or unit) may be made at the sole determination of the Department, based on current rules and policy, within 30 days of the License issuance. Any changes requested more than 30 days after License issuance will require the submission of an application for renewal, new inspection, and new fee payment, per the applicable rate.(o) An applicant or Licensee that wishes to appeal any order of the Director, including the appeal of a denial of an application for a License or an election to appeal the imposing of conditions upon a License, may appeal such order by sending a signed letter to the Director within thirty (30) days from the date specified on such order, indicating the matter that they wish to appeal.</content><note type="source"><p>Source Note: The provisions of this §90.5 adopted to be effective July 4, 2024, 49 TexReg 4761; amended to be effective February 25, 2026, 51 TexReg 1044.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c90/sc/s90.6"><num value="90.6">§90.6</num><heading>Records</heading><content>(a) Each Licensee shall maintain and upon request make available for inspection by the Department, the following records:(1) Copies of all correspondence to and from the Department. This shall include the current designation of each Provider;(2) A current list of the Occupants of the Facility and the date that the occupancy of each commenced;(3) Documentation establishing that all bedding facilities were sanitized prior to their being assigned to the current occupant; and(4) Copies of any and all required federal, state, or local approvals and permits, including but not limited to any permits to operate a waste disposal system or a well or other water supply, and any correspondence to or from such approving or permitting authorities. (b) All such records shall be maintained for a period of at least three years.(c) A Licensee shall post in at least one conspicuous location in a Facility or in at least one building per site for a scattered site Facility:(1) A copy of the License;(2) A decal provided by the Department with the licensing program logo and the year for which the License was granted; and(3) A complaint procedure poster or notice in at least 20 point bold face type using the form provided on the Department's website at https://www.tdhca.texas.gov/migrant-labor-housing-facilities, which is written in English and Spanish. However, at the request of a Provider or Worker, the Department, at its expense, will translate the poster to additional requested languages.(4) For hotels, the License and poster described in paragraph (3) of this subsection may be posted in the lobby or front desk area only if this area is clearly visible, allows for easy reading of the aforementioned documents, and is readily accessible to the hotel guests and general public. If the hotel refuses to allow this posting, the License and poster described in this paragraph then must be posted in each room used to house the Workers.</content><note type="source"><p>Source Note: The provisions of this §90.6 adopted to be effective July 4, 2024, 49 TexReg 4761; amended to be effective February 25, 2026, 51 TexReg 1044.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c90/sc/s90.7"><num value="90.7">§90.7</num><heading>Complaints</heading><content>(a) If the Department receives any complaint, it shall investigate it by appropriate means, including the conducting of a complaint inspection. Any complaint inspection will be conducted after giving the Provider notice of the inspection and an opportunity to be present. The complainant will be contacted by the Department as soon as possible but no later than 10 days after making a complaint and such a call may be relayed to local authority(s) if a possible life threatening safety or health issue is involved. Complaints received by the Department:(1) will be accepted through the Department 's Internet website, in person at any Department office, or by telephone to 1-833-522-7028, or written notice to the Department (either through mail or electronic mail); and(2) May be made in English, Spanish, or other language, as needed.(3) May only be submitted by:(A) An occupant of the Facility that is the subject of the complaint;(B) A prospective occupant of the Facility that is the subject of the complaint;(C) The Designated Representative of a person described by subparagraph (A) or (B) of this paragraph; or(D) An individual, including the owner or tenant of an adjacent property, that has observed a clear violation of this chapter.(b) On receipt of a complaint, the Department will not later than the fifth day after the date on which the Department receives a complaint, the Department shall notify the Provider by electronic mail that is the subject of the complaint. Notice under this subsection must include:(1) the date that the complaint was received;(2) the subject matter of the complaint;(3) the name of each person contacted in relation to the complaint, if any; and(4) the timeline for remedying a complaint that is not otherwise dismissed by the Department.(c) If the Department is unable to make contact with a Provider of a Facility for the purpose of serving a notification of a complaint, the Department shall serve the notification of the complaint via registered or certified mail, return receipt requested.(d) If the Department determines that a complaint is unfounded or does not violate the standards adopted by rule, the Department may dismiss the complaint and shall include a statement of the reason for the dismissal in the record of the complaint. The Department shall provide timely notice of any dismissal of the complaint, including the explanation for the dismissal, to the Provider of the Facility that is the subject of the complaint, and the complainant or their Designated Representative. (e) A Designated Representative may not be required to reveal the name of any Worker on whose behalf the representative submitted a complaint under this section if the Department reviews the written authorization establishing the representation and verifies that the representative is authorized to submit the complaint. The Department will verify the Designated Representative is authorized through the following process:(1) A written authorization must be submitted to the Department, using a Department-provided form or another document containing the following:(A) The name of the Designated Representative, their contact information, and the name of any applicable organization they are representing.(B) The complainant's name and contact information, if authorized to disclose.(C) Whether the complainant wishes and authorizes the Designated Representative to disclose their name.(D) The complainant's employer, contact information, and housing address.(E) The length of time the authorization is valid for, not to exceed one year, as well as the effective date of the authorization. (F) A list of the communications the Designated Representative is authorized to conduct on the complainant's behalf. (G) The signature of both the complainant and the Designated Representative. The complainant's signature may be redacted by the Designated Representative if confidentiality is requested.(2) If the written authorization indicates that a complainant wishes to maintain confidentiality, the Department will conduct a virtual conference (or, upon the request of the complainant, an in-person meeting that can occur during the complaint investigation including during a follow up inspection) with the Designated Representative and the complainant, to confirm the validity of the written representation authorization, and to discuss any other details of the authorization, as needed.(f) The Department may seek to protect the identity of any complainant from disclosure, but cannot guarantee a complainant's identity would not be subject to disclosure under the law. However, as stated and conditioned in subsection (e) of this subsection, a Designated Representative may not be required to reveal the name of any Worker on whose behalf the representative submitted a complaint.(g) A person who owns, establishes, maintains, operates, or otherwise provides a Facility, and a Person who employs a Worker who occupies a Facility may not retaliate against a person for filing a complaint or providing information in good faith relating to a possible violation of this chapter.(h) Remediation of a complaint:(1) Not later than the seventh day after the date that notice is received under Tex. Gov't Code §2306.934, the Provider of a Facility shall remedy the complaint.(2) Proof of remediation, at the Department's sole discretion and determination will be submitted in the form of visual evidence (such as photos/videos, invoices/receipts, etc.) and a sworn affidavit. A follow up inspection by the Department's designated inspectors, prior to the end of the prescribed corrective action period may also be proof of remediation.(3) For a Provider of a Facility who receives notice under Tex. Gov't Code §2306.934(e) or who does not submit proof of remediation in the manner provided by subsection (b) of this section, the Department shall have the Facility inspected as soon as possible following the seventh day after the date notice is received under Tex. Gov't Code §2306.934 to ensure remediation of the complaint.(i) Remediation of a Complaint Regarding Certain Violations: This section applies only to a complaint that alleges a violation that the Department determines poses an imminent hazard or threat to the health and safety of the occupants of the Facility, including violations of rules adopted by the Department concerning sanitation. Examples include but are not limited to: failure to provide minimum square footage per person, insufficient or substandard bedding, bed sharing, insufficient kitchen facilities or meals not provided and insufficient waste disposal and interruption in or access to water. (1) Subject to paragraph (3) of this subsection, not later than the 30th day after the date notice is received under Tex. Gov't Code §2306.934, the Provider of a Facility that is the subject of a complaint described by subsection (h) of this section shall remedy the complaint.(2) The Department may refer a complaint described herein to a local authority for immediate inspection of the Facility.(3) The Provider must relocate or provide for the relocation to another Facility of the occupants of a Facility that is the subject of a complaint under subsection (h) of this section if the remediation of that complaint is projected to take longer than a period of 30 days. The relocation must be completed within seven days. A Facility to which a Person is relocated under this subsection:(A) must meet the standards described in §90.4 of this chapter (relating to Standards and Inspections);(B) must be located in the same vicinity as the vacated Facility;(C) any moving expenses shall be paid by the Provider; and(D) Provider shall hand-deliver or send via certified mail, return receipt requested, a written notice in both English and Spanish (or any other language that may be the primary language of the workers involved). This notice shall be in plain language and detail timeframes, procedure for payments/reimbursements, likely time frames for moving, and all relevant phone numbers and other contact information, including the Department's complaint line. Providers must arrange a reader to communicate with illiterate Workers.(E) These relocation procedures and requirements shall not apply when the Workers housed are temporarily in the United States under an H-2A visa authorized by 8 U.S.C. Section 1101(a)(15)(H)(ii)(a).(j) The Department may conduct interviews, including interviews of Providers and Occupants, and review such records as it deems necessary to investigate a complaint.(k) Any violations not resolved in the time frame above will be subject to the enforcement procedure described in §90.8 of this chapter (relating to Civil Penalties and Sanctions).(l) Complaints regarding Migrant Labor Housing Facilities will be addressed under this section, and not §1.2 of this title (relating to Department Complaint System to the Department).</content><note type="source"><p>Source Note: The provisions of this §90.7 adopted to be effective July 4, 2024, 49 TexReg 4761; amended to be effective February 25, 2026, 51 TexReg 1044.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c90/sc/s90.8"><num value="90.8">§90.8</num><heading>Civil Penalties and Sanctions</heading><content>(a) When the Director finds that the requirements of the Act or these rules are not being met, he or she may assess civil penalties or impose other sanctions as set forth herein. Nothing herein limits the right, as set forth in the Act, to seek injunctive and monetary relief through a court of competent jurisdiction.(b) A civil penalty collected by the Department, the county attorney for the county in which the violation occurred, or the attorney general, at the request of the Department, shall be deposited to the credit of the general revenue fund and may be appropriated only to the Department for the enforcement of this chapter.(c) For violations that present an imminent threat to health or safety or if licensee has a history of violations, if not promptly addressed, the Director may suspend or revoke the affected License.(d) For violations that the Department determines poses an imminent hazard or threat to the health and safety of the occupants of the facility, including violations of rules adopted by the Department concerning sanitation, the Provider will need to follow the relocation procedure described in 10 TAC §90.7(i)(3) relating to situations and procedures needed when Workers have to be relocated to alternate housing.(e) For each violation of the Act or rules a civil penalty according to the attached penalty schedule but not less than $50 for each Person occupying the Facility in violation of this chapter for each day that the violation occurs will be assessed at the Department's sole determination.(f) An action to collect a civil penalty under this section may be brought by:(1) the Department through the contested case hearing process described by Tex. Gov't Code § 2306.930(b);(2) the county attorney for the county in which the violation occurred, or the attorney general, at the request of the Department; or(3) a Migrant Agricultural Worker if:(A) a complaint regarding the violation for which the civil penalty is sought has been submitted under Tex. Gov't Code §2306.934; and(B) at the time the complaint is submitted, the worker:(i) lives in the Facility that is the subject of the complaint; and(ii) is not temporarily in the United States under an H‐2A visa authorized by 8 U.S.C. Section 1101(a)(15)(H)(ii)(a).(g) An action to collect a civil penalty under this section may not be brought while:(1) a contested case hearing brought by the Department under Tex. Gov't Code §2306.930(b) and relating to the same Facility is pending;(2) an action for injunctive relief relating to the same violation is pending under Tex. Gov't Code §2306.932;(3) an action brought by a county attorney or the attorney general and relating to the same migrant labor housing facility is pending; or(4) the Provider of the Facility that is the subject of the action is:(A) Awaiting for the Facility to be inspected under Tex. Gov't Code §2306.935(c) to confirm remediation of the violation that is the subject of the action; or(B) providing housing at a Facility under Tex. Gov't Code §2306.936(d) to which the Migrant Agricultural Workers who occupied the Facility that is the subject of the action have been relocated under the procedures described in 10 TAC §90.7(i)(3).(h) A civil penalty under this section begins accruing on the earlier of:(1) for a violation with a remediation period described by Tex. Gov't Code §2306.935, the day that:(A) the Department determines based on information submitted under Tex. Gov't Code §2306.935(b) that the Provider has failed to remedy the violation; or(B) an inspection described by Tex. Gov't Code §2306.935(c) establishes that the Provider has failed to remedy the violation; or(2) for a violation with a remediation period described by Tex. Gov't Code §2306.936, the 31st day following the date that notification of the complaint is received from the Department, unless the Provider has relocated under Tex. Gov't Code §2306.936(d) the Migrant Agricultural Workers who occupied the Facility that is the subject of the complaint.(i) The Department shall issue a civil penalty invoice in accordance with the attached schedule for any findings of noncompliance that remain uncorrected as of the accrual dates noted above, provided that the TDHCA Compliance Division has not approved a corrective plan or extension. These invoices will be sent by electronic mail and USPS to the addresses provided on the most recent TDHCA license application. A civil penalty invoice must be paid within 30 days of issuance by the Department.(j) In the event that there are multiple findings of noncompliance subject to civil penalties that fall under multiple groups in the attached schedule, the civil penalty shall be for the higher penalty amount.(k) Failure to timely pay a civil penalty invoice shall cause the TDHCA Compliance Division to refer the unpaid invoice to the TDHCA Legal Division. The Legal Division will first attempt to resolve the matter informally. If the Legal Division is unable to resolve the matter informally, the Director, with the approval of the Board, shall cause a contested case hearing to be docketed before a SOAH administrative law judge in accordance with §1.13 of this title (relating to Contested Case Hearing Procedures), which outlines the remainder of the process. Alternatively, the Department may request that an action to collect the civil penalty be brought by the county attorney for the county in which the violation occurred, or the attorney general. (l) The court in a suit brought under this chapter may award reasonable attorney's fees to the prevailing party.(m) Civil penalties assessed regarding Migrant Labor Housing Facilities will be addressed under this section. Nothing herein limits the right, as set forth in the Act, to seek injunctive and monetary relief through a court of competent jurisdiction.</content><note type="source"><p>Source Note: The provisions of this §90.8 adopted to be effective July 4, 2024, 49 TexReg 4761; amended to be effective February 25, 2026, 51 TexReg 1044.</p></note></section><section identifier="/us/state/tx/tac/t10/p1/c90/sc/s90.9"><num value="90.9">§90.9</num><heading>Dispute Resolution, Appeals, and Hearings</heading><content>(a) A Licensee is entitled to appeal any order issued by the Director, including any order as a result of an inspection or a complaint and any order denying a License or issuing a License subject to specified conditions.(b) In lieu of or during the pendency of any appeal, a Licensee may request to meet with the Director or, at his or her option, his or her designee to resolve disputes. Any such meeting may be by telephone or in person. Meetings in person shall be in the county where the Facility affected is located, unless the Licensee agrees otherwise.(c) A Licensee may request alternative dispute resolution in accordance with the Department's rules regarding such resolution set forth at §1.17 of this title (relating to Alternative Dispute Resolution).(d) All administrative appeals are contested cases subject to, and to be handled in accordance with, Chapters 2306 and 2001, Tex. Gov't Code.</content><note type="source"><p>Source Note: The provisions of this §90.9 adopted to be effective July 4, 2024, 49 TexReg 4761; amended to be effective February 25, 2026, 51 TexReg 1044.</p></note></section></subchapter></chapter></part><part identifier="/us/state/tx/tac/t10/p5"><num value="5">PART 5</num><heading>OFFICE OF THE GOVERNOR, ECONOMIC DEVELOPMENT AND TOURISM OFFICE</heading><chapter identifier="/us/state/tx/tac/t10/p5/c174"><num value="174">CHAPTER 174</num><heading>ECONOMIC DEVELOPMENT ADVISORY COMMITTEES</heading><subchapter identifier="/us/state/tx/tac/t10/p5/c174/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p5/c174/sc/s174.1"><num value="174.1">§174.1</num><heading>Establishment of Advisory Committees</heading><content>(a) This chapter governs the creation and operation of advisory committees, except as otherwise provided by law or rule in this chapter. The purpose of an advisory committee is to make recommendations to the Economic Development and Tourism Office in the Office of the Governor (Office) on programs, rules, and policies administered by the Office. An advisory committee's sole role is to advise the Office. An advisory committee has no executive or administrative powers or duties with respect to the operation of the Office.(b) The Office shall establish advisory committees by rule in this chapter. An advisory committee is abolished on the fourth anniversary of the date of its creation unless the Office designates a different expiration date for an advisory committee, or an advisory committee has a specific duration prescribed by law.(c) The Chief of Staff of the Office of the Governor or designee will appoint members to an advisory committee based on advice and input from the Executive Director and staff of the Office. The appointees serve at the pleasure of the Chief of Staff of the Office of the Governor.(d) Each advisory committee will select from its members a chair to serve as a presiding officer, a vice-chair, and any other officers the members determine are necessary to achieve the purposes of the advisory committee.(e) An advisory committee must be composed of a reasonable number of members not to exceed twenty-four members. A quorum of an advisory committee consists of a majority of the number of members fixed by rule in this chapter. An advisory committee may act only by majority vote of the members present and voting at the meeting.(f) Advisory committee members:(1) shall serve two-year staggered terms;(2) must have knowledge about and interests in the specific purpose and tasks of an advisory committee established under this chapter;(3) are subject to the conflict-of-interest provisions established under chapter 481, Texas Government Code;(4) must complete training regarding the Open Meetings Act, chapter 551, Texas Government Code, and the Public Information Act, chapter 552, Texas Government Code; and(5) automatically vacate the positions to which they were appointed if they miss three or more consecutive advisory committee meetings, and the Chief of Staff or designee will appoint a new member to fill the remainder of the unexpired term created by the vacancy.(g) For each advisory committee established under this chapter, the Executive Director of the Office will designate a division of the Office that will be responsible for providing necessary administrative support essential to the functions of the advisory committee.(h) Advisory committee meetings shall:(1) relate to the business in an agenda and occur on the date, time, and place established by the division designated under subsection (g) of this section; and(2) be held at least annually.(i) For each advisory committee created under this chapter, the Office shall adopt rules that address the purpose and role of the advisory committee. The rules may address additional items, including membership qualifications, terms of service, operating procedures, and other standards to ensure the effectiveness of an advisory committee appointed under this chapter.(j) Office staff shall maintain minutes of each advisory committee meeting and distribute copies of approved minutes and other advisory committee documents to advisory committee members.(k) Office staff shall report an advisory committee's recommendations to the Executive Director or designee. The presiding officer of an advisory committee or designee may present the committee's recommendations to the Executive Director of the Office.(l) Members of an advisory committee will serve without compensation and shall not be reimbursed for expenses unless reimbursement is authorized by law and approved by the Executive Director.(m) The Office shall monitor the activities, work, usefulness, costs, Office staff time used to support, and composition of advisory committees.</content><note type="source"><p>Source Note: The provisions of this §174.1 adopted to be effective December 29, 2024, 49 TexReg 10627.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c174/sc/s174.2"><num value="174.2">§174.2</num><heading>International Business Advisory Committee</heading><content>(a) The Texas International Business Advisory Committee (IBAC) is established to assist the Office with the international trade relations and economic development in specific countries to benefit the State of Texas. The IBAC shall assist the Office, provide information, referrals, and recommendations to the Office to spur foreign trade and foreign direct investment to the State.(b) The IBAC shall be composed of no more than fifteen members, the presence of eight of whom constitutes a quorum. The Chief of Staff of the Office of the Governor will select IBAC members on basis of high-level business and government contact in a Country of Interest, business relationships in a Country of Interest, or specialized knowledge about or substantial experience with interacting with a Country of Interest.(c) For purposes of subsection (b) of this section, the Office will identify Countries of Interest through trade statistics and foreign direct investment figures and will communicate the Countries of Interest to the Chief of Staff of the Office of the Governor and IBAC members.</content><note type="source"><p>Source Note: The provisions of this §174.2 adopted to be effective December 29, 2024, 49 TexReg 10627.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p5/c175"><num value="175">CHAPTER 175</num><heading>DEFENSE ECONOMIC READJUSTMENT ZONES</heading><subchapter identifier="/us/state/tx/tac/t10/p5/c175/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p5/c175/sc/s175.1"><num value="175.1">§175.1</num><heading>Defense Economic Readjustment General Provisions</heading><content>(a) Introduction. Pursuant to the authority granted by the Defense Economic Readjustment Zone Act, Texas Government Code, Chapter 2310, and the Administrative Procedure Act, Texas Government Code, Chapter 2001, Subchapter B, as amended, the Economic Development and Tourism Office in the Office of the Governor (Office) prescribes the following sections regarding practice and procedure before the Office in the administration and implementation of the Readjustment Zone Program.(b) Purpose. It is the purpose of the Defense Economic Readjustment Zone Act to establish a process to identify areas impacted by defense base closure, downsizing, or realignment and to provide local and state regulatory and tax incentives to encourage businesses to locate or expand in these areas. The purpose of these sections is to provide standards of eligibility and procedures for applications for designating qualified areas as readjustment zones and for designating qualified businesses as readjustment projects.(c) Definition of terms. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:(1) Act--The Defense Economic Readjustment Zone Act, Texas Government Code, Chapter 2310.(2) Administrative authority--An administrative body that may be delegated responsibilities by the readjustment zone governing body. The administrative authority must:(A) be composed of 3, 5, 7, 9, 11, or 15 members;(B) be a viable and responsive body generally representative of all public or private entities that have a stake in the development of the zone; and(C) if the readjustment zone includes private residences, include:(i) an elected official representing readjustment zone residents and businesses; or(ii) at least two readjustment zone residents.(3) Adversely affected defense dependent community--A municipality or county is an adversely affected defense-dependent community if the Office determines that:(A) the municipality or county requires assistance because of:(i) the proposed or actual establishment, realignment, or closure of a defense facility;(ii) the cancellation or termination of a United States Department of Defense contract or the failure of the Department of Defense to proceed with an approved major weapon system program;(iii) a publicly announced planned major reduction in Department of Defense spending that would directly and adversely affect the municipality or county; or(iv) the closure or a significant reduction of the operations of a defense facility as the result of a merger, acquisition, or consolidation of a defense contractor operating the facility; and(B) the municipality or county is expected to experience, during the period between the beginning of the federal fiscal year during which an event described by subparagraph (A) of this paragraph is finally approved and the date that the event is to be substantially completed, a direct loss of:(i) 2,500 or more defense worker jobs in any area of the municipality or county that is located in an urbanized area of a metropolitan statistical area;(ii) 1,000 or more defense worker jobs in any area of the municipality or county that is not located in an urbanized area of a metropolitan statistical area; or(iii) 1.0% of the civilian jobs in the municipality or county.(4) Applicant--The municipality, county or combination of municipalities or counties filing an application with the Office for designation of a readjustment zone or nominating a business for designation as a readjustment project or a business filing for certification as a qualified business.(5) Application--An application, including supporting and supplemental instruments and documentation, for designation of a readjustment zone or readjustment project or for certification by the Office or local governing body as a qualified business under the Act and this chapter.(6) Day--The period of time between 8:00 a.m. and 5:00 p.m. Central Standard Time on any day other than a Saturday, Sunday, or state or federal holiday.(7) Defense worker--(A) an employee of the United States Department of Defense, including a member of the armed forces and a government civilian worker;(B) an employee of a government agency or private business, or an entity providing a department of defense related function, who is employed on a defense facility;(C) an employee of a business that provides direct services or products to the Department of Defense and whose job is directly dependent on defense expenditures; or(D) an employee or private contractor employed by the United States Department of Energy working on a defense or Department of Energy facility in support of a Department of Defense related project.(8) Defense worker job--A Department of Defense authorized permanent position or a position held or occupied by one or more defense workers for more than 12 months.(9) Extraterritorial jurisdiction--Territory in the extraterritorial jurisdiction of a municipality that is considered to be in the jurisdiction of the municipality as defined by Local Government Code, Chapter 42.(10) Governing body--The governing body of a municipality or county that has applied to have an area within its jurisdiction designated as a readjustment zone.(11) New permanent job--A new employment position created by a qualified business as described by Texas Government Code, §2310.302, that:(A) has provided at least 1,820 hours of employment a year to a qualified employee; and(B) is intended to exist during the period that the qualified business is designated as a defense readjustment project under Texas Government Code, §2310.306.(12) Nominating body--The governing body of a municipality or county, or a combination of the governing bodies of municipalities or counties, that nominates and applies for designation of an area as a readjustment zone.(13) Office--The Economic Development and Tourism Office in the Office of the Governor.(14) Qualified business--A person is a qualified business if the Office, for the purpose of state benefits under this chapter, or the governing body of a readjustment zone, for the purpose of local benefits, certifies that:(A) the person is engaged in or has provided substantial commitment to initiate the active conduct of a trade or business in the readjustment zone; and(B) at least 25% of the person's new employees in the readjustment zone are:(i) residents of the governing jurisdiction;(ii) economically disadvantaged individuals, as defined by Government Code, §2310.402(c); or(iii) dislocated defense workers.(15) Qualified employee--A person who:(A) works for a qualified business; and(B) performs at least 50% of the person's service for the business in the readjustment zone.(16) Qualified property--Any one or more of the following:(A) tangible personal property located in the zone that was acquired by the taxpayer not earlier than the 90th day before the date of designation of the area as a readjustment zone or readjustment project, as applicable, and was or will be used predominantly by the taxpayer in the active conduct of a trade or business;(B) real property located in a zone that:(i) was acquired by the taxpayer no earlier than the 90th day before the date of designation of the readjustment zone or readjustment project, as applicable, and used predominantly by the taxpayer in the active conduct of a trade or business; or(ii) was the principal residence of the taxpayer on the date of the sale or exchange; or(C) interest in a corporation, partnership, or other entity if, for the most recent taxable year of the entity ending before the date or sale or exchange the entity was a qualified business.(17) Readjustment project--A person designated by the Office as a readjustment project under Texas Government Code, Chapter 2310.(18) Readjustment zone--An area designated as a readjustment zone under Government Code, Chapter 2310.(19) Retained job--A job that existed with a business prior to designation as a readjustment project or certification as a qualified business that has provided employment to a qualified employee of at least 1,820 hours annually and that is intended to be an employment position retained during the period the business is designated a readjustment project or certified as a qualified business in accordance with Texas Tax Code, §151.4291.(20) Staff--The staff of the Office.(d) Amendment and suspension of rules. These sections may be amended by the executive director at any time in accordance with the Administrative Procedure Act, Texas Government Code, Chapter 2001, Subchapter B, as amended. The executive director may suspend or waive a section, not statutorily imposed, in whole or in part, upon the showing of good cause or when, at the discretion of the executive director, the particular facts or circumstances render such waiver of the section appropriate in a given instance.(e) Written communication with the Office. Applications and other written communications to the Office should be addressed to the attention of the Texas Defense Economic Readjustment Zone Program, Economic Development and Tourism Office, Office of the Governor, P.O. Box 12428, Austin, Texas 78711-2428.</content><note type="source"><p>Source Note: The provisions of this §175.1 adopted to be effective September 15, 1997, 22 TexReg 8961; amended to be effective August 5, 2012, 37 TexReg 5729.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c175/sc/s175.2"><num value="175.2">§175.2</num><heading>Eligibility Requirements for Designation of a Readjustment Zone</heading><content>(a) Criteria for Readjustment Zone Designation. To be designated as a readjustment zone, an applicant must make written application to the Office for designation of an area within the applicant's jurisdiction and meet the qualifications specified in the Act, §§2310.101, 2310.102, 2310.103 and 2310.104.(b) The governing body of a county may not nominate area in a municipality or a municipality's extraterritorial jurisdiction to be included in a readjustment zone unless the municipality is a joint applicant with the county.(c) Documentation. An application for readjustment zone designation must contain the information and documentation specified in the Act, including the source, methodology and certification of the data. The application must provide adequate documentation of defense worker job loss during the period between the beginning of the federal fiscal year during which the event described in the Act, §2310.102, occurred and the date that the event is substantially complete. In order to establish eligibility, this documentation must include:(1) defense worker baseline data representing the number of defense workers employed during the fiscal year of the event described above;(2) number of defense worker jobs lost during the period between the fiscal year that the event was announced and the date the event is substantially complete; and(3) total number of people currently employed within the jurisdiction making application.(d) Information from Department of Defense manpower or personnel records, socio-economic impact studies and Environmental Impact Statements, United States Census Bureau, Department of Labor, or the Texas Workforce Commission reports or statistics are considered possible acceptable source documents. Other data provided by the local governmental entity and approved by the Office may also serve as appropriate documented evidence of defense worker job loss.(e) Citizen participation. The Office will not approve the designation of an area as a readjustment zone unless:(1) The governing body of an applicant first notifies the Office of the date it will hold a public hearing as required under the Act, §2310.103, and this chapter for the purpose of nominating an area as a readjustment zone or to amend the boundaries of a designated readjustment zone by encompassing additional area into the readjustment zone. The notice to the Office shall be given in writing not less than seven days prior to the date of the public hearing; and(2) Notice of such hearing is given to the public by publishing once in a newspaper of general circulation in the municipality or county or combination of municipalities or counties and posting a copy of the same at the city hall or county courthouse not later than seven days prior to the date of the hearing. Such notice shall contain a description of the area proposed by the municipality or county or combination of municipalities or counties to be designated as a readjustment zone, and the date, time, and location of such hearing. The description of the area must be worded so that residents of the area and other interested parties may reasonably identify the area to be discussed at the public hearing. The notice shall also encourage all interested parties, including residents of the proposed readjustment zone to present their views at the hearing. The hearing must include a presentation on the proposed location of the readjustment zone and the provision for any tax or other incentives applicable to business enterprises in the readjustment zone. A municipality or county or combination of municipalities or counties must adopt the readjustment zone nominating ordinance or order within 180 calendar days of the date the last public hearing was held.</content><note type="source"><p>Source Note: The provisions of this §175.2 adopted to be effective September 15, 1997, 22 TexReg 8961; amended to be effective August 5, 2012, 37 TexReg 5729.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c175/sc/s175.3"><num value="175.3">§175.3</num><heading>Eligibility Requirements for Designation of a Readjustment Project</heading><content>(a) The Office may designate a qualified business as a readjustment project only if the Office determines that the applicant governing body and the qualified business meet the conditions specified in the Act, §§2310.301, 2310.302, 2310.303, and 2310.304.(b) The Office may designate at least one readjustment project located off of the defense facility. The Office may allow additional projects to be located off of the defense facility if requested by the governing body and approved by the Office.</content><note type="source"><p>Source Note: The provisions of this §175.3 adopted to be effective September 15, 1997, 22 TexReg 8961; amended to be effective August 5, 2012, 37 TexReg 5729.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c175/sc/s175.4"><num value="175.4">§175.4</num><heading>Application Contents for Designation of Readjustment Zones</heading><content>(a) For an area to be designated as a Readjustment Zone, the nominating body, after nominating the area as a readjustment zone, must send to the Office a written application for designation of the area as a readjustment zone with the information specified in the Act, §2310.105.(b) Documentation. An application for readjustment zone designation must contain the information and documentation specified in the Act. In addition, each application for designation of a readjustment zone or application to amend the boundaries of a designated readjustment zone must be typed directly on the form provided by the Office and must include all applicable attachments as specified in the application, including:(1) the name, physical address, mailing address, and telephone number of the applicant governing body or bodies, their designated representative and their liaison to communicate and negotiate with the Office and the administrative authority and its representative, if applicable;(2) information and documentation concerning the applicant. If a joint application is being submitted by a municipality and county, or a combination of municipalities and/or counties, the information must be provided for each entity. The information concerning the applicant must include:(A) a statement signed by the applicant certifying that the contents of the application are true and correct to the best information and belief of the applicant and that the applicant has read the Act and this chapter and is familiar with the provisions of the defense readjustment zone program;(B) a certified copy of the ordinance or order, as appropriate, of the governing body of the applicant nominating the area within its jurisdiction as a readjustment zone under the Act, containing the information set forth in the Act, §2303.104, and identifying by job title the liaison, liaisons, representative or representatives in accordance with paragraph (1) of this subsection. The ordinance or order must specify any incentives to be provided by the municipality or county to business enterprises in the readjustment zone. At least three incentives must be offered in the readjustment zone which are not offered elsewhere throughout the jurisdiction. At least one incentive must be financial in nature; and(C) if a joint application, a description and certified copy of the agreements between joint applicants providing for the joint administration of the readjustment zone.(3) information and documentation concerning administration of the zone:(A) a brief description of how the zone will be managed, including the unit or department within the municipality or county responsible for oversight of readjustment zone activities and person or persons responsible for readjustment zone administration within the municipality or county;(B) the procedures for negotiating with residents, community groups, and other entities affected by the readjustment zone and qualified businesses within the readjustment zone;(C) a description of the administrative authority, if any, including a list of members with representation as set forth in the Act, §2310.202; and(D) a description of the functions and duties of the administrator or administrative authority, if any, including decision-making authority and the authority to negotiate with affected entities; and(4) information and documentation concerning the proposed readjustment zone, including:(A) a map of the proposed readjustment zone location which clearly shows readjustment zone boundaries, including existing streets and highways, rail, and air facilities, and the area of the readjustment zone that contains area of an enterprise zone designated under Government Code, Chapter 2303;(B) certification of the geographic makeup of the proposed readjustment zone including the total square miles in the proposed defense readjustment zone, the total square miles of each applicant's jurisdiction, and the percentage of the jurisdiction in the readjustment zone;(C) a summary, in tabular form, of the data qualifying the area for a readjustment zone and supporting data as required by the Act and this chapter;(D) a statement setting forth the economic objectives, the current business and labor conditions, and the marketing strategy for the readjustment zone; and(E) an annualized seven-year estimate of the economic impact of the readjustment zone that reflects at least the number of jobs and capital investment expected as a result of the designation of the readjustment zone, considering all of the tax incentives, financial benefits, and programs contemplated, on the revenues of the municipality or county. The estimate must be provided in tabular form and must describe the basis and assumptions used.</content><note type="source"><p>Source Note: The provisions of this §175.4 adopted to be effective September 15, 1997, 22 TexReg 8961; amended to be effective August 5, 2012, 37 TexReg 5729.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c175/sc/s175.5"><num value="175.5">§175.5</num><heading>Application Contents for Designation of Defense Readjustment Projects</heading><content>(a) For a qualified business to be designated as a readjustment project, the nominating body, after nominating the area as a readjustment zone, must send to the Office a written application for designation of the qualified business as a readjustment project with the information specified in the Act, §2310.305.(b) Documentation. An application for readjustment project designation must contain the information and documentation specified in the Act. If a readjustment project application is being filed on behalf of a business to be located in an readjustment zone that was nominated by more than one governing body, the information must be included for each applicant governing body. In addition, the application must contain the following information and documentation, as applicable:(1) the name, physical address, mailing address, and telephone number for each of the following involved in the designation of qualified businesses as readjustment projects, including:(A) the applicant governing body, applicant governing body's representative, and its designated readjustment zone liaison;(B) the qualified business, qualified business's representative; and(C) if any, the administrative authority, the administrative authority's representative.(2) information and documentation concerning the applicant, including:(A) a statement signed by the qualified business and a statement signed by the applicant governing body or bodies certifying that the contents of the application are true and correct to the best information and belief of the qualified business and that the qualified business has read the Act and this chapter and is familiar with the provisions thereof;(B) a certified copy of a resolution from the applicant governing body or bodies nominating the qualified business for designation as a readjustment project and containing the findings required by the Act, §2310.302;(C) a complete description of the conditions in the zone that constitute it as an adversely affected defense dependent community under this Act, including:(i) the tabular summary from the appropriate readjustment zone application, or most recent readjustment zone amendment application, that demonstrates the project is located in a readjustment zone; and(ii) a city street map which clearly identifies the readjustment zone area and the location of the proposed readjustment project;(D) a description of each municipality's or county's procedures and efforts to facilitate and encourage participation by and negotiation between all affected entities in the readjustment zone in which the qualified business is located, including:(i) any agreements made since the designation of the readjustment zone between affected entities;(ii) minutes of meetings or other written documents that outline the means of establishing cooperation and communication between any affected entities in the readjustment zone where the readjustment project will be located and, if regular meetings are scheduled, when the meetings are scheduled to occur;(iii) a description of the business activity that has occurred within the last year of designation of the readjustment zone or within the last year prior to designation of the readjustment zone, if the readjustment zone has been designated for less than one year. This description must demonstrate the cooperation among the public and private sectors and information on the number of jobs created and retained and capital investment made as a result of the business activity;(E) a description of the local effort made by the municipality or county, the administrative authority, if any, and other affected entities to achieve development and revitalization of the readjustment zone as described in the Act. This includes a brief historical description of the trade and business conducted in the readjustment zone and a brief historical description of the qualified business' activities in other locations with respect to its location in the readjustment zone;(3) information and documentation concerning the proposed project, including:(A) a description and introduction of the business applying for the readjustment project designation, which includes:(i) a copy of the articles of incorporation filed with the Secretary of State of the State of Texas or the d.b.a. statement under which the business operates. The name under which the business is applying for designation must be the same as the business paying state taxes and creating and/or retaining jobs to obtain program benefits;(ii) the principal owners and history of the business;(iii) a corporate resolution that provides signatory authority to a person or persons to sign any contracts or forms on behalf of the business for the readjustment project application;(iv) the number of business locations, total sales, and number of employees in the State of Texas, the United States, and outside the United States; and(v) a description of the business' products and services;(B) the plans of the business for expansion, revitalization, and other activity in the zone for the five-year designation period of the project, including:(i) a description of the project location and intended use;(ii) a summary of short and long-term plans for expansion in the readjustment zone;(iii) the amount of capital investment to be made in the zone and the source of funding for the investment;(iv) the status of any required local, state, or federal permits or licenses that must be obtained to enable the project to be initiated and completed as represented in the defense readjustment project application;(v) a tabular summary of the classification titles and salary ranges of full-time, part-time, and seasonal jobs to be maintained, new jobs to be created, and jobs to be retained, if applying for retained job benefits; and(vi) the total projected annual payroll for the jobs that are being considered for benefit; and(C) commitments from the business that include:(i) a completed form, to be provided by the Office, certifying the business as a qualified business;(ii) a statement that the business is located entirely in the readjustment zone and that it will maintain separate payroll and tax records of the business activity conducted in the readjustment zone;(iii) the percentage of new or additional employees hired to occupy the jobs being claimed for benefit that are residents of any zone within the governing body's or bodies' jurisdiction or that are economically disadvantaged; and(iv) a description of the efforts of the business to develop and revitalize the defense readjustment zone as described in the Act, §2310.305.