10 TAC §§49.1-49.16
The Texas Department of Housing and Community Affairs (the
Department) adopts the new §§49.1-49.16, concerning the Qualification
Allocation Plan and Rules (the Rules), with changes to the proposed text
as
published in the December 5, 1997 issue of the
Texas
Register
(22 TexReg 11880) to provide procedures for the allocation,
by the Department, of low income housing tax credits available under federal
income tax laws to owners of qualified low income rental housing projects.
This adoption is contingent upon the Governor's approval by February 28,
1998 pursuant to §2306.671(c) of the Texas Government Code, Title 10.
The new sections are being adopted to provide procedures for the allocation,
by the Department, of low income housing tax credits available under federal
income tax laws to owners of qualified low income rental housing projects.
SUMMARY OF COMMENTS RECEIVED UPON PUBLICATION OF THE PROPOSED RULES IN
THE TEXAS REGISTER ON DECEMBER 5, 1997, AND COMMENTS MADE AT PUBLIC HEARINGS
HELD BY THE DEPARTMENT.
On December 5, 1997, the proposed Rules was published in the Texas Register
thereby commencing the required 30-day comment period. Said comment period
ended on January 5, 1998.
The Department received 93 requests for copies of the proposed Rules from
the public.
During the public comment period the Department held two public hearings.
The Department received both oral and written comments.
The scope of public comments concerning the Rules pertain to the following
issues:
Definitions {Sec. 49.2}
It was suggested that the TxRD definition be changed.
Department's Response - The Department concurs and proposes that the definition
be modified as follows:
"TxRD - The Rural Development (RD) services of the United States Department
of Agriculture (USDA) serving the State of Texas (formerly known as TxFmHA)
or its successor."
Board's Recommendation - Department's response accepted.
Rural Set-Aside {Sec. 49.5(a)}
It was suggested that the 25% TxRD apportionment of the Rural Set-aside
be increased to 50%.
Department's Response - The Department believes that the 25% apportionment
adequately meets the concerns of TxRD. It is noted that TxRD projects can
also receive credits outside of the 25% TxRD reserve.
Board's Recommendation - Department's response accepted.
Rural Development Projects
One comment was made requesting the compliance and monitoring fee be reduced
to $100 for TxRD projects while another requested that the inspections be
waived for TxRD projects.
Department's Response - The Department's compliance and monitoring staff
has numerous duties associated with TxRD projects. The compliance and monitoring
fee reflects the costs associated with these compliance and monitoring duties.
Inspections by the Department are necessary to gain an understanding of
the transactions being proposed, to monitor progress, and to complete the
Department's due diligence prior to the issuance of Forms 8609. These inspections
are necessary as part of an ongoing monitoring process.
Board's Recommendation - Department's response accepted.
Prison Community List {Reference Manual}
It was suggested that Jefferson County be added to the Prison Community
List.
Department's Response - We recognize the need for affordable housing in
Jefferson County. The current list is specifically comprised of rural areas
that were recently awarded a state prison. The Department is not able to add
Jefferson County to the list because it does not qualify under the program's
Prison Community definition as set forth in the QAP. The Department's program
is constantly undergoing change and will take the comment received into future
consideration.
Board's Recommendation - Department's response accepted.
Proposed Additions to Comply with Rider 11(c) to Article VII of the General
Appropriation Act Requirements {Sec. 49.6 and Sec. 49.8}
The General Appropriation Act, Article VII, Rider 11(c) requires that a
general contractor hired by an applicant or an applicant, if the applicant
serves as general contractor, must demonstrate a history of constructing similar
types of housing without the use of federal tax credits. A member of the Legislature
contacted the Department indicating that the language currently proposed in
the draft version of the QAP might be read to imply that this requirement
pertains to only those projects claiming experience points.
Department's Response - To clarify the intent of this law, the Department
is proposing the following:
1. Sec. 49.6(b) Threshold Criteria
"(14) EXHIBIT 114: must be the original copy of the completed and executed
General Contractor Certification Form (EXHIBIT 114) provided as part of the
Application Submission Procedures Manual;
2. Sec. 49.6(c)(4)(A) EXHIBIT 210 The criteria and conditions which are
specifically related to general contractors as outlined in Section 49.8 of
this title (relating to Housing Credit Allocations) must be met in order to
receive a final allocation of credits. Therefore, while points may be awarded
for experience under this Section 49.6(c)(4)(A) during the application process,
if upon review of documents required under Section 49.8 of this title (relating
to Housing Credit Allocations), the general contractor is shown not to have
the required experience, the conditions of the commitment notice or carryover
agreement will not have been met and the final allocation of credits may be
denied; and
3. Sec. 49.8. Housing Credit Allocations
(c) The General Contractor hired by the Project Owner must meet specific
criteria as defined by the Seventy-fifth Legislature. A general contractor
hired by an applicant or an applicant, if the applicant serves as general
contractor must demonstrate a history of constructing similar types of housing
without the use of federal tax credits. Evidence must be submitted to the
Department which sufficiently documents that the general contractor has constructed
some housing without the use of low income housing credits. This documentation
will be required as a condition of the commitment notice or carryover agreement,
and must be complied with prior to commencement of construction and at cost
certification and final allocation of credits."
Board's Recommendation - Department's response accepted.
Tenant Populations with Special Housing Needs {Sec. 49.6(c)(6)(A)}
It was suggested in one public comment that the Department develop a QAP
which promotes the development of affordable housing for seniors. The commentator
stated that last year only 8% of the units awarded in the State of Texas under
the LIHTC program were targeted for seniors and that there are factors in
both the scoring and underwriting criteria that are not conducive to the selection
of projects for seniors in this competitive process.
Some members of the development community have expressed a concern that
the requirements of the elderly provision currently in the draft QAP might
violate the Fair Housing Act.
Department's Response - The Department appreciates the public comments
received on this issue and has given them consideration. While the comments
regarding the scoring and underwriting criteria will be considered further,
the Department believes the QAP does promote the development of affordable
housing for seniors. It is noted that last year 17% of the units awarded under
the LIHTC program were targeted for seniors. The QAP seeks to promote multiple
housing objectives for a diverse tenant group, including both elderly and
non-elderly populations. The Department and the Board, through their discretionary
authority, strive to ensure that the allocation reflects this diversity by
taking factors other than points into consideration.
After discussing the issue with outside counsel and the Department's general
counsel, it has been determined that the current language, while more restrictive
than federal law with respect to units constructed for, and occupied by at
least one person who is 60 years of age or older, it is not a violation of
the act. To clarify that developers still may adhere to the "62 years of age
and older" alternative exemption of the Fair Housing Act and with respect
to the provisions of the Fair Housing Act as to projects intended for, and
solely occupied by persons 62 years of age or older, the amended language
shown below is being proposed:
Sec. 49.6(c) Selection Criteria
"(A) This criterion applies to elderly Projects which must provide significant
facilities and services specifically designed to meet the physical and social
needs of the residents. Significant services may include congregate dining
facilities, social and recreation programs, continuing education, welfare
information and counseling, referral services, transportation and recreation.
Other attributes of such Projects include providing hand rails along steps
and interior hallways, grab bars in bathrooms, routes that allow for barrier-free
lever type doorknobs and single lever faucets, as well as elevators for Projects
of over two stories. Elderly Projects must not contain any Units with three
or more bedrooms. Such a Project must conform to the Federal Fair Housing
Act in all respects and must be a Project:
(i) intended for, and solely occupied by Persons 62 years of age or older;
or
(ii) in which all Units (excluding those occupied by an employee or owner)
are constructed for, and occupied by at least one Person who is 60 years of
age or older; and
(iii) which adheres to policies and procedures which demonstrate a firm
commitment by the owner and manager to provide housing for Persons 60 years
of age or older. (10 points)"
Board's Recommendation - Department's response accepted.
Tenant Populations with Special Housing Needs {Sec. 49.6(c)(6)(B)}
It was requested that changes to the QAP be made to increase affordable,
accessible housing for Texans with disabilities. The changes also included
suggestions to increase the financial stability of tax credit projects serving
tenants with disabilities and to ensure compliance with the Fair Housing Accessibility
Guidelines.
Department's Response - The Department appreciates the public comments
received on this issue and has created a task force comprised of members of
the Department and the development community to address these concerns. The
Department will work with the entities who are providing accessible units
in meeting the requirements as set forth in the QAP. The task force will work
on disseminating information regarding qualified tenants with special needs
to the development community and to address other issues prior to program
year 1999. It should be noted that electing to claim points for setting aside
units for persons with physical or mental disabilities does not preclude compliance
with the Fair Housing Accessibility Guidelines or any other applicable federal,
state or local laws governing accessibility for such groups. It is recommended
that this section remain unchanged at this time.
Board's Recommendation - Department's response accepted.
The new sections are adopted under the Texas Government Code,
Chapter 2306 and Texas Civil Statutes. Article 4413(501) as amended by the
73rd Legislature, Chapter 725 and 141, and Chapter 2001 and 2002, Texas Government
Code, V.T.C.A.
The Internal Revenue Code of 1986, Section 42 as amended, provides for
credits against federal income taxes for owners of qualified low income rental
housing projects. That section provides for the allocation of available tax
credit amount by state housing credit agencies. Pursuant to Executive Order
AWR-91-4 (June 17, 1991), the Texas Department of Housing and Community Affairs
was authorized to make housing credit allocation for the State of Texas.
As required by the Internal Revenue Code, Section 42 (m)(1), the Department
developed a Qualified Allocation Plan which sets forth §49.3 through
§49.8 of this plan (relating to State Housing Credit Ceiling, Applications;
Environmental Assessments; Market Study; Commitments; Extensions; Carryover
Allocations; Agreements and Elections; Extended Commitments, Set-Asides,
Commitments and Preferences, Threshold Criteria; Evaluation Factors; Selection
Criteria; Final Ranking; Credit Amount; Tax Exempt Bond Financed Projects;
Compliance Monitoring, Housing Credit Allocations).
§49.1.Scope.
The Rules in this chapter apply to the allocation by the Texas Department
of Housing and Community Affairs (the Department) of certain low income housing
tax credits authorized by applicable federal income tax laws. The Internal
Revenue Code of 1986, §42, as amended, provides for credits against
federal income taxes for owners of qualified low income rental housing Projects.