(c) A designated readjustment project may apply to the Office for a name change. To receive Office approval for a name change, the readjustment project must submit through the applicant governing body or bodies:(1) a written explanation by the designee of the reasons for the name change, the date the name change occurred, and any changes to the commitments made by the business in the original readjustment project application, if applicable;(2) a copy of the certificate of amendment to the articles of incorporation and the amended articles of incorporation filed with the secretary of state of the State of Texas or the d.b.a. statement under which the business operates, if applicable; and(3) written acknowledgment from the applicant governing body or bodies that it is aware of the name change for the readjustment project as a qualified business operating in an readjustment zone within its jurisdiction.(d) A lessee or purchaser of a qualified business which has been designated as a readjustment project may apply to the Office to assume the readjustment project designation of the business that is being leased or purchased. The request must be made through the appropriate readjustment zone governing body or bodies which must take official action, in the form of a resolution approving of the assumption of the readjustment project designation by the lessee or purchaser. The resolution should be submitted along with the following information to the Office:(1) a written commitment from the qualified business that is the designated project to the governing body or bodies of the readjustment zone where the project is located and to the Office to release all claim to the project designation and any benefits represented thereunder and agreeing to the assumption of the designation as of a specific date by the lessee or purchaser seeking to assume the designation;(2) a written certification from the lessee or purchaser on a form to be provided by the Office that the lessee or purchaser will be a qualified business under the Act, §2310.302;(3) a letter of commitment from the lessee or purchaser addressed to the readjustment zone governing body or bodies and to the Office like the letter of commitment filed in the original application for project designation by the initial qualified business. The letter should outline any modifications proposed by the lessee or purchaser to the original commitments made by the qualified business holding the project designation, including capital investment and jobs to be created, or retained, as applicable, and a statement as to why the assumption is essential to their operations in the readjustment zone; and(4) a copy of the lessee's or purchaser's articles of incorporation filed with the Secretary of State of the State of Texas or the d.b.a. statement under which the business operates and financial statements to satisfy concerns about the ability of the lessee or purchaser to fulfill its commitments.</content><note type="source"><p>Source Note: The provisions of this §175.5 adopted to be effective September 15, 1997, 22 TexReg 8961; amended to be effective August 5, 2012, 37 TexReg 5729.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c175/sc/s175.6"><num value="175.6">§175.6</num><heading>Filing Requirements for Applications and Claims</heading><content>(a) Form. Readjustment zones and readjustment zone projects.(1) An application must be filed on letter-sized paper and must contain all information and documentation required under the Act and this chapter, as applicable. The application must be submitted in a three-ring loose-leaf binder. Each application for designation as a readjustment zone, for readjustment zone boundary amendments, or for a readjustment project must be typed directly on the form provided by the Office and must include all applicable attachments as specified in the application.(2) Certifications or refunds. An application to request refunds, credits, tax reductions, or certification of new permanent jobs created or jobs that have been retained, or other state benefits encouraged under the Act, as appropriate, must be made to the Office in writing on the appropriate forms provided by the Office or the Comptroller of Public Accounts.(b) Filing.(1) Readjustment zone applications may be filed with the Office on any day. When applying for designation of a readjustment zone, or applying for readjustment zone boundary amendments, or a readjustment project, the applicant shall file a separate, original application with the Office.(2) Readjustment projects. Applications for readjustment project designation may be filed with the Office on any day. The applicant shall file with the Office an original of an application for designation as a readjustment project.(3) Certifications for readjustment projects.(A) Requests for job certifications for readjustment projects may be filed on any day with the Office annually or semiannually at the discretion of the qualified business holding project status.(B) A readjustment project must be annually certified by the Office as a qualified business to receive its state sales and use tax refunds and franchise tax reductions.(C) Requests for refunds for readjustment projects should be filed directly with the comptroller in accordance with the applicable comptroller rules.(4) Certifications for qualified businesses. The certification of qualified businesses, for the purposes of local benefits, is the responsibility of the local governing body.(5) Forms. One original form must be submitted to the Office to request certification as a qualified business, to request certification of new permanent jobs created or to request certification of retained jobs. One original form as provided by the comptroller should be submitted to the comptroller to request refunds of state sales and use taxes. The rules promulgated by the comptroller must also be followed to file a claim for tax refunds or reductions.(c) Completeness. Each application or claim must be as complete as practicable, and must include the fee set forth in subsection (d) of this section. The Office will stamp or otherwise designate the date on which it receives each application. The date stamped or otherwise designated for any application received after the close of business on any day will be the next day.(d) Fees. A nonrefundable fee, in the form of a cashiers check made payable to the Office of the Governor to recover the Office's cost of providing direct technical assistance relating to the defense readjustment zone program, must accompany an application to the Office in the amount of:(1) $500 for a readjustment zone designation;(2) $500 to amend the boundaries of a state designated readjustment zone;(3) $500 for a readjustment project designation; and(4) $500 for application to change/assume readjustment project designation as defined in §175.5(c) and (d) of this title (relating to Application Contents for Designation of Defense Readjustment Projects).(e) Staff consideration of applications.(1) Staff shall review the application to determine if the application request meets the eligibility criteria under the Act and this chapter. A job certification application submitted by a readjustment project may cover any consecutive twelve-month period even if it includes multiple calendar years. Businesses applying for designation and job certifications are subject to on-site inspection. The Office may monitor a defense readjustment project to determine whether and to what extent the project has followed through on any commitments made by it or on its behalf under the Act, §2310.413.(2) Following staff review, the application will be submitted to the executive director for consideration. Written notification will be given to applicants of the final status of an application or job certification.(3) Readjustment project designation becomes effective immediately upon Office approval of a readjustment project application and action to grant the designation. Written notice of the designation will simultaneously be given to the applicant governing body's or bodies' designated liaison or liaisons and the defense readjustment project applicant. The notice will include an effective date and an expiration date of the project designation which shall include the 90-day period immediately preceding the designation during which benefits under the designation may be allowed.</content><note type="source"><p>Source Note: The provisions of this §175.6 adopted to be effective September 15, 1997, 22 TexReg 8961; amended to be effective January 1, 2003, 27 TexReg 12186; amended to be effective August 5, 2012, 37 TexReg 5729.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c175/sc/s175.7"><num value="175.7">§175.7</num><heading>Requirements for Designation of Readjustment Projects</heading><content>(a) The Office may not designate a nominated qualified business as a readjustment project unless it determines that:(1) the business meets the requirements set forth in the Act, §2310.301, and this chapter;(2) the qualified business is located in or has made substantial commitment to locate in a readjustment zone;(3) the project demonstrates viability as determined by the Office;(4) the applicant's governing body or bodies have demonstrated that a high level of cooperation between public, private, and neighborhood entities exists in the zone; and(5) the designation of the qualified business as a readjustment project will contribute significantly to the achievement of the plans of the applicant for development and revitalization of the zone.(b) The Office will use the scoring mechanism set forth in the Act, §2310.306, making readjustment project designation decisions.(c) The Office may approve the assumption of a readjustment project that leases or transfers ownership to another entity that will continue operations in the readjustment zone in the same way that was originally committed to in the initial readjustment project application or which otherwise demonstrates to the satisfaction of the Office that the designation assumption is warranted to avoid disruption of operations and loss of jobs.</content><note type="source"><p>Source Note: The provisions of this §175.7 adopted to be effective September 15, 1997, 22 TexReg 8961; amended to be effective August 5, 2012, 37 TexReg 5729.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c175/sc/s175.8"><num value="175.8">§175.8</num><heading>Approval Standards</heading><content>(a) Final approval standards for designation of readjustment zones. Within ten business days of final approval of the designation of a zone by the executive director, the staff shall present the negotiated agreement to the governing body or bodies of the applicant. Such agreement must include designation of the zone and the administrative authority, if any, and its function and duties and any other information required under the Act and this chapter. The Office shall complete the negotiations and sign the agreements in accordance with the Act, §2310.107.(b) Period for which designation is in effect.(1) An area may be designated as an readjustment zone for a maximum period of seven years. Any designation of an area as a readjustment zone shall remain in effect during the period beginning on the date of the designation and ending on the earliest of:(A) September 1 of the seventh calendar year following the calendar year in which such date ending the readjustment zone designation occurs; or(B) following a public hearing, the date the Office removes the designation of zone for the following reason:(i) the area no longer qualifies for designation as an readjustment zone as set forth in the Act, §2310.102, or this chapter; or(ii) the Office determines that the governing body has not complied with commitments made in the ordinance or order nominating the area as a readjustment zone.(2) A qualified business may be designated as an readjustment project for a maximum period of five years. The designation of a qualified business as an readjustment project shall remain in effect during the period beginning on the date of the designation and ending on the earliest of:(A) five years after the date the designation is made; or(B) the last day that completes the original project designation period of a qualified business that has assumed the designation of the readjustment project through a lease or purchase of a designated qualified business for the purpose of continuing its operations in the applicable readjustment zone under a name or legal structure other than that of the qualified business originally receiving the designation and that has met the requirements of the Office to qualify for the assumption, as specified under §175.5(d) of this title (relating to Application Contents for Designation of Defense Readjustment Projects). The assumption of a project designation or a name change by a qualified business does not extend the original designation period, which is applicable to the original and subsequent designee, and which will end on the earliest of the last day of the original five-year designation; or(C) following a public hearing by the governing body or bodies that nominated the qualified business for readjustment project designation, the date the Office determines that the qualified business is not in compliance with any requirement for designation as an readjustment project. The governing body or bodies will be deemed to have held a public hearing if the removal of the designation of an readjustment project is included as an agenda item of a regular session in which the governing body or bodies meet to take official action. The Office will act to dedesignate a readjustment project upon the written request of a governing body or bodies after:(i) the governing body or bodies has provided written notice to the qualified business that has been designated a readjustment project, 30 calendar days in advance of the proposed action, that the governing body or bodies is initiating proceedings to remove the readjustment project designation. The notice must specify the reason why the governing body or bodies believes the readjustment project is in noncompliance and specify the time, date, and location where the readjustment zone governing body or bodies plans to take official action to request the Office to remove the readjustment project designation. A copy of the notice and copies of any written responses to the notice by the qualified business must be provided to the Office; and(ii) a public hearing is held and a resolution adopted that requests the Office to remove the readjustment project designation as of a specific date. The resolution must specify the conditions that caused the dedesignation process to be initiated and include a finding that written notice as specified under this chapter has been given.(3) Following the governing body's or bodies' written request to the Office to dedesignate a readjustment project, the qualified business may appeal the governing body's or bodies' action to the Office's executive director. Such appeal must be made in writing within 30 days of the governing body's or bodies' written request to the Office for dedesignation. Upon receipt of such appeal, the executive director shall act upon the appeal within 30 days from the date the appeal is received.</content><note type="source"><p>Source Note: The provisions of this §175.8 adopted to be effective September 15, 1997, 22 TexReg 8961; amended to be effective August 5, 2012, 37 TexReg 5729.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c175/sc/s175.9"><num value="175.9">§175.9</num><heading>Reporting Requirements</heading><content>(a) The governing body of a readjustment zone shall report to the Office annually, according to the requirements of the Act, §2310.204, on a form required by the Office. If such report is not received by the deadline, the Office may, following a public hearing, consider termination of the designation of the readjustment zone.(b) The information in the report will be used by the Office to compile an annual report to the governor, legislature, and the legislative budget board by December 1 of each year as required by the Act, §2310.052.(c) The applicant shall furnish additional information, reports, or statements as the Office may from time to time request in connection with the Act and this chapter.</content><note type="source"><p>Source Note: The provisions of this §175.9 adopted to be effective September 15, 1997, 22 TexReg 8961; amended to be effective August 5, 2012, 37 TexReg 5729.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p5/c176"><num value="176">CHAPTER 176</num><heading>ENTERPRISE ZONE PROGRAM</heading><subchapter identifier="/us/state/tx/tac/t10/p5/c176/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p5/c176/sc/s176.1"><num value="176.1">§176.1</num><heading>General Provisions</heading><content>(a) Purpose. It is the purpose of the Texas Enterprise Zone Act to establish a process that clearly identifies distressed areas and provides incentives by both local and state government to induce private investment in those areas by the provision of tax incentives and economic development program benefits for the creation and retention of high quality jobs. Under this program, economic development is encouraged by allowing enterprise projects to be designated outside of an enterprise zone, with a higher threshold of hiring economically disadvantaged, enterprise zone residents, or veterans. The rules in this chapter provide standards of eligibility and procedures for designation of applications for qualified businesses as enterprise projects. (b) Definition of terms. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. (1) Act--The Texas Enterprise Zone Act, Chapter 2303, Texas Government Code, as amended. (2) Active designation--The period of time from the designation date to the ending date of the project or activity as provided in the nominating ordinance, order or resolution. (3) Applicant--The municipality or county filing an application with the Bank on behalf of a qualified business for designation of an enterprise project under the Act, §2303.405, and this chapter. (4) Application date--The first business day of the months of September, December, March and June, if there are designations available. (5) Approval date--The application date of an enterprise project as approved by the Bank. (6) Capital investment--Money paid to purchase capital assets to be used in the regular conduct of the business or activity at the qualified business site, or fixed assets including but not limited to land, buildings, labor used to construct or renovate a capital asset, furniture, manufacturing machinery, computers and software, or other machinery and equipment. Expenditures for routine and planned maintenance required to maintain regular business operations are only considered qualified capital investment if there will be a measurable increase in production capacity or if the expenditures will result in increased productivity which may be expressed as a decrease in the overall cost per unit produced, and are limited to 40 percent of the total capital investment spent at the qualified business site. Property that is leased under a capitalized lease is considered a qualified capital investment but property that is leased under an operating lease is not considered a qualified capital investment. (7) Claim period--A twelve-month period, during the active designation period, for which hours are accumulated by qualified employees to be claimed for benefit. (8) Concurrent designation--Two enterprise project designations for the same qualified business at the same qualified business site for separate projects or activities, with overlapping designation periods. (9) Controlled group--A group of businesses as defined in Title 26, Subtitle A, Subchapter B, Part II, Section 1563(a), Internal Revenue Code, or business entities with the same ownership. (10) Director--The Director of the Texas Economic Development Bank. (11) Distressed county--A county that has a poverty rate above 15.4 percent based on the most recent decennial census; in which at least 25.4 percent of the adult population does not hold a high school diploma or high school equivalency certificate based on the most recent decennial census; and that has an unemployment rate that has remained above 4.9 percent during the preceding five years, based on Texas Workforce Commission data. (12) Economic Development and Tourism--Economic Development and Tourism Office in the Governor's Office (Office) as established under Chapter 481, Texas Government Code. (13) Eligible taxable proceeds--Taxable proceeds generated, paid, or collected by a qualified hotel project or a business at a qualified hotel project including hotel occupancy taxes, ad valorem taxes, sales and used taxes, and mixed beverage taxes. (14) Enterprise project--A designation given to a qualified business by the Bank under the Act, §2303.406, and §176.3 of this title (relating to Qualification for Designation of Enterprise Projects) making the qualified business eligible for the state tax incentives provided by law for an enterprise project. (15) Executive Director--The Executive Director of the Office. (16) Extraterritorial jurisdiction--Territory in the extraterritorial jurisdiction (ETJ) of a municipality that is considered to be in the jurisdiction of the municipality, as defined by Chapter 42, Local Government Code. (17) Governing body--The governing body of a municipality or county participating in the program. (18) Governing body liaison--The person who holds the position set out in the ordinance or order indicating participation in the program, for the municipality or county to communicate and negotiate with the Bank or Office, qualified businesses nominated to be enterprise projects and any other entities affected by the enterprise zone. (19) Local government--A municipality or county. (20) Local incentive--Each tax incentive, grant, other financial incentive or benefit, or program to be provided by the governing body to business enterprises through the program. (21) Ninety-day window--The period 90 business days prior to the quarterly application deadline date for which an enterprise project is approved. The period of time in which the project may begin making investment and creating jobs for purposes related to the enterprise project designation. (22) Nominating body--The governing body of a municipality or county that nominated a project or activity of a qualified business for designation as an enterprise project which is located within the jurisdiction of that governing body. (23) Primary job--A job to be created or retained for benefit by a designated enterprise project, as defined by the Development Corporation Act of 1979. (24) Qualified property--Any one or more of the following: (A) tangible personal property located at the qualified business site that was acquired by a taxpayer not earlier than the 90th day before the date of designation as an enterprise project and was or will be used predominantly by the taxpayer in the active conduct of a trade or business; (B) real property located at a qualified business site that: (i) was acquired by the taxpayer not earlier than the 90th day before the date of designation of the enterprise project, and used predominantly by the taxpayer in the active conduct of a trade or business; or (ii) was the principal residence of the taxpayer on the date of the sale or exchange; or (C) interest in a corporation, partnership, or other entity if, for the most recent taxable year of the entity ending before the date of sale or exchange, the entity was a qualified business. (25) Staff--The staff of the Texas Economic Development Bank. (26) Undocumented worker--An individual who, at the time of employment, is not: (A) lawfully admitted for permanent residence to the United States; or (B) authorized under law to be employed in that manner in the United States. (c) Amendment and suspension of the rules. These sections may be amended by the executive director at any time in accordance with the Administrative Procedure Act, Texas Government Code, Subchapter B, as amended. The executive director may suspend or waive a section, not statutorily imposed, in whole or in part, upon the showing of good cause or when, at the discretion of the executive director, the particular facts or circumstances render such waiver of the section appropriate in a given instance. (d) Written communication with the office. Applications and other written communications to the office must be submitted electronically in the manner specified by the office.(e) Fees. On a regular basis, the bank will review all application fees with regard to the program and make adjustments as needed to further the purposes of the program.</content><note type="source"><p>Source Note: The provisions of this §176.1 adopted to be effective May 28, 2006, 31 TexReg 4420; amended to be effective November 10, 2011, 36 TexReg 7545; amended to be effective September 10, 2025, 50 TexReg 5932.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c176/sc/s176.2"><num value="176.2">§176.2</num><heading>Participation in the Program</heading><content>(a) Participation. A local government that seeks to participate in the program must submit to the Bank the following: (1) A copy of all public hearing notices posted in compliance with the requirements set forth in subsection (b) of this section. (2) A certified copy of the ordinance or order, as appropriate that: (A) outlines the local incentives that are offered in the enterprise zone area or areas within its jurisdiction; (B) identifies, by position, a liaison to oversee, communicate and negotiate with the bank, qualified businesses nominated to be enterprise projects, and any other entities effected by the enterprise zone; (C) states the date a public hearing was conducted with respect to local incentives offered, prior to passing the ordinance or order; (D) nominates the qualified business for enterprise project designation; (E) state the type of project requested, i.e. single, half, double jumbo or triple jumbo enterprise project; (F) states whether the qualified business is located in an enterprise zone; and (G) is finally adopted no later than the day of the deadline for which the project will be submitted. (3) A certified copy of the minutes of all public hearings held with respect to local incentives available to business enterprises within the jurisdiction of the governmental entity wishing to participate in the program. (4) The name, title, address, telephone number, and electronic mail address of the nominating body's liaison. (5) Provide a summary of the economic objectives to revitalize the jurisdiction, as well as a description of the efforts made to develop and revitalize the jurisdiction of the governing body. (b) Before the seventh calendar day prior to a public hearing, a local government that seeks to participate in the program must provide notice of the date, time, and location of the public hearing; the name and address of the proposed project; and the designation being sought and notice that tax incentives will be considered, if applicable. The local government must provide the notice in all the following places:(1) public posting at city hall or county courthouse, as applicable; (2) a newspaper of general circulation for the area; and (3) written notice to the Bank.</content><note type="source"><p>Source Note: The provisions of this §176.2 adopted to be effective May 28, 2006, 31 TexReg 4420; amended to be effective November 10, 2011, 36 TexReg 7545; amended to be effective September 10, 2025, 50 TexReg 5932.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c176/sc/s176.3"><num value="176.3">§176.3</num><heading>Qualification for Designation of Enterprise Projects</heading><content>(a) The Bank may not designate a nominated qualified business as an enterprise project unless it determines that: (1) the business meets the requirements set forth in the Act, §2303.402, and this chapter; (2) the qualified business is located in, or has made substantial commitment to locate in an enterprise zone or at a qualified business site; (3) the applicant's governing body has not reached the maximum number of designations allowed during the biennium; (4) the applicant's governing body has demonstrated that a high level of cooperation exists between public and private entities; (5) the designation of the qualified business as an enterprise project will contribute significantly to the achievement of the plans of the applicant for development and revitalization of the area; (6) the designation of the qualified business as an enterprise project will further the public purposes of the Act and significantly benefit the goals of the program which include, but are not limited to, high impact projects or activities, targeted industry clusters and creation of primary jobs; and (7) the applicant's governing body is in compliance with the Act. (b) For job creation, a qualified business must seek to create new jobs, or for an existing business, must seek to expand and increase their current level of employment in Texas. The program, however, does not allow benefit for moving existing jobs from one municipality or county in Texas to another within the state. (c) For job retention, a qualified business must submit to the governing body a written request for the retained job benefit with documentation verifying which criteria is applicable. The governing body must authenticate the documentation. A copy of the request from the qualified business requesting the retained jobs benefit to the governing body, as well as the backup documentation, must be attached to the application under the applicable Tab. The governing body liaison must verify that the documentation meets at least one requirement for the retained jobs benefit on the application form. In any case, for job retention, the qualified business must maintain the same level of employment that existed 90 days prior to the date of designation. Documentation that the level of employment has been maintained must be submitted with the job certification application to the Comptroller of Public Accounts. Any of the retained jobs that are subsequently vacated must meet the 25% or 35% economically disadvantaged, enterprise zone resident, or veteran hiring requirement, as applicable, when the vacant position is filled. The retained job benefit may not be used to receive benefit for moving existing jobs from one municipality or county in Texas to another within the state. (d) Municipalities or counties with a population of 250,000 or more, based on the most recent decennial census, are eligible for up to nine enterprise project designations during a state biennium based upon availability. (e) Municipalities or counties with a population of less than 250,000, based on the most recent decennial census, are eligible for up to six enterprise project designations during a state biennium based upon availability. (f) The Bank may not allocate more than 12 project designations during a quarterly round unless there were fewer than 12 project designations allocated during a previous round in the biennium to offset the difference. The Bank may allocate the remaining nine designations during any round, and may award a designation to a lower scoring project over and above a higher scoring project if it proposes to create a significant number of new jobs and makes a substantial capital investment. (g) The governing body of a county may nominate for designation as an enterprise project a project or activity of a qualified business that is located within the jurisdiction of a municipality located in the county.</content><note type="source"><p>Source Note: The provisions of this §176.3 adopted to be effective May 28, 2006, 31 TexReg 4420; amended to be effective November 10, 2011, 36 TexReg 7545; amended to be effective January 4, 2015, 39 TexReg 10420; amended to be effective September 10, 2025, 50 TexReg 5932.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c176/sc/s176.4"><num value="176.4">§176.4</num><heading>Application for Designation of Enterprise Projects</heading><content>(a) An application must be submitted through the online portal and must contain all information and documentation required under the Act and this chapter, as applicable. Each application for enterprise project designation must be typed directly on the form provided by the Bank. (b) An application that is submitted with four or more material deficiencies will be declined as incomplete. Material deficiencies are items such as the governing body application certification, the qualified business application certification, or any other required tabbed item. (c) The applicant shall file with the Bank one original application for designation as an enterprise project. All applications for enterprise project designation must be received by the Office no earlier than one week before, and no later than 11:59 p.m. Central Standard Time, on the first business day of the following months: September, December, March and June. Further, all applications include a non-refundable application fee in the form of a certified check or money order made payable to the Office of the Governor. The application is not considered to be received unless it is received on the online portal with the non-refundable application fee submitted under separate cover to Office of the Governor, Economic Development and Tourism, Texas Economic Development Bank, Attn: Financial Services, Post Office Box 12428, Austin, Texas 78711. The application fee must clearly show the name of the nominating jurisdiction, as well as the name of the qualified business. Both the application and the application fee must be received by the application deadline. Applications received after a deadline will not be accepted, and must be resubmitted to the Bank in the prescribed timeframe to be considered for designation during the next application deadline. (d) Applications received during a quarterly round will be reviewed and scored by the Bank in accordance with the Act, this chapter and the goals of the program. (e) The application for designation of an enterprise project must contain the following information and documentation, as applicable: (1) The participants. The application must contain the name, street address, mailing address, telephone number, and electronic mail address for each of the following involved in the designation of a qualified business as an enterprise project: (A) the applicant governing body and the applicant governing body's liaison; and (B) the qualified business, the primary business's representative and the local business liaison. The local business liaison must be located at the qualified business site. (2) The applicant. The application must contain the following information and documentation concerning the applicant: (A) a statement signed by the governing body liaison certifying that the contents of the application are true and correct to the best information and belief of the liaison, and that he or she has read the Act and this chapter and is familiar with the provisions thereof; (B) a certified copy of the nominating ordinance or order under §176.2(a)(2) of this title (relating to Participation in the Program), or if an ordinance or order has already been passed nominating a project for designation, a certified copy of a resolution from the applicant governing body nominating the qualified business for designation as an enterprise project and containing: (i) nomination of the project or activity as an enterprise project; (ii) a statement as to whether the project or activity is located in an area designated as an enterprise zone, and, if applicable, that the project is located in an area that is also designated as a defense base development authority established under Chapter 379B, Local Government Code, a federal empowerment zone, a federal enterprise community, or a renewal community; (iii) reference by number to the nominating ordinance or order indicating participation in the program, with a statement that the local incentives described in the previously issued ordinance or order electing to participate in the enterprise zone program are the same as those made available to the project or activity; (iv) the active designation period of the project; and (v) if the project or activity is nominated as a double jumbo enterprise project or a triple jumbo enterprise project, a statement that the designation will count as two or three designations, respectively, against the total number of designations allowed, as applicable. (C) the block group of the primary business address of the qualified business site, verifiable by the local appraisal district; (D) the poverty rate for the block group of the primary business address of the qualified business site, or the poverty rate of the distressed county in which the qualified business site is located; (E) an official census map, which clearly identifies the location of the proposed project and the census area where it is located; (F) a description of the municipality's or county's procedures and efforts to facilitate and encourage participation by and negotiation between all affected entities in the jurisdiction in which the qualified business is located including a description of the business activity that has occurred in the area within the last year. This description must demonstrate the cooperation among the public and private sectors; (G) a description of the local effort made by the municipality or county and other affected entities to achieve development and revitalization of the area as described in the Act, §2303.405(c). This includes a brief historical description of the trade and business conducted in the area. (3) The project. The application must contain the following information and documentation concerning the proposed project: (A) a statement signed by the primary business representative and the local business liaison certifying that the contents of the application are true and correct to their best information and belief, and that they have read the Act and this chapter and are familiar with the provisions thereof; (B) a description and introduction of the business applying for the project designation, which includes: (i) a copy of the articles of incorporation, or the dba statement under which the business operates, filed with the Secretary of State of the State of Texas. The name under which the business is applying for designation must be the same as the business paying state taxes and creating and/or retaining jobs to obtain program benefits; (ii) the principal owners and history of the business; (iii) a resolution for corporations or a certificate of authority that provides signatory authority to a person or persons to submit the enterprise project application and sign any contracts or forms on behalf of the business for the enterprise project; (iv) the number of business locations, total sales, and number of employees in the State of Texas, the United States, and outside the United States; (v) the federal tax identification number, and/or the Texas Comptroller tax identification number, as applicable, for all participating entities of a controlled group; (vi) a description of the business' products and services, including NAICS code; (vii) a description of the business' export history, if applicable; and (viii) an organizational chart that indicates the business structure, as well as the role of each entity participating in the project; (C) the plans of the business for expansion, revitalization, and other activity at the qualified business site for the designation period of the project including: (i) a description of the project location and intended use; (ii) a summary of short and long-term plans for expansion at the qualified business site; (iii) the amount of capital investment to be made at the qualified business site during the designation period; (iv) the status of any required local, state or federal permits or licenses that must be obtained to enable the project to be initiated and completed as represented in the enterprise project application; (v) a tabular summary of the current number of full-time, part-time jobs which includes the titles and/or Standard Occupational Classification by six-digit code and salary ranges of jobs to be maintained at the qualified business site. Full-time positions will be used for baseline information; (vi) a tabular summary of the number of new full-time jobs, the titles and/or Standard Occupational Classification by six-digit code and salary ranges of full-time jobs to be created; (vii) a tabular summary of the number of full-time jobs, the titles and/or Standard Occupational Classification by six-digit code and salary ranges of full-time jobs to be retained, if applying for retained job benefit; and (viii) the total projected annual payroll for the jobs that are being considered for benefit; (D) commitments from the business that include: (i) a completed form provided by the Bank, certifying the business as a qualified business; (ii) a statement from a franchise or subsidiary, if applicable, stating that the business will maintain separate payroll and tax records of the business activity conducted at the qualified business site; (iii) the percentage of new or additional employees hired to occupy the jobs being claimed for benefit that are residents of any enterprise zone in the state, that are economically disadvantaged, or that are veterans; (iv) a description of the efforts of the business to develop and revitalize the area as described in the Act, §2303.405(e); and (v) a statement certifying that the business, or a branch, division, or department of the business, does not and will not knowingly employ an undocumented worker. (f) Concurrent enterprise project designations. A qualified business that currently has an enterprise project designation may apply for one additional enterprise project designation at the same qualified business site. To receive the additional enterprise project designation the governing body must complete an enterprise project application with all of the required nominations and attachments. Additionally, the application must include a breakdown of capital investment and new and/or retained jobs for each designation, clearly delineating what capital investment and jobs will apply to which designation, with timelines for all. (g) Name change. If the name of a qualified business that has received an enterprise project designation has changed, the Bank may approve the name change for the enterprise project designation. The designated enterprise project must apply for a name change to the Bank no later than 18 months after the enterprise project designation expires, or the business will not be eligible for program benefits. The name change of a project designation by a qualified business does not extend the original designation period, which is applicable to the original and subsequent designee, and which will end on the last day of the original designation period. The receive Bank approval for a name change, the qualified business must submit through the applicant governing body: (1) a completed Name Change Application, along with a non-refundable cashiers check or money order made payable to Office of the Governor, for a processing fee; (2) a written explanation by the designee of the reasons for the name change, the date the name change occurred and any changes to the commitments made by the business in the original enterprise project application, if applicable; and (3) written acknowledgment from the applicant governing body that it is aware of the name change for the project as a qualified business operating at the qualified business site within its jurisdiction. (h) Assignment or Assumption. The Bank may approve the assignment or assumption of a state-designated enterprise project that has transferred through a sale to another entity that will commit to continue operations at the qualified business site in the way originally committed within the initial enterprise project application, or which otherwise demonstrates to the satisfaction of the Bank that the assignment or assumption is warranted to avoid disruption of operations and loss of jobs. The transfer of a project designation by a qualified business does not extend the original designation period, which is applicable to the original and subsequent designee and which will end on the last day of the original designation period. The designated enterprise project must apply to the Bank, through the appropriate governing body, for designation assignment or assumption no later than 18 months after the enterprise project designation expires, or the business will not be eligible for program benefits. The following must be submitted through the applicant governing body to the Bank: (1) official action by the governing body in the form of a resolution approving the transfer of the enterprise designation to the purchaser; (2) a completed Enterprise Project Assignment Application, along with a non-refundable cashiers check or money order made payable to Office of the Governor for a processing fee; (3) a written relinquishment from the designated project's qualified business to the governing body and Bank to release all claim to the project designation and any benefits represented thereunder and agreeing to the assignment of the designation as of a specific date by the purchaser seeking to assume the designation; (4) a written certification from the purchaser on a form to be provided by the Bank that the purchaser will be a qualified business under the Act, §2303.402; (5) a letter of commitment from the purchaser addressed to the governing body and the Bank in the same format as the letter of commitment filed in the original application for project designation by the initial qualified business. The letter should outline any modifications proposed by the purchaser to the original commitments made by the qualified business holding the project designation, including capital investment and jobs to be created or retained, as applicable, and a statement as to why the assignment is essential to their operations at the qualified business site; (6) a Comptroller of Public Accounts tax identification number and federal tax identification number for the purchaser; and (7) a copy of the purchasers' articles of incorporation filed with the State of Texas Secretary of State, or the dba statement under which the business operates. (i) A qualified business may be designated as an enterprise project for no less than one year and no longer than five years. The designation of a qualified business as an enterprise project shall remain in effect during the period beginning on the date of the designation and ending on the earliest of: (1) the date requested in the application for designation as an enterprise project as indicated in the nominating ordinance, order or resolution, as applicable; (2) five years after the date the designation is made; (3) the last day that completes the original project designation period of a qualified business that has assumed the designation of the enterprise project designation through or purchase of a designated qualified business for the purpose of continuing its operations at the applicable qualified business; or (4) the date the Bank notifies the qualified business and the governing body that the qualified business is not in compliance with any requirement for designation as an enterprise project.</content><note type="source"><p>Source Note: The provisions of this §176.4 adopted to be effective May 28, 2006, 31 TexReg 4420; amended to be effective November 10, 2011, 36 TexReg 7545; amended to be effective January 4, 2015, 39 TexReg 10420; amended to be effective September 10, 2025, 50 TexReg 5932.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c176/sc/s176.5"><num value="176.5">§176.5</num><heading>Monitoring and Reporting Requirements</heading><content>(a) Annual reports and certifications. (1) Governing Body Annual Report. Each municipality or county that participates in the program must submit an annual report to the Bank on or before October 1 of each year. The report must be in a form prescribed by the Bank and contain the information listed in the Act, §2303.205(c). If this report is not received by October 1, the Bank may not designate any additional enterprise projects in the governing body's jurisdiction until such report is received. (2) Comptroller Annual Report. Not later than the 60th day after the last day of each fiscal year, the Comptroller will report to the Bank the statewide total of actual jobs created, actual jobs retained and the tax refunds and credits made under this section during the previous fiscal year as required by the Act. (3) Program Annual Report. The information in the governing body annual report, as well as the Comptroller annual report will be used by the Bank to compile an annual report on the program to the governor, legislature and the Legislative Budget Board by January 1 as required by the Act. (b) Other reports or documents. (1) Governing Body Designated Project Status Report. The nominating body shall submit a report to the Bank and Comptroller, conducted at the completion of the enterprise project designation period monitoring the qualified business to determine whether the business or project has followed through on any commitments or goals made in the application for enterprise project designation. This information may also be provided through the Governing Body Annual Report. (2) Qualified Business Benefit Request Status Report. At the time of submittal of a request for a state tax benefit, the qualified business must provide a certified report to the Comptroller of the actual amount of capital investment, as well as the actual number of new and/or retained jobs by category and title. (3) Additional Information as requested. The applicant shall furnish additional information, reports or statements as the Bank from time to time may request in connection with the Act and this chapter.</content><note type="source"><p>Source Note: The provisions of this §176.5 adopted to be effective May 28, 2006, 31 TexReg 4420; amended to be effective November 10, 2011, 36 TexReg 7545; amended to be effective September 10, 2025, 50 TexReg 5932.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p5/c177"><num value="177">CHAPTER 177</num><heading>PRODUCT DEVELOPMENT AND SMALL BUSINESS INCUBATOR FUND</heading><subchapter identifier="/us/state/tx/tac/t10/p5/c177/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p5/c177/sc/s177.1"><num value="177.1">§177.1</num><heading>Scope</heading><content>The rules in this chapter apply to the Product Development and Small Business Incubator Fund established by Article XVI, Section 71, of the Texas Constitution and by Government Code, Chapter 489, Subchapter D.</content><note type="source"><p>Source Note: The provisions of this §177.1 adopted to be effective May 29, 2005, 30 TexReg 3089.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c177/sc/s177.2"><num value="177.2">§177.2</num><heading>Definitions</heading><content>(a) The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.(1) Applicant--means any individual, partnership, corporation or any other private entity, whether organized for profit, or a city, county, district, or any other political subdivision, public entity, quasi-governmental entity, or agency of the state or federal government that applies for funding under the program.(2) Bank--means the Texas Economic Development Bank established under Texas Government Code, Chapter 489.(3) Board--means the Product Development and Small Business Incubator Board.(4) Financing--unless otherwise defined by Texas Government Code, Subchapter D, means a loan, loan guarantee, or equity investment from the product fund to a person for use in the development and production of a product in this state, or a grant, loan, or loan guarantee from the small business fund to a person for use in the development of a small business in this state.(5) Office--means the Economic Development and Tourism Office in the Office of the Governor(6) Product--unless otherwise defined by Texas Government Code, Subchapter D, includes an invention, device, technique, or process, without regard to whether a patent has been or could be granted, that has advanced beyond the theoretical stage and has or is readily capable of having a commercial application. The term does not include pure research (basic research).(7) Product fund--means the Texas product development fund.(8) Program--means the product development program or the small business incubator program.(9) Small business fund--means the Texas small business incubator fund.(10) Unit--means the State of Texas.(11) User--means any individual, partnership, corporation, or any other private entity, whether organized for profit, or a city, county, district, or any other political subdivision, public entity, quasi-governmental entity, or agency of the state or federal government that has been approved for financing under the program.(b) Amendment and suspension of the rules. These sections may be amended by the board at any time in accordance Government Code, Chapter 2001, Subchapter B, as amended. The board may suspend or waive a section, not statutorily imposed, in whole or in part, upon the showing of good cause or when, at the discretion of the board, the particular facts or circumstances render such waiver of the section appropriate in a given instance.</content><note type="source"><p>Source Note: The provisions of this §177.2 adopted to be effective May 29, 2005, 30 TexReg 3089.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c177/sc/s177.3"><num value="177.3">§177.3</num><heading>Procedures of the Board</heading><content>(a) Officers.(1) The board chair shall be appointed by the Governor.(A) The chair shall have the duty to generally direct, supervise, or control the business of the board and shall exercise supervisory duties as may be required or given her by the board from time to time.(B) The chair is hereby authorized to represent, both verbally and in written communications, the official position of the board and the department on issues concerning the fund.(2) Vice Chair. The vice chair of the board shall have such powers and duties as may be assigned to him by the chair and shall exercise the powers of the chair during any time that the chair is absent or unable to act. During any time that the vice chair is absent or unable to act, either the chair or the vice chair may designate another board member to exercise the powers of the chair.(3) Secretary. The secretary shall keep or cause to be kept the minutes of all meetings and records of all actions of the board. During any time that the secretary is absent or unable to fulfill his duties, the secretary or the chair may designate another board member to exercise the powers of the secretary.(4) To the extent permitted by law, the board may designate the chair, any member or members, or staff to act on behalf of the full board.(b) Committees.(1) Standing committees of the board. By a majority vote, the board may from time to time establish standing committees to assist the board in carrying out its duties. Such committees will be made up of not less than two and not more than four members of the board, and shall serve the board in an advisory capacity. Standing committees may be established to expire upon a certain term and/or may be dissolved at any time by a majority vote of the board.(2) Advisory committees. By a majority vote, the board may from time to time establish advisory committees, made up of any individuals and for any legal purpose, to study, advise, make recommendations, and otherwise assist the board in carrying out its duties. Advisory committees may be established to expire upon a certain term and/or may be dissolved at any time by a majority vote of the board.(3) Special committees, made up of any individuals and for any legal purpose, may be appointed and dissolved at any time by majority vote of the board.(4) A member of a standing committee, an advisory committee, or a special committee shall serve without compensation, and members shall not be reimbursed for expenses unless reimbursement is deemed necessary and feasible by the board, subject to any applicable limitation on reimbursement provided by the General Appropriations Act or other law.(c) Meetings.(1) The board shall hold regular meetings, as called by the chair, at least two times per year.(2) Public appearances at board meetings. Members of the public may appear before the board regarding any issue under the board's jurisdiction.(A) Unless otherwise required or instructed by staff, a person or organization wishing to be placed on the board meeting agenda must provide a written statement of such request. The request must identify the name of the presenter(s) and the topic of discussion desired to be discussed, and must be delivered to the office at 221 East 11th Street, Austin, Texas 78701, or mailed to P.O. Box 12428, Austin, Texas 78711-2428, or faxed to (512) 936-0520. The request must include a contact person's name, mailing address, telephone number, and fax number, if available.(B) Within 30 days after receipt of the request, the requestor will be notified of the time and place of the next board meeting for which the requestor may be placed on the agenda and the amount of time scheduled for the requestor's presentation.(3) Public comment on scheduled agenda items. Members of the public may comment on scheduled agenda items as determined by the board, consistent with the Texas Open Meetings Act.(A) Members of the public who wish to speak on a scheduled board agenda item must complete a comment sheet, identifying the presenter and the item to be addressed, prior to board discussion on the item. Comment sheets will be available to members of the public prior to and during board meetings.(B) The chairman will recognize the presenter at the point in the agenda where the comments are most relevant and may determine an appropriate amount of time for the presentation. The board may further limit presentations at any time in accordance with the Act.(4) To the greatest extent practicable and where consistent with the Texas Open Meetings Act, meetings shall proceed in accordance with Robert's Rules of Order. In the event a point of order is raised with respect to any process or action of the governing board, a determination regarding the validity of the process or action shall be within the discretion of the Governor's General Counsel division.(5) Meeting accessibility. Any disabled or non-English speaking person who requires assistance in order to attend a board meeting will be reasonably accommodated whenever possible. Any person requiring an accommodation must contact the bank as set out in paragraph (2)(A) of this subsection.(6) Written communication with the Board. Applications and other written communications regarding the program should be addressed to the attention of the Office of the Governor, Economic Development and Tourism Division, Texas Economic Development Bank, Attn: Product Development and Small Business Incubator Program, Post Office Box 12428, Austin, Texas 78711-2428.(d) Responsibilities of the Board and Bank.(1) The board will develop and implement policies that separate the policy-making responsibilities of the board and the management responsibilities of the office, the bank, and the executive director of the office. In addition, the board shall:(A) approve bonds issued for the program;(B) review and approve financing documents, loan applications, and loan agreements presented to it by the bank; and(C) exercise any powers necessary and reasonable to implement the program.(2) The bank, as staffed by the executive director of the office, will carry out administrative duties related to the bonds and the program and carry out any duties and responsibilities reasonable and necessary to implement the program. In addition, in accordance with the bond resolution, the bank shall:(A) review and approve financing documents, including but not limited to financing agreements, funds management agreements, loan agreements, and official statements; and(B) approve loan applications.(C) Financing documents and other agreements executed by the bank will be signed by the governor's chief of staff or other designee of the governor, as applicable, according to the internal policies of the governor's office.(3) The bonds shall be issued as Texas Economic Development Bank, State of Texas, General Obligation Variable Rate Demand Bonds, with program and series designations to be added as set forth in the bond resolution.(A) The bonds will be executed on behalf of the state by the governor with his/her manual or facsimile signature.(B) The bonds shall be authorized by resolution of the board; the resolution shall be approved as to form by the governor's chief of staff or other designee on behalf of the bank and the executive director on behalf of the office.(C) Bonds issued by the bank for the program shall be a public security issued by a state agency for purposes of Government Code, Chapters 1201, 1202 and 1371.(D) All issuances of bonds under the program shall be subject to review and approval by the Bond Review Board and the attorney general.</content><note type="source"><p>Source Note: The provisions of this §177.3 adopted to be effective May 29, 2005, 30 TexReg 3089.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c177/sc/s177.4"><num value="177.4">§177.4</num><heading>Bonds</heading><content>(a) Use of product development bond proceeds. The proceeds of the product development bonds may be used:(1) to fund reasonably required reserve accounts.(2) to pay costs incurred in issuing the bonds; and(3) to either:(A) fund loans made by the bank to an applicant to provide financing to aid in the development and production, including the commercialization, of new or improved products in this state; or(B) refund or redeem all or part of any outstanding bonds.(b) Use of small business incubator bond proceeds. The proceeds of the small business incubator bonds may be used:(1) to fund reasonably required reserve accounts.(2) to pay all costs incurred in issuing the bonds; and(3) to either:(A) fund loans made by the bank to an applicant to provide financing to foster and stimulate the development of small businesses in this state; or(B) refund or redeem all or part of any outstanding bonds.(c) In no event shall the board, the governing body, the office, or the unit have any obligation, financial or otherwise, to any person for failure to issue, sell, or deliver its bonds.</content><note type="source"><p>Source Note: The provisions of this §177.4 adopted to be effective May 29, 2005, 30 TexReg 3089.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c177/sc/s177.5"><num value="177.5">§177.5</num><heading>Loans</heading><content>(a) Term of loan. The following requirements regarding the maximum term of a loan apply to any loan made under the program.(1) Real property. The maximum term of a loan to finance real property may not exceed 20 years.(2) Tangible personal property. The maximum terms of a loan to finance tangible personal property may not exceed 15 years.(3) Other loans. The maximum term of a loan shall have a maturity satisfactory to the board and any third-party guarantor or insurer.(b) Interest rate. The interest rate shall be determined by the board or its designee, considering, among other things, the funding needed to cover the cost of bond financing, bond service providers and reasonable and customary administrative and programmatic costs.(c) Amortization. Each loan shall be repaid over the term of the loan in a manner acceptable to the program and any third party, insurer, or guarantor of the loan.(d) Terms and conditions of financing. Terms and conditions of financing must include requirements for, at minimum, the repayment of loan principal and interest payments and security or collateral, such as equity interest, royalties, patent rights, or a combination of those royalties and interests from or in the product or the proceeds of the product for which financing is requested.(e) Security. Unless otherwise approved by the board, no loan may be made by the bank to an applicant if the applicant's equity participation in its business, if required by the bank, came from a loan secured by a lien on the business.(f) Other terms. The bank and the board shall specify terms and conditions with respect to each investment as they deem to be reasonable, appropriate and consistent with the purposes and objectives of the fund.</content><note type="source"><p>Source Note: The provisions of this §177.5 adopted to be effective May 29, 2005, 30 TexReg 3089.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c177/sc/s177.6"><num value="177.6">§177.6</num><heading>Application</heading><content>(a) To apply for financing from the fund, an applicant shall submit to the bank:(1) an application for financing on a form prescribed by the bank; and(2) an application fee as prescribed by the bank, payable to the Office of the Governor, Texas Economic Development Bank.(b) The application must include a business plan containing the information required by the bank. All confidential and proprietary information shall be identified by the applicant in the business plan. This information must be treated as confidential as provided by the exception set forth in Government Code, Section 489.215, and other law. The business plan will include at a minimum, as applicable, information regarding:(1) an executive summary which does not contain any confidential or proprietary information and is no longer than two typewritten, double spaced pages;(2) the prior three years audited financial statements, as applicable, and projected financial statements, including loan repayment. The financial documents must include the applicant's income statement, balance sheet and cash flow statement;(3) the applicant's present markets and market prospects;(4) a discussion of the economic and other benefits to the State of Texas, including the anticipated effects on the emerging technology industry cluster(s) in which the applicant belongs;(5) the background and integrity of the applicant's management;(6) a statement of the feasibility of the product for which financing is requested, including the state of development of any product to be developed and the proposed schedule of its commercialization;(7) if applicable, documentation of attempts to obtain private financing;(8) a financial plan that shows how loan proceeds will generate income to repay the loan;(9) use of funds and business model;(10) the name, street address, mailing address, telephone number, fax number and electronic mail address for the business and the business' authorized officer with a signed statement from each, as applicable, that the contents of the application are true and correct to their best knowledge and belief; and(11) authorization of the applicant's board of directors to participate in the program.(c) In determining which products and businesses are eligible for financing, the bank shall consider criteria, which includes but is not limited to, the following:(1) the product or business for which financing is requested is economically sound;(2) there is a reasonable expectation that the product or business will be successful;(3) the product or business will create or preserve jobs and otherwise benefit the economy of the state;(4) the applicant has the management resources and other funding to complete the project;(5) financing is necessary because full financing is unavailable in traditional capital markets or credit has been offered on terms that would preclude the success of the project;(6) there is reasonable assurance that the potential revenues to be derived from the sale of the product will be sufficient to repay any financing approved by the bank;(7) the extent to which the product or business will leverage non-state funds;(8) the number of jobs to be created or retained in the state; and(9) availability of program funds.(d) In determining eligible products and businesses, the bank shall give special preference to products or businesses in the areas of semiconductors, nanotechnology, biotechnology, biomedicine, and such other emerging technologies or areas that have the greatest likelihood of commercial success, job creation, and job retention in this state.(e) The bank shall give further preference to providing financing to projects or businesses that are:(1) grantees under the small business innovation research program established under 15 U.S.C. Section 638, as amended;(2) companies formed in this state to commercialize research funded at least in part with state funds;(3) applicants that have acquired other sources of financing;(4) companies formed in this state and receiving assistance from designated state small business development centers; or(5) applicants who are residents of this state doing business in this state and performing financed activities predominantly in this state.(f) After considering the application and all other information it considers relevant, the bank shall approve or deny the application and promptly notify the applicant of its decision.(g) Application and closing fee. The Bank shall charge an application fee of $500.00 for all applications. In addition, successful applicants may be required to pay, upon financing by the bank, a closing fee.</content><note type="source"><p>Source Note: The provisions of this §177.6 adopted to be effective May 29, 2005, 30 TexReg 3089.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c177/sc/s177.7"><num value="177.7">§177.7</num><heading>Monitoring and Reporting Requirements</heading><content>(a) Any user under the program will be required to meet reporting and compliance requirements, as set out in the agreement between the user and the bank, including, but not limited to:(1) annual submission of audited fiscal year end financial statements;(2) annual update, including but not limited to efforts and progress toward commercialization;(3) the use of money distributed through either fund;(4) notification within 10 days of a user's name change or any other non-material change in the user's product or business;(5) notification in advance of any anticipated material change to the user's product or business; and(6) notification within five days of any material change to the user's product or business.(7) In the event of a name change, sale, or assumption, or similar change, notification to the bank must include a copy of the certificate of amendment to the articles of incorporation, and/or the d/b/a statement under which the user operates, filed with the Texas Secretary of State, as applicable.(b) Projects may be subject to on site monitoring visits, by the board, the bank or its designee. Such visits shall occur during normal working hours, upon reasonable notice, and be conducted in a manner that is consistent with obligations of confidentiality and workplace safety.</content><note type="source"><p>Source Note: The provisions of this §177.7 adopted to be effective May 29, 2005, 30 TexReg 3089.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c177/sc/s177.8"><num value="177.8">§177.8</num><heading>Loan Agreements</heading><content>Before providing financing to a person, the bank will enter into an agreement with the person that will set forth the terms and conditions of the loan. The agreement must ensure the proper use of funds and will include, but is not limited to, provisions for collateral to secure the loan, reporting requirements, and repayments.</content><note type="source"><p>Source Note: The provisions of this §177.8 adopted to be effective May 29, 2005, 30 TexReg 3089.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p5/c178"><num value="178">CHAPTER 178</num><heading>SINGLE UNIFIED PROJECTS</heading><subchapter identifier="/us/state/tx/tac/t10/p5/c178/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p5/c178/sc/s178.1"><num value="178.1">§178.1</num><heading>General Provisions</heading><content>(a) Authority. Pursuant to the authority granted by the Texas Economic Development Act, Texas Tax Code, Title 3, §313.024, the Economic Development and Tourism Office in the Office of the Governor (Office) prescribes the following chapter regarding the application, administration, and procedure for determining whether projects constitute a Single Unified Project.(b) Purpose. It is the purpose of this chapter to set forth a procedure by which qualifying jobs located in one school district may be counted as qualifying jobs in another, as provided for in the Texas Economic Development Act, by determining that one or more projects constitute a Single Unified Project.(c) The Single Unified Project designation will only be used for the purpose of counting qualified jobs and is not intended to allow the combination of project investments to meet statutorily defined minimums.</content><note type="source"><p>Source Note: The provisions of this §178.1 adopted to be effective January 4, 2015, 39 TexReg 10422.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c178/sc/s178.2"><num value="178.2">§178.2</num><heading>Definitions</heading><content>(a) "Act" means the Texas Economic Development Act, Texas Tax Code, Title 3, Chapter 313 as amended.(b) "Single Unified Project" means a project:(1) consisting of a site or a collection of sites located in contiguous school districts;(2) comprised of separate investments that are subject to two or more Chapter 313 Appraised Value Limitation Agreements;(3) sufficiently integrated to contribute to the delivery of the same product or service;(4) whose qualifying investments are made and managed by members of the same controlled group and;(5) that has been issued a Single Unified Project Certificate by the Office.(c) "Office" means the Economic Development and Tourism Office in the Office of the Governor.(d) Unless this chapter specifically defines a word or phrase used in this chapter, the meaning of the word or phrase ascribed in the Act applies to the word or phrase used in this chapter.</content><note type="source"><p>Source Note: The provisions of this §178.2 adopted to be effective January 4, 2015, 39 TexReg 10422.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c178/sc/s178.3"><num value="178.3">§178.3</num><heading>Application Procedure</heading><content>(a) A company seeking a Single Unified Project designation must notify each school district intended to be a party to a Chapter 313 Appraised Value Limitation Agreement and intended to be included in the Single Unified Project of their intent to seek Single Unified Project status.(b) The company seeking Single Unified Project designation shall obtain a letter from each included school district, authorized by the school board, specifying the school district's acceptance of their inclusion in the Single Unified Project.(c) After notification from a company seeking a Single Unified Project designation, one of any of the school districts intended to be a party under subsection (a) of this section must apply to the Office for determination. To be considered complete, an application should include the applicable request form promulgated by the Office and a copy of each acceptance letter required by subsection (b) of this section. Each acceptance letter must be dated no earlier than 30 days before the application's submission to the Office.(d) The Office will accept only one application per Single Unified Project request, and may require additional information be submitted to complete the review.</content><note type="source"><p>Source Note: The provisions of this §178.3 adopted to be effective January 4, 2015, 39 TexReg 10422.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c178/sc/s178.4"><num value="178.4">§178.4</num><heading>Single Unified Project Determination</heading><content>(a) If the Office determines that one or more projects constitute a Single Unified Project consistent with the definition in §178.2(b) of this title, the Office will issue a Single Unified Project Certificate to the school district that submitted the application. The Office may also notify other included school districts or the company seeking Single Unified Project designation of its decision. If the Office determines that a project does not meet the criteria established in this chapter, it will issue a letter of denial.(b) An Application for Appraised Value Limitation on Qualified Property that includes a request for Single Unified Project status, must include the Single Unified Project Certificate issued by the Office in order to be considered complete.</content><note type="source"><p>Source Note: The provisions of this §178.4 adopted to be effective January 4, 2015, 39 TexReg 10422.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c178/sc/s178.5"><num value="178.5">§178.5</num><heading>Effect of Determination on Qualifying Jobs</heading><content>If a determination is made by the Office under this chapter that one or more projects constitute a Single Unified Project, the number of qualified jobs required by the Act and/or determined by Texas Workforce Commission under the Act, §313.021(3)(F), can be used to satisfy each school district's minimum number of qualified jobs established by the Act.</content><note type="source"><p>Source Note: The provisions of this §178.5 adopted to be effective January 4, 2015, 39 TexReg 10422.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p5/c180"><num value="180">CHAPTER 180</num><heading>INDUSTRIAL PROJECTS</heading><subchapter identifier="/us/state/tx/tac/t10/p5/c180/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p5/c180/sc/s180.1"><num value="180.1">§180.1</num><heading>General Rules</heading><content>(a) Introduction. Pursuant to the authority granted by the Administrative Procedure and Texas Register Act, as amended, the Economic Development and Tourism Office in the Office of the Governor (Office) prescribes the following rules regarding practice and procedure before the Office. The rules promulgated under this chapter are not applicable to local development corporations created pursuant to Texas Civil Statutes, Article 5190.6, §4A.(b) Delegation of authority to executive director. Pursuant to the Act, §24(c), by adoption of this chapter, the department has delegated to its executive director the authority to give approval of a lease, sale, or loan agreement made under this Act or bonds issued by a corporation or any document submitted as provided in the Act and in accordance with this chapter; provided that the department also reserves the right to act upon any such agreement which has not otherwise been acted upon by the executive director.(c) Waivers. The executive director may waive any provision of this chapter upon a finding that the public interest would be furthered by granting the waiver.</content><note type="source"><p>Source Note: The provisions of this §180.1 adopted to be effective October 13, 1981, 6 TexReg 3632; amended to be effective April 24, 1984, 9 TexReg 2017; amended to be effective March 23, 1990, 15 TexReg 1291; amended to be effective September 29, 1999, 24 TexReg 8161; amended to be effective August 5, 2012, 37 TexReg 5730.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c180/sc/s180.2"><num value="180.2">§180.2</num><heading>Industrial Revenue Bond Program</heading><content>(a) General.(1) Filing of applications. Applications shall be filed by the applicant with the Finance Division of the Office. Each application shall be as complete as practicable, and not requiring addendum in order to be approved. To insure adequate time for review by the Office staff, an application should be filed with the Office at least 14 days prior to the Office's approval.(2) Filing fee. Each application for approval shall be accompanied by a nonrefundable filing fee in the amount equal to one-tenth of 1.0% of the face amount of the bond issue or $25,000, whichever is less, but in no event less than $500. This fee is payable to the department upon the initial filing of such application.(3) Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.(A) Act--The Development Corporation Act, Texas Local Government Code, Title 12, as amended.(B) Application--The application to the department, the contents of which are outlined in subsection (b) of this section.(C) Approval--The approval of a lease, sale, or loan agreement or bonds issued by a corporation or any other document submitted as a part of the application to the department.(D) Board of directors--The board of directors of any corporation organized pursuant to the Act.(E) Bonds--Bonds, notes, and other evidences of indebtedness.(F) City--Any municipality of the state incorporated under the provisions of:(i) any general or special law; or(ii) the home-rule amendment to the constitution.(G) Corporation--An industrial development corporation organized pursuant to the Act, §4(a).(H) Cost--The cost of acquisition, construction, reconstruction, improvement, and expansion, including the cost of the acquisition of all land, rights-of-way, property rights, easements, and interests, the cost of all machinery and equipment, financing charges, inventory, raw materials and other supplies, research and development costs, interest prior to and during construction and for one year after completion of construction, whether or not capitalized, necessary reserve funds, cost of estimates and of engineering and legal services, plans, specifications, surveys, estimates of cost and of revenue, other expenses necessary or incident to determining the feasibility and practicability of acquiring, constructing, reconstructing, improving, and expanding any such project, administrative expense and such other expense as may be necessary or incident to the acquisition, construction, reconstruction, improvement, and expansion thereof, the placing of the same in operation, and the financing or refinancing of any such project, including the refunding of any outstanding obligations, mortgages, or advances issued, made or given by any person for any of the cost mentioned in this definition.(I) County--A county of this state.(J) Development area--Any area or areas of a city that the city finds and determines, after a public hearing, should be developed in order to meet the development objectives of the city.(K) District--A conservation and reclamation district established under authority of Texas Constitution, Article XVI, §59.(L) Executive director--The executive director of the Office.(M) Federally assisted new community--Those federally assisted areas which have received or will receive assistance in the form of loan guarantees under the National Housing Act, Title X, and a portion of the federally assisted area has received grants under the 42 U.S.C.A. §5307.(N) Governing body--The board, council, commission, commissioners' court, or legislative body of the unit.(O) Governmental agency--(i) the United States or any political subdivision, agency, territory, or insular possession thereof;(ii) the District of Columbia; or(iii) the State of Texas or any other state of the United States, or any unit, county, city, municipal corporation, district, political subdivision, or agency of the State of Texas, or of any other state of the United States.(P) Guarantor--(i) any individual, partnership, corporation, or any other private entity that is a party to a contract with the user, if such entity is contractually obligated to make payments to or on behalf of the user in amounts at least equal to the payments required to be made by the user under its lease, sale, or loan agreement with the corporation, provided the user has assigned to the corporation its contractual rights to receive such payments in order to secure said user's obligations under the lease, sale, or loan agreement;(ii) any individual, partnership, corporation, or any other private entity directly guaranteeing the user's payments in the amounts required under the lease, sale, or loan agreements;(iii) any individual, partnership, corporation, or any other private entity directly guaranteeing payment of bonds issued to finance the project.(Q) Office--The Economic Development and Tourism Office in the Office of the Governor.(R) Population--The number of inhabitants within a geographical area as found and determined by the most recent federal decennial census.(S) Project--The project as defined in the Act.(T) Resolution--The resolution, order, ordinance, or other official action by the governing body of a unit.(U) Rules--The rules of the Office.(V) Unit--A city, county, or district which may create and utilize a corporation.(W) User--An individual, partnership, corporation, or any other private entity, whether organized for profit or not for profit, or a city, county district, or any other political subdivision or public entity of the state.(4) Fee schedules and bond procedures. Each corporation shall file with the Office a schedule of all fees charged by, collected by, or otherwise involved with the corporation, directly or indirectly, in the application for approval to issue industrial revenue bonds. In addition, a complete set of the corporation's written procedures for application of industrial revenue bond projects shall be submitted prior to the Office review of industrial revenue bond applications involving such corporations. Such written procedures and fee schedules shall be updated upon amendment, such update to be filed with the Office within 30 days from the effective date of such amendment. In the event that the procedures and fee schedule already on file with the Office are still in full force and effect at the time an application is submitted to the Office, a letter from the issuer stating such shall be included in the application. All bond procedures filed with the Office must contain the name, street address, mailing address, and telephone number of the corporation's authorized agent or representative.(b) Application contents.(1) Generally.(A) The project description prepared by the user shall include:(i) a brief description of the project, its location, and intended use;(ii) estimates of the number and type of jobs to be created as a result of the project and the estimated annual payroll of employees working at the project. If there is a probability that loss of existing jobs would occur within the unit as a result of the disapproval of the lease, sale, or loan agreement, estimate the number and type of existing jobs which would be lost and the estimated annual payroll of employees currently holding such jobs;(iii) a statement indicating who presently owns the project site describing any liens and encumbrances, and representing that all necessary interest in real estate required for the construction, installation, and operation of the project has been or can be acquired; that all necessary access roads, utilities, and drainage facilities have been or can be provided; and that all approvals, permits, consents, or authorizations of any governmental or public agency, authority, or person required in connection with the construction, installation, and operation of the project have been or can be obtained;(iv) a detailed showing of the estimated costs of the project, together with a list of the sources from which payment will be made, which statement shall show actual, or if not possible, estimated, cost of items as follows:(I) the acquisition, construction, reconstruction, improvement, and expansion, including the cost of the acquisition of all land, rights-of-way, property rights, and easements; if none, so state;(II) machinery and equipment; if none, so state;(III) building costs; if none, so state;(IV) financing charges, specifically designated fees and expenses of original purchasers, issuer, issuer's counsel, underwriters, financial advisors, placement agents, bond counsel, other legal counsel, bond delivery and printing expenses, the cost of preparing and processing the application, engineering fees, plans, specifications, surveys, and all other fees and/or expenses in connection with the financing;(V) interest prior to and during construction and for one year after completion of construction, if applicable; otherwise, state inapplicable;(VI) any reserve funds; if none, so state;(VII) all other expenses, such as the costs of financing or refinancing of any project, including the refunding of any outstanding obligations, mortgages, or advances issued, made, or given by any person for any of the aforementioned costs; if none, so state;(VIII) contingencies; if none, so state;(IX) inventory, raw materials, and other supplies;(X) research and development costs;(v) the approximate date of commencement and completion of construction of the project.(B) The list of participants shall include the name, street, mailing address, and telephone number of each of the following:(i) the user, the user's representative, the user's counsel, counsel's representative, and the user's corporation's counsel, accounting firm and accounting firm's representative;(ii) the corporation, the corporation's representative, and corporation's counsel, counsel's representative;(iii) the original purchaser, the purchaser's representative, the purchaser's counsel, and counsel's representative;(iv) the guarantor, the guarantor's representative, guarantor's counsel, counsel's representative, the guarantor's accounting firm, and accounting firm's representative, or a statement that there is no guarantor;(v) the financial advisor or placement agent, and such advisor's or agent's representative, counsel, and counsel's representative or a statement that there is no financial advisor or placement agent; no financial advisor or placement agent;(vi) the underwriter, the underwriter's representative counsel, and counsel's representative or a statement that there is no underwriter;(vii) the trustee or depository, and the trustee's or depository's representative, counsel, and counsel's representative or a statement that there is no trustee or depository;(viii) the paying agent, such agent's representative, counsel, and counsel's representative, or a statement that there is no paying agent;(ix) the letter of credit bank, the letter of credit bank's representative, or a statement that there is no letter of credit bank; and(x) bond counsel and bond counsel's representative.(2) The corporation.(A) The description of corporation shall include:(i) the name, street address, and mailing address of the members of the board of directors of the corporation;(ii) a description of any other bonds which have been issued by the corporation to finance a project and a statement as to whether there has been a default in the payment of principal or of premium, if any, or interest on any such bonds.(B) The resolution of the corporation shall be certified by the board of directors and include a description of the purpose of the bonds, set out the specific amount of bonds to be issued, and make the appropriate findings required by the Act, §2(10).(C) The opinion of corporation counsel shall be submitted on counsel's letterhead in substantially the form to be delivered at closing, as to the incorporation and existence of the corporation and the authority, the actions and other proceedings of the corporation in connection with the project and the bonds, and further stating that the lease, sale, or loan agreement constitutes a legal and binding obligation of the corporation.(3) The unit. A certified copy of the resolution of the governing body of the unit satisfying the requirements of the Act, §25(f), and authorizing the specific bond amount and purpose of the bonds shall be included.(4) The user.(A) The description of the user shall include:(i) the name and address of the user;(ii) the state or other jurisdiction of incorporation or organization, the form of organization, and a complete description of the organizational structure, including parent, subsidiaries, and affiliates;(iii) a statement of the history and type of business engaged in by the user;(iv) the names and ages of executive or managing officers and directors of the user, an account of the business experience of each such officer or director, including his principal occupation and employment and the name and principal business of the corporation or other organization in which such occupation and employment was carried on;(v) a statement of the user's debt security rating or listing by any published rating agency, or, if none, such fact shall be noted;(vi) financial statements as available for the previous three years;(vii) in lieu of the information required by clauses (ii) - (vi) of this subparagraph, the user's Form 10-K for each of the three preceding fiscal years, together with the user's most recent Form 10-Q.(B) Certificate of user. A certificate signed by an officer of the user to the same effect as the finding required to be made by the board of directors of the corporation under paragraph (2)(B) of this subsection.(C) The proposed opinion of user counsel shall be submitted on counsel's letterhead in substantially the form to be delivered at closing, as to the creation and existence of the user and the authority, actions and other proceedings of the user in connection with the project and the bonds, and stating that the lease, sale, or loan agreement constitutes a legal and binding obligation of the user. User counsel must be licensed in the State of Texas or a supplemental opinion must be provided by Texas counsel.(5) Guarantor.(A) The description of guarantor shall provide the same information required of the user in paragraph (4)(A) of this subsection.(B) The opinion of guarantor counsel shall be on counsel's letterhead to include an opinion of counsel for each guarantor, in substantially the form to be delivered at closing, as to the creation and existence of the guarantor and the authority, the actions and other proceedings of the guarantor in connection with the project and the bonds, and stating that the instrument of guarantee constitutes a legally binding obligation of the guarantor.(6) The bonds.(A) The description of the bonds shall include:(i) no total amount of bonds to be issued;(ii) a maturity schedule for the bonds;(iii) the proposed date of closing and delivery of the bonds;(iv) if the bonds have been rated by any published rating agency, or if application for such rating has been made, such fact shall be noted with the ratings assigned. A letter must be submitted regarding rating or application for rating;(v) the security for the bonds.(B) Investment letters shall include investment letters from the original purchasers of the bonds, or the purchasers of the bonds from the underwriter, in the form to be delivered at closing, substantially to the effect that said purchaser:(i) is a financial institution or other accredited investor as defined in the Securities Act of 1933, Regulation D, 17 Code Federal Regulations §230.501(a);(ii) has been furnished with all necessary information that it desires in order to enable it to make an informed decision concerning investment in the bonds; and(iii) intends to purchase the bonds for its own account (subject to certain rights to sell, pledge, transfer, convey, hypothecate, mortgage, or dispose of such bonds at some future date). The investment letter is not required if the letter regarding bonds in subparagraph (C) of this paragraph is provided; and(iv) prior to the release of the Office's approval letter, investment letters must be signed by purchasers and include the following information:(I) name of purchaser;(II) signature of purchaser or authorized representative;(III) typed name and title of purchaser or authorized representative; and(IV) address and telephone number of purchaser;(v) the investment letter is not required if the letter regarding bonds in subparagraph (C) of this paragraph is provided.(C) The letter regarding the bonds shall include a letter from the underwriter, and/or a letter from the placement agent or financial adviser, submitted on letterhead, that the bonds are marketable; provided, that the following requirements are met:(i) either the user or any guarantor has a current rating on any of its outstanding securities from Moody's Investors Service of Ba or higher or from Standard and Poor's Corporation of BB or higher; or(ii) the bonds sought to be issued have received a rating from either Moody's or Standard and Poor's of at least Baa or BBB, respectively.(D) The bond counsel opinion, included in the application, shall be submitted on counsel's letterhead in substantially the form to be delivered at closing as to the effect that the bonds have been duly issued and delivered by the corporation in compliance with the Act. Bond counsel must be licensed in the State of Texas or a supplemental opinion must be provided by Texas bond counsel.(7) Agreements.(A) Any agreements between the participants involved in the transaction, including, but not limited to, the loan lease, or sale agreement and the trust indenture, in which:(i) the user and/or guarantor agrees to pay all project costs which are not or cannot be paid or reimbursed from the proceeds of bonds; and(ii) the user and/or guarantor agrees at all times, to indemnify and hold harmless the corporation, Office against all losses, costs, damages, expenses, and liabilities of whatsoever nature (including, but not limited to, attorney's fees, litigation and court costs, amounts paid in settlement, and amounts paid to discharge judgments) directly or indirectly resulting from, arising out of, or related to the issuance, offering, sale, delivery, or payment of the bonds, and interest thereon, or the design, construction, installation, operation, use, occupancy, maintenance, or ownership of the project;(iii) written notification is provided to the Office by the trustee, depository, or lender as appropriate, in the event of a default in the timely payment of monies due in payment of the bonds or interest coupons or upon notification of the trustee by the Internal Revenue Service that the interest is, or may be, subject to federal income taxation;(iv) a provision is included stating that no additional or refunding bonds will be issued or delivered without prior Office approval; and(v) a provision is included stating that, by virtue of the project being financed under the Act, the user has not and will not maintain that it is entitled to an exemption from Texas sales or use taxes on personal property acquired in connection with the project.(B) Copies of official statement, placement agent agreement, bond purchase agreement, letter of credit agreement, and instrument of guarantee, if any, shall be included as part of the application submitted to the Office.(C) If applicable, public hearing information required by the Tax Reform Act of 1986, §147(f), shall be included.(8) Project approval standards--generally.(A) The proposed project will contribute to the economic growth or stability of the unit by:(i) increasing or stabilizing employment opportunity;(ii) significantly increasing or stabilizing the property tax base; and(iii) promoting commerce within the unit and the state.(B) The user has no present intention of disposing of or abandoning the proposed project.(C) The user has no present intention of directing the proposed project to a use other than the purposes represented to the Office and, if appropriate, the city or county.(D) If applicable, the user must certify and represent that no car, truck, mobile unit, or any vehicle of any kind whatsoever, which is financed in whole or in part by the proceeds of the bonds, will be away from the project site for more than 30 continuous calendar days and that all cars, trucks, mobile units, or vehicles of any kind whatsoever, financed in whole or in part by the proceeds of the bonds, will be rendered on the local tax rolls.(9) Special rules for commercial projects in economically depressed counties. The Office will not approve the financing of projects which are to be used for commercial projects in counties except in conformity with this section and the project approval standards set forth in paragraph (8) of this subsection.(A) To establish an eligible county, the commissioners' court of the county (the governing body) shall provide evidence satisfactory to the Office that:(i) the county is a federally designated economically distressed county; and(ii) the population of the county is less than 50,000 according to the last federal decennial census.(B) The Office may, but shall not be required to suggest limitations as to the amount or type of projects to be financed for commercial purposes under the Act and this chapter within such county.(C) If the governing body of the county shall conclude to request the Office to approve projects for commercial uses, it shall adopt a resolution citing the Act and this chapter, and further containing:(i) a description or a map of the boundaries of the county, and if practicable, the location of any proposed project;(ii) a description of the overall objectives of the county for redevelopment and recovery of the county, if any;(iii) a finding and representation to the Office that the availability of financing of projects for commercial uses under the Act will contribute significantly to the alleviation of the economically depressing conditions found to exist in the county;(iv) a description of the type of projects for commercial uses desired and authorized by the county to enhance its redevelopment efforts, together with a description of any exclusions or limitations by type or amount of commercial project uses which the county would consider detrimental to its efforts to redevelop the county; and(v) based upon the county's best estimates at the time of adoption of the resolution, a description of proposed public improvements, if any, to be made within reasonable proximity to the proposed commercial project, the estimated commencement date of such public improvements, the approximate schedule for such improvements, and the sources of funds which the county will use for such purposes.(D) Upon certification of the eligibility of the affected county as set forth in subparagraph (C) of this paragraph, the Office will approve projects for commercial uses in the county only after the applicant demonstrates that:(i) the specific project conforms with any limitations specified in the resolution as provided in this section;(ii) the governing body of the county has approved the project and made the determinations and findings required by this chapter; and(iii) the specific project to be financed for commercial uses will significantly contribute to the fulfillment of the overall redevelopment objectives of the county, if any; and the project conforms to the project approval standards specified in paragraph (8) of this subsection.(10) Refunding issues.(A) A complete application shall be submitted to the Office for approval of a refunding issue, unless such bond issue does not exceed the outstanding amount of the refunded bond.(B) If the refunding issue does not exceed the outstanding amount of the refunded bond, then the application to the Office shall contain the following:(i) information outlined in paragraphs (1) - (6) of this subsection; and(ii) pursuant to paragraph (7) of this subsection, the application shall also include the official statement and any supplemental agreements relating to the refunding issue, if any, and all others that have not been previously approved by the Office.(C) The application for approval of a refunding issue shall reference, by Office docket number, the application originally approved by the Office.(11) Miscellaneous information.(A) Closing information. Each application shall contain the proposed time, date, and location for the closing of the transaction and delivery of the bonds.(B) Proposed approval letter. Each application shall contain the proposed approval letter in the same form and content to which it is desired the Office give its approval.