That section provides for the allocation of the available tax credit amount
by state housing credit agencies. Pursuant to Executive Order AWR-91-4 (June
17, 1991), the Department was authorized to make housing credit allocations
for the State of Texas. As required by the Internal Revenue Code, §42(m)(1),
the Department developed a Qualified Allocation Plan (QAP) which is set forth
in §49.3 through §49.8 of this title (relating to State Housing
Credit Ceiling, Applications; Environmental Assessments; Market Study; Commitments;
Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments,
Set-Asides, Commitments and Preferences, Threshold Criteria; Evaluation Factors;
Selection Criteria; Final Ranking; Credit Amount; Tax Exempt Bond Financed
Projects; Compliance Monitoring, Housing Credit Allocations). Sections in
this chapter establish procedures for applying for and obtaining an allocation
of the low income housing tax credit, along with insuring that the proper
Threshold Criteria, Selection Criteria, priorities and preferences are followed
in making such allocations. It shall be the goal of this Department and the
Board, through these provisions, to encourage diversity through broad geographic
allocation of tax credits within the state and to promote maximum utilization
of the available tax credit amount. The criteria utilized to realize this
goal shall include, but are not limited to, evaluation of geographic location
within the state of developments applying for tax credits, concentration of
tax credit developments and other affordable housing developments within specific
markets and submarkets, site conditions of the developments, and a development's
impact on and conformance with the goals and objectives as stated in the QAP
and the Rules. The foregoing shall be implemented to be consistent with ensuring
that the tax credits are allocated to owners of Projects that will serve the
Department's public policy objectives and federal requirements to provide
housing to persons and families of very low and low income. It is the policy
of the Department to encourage the use of Historically Underutilized Businesses
(HUBs) in all of the Department's programs. In response to this policy, the
Department has established a minimum goal of 30% participation of HUBs in
the low income housing tax credit program. Project Owners are encouraged to
achieve these minimum goals.
§49.2.Definitions.
The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise.
Ad Hoc Tax Credit Committee
-That Committee comprised of members
of the Board of the Department charged with the direct oversight of the Low
Income Housing Tax Credit Program, also referred to as the "Committee."
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, controls, is controlled by, or is under
common control with any other Person, and specifically shall include parents
or subsidiaries.
Agreement and Election Statement
-A document in which the Project
Owner elects, irrevocably, to fix the applicable credit percentage with respect
to a building or buildings, as that in effect for the month in which the Department
and the Project Owner enter into a binding agreement as to the housing credit
dollar amount to be allocated to such building or buildings, which Agreement
and Election Statement shall be executed by the Project Owner no later than
five days after the end of the month of execution of the agreement as to housing
credit dollar amount.
Applicable Fraction
-The fraction used to determine the Qualified
Basis of the qualified low income building, which is the smaller of the Unit
fraction or the floor space fraction, as defined more fully in the Code, §42(c)(1).
Applicable Percentage
-The percentage used to determine the
amount of the low income housing tax credit, as defined more fully in the
Code, §42(b).
Applicant
-Any Person and any Affiliate of such Person, corporation,
a partnership, joint venture, association, or other that submits an Application
to the Department requesting a tax credit allocation pursuant to the Rules
and the QAP. The Applicant is also the Project Owner unless the Applicant
transfers or assigns its interest in the Project (which assignment can only
occur with the consent of the Department). Each Project Owner, and each of
the Project Owner's successors in interest, shall be obligated to carry out
the commitments made to the Department by the Applicant.
Application
-An Application in the form prescribed by the Department,
including any required exhibits or other supporting materials, filed with
the Department by a Project Owner requesting a low income housing tax credit
allocation.
Application Acceptance Period
-That period of time as published
in the Texas Register during which Applications for tax credits may be submitted
to the Department.
Application Round
-The period beginning with the start of the
Application Acceptance Period and lasting until such time as all available
credits (as stipulated by the Department) are allocated, provided that the
Application Round not extend beyond the last day of the calendar year. Applications
for Projects which receive at least 50% of their financing from the proceeds
of tax exempt bonds may be submitted at any time during the year.
Application Submission Procedures Manual
-That certain manual
produced by the Department which sets forth procedures, forms, and guidelines
for the filing of Applications for low income housing tax credits, which manual
may be amended from time to time by the Department.
Appraiser
-A real estate professional certified or licensed
by the Texas Appraiser Licensing and Certification Board who has satisfied
continuing education requirements. The appraiser must have, at a minimum,
5 years appraisal experience, preferably in the geographic area of the property
to be appraised. It is desirable, but not required, that the appraiser have
a professional designation or be an active member of a professional accredited
appraisal institution.
Beneficial Owner
-A "Beneficial Owner" means:
(A)
Any Person who, directly or indirectly, through
any contract, arrangement, understanding, relationship or otherwise has or
shares;
(i)
voting power which includes the power to vote, or to direct
the voting as any other Person or the securities thereof, and/or
(ii)
investment power which includes the power to dispose,
or direct the disposition of, any Person or the securities thereof.
(B)
Any Person who, directly or indirectly, creates
or uses a trust, proxy, power of attorney, pooling arrangement or any other
contract, arrangement or device with the purpose or effect of divesting such
Person of Beneficial Ownership (as defined herein) of a security or preventing
the vesting of such Beneficial Ownership as part of a plan or scheme to evade
inclusion within the definitional terms contained herein; and
(C)
Any Person who has the right to acquire Beneficial
Ownership during the Compliance Period, including but not limited to any right
to acquire any such Beneficial Ownership;
(i)
through the exercise of any option warrant or right,
(ii)
through the conversion of a security,
(iii)
pursuant to the power to revoke a trust, discretionary
account or similar arrangement, or
(iv)
pursuant to the automatic termination of a trust, discretionary
account, or similar arrangement.
(D)
Provided, however, that any Person who acquires
a security or power specified in clauses (i), (ii) or (iii) of this subparagraph,
with the purpose or effect or changing or influencing the control of any other
Person, or in connection with or as a participant in any transaction having
such purpose or effect, immediately upon such acquisition is deemed to be
the Beneficial Owner of the securities which may be acquired through the exercise
or conversion of such security or power. Any securities not outstanding which
are subject to options, warrants, rights or conversion privileges as deemed
to be outstanding for the purpose of computing the percentage of outstanding
securities of the class owned by such Person but are not deemed to be outstanding
for the purpose of computing the percentage of the class by any other Person.
Board
-The governing Board of Directors of the Department and
may also denote as used in this chapter, the Committee.
Carryover Allocation
-An allocation of current year tax credit
authority by the Department pursuant to the provisions of the Code, §42(h)(1)(E)
and Treasury Regulations, §1.42-6.
Carryover Allocation Document
-A document issued by the Department
to a Project Owner pursuant to §49.4(k) of this title (relating to Applications;
Environmental Assessments; Market Study; Reservations; Notification; Commitments;
Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments).
Carryover Allocation Procedures Manual
-That certain manual
produced by the Department which sets forth procedures, forms, and guidelines
for the filing of request for Carryover Allocations for low income housing
tax credits, which said manual may be amended from time to time by the Department.
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 United States Department of the Treasury or the Internal
Revenue Service relating to the Low Income Housing Tax Credit Program authorized
by the Code, §42, and as may be amended from time to time.
Commitment Notice
-A notice issued by the Department to a Project
Owner pursuant to §49.4(h) of this title (relating to Applications; Environmental
Assessments; Market Study; Commitments; Extensions; Carryover Allocations;
Agreements and Elections; Extended Commitments) and also referred to as the
"commitment".
Compliance Period
-With respect to a building, the period of
15 taxable years, beginning with the first taxable year of the Credit Period
pursuant to the Code, §42(i)(1).
Contractor
-One who contracts for the construction, or rehabilitation
of an entire building or Project, rather than a portion of the work. The Contractor
hires subcontractors, such as plumbing contractors, electrical contractors,
etc., coordinates all work, and is responsible for payment to the said subcontractors.
This party may also be referred to as the "general contractor".
Control
-(including the terms "controlling," "controlled by,
and/or "under common control with") the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies
of any Person, whether through the ownership of voting securities, by contract
or otherwise.
Cost Certification Procedures Manual
-That certain manual produced
by the Department which sets forth procedures, forms, and guidelines for the
filing of requests for IRS Forms 8609 for Projects placed in service under
the Low Income Housing Tax Credit Program, which said manual may be amended
from time to time by the Department.
Credit Period
-With respect to a building within a Project,
the period of ten taxable years beginning with the taxable year the building
is placed in service or, at the election of the Project Owner, the succeeding
taxable year, as more fully defined in the Code, §42(f)(1).
Declaration of Land Use Restrictive Covenants (LURA)
-An agreement
between the Department, the Project Owner and all successors in interest in
the Project Owner which encumbers the Project with respect to provisions stipulated
in the Code, §42, §§49.1-49.15 of this title (relating to Low
Income Housing Tax Credit Qualified Allocation Plan and Rules), and the Texas
Government Code, Chapter 2306 as may be amended from time to time. The LURA
includes an Extended Low Income Housing Commitment Agreement.
Department
-The Texas Department of Housing and Community Affairs,
a public and official governmental Department of the State of Texas created
and organized under the Texas Department of Housing and Community Affairs
Act, Texas Government Code, Chapter 2306 and Texas Civil Statutes, Article
4413(501) as amended by the 73rd Legislature, Chapter 725 and 141.
Development Team
-All Persons or Affiliates thereof which play(s)
a material role in the development, construction, rehabilitation, management
and/or continuing operation of the subject Property, which may include any
consultant(s) hired by the Applicant for the purpose of the filing of an Application
for low income housing tax credits with the Department.
Difficult Development Area
-Any area which is so designated
by the Secretary of the United States Department of Housing and Urban Development
(HUD) as an area which has high construction, land, and utility costs relative
to area median family income.
Eligible Basis
-With respect to a building within a Project,
the building's Eligible Basis as defined in the Code, §42(d).
Equity Gap
-The difference between the total sources of financing
for the Project and the total Project costs that is to be filled with the
proceeds of the credit.
Extended Low Income Housing Commitment Agreement
-An agreement
between the Department, the project owner and all successors in interest to
the project owner concerning the extended low income housing use of buildings
within the project throughout the extended use period as provided in the Code,
§42(h)(6).
Financial Statement
-Document(s) which provides information
about the Applicant's economic resources, claims against those resources,
and the interests of owners at specific dates as more fully described in subparagraphs
(A)-(D) of this definition.
(A)
Statement of Financial Position/Balance Sheet
- a listing, as of a particular date, of all assets and claims against those
assets (liabilities). The difference is equity.
(B)
Income Statement - a listing that relates to a specific
period of time, presenting an entity's results of operations.
(C)
Statement of Retained Earnings - reports all changes
in retained earnings during the accounting period, reconciles beginning and
ending retained earning balances and provides a connecting link between the
income statement and the balance sheet.
(D)
Cash Flow Statement - a report listing the changes
in an entity's cash and cash equivalents, classified by principal sources
and uses, for a given period.
General Projects
-Any project which is not a Qualified Nonprofit
Project or is not under consideration in the Rural/Prison set-aside as such
terms are defined by the Department.
General Pool
-The pool of credits that have been returned or
recovered from prior years' allocations or current year's Commitment Notices
after the Board has made its initial allocation of the current year's available
credit ceiling. General pool credits will be used to fund Applications on
the waiting list without regard to set-aside.
Governmental Entity
-Includes federal or state agencies, departments,
boards, bureaus, commissions, authorities, and political subdivisions, special
districts and other similar entities.
Historically Underutilized Businesses
-Pursuant to Texas Civil
Statutes, Article 601b, §§1.02, 1.03, and 1.04, entitled State Purchasing
and General Services Act which is codified at Chapter 2161, Texas Government
Code, entitled Historically Underutilized Businesses, a business in the form
of a corporation, partnership or joint venture which is at least 51% owned,
or a sole proprietorship which is 100% owned by a person or persons who have
been historically underutilized due to their identification as a member of
a certain group. The following are the groups which will be considered pursuant
to this definition:
(A)
African Americans - persons having origins in
any of the Black racial groups of Africa;
(B)
Hispanic Americans - persons of Mexican, Puerto Rican,
Cuban, Central or South American, or other Spanish or Portuguese culture or
origin, regardless of race;
(C)
Asian-Pacific Americans - persons whose origins are
from Japan, China, Taiwan, Korea, Vietnam, Laos, Cambodia, Philippines, Samoa,
Guam, U.S. Trust Territories of the Pacific and the Northern Marianas;
(D)
Native Americans - persons who are American Indians,
Eskimos, Aleuts, or Native Hawaiians; or
(E)
Women - includes all women of any ethnicity.
Homeless Person
-An individual or family that lacks a fixed,
regular, and adequate nighttime residence as more fully defined in 24 Code
of Federal Regulations, §841.1, and as may be amended from time to time.
Housing Credit Agency
-A governmental entity charged with the
responsibility of allocating low income housing tax credits pursuant to the
Code, §42. For the proposes of these Rules, the Department is the sole
"Housing Credit Agency" of the State of Texas.
Housing Credit Allocation
-An allocation by the Department
to a Project Owner of low income housing tax credit in accordance with §49.8
of this title (relating to Housing Credit Allocations).
Housing Credit Allocation Amount
-With respect to a Project
or a building within a Project, that amount the Department determines to be
necessary for the financial feasibility of the Project and its viability as
a qualified low income housing Project throughout the Compliance Period and
allocates to the Project.
HUD
-The United States Department of Housing and Urban Development,
or its successor.
Intermediary Costs
-Costs associated with the sale or use of
tax credits to raise equity capital. Such costs include but are not limited
to syndication and partnership organization costs and fees, filing fees, broker
commissions, related attorney and accounting fees, appraisal, engineering,
environmental site assessment, etc.
IRS
-The Internal Revenue Service, or its successor.
Local Tax Exempt Organization
-An entity which is described
in the Code, §501(c)(3) or (4), as these cited provisions may be amended
from time to time, and which is registered or qualified to conduct business
in the State of Texas and/or the governmental unit wherein the Project will
be situated.
Person
-Means, 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 of any nature whatsoever and
shall include any group of Persons acting in concert toward a common goal.
Persons with Disabilities
-A person who:
(A)
has a physical, mental or emotional impairment
that;
(i)
is expected to be of a long, continued and indefinite
duration,
(ii)
substantially impedes his or her ability to live independently,
and
(iii)
is of such a nature that the ability could be improved
by more suitable housing conditions, or
(B)
has a developmental disability, as defined in
section 102(7) of the Developmental Disabilities Assistance and Bill of Rights
Act (42 U.S.C. 6001-6007).
Prison Community
-A city or town which is located outside of
a Metropolitan Statistical Area (MSA) or Primary Metropolitan Statistical
Area (PMSA) and was recently awarded a state prison as set forth in the Reference
Manual.
Project
-A low income rental housing Property the owner of
which represents that it is or will be a qualified low income housing Project
within the meaning of the Code, §42(g). With regards to this definition,
the "Project" is that Property which is the basis for the Application for
low income housing tax credits. May also be referred to as the subject "property".
Project Consultant
-Any Person (without ownership interest
in the Project) who provides professional services relating to the filing
of an Application, Carryover Allocation Document, and/or cost certification
documents.
Project Owner
-Any Person or Affiliate thereof that owns or
proposes to develop the Project or expects to acquire Control of the Project
pursuant to a purchase contract satisfactory to the Department.
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 thereon in connection with the Application.
Qualified Allocation Plan
-An allocation plan executed by the
Governor of the State of Texas which sets forth the Threshold Criteria, Selection
Criteria, priorities, preferences, and compliance and monitoring as provided
in the Code, §42(m)(1) and as further provided in §49.3 through
§49.8 of this title (relating to State Housing Credit Ceiling, Applications;
Environmental Assessments; Market Study; Commitments; Extensions; Carryover
Allocations; Agreements and Elections; Extended Commitments, Set-Asides, Commitments
and Preferences, Threshold Criteria; Evaluation Factors; Selection Criteria;
Final Ranking; Credit Amount; Tax Exempt Bond Financed Projects; Compliance
Monitoring, Housing Credit Allocations).
Qualified Basis
-With respect to a building within a Project,
the building's Eligible Basis multiplied by the Applicable Fraction, within
the meaning of the Code, §42(c)(1).
Qualified Census Tract
-Any census tract which is so designated
by the Secretary of HUD and, for the most recent year for which census data
are available on household income in such tract, in which 50% or more of the
households have an income which is less than 60% of the area median family
income for such year.
Qualified Market Analyst
-A real estate appraiser certified
or licensed by the Texas Appraiser or Licensing and Certification Board or
a real estate consultant or other professional currently active in the subject
property's market area who demonstrates competency, expertise, and the ability
to render a high quality written report. The individual's experience and educational
background will provide the general basis for determining competency as a
Market Analyst. Such determination will be at the sole discretion of the Department.
The Qualified Market Analyst must not be related to or Affiliated with the
Project Consultant, or the independent CPA employed for certifying the 10%
test and/or the final Project cost certification.
Qualified Nonprofit Organization
-An organization that is described
in the Code, §501(c)(3) or (4), as these cited provisions may be amended
from time to time, that is exempt from federal income taxation under the Code,
§501(a), that is not Affiliated with or Controlled by a for profit organization,
and includes as one of its exempt purposes the fostering of low income housing
within the meaning of the Code, §42(h)(5)(C).
Qualified Nonprofit Project
-A Project in which a Qualified
Nonprofit Organization has Control (directly or through a partnership or wholly-owned
subsidiary) and materially participates (within the meaning of the Code, §469(h),
as may be amended from time to time) in its development and operation throughout
the Compliance Period.
Real Estate Owned (REO) Projects
-Any existing residential
development that is owned or that is being sold by an insured depository institution
in default, or by a receiver or conservator of such an institution, or is
a property owned by HUD, Federal National Mortgage Association (Fannie Mae),
Federal Home Loan Mortgage Corporation (Freddie Mac), federally chartered
bank, savings bank, savings and loan association, Federal Home Loan Bank or
a federally approved mortgage company or any other federal agency.
Reference Manual
-That certain manual, and any amendments thereto,
produced by the Department which sets forth reference material pertaining
to the Low Income Housing Tax Credit Program.
Rehabilitation Expenditure
-Amounts incurred in connection
with the rehabilitation which the Project Owner represents to be "Rehabilitation
Expenditures" within the meaning of the Code, §42(e)(2).
Residential Development
-Any Project that is comprised of at
least one "Unit" as such term is defined in this title.
Rules
-The Department's low income housing tax credit Rules,
§§49.1-49.15 of this title (relating to Low Income Housing Tax Credit
Qualified Allocation Plan and Rules) excluding §49.3 through §49.8
of this title (relating to State Housing Credit Ceiling, Applications; Environmental
Assessments; Market Study; Commitments; Extensions; Carryover Allocations;
Agreements and Elections; Extended Commitments, Set-Asides, Commitments and
Preferences, Threshold Criteria; Evaluation Factors; Selection Criteria; Final
Ranking; Credit Amount; Tax Exempt Bond Financed Projects; Compliance Monitoring,
Housing Credit Allocations).
Rural Project
-A Project located within an area which:
(A)
is situated outside the boundaries of a PMSA
or MSA; or
(B)
is situated within the boundaries of a PMSA or MSA
if it has a population of not more than 20,000 and does not share boundaries
with an urbanized area; or
(C)
is located in an area that is eligible for funding
by TxRD.
Scattered Site Project
- "A group of buildings, (excluding
apartments and townhomes) which would (but for their lack of proximity) qualify
as a Project for purposes of the Code and which are all rent restricted, owned
by the same Project Owner and financed under a common plan. This shall include
all single family detached housing, duplexes, triplexes and fourplexes, except
fourplexes in clusters of four or more on contiguous property under common
ownership, management and Control. An existing Rural Project that is federally
assisted within the meaning of §42(d)(6)(B) of the Code and is under
common ownership, management and Control shall not be considered as a Scattered
Site Project. For qualifying Rural Projects, construction activity must be
rehabilitation only with no expansion to the existing development. Rural Projects
purchased from HUD will also qualify as being federally assisted." Any project
comprised of single family detached homes of 35 units or less that is located
within a city or county with a population of not more than 20,000 or 50,000,
respectfully, shall not be considered a Scattered Site Project. Additionally,
all the proposed units must be located on contiguous property under common
ownership, management and control or dispersed within existing residential
subdivisions.
Selection Criteria
-Criteria used to determine housing priorities
of the State under the Low Income Housing Tax Credit Program.
Small Development
-A Project consisting of not more than ten
single-family detached Units or 35 multifamily Units, which is not a part
of, or contiguous to, a larger Project.
Special Housing Project
-Any Project developed specifically
for Special Housing Need Groups, including mental health/mental retardation
Projects, group homes, housing for the homeless, transitional housing, elderly
Projects, congregate care facilities, projects for persons with HIV/AIDS,
or as otherwise defined in the State Consolidated Plan.
State Housing Credit Ceiling
-The limitation imposed by the
Code, §42(h), on the aggregate amount of 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 the Code, §42(h)(3).
Sustaining Occupancy
-The figure at which occupancy income
is equal to all operating expenses and mandatory debt service requirements
for a Project.
Threshold Criteria
-Criteria used to determine the Project's
qualifications which are the minimum level of acceptability for consideration
under the Low Income Housing Tax Credit Program.