(c) Final transcript of proceedings.(1) Executed documents. If the Office gives approval to an application, upon delivery of the bonds described in the application, there shall be submitted to the Office a final transcript of proceedings, containing a copy of the application, and the following instruments.(A) Certificate of issuer. A certificate signed by an officer of the issuer substantially to the effect that:(i) as of the closing date there has been no material adverse change in the affairs of the issuer from that described in the application for approval to the Office or otherwise disclosed to and approved by the Office; and(ii) the instruments provided to the Office pursuant to subsection (b)(2)(B) and (3) of this section, as executed and delivered by the respective parties, are substantially in the form previously approved by the Office.(B) Certificate of user. A certificate signed by an officer of the user substantially to the effect that:(i) as of the closing date there has been no material adverse change in the affairs of the user from that described in the application for approval to the Office or otherwise disclosed to and approved by the Office; and(ii) the instruments provided to the Office pursuant to subsection (b)(2)(B) and (3) of this section, as executed and delivered by the respective parties, are substantially in the form previously approved by the Office.(C) Certificate of guarantor. A certificate for each guarantor signed by an officer of the guarantor substantially to the effect that, as of the closing date, there has been no material adverse change in the affairs of the guarantor from that described by the application or otherwise disclosed to and approved in writing by the Office.(D) Opinions of counsel. Executed opinions of counsel, in substantially the forms previously approved by the Office in accordance with subsection (b)(2)(C), (4)(C), (5)(B), and (6)(D) of this section and the opinion of the attorney general authorizing the issuance of the bonds.(E) Investment letter. As appropriate, executed investment letters from the original purchasers of the bonds, or the purchasers of the bonds from the underwriter, in substantially the form previously approved by the Office in accordance with subsection (b)(6)(B) of this section, or if appropriate, subsection (b)(6)(C) of this section.(F) Issuance and delivery notification. Within five days of issuance and delivery of bonds a certified letter signed by an officer of the issuer, addressed to the Office stating bonds are issued and delivered including the following information:(i) time;(ii) date; and(iii) location.(G) Other agreements. Executed copies of all agreements in substantially the same form as originally submitted in the application in compliance with subsection (b)(7) of this section.(H) Additional information. The Office may require additional information at any time as a precondition to conditional or final approval, or otherwise, and the costs thereof shall be borne by the user.(2) Filing of transcript of proceedings. The Office requires a complete transcript of all proceedings relating to the authorization, issuance, sale, and delivery of the bonds to be bound as a permanent record, spine labeled as to issue, amount and date, and be submitted to it within 45 days after the bond closing. This requirement is not a precondition to final approval by the Office; however, the Office will not review any additional applications submitted by the issuer until such complies with this requirement, unless an application is submitted within the 45 day time period. The binding shall be of such quality as will preserve the enclosures for the term of the bonds.</content><note type="source"><p>Source Note: The provisions of this §180.2 adopted to be effective October 13, 1981, 6 TexReg 3632; amended to be effective August 16, 1984, 9 TexReg 4178; amended to be effective October 1985; amended to be effective April 29, 1986, 11 TexReg 1823; amended to be effective February 19, 1988, 13 TexReg 605; amended to be effective March 23, 1990, 15 TexReg 1291; amended to be effective August 30, 1990, 15 TexReg 4694; amended to be effective September 29, 1999, 24 TexReg 8161; amended to be effective August 5, 2012, 37 TexReg 5730.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p5/c181"><num value="181">CHAPTER 181</num><heading>TEXAS LEVERAGE FUND PROGRAM</heading><subchapter identifier="/us/state/tx/tac/t10/p5/c181/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p5/c181/sc/s181.1"><num value="181.1">§181.1</num><heading>Texas Leverage Fund General Rules</heading><content>(a) Introduction. Pursuant to the authority granted by the Texas Government Code, Chapter 481, as amended, and the Administrative Procedure Act, Texas Government Code, Chapter 2001, Subchapter B, Rulemaking, as amended, the Economic Development and Tourism Office in the Office of the Governor (Office) prescribes the following rules regarding practice and procedure applicable to economic development corporations established pursuant to the Texas Local Government Code, Chapter 504 and Chapter 505, as amended. The rules relate to loans made to economic development corporations under the Office's Texas Leverage Fund Program.(b) Authority.(1) Pursuant to the provisions of the Constitution of the State of Texas, Article III, §52-a, adopted by the voters of the State of Texas on November 3, 1987, and the Texas Government Code, Chapter 481, as amended, the Office, an agency of the State of Texas, is authorized to provide for the issuance of revenue bonds or notes for the purpose of providing money to fund economic development programs.(2) The Office adopted a Master Resolution as of September 9, 1992, establishing a $300,000,000 Taxable Commercial Paper Note Program Series A for the purpose of providing money to establish certain Office loan programs. By First Supplemental Resolution dated as of September 9, 1992, the Office authorized the issuance of $25,000,000 in aggregate principal amount at any one time outstanding of its Taxable Commercial Paper Notes Series A to fund economic development programs.(c) Delegation of authority to executive director. Pursuant to the Texas Government Code, §481.075(a) and the Master Resolution, the Office has delegated to the executive director, or his/her designee, the authority to approve each loan made under the Texas Leverage Fund Program. Further, the Office delegated to the executive director, or his/her designee, all necessary authority in regard to collection, settlement and enforcement of each and every loan approved and funded under this program.</content><note type="source"><p>Source Note: The provisions of this §181.1 adopted to be effective March 27, 1997, 22 TexReg 2871; amended to be effective December 10, 2001, 26 TexReg 10054; amended to be effective August 5, 2012, 37 TexReg 5730.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c181/sc/s181.2"><num value="181.2">§181.2</num><heading>Definitions</heading><content>The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.(1) Act--The Development Corporation Act, Texas Local Government Code, Title 12, as amended.(2) Applicant--An EDC filing an application for a Texas Leverage Fund program loan.(3) Application--The information submitted by an applicant to the Office, including supporting documentation and schedules, required by the Office for loan underwriting and loan approval under this program.(4) Approval--The executive director's, or his/her designee's, approval of the terms and conditions for a program loan and loan agreement between the Office and the EDC.(5) Bank--The financial institution providing credit facilities for this program.(6) Board of directors--The governing body of an EDC.(7) City--The governmental entity creating the EDC.(8) Cost--As defined by the Act, §501.002(6) as applied to the use of program loan proceeds to fund eligible projects.(9) Debt Service Coverage Ratio--The ratio of the projected or actual sales and use tax receipts generated by the levy and collection of the economic development sales and use tax by the city for the benefit of an EDC, which sales and use tax receipts shall be determined by using the lowest 12 consecutive months of sales and use tax receipts of the 18 months immediately preceding the date of determination thereof, to the scheduled maximum annual principal of and interest on the program loan plus the scheduled maximum annual principal of and interest on any other debt or obligation existing on the date of the program loan secured in whole or in part by and payable from such economic development sales and use tax on a parity with the proposed program loan and giving the holder thereof an equal and ratable claim to the proceeds of the economic development sales and use tax. In the event that an economic development sales and use tax has not been previously collected or has not been collected for at least 18 months, then there shall be estimated by the Office the economic development sales and use tax that may have been collected over that period had such economic development sales and use tax been in place.(10) Economic development sales and use tax--That certain sales and use tax that may be levied by a city for the benefit of an EDC under either Chapter 504 or Chapter 505 of the Act.(11) EDC--An economic development corporation created by a city pursuant to Chapter 504 or Chapter 505 of the Act.(12) Executive director--The executive director of the Office.(13) Federally assisted new communities--As defined by the Act, §2(11)(C) and §180.2(a)(3)(M) of this title (relating to Industrial Revenue Bond Program).(14) Full time equivalent job--Permanent employment for 1,820 hours or more per year.(15) Interest rate--The floating prime or base rate published in the Wall Street Journal from time to time (Wall Street Journal Prime Rate) or the interest rate in effect under the Program guidelines from time to time.(16) Largest Four Year Sales Tax Decline--A decline in the total sales tax receipts of the city calculated as follows: (HIGH - LOW) / HIGH X 100. For the purpose of this definition "LOW" shall mean the lowest sum of sales tax revenue receipts collected by a city for any calendar year (adjusted for changes in sales tax rates) during the four year period preceding the date of calculation, as determined from the most recent June 30 or December 31, as applicable, for which sales tax data is available, and "HIGH" shall mean the highest sum of sales tax revenue received collected for any calendar year (adjusted for changes in sales tax rates) during the four year period preceding the date of calculation, as determined from the most recent June 30 or December 31, as applicable, for which sales tax data is available and which occurred in a calendar year preceding the calendar year in which the "LOW" occurred.(17) Largest Fifteen Year Sales Tax Decline--A percentage decline in the total sales tax receipts of a participating city calculated as follows: (HIGH - LOW) / HIGH X 100. For purposes of this definition "LOW" shall mean the lowest sum of sales tax revenue receipts collected by the city for any calendar year (adjusted for changes in sales tax rates) during the 15 year period preceding the date of calculation, as determined from the most recent December 31, and "HIGH" shall mean the highest sum of sales tax revenue receipts collected for any calendar year (adjusted for changes in sales tax rates) during this same period and which occurred in a calendar year preceding the calendar year in which the "LOW" occurred.(18) Office--The Economic Development and Tourism Office in the Office of the Governor.(19) Parity debt--Debt or other obligations, existing or incurred during the term of the program loan, secured in whole or in part by and payable from the economic development sales and use tax receipts of the city on a parity with the program loan and giving the holder an equal and ratable claim to the proceeds of the economic development sales and use tax.(20) Program--The Texas Leverage Fund.(21) Program guidelines--The Office guidelines relating to the program in effect at any particular time pursuant to the Act and the authority granted to the Office under the Master Resolution and First Supplemental Resolution, as amended.(22) Program loan--Loan from the Office to the EDC under the program.(23) Project--An eligible project as defined by the Act.(24) Projected Debt Service--The scheduled maximum annual debt service on all parity debt including any program loan.(25) Rating--The long-term general obligation debt rating assigned by a rating agency. Any reference in this chapter to the rating structure of one rating agency shall be deemed to include a reference to the equivalent rating or ratings of the other rating agency.(26) Rating agency--Standard Poor's Corporation, Moody's Investors Service and Fitch Investors Service, Inc.(27) Resolution--The resolution, order, ordinance, or other official action by the governing body of the city or EDC.(28) Rules--The rules of the Office.(29) State--The State of Texas.(30) Texas Enterprise Zone Act--Texas Government Code, §§2303.001 et seq., as amended.(31) Texas Leverage Fund--The economic development program of the Office pursuant to which the Office makes loans, meeting certain criteria in accordance with the Master Resolution and First Supplemental Resolution, as amended, to certain EDCs to fund the cost of certain eligible projects as defined by the Act and which loans are secured by and paid from the economic development sales and use tax receipt proceeds.(32) Trustee--A corporation with corporate trust powers serving in the capacity of trustee under the Office's Taxable Commercial Paper Notes Series A pursuant to a trust agreement between the corporation and the Office under the Master Resolution and First Supplemental Resolution, as amended.(33) User--An individual, partnership, corporation, or any other private entity, whether organized for profit or not for profit, or a city, county district, or any other political subdivision or public entity of the state or federal government.</content><note type="source"><p>Source Note: The provisions of this §181.2 adopted to be effective March 27, 1997, 22 TexReg 2871; amended to be effective December 10, 2001, 26 TexReg 10054; amended to be effective August 5, 2012, 37 TexReg 5730.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c181/sc/s181.3"><num value="181.3">§181.3</num><heading>Program</heading><content>Established pursuant to the authority recited in §181.1(b) of this title (relating to Texas Leverage Fund General Rules), the program provides a source for EDCs to leverage economic development sales and use tax receipt proceeds. The Office provides a program loan to the EDC to fund the cost of an eligible project as defined by the Act and in accordance with the Office's program guidelines. The program loan is secured by a pledge to the Office of the EDC's economic development sales and use tax receipt proceeds.</content><note type="source"><p>Source Note: The provisions of this §181.3 adopted to be effective March 27, 1997, 22 TexReg 2871; amended to be effective December 10, 2001, 26 TexReg 10054; amended to be effective August 5, 2012, 37 TexReg 5730.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c181/sc/s181.4"><num value="181.4">§181.4</num><heading>Program Loan Limitations</heading><content>The Office's maximum total program loans outstanding at any one time, including any unfunded program loan commitments, shall not exceed $50,000,000, or any lesser amount as determined by the Office and the Bank from time to time.</content><note type="source"><p>Source Note: The provisions of this §181.4 adopted to be effective March 27, 1997, 22 TexReg 2871; amended to be effective December 10, 2001, 26 TexReg 10054; amended to be effective August 5, 2012, 37 TexReg 5730.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c181/sc/s181.5"><num value="181.5">§181.5</num><heading>Eligible Projects</heading><content>(a) Chapter 504 City Projects. The projects of an applicant created pursuant to the Act, Chapter 504 must meet the definition of "Project" as that term is defined by the Act, §501.101, subject to the limitations imposed by the Act, §501.101(2)(A).(b) Chapter 505 City Projects. An applicant created pursuant to the Act, Chapter 505 must meet the definition of "Project" as that term is defined by the Act, §505.151.</content><note type="source"><p>Source Note: The provisions of this §181.5 adopted to be effective March 27, 1997, 22 TexReg 2871; amended to be effective December 10, 2001, 26 TexReg 10054; amended to be effective August 5, 2012, 37 TexReg 5730.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c181/sc/s181.6"><num value="181.6">§181.6</num><heading>Consideration of Applications by the Office</heading><content>(a) Application forms. Applications shall be filed by applicants on forms prescribed by the Office. Applications and other written communications relating to the program shall be addressed to the attention of the Texas Leverage Fund, Economic Development and Tourism Office, Office of the Governor, P.O. Box 12428, Austin, Texas 78711-2428. Applications shall be as complete as practicable, not requiring addendum in order to be approved. Requests for an application and program guidelines should also be sent to address indicated.(b) Assistance. Office staff will be available prior to submission of applications to assist applicants in determining program eligibility.(c) Denial of application. The Office may deny applications for program loans for the following reasons:(1) The applicant and/or the city do not submit all required information to the Office.(2) The applicant and/or the city do not meet the minimum financial criteria established by the Office for program loans under the program guidelines in effect at the time application is made.(3) The Office is unable to approve program loans due to unavailability of funding.</content><note type="source"><p>Source Note: The provisions of this §181.6 adopted to be effective March 27, 1997, 22 TexReg 2871; amended to be effective December 10, 2001, 26 TexReg 10054; amended to be effective August 5, 2012, 37 TexReg 5730.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c181/sc/s181.7"><num value="181.7">§181.7</num><heading>Contents of Application</heading><content>Required information. Applications must set forth the information necessary for the Office to determinate program eligibility. Applications shall include the following information:(1) EDC information, including:(A) applicant's legal name;(B) corporate charter number;(C) date of incorporation;(D) federal employer identification number;(E) physical and mailing addresses;(F) telephone and fax numbers;(G) contact name and title; and(H) whether the EDC was created under Chapter 504 or Chapter 505 of the Act;(2) information on the election for economic development sales and use tax, including:(A) election date;(B) date tax effective;(C) expiration date (if any);(D) rate of tax adopted;(E) date tax proceeds first received from comptroller; and(F) limitations/restrictions on use of tax receipt proceeds;(3) information on any election for an additional sales and use tax under Chapter 321, Texas Tax Code, including:(A) election date;(B) date tax effective;(C) rate of tax adopted;(D) date tax proceeds first received from the comptroller;(E) date tax was repealed or modified after passage; and(F) if applicable, describe any changes to the tax;(4) names and titles of EDC officers and board of directors;(5) names, addresses, and telephone and fax numbers of mayor, city manager and city attorney;(6) executed acknowledgment that all underwriting responsibilities for loans to a user are those of the EDC and city, and that the Office has no responsibility for loan repayment by the user;(7) completion of the debt service coverage ratio worksheet in accordance with the instructions provided by the Office, including:(A) the city's general obligation bond rating;(B) the rating agency;(C) the target funding date for the program loan;(D) the program loan amount;(E) the terms of program loan;(F) the EDC's annual debt service amount; and(G) the EDC's parity debt service amount;(8) a listing of all parity and non-parity debt obligations, including:(A) creditor's name, address, and telephone and fax numbers;(B) loan origination date;(C) original loan amount;(D) current loan balance;(E) monthly loan payment;(F) maturity date; and(G) collateral description and value;(9) user information, including:(A) business name, address, and telephone and fax numbers;(B) contact name and title;(C) type of legal entity;(D) minority or woman-owned ownership percentage;(E) business description including:(i) the standard industrial classification code number;(ii) industry category;(iii) current number of employees;(iv) total annual sales;(v) number of years in business;(vi) date started doing business; and(vii) brief description of business;(10) a summary of the project, including:(A) project address and the county in which located;(B) the number of full time equivalent jobs created and/or retained as a result of project;(C) a concise description of the type of project, including:(i) primary purpose of project;(ii) ownership of project such as EDC, city, or user;(iii) components of project such as land, buildings, infrastructure, equipment, facilities, and improvements;(iv) whether project is located in one of the following designated areas:(I) federally designated empowerment zone and enterprise community designated under the Internal Revenue Code of 1986, §1391;(II) federally assisted new community;(v) applications for Chapter 505 projects must include documentation that the project has been published for at least 60 days as required by the Act, §505.160 and that no petition from 10% or more of the registered voters of the city requesting an election has been received by the city; and(vi) applications for Chapter 505 projects must also include documentation that at least one public hearing was held on the proposed project as required by the Act, §505.159;(11) a cost breakdown of the project specifying sources of funds (such as program loan, equity and other) and uses of funds (such as land, infrastructure, building, machinery, equipment, professional fees, debt, working capital and other);(12) a certification that the representations made by the EDC are true and that no relevant facts have been intentionally omitted;(13) EDC's articles of incorporation and bylaws;(14) Chapter 504 or Chapter 505 sales and use tax ballot proposition (actual wording);(15) city's economic development plan (infrastructure projects only);(16) documents in support of federal designation of empowerment zones or enterprise communities;(17) documents in support of grants received under the Housing and Community Development Act of 1974, §107(a)(1), as amended, for federally assisted new communities;(18) documents in support of enterprise zone designation under the Texas Enterprise Zone Act; and(19) such other information as may be required by the Office in order to make a prudent loan decision on the project application and to insure that the project and cost are eligible under the Act.</content><note type="source"><p>Source Note: The provisions of this §181.7 adopted to be effective March 27, 1997, 22 TexReg 2871; amended to be effective December 10, 2001, 26 TexReg 10054; amended to be effective August 5, 2012, 37 TexReg 5730.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c181/sc/s181.8"><num value="181.8">§181.8</num><heading>General Terms and Conditions of the Office's Financial Commitment</heading><content>(a) Permissible use of financial commitment. The Office's financial commitment shall to be used to finance the cost of the project identified in the application in accordance with the Act and the Office's program guidelines.(b) Eligibility. To be eligible to participate, a city must not have experienced a "Largest Four Year Sales Tax Decline" of greater than 10%.(c) Minimum amount of loan. There is no minimum loan amount.(d) Maximum amount of loan. No city with a rating of BBB+/Baa or better shall account for more than $6,000,000 of program loans outstanding at any one time. No city with a rating less than BBB+/Baa, or city with no rating shall account for more than $5,000,000 of program loans outstanding at any one time.(e) Interest. The program loan shall bear an interest rate as provided by the program guidelines in effect from time to time.(f) Maximum loan term. No program loan may be amortized for a period longer than 15 years.(g) Security. All program loans must be secured by a first lien pledge of tax receipt proceeds sufficient, as of the loan closing date, to comply with a "Debt Service Coverage Ratio," based on loan term and the "Largest Fifteen Year Sales Tax Decline," as required under the program guidelines.(h) Pledge of tax receipt proceeds. All program loans must be on a parity with or superior to any other debt obligations secured by the tax receipt proceeds and owing or incurred while any portion of the program loan is outstanding to insure that the Office shall have no less than an equal claim to all pledged tax receipt proceeds.(i) Other parity debt. If parity debt exists or is incurred during the term of the program loan, the "Debt Service Coverage Ratio" based on total "Projected Debt Service" must exceed the ratios set forth under the Program guidelines by a factor of 0.1 as of both the closing date of the program loan and the closing date of any parity debts subsequently incurred.(j) Cross-default. The program loan shall be cross-defaulted with all parity debt obligations and the Office must be notified in advance of the issuance of any parity debt obligations.(k) Purpose of loan. The purpose of the program loan and the use of funds must comply with all applicable requirements of the Act and the Office Program guidelines. EDCs are permitted to use the proceeds of a program loan to fund the eligible cost of any eligible project as defined by the Act and the Office program guidelines.(l) Program loan approval. The program loan approval shall be evidenced by a loan commitment letter issued by the Office to the applicant. The loan commitment requires formal acceptance and response by the applicant and the city within 45 days from the date of the loan commitment letter. All program loan agreements must be approved by the executive director, or his/her designee, before loan closing.(m) Conditions precedent to loan closing. The following events shall be conditions precedent to the closing of the program loan:(1) Delivery to the Office of an opinion of counsel from counsel representing the EDC addressed to the Office, the Trustee, and the Bank in form and substance acceptable to the Office;(2) Delivery to the Office of evidence of voter and city council approval of the economic development sales and use tax under the Act, Chapter 504 or Chapter 505 in a form acceptable to the Office;(3) Delivery to the Office of a certificate of the chief financial officer of the city in a form acceptable to the Office that the "Debt Service Coverage Ratio" required by the Office program guidelines has been met;(4) Delivery to the Office of an incumbency, signature identification and authority certificate for the EDC and the city in form and substance acceptable to the Office;(5) Delivery to the Office of a certified copy of a resolution of the EDC authorizing and approving the program loan and pledging the economic development sales and use tax receipts in favor of the Office;(6) Delivery to the Office of a copy of a letter addressed to the Texas State Treasury providing wire transfer instructions for the program loan proceeds; and(7) Delivery to the Office of a certified copy of a resolution of the city authorizing and approving the program loan of the EDC.</content><note type="source"><p>Source Note: The provisions of this §181.8 adopted to be effective March 27, 1997, 22 TexReg 2871; amended to be effective December 10, 2001, 26 TexReg 10054; amended to be effective August 5, 2012, 37 TexReg 5730.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c181/sc/s181.9"><num value="181.9">§181.9</num><heading>Loan Closing</heading><content>(a) Time and place. A loan closing shall take place at the Office or such other place as the Office shall designate. The time of a loan closing shall be mutually agreeable to the Office and the applicant, but in no event later than six months from the date of the loan commitment letter.(b) Documents. The following documents shall be executed and delivered to the Office in a form acceptable to the Office, prior to funding of the program loan:(1) Loan agreement executed by the applicant, the city, and the Office;(2) Promissory note executed by the applicant;(3) Uniform Commercial Code financing statement executed by the applicant and the Office.(c) Funding of loan. The program loan proceeds shall be made by wire transfer according to instructions specified by the EDC.</content><note type="source"><p>Source Note: The provisions of this §181.9 adopted to be effective March 27, 1997, 22 TexReg 2871; amended to be effective December 10, 2001, 26 TexReg 10054; amended to be effective August 5, 2012, 37 TexReg 5730.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c181/sc/s181.10"><num value="181.10">§181.10</num><heading>Loan Administration</heading><content>(a) Loan servicing. The Office shall perform all loan administration services for the program loan except for the receipt of loan payments.(b) Loan payments. All payments of principal and interest and any prepayments on the program loan shall be payable by the EDC by wire transfer to the Trustee on the first business day of each month.(c) Principal and interest payment adjustments. The program loan shall provide for equal monthly principal and interest payments. Payment amounts shall be adjusted by the Office upon a change in interest rate or a prepayment to amortize the loan over its original term.(d) Other payments. All repayments to the EDC under any loan, lease or sale agreement to any user in excess of the scheduled payments provided by such agreements, including prepayments, proceeds of condemnation awards, foreclosure proceeds, insurance payments or other monies not reinvested in the collateral, or proceeds from the disposition of an asset, shall be used by the EDC to prepay a like principal amount on the program loan.(e) Reporting. The EDC shall provide to the Office within 15 days after the end of each quarter ending November 30, February 28 (or February 29 during a leap year), May 31, and August 31, the following written reports:(1) A quarterly payment status report, including the principal and interest balance outstanding on the program loan, and all indebtedness of the EDC secured by the economic development sales and use tax; and(2) Quarterly reports on the rating, economic development sales and use tax revenues, and the "Debt Service Coverage Ratio" of the city, which shall also take into account any parity debt incurred after the date of the program loan.</content><note type="source"><p>Source Note: The provisions of this §181.10 adopted to be effective March 27, 1997, 22 TexReg 2871; amended to be effective December 10, 2001, 26 TexReg 10054; amended to be effective August 5, 2012, 37 TexReg 5730.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p5/c184"><num value="184">CHAPTER 184</num><heading>SPORTS AND EVENTS TRUST FUND</heading><subchapter identifier="/us/state/tx/tac/t10/p5/c184/scA"><num value="A">SUBCHAPTER A</num><heading>AUTHORITY AND APPLICABILITY, PURPOSE, CONSTRUCTION OF RULES AND GENERAL DEFINITIONS</heading><section identifier="/us/state/tx/tac/t10/p5/c184/scA/s184.1"><num value="184.1">§184.1</num><heading>Authority and Applicability</heading><content>(a) Authority for this Chapter is provided in Texas Revised Civil Statutes, Article 5190.14, Sections 3A, 5A(v) and 5C(p).(b) A request to participate in the Major Events Reimbursement Program, Events Trust Fund Program, or Motor Sports Racing Trust Fund Program that is submitted to the Office prior to the effective date of these rules is governed by the applicable rules in effect at the time the request is received by the Office.(c) The effective date of these rules is January 1, 2017.</content><note type="source"><p>Source Note: The provisions of this §184.1 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scA/s184.2"><num value="184.2">§184.2</num><heading>Purpose</heading><content>(a) The purpose of the Major Events Reimbursement Program is to reimburse local governments and local organizing committees for certain eligible costs associated with conducting major events specifically referenced in Texas Revised Civil Statutes, Article 5190.14, Section 5A, provided that all statutory and administrative requirements are satisfied.(b) The purpose of the Events Trust Fund Program is to reimburse local governments and local organizing committees for certain eligible costs associated with conducting eligible events under Texas Revised Civil Statutes, Article 5190.14, Section 5C, provided that all statutory and administrative requirements are satisfied.(c) The purpose of the Motor Sports Racing Trust Fund Program is to reimburse local governments and local organizing committees for certain eligible costs associated with conducting specific motor sports racing events under Texas Revised Civil Statutes, Article 5190.14, Section 5B, provided that the event is sanctioned by the Automobile Competition Committee for the United States, held at a temporary event venue, and that all statutory and administrative requirements are satisfied.</content><note type="source"><p>Source Note: The provisions of this §184.2 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scA/s184.3"><num value="184.3">§184.3</num><heading>Construction of Rules</heading><content>(a) The Office shall administer the Major Events Reimbursement Program, the Events Trust Fund Program, and the Motor Sports Racing Trust Fund program in a manner consistent with the requirements in Texas Revised Civil Statutes, Article 5190.14, and that statute shall control over any conflicting provision of these administrative rules.(b) Unless otherwise provided by law or this chapter, the rules applicable to the Events Trust Fund Program shall also be applicable in the same manner to the Motor Sports Racing Trust Fund Program.(c) The Chief of Staff of the Office of the Governor or his designee may, in their sole discretion, waive any provision of this chapter upon a finding that the public interest would be furthered by granting a waiver. Any such waiver must be consistent with applicable statutory law.</content><note type="source"><p>Source Note: The provisions of this §184.3 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scA/s184.4"><num value="184.4">§184.4</num><heading>General Definitions</heading><content>The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:(1) Applicant--An endorsing county, endorsing municipality, or local organizing committee that is eligible to participate in the Major Events Reimbursement Program, Events Trust Fund Program, or Motor Sports Racing Trust Fund Program. The term includes one or more endorsing counties and/or endorsing municipalities acting collectively or in conjunction with a local organizing committee. The term may also include a local government corporation that meets the requirements of Texas Revised Civil Statutes, Article 5190.14, Section 12.(2) Day--As used in this chapter, all references to "day" mean a calendar day.(3) Direct cost--Any cost that is directly attributable to the preparation or presentation of an event. The term does not include:(A) any indirect, administrative, or overhead cost;(B) any cost that is recouped or refunded by other parties or from event related revenue relating to the same expense or obligation; or(C) any cost that is not directly attributable to an event.(4) Estimate--The Office's determination of the amount of incremental increase in tax receipts that are directly attributable to the preparation or presentation of an event eligible to be deposited in the trust fund for an eligible event.(5) Event support contract--A contract by and between a site selection organization and a local organizing committee, an endorsing municipality, or an endorsing county setting out the representations and assurances of the parties with respect to the selection of a site in this state for the location of an event, and the requirements and costs necessary (or desirable, as authorized by Texas Revised Civil Statutes, Article 5190.14, Section 5A(h) or 5B(h)) for the preparation or presentation of an event. The term includes a joinder agreement or joinder undertaking as defined by Texas Revised Civil Statutes, Article 5190.14. The term does not include a request for bid, request for proposal, bid response, or a selection letter from a site selection organization except as those documents may be incorporated by reference into the event support contract.(6) Events Trust Fund--The fund established by the Office for the event pursuant to Texas Revised Civil Statutes, Article 5190.14, Section 5C(d).(7) Highly competitive selection process--A process in which the site selection organization has considered sites for the event outside of Texas on a competitive basis and intends to do so in the future.(8) Host fee or sanction fee--A cost charged by a site selection organization under an event support contract for the cost of hosting or authorizing the event.(9) Internal billing--Costs incurred under an event support contract by a local organizing committee, an endorsing municipality, or an endorsing county for the costs of services or facilities provided for the event by an endorsing municipality or endorsing county, including, but not limited to, facility rentals and charges for police, fire, or emergency medical services.(10) Local organizing committee--A nonprofit corporation or its successor in interest that:(A) has been authorized by an endorsing municipality, endorsing county, or more than one endorsing municipality or county acting collectively to pursue an application and bid with a site selection organization for selection as the site of an event; or(B) with the authorization of an endorsing municipality, endorsing county, or more than one endorsing municipality or county acting collectively, has executed an agreement with a site selection organization regarding a bid to host an event.(11) Local share--The contribution to the fund made by or on behalf of an endorsing municipality or endorsing county pursuant to Texas Revised Civil Statutes, Article 5191.14, Section 5A(d), 5A(d-1), 5B(d), 5C(d), or 5C(d-1).(12) Major Events Reimbursement Program Trust Fund-- The trust fund established by the Office for the event pursuant to Texas Revised Civil Statutes, Article 5190.14, Section 5A(d).(13) Market area--The geographic area within which the Office determines there is a reasonable likelihood of measurable economic impact directly attributable to the preparation for or presentation of the event and related activities.(14) Motor Sports Racing Trust Fund-- The fund established by the Office for the event pursuant to Texas Revised Civil Statutes, Article 5190.14, Section 5B(d).(15) Office--The Economic Development and Tourism Office within the Office of the Governor.(16) Professional services--The services of a licensed accountant, architect, attorney, professional engineer, landscape architect, land surveyor, physician, nurse, or real estate appraiser. The term does not include the services of other types of licensed professionals unless otherwise determined by the Office to be reasonably necessary (or desirable, as authorized by Texas Revised Civil Statutes, Article 5190.14, Section 5A(h) or 5B(h)) for the preparation or presentation of an approved event.(17) Proof of payment--An official banking statement, check copy, credit card receipt, or other document required by the Office to support or document a requested disbursement from the trust fund that reflects the transmission, transfer, or payment of funds related to an event, which may be redacted of information related to transactions and balances not pertaining to the event.(18) Publicly owned property-- Any property that is owned by a governmental unit as defined by Texas Civil Practices and Remedies Code, Section 101.001(3).(19) Travel--Includes lodging, mileage, rental car expense, airfare, toll fares, parking and meals that are incurred while a person travels.(20) Trust fund--The fund created by the Texas Comptroller of Public Accounts, at the direction of the Office, and designated as either the Major Events Reimbursement Program Fund, Events Trust Fund, or Motor Sports Racing Trust Fund for the event.</content><note type="source"><p>Source Note: The provisions of this §184.4 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p5/c184/scB"><num value="B">SUBCHAPTER B</num><heading>MAJOR EVENTS REIMBURSEMENT PROGRAM DEFINITIONS, ELIGIBILITY, PARTICIPATION AND DEADLINES</heading><section identifier="/us/state/tx/tac/t10/p5/c184/scB/s184.10"><num value="184.10">§184.10</num><heading>Definitions</heading><content>The following words and terms, when used in this chapter in the context of the Major Events Reimbursement Program, shall have the following meanings:(1) Cost--An Applicant's direct expenses and obligations necessary or desirable for the preparation or presentation of an event and related activities under an event support contract that are not recouped from or refunded by other parties.(2) Endorsing county--A county that contains a site selected by a site selection organization for one or more events, or a county that:(A) does not contain a site selected by a site selection organization for an event;(B) is included in the market area for the event as designated by the Office; and(C) is a party to an event support contract.(3) Endorsing municipality--A municipality that contains a site selected by a site selection organization for one or more events, or a municipality that:(A) does not contain a site selected by a site selection organization for an event;(B) is included in the market area for the event as designated by the Office; and(C) is a party to an event support contract.(4) Event--This term has the same meaning as assigned by Texas Revised Civil Statutes, Article 5190.14, Section 5A(a)(4).(5) Site selection organization-- An entity expressly listed in Texas Revised Civil Statutes, Article 5190.14, Section 5A(a)(5).</content><note type="source"><p>Source Note: The provisions of this §184.10 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scB/s184.11"><num value="184.11">§184.11</num><heading>Eligibility</heading><content>(a) An event is eligible for participation in the Major Events Reimbursement Program only if:(1) the event and the site selection organization for the event are identified in Texas Revised Civil Statutes, Article 5190.14, Sections 5A(a)(4) and (5);(2) a site selection organization selects a site in Texas through a highly competitive process after considering one or more sites that are not located in this state, for the event to be held one time or, for an event scheduled to be held each year for a period of years under an event support contract, one time each year for the period of years;(3) a site selection organization selects a site in this state as:(A) the sole site for the event; or(B) the sole site for the event in a region composed of this state and one or more adjoining states;(4) the event will not be held more than one time in any year; and(5) the Office determines that the incremental increase in tax receipts equals or exceeds $1 million per year for the event, provided that for an event scheduled to be held each year for a period of years under an event support contract, the incremental increase in tax receipts shall be calculated as if the event did not occur in the prior year.(b) The requirements of subsections (a)(2) of this section do not apply to an event as described by Texas Revised Civil Statutes, Article 5190.14, Section 5A(a-2).(c) An Applicant cannot receive disbursements for the same event under both the Major Events Reimbursement Program and the Events Trust Fund Program. Nothing contained herein prohibits the submission of an application for the Events Trust Fund Program for events that are ineligible as a matter of law to participate in the Major Events Reimbursement Program.</content><note type="source"><p>Source Note: The provisions of this §184.11 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scB/s184.12"><num value="184.12">§184.12</num><heading>Request to Participate in the Major Events Reimbursement Program</heading><content>(a) A request to establish a trust fund for the Major Event Reimbursement Program must contain:(1) a complete and signed application;(2) documentation from the endorsing municipality or endorsing county requesting participation in the trust fund program and signed by a person authorized to bind the municipality or county;(3) a signed letter from the site selection organization selecting the site in Texas that includes all the information necessary to establish that the site was selected through a highly competitive selection process; and(4) an economic impact study or other data sufficient for the Office to make the determination of the estimated incremental increase in tax revenue directly attributable to the preparation or presentation of the event, including any data for any related activities.(A) the economic impact study and other data submitted should contain detailed information on the direct expenditures for the event in the requested market area relating to the economic activity of attendees and other persons associated with the event during a reasonable time prior to the event, during the event, and within a reasonable time immediately after the event. The study may also include information on event expenditures if available.(B) any other data or information addressing the secondary economic impact for the event in the requested market area during the ten months immediately following the last day of the event must be stated separately from data listed in subparagraph (A) of this paragraph such that the data for each can be easily distinguished. If the applicant fails to include information listed in this subparagraph, the Office's determination of the amount of incremental tax receipts will be based solely on the submitted data.(C) all economic impact studies and other data submitted by the applicant shall address only the incremental increase in tax receipts for the tax types identified in Texas Revised Civil Statutes, Article 5190.14, Section 5A(b)(1)-(5). Information regarding other actual or estimated economic impacts will not be considered by the Office.(D) any economic impact study submitted shall include a certification from the person(s) who prepared the study for the application, attesting to the accuracy of the information provided.(b) The request for participation and the economic impact report should propose the applicant's desired market area and include information to support the choice of market area. The Office shall make the final determination establishing the market area. An endorsing municipality or endorsing county that has been selected as the site for the event must be included in the market area for the event.(c) The request for participation and the economic impact report should include a list of all event activities proposed to be included in the estimate and must include data for each activity, including, at a minimum:(1) projected attendance figures;(2) a description of the methodology that will be used for determining the total actual attendance at the event;(3) the projected spending of attendees; and(4) any anticipated expenditure information related to the activity.(d) The request for participation must be accompanied by a certification provided by an authorized representative from each endorsing municipality, endorsing county, and local organizing committee (if applicable) attesting to the accuracy of the information provided.(e) The Office is not required to review or act on a request for participation that does not contain all items in subsections (a) - (d) of this section.(f) A request for participation must be submitted not earlier than one year and not later than 45 days before the date the event begins. Requests submitted outside this time frame shall not be reviewed.(g) The Office may issue guidance to establish, interpret, or clarify requirements for the submission of requests to participate in the Major Events Reimbursement Program. Compliance with any such guidance shall be required by the Applicant. Any such guidance must be consistent with all applicable statutes and this chapter.(h) All requests and required documentation must be submitted electronically to: eventsfund@gov.texas.gov.(i) The Office shall make a determination of the amount of incremental increase in tax receipts not later than the 30th day after the date the Office receives the completed request for participation and all related information required by this section.</content><note type="source"><p>Source Note: The provisions of this §184.12 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scB/s184.13"><num value="184.13">§184.13</num><heading>Major Events Reimbursement Program Deadlines</heading><content>(a) Application Deadline. Applications for participation in the Major Events Reimbursement Program must be submitted not earlier than one year, and not later than 45 days, before the first day of the event.(b) Determination Deadline. Not later than the 30th day after the date the Office receives a completed request for participation and all required information, the Office will make a determination of whether the event meets the eligibility requirements of Texas Revised Civil Statutes, Article 5190.14 for the establishment of a Major Events Reimbursement Program Fund, and a determination of the amount of incremental increase in tax receipts, as determined by the Office, that is directly attributable to the preparation or presentation of the event.(c) Event Support Contract Submission. Before the first date of the event, the applicant shall submit an event support contract and other documentation required by section 184.31 of this chapter. If the event support contract is not timely submitted, the Office may deem the Applicant ineligible for disbursements from the trust fund established for the event.(d) Attendance Certification Deadline. The applicant shall submit the attendance certification and supporting documentation required by section 184.30 of this chapter not later than 45 days after the last date of the event. If the attendance documentation for the event is not timely submitted, the Office may deem the applicant ineligible for disbursements from the trust fund established for the event.(e) Local Share Submission. Not later than 90 days after the last day of the event, the applicant shall remit to the Office the local share contribution to the fund made by or on behalf of an endorsing municipality or endorsing county pursuant to Texas Revised Civil Statutes, Article 5191.14, Section 5A(d) or (d-1). The local share cannot be submitted on a weekend or state holiday. If the local share is not timely submitted, the trust fund established for the event will be closed.(f) Disbursement Request Submission. The applicant shall submit all requests for disbursements from the trust fund and supporting documentation no later than 180 days after the last day of the event. Any disbursement requests that are not timely submitted may be ineligible for reimbursement from the trust fund established for the event.(g) A local organizing committee, endorsing municipality, or endorsing county must provide an annual audited financial statement if requested by the Office no later than the end of the fourth month after the date the period covered by the financial statement ends.