Total Housing Development Cost
-The total of all costs incurred
or to be incurred by the Project Owner in acquiring, constructing, rehabilitating
and financing a Project, as determined by the Department based on the information
contained in the Project Owner's Application. Such costs include Intermediary
Costs, reserves and any expenses attributable to commercial areas. Projects
which include commercial space must allocate the relative portion of all applicable
expenses to the commercial space and exclude the same from Total Development
Costs. In determining the Equity Gap calculation, the Department will not
deduct from the Project's sources of funds the amount of financing associated
with the commercial use, unless such financing specifically identifies in
its terms that it is being provided for the commercial use.
TxRD
-The Rural Development (RD) services of the United States
Department of Agriculture (USDA) serving the State of Texas (formerly known
as TxFmHA) or its successor.
Unit
-Any residential rental unit in a Project consisting of
an accommodation containing separate and complete physical facilities and
fixtures for living, sleeping, eating, cooking and sanitation. The term "Unit"
includes a single room occupancy housing unit used on a non-transient basis.
§49.3.State Housing Credit Ceiling.
(a)
The Department shall determine the State Housing Credit
Ceiling for each calendar year as provided in the Code, §42(h)(3)(C).
(b)
The Department shall publish each such determination in
the Texas Register within 30 days after notification by the Internal Revenue
Service.
(c)
The aggregate amount of Housing Credit Allocations made
by the Department during any calendar year shall not exceed the State Housing
Credit Ceiling for such year as provided in the Code, §42.
§49.4.Applications; Environmental Assessments; Market Study; Commitments; Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments.
(a)
Any Project Owner requesting a Housing Credit Allocation
for a Project must submit an Application to the Department which Application
shall be originally executed by the Project Owner. This Application shall
contain full and complete information as to each item specified in the Application
Submission Procedures Manual, as amended. When any item is marked "not applicable,"
the Project Owner shall provide a written explanation why such item is "not
applicable." Failure to provide a detailed written explanation will result
in the Application being deemed incomplete and not accepted for filing. The
Department is also authorized to request the Project Owner to provide any
additional information it deems relevant as clarification to the Application.
The Department will require, as a part of a completed Application, information
to be submitted by the Project Owner which identifies the number of HUBs to
be used in the development and/or continuous operation of the Project, in
a form specified within the Application Submission Procedures Manual. Further,
the Department will require the Project Owner to supply sufficient documentation
which will represent the means by which these HUBs were or are to be selected.
The Project Owner is also advised that the Department will be requesting information
pertaining to the use of HUBs in the actual development of the Project at
the time of final allocation of tax credits, pursuant to §49.8(c) of
this title (relating to Housing Credit Allocations).
(b)
As part of the complete Application the Applicant must
submit the most current Phase I Environmental Assessment of the subject Property,
dated not more than 12 months from the date of Application to the Department.
In the event that a Phase I Environmental Assessment on the Project is older
than 12 months, the Project Owner may supply the Department with an update
letter from the Person or organization which prepared the initial assessment;
provided, however, that the Department will not accept any Phase I Environmental
Assessment which is more than 24 months old. This environmental assessment
should be conducted and reported in conformity with the standards of the American
Society for Testing and Materials (ASTM) 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 report must include, but is not
limited to, a review of records, interviews with people knowledgeable about
the Property, a certification that the environmental engineer has conducted
an inspection of the Property, the building(s), and adjoining Properties,
as well as any other industry standards concerning the preparation of this
type of environmental assessment. 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
Project Owner must act on such a recommendation or provide either a plan for
the abatement or elimination of the hazard. The environmental assessment shall
be conducted by an environmental or professional engineer and be prepared
at the expense of the Project Owner. For Projects which have had a Phase II
Environmental Assessment performed and hazards identified, the Project Owner
is required to maintain a copy of said assessment on site available for review
by all persons which either occupy the Property or are applying for tenancy.
Properties financed through the TxRD or Properties with four Units or fewer
will not be required to supply this information; however, the Project Owners
of such Projects are hereby notified that it is their responsibility to ensure
that the Property is maintained in compliance with all state and federal environmental
hazard requirements. Those Projects which have or are to receive first lien
financing from HUD may submit HUD's environmental assessment report, provided
that it conforms with the requirements of this subsection. An environmental
report that is not submitted with the Application will result in the Application
being deemed incomplete and not accepted for filing.
(c)
The Market Study required by the Department shall comply
with the Uniform Standards of Professional Appraisal Practice and with paragraphs
(1)-(2) of this subsection and other guidelines provided in the Reference
Manual.
(1)
A Market Study (prepared by a Qualified Market Analyst
acceptable to the Department who is independent of the Development Team),
which is not dated more than six months prior to the date of Application,
is required as part of the complete Application. Projects which are comprised
of 12 Units or fewer or whose funds have been obligated by TxRD are not required
to provide the Department with a market study; provided that the Department
may request information with respect to the operating expenses, proposed new
construction or rehabilitation cost or other information. In the event that
a Market Study on a Project is older than six months, a Project Owner may
supply the Department with an updated Market Study from the entity or organization
which prepared the initial report; provided, however, that the Department
will not accept as having satisfied the condition of this subsection (c) of
this section any Market Study which is more than 12 months old. The Market
Study shall be prepared for the Department at the expense of the Project Owner
and shall include, at a minimum, the required information. If any of the required
information in subparagraghs (A)-(K) is not obtainable, the Market Analyst
shall provide a statement to such effect and offer an alternative analysis
intended to address the applicable question.
(A)
an evaluation of the existing occupancy rates in comparable
multifamily rental Residential Developments in the same market and submarket
area as the proposed Project with special emphasis given to available low
income rental housing;
(B)
Project absorption rates for the three years prior to
the date of the study for Units in comparable multifamily rental Residential
Developments in the same market area as the Project. Further, provide a projection
of the time necessary for the Project to achieve Sustaining Occupancy;
(C)
an evaluation of the current physical condition of existing
rental housing Units in the market area, with special emphasis given to available
low income rental housing;
(D)
an evaluation of the need for affordable housing within
the Project market area, which includes an analysis of any existing federal,
state and/or locally subsidized rental housing Units in the market area;
(E)
an evaluation of the appropriateness of the Unit-mix and
size in terms of market demand and low income housing demographics;
(F)
an evaluation of the appropriateness of the location and
total development cost of the Project from a market feasibility standpoint;
(G)
an evaluation of the appropriateness of the anticipated
operating costs of the Project for the housing market in which the Project
is located, generally, and specifically for low income housing;
(H)
an evaluation of the appropriateness of the existing or
proposed physical amenities and appliance packages at the Project for the
low income target population;
(I)
a summary of qualifications of the individuals who participated
in the development of the Market Study;
(J)
a statement from the Qualified Market Analyst certifying
that he/she is not a part of the Development Team, nor Affiliated with any
member of the Development Team engaged in the development of the Property;
and
(K)
such other matters as the Department, in its discretion,
may determine from time to time to be relevant to the Department's evaluation
of the need for the Project and the allocation of the requested Housing Credit
Allocation Amount.
(2)
a written opinion is required from the Qualified
Market Analyst who prepared the Market Study required under paragraph (1)
of this subsection, stating that:
(A)
the projected Total Housing Development Costs of the proposed
Project do or do not appear to be reasonable. The Qualified Market Analyst
must provide the Department with sufficient documentation to support his/her
conclusion with regards to the reasonableness of the projected development
costs;
(B)
the projected Total Operating Costs of the proposed Project
do or do not appear to be reasonable. The Qualified Market Analyst must provide
the Department with sufficient documentation to support his/her conclusions
with regards to the reasonableness of the projected operating costs;
(C)
the proposed Project, in light of the vacancy and absorption
rates for the applicable market area and/or any applicable submarket area,
is or is not likely to result in an unreasonably high vacancy rate for comparable
Units within the market area and/or any applicable submarket area (i.e., standard,
well maintained Units within such market area that are reserved for occupancy
by low and very low income tenants). The Qualified Market Analyst must provide
the Department with sufficient documentation to support his/her conclusion
with regard to the effects of the Project's development on the vacancy rates
for comparable Units within the market area and/or any applicable submarket
area;
(D)
the projected initial rents for the Project are or are
not below the rental range for comparable Projects within the market area.
The Qualified Market Analyst must provide the Department with sufficient documentation
to support his/her conclusion with respect to the data on comparable rents
in the Project's market area; and
(E)
Project reserves are or are not adequate to cover operating
shortfalls until the Project achieves Sustaining Occupancy. The Qualified
Market Analyst must provide the Department with sufficient documentation to
support his/her conclusions with regards to the adequacy of the Project reserves.
(3)
All Applicants shall acknowledge by virtue of
filing an Application that the Department shall not be bound by any such opinion
or the Market Study itself, and may substitute its own analysis and underwriting
conclusions for those submitted by the Qualified Market Analyst.
(d)
A Project Owner may file an Application at any time during
the Application Acceptance Period(s), as published from time to time by the
Department in the Texas Register. Applicants which submit the Application
prior to the close of the published Bonus Period will be notified of threshold
deficiencies to allow for corrective action. Applicants must submit the documentation
required to correct the deficiency within a time period to be determined by
the Department. Only one opportunity to supply the required documentation
will be granted. Applications with corrected deficiencies will not be eligible
for the Selection Criteria points associated with the bonus period. Applications
submitted after the close of the Bonus Period that show material deficiencies
will be terminated per §49.4(c)(3)(e) of this Qualified Allocation Plan
and the Project Owners will only have the opportunity to re-apply if the Application
Acceptance Period is still open.
(e)
An Application that does not fulfill the requirements
of this Qualified Allocation Plan and Rules and the current Application Submission
Procedures Manual will be deemed not to have been timely filed and the Department
shall not be deemed to have accepted the Application. While the Application
shall be returned to the Applicant, failure to return the Application shall
not affect its status. The Department may, at its sole discretion, request
supplemental information from an Applicant to clarify information contained
in previously submitted documentation.
(f)
The Department will not recommend an Application for funding
if it includes a member of the Development Team who has been, or is:
(1)
barred, suspended, or terminated from procurement in a
state or federal program or who is listed in the List of Parties Excluded
from Federal Procurement or Nonprocurement Programs, whether in the hard copy
or electronic form;
(2)
convicted within the past five years, under indictment
for or is on probation for a state or federal crime involving fraud, bribery,
theft, misrepresentations of material facts, misappropriation of funds, or
other similar criminal offenses;
(3)
subject to enforcement action under state or federal
securities law, or is the subject of an enforcement proceeding with a state
or federal agency or another governmental entity unless any such action has
been concluded and no adverse action or finding (or entry into a consent order)
has been taken with respect to such member; or
(4)
active in the ownership or management of any other
low income housing tax credit Property (or any Property pursuant to an affordable
housing program administered by a local, state or federal entity) that is
or was materially out of compliance with the rules or regulations of the appropriate
regulatory authority.
(g)
After eligible Applications have been evaluated, ranked
and underwritten in accordance with the QAP and the Rules the Department shall
make its recommendations to the Committee and the Board at their next meeting
for the issuance of Commitment Notices.
(h)
The Board's decisions shall be based upon its evaluation
of the Project's consistency with the criteria and requirements set forth
in the QAP and the Rules. In making a determination to allocate tax credits,
the Department and Board shall be authorized not to rely solely on the number
of points scored by an Applicant. They shall in addition, be entitled to take
into account, as appropriate, such factors as Project feasibility, underwriting,
concentration of low income Projects within specific markets or submarkets,
geographic dispersion of multifamily housing in any particular market or submarket,
as well as dispersion of the credits on a state-wide basis, site conditions,
the experience of the Development Team, the type of housing being proposed
and/or the Project's impact on the Low Income Housing Tax Credit Program's
goals and objectives as stated in the QAP and the Rules and as otherwise provided
under this chapter. The Board shall authorize the Department to allocate credits
among as many different entities as practicable without diminishing the quality
of the housing that is built.
(1)
If the Board approves the Application, the Department
will issue a Commitment Notice to the Project Owner which :
(A)
shall confirm that the Board has approved the Application;
and
(B)
shall state the Department's commitment to make a Housing
Credit Allocation to the Project Owner in a specified amount, subject to the
feasibility determination described at §49.8(a) of this title (relating
to Housing Credit Allocations), compliance by the Project Owner with the remaining
requirements of this chapter, and any other conditions set forth therein by
the Department. This Commitment Notice shall expire on the date specified
therein, unless the commitment has been accepted and the conditions to receipt
of an allocation set forth therein shall have been met.
(C)
the Department shall notify, in writing, the mayor or
other equivalent chief executive officer of the municipality in which the
Property is located informing him/her of the Boards issuance of a Commitment
Notice.
(2)
If the Board disapproves or fails to act upon
the Application, the Department shall issue to the Project Owner a written
notice stating the reason(s) for the Board's disapproval or failure to act.
(i)
A Project Owner may request that the Department extend
the expiration date of a Commitment Notice which has not expired or the date
for the submission of the Carryover Allocation Document by submitting a written
request for such action, accompanied by the extension fee specified in §49.11
of this title (relating to Program Fees). The request shall specify the term
of the extension requested and the reason(s) why the Project Owner has been
unable to satisfy the requirements of this chapter prior to the original expiration
date. The Department, in its sole discretion, may consider and grant such
extension requests; provided, however, that in no event shall the expiration
date of a Commitment Notice be extended beyond the last business day of the
applicable calendar year.
(j)
A Project Owner must indicate acceptance of the Department's
offer of a commitment of tax credit authority by executing the Commitment
Notice and paying the commitment fee specified in §49.11 of this title
(relating to Program Fees) prior to the expiration date set forth in the notice.
Together with or following the Project Owner's acceptance of the commitment,
the owner may request the Department to execute an Agreement and Election
Statement, in the form prescribed by the Department, for the purpose of fixing
the applicable credit percentage for the Project as that for the month in
which the commitment was accepted, as provided in the Code, §42(b)(2).
Upon receipt of a duly dated and executed Agreement and Election Statement
and the accepted Commitment Notice, if the Project Owner is in compliance
with the Rules of this chapter, the Department shall execute the Agreement
and Election Statement and return a copy to the Project Owner. The Agreement
and Election Statement shall be executed by the Project Owner no later than
five days after the end of the month in which the offer of commitment was
accepted. Current Treasury Regulations, §1.42-8(a)(1)(v), suggest that
in order to permit a Project Owner to make an effective election to fix the
applicable credit percentage for a Project, the Commitment Notice must be
executed by the Department and the Project Owner in the same month. The Department
will cooperate with a Project Owner, as needed, to assure that the Commitment
Notice can be so executed.
(k)
Prior to the expiration of the Commitment Notice a Project
Owner who has been issued a Commitment Notice may request the Department to
execute a Carryover Allocation Document. The Carryover Allocation must be
properly completed, signed, dated and notarized by the Project Owner and delivered
to the Department along with any and all other documentation prescribed in
the Carryover Allocation Procedures Manual, as amended. The commitment fee
as specified in §49.11 of this title (relating to Program Fees) must
be received by the Department prior to the processing of any Carryover Allocation
Documentation.
(l)
If the entire State Housing Credit Ceiling for the applicable
calendar year has been, committed or allocated in accordance with this chapter,
the Department shall place all remaining Applications which have satisfied
all Threshold Criteria on a waiting list. All such waiting list Applications
will be weighed one against the other and a priority list shall be developed
by the Department and approved by the Committee. If at any time prior to the
end of the Application Round, one or more Commitment Notices expire and a
sufficient amount of the State Housing Credit Ceiling becomes available, the
Department shall issue a Commitment Notice to Applications on the waiting
list in order of priority. In the event that the Department makes a Commitment
Notice or offers a commitment within the last month of the calendar year,
it will require immediate action by the Applicant to assure that an allocation
or Carryover Allocation can be issued before the end of that same calendar
year.
(m)
Within 15 business days of the date an Application is
received, the Department shall notify in writing the mayor or other equivalent
chief executive officer of the municipality, if the Project or a part thereof
is located in a municipality; otherwise the Department shall notify the chief
executive officer of the county in which the Project or a part thereof is
located, to advise such individual that the Project or a part thereof will
be located in his/her jurisdiction and request any comments which such individual
may have concerning such Project. Such comments shall be part of the documents
required to be reviewed by the Board under this subsection if received by
the Department within 30 days after receipt of such certified mail notification
to said individual; otherwise, if comments are received by the Department
after 30 days, same may be reviewed at the discretion of the Board under this
subsection. If the local municipal authority expresses opposition to the Project,
the Department will give consideration to the objections raised and will visit
the proposed site or Project within 30 days of notification.
(n)
The Department shall give notice of a proposed project
to the state representative and state senator representing the area where
a project would be located. The state representative or senator may hold a
community meeting at which the Department shall provide appropriate representation.
(o)
Prior to the Department's issuance of the IRS Form 8609
declaring that the Project has been placed in service for purposes of the
Code, §42, Project Owners must date, sign and acknowledge before a notary
public a LURA and send the original to the Department for execution. The Project
Owner shall then record said LURA, along with any and all exhibits attached
thereto, in the real Property records of the county where the Project is located
and return the original document, duly certified as to recordation by the
appropriate county official, to the Department. If any liens (other than mechanics'
or materialmen's liens) shall have been recorded against the Project and/or
the Property prior to the recording of the LURA, the Project Owner shall obtain
the subordination of the rights of any such lienholder, or other effective
consent, to the survival of certain obligations contained in the LURA following
the foreclosure of any such lien. Receipt of such certified recorded original
LURA by the Department is required prior to issuance of IRS Form 8609. A representative
of the Department shall physically inspect the Property for compliance with
the Application and the representatives, warranties, covenants, agreements
and undertakings contained therein before the IRS Form 8609 is issued.
§49.5.Set-Asides, Commitments and Preferences.
(a)
At least 10% of the State Housing Credit Ceiling for each
calendar year shall be allocated to Qualified Nonprofit Projects which meet
the requirements of the Code, §42(h)(5). Such organizations may compete
in one of the following set-asides: Non Profit 10%; Rural Projects/Prison
Communities 15%; General Projects 75%.
(b)
The Department may redistribute the credits depending
on the level of demand exhibited during the Allocation Round; provided that
no more than 90% of the State's Housing Credit Ceiling for the calendar year
may go to Projects which are not Qualified Nonprofit Projects. The Department
will reserve 25% of the 15% Rural Projects/Prison Communities set-aside for
projects financed through Rural Development (TxRD) (formerly Farmer's Home).
Should there not be sufficient qualified applications submitted for the TxRD
set-aside, then the allocations would revert back to the Rural Projects/Prison
Communities set-aside pool. Information concerning the appropriate set-aside
for each Application Round will be published in the Texas Register. Applicants
may submit only one Application for each site.
(c)
No Commitment Notice shall be issued with respect to any
Project, the total development cost of which, as determined by the Department,
or the acquisition, construction or rehabilitation cost of which exceed the
limitations established from time to time by the Department and the Board
as more specifically provided for within the Reference Manual. The Department
will reduce the Applicant's estimate of developer's and/or Contractor fees
in instances where these fees are considered excessive, as more specifically
provided for within the Application Submission Procedures Manual, as amended.
In the instance where the Contractor is an Affiliate of the Project Owner
and both parties are claiming fees, Contractor's overhead, profit, and general
requirements, the Department will reduce the total fees estimated to a level
that it deems appropriate. Further, the Department shall deny or reduce the
amount of low income housing tax credits on any portion of costs which it
deems excessive or unreasonable. The Department also may require bids in support
of the costs proposed by any Applicant.
(d)
The Department may, at any time and without additional
administrative process, determine to award credits to projects previously
evaluated and awarded credits if it determines that such previously awarded
credits are or may be invalid and the owner was not responsible for such invalidity.
To the maximum extent feasible, the Department will use credits carried forward
from the prior year or recovered during the current year to make awards pursuant
to subparagraphs (a)-(d) of this section.
§49.6.Threshold Criteria; Evaluation Factors; Selection Criteria; Final Ranking; Credit Amount; Tax Exempt Bond Financed Projects.
(a)
Threshold Criteria. To have an Application considered
for Selection Criteria, a Project Owner must first supply all required information
and demonstrate that the Project meets all of the requirements of the Threshold
Criteria set forth as follows and as more specifically provided for in the
Application Submission Procedures Manual, as amended. Applications not meeting
Threshold Criteria may be terminated as otherwise provided under this chapter.
No Scattered Site Project will be considered for allocation of tax credits
under this QAP and the Rules, and thus Scattered Site Projects do not satisfy
Threshold Criteria. Project Owners whose Applications do not meet Threshold
Criteria will be so informed in writing. The following are the Threshold Criteria
that are mandatory requirements at the time of Application submission:
(1)
EXHIBIT 101: Label as EXHIBIT 101, the following documents:
(A)
a letter from the design architect specifying the type
of amenities proposed for the development;
(B)
original photographs of the signage, existing buildings,
and interior photographs; and
(C)
original photographs of the development site and the surrounding
area. Property Owners must provide at least four of the following amenities:
(i)
limited access security fence;
(ii)
designated playground and equipment;
(iii)
community laundry room/laundry hook-up in Units;
(iv)
furnished community room;
(v)
recreation facilities;
(vi)
public telephone(s);
(vii)
on-site day care, Senior Center, or Community meals
room;
(viii)
storage areas; or
(ix)
covered parking.