</content><note type="source"><p>Source Note: The provisions of this §184.13 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p5/c184/scC"><num value="C">SUBCHAPTER C</num><heading>EVENTS TRUST FUND PROGRAM DEFINITIONS, ELIGIBILITY, PARTICIPATION AND DEADLINES</heading><section identifier="/us/state/tx/tac/t10/p5/c184/scC/s184.20"><num value="184.20">§184.20</num><heading>Definitions</heading><content>The following words and terms, when used in this Chapter in the context of the Events Trust Fund Program, shall have the following meanings:(1) Cost--An applicant's direct expenses and obligations necessary for the preparation or presentation of an event and related activities under an event support contract that are not recouped from or refunded by other parties.(2) Endorsing county--A county that contains within its boundaries a site selected by a site selection organization for one or more events.(3) Endorsing municipality--A municipality that contains within its boundaries a site selected by a site selection organization for one or more events.(4) Event--An event or a related series of events held in this state for which a local organizing committee, endorsing county, or endorsing municipality seeks approval from a site selection organization to hold the event at a site in this state. The term includes any activities related to or associated with the event.(5) Direct spending--The amount of incremental increase in tax receipts for the 30-day period that ends one day after the last date of the event that are directly attributable to spending related to the preparation or presentation of an event.(6) Site selection organization--An entity that conducts or considers conducting an eligible event in this state.</content><note type="source"><p>Source Note: The provisions of this §184.20 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scC/s184.21"><num value="184.21">§184.21</num><heading>Eligibility</heading><content>(a) An event is eligible for participation in the Events Trust Fund Program only if:(1) a site selection organization selects a site in Texas through a highly competitive process after considering one or more sites that are not located in this state, for the event to be held one time or, for an event scheduled to be held each year for a period of years under an event support contract, one time each year for the period of years;(2) a site selection organization selects a site in this state as:(A) the sole site for the event; or(B) the sole site for the event in a region composed of this state and one or more adjoining states; and(3) the event that is held not more than one time in this state or an adjoining state in any year.(b) During any state fiscal year (September 1 - August 31), an applicant may not submit more than 10 events, only three of which may be nonsporting events, for reimbursement under the Events Trust Fund Program for which the Office determines that the amount of the incremental increase in tax receipts is less than $200,000. A sporting event is an event whose primary purpose, as determined by the Office, is the conduct of recreational or competitive athletic or physical activities, including individual, team, equestrian, or automotive competitions.(c) An applicant cannot receive disbursements for the same event under both the Major Events Reimbursement Program and the Events Trust Fund Program. Nothing contained herein prohibits the submission of an application for the Events Trust Fund Program for events that are ineligible as a matter of law for participation in the Major Events Reimbursement Program.</content><note type="source"><p>Source Note: The provisions of this §184.21 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scC/s184.22"><num value="184.22">§184.22</num><heading>Request to Establish a Trust Fund</heading><content>(a) A request to establish a trust fund for the Events Trust Fund Program must contain:(1) a complete and signed application;(2) documentation from the endorsing municipality or endorsing county requesting participation in the trust fund program and signed by a person authorized to bind the municipality or county;(3) a signed letter from the site selection organization selecting the site in Texas that includes all the information necessary to establish that the site was selected through a highly competitive selection process; and(4) an economic impact study or other data sufficient for the Office to make the determination of the estimated incremental increase in tax revenue directly attributable to the preparation or presentation of the event, including any data for any related activities.(A) the economic impact study and other data submitted must contain detailed information on the direct expenditures and direct spending data for the event for the requested market area.(B) all economic impact studies and other data submitted by the applicant shall address only the incremental increase in tax receipts for the tax types identified in Texas Revised Civil Statutes, Article 5190.14, Section 5C(b)(1)-(5). Information regarding other actual or estimated economic impacts will not be considered by the Office.(C) any economic impact study submitted shall include a certification from the person(s) who prepared the study for the application, attesting to the accuracy of the information provided.(b) The request for participation and the economic impact report should propose the applicant's desired market area and include information to support the choice of market area. The Office shall make the final determination establishing the market area. An endorsing municipality or endorsing county that has been selected as the site for the event must be included in the market area for the event.(c) The request for participation and the economic impact report should include a list of all event activities proposed to be included in the estimate and must include data for each activity, including, at a minimum:(1) projected attendance figures;(2) a description of the methodology that will be used for determining the total actual attendance at the event;(3) the projected spending of attendees; and(4) any anticipated expenditure information related to the activity.(d) The request for participation must be accompanied by a certification provided by an authorized representative from each endorsing municipality, endorsing county, and local organizing committee (if applicable) attesting to the accuracy of the information provided.(e) The Office is not required to review or act on a request for participation that does not contain all items in subsections (a) - (d) of this section.(f) A request for participation must be submitted not later than 120 days before the date the event begins. Requests submitted outside this time frame shall not be reviewed.(g) The Office may issue guidance to establish, interpret, or clarify requirements for the submission of requests to participate in the Events Trust Fund Program. Compliance with any such guidance shall be required by the Applicant. Any such guidance must be consistent with all applicable statutes and this chapter.(h) All requests and required documentation must be submitted electronically to: eventsfund@gov.texas.gov.(i) The Office shall make a determination of the amount of incremental increase in tax receipts not later than the 30th day after the date the Office receives the completed request for participation and all related information required by this section, and not later than three months before the date of the event.</content><note type="source"><p>Source Note: The provisions of this §184.22 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scC/s184.23"><num value="184.23">§184.23</num><heading>Events Trust Fund Program Deadlines</heading><content>(a) Application Deadline. Applications for participation in the Events Trust Fund Program should be submitted no later than 120 days before the first day of the event in order to permit the Office to timely determine the amount of incremental increase in tax by not later than three months before the date of the event.(b) Determination Deadline. No later than the 30th day after the date the Office receives a completed request for participation and all required information, the Office will make a determination of whether the event meets the eligibility requirements of Texas Revised Civil Statutes, Article 5190.14 for the establishment of an event trust fund, and a determination of the amount of incremental increase in tax receipts, as determined by the Office, that is directly attributable to the preparation or presentation of the event. The determination must be made no later than three months before the date of the event.(c) Event Support Contract Submission. Before the first date of the event, the applicant shall submit an event support contract and other documentation required by section 184.31 of this chapter. If the event support contract is not timely submitted, the Office may deem the applicant ineligible for disbursements from the trust fund established for the event.(d) Attendance Certification Deadline. The applicant shall submit the attendance certification and supporting documentation required by Section 184.30 not later than 45 days after the last date of the event. If the attendance documentation for the event is not timely submitted, the Office may deem the applicant ineligible for disbursements from the trust fund established for the event.(e) Local Share Submission. Not later than 90 days after the last day of the event, the applicant shall remit to the Office the local share contribution to the fund made by or on behalf of an endorsing municipality or endorsing county pursuant to Texas Revised Civil Statutes, Article 5191.14, Section 5B(d), 5C(d) or 5C(d-1). The local share cannot be submitted on a weekend or state holiday. If the local share is not timely submitted, the trust fund established for the event will be closed.(f) Disbursement Request Submission. The applicant shall submit all requests for disbursements from the trust fund and supporting documentation by not later than 180 days after the last day of the event. Any disbursement requests that are not timely submitted may be ineligible for reimbursement from the trust fund established for the event.(g) A local organizing committee, endorsing municipality, or endorsing county must provide an annual audited financial statement if requested by the Office no later than the end of the fourth month after the date the period covered by the financial statement ends.</content><note type="source"><p>Source Note: The provisions of this §184.23 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p5/c184/scD"><num value="D">SUBCHAPTER D</num><heading>REQUIRED REPORTS</heading><section identifier="/us/state/tx/tac/t10/p5/c184/scD/s184.30"><num value="184.30">§184.30</num><heading>Attendance Certification</heading><content>(a) Not later than 45 days after the last day of the approved event, an attendance certification based on a methodology acceptable to the Office signed by the person who signed the original request for participation or their successor under §184.12 (for the Major Events Reimbursement Program) or §184.22 (for the Events Trust Fund Program) of this chapter as applicable. The certification must include:(1) total actual attendance at the event;(2) the estimated number of attendees at the approved event that are not residents of Texas; and(3) the verifiable source and methodology for such numbers. Approved attendance methodologies are:(A) ticket sales count;(B) turnstile count;(C) ticket scan count;(D) convention registration check-in count;(E) participant totals; or(F) another methodology that is approved by the Office in its sole discretion prior to the first day of the event.(b) If the actual attendance figures are significantly lower than the estimated attendance numbers, the Office may reduce the amount of a disbursement for an endorsing entity under the trust fund in proportion to the discrepancy and in proportion to the amount contributed to the fund by the entity. Actual attendance at an event is considered significantly lower than estimated attendance when the difference is 25% or greater.</content><note type="source"><p>Source Note: The provisions of this §184.30 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scD/s184.31"><num value="184.31">§184.31</num><heading>Submission of Event Support Contract</heading><content>Before the first date of the event, the Applicant shall submit to the Office a complete and fully executed copy of the event support contract, any amendment to the contract, and any incorporated documentation.</content><note type="source"><p>Source Note: The provisions of this §184.31 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scD/s184.32"><num value="184.32">§184.32</num><heading>Other Information Required by the Office</heading><content>(a) Upon request of the Office, the applicant must provide to the Office any additional information, including financial information, or other information held by the applicant that the Office considers necessary to verify event related expenditures or to administer the program.(b) If the applicant fails or refuses to timely provide any information required by statute or this section, the Office may deem the applicant ineligible for disbursements from the trust fund established for the event.</content><note type="source"><p>Source Note: The provisions of this §184.32 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scD/s184.33"><num value="184.33">§184.33</num><heading>Post Event Report Information for Major Events Reimbursement Program</heading><content>Upon request of the Office, an applicant to the Major Events Reimbursement Program must provide to the Office any information the Office finds necessary to comply with the post event reporting requirements in Texas Revised Civil Statutes, Article 5190.14, Section 5A(w).</content><note type="source"><p>Source Note: The provisions of this §184.33 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p5/c184/scE"><num value="E">SUBCHAPTER E</num><heading>DISBURSEMENT PROCESS</heading><section identifier="/us/state/tx/tac/t10/p5/c184/scE/s184.40"><num value="184.40">§184.40</num><heading>Disbursements for Event Costs</heading><content>(a) Disbursements from the trust fund established for the event shall be issued by the Office to reimburse only allowable direct costs that are directly attributable to the preparation or presentation of the approved event related to:(1) preparing for and conducting an event in this state in accordance with the event support contract;(2) the construction, improvement, or renovation of facilities to the extent authorized by law that are directly attributable to fulfilling obligations of the event support contract and that are reasonably necessary (or desirable, as authorized by Texas Revised Civil Statutes, Article 5190.14, Section 5A(h) or 5B(h)) for the conduct of the event as required by the site selection organization; or(3) paying the principal of and interest on notes issued by an endorsing municipality or endorsing county under Texas Revised Civil Statutes, Article 5190.14, Section 5A(g), 5B(g) or 5C(g) as applicable.(b) Disbursements from the trust fund may not be used to make payments to an applicant or any other entity that are not directly attributable to allowable costs as set forth in §184.44 (Allowable Costs). Disbursements are subject to verification or audit prior to or after payment by the Office to ensure compliance.(c) The Office may issue guidance to establish, interpret, or clarify requirements for the disbursement requests for trust fund programs. Compliance with any such guidance shall be required by the applicant. Any such guidance must be consistent with all applicable statutes and this chapter.</content><note type="source"><p>Source Note: The provisions of this §184.40 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scE/s184.41"><num value="184.41">§184.41</num><heading>Documentation Required to Initiate Disbursement Process</heading><content>(a) To initiate the disbursement process, the applicant must electronically submit to the Office the following required documentation in a format required by the Office no later than 180 days after the last date of the event:(1) a signed disbursement request in the form prescribed by the Office;(2) a general explanation of the costs the disbursement request represents in the form prescribed by the Office;(3) copies of any publications, printed materials, signage, or advertising to support any costs relating to those items that are included in the disbursement request;(4) copies of the invoices, receipts, contracts, proof of payment, and other documents supporting the costs included in the disbursement request;(A) Estimates of expenditures, proposals, or purchase orders will not be accepted to support the reimbursement of a cost unless accompanied by invoices or other documentation to support that the related cost was actually incurred;(B) Acceptable forms of documentation must show itemized costs that are directly attributable to the event, including the invoice date and the date(s) the goods were delivered or the services performed. Allowable costs attributable to event staff shall include documentation sufficient to support how such costs were calculated and shall include the description of the work performed, the dates of service, rate of pay, and the number of hours worked per day, and an accounting of any overtime pay, if applicable;(5) if an Applicant seeks reimbursement for expenses incurred by another entity because of an obligation specified in the event support contract, copies of the invoice(s) sent by the entity to the Applicant for the expenses, and proof of the payment to the vendor;(6) for a request submitted by a local organizing committee, documentation showing the prior approval of the disbursement request by each contributing endorsing municipality and/or endorsing county;(7) a statement indicating whether any disbursement information provided to the Office is confidential and exempt from public disclosure under the Texas Public Information Act (Government Code, Chapter 552), including the legal citation of the exception claimed; and(8) a spreadsheet of event expenses.(b) An applicant shall retain all records related to an event for at least seven (7) years following the last day of the event. Such records must be made available to the Office upon request.</content><note type="source"><p>Source Note: The provisions of this §184.41 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scE/s184.42"><num value="184.42">§184.42</num><heading>Extension of Time to Submit Disbursement Documentation</heading><content>If the applicant is unable to provide all the information required for a completed disbursement request by the 180th day after the last date of the event, the Office may extend the period of time for requesting disbursement upon the receipt of a timely request for an extension from the Applicant. Any such requests from the applicant must be submitted to the Office by the 180th day after the last date of the event and must be accompanied by a narrative justification for the proposed extension of time. The Office is not required to act on any request for an extension of time, and any extension granted is within the discretion of the Office.</content><note type="source"><p>Source Note: The provisions of this §184.42 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scE/s184.43"><num value="184.43">§184.43</num><heading>Disbursement of Trust Funds</heading><content>(a) The Office will only consider a disbursement request that:(1) is supported by an event support contract;(2) requests reimbursement for payments or obligations for allowable costs; and(3) is complete, supported by proof of payment or internal billing documentation, and includes all event reimbursement costs being sought by the applicant for disbursement.(b) The Office may request additional supporting documentation or justification regarding any costs submitted for a disbursement. The Office, at its sole discretion, may withhold disbursements for event costs pending the receipt of any information the Office considers necessary to appropriately document the applicant's entitlement to reimbursement.(c) The Office shall not make any disbursements for event costs until all reporting requirements under Subchapter D (Required Reports) of this chapter are satisfied.(d) Upon disbursement of all reimbursement payments, any unexpended balance remaining in the trust fund will be returned to each endorsing entity in proportion to the local share contributed by the entity, and any unexpended state share shall be returned to the Comptroller of Public Accounts.(e) A disbursement made from the trust fund by the Office in satisfaction of an applicant's obligation shall be satisfied proportionately from the state and local share in the trust fund in the proportion of 6.25:1 of state funds to local share notwithstanding any agreements to the contrary made by an Applicant.(f) If the Office determines, based on information obtained from verifiable sources, including any monitoring, inspection, review or audit conducted by the Office or its authorized representatives, that the applicant received a disbursement in excess of the amount to which the applicant is entitled under applicable statutes and this chapter, or that the applicant provided erroneous information that resulted in an overstatement of the estimated incremental tax receipt increase for an event, then the Office may withhold, offset, recoup, or otherwise require the return of any excess disbursement amounts.</content><note type="source"><p>Source Note: The provisions of this §184.43 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scE/s184.44"><num value="184.44">§184.44</num><heading>Allowable Costs</heading><content>The following costs are supportive of the trust fund program goals and are generally allowable to the extent that such costs are supported by the event support contract and not otherwise unallowable in accordance with §184.45:(1) planning for or conducting the event in accordance with the event support contract;(2) the cost of any structural improvement or fixture for an event, as authorized by Texas Revised Civil Statutes, Article 5190.14, Sections 5A(k) or 5C(k).(3) financing costs for event sites;(4) fees charged by a site selection organization, which must be paid as a condition to holding an event, including hosting fees, sanction fees, participation fees, or bid fees, provided that the amount of all such fees is clearly stated in the application for participation in the trust fund program;(5) performance bonds or insurance required for hosting the event;(6) temporary maintenance to property impacted by the conduct of the event that is directly related to the preparation or presentation of the event;(7) costs that are necessary (or desirable, as authorized by Texas Revised Civil Statutes, Article 5190.14, Section 5A(h) or 5B(h)) for the public health or safety of people or animals involved in hosting, attending, or participating in the event, including:(A) water;(B) security;(C) professional fire marshal or engineer requirements for event facilities and other event related property or equipment;(D) portable restrooms, trash receptacles, and other types of sanitation necessities;(E) shade;(F) lighting and sound equipment required for security or public safety;(G) traffic planning and management;(H) severe weather planning and mitigation;(I) way-finding signage or staff;(J) barriers;(K) permits and professional or consulting services necessary (or desirable, as authorized by Texas Revised Civil Statutes, Article 5190.14, Section 5A(h) or 5B(h)) for acquiring permits;(L) stand-by services, such as stand-by medical services;(M) "Americans with Disabilities Act" (ADA) accommodations and compliance;(N) public health or safety command center expenses;(O) credentials; and(P) costs needed for police, fire, and other emergency operations staff.(8) event facility costs, including:(A) cost to rent an event facility, including any internal billing, if the terms of the event support contract require the Applicant to either reimburse the site selection organization for the cost to rent a facility, or to provide the facility at no cost to the site selection organization; and(B) the purchase or rental of seating or other furnishings, supplies and equipment that are reasonable and necessary (or desirable, as authorized by Texas Revised Civil Statutes, Article 5190.14, Section 5A(h) or 5B(h)) to conduct the event;(9) an applicant's event staffing costs incurred for services directly attributable to conducting the event that are performed within a reasonable time prior to the event, during the event, and within a reasonable time after the event, including:(A) hourly pay or overtime for personnel attributable to public health or safety for the event;(B) compensation of non-health and safety staff hired or contracted specifically to meet the objectives of an approved event; or(C) compensation for referees, score keepers, timers, and other similar officials required to meet the objectives of an approved event;(10) an applicant's professional service costs for fulfilling specific obligations of the event support contract, including for:(A) preparing event-related documents unless otherwise unallowable under §184.45 (Unallowable Costs);(B) fulfilling specific obligations of the event support contract; or(C) consulting on soliciting, preparing for, or hosting the event;(11) market-area transportation and/or parking services, but excluding personal travel, within a reasonable time prior to the event, during the event, or within a reasonable time after the event that have not otherwise been compensated or recovered from event-related revenue earned from providing the transportation and/or parking;(12) temporary signs and banners;(13) advertising for the event which:(A) occurs prior to or during the event;(B) includes the event name and date, or event name and location; and(C) are the Applicant's obligations in the event support contract;(14) promotional items that are created specifically to promote the event to the extent that the per-unit costs of such items are nominal in value;(15) production costs directly associated with the production of the main event, including staging, rigging, sound and lighting systems;(16) uniforms for event staff that are created specifically for the event;(17) costs directly attributable to inclement weather occurring immediately before, during, or immediately after an event, except costs of damages or lost revenue;(18) any other direct costs resulting from requirements of the event support contract that are not otherwise unallowable by state law or regulations, including §184.45 (Unallowable Costs), and which are determined by the Office to be directly attributable to the preparation or presentation of the event;(19) costs directly attributable to the performance of the national anthem of the United States or a foreign nation at the event;(20) cost of a photographer or videographer that documents the event;(21) food, the provision of which is directly related to the conduct of the event and that is provided on-site at the event to event participants or other personnel necessary to the conduct of the event (e.g. referees, judges, volunteers). The Office will only reimburse food costs up to $36 per person/per day;(22) the cost of a non-monetary prize or other form of award for participation or competitive performance in an event that is reasonable and customary for that event; and(23) the cost of an event participant's, coach's, referee's, judge's, or other similar person's lodging, automobile mileage, rental car, and commercial airfare that is directly related to the conduct of the event, provided that the participant, coach, referee, judge, or other similar person does not reside in the event market area. The Office will only reimburse:(A) lodging and automobile mileage costs up to the allowable rates for state employees, found at: https://fmx.cpa.texas.gov/fmx/travel/textravel/rates/current.php (last visited on September 20, 2016);(B) rental car costs up to the regular published rates for a standard full-size vehicle; and(C) airfare costs up to the regular published rates for coach-class airfare on a commercial airline.</content><note type="source"><p>Source Note: The provisions of this §184.44 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scE/s184.45"><num value="184.45">§184.45</num><heading>Unallowable Costs</heading><content>(a) Disbursements for the following costs are prohibited, regardless of their inclusion in an event support contract:(1) any tax listed in Texas Revised Civil Statutes, Article 5190.14;(2) gifts of any kind, including tips, gratuities, or honoraria;(3) grants to any person, entity, or organization;(4) alcoholic beverages;(5) food not specifically authorized in §184.44(21);(6) travel not specifically authorized in §184.44(23);(7) costs related to an applicant's application or participation in the trust fund program, including, but not limited to:(A) representing any entity, including an applicant or related party, in front of the legislature for any reason;(B) representing any entity, including an applicant or related party, in front of the Office for the purpose of applying to or seeking reimbursement from the trust fund;(C) preparing an application to the reimbursement program, a disbursement request, or other event-related documents;(D) preparing a pre-event or post-event economic impact study;(E) preparing a pre-event attendance estimate or post-event attendance verification;(F) conducting any pre-event or post-event survey; or(G) costs associated with responding to requests for information relating to participation in the program, including requests for information from the Office, the Texas State Auditor's Office, or pursuant to the requirements of the Texas Public Information Act (Chapter 552, Texas Government Code).(8) expenses related to:(A) monetary compensation for participation or competitive performance in an event, including, but not limited to, cash, gift cards, or pre-paid service certificates;(B) gaming;(C) raffles; or(D) giveaways that do not meet the requirements of §184.44(14) (allowable costs for promotional items);(9) costs for any personal items and services;(10) costs for entertainment, hospitality, appearance or talent fees, and "VIP" expenses, except as permitted under §184.44(19) of this chapter;(11) reimbursement of any cost not incurred, such as for lost profit or for an exchange-in-kind or product;(12) damages of any kind;(13) any cost or expense of or related to constructing an arena, stadium, or convention center;(14) any cost or expense related to conducting usual and customary maintenance of a facility;(15) any amount in excess of 5.0% of the cost of any structural improvement made or fixture for an event that is added to a site that is privately owned property where the improvement or fixture is expected to derive most of its value in subsequent uses of the site for future events;(16) costs that are not direct costs;(17) any costs, the reimbursement of which, could result in a payment to and/or from a party with an inappropriate conflict of interest, as determined by the Office;(18) the amount of any host fees or sanction fees charged by a site selection organization as a prerequisite to holding an event that is in excess of the amount stated in the application for participation in the trust fund program; or(19) costs of any particular expense or obligation that was recouped or refunded, or that will be recouped or refunded from another entity under the event support contract or from event related revenue relating to the same expense or obligation, the reimbursement of which could result a net surplus to the applicant.(b) The Office may deny a disbursement for any event, cost, expense, or obligation the Office deems fiscally irresponsible or not supportive of program objective.</content><note type="source"><p>Source Note: The provisions of this §184.45 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p5/c184/scF"><num value="F">SUBCHAPTER F</num><heading>EVENT SUPPORT CONTRACTS</heading><section identifier="/us/state/tx/tac/t10/p5/c184/scF/s184.50"><num value="184.50">§184.50</num><heading>Requirements for Event Support Contracts</heading><content>(a) An event support contract is required for any event that is participating in the Major Events Reimbursement Program, Events Trust Fund Program, or Motor Sports Racing Trust Fund Program. The parties to an event support contract shall include, at a minimum, the site selection organization and the applicant.(b) The event support contract must establish the applicant's role and obligation in the preparation or presentation of the event, and shall set out the representations and assurances of the parties with respect to the selection of a site in this state for the location of an event, and the requirements and costs necessary (or desirable, as authorized by Texas Revised Civil Statutes, Article 5190.14, Section 5A(h) or 5B(h)) for the preparation or presentation of an event. The Office will not consider a disbursement request that is for a cost that is not supported by an event support contract.(c) Any costs included in the event support contract that are anticipated to be paid, recovered, refunded, or offset from event-related revenue should be clearly identified.(d) The event support contract should clearly identify any costs that are intended to be reimbursed from the event trust fund for structural improvements or fixtures for an event site where the improvement or fixture is expected to derive most of its value in subsequent uses of the site for future events.(e) The applicant's obligations must be sufficiently described in the event support contract to allow the Office to determine the eligibility of event costs for reimbursement in accordance with Rule 184.44 (Allowable Costs). In order for the Office to make a disbursement for a cost, the event support contract must specify which types of goods, services, fixtures, equipment, facility or other property improvements, or temporary maintenance that are required to conduct the event.(f) All requirements of the site selection organization must be set forth in the event support contract, and must be reasonable and necessary (or desirable, as authorized by Texas Revised Civil Statutes, Article 5190.14, Section 5A(h) or 5B(h)) for the preparation or presentation of the event.</content><note type="source"><p>Source Note: The provisions of this §184.50 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c184/scF/s184.51"><num value="184.51">§184.51</num><heading>Contract Guidelines</heading><content>(a) In considering whether to make a disbursement from the trust fund, the Office will not consider a contingency clause in an event support contract as relieving an applicant's obligation to pay a cost under the contract, as mandated by Texas Revised Civil Statutes, Article 5190.14, Sections 5A(k) and 5C(k).(b) The event support contract must not create or shift obligations or liabilities from the endorsing municipality, endorsing county, local organizing committee, or another party to the Office.(c) The Office will not consider for reimbursement any cost that is identified in an event support contract in terms which are overly broad or too general in nature, such terms include:(1) blanket "catch-all" terms, such as "any necessary fixtures or improvements;"(2) references in terms such as "etc." or "miscellaneous" or "as needed" or "other;" and(3) terms that reference the Office's decision making authority, such as "any expense allowed by Office" or "any expense allowed by statute."(d) Regardless of whether a cost is included in an event support contract, the Office will only consider making a disbursement for direct costs that are allowable in accordance with §184.44 (Allowable Costs).</content><note type="source"><p>Source Note: The provisions of this §184.51 adopted to be effective January 1, 2017, 41 TexReg 10263.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p5/c187"><num value="187">CHAPTER 187</num><heading>CAPITAL ACCESS PROGRAM</heading><subchapter identifier="/us/state/tx/tac/t10/p5/c187/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.1"><num value="187.1">§187.1</num><heading>Capital Access Program Authority</heading><content>Pursuant to the authority granted by the Texas Government Code, Chapter 481, Subchapter BB, §481.406, and the Administrative Procedure Act, Texas Government Code, Chapter 2001, Subchapter B, Rulemaking, the Economic Development and Tourism Office in the Office of the Governor (Office) prescribes the following rules regarding the administration, implementation, practice and procedure of the capital access program. The purpose of this program is to provide access to capital for small and medium sized businesses and nonprofit organizations, as defined herein, that may otherwise fall outside conventional lending guidelines. Special consideration is given to small and medium sized businesses that are either located in an established enterprise zone, or operate or propose to operate a day-care center or group day-care home.</content><note type="source"><p>Source Note: The provisions of this §187.1 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.2"><num value="187.2">§187.2</num><heading>Definitions</heading><content>The following words and terms, when used in this chapter, shall have the following meanings, unless the context indicates otherwise.(1) Capital access loan--A loan, or portion of a loan, that is entitled to be secured by the fund.(2) Child-care provider--A small or medium size business or a nonprofit organization that operates or proposes to operate a day-care center or group day-care home, as those terms are defined by Texas Human Resources Code, §42.002.(3) Eligible applicant--A small or medium size business or nonprofit organization.(4) Enrollment form--A form remitted to the Office, by a participating financial institution, subsequent to loan funding by the financial institution, to receive the state's contribution to the institution's reserve account.(5) Enterprise Zone--A geographic area designated by a city or county, through an application to the Office, as economically distressed pursuant to Chapter 2303, Texas Government Code.(6) Financial institution--A bank, trust company, banking association, savings and loan association, mortgage company, investment bank, credit union, or nontraditional financial institution.(7) Fund--The capital access fund.(8) Inside bank transactions--Loans to insiders of the financial institution as defined by federal laws and regulations concerning insider transactions including the Financial Institutions Regulatory and Interest Rate Control Act of 1978, as amended, and applicable implementing regulations; the 1982 Banking Act, as amended, and applicable implementing regulations; and the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended, and applicable implementing regulations.(9) Loan--Includes a line of credit and must meet the requirements of Texas Government Code, §481.405(e).(10) Medium business--A corporation, partnership, sole proprietorship, or other legal entity that:(A) is domiciled in this state or has at least 51% of its employees located in this state;(B) is formed to make a profit;(C) is independently owned and operated; and(D) employs 100 or more but fewer than 500 full-time employees.(11) Money market fund--An open-ended management investment company regulated under the Investment Company Act of 1940, as amended, which values its securities pursuant to §270, 2a-7 of Title 17 of the Code of Federal Regulations.(12) Nonprofit organization--A private, nonprofit, tax-exempt corporation, association, or organization listed in §501(c)(3), Internal Revenue Code of 1986, that is domiciled in this state or has at least 51% of its members located in this state.(13) Office--The Economic Development and Tourism Office in the Office of the Governor.(14) Partial enrollment--A loan which is not 100% enrolled into the program.(15) Participating financial institution--A financial institution participating in the program, after entering into a participation agreement with the Office.(16) Participation agreement--The agreement between the financial institution and the Office which allows the financial institution to participate in the program.(17) Program--The capital access program.(18) Reserve account--An account established at a participating institution on approval of the Office in which the money is deposited to serve as a source of additional revenue to reimburse the financial institution for losses on loans enrolled in the program.(19) Small business--A corporation, partnership, sole proprietorship, or other legal entity that:(A) is domiciled in this state or has at least 51% of its employees located in this state;(B) is formed to make a profit;(C) is independently owned and operated; and(D) employs fewer than 100 full-time employees.</content><note type="source"><p>Source Note: The provisions of this §187.2 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.3"><num value="187.3">§187.3</num><heading>Eligible and Restricted Uses of Capital Access Loans</heading><content>(a) To qualify as a capital access loan, a loan must be made to a small or medium size business or to a nonprofit organization and be used by the business or nonprofit organization for any project, activity, or enterprise in this state that is in furtherance of economic development.(b) The eligible applicant must apply the capital access loan to working capital or to the purchase, construction, or lease of capital assets, including buildings and equipment used by the business or nonprofit organization. Working capital uses include the cost of exporting, accounts receivable, payroll, inventory, and other financing needs of the business or organization.(c) A loan is not eligible to be enrolled under this subchapter for:(1) construction or purchase of residential housing;(2) simple real estate investments, excluding the development or improvement of commercial real estate occupied by the applicant's business or organization. The purchase or development of commercial real estate will be considered a "simple real estate investment" unless the eligible borrower occupies at least 51% of the usable space of the property being financed. Should the owners of the eligible business wish the commercial real estate to be owned by a separate legal entity, such ownership structure will be allowed so long as the eligible business occupies 51% of the usable space and the eligible business guarantees the real estate loan.(3) refinancing of existing loans not originally enrolled under, Chapter 481, Government Code, Subchapter BB. Taking over or refinancing the indebtedness of eligible borrowers held at unrelated financial institutions will not be defined as refinancing under this section; or(4) inside bank transactions.</content><note type="source"><p>Source Note: The provisions of this §187.3 adopted to be effective September 15, 1997, 22 TexReg 8967.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.4"><num value="187.4">§187.4</num><heading>Other Provisions Relating to Capital Access Loans</heading><content>(a) Except as otherwise provided by Texas Government Code, Chapter 481, Subchapter BB, the Office may not determine the recipient, amount, or interest rate of a capital access loan or the fees or other requirements related to the loan.(b) Consortiums of financial institutions may participate in the program so long as each financial institution is subject to common underwriting guidelines.(c) The state is not liable to a participating financial institution for payment of the principal, interest, or any late charges on capital access loans made under Government Code, Chapter 481, Subchapter BB.(d) Loans made under Government Code, Chapter 481, Subchapter BB may be refinanced. If the amount refinanced exceeds the original loan amount, additional reserve contributions can be made by both the participating financial institution and the eligible applicant based on the excess, subject to the provisions of §187.11 of this title (relating to Contributions Made to the Reserve Account). The state will make contributions to the reserve account for loans being refinanced based on the excess being refinanced, subject to §187.11 of this title.(e) Loans not originally enrolled under the program may be eligible to be partially enrolled in the program if the loan is refinanced for an amount exceeding the original loan amount. Only that portion which exceeds the original loan amount may be enrolled under the program.</content><note type="source"><p>Source Note: The provisions of this §187.4 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.5"><num value="187.5">§187.5</num><heading>Capital Access Lines of Credit</heading><content>For purposes of this program, reserve contributions made by the eligible borrower, participating financial institution and the Office will be based on the amount of the open line of credit facility. Once established, lines of credit can be renewed by the participating financial institution without further application or reserve contributions. If the line of credit is increased the excess is eligible for further reserve contributions, to be treated in the same manner as a new line of credit or loan under the program. Reserve contributions covering line of credit facilities will be on the same terms as reserve contributions covering loans.</content><note type="source"><p>Source Note: The provisions of this §187.5 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.6"><num value="187.6">§187.6</num><heading>Application Procedure for Financial Institutions to Become Participating Financial Institutions</heading><content>(a) A financial institution must complete and remit to the Office a participation agreement, developed by the Office, to enroll loans under the program.(b) The participation agreement shall provide for:(1) the creation of the reserve account by the Office for the benefit of the participating financial institution;(2) the limitation of liability of the state of Texas and the Office to the balance held in reserve of a participating financial institution;(3) the terms and conditions of the loans under the program to be determined solely by agreement of the lender and borrower;(4) the enrollment of qualified loans into the program;(5) the deposit of funds by the eligible applicant, the participating financial institution, and subject to availability in the fund, the Office, into a reserve account when the participating financial institution makes an eligible capital access loan;(6) a claims process for reimbursement of losses incurred from charge-offs under the program;(7) removal of money from the reserve account to offset losses incurred through the program;(8) disposition of any recoveries from a borrower made by the participating financial institution subsequent to being reimbursed by the Office;(9) conditions for subrogation of the Office, at the Office's request, to the rights of the participating financial institution in collateral, personal guarantees, and all other forms of security for the capital access loan;(10) conditions for the withdrawal by the Office of excess balances in the reserve account;(11) conditions for the withdrawal by the Office of interest earned within the reserve account;(12) conditions for termination of the participation agreement, and disposition by the Office of any remaining balance in the reserve account;(13) termination by the Office of the obligation to enroll eligible borrowers into the program;(14) withdrawal by a participating financial institution from the program, and disposition by the Office of any remaining balance in the reserve account;(15) periodic reporting to the Office by the participating financial institution as required by the Office;(16) inspection by the Office of the pertinent files of the participating financial institution relating to qualified eligible borrowers;(17) transmittal to the Office by participating financial institution of any public information directly relating to the institution's participation in the program;(18) the submission of an annual report by the participating financial institution to the department containing the information required by Chapter 481, Subchapter BB, §481.411;(19) the delivery of financial statements of the financial institution as available for the previous three years to the department;(20) such other terms and conditions as may be required by the department.(c) The department, based on the information provided by the financial institution, reserves the right to not allow an institution to participate in the program.</content><note type="source"><p>Source Note: The provisions of this §187.6 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.7"><num value="187.7">§187.7</num><heading>Application Procedures for Eligible Applicant</heading><content>An eligible applicant must comply with the following procedures to obtain approval of the application for participation in the program:(1) the eligible applicant must obtain a loan application from a participating financial institution;(2) the eligible applicant shall submit to the participating institution a complete and accurate application and any required credit documentation as may be required by the financial institution; and(3) shall supply all other documentation as may be required by the financial institution that is material to the determination of whether the eligible applicant is qualified under the program.</content><note type="source"><p>Source Note: The provisions of this §187.7 adopted to be effective September 15, 1997, 22 TexReg 8967.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.8"><num value="187.8">§187.8</num><heading>Enrollment of Loans into the Program</heading><content>(a) Reserve deposits will not be remitted by the Office to the reserve account of participating financial institution until the receipt of an enrollment form by the institution.(b) An enrollment form shall be sent to the Office within 15 business days of loan origination. Origination is considered to be the earlier of the date the loan documents have been executed or the date the loan proceeds are first forwarded to the eligible borrower.(c) The enrollment form submitted by participating institutions, developed by the Office, shall include at least the following information as well as other information the Office may require:(1) name, address, phone and contact of the participating financial institution;(2) name, address, phone and contact of the eligible borrower;(3) certification that to the best of the participating institution's knowledge the borrower is eligible under program guidelines;(4) the total loan amount being made by the financial institution to the borrower;(5) the amount of the loan being enrolled in the program;(6) business description;(7) description of use of loan proceeds;(8) employment information of the eligible borrower;(9) gross sales of the eligible borrower for the past 12 months;(10) ethnicity and gender of borrower;(11) whether borrower is a certified State of Texas historically underutilized business;(12) if applicable, verification of status as a project within an enterprise zone, or for day-care center or group day-care home;(13) amount of participating financial institution's deposit to reserve;(14) amount of eligible borrower's deposit to reserve;(15) calculation of the Office's contribution to reserve;(16) execution of the certification on behalf of the participating financial institution by an authorized officer, which shall include the officer's name, title and the date of execution.(d) Execution of the enrollment form shall imply that all information provided on this form is true and correct, and that the lender is relying on the representation of the borrower for the following numbered items of the enrollment form: (2), (3), (6), (7), (8), (9), (10), (11), and (12).