(D)
With respect only to Small Developments (35 Units or less)
and Special Housing Projects, the Department will consider requests for waivers
of the foregoing amenity requirement. Any such waiver requests shall be submitted
in writing at the time of the Application submission, setting forth the reasons
for the proposed waiver.
(E)
All Projects must adhere to the Texas Property Code statute
relating to Security Devices and other applicable requirements for Residential
Tenancies.
(2)
EXHIBIT 102: Label as EXHIBIT 102(A) or (B),
according to the development type, provide construction costs breakdown associated
with the proposed new construction or rehabilitation. Additionally, all rehabilitation
Projects must provide a detailed work write-up/physical assessment report
with estimated cost which is prepared by a registered architect, professional
engineer or bonded general Contractor detailing the scope of work to be performed
throughout the rehabilitation process.
(3)
EXHIBIT 103: There shall exist evidence of readiness
to proceed in the form of at least one of the items under subparagraphs (A)-(E)
of this paragraph:
(A)
Label as EXHIBIT 103(A), evidence of site control through
one of the following:
(i)
A recorded warranty deed in the name of the ownership
entity, or entities which comprise the Applicant;
(ii)
A contract for sale or lease (the minimum term of the
lease must be at least 45 years) in the name of the ownership entity, or entities
which comprise the Applicant which is valid for the entire period the development
is under consideration for tax credits or at least 90 days, whichever is greater;
or
(iii)
An exclusive option to purchase in the name of the ownership
entity, or entities which comprise the Applicant which is valid for the entire
period the development is under consideration for tax credits or at least
90 days, whichever is greater.
(B)
Label as EXHIBIT 103(B), evidence of current and appropriate
zoning in the form of a letter from the appropriate municipal authority. In
lieu of such documentation the Applicant must submit evidence that a rezoning
request has been filed with the appropriate municipal authority as of the
date of submission of the Application. Any commitment of tax credits to the
Applicant will be contingent upon proper rezoning prior to Carryover Allocation.
If zoning is not required, the Applicant must submit a letter from the local
municipal/county authority so stating. If the Property is currently a non-conforming
use as presently zoned, provide the following:
(i)
a detailed narrative of the nature of non-conformance;
(ii)
the applicable destruction threshold;
(iii)
owners rights to reconstruct in the event of damage;
and
(iv)
penalties of noncompliance.
(C)
Label as EXHIBIT 103(C), evidence of the availability
of all necessary utilities/services to the development site. Exhibits must
be in the form of a letter from the appropriate municipal provider/local service
provider, or in the form of the last monthly bill which must clearly identify
the development by name and address. Necessary utilities are GAS/ELECTRIC;
TRASH; WATER, and SEWER.
(D)
Label as EXHIBIT 103(D), evidence of permanent financing
in only one of the following forms:
(i)
Bona Fide permanent financing in place as evidenced by
a valid and binding loan agreement and a deed(s) of trust in an amount not
less than the projected liens to be placed upon the Project upon completion
of construction in the name of the ownership entity which identifies the mortgagor
as the Applicant or entities which comprise the general partner;
(ii)
Bona Fide commitment or term sheet issued by a lending
institution or mortgage company that is actively and regularly engaged in
the business of lending money which is addressed to the ownership entity,
or entities which comprise the Applicant and which has been executed and accepted
by both parties (the term of the loan must be for a minimum of 15 years with
a 25 year amortization); or
(iii)
if the development will be financed through owner contributions,
provide a letter from an independent CPA verifying the capacity of the Applicant
to provide the proposed financing and that funds are committed solely for
such purpose with a letter from the Applicant's bank or banks confirming that
such funds have been provided for or deposited in a separate account at said
bank(s).
(E)
Label as EXHIBIT 103(E), either:
(i)
a copy of the current title policy which shows that the
ownership of the land/Project is vested in the exact name of the Applicant,
or entities which comprise the Applicant; or
(ii)
a copy of a current title commitment with the proposed
insured matching exactly the name of the Applicant or entities which comprise
the Applicant and the title of the land/Project vested in the name of the
exact name of the seller as indicated on the sales contract.
(4)
EXHIBIT 104: Label as EXHIBIT 104, evidence
of pre-Application notification by the Applicant to the local chief executive
officer(s) (i.e., mayor and county judge), state senator, and state representative
of the locality of the development. The pre-Application notification will
consist of a letter which at least includes the text described in Exhibit
113. Evidence of such notification shall be a copy of the letter sent to the
official and proof of delivery in the form of a certified mail receipt, overnight
mail receipt, or confirmation letter from said official. Proof of notification
should not be older than one month from the date that the Application is submitted
to the Department.
(5)
EXHIBIT 105: Using Exhibit 105 in the Application
Submission Manual, provide a current financial statement for each Applicant
(as defined in the QAP). Statement must not be more than 12 months old. If
submitting partnership and corporate financials in addition to the individual
statements; the Audited Financial Statements must not be older than 12 months
and the Certified Statements must not be older than 90 days.
(6)
EXHIBIT 106: must be the original copy of the completed
and executed Previous Participation and Background Certification Form (EXHIBIT
106) which is provided as part of the Application Submission Procedures Manual.
This form must be completed with respect to the ownership entity, general
partner, general contractor and their principals.
(7)
EXHIBIT 107: Label as EXHIBIT 107, a current rent
roll for occupied Projects undergoing rehabilitation. The rent roll must disclose
terms and rate of the lease, "street" rents, Unit mix, tenant names or vacancy,
dates of first occupancy and expiration of lease. Vacant and proposed new
construction Projects will, of course, be exempt from this requirement.
(8)
EXHIBIT 108: Label as EXHIBIT 108, for rehabilitation
developments, historical monthly operating statements of the subject development
to date for the past three full calendar years and for the current year to
date as of the end of the month occurring not more than 45 days prior to the
date of initial Application, or since the date of acquisition of the development
and for new construction, submit 15-year proforma estimates of operating expenses
and all supporting documentation to support projections. Rehabilitation Projects
must also submit a 15-year proforma of operating expenses with appropriate
supporting documentation.
(9)
EXHIBIT 109: Label as EXHIBIT 109 on the cover page
only, a Market Study addressing all items listed in §49.4(c) of this
title (relating to Applications; Environmental Assessments; Market Study;
Commitments; Extensions; Carryover Allocations; Agreements and Elections;
Extended Commitments) and/or required by the Reference Manual.
(10)
EXHIBIT 110: Label as EXHIBIT 110 on the cover page
only, a Phase I Environmental Study prepared in accordance with §49.4(c)
of this title (relating to Applications; Environmental Assessments; Market
Study; Commitments; Extensions; Carryover Allocations; Agreements and Elections;
Extended Commitments).
(11)
EXHIBIT 111: Label as EXHIBIT 111, for Applicants
seeking credits from the Non Profit Set-Aside, documentation that the Applicant
is a Qualified Nonprofit Organization pursuant to the Code, §42(h)(5)(C),
as evidenced by:
(A)
an IRS determination letter which states that the Qualified
Non Profit Organization is a 501(c)(3) or (4) entity,
(B)
if the project involves a joint-venture between a Qualified
Non Profit Organization and a for profit, an agreement which shows that the
nonprofit Controls the Project (directly or indirectly) and will materially
participate (within the meaning of the Code §469(h) in the development
and operation of the Project throughout the Compliance Period, and
(C)
a current list of all directors and officers of the nonprofit
organization, along with information pertaining to their primary occupations
and disclosing any relationship; as an Affiliate or otherwise, with other
members of the Applicant and/or any members or Affiliate of the Development
Team, including any market analyst, CPA, appraiser, or other professional
performing any services with respect to the Project and/or the subject Property.
(D)
a copy of the Articles of Incorporation which specifically
states the fostering of affordable housing is one of the entities exempt purposes.
(12)
EXHIBIT 112: Label as EXHIBIT 112, if applying
for acquisition credits or if the Applicant is affiliated with the seller
an appraisal of the Property apportioning the value of the land and the improvements
where applicable, a valuation report from the local tax appraisal district
and a bona fide valid contract verifying the acquisition cost which clearly
identifies the selling Persons or entities, and details any relationship with
the Applicant or any Affiliation with the Development Team, any Qualified
Market Analyst and any other professional or consultant performing services
with respect to the Project.
(13)
EXHIBIT 113: Label as EXHIBIT 113, a copy of the
public notice published in a widely circulated newspaper in the area in which
the proposed development will be located. Such notice must run at least twice
within a two week period, except on holidays, prior to the submission of the
Application to the Department. The notice must be prepared in accordance with
the guidelines established in the Application Submission Procedures Manual.
(14)
EXHIBIT 114: must be the original copy of the completed
and executed General Contractor Certification Form (EXHIBIT 114) provided
as part of the Application Submission Procedures Manual.
(b)
Evaluation Factors. The Department will consider Applications
for a housing credit allocation using the evaluation and point system described
herein and in the Application Submission Procedures Manual:
(1)
Applications will be initially evaluated against the Threshold
Criteria as they are accepted for filing in the Department during any Application
Acceptance Period. Applications not meeting the Threshold Criteria may be
terminated and may, at the Department's discretion, be returned to the Applicant
without further review. The Department shall not be responsible for the Applicant's
failure to meet the Threshold Criteria, and any oversight or failure of the
Department's staff to notify the Applicant of such inability to satisfy the
Threshold Criteria shall not confer upon the Applicant any rights to which
it would not otherwise be entitled. All Applicants may withdraw and subsequently
refile an Application, as well as file a new Application before the filing
deadline.
(2)
Applications will then be ranked according to the
points scored under the Selection Criteria in accordance with the Rules and
the Application Submission Procedures Manual. Applications not scored by the
Department's staff shall be deemed to have the points allocated through self-scoring
by the Applicants until actually scored. This shall apply only for ranking
purposes.
(3)
In addition to the number of points scored, the decision
to underwrite a Project shall be subject to considerations contained in §49.4(h)
of this title (relating to Applications; Environmental Assessments; Market
Study; Commitments; Extensions; Carryover Allocations; Agreements and Elections;
Extended Commitments). The Department, the Committee, and the Board shall
evaluate an Application on the basis of additional factors beyond scoring
criteria such as underwriting analysis, geographic dispersion of multi-family
housing as well as tax credit allocation, site conditions, impact on the Low
Income Housing Tax Credit Program's goals and objectives as stated in the
QAP and the Rules, and as otherwise provided under this chapter. If such evaluation
warrants, the Application will be forwarded to the Committee and to the Board
for approval. In making its recommendation to the Board, the Department shall
enumerate the reason(s) for the Project's selection, including all discretionary
factors used in making its determination. The Department may have an outside
third party perform the underwriting evaluation to the extent it determines
appropriate. The expense of any third party underwriting evaluation shall
be paid by the Applicant prior to the commencement of the aforementioned evaluation.