(e) The Office may, but is not required, to notify participating financial institutions when proceeds available in the fund soon may not be sufficient to meet the demand for reserve contributions.(f) If proceeds within the fund are insufficient to provide reserve contributions to participating financial institutions, those institutions may still enroll loans without the additional state contribution, subject to normal enrollment guidelines.</content><note type="source"><p>Source Note: The provisions of this §187.8 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective October 31, 2002, 27 TexReg 10010; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.9"><num value="187.9">§187.9</num><heading>Procedure for Review by the Office</heading><content>(a) Upon receipt of the certified enrollment form from the financial institution, the Office shall review the form and determine:(1) the current availability of funds under the program;(2) the completeness of the form;(3) the eligibility of the applicant and the financial institution;(4) the qualified use of the proceeds;(5) the amount of deposit to be placed into the reserve account by the Office; and(6) compliance with statutes and rules.(b) The Office shall notify the participating financial institution of any deficiencies on the enrollment form within three business days after receipt of the application. The participating financial institution may amend the form to comply with the Office's comments or withdraw the loan from consideration under the program.(c) Only when an enrollment form is considered complete by the Office will allocation be made to the participating financial institution's reserve account. An enrollment form that has been returned from the Office to a participating financial institution shall not constitute a claim to Office contributions to the financial institution's reserves.</content><note type="source"><p>Source Note: The provisions of this §187.9 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.10"><num value="187.10">§187.10</num><heading>Establishment of the Reserve Account and Purpose</heading><content>(a) On approval of the Office and after entering into a participation agreement with the Office, a participating financial institution making a capital access loan shall establish a reserve account in accordance with the provisions of Texas Government Code, Chapter 481, Subchapter BB, §481.408.(b) Reserve accounts shall be established in a money market fund within the participating financial institution. The interest rate for the money market fund shall be the competitive rate offered to other customers of the financial institution invested in the money market fund.(c) The reserve account shall be used by the financial institution only to cover any losses arising from a charge-off of a capital access loan, or a loan partially enrolled under the program, made by the financial institution.</content><note type="source"><p>Source Note: The provisions of this §187.10 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective October 31, 2002, 27 TexReg 10010; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.11"><num value="187.11">§187.11</num><heading>Contributions Made to the Reserve Account</heading><content>(a) For each capital access loan made by a participating financial institution, the financial institution shall certify to the Office, within 15 business days, that the institution has made a capital access loan, the amount the financial institution has deposited into the reserve account, including the contributions made by the eligible applicant, and, if applicable that the eligible applicant is located in or financing a project, activity, or enterprise in an area designated as an enterprise zone or is a child-care center or group day-care home.(b) When a participating financial institution makes a loan enrolled under the program, it shall require a fee of the eligible applicant in an amount that is not less than two percent but not greater than three percent of the principal amount of the loan, which will then be deposited into the institution's reserve account. The amount of reserve contribution made by an eligible applicant may be financed within the loan being originated.(c) The financial institution shall also place into the reserve account an amount equal to that placed into the reserve account by the eligible applicant. The institution may recover all or part of its contribution to reserve in any manner previously agreed upon between the participating financial institution and the eligible borrower.(d) The department shall place into the reserve account an amount to be determined by the following:(1) an amount equal to the total amount deposited by the financial institution and the eligible applicant for each loan if the institution:(A) has assets of more than $1 billion; or(B) has previously enrolled loans in the program that in the aggregate are more than $2 million.(2) an amount equal to 150% of the total deposit made by the financial institution and the eligible applicant if the financial institution is not described within paragraph (1) of this subsection.(3) notwithstanding paragraphs (1) and (2) of this subsection, an amount equal to 200% of the total amount deposited by both the institution and the eligible applicant if:(A) the eligible applicant is located or financing a project, activity, or enterprise in an area designated as an enterprise zone; or(B) the eligible applicant is a small or medium size business or a non-profit organization that operates or proposes to operate a day-care center or group day-care home, as those terms are defined by Human Resources Code, §42.002.</content><note type="source"><p>Source Note: The provisions of this §187.11 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective October 31, 2002, 27 TexReg 10010; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.12"><num value="187.12">§187.12</num><heading>Limitations on the Office's Deposit to Reserve</heading><content>Deposits made by the Office into a reserve account to be placed at a participating financial institution shall be limited by the following:(1) The maximum amount the Office may deposit into a reserve account for each capital access loan made under the program is the lesser of $35,000 or an amount equal to:(A) 8.0% of the loan amount if:(i) the eligible applicant is located or financing a project, activity, or enterprise in an area designated as an enterprise zone; or(ii) the eligible applicant is a small or medium size business or a non-profit organization that operates or proposes to operate a day-care center or group day-care home, as those terms are defined by Human Resources Code, §42.002.(B) 6.0% of the loan for any other eligible applicant.(2) The amount deposited by the Office into a participating financial institution's reserve account for any single loan recipient may not exceed $150,000 during a three-year period.</content><note type="source"><p>Source Note: The provisions of this §187.12 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.13"><num value="187.13">§187.13</num><heading>Withdrawals from Reserves by Participating Institutions</heading><content>(a) In the event a loan enrolled under this program is charged-off, the participating financial institution may withdraw from its established reserve account an amount necessary to cover the anticipated loss.(b) A participating financial institution, with the Office's approval, may withdraw from its established reserve immediately subsequent to loan charge-off that has been approved by the Office, or the institution may choose to attempt further collection proceedings before withdrawal. So long as the lender has notified the Office of the charge-off of an enrolled loan within the allowed 30 day time frame and the reserves are adequate to cover the charge-off at the time of notification, the lender shall not be limited to how long they may delay a claim for reimbursement. However, accrual of interest on charged-off loans will only be allowed for a time period of 180 days subsequent to charge-off. Recoupment of all other expenses, as is reasonable and necessary, shall be allowed to be claimed by the financial institution through its established reserve account.(c) Only non-recoverable losses, plus reasonable and customary expenses, may be removed from the reserve account. Money taken in excess of this amount must be returned immediately to the reserve account. The financial institution must pursue recovery of claimed amounts, unless otherwise noted on the claim form. The financial institution shall notify the Office within thirty calendar days of any subsequent recovery made on any loan upon which a claim has been made.(d) The reserve account shall be used by the financial institution only to cover any losses arising from a charge-off of a capital access loan, or that portion of a partially enrolled loan that is enrolled under the program, made by the financial institution.(e) Partially enrolled loan amounts and enrolled loans sharing collateral or guarantees shall be subordinated to unenrolled portions and loans for purposes of claim subsequent to charge-off.(f) The financial institution shall maintain records substantiating the non-recoverable losses, plus reasonable and necessary expenses, for three years following withdrawal from the program.(g) A claim form, signed and dated by an authorized officer of the financial institution, must be remitted to the Office detailing the charged-off program loan 30 days prior to the charge-off. Claim forms will contain the following information:(1) borrower's name;(2) loan number used by the bank to identify the loan;(3) date of charge-off;(4) amount of claim, broken down to include:(A) customer principal;(B) accrued/unpaid interest;(C) out-of-pocket expenses; and(D) total claim amount.(5) statement of intent by the financial institution concerning its continued efforts to recover the charged-off loan;(6) statement of intent by the financial institution on whether to claim against the reserves as outlined on the form submitted or to request payment on the claim at a later date;(7) authorized signature, title, date and phone number of officer of the submitting financial institution.(h) The Office may reject a claim:(1) if the claim form is not accurate and complete as prescribed by subsection (g) of this section;(2) if the representations and warranties provided by the participating financial institution at the time of enrollment have been determined to be misleading or false;(3) if the records of the financial institution do not substantiate the claim;(4) if funds in the financial institution's reserve account are insufficient to cover the claim;(5) if the claim form is not submitted thirty (30) days prior to the charge-off; or(6) for other good cause.</content><note type="source"><p>Source Note: The provisions of this §187.13 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective October 31, 2002, 27 TexReg 10010; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.14"><num value="187.14">§187.14</num><heading>State's Rights with Respect to the Reserve</heading><content>(a) All of the money in a reserve account established under this program is property of the state.(b) The state is entitled to earn interest on the amount of contributions made by the Office, eligible applicant, and financial institution to a reserve account.(c) The Office shall withdraw monthly or quarterly from a reserve account the amount of interest earned by the state.(d) The Office shall deposit the amount withdrawn into the fund.(e) If the amount in a reserve account exceeds 33% of the balance of the financial institution's outstanding capital access loans, the Office may withdraw the excess amount and deposit the amount in the fund. A withdrawal of money authorized hereunder may not reduce an active reserve account to less than $200,000.(f) Withdrawal of reserves in accordance with subsection (c) of this section shall be based on information provided by the participating financial institution in its annual report to the Office.(g) The Office shall withdraw from the financial institution's reserve account all principal and interest and deposit it into the fund when all three of the subsequent conditions exist:(1) a financial institution is no longer eligible to participate in the program or a participation agreement entered into under the program expires without renewal by the Office or financial institution;(2) the financial institution has no outstanding capital access loans; and(3) the financial institution has not made a capital access loan within the preceding 24 months.(h) The Office may withdraw from the financial institution's reserve account all principal and interest and deposit it into the fund when either of the subsequent conditions exist:(1) the financial institution has failed to comply with any directive or instruction issued by the Office; or(2) the financial institution has failed to comply with any express term or condition of the participation agreement.(i) The Office may inspect the files of a participating financial institution with regard to loans enrolled under the program during normal business hours.(j) The financial institution shall remit a quarterly statement to the Office providing details of the balance and the payments and receipts activity in the reserve account for the prior quarter.</content><note type="source"><p>Source Note: The provisions of this §187.14 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective October 31, 2002, 27 TexReg 10010; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.15"><num value="187.15">§187.15</num><heading>Limitations on State's Liability</heading><content>(a) The liability of either the Office or the state is limited to the proceeds contributed to the reserve of a participating financial institution.(b) In no instance shall the liability of either the state or the Office be extended beyond the capacity of the participating financial institution's established reserve account.</content><note type="source"><p>Source Note: The provisions of this §187.15 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.16"><num value="187.16">§187.16</num><heading>Annual Reporting and Auditing Requirements</heading><content>(a) A participating financial institution shall remit an annual report to the Office containing the information required by Texas Government Code, Chapter 481, Subchapter BB, §481.411. The report must:(1) provide information with regard to outstanding capital access loans, capital access loan losses, and any other information consistent with the objectives of the program the Office considers appropriate;(2) state the total amount of loans for which the Office has made a contribution from the fund under the program;(3) include a copy of the institution's most recent financial statement; and(4) include information regarding the type and size of businesses and nonprofit organizations with capital access loans.(b) The Office may suspend enrollment of subsequent loans of a financial institution that fails to comply with the annual reporting requirement prescribed by this section.</content><note type="source"><p>Source Note: The provisions of this §187.16 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective October 31, 2002, 27 TexReg 10010; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.17"><num value="187.17">§187.17</num><heading>Communications with the Office</heading><content>All communications about the program should be directed to the Economic Development Bank Division, Capital Access Program, Economic Development and Tourism Office, Office of the Governor, P.O. Box 12428, Austin, Texas 78711-2428; (512) 936-0101.</content><note type="source"><p>Source Note: The provisions of this §187.17 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective October 31, 2002, 27 TexReg 10010; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c187/sc/s187.18"><num value="187.18">§187.18</num><heading>Waiver</heading><content>The executive director of the Office may waive any provision in this chapter that is not statutorily imposed upon a finding of good cause.</content><note type="source"><p>Source Note: The provisions of this §187.18 adopted to be effective September 15, 1997, 22 TexReg 8967; amended to be effective August 5, 2012, 37 TexReg 5735.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p5/c190"><num value="190">CHAPTER 190</num><heading>GOVERNOR'S UNIVERSITY RESEARCH INITIATIVE GRANT PROGRAM</heading><subchapter identifier="/us/state/tx/tac/t10/p5/c190/scA"><num value="A">SUBCHAPTER A</num><heading>DEFINITIONS AND GENERAL PROVISIONS</heading><section identifier="/us/state/tx/tac/t10/p5/c190/scA/s190.1"><num value="190.1">§190.1</num><heading>Definitions</heading><content>The following terms and abbreviations, when used in this Chapter, shall have the following meanings, unless the context clearly indicates otherwise:(1) "Advisory board" means the Governor's University Research Initiative Advisory Board, the nine member board appointed by the Governor.(2) "Applicant" is the entity that applies for a grant from the Governor's University Research Initiative program.(3) "Application" is the information that is required to be completed and submitted by an applicant for a grant from the Governor's University Research Initiative program.(4) "Distinguished researcher" means :(A) an individual researcher who:(i) is a Nobel laureate;(ii) is a member of the National Academy of Sciences, the National Academy of Engineering, or the National Academy of Medicine, formerly known as the Institute of Medicine; or(iii) has attained one or more of the following national academic recognitions:(I) American Academy of Nursing Fellows;(II) American Council of Learned Societies Fellows;(III) American Law Institute Members;(IV) Beckman Young Investigators;(V) Burroughs Wellcome Fund Career Award Winners;(VI) Cottrell Scholars;(VII) Getty Scholars in Residence;(VIII) Guggenheim Fellows;(IX) Howard Hughes Medical Institute Investigators;(X) Lasker Medical Research Award Winners;(XI) MacArthur Foundation Fellows;(XII) Andrew W. Mellon Foundation Distinguished Achievement Award Winners;(XIII) National Endowment for the Humanities Fellows;(XIV) National Humanities Center Fellows;(XV) National Institutes of Health MERIT (R37) Winners;(XVI) National Medal of Science Winners;(XVII) National Medal of Technology and Innovation Winners;(XVIII) National Science Foundation CAREER Award Winners (excluding those who are also PECASE winners);(XIX) Newberry Library Long-term Fellows;(XX) Pew Scholars in Biomedicine;(XXI) Pulitzer Prize Winners;(XXII) Presidential Early Career Awards for Scientists and Engineers (PECASE) Winners;(XXIII) Robert Wood Johnson Health Policy Fellows;(XXIV) Searle Scholars;(XXV) Sloan Research Fellows;(XXVI) Fellows of the Woodrow Wilson Center; or(B) a group of researchers who have attained a recognition described by subparagraph (A)(iii) of this paragraph.(5) "Eligible institution" means a general academic teaching institution or medical and dental unit .(6) "Fund" means the Governor's University Research Initiative fund established under §62.165 of the Education Code.(7) "General academic teaching institution" has the meaning assigned by §61.003 of the Education Code.(8) "Governing Board" has the meaning assigned by §61.003 of the Education Code.(9) "Grant agreement" means the GURI grant agreement executed by the Office of the Governor and the grantee.(10) "Grantee" is the entity named as the recipient of the award in the grant agreement.(11) "GURI" means Governor's University Research Initiative.(12) "Medical and dental unit" has the meaning assigned by §61.003 of the Education Code.(13) "OOG" or "Office" means the Texas Economic Development and Tourism Office within the Office of the Governor.(14) "Private or independent institution of higher education" has the meaning assigned by §61.003 of the Education Code.</content><note type="source"><p>Source Note: The provisions of this §190.1 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971; amended to be effective June 10, 2024, 49 TexReg 4035.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scA/s190.2"><num value="190.2">§190.2</num><heading>Authority and Purpose</heading><content>(a) Authority for this Chapter is provided in §§62.161 - 62.169 of the Education Code, Governor's University Research Initiative. These rules establish procedures to administer this grant program to award matching grants to eligible institutions in Texas.(b) The purpose of the GURI grant program is to provide matching grants to qualified applicants to provide funds to support the recruitment of distinguished researchers to eligible institutions in Texas in the areas of science, technology, engineering, mathematics, and medicine.</content><note type="source"><p>Source Note: The provisions of this §190.2 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scA/s190.3"><num value="190.3">§190.3</num><heading>Waiver of Rules</heading><content>The OOG Chief of Staff or his designee may, in his sole discretion, waive any provision of this Chapter upon a finding that the public interest would be furthered by granting a waiver. Any such waiver must be consistent with applicable statutory law.</content><note type="source"><p>Source Note: The provisions of this §190.3 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scA/s190.4"><num value="190.4">§190.4</num><heading>Source of Funds</heading><content>Section 62.162 of the Education Code authorizes the OOG to use money appropriated to the fund for grants to eligible applicant institutions. The GURI fund is a dedicated account in the state's general revenue fund. The source of funds for the GURI grant program is a biennial appropriation by the Texas Legislature in addition to other authorized deposits in the fund.</content><note type="source"><p>Source Note: The provisions of this §190.4 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scA/s190.5"><num value="190.5">§190.5</num><heading>Availability of Funds</heading><content>All funding is contingent upon the appropriation of funds by the Texas Legislature and upon approval of a grant application by the OOG. Neither these rules nor a grant agreement creates any entitlement or right to grant funds by an applicant.</content><note type="source"><p>Source Note: The provisions of this §190.5 adopted to be effective February 4, 2016, 41 TexReg 776.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scA/s190.6"><num value="190.6">§190.6</num><heading>Funding Levels and Withholding of Funds</heading><content>(a) The amount of an award is determined solely by the OOG. The OOG is not obligated to fund a grant at the amount requested by the applicant.(b) The OOG may withhold some or all grant funds if the awarded institution fails to meet grant requirements, including, but not limited to, the following:(1) Failure to attain grant-related program or project goals;(2) Failure to adhere to GURI grant agreement requirements or special conditions;(3) Improper expenditure of awarded funds as determined by the OOG;(4) Failure to submit reliable or timely reports, including, but not limited to, financial status reports and progress reports; and/or(5) Failure to achieve timely financial closeout at the end of the project period of any grant.</content><note type="source"><p>Source Note: The provisions of this §190.6 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scA/s190.7"><num value="190.7">§190.7</num><heading>Match</heading><content>(a) Using cash or in-kind contributions, an applicant must commit amounts at least equal to the amount of the grant requested from the OOG. An applicant eligible institution may commit for matching purpose any funds of the institution immediately available for that purpose other than appropriated general revenue.(b) The GURI grant award may not be used as a source of funding to support a match requirement for any other grant obtained by the institution.</content><note type="source"><p>Source Note: The provisions of this §190.7 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scA/s190.8"><num value="190.8">§190.8</num><heading>Compliance with Other Standards</heading><content>(a) Grantees must comply with all applicable state and federal statutes, regulations, administrative rules, OOG policies, procedures, and guidelines applicable to the GURI grant program.(b) Grantees must comply with the relevant provisions of the Uniform Grant Management Standards and the State of Texas Contract Management Guide, or their successors, as adopted in accordance with Texas law.(c) Grantees must comply with applicable laws relating to any research proposed or conducted with GURI grant funds.</content><note type="source"><p>Source Note: The provisions of this §190.8 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p5/c190/scB"><num value="B">SUBCHAPTER B</num><heading>GOVERNOR'S UNIVERSITY RESEARCH INITIATIVE ADVISORY BOARD</heading><section identifier="/us/state/tx/tac/t10/p5/c190/scB/s190.10"><num value="190.10">§190.10</num><heading>Purpose of the Governor's University Research Initiative Advisory Board</heading><content>The Governor's University Research Initiative Advisory Board is established to assist the OOG with the review and evaluation of applications for funding of grant proposals under GURI . The advisory board shall make recommendations to the OOG for approval or disapproval of grant applications. Decision making authority lies with the OOG.</content><note type="source"><p>Source Note: The provisions of this §190.10 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scB/s190.11"><num value="190.11">§190.11</num><heading>Advisory Board Meetings</heading><content>(a) The advisory board shall meet in person or by teleconference to consider grant applications. Because the advisory board is purely advisory in nature and does not have supervision or control over public business or public policy, the advisory board is not subject to the Open Meetings Act.(b) If a quorum is present, action by a majority of the advisory board members present is required to adopt a proposed recommendation of the advisory board.</content><note type="source"><p>Source Note: The provisions of this §190.11 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scB/s190.13"><num value="190.13">§190.13</num><heading>Conflicts of Interest</heading><content>(a) A member of the advisory board who is or has been employed by, is or has been a party to a contract for any purpose with, or is a student or former student of an applicant eligible institution may not be involved in the review, evaluation, or recommendation of a grant proposal made by that institution. In addition, a member of the advisory may not be involved in the review, evaluation, or recommendation of a grant proposal if there is any other actual or potential conflict of interest.(b) A member of the advisory board shall immediately notify the OOG of any actual or potential conflict of interest. The OOG will determine whether the conflict of interest warrants the exclusion of the member's involvement in all or part of the review, evaluation, or recommendation of a grant application. Regardless of the OOG's determination, a member is free to voluntarily recuse from involvement in any grant application.</content><note type="source"><p>Source Note: The provisions of this §190.13 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scB/s190.14"><num value="190.14">§190.14</num><heading>Communications between the Advisory Board and Applicants, Distinguished Researchers and Others</heading><content>(a) The OOG will manage the communications between the advisory board and the applicant, the distinguished researcher, and the institution. The applicant, the distinguished researcher, or anyone on the applicant's or distinguished researcher's behalf may not, at any time, initiate contact with any member of the advisory board about a possible application or a submitted application or any other matter related to an application to the GURI program.(b) If an advisory board member contacts the applicant, the distinguished researcher, or anyone acting on behalf of the applicant or distinguished researcher about an application to the GURI program, the person contacted, the advisory board member initiating the contact, or any other person involved in the consideration of a grant application shall notify the OOG immediately of the contact.(c) Applications may be disqualified from consideration if communications occur in violation of this subsection.(d) As part of its review or evaluation, the OOG, in its discretion, and on behalf of the advisory board, may require the applicant to make a presentation to the advisory board. Failure to deliver a presentation may result in the application being disapproved.</content><note type="source"><p>Source Note: The provisions of this §190.14 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p5/c190/scC"><num value="C">SUBCHAPTER C</num><heading>APPLICATION, REVIEW AND AWARD PROCESS</heading><section identifier="/us/state/tx/tac/t10/p5/c190/scC/s190.20"><num value="190.20">§190.20</num><heading>Application Process</heading><content>(a) The OOG will maintain a formal application available electronically at the OOG website.(b) At any time, the OOG may change the terms of the formal application document. Any applicant may be required to provide supplemental information if the formal application document is changed by the OOG.(c) At the discretion of the OOG, applications may be accepted by a specified deadline or on a rolling basis. The OOG will post notice of the application schedule of the GURI program at the OOG website.(d) An application must be submitted not later than the 30th day before the distinguished researcher begins employment at the eligible institution.</content><note type="source"><p>Source Note: The provisions of this §190.20 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971; amended to be effective January 5, 2025, 49 TexReg 10627.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scC/s190.21"><num value="190.21">§190.21</num><heading>GURI Eligible Applicants</heading><content>An applicant interested in applying for an award from the GURI fund must meet all basic qualifying criteria, including, but not limited to, the following:(1) an applicant must be an eligible institution;(2) the researcher or group of researchers proposed for recruitment must meet all the eligibility requirements necessary to qualify as a distinguished researcher;(3) the applicant and researcher or group of researchers meet the requirements of the applicable provisions of Chapter 62 of the Education Code; and(4) the grant application has the support of the applicant institution's president and of the institution's governing board, the chair of the institution's governing board, or the chancellor of the university system if the applicant institution is a component of a university system .</content><note type="source"><p>Source Note: The provisions of this §190.21 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scC/s190.22"><num value="190.22">§190.22</num><heading>Ineligible Recruiting Activities</heading><content>(a) The eligible applicant cannot receive GURI funds to recruit a distinguished researcher from another eligible institution in Texas.(b) The eligible applicant cannot recruit a distinguished researcher from a private or independent institution of higher education in Texas, as defined by §61.003(15) of the Education Code.</content><note type="source"><p>Source Note: The provisions of this §190.22 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scC/s190.23"><num value="190.23">§190.23</num><heading>Application Form</heading><content>(a) At a minimum, the application for GURI funds must include the following information:(1) the name and credentials of the specific distinguished researcher being recruited;(2) eligibility information to establish the application is eligible for consideration;(3) narrative of the grant proposal, including objectives, and timeline to accomplish grant purpose.(4) information relating to funding priority or funding consideration;(5) proposed grant budget;(6) details on the source and amount of the matching funds; and(7) any other information the OOG determines is relevant or necessary.(b) All applications must be supported by the applicant institution. The grant application must be accompanied by signed letters of support from the applicant's president and from the applicant's governing board, the chair of the applicant's governing board, or the chancellor of the university system, if the applicant is a component of a university system.(c) All applications and supporting documentation must be submitted electronically in a manner prescribed by the OOG.</content><note type="source"><p>Source Note: The provisions of this §190.23 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scC/s190.24"><num value="190.24">§190.24</num><heading>Initial Screening; Evaluation and Review Process</heading><content>(a) The OOG will only consider completed applications. Applications are complete when the OOG has received all required documentation.(b) The OOG will initially screen each completed application for eligibility. Applications that are ineligible will not be considered further.(c) During the initial screening or evaluation and review process, the OOG may request an applicant to provide additional information necessary to process the application.(d) If any required documentation is not received, the OOG will notify the applicant in writing. The applicant must submit the additional required information within five business days after the date the OOG sends notice to the applicant.(e) The OOG will determine an application is ineligible if:(1) the application is submitted by an ineligible applicant;(2) the application is not filed in the manner and form required by the OOG;(3) the application does not meet the requirements stated in the grant application;(4) the application was not complete and, if requested, additional required information was not timely submitted to the OOG; or(5) any other reason the OOG determines is relevant.(f) During the OOG's review and evaluation of an application, the OOG may deny the application at any point.(g) Providing false information, knowingly or unknowingly, on a grant application may result in the OOG denying an application or, if a grant has been awarded, terminating the grant agreement.</content><note type="source"><p>Source Note: The provisions of this §190.24 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scC/s190.25"><num value="190.25">§190.25</num><heading>Grant Award Recommendations and Decisions</heading><content>(a) Grant award recommendations and decisions, including, but not limited to, actions relating to an applicant's eligibility, evaluation, award, and funding amount rest within the discretionary authority of the OOG and all award decisions are final and are not subject to appeal.(b) Only applications that have first received a recommendation from the advisory board will be considered by the OOG for funding.(c) The OOG will make the final determination on whether a researcher who is proposed for recruitment by an applicant qualifies as a distinguished researcher for purposes of the GURI program.</content><note type="source"><p>Source Note: The provisions of this §190.25 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scC/s190.26"><num value="190.26">§190.26</num><heading>Grant Decision Notification Process</heading><content>(a) The OOG shall notify the applicant in writing of the decision regarding a grant award.(b) The OOG may establish a time deadline for the applicant to work with the OOG to execute a grant agreement.</content><note type="source"><p>Source Note: The provisions of this §190.26 adopted to be effective February 4, 2016, 41 TexReg 776.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scC/s190.27"><num value="190.27">§190.27</num><heading>Grant Funding Decisions</heading><content>(a) The OOG will allocate grant funds on a competitive basis based on a careful selection process.(b) The OOG shall determine the manner and procedure for making funding decisions that support the efficient and effective use of public funds.</content><note type="source"><p>Source Note: The provisions of this §190.27 adopted to be effective February 4, 2016, 41 TexReg 776.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scC/s190.28"><num value="190.28">§190.28</num><heading>Grant Agreement</heading><content>(a) Eligible institutions that are selected for a GURI matching grant must execute a grant agreement as a condition of the grant award.(b) A grant agreement may be for a specific duration determined solely by the OOG.(c) The grant agreement does not create an entitlement or right by the applicant to grant funds. Receipt of grant funds depends, among other things, upon strict compliance with all terms, conditions, and provisions of the grant agreement.(d) The execution of a grant agreement to the grantee shall not commit or obligate the OOG in any way to make any additional, supplemental, continuation, or other awards to the grantee.</content><note type="source"><p>Source Note: The provisions of this §190.28 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p5/c190/scD"><num value="D">SUBCHAPTER D</num><heading>GRANT BUDGET REQUIREMENTS</heading><section identifier="/us/state/tx/tac/t10/p5/c190/scD/s190.30"><num value="190.30">§190.30</num><heading>General Budget Provisions</heading><content>(a) Unless otherwise stated by the OOG in the grant application, eligible budget categories include the following cost categories:(1) One-Time Salary Supplement;(2) Professional and consulting;(3) Travel;(4) Equipment;(5) Supplies;(6) Construction; and(7) Direct operating expenses.(b) All applicants must submit a completed grant budget on the form prescribed by the OOG.(c) Grants funds will be awarded on a reimbursement-only basis. Grantees will be reimbursed for authorized actual expenditures substantiated by documentation submitted to the OOG. If allowed, the OOG may use an alternative method of payment.(d) All budget items must be reasonable and necessary and properly allocated within each budget category.</content><note type="source"><p>Source Note: The provisions of this §190.30 adopted to be effective February 4, 2016, 41 TexReg 776.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scD/s190.31"><num value="190.31">§190.31</num><heading>One-Time Salary Supplement</heading><content>(a) Grant funds may be used to pay the costs of a one-time salary supplement for the distinguished researcher that is necessarily incurred to attract the distinguished researcher to the eligible institution.(b) The OOG will not award grant funds to pay the costs of any fringe benefits or fringe supplement.</content><note type="source"><p>Source Note: The provisions of this §190.31 adopted to be effective February 4, 2016, 41 TexReg 776.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scD/s190.32"><num value="190.32">§190.32</num><heading>Professional and Consultant</heading><content>(a) "Professional and consultant services" is defined as any service for which the grantee uses an outside source for necessary support. Professional and consultant services include, but are not limited to, accounting services, legal services, and computer support.(b) Any contract or agreement entered into by the grantee that obligates grant funds must be in writing and consistent with applicable Texas contract law, including, but not limited to, Chapter 2254 of the Texas Government Code. The grantee must maintain adequate documentation supporting budget items for a contractor's time, services, and rates of compensation. The grantee must establish a contract administration and monitoring system to regularly and consistently ensure that contract deliverables are provided as specified in the contract.</content><note type="source"><p>Source Note: The provisions of this §190.32 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scD/s190.33"><num value="190.33">§190.33</num><heading>Travel</heading><content>(a) Travel expenses, including food and beverages, may be reimbursed according to the Texas State Travel Guidelines, unless the grantee's travel policy provides a lesser reimbursement.(b) Travel must relate directly to the grant project.</content><note type="source"><p>Source Note: The provisions of this §190.33 adopted to be effective February 4, 2016, 41 TexReg 776.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scD/s190.34"><num value="190.34">§190.34</num><heading>Equipment</heading><content>(a) "Equipment" means tangible, nonexpendable personal property (including information technology systems) having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.(b) The grantee may use equipment paid for with OOG funds for any purpose consistent with the teaching and research mission of the institution, as long as the primary use of such equipment remains for grant-related purposes.(c) The grantee shall not give any security interest, lien or otherwise encumber any item of equipment purchased with grant funds. The grantee shall permanently identify all equipment purchased under the grant by appropriate tags or labels affixed to the equipment. The grantee shall maintain a current inventory of all equipment, which shall be available to the OOG at all times upon request, however, the title for equipment will remain with the grantee.(d) The grantee will operate, maintain, repair, and protect all equipment purchased in whole or in part with grant funds so as to ensure the full availability and usefulness of such equipment for the purposes of the GURI grant award. In the event the grantee is indemnified, reimbursed, or otherwise compensated for any loss of, destruction of, or damage to the equipment purchased with grant funds, it shall use the proceeds to repair or replace said equipment.</content><note type="source"><p>Source Note: The provisions of this §190.34 adopted to be effective February 4, 2016, 41 TexReg 776.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scD/s190.35"><num value="190.35">§190.35</num><heading>Supplies and Direct Operating Expenses</heading><content>(a) "Supplies" is defined as consumable items directly related to the day-to-day operation of the grant program. Allowable items include, but are not limited to, office and laboratory supplies, paper, postage, and other general items.(b) "Direct operating expenses" is defined as those costs not included in other budget categories and which are directly related to the day-to-day operation of the grant project.</content><note type="source"><p>Source Note: The provisions of this §190.35 adopted to be effective February 4, 2016, 41 TexReg 776.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scD/s190.36"><num value="190.36">§190.36</num><heading>Construction</heading><content>(a) "Construction costs" is defined as "Construction of new buildings or renovation of existing buildings (including the installation of fixed equipment, but excluding the cost of land acquisition and off-site improvements)." New construction, or activities that would change the "footprint" of an existing facility (e.g., relocation of existing exterior walls, roofs, or floors, attachment of fire escapes) is considered an allowable construction cost.(b) The construction of shell space is not allowable as a construction activity since shell space does not provide usable space for research activities.</content><note type="source"><p>Source Note: The provisions of this §190.36 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scD/s190.37"><num value="190.37">§190.37</num><heading>Indirect Costs</heading><content>Indirect costs are not allowable. The OOG will not award any indirect costs.</content><note type="source"><p>Source Note: The provisions of this §190.37 adopted to be effective February 4, 2016, 41 TexReg 776.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c190/scD/s190.38"><num value="190.38">§190.38</num><heading>Unallowable Costs</heading><content>(a) Grant funds may not be used for the following:(1) Salary and fringe benefits;(A) The grantee may not use grant funds to pay any portion of the salary for a distinguished researcher or other personnel, other than a one-time salary supplement as described in §190.31 of these rules.(B) "Fringe benefits" is defined as allowances and services provided by the grantee to its employees as compensation in addition to regular salaries and wages. Fringe benefits include, but are not limited to, the costs of leave, employee insurance, pensions, and unemployment benefit plans.(C) The grantee may not use grant funds to pay any portion of the salary, fringe benefits, or any other compensation for an elected government official.(2) Costs to recruit an ineligible researcher;(3) Costs related to entertainment, amusements, or social activities, including, but not limited to, shows, exhibitions, or sporting events;(4) Professional dues, memberships, or lobbying;(5) Honoraria or gifts;(6) Purchase or lease of vehicles;(7) Promotional items or recreational activities;(8) Travel that is unrelated to the direct support of the grant project;(9) Consultants or vendors who participate directly in writing a grant application;(10) Professional association fees, dues or memberships; and(11) Unallowable costs set forth in state or federal cost principles, the grant application, or the grant agreement.(b) Grant funds may not be used to purchase any other products or services the OOG identifies as inappropriate or unallowable within the grant application, or during the grant management processes and procedures.</content><note type="source"><p>Source Note: The provisions of this §190.38 adopted to be effective February 4, 2016, 41 TexReg 776; amended to be effective July 14, 2022, 47 TexReg 3971.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p5/c198"><num value="198">CHAPTER 198</num><heading>ADVERTISING RULES</heading><subchapter identifier="/us/state/tx/tac/t10/p5/c198/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p5/c198/sc/s198.1"><num value="198.1">§198.1</num><heading>General Provisions</heading><content>(a) Introduction. Pursuant to the authority granted by Texas Government Code, §481.174, as amended, and the Administrative Procedure Act, Texas Government Code, Chapter 2001, Subchapter B, Rulemaking, as amended, the Economic Development and Tourism Office in the Office of the Governor (Office) prescribes the following sections regarding the policies and procedures to be followed by the Office in selling advertisements within its travel promotion materials.(b) Purpose. This chapter sets forth the Office policies and procedures relating to the sale of advertisements in the Office travel promotion materials of any media including print, broadcast, hi-tech venues and any other media.</content><note type="source"><p>Source Note: The provisions of this §198.1 adopted to be effective September 18, 1996, 21 TexReg 8599; amended to be effective May 29, 2002, 27 TexReg 4564; amended to be effective August 8, 2012, 37 TexReg 5737.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c198/sc/s198.2"><num value="198.2">§198.2</num><heading>Definitions</heading><content>The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.(1) Executive Director--The executive director of the Office.(2) Office--The Economic Development and Tourism Office in the Office of the Governor.(3) Serving Texas--Benefitting the state.(4) Texas Hospitality Industry--Any Texas business operating in or providing travel service to Texas, categorized by standard industrial category (SIC) code, as defined in the glossary of terms in the Office publication entitled "Travel Spending for Texas Communities."(5) Texas Travel and Tourism Industry--Businesses with direct relationships to travel as defined in paragraph (4) of this section.</content><note type="source"><p>Source Note: The provisions of this §198.2 adopted to be effective September 18, 1996, 21 TexReg 8599; amended to be effective May 29, 2002, 27 TexReg 4564; amended to be effective August 8, 2012, 37 TexReg 5737.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c198/sc/s198.5"><num value="198.5">§198.5</num><heading>Advertised Products and Services</heading><content>(a) Acceptable Products and Services. Subject to the limitations set forth in subsection (b) of this section, the following products and services are acceptable for advertising in Office travel promotion materials:(1) travel destinations, attractions, facilities and associations located in and serving Texas;(2) products and services within the Texas hospitality industry;(3) restaurants, retailers, and air and ground transportation services located in and serving Texas; and(4) other sites, products, equipment, facilities and services relating to travel and tourism.(b) Unacceptable Products and Services. The following products and services are unacceptable for advertising in Office travel promotion materials:(1) out-of-state travel and tourism destinations, attractions, facilities and associations unless such advertisements augment and complement Texas travel and tourism promotions;(2) alcoholic beverages;(3) tobacco products;(4) sexually-oriented products and services;(5) advertisements of a political nature;(6) advertisements containing disparaging characteristics;(7) inherently dangerous products;(8) such other products and services as the executive director determines could diminish or damage the reputation of the State of Texas; and(9) any advertising that the Office determines is inappropriate or inconsistent with the goals of the promotion.</content><note type="source"><p>Source Note: The provisions of this §198.5 adopted to be effective September 18, 1996, 21 TexReg 8599; amended to be effective May 29, 2002, 27 TexReg 4564; amended to be effective August 8, 2012, 37 TexReg 5737.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c198/sc/s198.8"><num value="198.8">§198.8</num><heading>Approval of Advertising Copy</heading><content>The advertiser will have final editorial and proofing approval on all advertising copy prior to printing of the advertisement by the Office. However, the Office reserves the right to reject advertising copy which it deems inappropriate pursuant to §198.5(b) of this title (relating to Advertised Products and Services) or which it considers misleading or a misrepresentation of facts.</content><note type="source"><p>Source Note: The provisions of this §198.8 adopted to be effective September 18, 1996, 21 TexReg 8599; amended to be effective May 29, 2002, 27 TexReg 4564; amended to be effective August 8, 2012, 37 TexReg 5737.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c198/sc/s198.9"><num value="198.9">§198.9</num><heading>Liability</heading><content>The Office shall have no liability for errors or omissions in advertisements.</content><note type="source"><p>Source Note: The provisions of this §198.9 adopted to be effective September 18, 1996, 21 TexReg 8599; amended to be effective May 29, 2002, 27 TexReg 4564; amended to be effective August 8, 2012, 37 TexReg 5737.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c198/sc/s198.12"><num value="198.12">§198.12</num><heading>Refusal To Do Business with Certain Individuals and Entities</heading><content>The Office reserves the right to refuse advertisements from individuals or entities that discriminate against customers on the basis of sex, race, color, creed, religion or national origin.</content><note type="source"><p>Source Note: The provisions of this §198.12 adopted to be effective September 18, 1996, 21 TexReg 8599; amended to be effective May 29, 2002, 27 TexReg 4564; amended to be effective August 8, 2012, 37 TexReg 5737.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p5/c200"><num value="200">CHAPTER 200</num><heading>TEXAS SMALL BUSINESS CREDIT INITIATIVE</heading><subchapter identifier="/us/state/tx/tac/t10/p5/c200/scA"><num value="A">SUBCHAPTER A</num><heading>TEXAS SMALL BUSINESS CREDIT INITIATIVE CAPITAL ACCESS PROGRAM</heading><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.1"><num value="200.1">§200.1</num><heading>Texas Small Business Credit Initiative Capital Access Program Authority and Purpose</heading><content>(a) Authority. Pursuant to the authority granted by the Texas Government Code, Chapter 481, Subchapter BB, concerning Access to Capital Programs, and Texas Government Code, Chapter 2001, Subchapter B, concerning Rulemaking, the Economic Development and Tourism Office in the Office of the Governor prescribes the following rules to provide definitions, procedures, and eligibility standards and criteria for the Texas Small Business Credit Initiative Capital Access Program.(b) Purpose. The purpose of this Program is to provide increased access to financing for small and medium-sized businesses by providing portfolio insurance through the establishment of loss reserves to reduce risk assumed by lending institutions in lending funds to Qualified Borrowers. Special consideration is given to Very Small Businesses with fewer than 10 employees and businesses owned by Socially and Economically Disadvantaged Individuals.</content><note type="source"><p>Source Note: The provisions of this §200.1 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.2"><num value="200.2">§200.2</num><heading>Definitions</heading><content>The following words and terms, when used in this Subchapter, shall have the following meanings, unless the context clearly indicates otherwise:(1) Agreement--A contract between a Financial Institution and the Office that authorizes the Financial Institution to participate in the Program and establishes, in accordance with §200.4 of this chapter (relating to Agreement), the terms required for the Financial Institution's participation.(2) Borrower--A Qualified Business that has received a Qualified Loan from a Participating Financial Institution.(3) Enrolled Loan--A Qualified Loan enrolled in the Program as described in §200.10 of this chapter (relating to Procedure for Enrollment of a Qualified Loan).(4) Financial Institution--An insured depository institution, insured credit union, or Community Development Financial Institution, as each of those terms is defined in 12 U.S.C. § 4702.(5) Fund--The Texas Small Business Credit Initiative Capital Access Fund.(6) Loan Loss Reserve Account--An account established at a financial institution in which premiums are deposited to serve as insurance to reimburse a Participating Financial Institution for Losses on Enrolled Loans.(7) Loss--Any original principal amount due and not paid and not more than the enrolled amount of the Qualified Loan plus reasonable out-of-pocket expenses. In the event only a portion of a Qualified Loan was enrolled, the Office limits reimbursement of out-of-pocket expenses to the ratio of the enrolled portion to the total loan amount.(8) Office--The Economic Development and Tourism Office in the Office of the Governor.(9) Participating Financial Institution or PFI--A Financial Institution authorized to conduct business in the State of Texas that has adequate capacity, as determined by the Office in its sole discretion, to underwrite and monitor loans and has executed an Agreement with the Office to participate in the Program.(10) Principal of a Borrower--A person, other than an insured bank, that directly or indirectly, or acting through or in concert with one or more persons, owns, controls, or has the power to vote more than 10 percent of any class of voting securities of a member bank or company. Shares owned or controlled by a member of an individual's immediate family are considered to be held by the individual.(11) Principal of a Lender--The principal of a lender is:(A) If a sole proprietorship, the proprietor;(B) If a partnership, each partner; and(C) If a corporation, limited liability company, association or a development company, each director, each of the five most highly compensated executives, officers or employees of the entity, and each direct or indirect holder of twenty percent or more of the ownership stock or stock equivalent of the entity.(12) Program--The Texas Small Business Credit Initiative Capital Access Program.(13) Program Website--The dynamic web portal developed by the Office and located at https://tsbci.gov.texas.gov.(14) Qualified Business--A Small Business authorized to conduct business in the State of Texas that meets the eligibility requirements of §200.7 of this chapter (relating Qualified Loan Eligibility and Approval).(15) Qualified Loan--A loan or portion of a loan that is made by a PFI to a Qualified Business for a business purpose consistent with §200.8 of this chapter (relating to Eligible and Restricted Uses of Texas Small Business Credit Initiative Capital Access Program Loan Proceeds), and not contrary to state or federal law or policy.(16) Small Business--A corporation, partnership, sole proprietorship, or other legal entity that:(A) is domiciled in this state or has at least 51 percent of its employees located in this state;(B) is formed to make a profit;(C) is independently owned and operated; and(D) employs fewer than 500 employees.(17) Socially and Economically Disadvantaged Individuals or SEDI--Individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business who are not socially disadvantaged.(18) Treasury--The United States Department of Treasury.(19) Very Small Business--A Small Business that employs fewer than 10 employees.</content><note type="source"><p>Source Note: The provisions of this §200.2 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.3"><num value="200.3">§200.3</num><heading>Program Application Procedure</heading><content>(a) A Financial Institution seeking to participate in the Program must submit a completed application to the Office through the Program Website.(b) Upon request, an applicant Financial Institution must provide any additional information the Office determines is necessary on or before the fifth business day after the applicant Financial Institution receives the request for information from the Office. The Office may reject an application if an applicant Financial Institution fails to provide the additional information requested under this Subsection.(c) The Office shall determine the Financial Institution's eligibility to participate in the Program based on the application submitted under subsection (a) of this section and any other information the Office determines is necessary and requests pursuant to subsection (b) of this section. The Office has no obligation to authorize an applicant Financial Institution's participation in the Program.(d) A Financial Institution the Office determines is eligible to participate in the Program must enter an Agreement with the Office. Otherwise-eligible Financial Institutions that have not entered an Agreement shall not participate in the Program.</content><note type="source"><p>Source Note: The provisions of this §200.3 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.4"><num value="200.4">§200.4</num><heading>Agreement</heading><content>To participate in the Program, a Financial Institution must enter an Agreement developed by the Office.</content><note type="source"><p>Source Note: The provisions of this §200.4 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.5"><num value="200.5">§200.5</num><heading>Establishment of a Loan Loss Reserve Account</heading><content>(a) After entering an Agreement with the Office, a PFI making Qualified Loans shall establish a Loan Loss Reserve Account to receive the premium payments described in §200.9 of this chapter (relating to Contributions to Loan Loss Reserve) from the Borrower and the PFI, and the Office's matching contribution as described in §200.11 of this chapter (relating to State Contributions to Loan Loss Reserve Accounts).(b) The Loan Loss Reserve Account shall be:(1) used by the PFI only to cover Losses arising from a charge off of an Enrolled Loan or as provided by the Agreement or this subchapter; and(2) established in a money market fund in a Financial Institution specified by the Office; the interest rate for the money market fund must be a competitive rate.</content><note type="source"><p>Source Note: The provisions of this §200.5 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.6"><num value="200.6">§200.6</num><heading>Ownership, Control, Investment of Loan Loss Reserve Account</heading><content>(a) All money in a Loan Loss Reserve Account established under this Program is property of the State of Texas.(b) The state is entitled to all interest earned on the contributions made by the Office, Borrower, and PFI to the Loan Loss Reserve Account.(c) In accordance with the Agreement, the Office may periodically withdraw the amount of interest earned from the funds in the Loan Loss Reserve Account.(d) The Office shall deposit the amount withdrawn under subsection (c) of this section into an account designated by the Office.(e) The Office may withdraw from a PFI's Loan Loss Reserve Account all interest earned in the Loan Loss Reserve Account and all contributions made by the Office to the account that relate to an Enrolled Loan if the Office discovers after enrollment that the Enrolled Loan involves a Borrower whose business activities violate or are contrary to the requirements of this chapter or the law or policies of this state or the United States.</content><note type="source"><p>Source Note: The provisions of this §200.6 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.7"><num value="200.7">§200.7</num><heading>Qualified Loan Eligibility and Approval</heading><content>A PFI may request to enroll a Qualified Loan under the Program if the PFI determines the Qualified Loan:(1) is for an amount equal to or between $5,000 and $5,000,000;(2) is provided to a Borrower who is not an executive officer, director, or Principal of the Lender, or person with comparable official capacity with or significant ownership in the PFI, or a member of the immediate family of such a person;(3) is not for a business enterprise in which a person described in paragraph (2) of this section has a shared ownership, investment, or other significant pecuniary interest; and(4) is being provided to a Borrower that is a Small Business that:(A) is not engaged in speculative activities that develop profits from fluctuations in price rather than through the normal course of trade unless those activities are incidental to the regular activities of the business and are part of a legitimate risk management strategy to guard against price fluctuations related to the regular activities of the business;(B) does not earn more than half of its annual net revenue from lending activities unless the Borrower is a Community Development Financial Institution that is not a depository institution or a bank holding company or a tribal enterprise lender that is not a depository institution or a bank holding company;(C) is not engaged in pyramid sales, where a participant's primary incentive is based on the sales made by an ever-increasing number of participants;(D) is not engaged in activities that are prohibited by state law, federal law, or other applicable laws in the jurisdiction where the business is located or conducted;(E) at the time of loan obligation, is not delinquent in any taxes owed the State of Texas, and is in good standing with the Comptroller of Public Accounts; and(F) does not derive any of its gross annual revenue from gambling activities.</content><note type="source"><p>Source Note: The provisions of this §200.7 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.8"><num value="200.8">§200.8</num><heading>Eligible and Restricted Uses of Texas Small Business Credit Initiative Capital Access Program Loan Proceeds</heading><content>(a) Borrowers must use loan proceeds for a business purpose. Business purposes include, but are not limited to:(1) start-up costs;(2) working capital;(3) franchise fees; and(4) acquisition of equipment, inventory, or services used in the production, manufacturing, or delivery of a business's goods or services, or in the purchase, construction, renovation, or tenant improvements of an eligible place of business that is not for passive real estate investment purposes.(b) Loan proceeds shall not be used for:(1) acquiring or holding passive investments in real estate;(2) the purchase of owner-occupied residential housing;(3) the construction, improvement, or purchase of residential housing that is owned or to be owned by the Borrower;(4) the purchase of real property that is intended for resale or not used for the business operations of the Borrower;(5) the purchase of securities;(6) lobbying activities;(7) the purchase of good will;(8) inside bank transactions;(9) repayment of delinquent federal or state income taxes unless the Borrower has a payment plan in place with the relevant taxing authority;(10) repayment of taxes held in trust or escrow;(11) reimbursement of funds owed to any owner, including any equity injection or injection of capital for the business' continuance;(12) purchase of any portion of the ownership interest of any owner of the Borrower, such as the acquisition of shares of a company or the partnership interest of a partner when the proceeds of the Enrolled Loan will go to any existing owner or partner of the Borrower;(13) refinance of any portion of a loan enrolled in another credit enhancement or credit insurance program not encompassed by 10 T.A.C. Chapter 200;(14) a loan in which any Principal of a Borrower has been convicted of a sex offense against a minor as such terms are defined 34 U.S.C. 20911; or(15) a loan that is contrary to federal or state law or policy.</content><note type="source"><p>Source Note: The provisions of this §200.8 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.9"><num value="200.9">§200.9</num><heading>Contributions to Loan Loss Reserve</heading><content>(a) When making a Qualified Loan for which a PFI will seek enrollment under the Program, the PFI must require the Borrower to pay a premium payment that is:(1) For SEDI-owned businesses and Very Small Businesses, at least 1 percent but not more than 3.5 percent of the principal amount of the Qualified Loan; or(2) For all other Borrowers, at least 1 percent but not more than 2.5 percent of the principal amount of the Qualified Loan.(b) The PFI must submit a premium payment equal to the premium payment made by the Borrower under this Section. The PFI may charge the Borrower a fee to recover its contribution under this Subsection.(c) The PFI shall deposit the premiums specified in subsections (a) and (b) of this section in the Loan Loss Reserve Account created under §200.5 of this chapter (relating to Establishment of a Loan Loss Reserve Account).(d) If a Qualified Loan is enrolled, the premiums specified under Subsection (a) of this Section are nonrefundable.(e) Notwithstanding subsection (d) of this section, if a Qualified Loan is not enrolled under this section or unenrolled because the Office determines in its sole discretion, the loan is not eligible for the Program, the Office shall refund the premiums deposited under subsection (c) of this section to the requesting PFI as soon as practicable.(f) Notwithstanding subsection (a) of this section, PFIs may request authorization from the Office to charge the maximum premiums specified under subsection (a)(1) of this section for all Borrowers, regardless of whether a Borrower is a SEDI-owned business or a Very Small Business. If the Office, in its sole discretion, grants authorization, the PFI may charge all Borrowers a premium up to 3.5 percent of the principal amount of the Qualified Loan. If approved, the PFI shall not pay a premium pursuant to subsection (b) of this section that is less than the premium paid by the Borrower.</content><note type="source"><p>Source Note: The provisions of this §200.9 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.10"><num value="200.10">§200.10</num><heading>Procedure for Enrollment of a Qualified Loan</heading><content>(a) A PFI may seek to enroll a Qualified Loan by:(1) submitting a Qualified Loan enrollment application through the Program Website on or before the fifteenth business day after the date loan funds were dispersed to the Borrower;(2) making required certifications; and(3) providing documentation to the Office establishing that the premiums required by §200.9 of this chapter (relating to Contributions to Loan Loss Reserve), have been deposited in the Loan Loss Reserve Account specified in §200.5 of this chapter (relating to Establishment of a Loan Loss Reserve Account).(b) The Office shall notify a PFI of any deficiencies in the enrollment application submitted under subsection (a)(1) of this section. The PFI may amend the form to resolve any deficiencies or withdraw the loan from consideration under the Program. If the PFI fails to cure the deficiencies in the enrollment form, the Office may reject the enrollment of the loan. The Office has sole discretion in determining whether a PFI has failed to cure deficiencies.(c) Upon receipt of documentation satisfying the requirements in subsection (a) of this section and the resolution of any deficiencies noted under subsection (b) of this section, the Office may enroll the Qualified Loan if:(1) the Office is satisfied the Qualified Loan is eligible to be enrolled under this chapter, including under §200.7 of this chapter (relating to Qualified Loan Eligibility and Approval) and §200.8 of this chapter (relating to Eligible and Restricted Uses of Texas Small Business Credit Initiative Capital Access Program Loan Proceeds);(2) with the information provided at the time the PFI requests a loan's enrollment, the Office is satisfied the Qualified Loan does not violate predatory lending laws or other state or federal laws, policies, regulations, or guidance;(3) sufficient funds are available from the Fund to meet the Office's contribution under §200.11 of this chapter (relating to State Contributions to Loan Loss Reserve Accounts);(4) enrollment would not result in the Qualified Business having two or more active Enrolled Loans in the Program for the same purpose at the same time, as determined by the Office in its sole discretion;(5) enrollment would not result in a single loan being enrolled in more than one approved program associated with the Texas Small Business Credit initiative at the same time; and(6) the Office, in its sole discretion, has not otherwise determined the loan may not be enrolled.(d) The Office shall, within a reasonable time after receipt of the information required by this Section, notify the PFI whether a loan is enrolled.(e) After notifying the PFI that the Qualified Loan has been approved for enrollment, the Office shall transfer from the Fund to the Loan Loss Reserve Account of the PFI a contribution amount detailed in §200.11 of this chapter.(f) Notwithstanding any provision to the contrary, the Office shall unenroll loans it determines, in its sole discretion, were enrolled in error because the loan did not meet the requirements of this Chapter, the PFI failed to disclose a material fact or factor about the nature or purpose of the loan in its request to enroll the loan, if the nature or use of the loan changed after enrollment, or other good cause.(g) Without regard to the terms of the Qualified Loan, the term of enrollment in the Program shall not exceed one hundred twenty months from the date of first disbursement of the Qualified Loan.</content><note type="source"><p>Source Note: The provisions of this §200.10 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.11"><num value="200.11">§200.11</num><heading>State Contributions to Loan Loss Reserve Accounts</heading><content>(a) Subject to subsection (b) of this section, for each Enrolled Loan, the Office shall deposit an amount equal to the premiums deposited by a PFI under §200.9(c) of this chapter (relating to Contributions to Loan Loss Reserve).(b) The Office shall not deposit the amount specified in subsection (a) of this section if:(1) the Fund does not contain an amount of money greater than or equal to the contribution;(2) the amount of money in the PFI's Loan Loss Reserve is greater than or equal to 100 percent of the aggregate amount of outstanding principal on all the PFI's Enrolled Loans;(3) the contribution per Enrolled Loan would be more than the lesser of $350,000 or the premium amount authorized pursuant to §200.9 of this chapter; or(4) the contribution would result in more than a total of $1,500,000 from the Fund to be contributed to the Loan Loss Reserve Account for a single Qualified Business during any three-year period.</content><note type="source"><p>Source Note: The provisions of this §200.11 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.12"><num value="200.12">§200.12</num><heading>Procedure for Making a Claim for Reimbursement for Charging Off of an Enrolled Loan</heading><content>(a) If a PFI charges off all or part of an Enrolled Loan because of a default by the Borrower, the PFI may claim reimbursement for all or part of the Loss incurred by requesting reimbursement for the charged off loan through the Program Website and providing all information and documentation required by the Office. The Office may notify the PFI of any deficiencies in the PFI's claim for reimbursement.(b) The PFI must make the claim:(1) only after exercising due care and diligent efforts to liquidate the loan collateral, realize the personal or other financial guarantees, or otherwise recover on the loan;(2) on or before the 180th day after charging off the loan; and(3) not before the first anniversary of the PFI's enrollment of the loan in the Program.(c) Subject to subsection (b)(1) of this section, a PFI may make a claim for reimbursement of a Loss prior to the liquidation of collateral, realization on personal or other financial guarantees, or otherwise recovering on the loan.(d) Notwithstanding subsection (b)(2) of this section, the Office may authorize the PFI to submit a claim after the 180th day after charging off the Enrolled Loan if, in the Office's sole discretion:(1) the PFI demonstrates it has consistently and actively undertaken activities to recover on the Enrolled Loan; or(2) shows other good cause.(e) The PFI shall retain documentation in its files substantiating all claims for a term commensurate with standard banking records retention practices but not less than seven years after the date that the Enrolled Loan is terminated.</content><note type="source"><p>Source Note: The provisions of this §200.12 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.13"><num value="200.13">§200.13</num><heading>Payment of Claims by the Office</heading><content>(a) Subject to subsection (b) of this section, and in accordance with the Agreement, the Office shall reimburse a PFI for Losses claimed under the procedure described in §200.12 of this chapter (relating to Procedure for Making a Claim for Reimbursement for Charging Off of an Enrolled Loan).(b) The Office may reject a claim in part or in full if:(1) the Office, in its sole discretion, determines:(A) the representations and warranties provided by the PFI in the Agreement were false;(B) the representations and warranties provided by the PFI at the time of enrolling the Qualified Loan were misleading or false;(C) the PFI did not exercise due care and diligent efforts to liquidate the loan collateral, realize the personal or other financial guarantees, or otherwise recover on the loan;(D) the documentation provided by the PFI does not substantiate the claim;(E) reimbursing the claim would violate state or federal law or policy; or(F) other good cause exists; or(2) the PFI:(A) fails to submit required information or documentation within the time period specified by the Office in the Office's notice of deficiency sent to the PFI;(B) does not have sufficient money in its Loan Loss Reserve Account to reimburse all or a portion of the claim; or(C) seeks reimbursement of more than the Loss, in which case the Office shall reimburse no more than the amount of the Loss.(c) If the Loan Loss Reserve Account does not contain sufficient funds to cover the total amount of a Loss claim, the Office shall pay an amount up to the available balance of the Loan Loss Reserve Account, less the interest earned on the account. This payment shall fully satisfy the claim and the PFI has no further right to receive any other amount with respect to such claim.(d) The Office shall review Loss claims in the order in which it receives them.</content><note type="source"><p>Source Note: The provisions of this §200.13 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.14"><num value="200.14">§200.14</num><heading>Recoveries on Loans Subsequent to Payment of Claim</heading><content>If the PFI recovers on a debt from a Borrower after the Office reimburses a Loss pursuant to §200.13 of this chapter (relating to Payment of Claims by the Office), the PFI shall promptly repay into the Loan Loss Reserve Account the amount the PFI recovered, up to the amount of the reimbursement.</content><note type="source"><p>Source Note: The provisions of this §200.14 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.15"><num value="200.15">§200.15</num><heading>Withdrawal from Program; Termination of Participation in Program</heading><content>(a) The Office may terminate enrollment of Qualified Loans under the Program:(1) on the date specified in the Office's notice of termination to the PFI; or(2) upon 90 days' notice, or an earlier date if the balance in the Fund reaches zero or the Office anticipates that the balance in the Fund will reach zero.(b) If a PFI's Loan Loss Reserve Account has a zero balance, the Office, in its sole discretion, may terminate the Agreement associated with that PFI.(c) A PFI may withdraw from the Program after giving written notice to the Office. After receipt of this notice, the Office shall withdraw from the PFI's Loan Loss Reserve Account the portion of any remaining balance attributable to the Office's contributions, including earned interest.</content><note type="source"><p>Source Note: The provisions of this §200.15 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.16"><num value="200.16">§200.16</num><heading>Excessive Annual Claims Rate by a Participating Financial Institution</heading><content>(a) The Office may disallow a PFI whose annual claims rates exceed 6 percent from enrolling any additional Qualified Loans if the Office determines the PFI's practices do not meet Program standards or it is using the Program to offset the costs of a high default rate.(b) The claims rate shall be measured by either claim amounts made against total capital or the number of claims made on the total number of loans in a twelve-month period.</content><note type="source"><p>Source Note: The provisions of this §200.16 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.17"><num value="200.17">§200.17</num><heading>Inspection of Files</heading><content>Upon reasonable notice to the PFI, the Office may inspect a PFI's files relating to Enrolled Loans at any time during normal business hours.</content><note type="source"><p>Source Note: The provisions of this §200.17 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.18"><num value="200.18">§200.18</num><heading>Reports to the Office</heading><content>(a) PFIs shall provide reports to the Office in accordance with the Agreement.(b) The Office may suspend enrollment of future loans of a PFI that fails to comply with reporting requirements prescribed by this Section.</content><note type="source"><p>Source Note: The provisions of this §200.18 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.19"><num value="200.19">§200.19</num><heading>Administrative Costs of Program</heading><content>The Office may charge actual and necessary administrative expenses in operating the Program to the Fund.</content><note type="source"><p>Source Note: The provisions of this §200.19 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scA/s200.20"><num value="200.20">§200.20</num><heading>Waiver</heading><content>The Chief of Staff or designee may suspend or waive any provision not statutorily imposed, in whole or in part, upon the showing of good cause or when, at the discretion of the Chief of Staff or designee, the particular facts or circumstances render such waiver of the Section appropriate in each instance.</content><note type="source"><p>Source Note: The provisions of this §200.20 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section></subchapter><subchapter identifier="/us/state/tx/tac/t10/p5/c200/scB"><num value="B">SUBCHAPTER B</num><heading>TEXAS SMALL BUSINESS CREDIT INITIATIVE LOAN GUARANTEE PROGRAM</heading><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.101"><num value="200.101">§200.101</num><heading>Texas Small Business Credit Initiative Loan Guarantee Program Authority and Purpose</heading><content>(a) Authority. Pursuant to the authority granted by the Texas Government Code, Chapter 481, Subchapter BB, concerning Access to Capital Programs, and Texas Government Code, Chapter 2001, Subchapter B, concerning Rulemaking, the Economic Development and Tourism Office in the Office of the Governor prescribes the following rules to provide definitions, procedures, and eligibility standards and criteria for the Texas Small Business Credit Initiative Loan Guarantee Program.(b) Purpose. The purpose of this Program is to provide increased access to financing for small and medium-sized businesses by guaranteeing portions of loans enrolled into the Program by Participating Financial Institutions. Special consideration is given to Very Small Businesses with fewer than 10 employees and businesses owned by Socially and Economically Disadvantaged Individuals.</content><note type="source"><p>Source Note: The provisions of this §200.101 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.102"><num value="200.102">§200.102</num><heading>Definitions</heading><content>The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:(1) Agreement--A contract between a Financial Institution and the Office that authorizes the Financial Institution to participate in the Program and establishes, in accordance with §200.104 of this chapter (relating to Agreement), the terms required for the Financial Institution's participation.(2) Borrower--A Qualified Business that has received a Qualified Loan from a Participating Financial Institution.(3) Enrolled Loan--A Qualified Loan enrolled in the Program as described in §200.107 of this chapter (relating to Loan Guarantee Maximums; Procedure for Enrollment of a Qualified Loan).(4) Financial Institution--An insured depository institution, insured credit union, or Community Development Financial Institution, as each of those terms is defined in 12 U.S.C. § 4702.(5) Fund--The Texas Small Business Credit Initiative Loan Guarantee Fund.(6) Guaranteed Amount--The amount of principal of an Enrolled Loan that is guaranteed by the Office.(7) Loss--Any original principal amount due and not paid and not in excess of the Guaranteed Amount of the Qualified Loan.(8) Office--The Economic Development and Tourism Office in the Office of the Governor.(9) Participating Financial Institution or PFI--A Financial Institution authorized to conduct business in the State of Texas that has adequate capacity, as determined by the Office in its sole discretion, to underwrite and monitor loans and has executed an Agreement with the Office to participate in the Program.(10) Principal of a Borrower--A person, other than an insured bank, that directly or indirectly, or acting through or in concert with one or more persons, owns, controls, or has the power to vote more than 10 percent of any class of voting securities of a member bank or company. Shares owned or controlled by a member of an individual's immediate family are considered to be held by the individual.(11) Principal of a Lender--The principal of a lender is:(A) If a sole proprietorship, the proprietor;(B) If a partnership, each partner; and(C) If a corporation, limited liability company, association or a development company, each director, each of the five most highly compensated executives, officers or employees of the entity, and each direct or indirect holder of twenty percent or more of the ownership stock or stock equivalent of the entity.(12) Program--The Texas Small Business Credit Initiative Loan Guarantee Program.(13) Program Website--The dynamic web portal developed by the Office and located at https://tsbci.gov.texas.gov.(14) Qualified Business--Any Small Business authorized to conduct business in the State of Texas that meets the eligibility requirements of §200.105 of this chapter (relating to Qualified Loan Eligibility and Approval).(15) Qualified Loan--A loan or portion of a loan that is made by a PFI to a Qualified Business for a business purpose consistent with §200.106 of this chapter (relating to Eligible and Restricted Uses of Texas Small Business Credit Loan Guarantee Program Loan Proceeds), and not contrary to state or federal law or policy.(16) Small Business--A corporation, partnership, sole proprietorship, or other legal entity that:(A) is domiciled in this state or has at least 51 percent of its employees located in this state;(B) is formed to make a profit;(C) is independently owned and operated; and(D) employs fewer than 500 employees.(17) Socially and Economically Disadvantaged Individuals or SEDI--Individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business who are not socially disadvantaged.(18) Treasury--The United States Department of Treasury.(19) Very Small Business--A Small Business that employs fewer than 10 employees.</content><note type="source"><p>Source Note: The provisions of this §200.102 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.103"><num value="200.103">§200.103</num><heading>Program Application Procedure</heading><content>(a) A Financial Institution seeking to participate in the Program must submit a completed application to the Office through the Program Website.(b) Upon request, an applicant Financial Institution must provide any additional information the Office determines is necessary on or before the fifth business day after the applicant Financial Institution receives the request for information from the Office. The Office may reject an application if an applicant Financial Institution fails to provide the additional information requested under this subsection.(c) The Office shall determine the Financial Institution's eligibility to participate in the Program based on the application submitted under subsection (a) of this section and any other information the Office determines is necessary and requests pursuant to subsection (b) of this section. The Office has no obligation to authorize an applicant Financial Institution's participation in the Program.(d) A Financial Institution the Office determines is eligible to participate in the Program must enter an Agreement with the Office. Otherwise-eligible Financial Institutions that have not entered an Agreement shall not participate in the Program.</content><note type="source"><p>Source Note: The provisions of this §200.103 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.104"><num value="200.104">§200.104</num><heading>Agreement</heading><content>To participate in the Program, a Financial Institution must enter an Agreement developed by the Office.</content><note type="source"><p>Source Note: The provisions of this §200.104 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.105"><num value="200.105">§200.105</num><heading>Qualified Loan Eligibility and Approval</heading><content>A PFI may request to enroll a Qualified Loan under the Program if the PFI determines the Qualified Loan:(1) is for an amount equal to or between $5,000 and $20,000,000;(2) is provided to a Borrower who is not an executive officer, director, or Principal of the Lender, or person with comparable official capacity with or significant ownership in the PFI, or a member of the immediate family of such a person;(3) is not for a business enterprise in which a person described in paragraph (2) of this section has a shared ownership, investment, or other significant pecuniary interest; and(4) is being provided to a Borrower that is a Small Business that:(A) is not engaged in speculative activities that develop profits from fluctuations in price rather than through the normal course of trade unless those activities are incidental to the regular activities of the business and are part of a legitimate risk management strategy to guard against price fluctuations related to the regular activities of the business;(B) does not earn more than half of its annual net revenue from lending activities unless the Borrower is a Community Development Financial Institution that is not a depository institution or a bank holding company or a tribal enterprise lender that is not a depository institution or a bank holding company;(C) is not engaged in pyramid sales, where a participant's primary incentive is based on the sales made by an ever-increasing number of participants;(D) is not engaged in activities that are prohibited by state law, federal law, or other applicable laws in the jurisdiction where the business is located or conducted;(E) at the time of loan obligation, is not delinquent in any taxes owed the State of Texas, and is in good standing with the Comptroller of Public Accounts; and(F) does not derive any of its gross annual revenue from gambling activities.</content><note type="source"><p>Source Note: The provisions of this §200.105 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.106"><num value="200.106">§200.106</num><heading>Eligible and Restricted Uses of Texas Small Business Credit Loan Guarantee Program Loan Proceeds</heading><content>(a) Borrowers must use loan proceeds for a business purpose. Business purposes include, but are not limited to:(1) start-up costs;(2) working capital;(3) franchise fees; and(4) acquisition of equipment, inventory, or services used in the production, manufacturing, or delivery of a business's goods or services, or in the purchase, construction, renovation, or tenant improvements of an eligible place of business that is not for passive real estate investment purposes.(b) Loan proceeds shall not be used for:(1) acquiring or holding passive investments in real estate;(2) the purchase of owner-occupied residential housing;(3) the construction, improvement, or purchase of residential housing that is owned or to be owned by the Borrower;(4) the purchase of real property that is intended for resale or not used for the business operations of the Borrower;(5) the purchase of securities;(6) lobbying activities;(7) the purchase of good will;(8) inside bank transactions;(9) repayment of delinquent federal or state income taxes unless the Borrower has a payment plan in place with the relevant taxing authority;(10) repayment of taxes held in trust or escrow;(11) reimbursement of funds owed to any owner, including any equity injection or injection of capital for the business' continuance;(12) purchase of any portion of the ownership interest of any owner of the Borrower, such as the acquisition of shares of a company or the partnership interest of a partner when the proceeds of the Enrolled Loan will go to any existing owner or partner of the Borrower;(13) refinance of any portion of a loan enrolled in another credit enhancement or credit insurance program not encompassed by 10 T.A.C. Chapter 200;(14) a loan in which any Principal of a Borrower has been convicted of a sex offense against a minor as such terms are defined 34 U.S.C. 20911; or(15) a loan that is contrary to federal or state law or policy.</content><note type="source"><p>Source Note: The provisions of this §200.106 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.107"><num value="200.107">§200.107</num><heading>Loan Guarantee Maximums; Procedure for Enrollment of a Qualified Loan</heading><content>(a) The Office may provide the following Guaranteed Amounts:(1) for SEDI-owned businesses and Very Small Businesses, up to 80 percent of Losses on an Enrolled Loan; or(2) for all other Borrowers, up to 50 percent of Losses on an Enrolled Loan.(b) A PFI may seek to enroll a Qualified Loan by:(1) submitting a Qualified Loan enrollment application through the Program Website on or before the fifteenth business day after the date loan documents were executed;(2) making required certifications; and(3) specifying the Guaranteed Amount of coverage it seeks for the loan based upon the loan agreement with the Borrower. Subject to subsection (g) of this section, the Guaranteed Amount shall not exceed the amounts specified in subsection (a) of this section.(c) The Office shall notify a PFI of any deficiencies in the enrollment application submitted under subsection (b)(1) of this section. The PFI may amend the form to resolve any deficiencies or withdraw the loan from consideration under the Program. If the PFI fails to cure the deficiencies in the enrollment form, the Office may reject the enrollment of the loan. The Office has sole discretion in determining whether a PFI has failed to cure deficiencies.(d) Upon receipt of documentation satisfying the requirements in subsection (b) of this section and the resolution of any deficiencies noted under subsection (c) of this section, the Office may enroll the Qualified Loan if:(1) the Office is satisfied the Qualified Loan is eligible to be enrolled under this chapter, including under §200.105 of this chapter (relating to Qualified Loan Eligibility and Approval) and §200.106 of this chapter (relating to Eligible and Restricted Uses of Texas Small Business Credit Loan Guarantee Program Loan Proceeds);(2) with the information provided at the time the PFI requests a loan's enrollment, the Office is satisfied the Qualified Loan does not violate predatory lending laws or other state or federal laws, policies, regulations, or guidance;(3) sufficient funds are available in the Fund to meet the Office's encumbrance obligations under §200.108 of this chapter (relating to Encumbrance of Funds);(4) enrollment would not result in the Qualified Business having two or more active Enrolled Loans in the Program for the same purpose at the same time, as determined by the Office in its sole discretion;(5) enrollment would not result in a single loan being enrolled in more than one approved program associated with the Texas Small Business Credit initiative at the same time; and(6) the Office, in its sole discretion, has not otherwise determined the loan may not be enrolled.(e) The Office shall, within a reasonable time after receipt of the information required by this section, notify the PFI whether a loan is enrolled.(f) After notifying the PFI that the Qualified Loan has been approved for enrollment, the Office shall encumber an amount in the Fund in accordance with §200.108 of this chapter.(g) Notwithstanding subsection (a) of this section, upon request from a PFI, the Office, in its sole discretion, may authorize the PFI to obtain a maximum Guaranteed Amount specified in subsection (a)(1) of this section for all Borrowers, regardless of whether the Borrower is a SEDI owned business or a Very Small Business.(h) Notwithstanding any provision to the contrary, the Office shall unenroll loans it determines, in its sole discretion, were enrolled in error because the loan did not meet the requirements of this chapter, the PFI failed to disclose a material fact or factor about the nature or purpose of the loan in its request to enroll the loan, if the nature or use of the loan changed after enrollment, or other good cause.(i) Without regard to the terms of the Qualified Loan, the term of enrollment in the Program shall not exceed one hundred eight months from the date of first disbursement of the Qualified Loan.</content><note type="source"><p>Source Note: The provisions of this §200.107 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.108"><num value="200.108">§200.108</num><heading>Encumbrance of Funds</heading><content>(a) Subject to subsection (b) of this section, for each Enrolled Loan, the Office shall encumber an amount in the Fund up to the Guaranteed Amount specified in §200.107 of this chapter (relating to Loan Guarantee Maximums; Procedure for Enrollment of a Qualified Loan) for the Enrolled Loan and attribute that encumbrance to the Enrolled Loan.(b) The Office shall not encumber the full amount specified in subsection (a) of this section if:(1) the Fund does not contain an amount of money greater than or equal to the amount to be encumbered, in which case the Office may encumber up to the balance of the Fund; or(2) the amount to be encumbered is more than $4,000,000, in which case the Office may encumber up to $4,000,000.(c) Notwithstanding any provision to the contrary, the Office may unencumber any encumbered amounts related to loans the Office, in its sole discretion, has determined are ineligible for reimbursement or for other good cause. If the encumbered amounts have been reported to Treasury, the Office shall promptly inform Treasury of the unencumbrance. The Office may use any unencumbered funds to guarantee any other Qualified Loan.</content><note type="source"><p>Source Note: The provisions of this §200.108 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.109"><num value="200.109">§200.109</num><heading>Procedure for Making a Claim for Reimbursement for Charging Off of an Enrolled Loan</heading><content>(a) If a PFI charges off all or part of an Enrolled Loan because of a default by the Borrower, the PFI may claim reimbursement for all or part of the Loss incurred by requesting reimbursement for the charged off loan through the Program Website and providing all information and documentation required by the Office. The Office may notify the PFI of any deficiencies in the PFI's claim for reimbursement.(b) The PFI must make the claim:(1) only after exercising due care and diligent efforts to liquidate the loan collateral, realize the personal or other financial guarantees, or otherwise recover on the loan;(2) on or before the 180th day after charging off the loan; and(3) not before the first anniversary of the PFI's enrollment of the loan in the Program.(c) Subject to subsection (b)(1) of this section, a PFI may make a claim for reimbursement of a Loss prior to the liquidation of collateral, realization on personal or other financial guarantees, or otherwise recovering on the loan.(d) Notwithstanding subsection (b)(2) of this section, the Office may authorize the PFI to submit a claim after the 180th day after charging off the Enrolled Loan if, in the Office's sole discretion:(1) the PFI demonstrates it has consistently and actively undertaken activities to recover on the Enrolled Loan; or(2) shows other good cause.(e) The PFI shall retain documentation in its files substantiating all claims for a term commensurate with standard banking records retention practices but not less than seven years after the date that the Enrolled Loan is terminated.</content><note type="source"><p>Source Note: The provisions of this §200.109 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.110"><num value="200.110">§200.110</num><heading>Payment of Claims by the Office</heading><content>(a) Subject to subsection (b) of this section, and in accordance with the Agreement, the Office shall reimburse a PFI for Losses claimed under the procedure described in §200.109 of this chapter (relating to Procedure for Making a Claim for Reimbursement for Charging Off of an Enrolled Loan).(b) The Office may reject a claim in part or in full if:(1) the Office, in its sole discretion, determines:(A) the representations and warranties provided by the PFI in the Agreement were misleading or false;(B) the representations and warranties provided by the PFI at the time of enrolling the Qualified Loan were misleading or false;(C) the PFI did not exercise due care and diligent efforts to liquidate the loan collateral, realize the personal or other financial guarantees, or otherwise recover on the loan;(D) the documentation provided by the PFI does not substantiate the claim;(E) reimbursing the claim would violate state or federal law or policy; or(F) other good cause exists; or(2) the PFI:(A) fails to submit required information or documentation within the time period specified by the Office in the Office's notice of deficiency sent to the PFI;(B) seeks reimbursement of more than the Guaranteed Amount, in which case the Office shall reimburse no more than the Guaranteed Amount.(c) If the Fund does not contain amounts sufficient to cover the total amount of a Loss claim, the Office shall pay an amount up to the available balance of the Fund. This payment shall fully satisfy the claim and the PFI has no further right to receive any other amount with respect to such claim.(d) The Office shall review Loss claims in the order in which it receives them.</content><note type="source"><p>Source Note: The provisions of this §200.110 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.111"><num value="200.111">§200.111</num><heading>Recoveries on Loans Subsequent to Payment of Claim</heading><content>If the PFI recovers on a debt from a Borrower after the Office remits a Guaranteed Amount pursuant to §200.110 of this chapter (relating to Payment of Claims by the Office), the PFI shall promptly repay the Office the money remitted to the PFI for the Loss, up to the amount of the remittance.</content><note type="source"><p>Source Note: The provisions of this §200.111 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.112"><num value="200.112">§200.112</num><heading>Withdrawal from Program; Termination of Participation in Program</heading><content>(a) The Office may terminate enrollment of Qualified Loans under the Program:(1) on the date specified in the Office's notice of termination to the PFI; or(2) upon 90 days' notice, or an earlier date if the balance in the Fund reaches zero or the Office anticipates that the balance in the Fund will reach zero.(b) A PFI may withdraw from the Program after giving written notice to the Office. After receipt of this notice, the Office shall unencumber any Guaranteed Amounts in the Fund related to loans enrolled by that Financial Institution. If the encumbered amounts have been reported to Treasury, the Office shall promptly inform Treasury of the unencumbrance.</content><note type="source"><p>Source Note: The provisions of this §200.112 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.113"><num value="200.113">§200.113</num><heading>Excessive Annual Claims Rate by a Participating Financial Institution</heading><content>(a) The Office may disallow a PFI whose annual claims rates exceed 6 percent from enrolling any additional Qualified Loans if the Office determines the PFI's practices do not meet Program standards or it is using the Program to offset the costs of a high default rate.(b) The claims rate shall be measured by either claim amounts made against total capital or the number of claims made on the total number of loans in a twelve-month period.</content><note type="source"><p>Source Note: The provisions of this §200.113 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.114"><num value="200.114">§200.114</num><heading>Inspection of Files</heading><content>Upon reasonable notice to the PFI, the Office may inspect a PFI's files relating to Enrolled Loans at any time during normal business hours.</content><note type="source"><p>Source Note: The provisions of this §200.114 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.115"><num value="200.115">§200.115</num><heading>Reports to the Office</heading><content>(a) PFIs shall provide reports to the Office in accordance with the Agreement.(b) The Office may suspend enrollment of future loans of a PFI that fails to comply with reporting requirements prescribed by this section.</content><note type="source"><p>Source Note: The provisions of this §200.115 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.116"><num value="200.116">§200.116</num><heading>Administrative Costs of Program</heading><content>The Office may charge actual and necessary administrative expenses in operating the Program to the Fund.