(4)
Applications which have not received a Commitment
Notice at the end of the Application Round may be placed on a waiting list
to be established by the Department and approved by the Committee and the
Board. At the end of each calendar year, all Applications which have not received
a Commitment Notice shall be deemed terminated, unless the Department shall
determine to retain or act upon such Applications as provided hereinafter
at §49.15 (relating to Forward Reservations; Binding Commitments). The
Applicant may re-apply to the Department during the next Application Acceptance
Period.
(c)
Selection Criteria. Pursuant to subsection (b)(1)(4) of
this section, Applications receiving the highest number of points in each
set aside category, in each Application Acceptance Period, if a sufficient
amount of the State Housing Credit Ceiling is available, will be eligible
for an evaluation by an Underwriter subject to §49.4(h) of this title
(relating to Applications; Environmental Assessments; Market Study; Commitments;
Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments).
All Applications will be ranked according to the Selection Criteria listed
in paragraphs (1)-(9) of this subsection. If no additional set-aside credits
are available, the Application shall be scored and evaluated in the General
Pool using the criteria to which such General Pool Applications are subject,
without special set-aside scoring points being considered.
(1)
DEVELOPMENT LOCATION
(A)
EXHIBIT 201: Label as EXHIBIT 201, a copy of the census
map (may be obtained from HUD or the local planning department) if the subject
Property is located within a Qualified Census Tract (QCT) as defined by the
Secretary of HUD and qualifies for the 30% increase in Eligible Basis, pursuant
to the Code, §42(d)(5)(C). The census map must clearly identify the proposed
development to be located within a QCT. Census tract numbers must be clearly
marked on the map, and must be identical to the QCT number stated in the Department's
Reference Manual. Applicants for Projects in a Difficult Development Area
or a Targeted Texas County must indicate this designation in the space provided
in the Application Submission Procedures Manual. (5 points) OR
(B)
EXHIBIT 202: Label as EXHIBIT 202, evidence that the proposed
development is located within a city-sponsored neighborhood preservation/redevelopment
area or a designated state or federal empowerment/enterprise zone. Such evidence
must be in the form of a letter and a map from a city/county official verifying
the proposed development to be located within a preservation/redevelopment
area or empowerment/enterprise zone. In order to qualify for these points,
an Applicant whose Project is located within a city-sponsored redevelopment
area must submit a certified copy of the appropriate resolution or documentation
from the mayor, local city council, county judge, county commissioners court
in support of the Project which documents that the designated area was:
(i)
created by the local city council/county commission;
(ii)
targets a specific geographic area; and
(iii)
offers tangible and significant area-specific incentives
or benefit over and above those normally provided by the city or county. Public
Improvement Districts (PIDs), Tax Increment Financing Zones (TIFs), or similar
districts organized under the Texas Local Government Code are prime examples
of such redevelopment efforts. (5 points)
(2)
HOUSING NEEDS CHARACTERISTICS
(A)
The proposed development is located in a county in which
10% or more of the households are below the poverty level as set forth in
the Department's "County Data Elements Guide" incorporated into the Reference
Manual. Utilize the percentages in clauses (i)-(iv) of this subparagraph to
assess the appropriate score.
(i)
10% to 20% of households are below the poverty level (3
points)
(ii)
21% to 31% of households are below the poverty level
(5 points)
(iii)
32% to 42% of households are below the poverty level
(7 points)
(iv)
42% + of households are below the poverty level (9 points)
(B)
The proposed development is located in a county in which
20% or more of the rental units have a cost burden as set forth in the County
Data Elements guide. Utilize the following percentages to assess the appropriate
score:
(i)
20% to 30% of rental units have a cost burden (4 points)
(ii)
31% to 41% of rental units have a cost burden (6 points)
(iii)
42% + of rental units have a cost burden (8 points)
(3)
PROJECT CHARACTERISTICS
(A)
EXHIBIT 203: Label as Exhibit 203, evidence that the proposed
development to be purchased qualifies as a federally assisted building within
the meaning of the Code, §42(d)(6)(B), and is in danger of having the
mortgage assigned to HUD, TxRD, or creating a claim on a federal mortgage
insurance fund. Such evidence must be a letter from the institution to which
the development is in danger of being assigned. (5 points)
(B)
EXHIBIT 204: Label as EXHIBIT 204, evidence that the proposed
development is a low income building with mortgage prepayment eligibility
as provided for in the Code, §42(d)(6)(C). Such evidence must be a copy
of the HUD regulatory agreement which evidences the prepayment clause. (5
points)
(C)
EXHIBIT 205: Label as EXHIBIT 205, evidence that the Applicant
is purchasing(ed) a Property (no earlier than 1995) owned by HUD, an insured
depository institution in default, or a receiver or conservator of such an
institution, or is an REO Property. Such evidence must be in the form of a
binding contract to purchase from such federal or other entity as described
in subparagraph (A)-(C) of this paragraph, closing statements, or recorded
warranty deed. (5 points)
(D)
The proposed development's composition offers a Unit mix
which is conducive to housing large families. To qualify for these points,
these Units must have at least 1000 square feet of living space for three
bedrooms or 1200 square feet for four bedrooms. Five points will be awarded
for the first 15% of the Units in the development that are three bedrooms
or larger. An additional point will be awarded in 5% increments for every
5%, up to 30% of Units which are three bedrooms or larger, up to a maximum
of three points. In computing qualified Units for this selection item where
the Unit Project is a mixed-income development, only tax credit Units should
be included.
(i)
15% of the Units in the development are three or four
bedrooms. (5 points)
(ii)
An additional point will be awarded for every 5% of Units
that are three or four bedrooms up to a maximum of three points. (3 points)
(E)
EXHIBIT 206: Label as Exhibit 206A, for new Construction,
a letter from the architect which certifies that at least four of the following
energy saving devices will be utilized in the construction of each tax credit
Unit. The devices selected must be certified as included in each tax credit
Unit of the Project upon placement in service.
(i)
Ceiling Fans
(ii)
Insulation which exceeds code for walls and ceilings
(iii)
Solar Screens
(iv)
Gas heating system with a minimum 80% flue efficiency
(v)
Energy efficient air conditioning system with a 10 SEER
or above
(vi)
Dual pane insulating windows
(vii)
Evaporative cooling system
(F)
To qualify for these points at least four of the seven
items listed in subparagraph (E) must be selected. (3 Points)
(G)
Label as Exhibit 206B for rehabilitation, an energy audit
of 10% of the tax credit Units and common areas, conducted by a local utility
servicer or a registered architect. Upon placement in service, another audit
will be required of the same Units to certify that the design features and/or
construction components installed in each tax credit Unit exceeds local/regional
building code with respect to energy efficiency. In the event that an energy
audit is unobtainable because the Units are currently vacant and uninhabitable,
a certification from a registered architect will suffice. (3 points)
(H)
The proposed development provides low density housing
of less than 16 Units per acre or as follows:
(i)
16 Units or less per acre (6 points)
(ii)
17 to 20 Units per acre (4 points)
(I)
The subject Project is an existing Residential Development
without maximum rent limitations or set-asides for affordable housing seeking
rehabilitation credits. (8 points)
(J)
The subject Project is a mixed-income development comprised
of both market rate Units and qualified tax credit Units.
(i)
Project's Applicable Fraction is no greater than 75%.
(6 points)
(ii)
Project's Applicable Fraction is no greater than 60%.
(10 points)
(K)
EXHIBIT 207: Label as EXHIBIT 207, evidence that the proposed
historic residential development has received an historic property designation
by a federal, state or local governmental entity. Such evidence must be in
the form of a letter from the designating entity identifying the development
by name and address and stating that the project is:
(i)
listed in the National Register of Historic Places under
the U.S. Department of the Interior in accordance with the National Historic
Preservation Act of 1966;
(ii)
located in a registered historic district and certified
by the U.S. Department of the Interior as being of historic significance to
that district;
(iii)
identified in a city, county, or state historic preservation
list; or
(iv)
designated as a state landmark. (6 points)
(L)
Property Owner will set-aside Units for households with
incomes at 50% or less of Area Median Family Income (AMFI) for occupancy of
the tax credit Units (TCU's) in the development. The rents for these Units
must not be higher than the allowable tax credit rents at the 50% AMFI level.
Utilize the percentages below to assess the appropriate score:
(i)
Four points will be awarded for the first 10% of the Units
in the development that are set-aside for tenants with incomes at 50% or less
of AMFI. (4 points)
(ii)
An additional point will be awarded for every 5% of additional
Units set-aside for tenants with incomes at 50% or less of AMFI up to a maximum
of four points. (4 points)
(M)
Proposed development is comprised of fourplexes in clusters
of four or more on contiguous property under common ownership, management
and Control or townhome developments of at least 16 Units. To qualify for
these points the development must have a density of no more than 16 Units
per acre. (5 points)
(N)
EXHIBIT 208: Label as EXHIBIT 208, for rehabilitation
evidence that a majority of the development's residential Units, as of the
end of the Application Acceptance Period, are vacant and uninhabitable. Such
evidence must be in the form of a letter and report from the local municipal
authority citing substantial code violations. To qualify for these points,
the Applicant or its Affiliates must not have owned a significant interest
in, or have had Control of the Project during the period in which such Units
were rendered uninhabitable. (4 points)
(O)
EXHIBIT 209: Label as EXHIBIT 209, evidence from the local
municipal authority stating that the proposed development fulfills a need
for additional affordable rental housing as evidenced in a local Consolidated
Plan, State Low Income Housing Plan, Comprehensive Plan or other planning
document and is supported by the local municipal authority. (5 points)
(P)
The Project is a Small Development. A Small Development
is defined as a Project consisting of not more than 35 multifamily Units,
which is not a part of, or contiguous to, a larger Project. A Project may
not receive points for this characteristic if it would otherwise qualify as
a Rural Project. (5 points)
(4)
SPONSOR CHARACTERISTICS
(A)
EXHIBIT 210: Label as EXHIBIT 210, evidence that the ownership
entity, general partner, general contractor or its principals have a record
of successfully constructing or developing residential units or comparable
commercial property (i.e., dormitory and hotel/motel). Evidence must be in
the form of the AIA Document A111 - Standard Form of Agreement Between Owner
& Contractor, the AIA Document G704 - Certificate of Substantial Completion,
IRS Form 8609, HUD Form 9822, Development Agreements, Partnership Agreements,
or other appropriate documentation verifying that the ownership entity, general
partner, general contractor or their principals have the required experience.