</content><note type="source"><p>Source Note: The provisions of this §200.116 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c200/scB/s200.117"><num value="200.117">§200.117</num><heading>Waiver</heading><content>The Chief of Staff or designee may suspend or waive any provision not statutorily imposed, in whole or in part, upon the showing of good cause or when, at the discretion of the Chief of Staff or designee, the particular facts or circumstances render such waiver of the section appropriate in each instance.</content><note type="source"><p>Source Note: The provisions of this §200.117 adopted to be effective June 25, 2023, 48 TexReg 3217.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p5/c201"><num value="201">CHAPTER 201</num><heading>TEXAS MICRO-BUSINESS DISASTER RECOVERY LOAN PROGRAM</heading><subchapter identifier="/us/state/tx/tac/t10/p5/c201/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p5/c201/sc/s201.1"><num value="201.1">§201.1</num><heading>Authority and Purpose</heading><content>(a) Authority. Pursuant to the authority granted by the Texas Government Code, Chapter 481, Subchapter CC, concerning a Micro-Business Disaster Recovery Loan Program, and Texas Government Code, Chapter 2001, Subchapter B, concerning Rulemaking, the Texas Economic Development and Tourism Office in the Office of the Governor prescribes the following rules to provide definitions, procedures, and eligibility standards and criteria for the Texas Micro-Business Disaster Recovery Loan Program.(b) Purpose. The purpose of this Program is to expand access to capital for qualifying micro-businesses following a declared disaster.</content><note type="source"><p>Source Note: The provisions of this §201.1 adopted to be effective January 5, 2025, 49 TexReg 10628.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c201/sc/s201.2"><num value="201.2">§201.2</num><heading>Definitions</heading><content>The following words and terms, when used in this Subchapter, shall have the following meanings, unless the context clearly indicates otherwise.(1) Applicant--A CDFI that submits an application to the Program.(2) CDFI--A Community Development Financial Institution, as that term is defined in 12 U.S.C. § 4702, that has received its CDFI Certification from the United States Department of the Treasury.(3) Declared Disaster--A declaration of a state of disaster under Texas Government Code §§ 418.014 or 418.108, or a disaster declared by the president of the United States, if any part of the State is named in the federally designated disaster area.(4) Default rate--The percentage of Disaster Recovery Loans made by a Participant that did not meet the payment terms during a period specified by the Office.(5) Disaster Recovery Loan--An interest-bearing loan made by a Participant to a Micro-Business that is supported by a Zero-Interest Loan from the Office to the Participant under the Program.(6) Fiscal Year--The period beginning September 1 and ending August 31.(7) Fund--The micro-business recovery fund established under Texas Government Code § 481.452.(8) Loan Agreement--An agreement under the Program made between a Participant and the Office for a Zero-Interest Loan.(9) Micro-Business--A corporation, partnership, sole proprietorship, or other legal entity that:(A) is domiciled in this state and has at least 95 percent of its employees located in this state;(B) is formed to make a profit; and(C) employs not more than 20 employees.(10) Office--The Texas Economic Development and Tourism Office in the Office of the Governor, which is authorized to exercise any power necessary to carry out Texas Government Code, Chapter 481, and has established the Texas Economic Development Bank under Texas Government Code, Chapter 489 for the purpose of:(A) providing globally competitive, cost-effective state incentives to expanding businesses operating in this state and businesses relocating to this state; and(B) ensuring that communities and businesses in this state have access to capital for economic development purposes.(11) Participant--A CDFI that is authorized to conduct business in the State, has submitted an application to the Program, been approved by the Office to participate in the Program, and entered into a Participation Agreement with the Office.(12) Participation Agreement--An agreement under the Program made between a Participant and the Office that must be entered before a Participant may apply to obtain a Zero-Interest Loan.(13) Program--The Texas Micro-Business Disaster Recovery Loan program.(14) State--The State of Texas.(15) Zero-Interest Loan--A zero-interest loan made by the Office to a Participant to support one or more Disaster Recovery Loans.</content><note type="source"><p>Source Note: The provisions of this §201.2 adopted to be effective January 5, 2025, 49 TexReg 10628.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c201/sc/s201.3"><num value="201.3">§201.3</num><heading>Participation Agreement</heading><content>(a) A CDFI seeking to participate in the Program must enter a Participation Agreement with the Office.(b) The Office shall make the Participation Agreement available through the Program website.(c) Before entering the Participation Agreement, the Applicant must provide the Office:(1) the Applicant's official name and primary business address, including the county;(2) the Applicant's federal tax identification and Comptroller of Public Accounts numbers;(3) documents from the Texas Secretary of State demonstrating the Applicant's authority to do business in Texas;(4) a letter from the Texas Comptroller of Public Accounts confirming the Applicant is in good standing;(5) an incumbency certificate from the Applicant; and(6) the Applicant's audited financial statements from the past three years.(d) Upon request, an Applicant must provide to the Office any additional information the Office determines is necessary.(e) The Applicant must identify all information it submits to the Office that the Applicant considers to be confidential or proprietary.(f) The Office may decline to enter into a Participation Agreement if an Applicant fails to provide the additional information requested under this Section.(g) The Office shall determine the Applicant's eligibility to participate in the Program based on the information submitted under subsection (c) of this section and any other information the Office determines is necessary and requests pursuant to subsection (d) of this section. The Office has no obligation to enter into a Participation Agreement with an Applicant.</content><note type="source"><p>Source Note: The provisions of this §201.3 adopted to be effective January 5, 2025, 49 TexReg 10628.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c201/sc/s201.4"><num value="201.4">§201.4</num><heading>Loan Application</heading><content>(a) After entering a Participation Agreement, a Participant seeking to obtain a Zero-Interest Loan from the Office to support one or more Disaster Recovery Loans must submit a completed Loan Application to the Office through the Program website.(b) All confidential and proprietary information must be identified by the Participant.(c) The Loan Application must provide, at a minimum:(1) the following information for each Micro-Business that will receive a Disaster Recovery Loan pursuant to the Loan Application:(A) the official business name and primary business address, including the county;(B) the federal tax identification and Comptroller of Public Accounts numbers;(C) certification of Micro-Business eligibility and Disaster Recovery Loan eligibility under the Program;(D) documents from the Texas Secretary of State demonstrating the Micro-Business's authority to do business in Texas; and(E) a letter from the Comptroller of Public Accounts confirming the Micro-Business is in good standing;(2) the total loan amount requested by the Participant from the Office;(3) a certification of the Loan Application from an authorized Participant representative; and(4) a resolution by the Participant's governing body authorizing the Loan Application.(d) The Office, in its sole discretion, may deny a Loan Application in full or in part for any reason.</content><note type="source"><p>Source Note: The provisions of this §201.4 adopted to be effective January 5, 2025, 49 TexReg 10628.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c201/sc/s201.5"><num value="201.5">§201.5</num><heading>Disaster Recovery Loan Requirements</heading><content>(a) A Disaster Recovery Loan may only be made to a Micro-Business that:(1) is in good standing under the laws of this state; and(2) did not owe delinquent taxes to a taxing unit of this state before the date of the initial issuance of the Declared Disaster.(b) A Disaster Recovery Loan may not be made to a Micro-Business that:(1) has total revenue that exceeds the amount for which no franchise tax is due under Tax Code § 171.002(d)(2);(2) is a franchise;(3) is a national chain with operations in this state;(4) is a lobbying firm; or(5) is a private equity firm or backed by a private equity firm.</content><note type="source"><p>Source Note: The provisions of this §201.5 adopted to be effective January 5, 2025, 49 TexReg 10628.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c201/sc/s201.6"><num value="201.6">§201.6</num><heading>Loan Agreement</heading><content>(a) Before the Office may provide a Zero-Interest Loan to a Participant, the Office and the Participant must enter a Loan Agreement that will set forth the terms and conditions of the Zero- Interest Loan. The Loan Agreement shall ensure the proper use of funds and will include, but is not limited to, provisions with respect to the following:(1) Interest Rate-- The Office shall provide a loan at a zero-percent interest rate to an applicant;(2) Amortization--Each loan shall be repaid on a quarterly basis;(3) Maturity--Each loan shall mature seven years after loan origination;(4) Security--The Office shall not take security interest; and(5) Income--All income received on a Disaster Recovery Loan made by a Participant, including the payment of interest by a Micro-Business and the administrative fees assessed by the Participant, remains the property of the Participant.(b) The Office shall specify any other terms and conditions that are reasonable, appropriate, and consistent with the purposes and objectives of the Program.</content><note type="source"><p>Source Note: The provisions of this §201.6 adopted to be effective January 5, 2025, 49 TexReg 10628.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c201/sc/s201.7"><num value="201.7">§201.7</num><heading>Monitoring and Reporting Requirements</heading><content>(a) A Participant must meet reporting and compliance requirements set out in the Loan Agreement, including, but not limited to providing:(1) annual audited financial statements, including income statement, balance sheet, cash flow, and aging accounts receivables, on or before the one hundred and twentieth day after the end of each Fiscal Year during the term of the Loan Agreement;(2) quarterly unaudited financial statements, including income statement, balance sheet, cash flow, and aging accounts receivables, on or before the thirtieth day after the end of each quarter during the term of the Loan Agreement;(3) quarterly report of the Participant's portfolio of Disaster Recovery Loans under the Program on or before the thirtieth day after the end of each quarter during the term of the Loan Agreement, which includes:(A) the name of the Micro-Businesses that have received a Disaster Recovery Loan;(B) the current balance of all outstanding Disaster Recovery Loans; and(C) the default rate of on existing Disaster Recovery Loans.(b) A Participant shall allow the Office to inspect the Participant's financial records on request for purposes that relate to one or more Disaster Recovery Loans under the Program.</content><note type="source"><p>Source Note: The provisions of this §201.7 adopted to be effective January 5, 2025, 49 TexReg 10628.</p></note></section><section identifier="/us/state/tx/tac/t10/p5/c201/sc/s201.8"><num value="201.8">§201.8</num><heading>Waiver</heading><content>The Chief of Staff or designee may suspend or waive any provision not statutorily imposed, in whole or in part, upon the showing of good cause or when, at the discretion of the Chief of Staff or designee, the particular facts or circumstances render such waiver of the Section appropriate in each instance.</content><note type="source"><p>Source Note: The provisions of this §201.8 adopted to be effective January 5, 2025, 49 TexReg 10628.</p></note></section></subchapter></chapter></part><part identifier="/us/state/tx/tac/t10/p8"><num value="8">PART 8</num><heading>TEXAS SPACE COMMISSION</heading><chapter identifier="/us/state/tx/tac/t10/p8/c320"><num value="320">CHAPTER 320</num><heading>COMMISSION GOVERNANCE</heading><subchapter identifier="/us/state/tx/tac/t10/p8/c320/scA"><num value="A">SUBCHAPTER A</num><heading>COMMISSION STANDARDS ON CONFLICTS OF INTEREST AND CODE OF CONDUCT</heading><section identifier="/us/state/tx/tac/t10/p8/c320/scA/s320.1"><num value="320.1">§320.1</num><heading>Intent</heading><content>It is the intent of the Texas Space Commission, its Board of Directors, Executive Director, Chief Compliance Officer, staff, and all parties affiliated with the Commission to provide applicants for funds from the Space Exploration and Aeronautics Research Fund a fair and unbiased, merit-based assessment free from conflicts of interests, impropriety, and self-dealing. This Subchapter provides requirements to avoid conflicts of interest and a code of conduct to be observed by those individuals involved in the application review process, the creation of contracts related to awards, and compliance and oversight matters.</content><note type="source"><p>Source Note: The provisions of this §320.1 adopted to be effective August 6, 2024, 49 TexReg 5768.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c320/scA/s320.2"><num value="320.2">§320.2</num><heading>Definitions</heading><content>The words and terms used in this Chapter shall have the meanings provided below, unless the context clearly indicates otherwise.(1) Board--The Board of Directors established under Section 482.105, Texas Government Code, to govern the Texas Space Commission.(2) Chair--The presiding officer of the Board.(3) Executive Director--The executive director of the Texas Space Commission, hired by the Board under Section 482.106(a), Texas Government Code.(4) General Counsel--The General Counsel Division of the Office of the Governor.(5) Second Degree of Affinity or Consanguinity--A spouse, parent, child, grandparent, grandchild, or sibling, or the spouse of each of those respective relatives, of a member of the Board. Stepfamily members (e.g., stepbrother, stepmother, etc.) are considered consanguineous relatives.(6) Space Exploration and Aeronautics Research Fund or Fund--The fund established by Section 482.301, Texas Government Code, created as a trust fund outside the treasury with the Texas Comptroller of Public Accounts and administered by the Commission.(7) Texas Space Commission or Commission--The body governed by the Board and established under Section 482.101, Texas Government Code, to strengthen Texas's proven leadership in civil, commercial, and military aerospace activity and to promote innovation in the fields of space exploration and commercial aerospace opportunities, including the integration of space, aeronautics, and aviation industries into the economy of this state.(8) Vice-chair--The officer of the Board empowered to fulfill the duties of the Chair in the Chair's absence from or inability to participate during a meeting of the Board.</content><note type="source"><p>Source Note: The provisions of this §320.2 adopted to be effective August 6, 2024, 49 TexReg 5768.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c320/scA/s320.3"><num value="320.3">§320.3</num><heading>Conflicts of Interest</heading><content>(a) A member of the Board, the Executive Director, the Chief Compliance Office, or staff of the Texas Space Commission or the Office of the Governor employee shall recuse himself or herself, as provided by §320.4 of this chapter (concerning Disclosure of Conflict Of Interest; Recusal), if the member or staff member, or an individual who is related to the member or staff member within the Second Degree of Affinity or Consanguinity, has a professional interest or financial interest in an entity receiving or applying to receive a grant from the Fund.(b) An individual has a financial interest in an entity receiving or applying to receive a grant from the Fund if the individual:(1) owns or controls, directly or indirectly, an ownership interest, including sharing in profits, proceeds, or capital gains, in an entity, or in a foundation or similar organization affiliated with an entity, receiving or applying to receive a grant from the Commission, unless the ownership interest is limited to shares owned through an investment in a publicly traded mutual fund or similar investment vehicle if the individual subject to this Chapter does not exercise any discretion or control regarding the investment of the assets of the fund or other investment vehicle; or(2) could reasonably foresee that an action or recommendation by the Board could result in a financial benefit to the individual.(c) An individual has a professional interest if the individual:(1) is a member of the board of directors, other governing board, or any committee of an entity or an organization affiliated with an entity receiving or applying to receive a grant from the Fund;(2) serves as an elected or appointed officer of an entity receiving or applying to receive a grant from the Fund or an organization affiliated with the entity;(3) is a staff member of, consultant for, or is negotiating future employment or a consulting arrangement with an entity receiving or applying to receive a grant from the Fund or an organization affiliated with the entity; or(4) represents in business or law, including actively seeking to represent, an entity receiving or applying to receive a grant from the Commission or an organization affiliated with the entity.(d) Notwithstanding anything to the contrary in this Chapter, if any notice, report, or disclosure required to be delivered under this Chapter would result in the communication going solely to an individual who holds a conflict of interest related to the matter being noticed, reported, or disclosed, the reporting individual shall instead deliver the notice, report, or disclosure to the first individual from the following list who does not hold a conflict of interest:(1) Chief Compliance Officer;(2) Executive Director;(3) Chair;(4) Vice-chair; or(5) a member of the Board, in descending order of seniority, as determined by how long the member has continuously served on the Board.</content><note type="source"><p>Source Note: The provisions of this §320.3 adopted to be effective August 6, 2024, 49 TexReg 5768.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c320/scA/s320.4"><num value="320.4">§320.4</num><heading>Disclosure of Conflicts of Interest; Recusal</heading><content>(a) If a member of the Board has a conflict of interest as described by §320.3 of this chapter (relating to Conflicts of Interest) regarding an application that comes before the Commission for review or other action, the member shall:(1) provide written notice to the Executive Director and the Chair, or the Vice-chair if the Chair holds a conflict of interest;(2) disclose the conflict of interest in an open meeting of the Board; and(3) recuse himself or herself from participating in the review, discussion, deliberation, and vote on the application and from accessing information regarding the matter to be decided.(b) If the Executive Director has a conflict of interest described by §320.3 of this chapter regarding an application that comes before the Executive Director to take an action, the Executive Director shall:(1) provide written notice to the Chair and Chief Compliance Officer of the conflict of interest; and(2) recuse himself or herself from participating in the processing or review of the application and be prevented from accessing information regarding the matter to be decided.(c) If the Executive Director must recuse himself or herself in a matter, the Chief Compliance Officer shall undertake the tasks and actions the Executive Director would have performed but for the conflict.(d) If an individual other than the Executive Director is serving as staff to the Commission and has a conflict of interest described by §320.3 of this chapter regarding an application that comes before the staff member for review or other action, the staff member shall:(1) provide written notice to the Executive Director of the conflict of interest; and(2) recuse himself or herself from participating in the review of the application and be prevented from accessing any information regarding the matter to be decided.(e) A member of the Board, the Executive Director, Chief Compliance Officer, or staff of the Commission with a conflict of interest may seek a waiver as provided by §320.5 of this chapter.(f) An individual who is subject to this Chapter is considered in compliance with the conflict of interest provisions of this Chapter if the individual:(1) reports his or her potential conflict of interest or another impropriety or self-dealing; and(2) fully complies with the recommendations of the General Counsel and recusal requirements.(g) If a member of the Board, the Executive Director, Chief Compliance Officer, or staff of the Commission intentionally violates this Chapter, that individual is subject to removal from further participation in the Commission's application review process.</content><note type="source"><p>Source Note: The provisions of this §320.4 adopted to be effective August 6, 2024, 49 TexReg 5768.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c320/scA/s320.5"><num value="320.5">§320.5</num><heading>Exceptional Circumstances Requiring Participation</heading><content>(a) The requirements of this Chapter related to conflicts of interest may be waived under exceptional circumstances for a member of the Board, the Executive Director, Chief Compliance Officer, or staff of the Commission. The waiver may only be granted in accordance with the requirements of this section.(b) Exceptional circumstances providing a potential basis for waiver:(1) Expertise or unique qualifications. The individual who holds the conflict is the only individual affiliated with the Commission with the expertise and ability to appropriately evaluate an application for a grant from the Fund.(2) Participation Significantly Outweighs Bias. The value of the participation of the individual who holds the conflict significantly outweighs the potential bias the individual may have in the review of an application.(3) Board Discretion. The Board may determine, in an open meeting and upon a majority vote of members present, that a circumstance presented to the Board presents an exceptional circumstance that requires participation of a member or staff member. A member whose circumstances are under consideration by the Board under this provision must recuse himself or herself from participation in the discussion, consideration, and vote on the determination made in this paragraph.(c) Procedure for seeking waiver of conflict-of-interest requirements for an exceptional circumstance:(1) The Executive Director or a member of the Board may propose granting a waiver to a conflicted individual by submitting to the Chair a written statement about the conflict of interest, the exceptional circumstance requiring the waiver, and any proposed limitations to the waiver;(2) the proposed waiver must be publicly reported at a meeting of the Board;(3) a majority vote of the Board members present and voting must vote to grant a waiver; and(4) the Commission must retain documentation of each waiver granted and retain them in accordance with the record retention policy applicable to the Commission.</content><note type="source"><p>Source Note: The provisions of this §320.5 adopted to be effective August 6, 2024, 49 TexReg 5768.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c320/scA/s320.6"><num value="320.6">§320.6</num><heading>Investigation of Failures to Report Conflicts of Interest</heading><content>(a) Any individual subject to this Chapter who becomes aware of a potential unreported conflict of interest shall immediately notify the Executive Director of the potential conflict of interest. If the potential conflict of interest is held by the Executive Director, the individual may submit the notice to the Chair.(b) An individual who is not subject to this Chapter who has a good faith belief that an individual who is subject to this Chapter has an unreported conflict of interest may submit written notice to the Executive Director of the potential conflict. If the potential conflict of interest is held by the Executive Director, the individual may submit the notice to the Chair. The written notice must provide all facts regarding the alleged conflict of interest known to the reporting individual.(c) Upon receipt of notice of a conflict under either subsection (a) or (b) of this section, the Executive Director must notify the Chair and the General Counsel. If the Chair receives the notice, the Chair shall notify the General Counsel.(d) After receiving a notice under this section, the General Counsel shall:(1) investigate the matter; and(2) provide an opinion to the Executive Director and Chair unless the alleged conflict is held by the Chair, then the opinion shall be provided to the Vice-chair instead. The opinion shall include:(A) a statement of the facts giving rise to the alleged conflict;(B) a determination of whether a conflict of interest, another impropriety, or self-dealing exists; and(C) if the opinion finds that a conflict of interest or another impropriety or self dealing exists, recommendations for any appropriate course of action.(e) After receiving the General Counsel's opinion and consulting with the member of the Board who receives notice under subsection (d) of this section, the Executive Director shall take immediate actions regarding the recusal of the individual from any discussion of or access to information regarding the matter at issue. If the alleged conflict of interest is held by the Executive Director, the Chair shall take actions to ensure the recusal of the Executive Director.(f) The Executive Director shall determine whether a conflict of interest exists involving the individual who is the subject of the investigation. If the Executive Director is alleged to hold the conflict, the Chair shall make the determination. The determination must include actions to be taken, if any, to address the conflict of interest, including reconsideration of an application.(1) The decision is final unless three or more members of the Board request that the issue be added to the agenda of the next meeting of the Board.(2) If a conflict of interest is present, the individual making the determination shall report the conflict to the Board, the Chief Compliance Officer, staff of the Commission, and General Counsel.(3) Unless specifically stated in the final determination, the validity of an action taken on an application is not affected if an individual that failed to report a conflict of interest participated in the action.</content><note type="source"><p>Source Note: The provisions of this §320.6 adopted to be effective August 6, 2024, 49 TexReg 5768.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c320/scA/s320.7"><num value="320.7">§320.7</num><heading>Code of Conduct</heading><content>(a) Each member of the Board, the Executive Director, the Chief Compliance Officer, and staff of the Commission must abide by the code of conduct established in this section.(b) All member of the Board, the Executive Director, the Chief Compliance Officer, and staff of the Commission shall avoid acts that are improper or give the appearance of impropriety in the disposition of funds and providing advice and recommendations to guide state policies.(c) A member of the Board, the Executive Director, the Chief Compliance Officer, staff of the Commission, or the spouse of such individuals shall not:(1) disclose confidential information, information that is excepted from public disclosure under the Texas Public Information, information contained in an application or other document in relation to which the member or staff member executed a Review and Evaluation Conflict of Interest & Non-Disclosure Certification, or information that has been ordered sealed by a court (collectively, "Protected Information"), that was acquired by reason of the member's or staff member's official position, or accept other employment, including self-employment, or engage in a business, charity, nonprofit organization, or professional activity that the member or staff member might reasonably expect would require or induce the member or staff member to disclose Protected Information that was acquired by reason of the member's or staff member's official position;(2) accept or solicit any gift, favor, or service that could reasonably influence the member or staff member in the discharge of official duties or that the member, staff member, or spouse of the member or staff member knows or should know is being offered with the intent to influence the member's or staff member's official conduct;(3) fail to disclose any gift or consideration if the gift or consideration is provided by a registered lobbyist;(4) accept employment or engage in any business or professional activity that would reasonably require or induce the member or staff member to disclose confidential information acquired in the member's or staff member's official position;(5) accept other employment or compensation that could reasonably impair the member's or staff member's independent judgment in the performance of official duties;(6) make personal investments or have a financial interest that could reasonably create a substantial conflict between the member's or staff member's private interest and the member's or staff member's official duties;(7) intentionally or knowingly solicit, accept, or agree to accept any benefit for exercising the member's official powers or performing the member's or staff member's official duties in favor of another;(8) lease, directly or indirectly, any property, capital equipment, or service to any entity that receives a grant from the Fund;(9) apply to receive a grant from the Fund;(10) serve on the board of directors of an organization established with a grant from the Fund;(11) serve on the board of directors of an organization that received a grant from the Fund;(12) if a member of a professional organization, fail to comply with the standards of conduct adopted by the professional organizations of which he or she is a member;(13) take actions that will discredit the Commission, Fund, or Board; or(14) solicit or accept an honorarium in consideration for services as a member of the Board, a member of any subcommittee established by the Board, or a staff member.(d) If a member of the Board, the Executive Director, Chief Compliance Officer, or staff of the Commission intentionally violates this section, that individual is subject to removal from further participation in the Commission's application review process.</content><note type="source"><p>Source Note: The provisions of this §320.7 adopted to be effective August 6, 2024, 49 TexReg 5768.</p></note></section></subchapter></chapter><chapter identifier="/us/state/tx/tac/t10/p8/c321"><num value="321">CHAPTER 321</num><heading>GRANTS</heading><subchapter identifier="/us/state/tx/tac/t10/p8/c321/sc"><num value="">SUBCHAPTER </num><heading></heading><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.1"><num value="321.1">§321.1</num><heading>Definitions</heading><content>The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.(1) Applicant--A person that has submitted an application for a grant award under this chapter.(2) Board--The board of directors of the commission.(3) Classified research--Research whose procedures, including required access to classified materials or cleared facilities, and results, subject to a Security Agreement between the U.S. Department of Defense and the governing body for an institution of higher education, are legally knowable only by individuals with U.S. government security clearance.(4) Commission--The Texas Space Commission.(5) Consortium--The Texas Aerospace Research and Space Economy Consortium created under Subchapter G, Chapter 482, Texas Government Code.(6) Digital signature--A signature that:(A) is created as an electronic identifier by cryptographic means involving the use of two mathematically related keys (i.e., a public and private key pair, often referred to as Public Key Infrastructure or PKI);(B) complies with the requirements of Title 1, Chapter 203, Texas Administrative Code (relating to Management of Electronic Transactions and Signed Records); and(C) is not a photographic digital facsimile of a hand-made signature.(7) Direct award--The award of a grant without first soliciting competitive proposals or applications.(8) Electronic signature--A signature that is an image of a hand-made signature such as on a transmitted facsimile, an electronic document created by scanning the original physical document, or an electronic document (such as one created in a portable document format) where a separate image of a hand-made signature has been overlaid onto the electronic document in place of a physical hand-made signature.(9) Fund--The Space Exploration and Aeronautics Research Fund.(10) Governmental entity--Means:(A) the State of Texas and all the agencies of government that collectively constitute the government of the state, including boards, commissions, departments, committees, institutions, or offices that are within or are created by the executive or legislative branch of state government and that are directed by one or more elected or appointed members;(B) an institution of higher education, as that term is defined in Section 61.003, Texas Education Code;(C) a political subdivision of this state, including any city, county, junior college district, or other entity; and(D) any other institution, agency, or organ of government the status and authority of which are derived from the Constitution of Texas or from laws passed by the legislature under the constitution.(11) Grant--The award of financial assistance, including cooperative agreements, in the form of money, property in lieu of money, or other financial assistance paid or furnished by the state or federal government to carry out a program in accordance with rules, regulations, and guidance provided by the commission. The term does not include technical assistance which provides services instead of money, or other assistance in the form of revenue sharing, loans, loan guarantees, interest subsidies, insurance, or direct appropriations. Also, the term does not include assistance, such as a fellowship or other lump sum award, for which the grantee is not required to account.(12) Grant agreement--An agreement between the commission and a grant recipient that establishes the terms, duties, reporting requirements, and other responsibilities of each party in relation to a grant awarded by the commission.(13) Grant funds--Monies in the Space Exploration and Aeronautics Research Fund.(14) Grant recipient or Grantee--An applicant that receives a grant award under this chapter.(15) Hand-made signature--A signature created when a person physically marks a paper document; also known as a "wet ink" or "manual" signature.(16) TxGMS--The publication titled Texas Grant Management Standards, promulgated by the Texas Comptroller of Public Accounts, in accordance with Texas Government Code, Chapter 783, concerning Uniform Grant and Contract Management.</content><note type="source"><p>Source Note: The provisions of this §321.1 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.2"><num value="321.2">§321.2</num><heading>Authority</heading><content>Sections 482.301 and 482.302, Texas Government Code, authorize the commission to award grants for purposes set forth in §321.3 of this chapter (relating to Applicability).</content><note type="source"><p>Source Note: The provisions of this §321.2 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.3"><num value="321.3">§321.3</num><heading>Applicability</heading><content>The commission may award grants for the following purposes:(1) development of emerging technologies required for any aspect of human space flight;(2) research involving any aspect of space exploration and space flight;(3) workforce training to promote space exploration and space flight;(4) curation of post-mission materials involved in space exploration and space flight; and(5) development of infrastructure useful or necessary for the establishment or maintenance of a spaceport.</content><note type="source"><p>Source Note: The provisions of this §321.3 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.4"><num value="321.4">§321.4</num><heading>Funding; Availability of Funds</heading><content>(a) Grants awarded by the board under this chapter may use:(1) gifts, grants, and donations provided to the commission; and(2) money from any source designated by the legislature.(b) All grant funding is contingent upon the availability of funds, upon approval of a grant application by the commission, and the terms of the grant agreement. Neither this chapter nor a grant agreement creates any entitlement or right to grant funds by a grant applicant.</content><note type="source"><p>Source Note: The provisions of this §321.4 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.5"><num value="321.5">§321.5</num><heading>Notices</heading><content>(a) Unless otherwise required by law, the commission may prescribe all forms or other documents required to implement this chapter and may require that the forms or other documents be submitted electronically.(b) Any notice required by these rules to be sent by the commission may be provided electronically and the commission is entitled to rely on an email address provided by an applicant, grant recipient, or other person for all purposes relating to notification. Applicants and grant recipients must provide an email address that is designated for receipt of notices from the commission.(c) If notice cannot be sent electronically, the commission shall provide notice by regular mail via U.S. Postal Service and the commission is entitled to rely on the mailing address currently on file for all purposes relating to notification.(d) Service of notice by the commission is complete and receipt is presumed on:(1) the date the notice is sent, if sent before 5:00 p.m. by electronic mail;(2) the date after the notice is sent, if sent after 5:00 p.m. by electronic mail; or(3) three business days after the date it is placed in the mail, if sent by regular U.S. Mail.</content><note type="source"><p>Source Note: The provisions of this §321.5 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.6"><num value="321.6">§321.6</num><heading>Eligible Recipients; Eligible Activities</heading><content>(a) Entities that are eligible for a grant award include:(1) a business or nonprofit entity with an established presence in this state that is involved in the space exploration, research, or aeronautics industry; and(2) a governmental entity with which the commission has entered into an intergovernmental agreement for that purpose.(b) An entity that has made a gift or grant to the commission, or to a nonprofit organization established to provide support to the commission, is not eligible for a grant award.(c) Multiyear projects are eligible for a grant award.(d) All activities funded by a grant awarded by the commission must relate directly to a purpose specified in the grant.</content><note type="source"><p>Source Note: The provisions of this §321.6 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.7"><num value="321.7">§321.7</num><heading>Established Presence in the State</heading><content>(a) To be eligible to receive a grant, an applicant must engage in business in the state of Texas by:(1) maintaining employees in the state of Texas;(2) having a fixed place of business in the state of Texas; or(3) providing any service in the state of Texas, whether or not the individuals performing the service are residents of the state.(b) Applicants may be located outside the state of Texas when the application is submitted and reviewed; however, the applicant must demonstrate that it engages in business in the state of Texas as a condition of the award of grant funds.(c) A grant recipient's failure to engage in business in the state of Texas is in violation of these rules for the purpose of §321.15 of this chapter (relating to Noncompliance; Failure to Perform).</content><note type="source"><p>Source Note: The provisions of this §321.7 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.8"><num value="321.8">§321.8</num><heading>Application Process Generally</heading><content>(a) The commission may not award a competitive grant to persons who do not submit an application or do not submit a complete application in accordance with the requirements established in this chapter.(b) Applicants must submit an application in the form and manner prescribed by the commission. The commission may require that applicants submit applications electronically.(c) The commission may reject and take no further action on an application that does not appear to comply with applicable program requirements on its face.(d) The commission may seek input from the consortium on grant applications.</content><note type="source"><p>Source Note: The provisions of this §321.8 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.9"><num value="321.9">§321.9</num><heading>Application Requirements</heading><content>(a) As set forth in greater detail in the application instructions prescribed by the commission, each application shall include:(1) applicant's exact name;(2) a description of the project, projected milestone dates, and proposed services;(3) project lead(s) and/or researcher(s), budget(s), matching funds, costs, and proof of funding availability;(4) project area and location(s) to be served;(5) information required by the application; and(6) any other information or documentation that the commission may require.(b) During the application process, the applicant shall provide any information the commission determines is necessary to make a determination on an application. The commission may disqualify an application if an applicant fails to supply the additional information requested under this subsection on or before the thirtieth day after the date the applicant receives notice from the commission.(c) The commission may accept:(1) hand-made signatures;(2) electronic signatures; or(3) digital signatures.</content><note type="source"><p>Source Note: The provisions of this §321.9 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.10"><num value="321.10">§321.10</num><heading>Grant Evaluation</heading><content>(a) Except as provided under §321.16 of this chapter (relating to Direct Award), the commission shall establish, for each proposed grant or series of grants, recipient selection criteria appropriate to the purposes of and activities under the proposed grant or grants.(b) The commission may specify any selection criterion it considers relevant to the grant.(c) All selection criteria must address the evaluation and scoring of:(1) available fiscal controls;(2) project effectiveness;(3) project cost;(4) the potential grant recipient's previous experience with grants and contracts; and(5) the potential grant recipient's established presence in the state and good faith efforts to achieve a goal of more than 50 percent of its purchase goods and services from suppliers in this state.(d) In addition to evaluation criteria provided under subsection (c) of this section, the commission may include and provide preferences for the following evaluation criteria:(1) application participant(s) relevant experience;(2) estimated project completion date;(3) the availability of matching funds, including amount, percentage, and source of matching funds;(4) cost effectiveness and overall impact, as measured by the total project cost; and(5) any additional factors the commission determines are necessary to promote innovation in the fields of space exploration and commercial aerospace opportunities, including the integration of space, aeronautics, and aviation industries into the economy of this state.(e) The commission may award a grant only to an entity who meets the established eligibility requirements of the proposed grant and who has been selected in accordance with the established selection criteria.(f) The commission's approval of an award shall not obligate the commission to make any additional, supplemental, or other awards.(g) All grant funding decisions made by the commission are final and are not subject to appeal.(h) The commission shall issue the award after the grant agreement is fully executed by the grant recipient and the commission.</content><note type="source"><p>Source Note: The provisions of this §321.10 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.11"><num value="321.11">§321.11</num><heading>Amount of Grant Award; Payment Procedures</heading><content>(a) The amount of a grant award is determined solely by the commission.(b) The commission is not obligated to fund a grant at the amount requested by the grant applicant.(c) Payments to grant recipients shall be in accordance with:(1) all allowable cost standards and payment-related requirements of the TxGMS if the recipient is a local government, a Texas state agency, or an Indian Tribal Government; and(2) any special payment-related requirements or procedures contained in the signed grant contract.</content><note type="source"><p>Source Note: The provisions of this §321.11 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.12"><num value="321.12">§321.12</num><heading>Reporting</heading><content>(a) Grant recipients shall submit to the commission periodic reports for each funded project for the duration of the grant agreement. The frequency, format, and requirements of the reports shall be determined at the discretion of the commission and specified in the grant agreement.(b) The commission, in its sole discretion and at any time, upon reasonable notice, may request any additional data and reporting information the commission deems necessary to substantiate that a grant recipient:(1) is using grant funds for their intended purpose; and(2) has complied with the terms, conditions, and requirements of the grant agreement.</content><note type="source"><p>Source Note: The provisions of this §321.12 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.13"><num value="321.13">§321.13</num><heading>Records Retention</heading><content>(a) A grantee must maintain all financial records, supporting documents, and all other records pertinent to an award for at least five years following the submission of a final report.(b) If any litigation, claim, or audit is started, or any open records request is received, before the expiration of the five-year records retention period, a grantee must retain the records related to the litigation, claim, audit, or open records request until the completion of the litigation, claim, audit, or open records request and resolution of all issues that arise from it or until the end of the regular five-year records retention period, whichever is later.(c) A grantee may retain records in an electronic format.</content><note type="source"><p>Source Note: The provisions of this §321.13 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.14"><num value="321.14">§321.14</num><heading>Request for Records; Audit</heading><content>(a) At any time during the grant agreement and for a period of five years after the project has been completed, the commission or its designee may, upon reasonable notice and in writing, request any records from, or audit the books and records of, a grant recipient to verify the grant recipient has complied with the terms, conditions, and requirements of the grant agreement and this chapter. Grant recipients shall provide the requested records or information to the commission on or before the thirtieth day after the commission makes a written request for such records.(b) The commission or its designee may, before the end of the five-year records retention period set forth in §321.13 of this chapter (relating to Records Retention), audit a grantee to ensure that grant funds are used for the intended purpose of the reimbursement award and that the grantee has complied with the terms, conditions, and requirements set forth in §321.13 of this chapter.</content><note type="source"><p>Source Note: The provisions of this §321.14 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.15"><num value="321.15">§321.15</num><heading>Noncompliance; Failure to Perform</heading><content>(a) A grant recipient shall forfeit up to the amount of the grant funds received, or return previously awarded funds, if the commission, in its sole discretion, determines the grant recipient has failed to perform, in material respect, the obligations established in the grant agreement. The commission may make such a determination at any time during the grant agreement. The commission, in its sole discretion, shall determine the amount forfeited.(b) A failure to perform resulting in forfeiture of grant funds may be cause for the commission to bar an applicant from future consideration for grant funds under this program.</content><note type="source"><p>Source Note: The provisions of this §321.15 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section><section identifier="/us/state/tx/tac/t10/p8/c321/sc/s321.16"><num value="321.16">§321.16</num><heading>Direct Award</heading><content>Notwithstanding any provision in this chapter, the commission may issue a direct award grant to an entity allowed by law if:(1) the grant recipient has entered into an agreement with the consortium under procedures established in Section 482.608(a)(3)(C), Texas Government Code, and:(A) the purpose of the grant is to enable the consortium to undertake its duties established under Chapter 482, Texas Government Code; and(B) the commission and grant recipient enter a grant agreement(s);(2) the board determines that circumstances related to a direct award grant request cannot follow standard application processes because it would result in an entity failing to meet a deadline or similar milestone, and:(A) without grant funds, the potential grantee could not successfully undertake the project to which the request relates;(B) failure to undertake the project to which the request relates would result in the loss of a significant commercial, civil, or military related opportunity for advancing the space, aeronautics, or aviation industries in the state;(C) the commission and grant recipient enter a grant agreement that places sufficient controls on the transaction to ensure the public purpose of the grant is carried out; and(D) awarding a direct grant is in the best interest of the state; or(3) the board determines a direct award grant is necessary for a potential grantee to respond to a matter of national security, defined by the intelligence community or the national defense strategy, as well as a natural disaster or public health crisis and states of emergency and, as soon as practicable, the commission and grant recipient enter a grant agreement that places sufficient controls on the transaction to ensure the public purpose of the grant is carried out.</content><note type="source"><p>Source Note: The provisions of this §321.16 adopted to be effective December 8, 2024, 49 TexReg 9957.</p></note></section></subchapter></chapter></part>