The criteria and conditions related to a general contractor as outlined in
§49.8(c) of this title (relating to Housing Credit Allocations) must
be met in order to receive a final allocation of credits. Therefore, while
points may be awarded for experience under this §49.6(c)(4)(A) during
the application process, if upon review of documents required pursuant to §49.8(c)
of this title (relating to Housing Credit Allocations), the general contractor
is shown not to have the required experience, the conditions of the commitment
notice or carryover agreement will not have been met and the final allocation
of credits may be denied. The evidence must clearly indicate:
(i)
that the project has been completed (i.e. Development
Agreements, Partnership Agreements, etc. must be accompanied by certificates
of completion.);
(ii)
that the names on the forms and agreements tie back to
the ownership entity, general partner, general contractor and their respective
principals as listed in the Application;
(iii)
the number of units completed or substantially completed.
(iv)
the term "successfully" is defined as acting in a capacity
as the general contractor or developer of;
(v)
at least 100 multifamily residential units or comparable
commercial property;
(vi)
at least 35 multifamily residential units or comparable
commercial property if the project applying for credits is a Rural Project;
or
(vii)
Property Owners in noncompliance with HUD, TxRD, HOME,
or LIHTC, but which are not barred from having an Application recommended
by §49.4(f), or which have had a continuing pattern of defaults and foreclosures
are ineligible to claim the points for this item. (10 points)
(B)
EXHIBIT 211: Label as EXHIBIT 211, evidence that the HUB
has been certified by the General Services Commission and is the Project Owner
or Controls the Project Owner. With respect to the filing of an Application
and the development, operation and ownership of a Project, the historically
underutilized person or persons whose ownership interests comprise a majority
of a corporation, partnership, joint venture or other business entity, must
maintain this majority and must demonstrate regular, continuous, and substantial
participation in the operation and management activities of the entity. Likewise,
with regard to a sole proprietorship, the individual who comprises the sole
proprietorship must demonstrate regular, continuous, and substantial participation
in the development, operation and ownership of the Project. The Department
shall require evidence of regular, continuous and substantial participation
and this evidence shall include, but not limited to, the agreement to personally
guarantee the interim construction loan secured (and all other guarantees
to the equity investor) relative to the development of a Project by the person
or persons upon whose purported ownership interest(s) and participation form
the basis for which the designation of a HUB is being claimed. Any such guarantee
wherein an Affiliate, partner and or Beneficial Owner of the guarantor agrees
to indemnify, in whole or in part, the guarantor from the liability arising
from the guarantee, shall not constitute said evidence. The Department shall,
during and after the Application Round, monitor those individuals upon whose
purported ownership interest(s) and participation form the basis for which
the designation of HUB is being claimed and may require the submission of
any additional documentation as required to verify said evidence. To qualify
for these points, in addition to the certification from the General Services
Commission, the historically underutilized person or persons whose ownership
interest(s) form the basis of the HUB designation must provide the necessary
loan and syndication guarantees to develop the Project. The Department's goal
is to have substantive participation by those individuals upon whose purported
ownership interest(s) and participation form the basis for which the designation
as a HUB is claimed. A determination by the Department that there has been
a material misrepresentation as to such participation or that insufficient
evidence has been provided to substantiate such participation will be final
and points awarded for HUB participation will be withdrawn accordingly. (5
points)
(5)
PARTICIPATION OF LOCAL TAX EXEMPT ORGANIZATIONS.
EXHIBIT 212: Label as EXHIBIT 212, evidence that the Property owner has an
executed agreement with a Local Tax Exempt Organization for the provision
of special supportive services that would not otherwise be available to the
tenants. The supportive services will be evaluated based upon the following:
(A)
the duration of the service agreement,
(B)
the accessibility and appropriateness of the service to
the tenants,
(C)
the experience of the service provider, and
(D)
the importance of the service in enhancing the tenants
standard of living. The supportive service will be included in the LURA. (Up
to 5 points)
(6)
TENANT POPULATIONS WITH SPECIAL HOUSING NEEDS.
(A)
This criterion applies to elderly Projects which must
provide significant facilities and services specifically designed to meet
the physical and social needs of the residents. Significant services may include
congregate dining facilities, social and recreation programs, continuing education,
welfare information and counseling, referral services, transportation and
recreation. Other attributes of such Projects include providing hand rails
along steps and interior hallways, grab bars in bathrooms, routes that allow
for barrier-free lever type doorknobs and single lever faucets, as well as
elevators for Projects of over two stories. Elderly Projects must not contain
any Units with three or more bedrooms. Such a Project must conform to the
Federal Fair Housing Act and must be a Project which:
(i)
which is intended for, and solely occupied by Persons
62 years of age or older; or
(ii)
in which all Units (excluding those occupied by an employee
or owner) are constructed for, and occupied by at least one Person who is
60 years of age or older; and
(iii)
which adheres to policies and procedures which demonstrate
a firm commitment by the owner and manager to provide housing for Persons
60 years of age or older. (10 points)
(B)
EXHIBIT 213: Label as EXHIBIT 213, evidence verifying
that the subject development provides Units specifically equipped for persons
with physical or mental disabilities. Such evidence must be in the form of
a certification from an accredited architect stating the number of Units which
are/will be designed to meet American National Standards for buildings and
facilities providing accessibility and usability for Persons with Disabilities
(ANSI A117.1 - 1992 or successor) and will conform to the Fair Housing Act.
"Equipped" means that features that make the Units fully usable to such persons
are installed in the Units at the time of construction or provisions have
been included in construction for easy modification to meet the ANSI A117.1
standards. The Department will require a minimum of two years during which
set-aside units must either be occupied by tenants who are physically or mentally
disabled or held vacant while being marketed to such tenants. If after this
two year period, the Project Owner is unable to locate qualified Persons with
disabilities following a good-faith effort, the units may be rented to tenants
without disabilities, provided that the next available unit (from among those
set-aside for Persons with disabilities) shall first be made available to
Persons with disabilities. To comply with this provision all Project Owners
must maintain a waiting list of qualified tenants with disabilities throughout
the Compliance Period. When such Units become available, Project Owners must
contact persons on the waiting list and/or provide notice to local service
providers that such Units are available.
(i)
6.0% to 10% of Units are set-aside for persons with physical
or mental disabilities. (4 points)
(ii)
11% to 15% of Units are set-aside for persons with physical/mental
disabilities. (6 points)
(iii)
16% + of Units are set-aside for persons with physical/mental
disabilities. (8 points)
(C)
EXHIBIT 214: Label as EXHIBIT 214, evidence that the Project
is designed solely for transitional housing for homeless persons on a non-transient
basis, with supportive services designed to assist tenants in locating and
retaining permanent housing. Such evidence must include a detailed narrative
describing the type of proposed housing; a referral agreement with an established
organization which provides services to the homeless; and a marketing plan
designed to attract qualified tenants and housing providers, as well as a
list of supportive services. (15 points)
(7)
PUBLIC HOUSING WAITING LISTS. EXHIBIT 215: Label
as EXHIBIT 215, evidence that the Property owner has committed in writing
to the local public housing authority (PHA), the availability of Units which
also states that the Property owner agrees to consider as potential tenants,
those households on the PHA's waiting list. Property owner's letter to the
PHA must be accompanied by a marketing plan outlining how these Units will
be marketed to individuals on the waiting list. If no PHA is within the locality
of the development PHA, the Property owner must utilize the nearest authority
or office responsible for administering Section 8 programs. Such evidence
must include a copy of the Property owner's letter to the local PHA; a copy
of the marketing plan submitted with letter to the local PHA; verification
of receipt by the PHA in the form of certified return receipt or overnight
mail receipt; and a letter received from an appropriate municipal authority,
or local PHA stating the need for additional affordable housing Units within
its jurisdiction. (3 points)
(8)
SUBSTANTIAL READINESS TO PROCEED. EXHIBIT 216: Label
as EXHIBIT 216, evidence of substantial readiness to proceed. Such evidence
must be in the form of an enforceable construction financing commitment from
a regulated financial institution that is actively and regularly engaged in
the business of lending money. Such a commitment must be a written approval
of a loan or grant (i.e., preliminary approval by the lender's loan committee)
and be subject only to conditions fully under the control of the Applicant
to satisfy (excluding the allocation of tax credits). (4 Points)
(9)
BONUS POINTS
(A)
EXHIBIT 217: Label as Exhibit 217, evidence that Sponsor
agrees to provide a right of first refusal to purchase the Project upon or
following the end of the Compliance Period for the minimum purchase price
provided in, and in accordance with the requirements of, § 42(i)(7) of
the Code (the "Minimum Purchase Price"), to (a) a Qualified Nonprofit Organization,
(b) the Department, and (c) an individual tenant with respect to a single
family building or a tenant cooperative and/or a resident management corporation
in the Project or other association of tenants in the Project with respect
to multifamily developments (together, including the tenants of a single family
building, a "Tenant Organization"). Sponsor may qualify for this bonus by
agreeing that the LURA with respect to the Project will, in substance, contain
the following terms:
(i)
Upon the earlier to occur of:
(I)
the Sponsor's determination to sell the Project, or
(II)
the Sponsor's request to the Department, pursuant to
§42 (h)(6)(I) of the Code, to find a buyer who will purchase the Project
pursuant to a "qualified contract" within the meaning of §42 (h)(6)(F)
of the Code, the Sponsor shall provide a notice of intent to sell the Project
("Notice of Intent") to the Department and to such other parties as the Department
may direct at that time. If the Sponsor determines that it will sell the Project
at the end of the Compliance Period, the Notice of Intent shall be given no
later than two years prior to expiration of the Compliance Period.
(ii)
During the two years following the giving of Notice of
Intent, the Sponsor may enter into an agreement to sell the Project only in
accordance with a right of first refusal for sale at the Minimum Purchase
Price with parties in the following order of priority:
(I)
during the first six-month period after the Notice of
Intent, only with a Qualified Nonprofit Organization that is also a community
housing development organization, as defined for purposes of the federal HOME
Investment Partnerships Program at 24 C.F.R. §92.1 (a "CHDO") and is
approved by the Department;
(II)
during the second six-month period after the Notice of
Intent, only with a Qualified Nonprofit Organization or a Tenant Organization;
and during the second year after the Notice of Intent, only with the Department
or with a Qualified Nonprofit Organization approved by the Department or a
Tenant Organization approved by the Department.
(iii)
After the later to occur of (I) the end of the Compliance
Period or (II) two years from delivery of a Notice of Intent, the Sponsor
may sell the Project without regard to any right of first refusal established
by the LURA if: (x) no offer to purchase the Project at or above the Minimum
Purchase Price has been made by a Qualified Nonprofit Organization, a Tenant
Organization or the Department, or (y) a period of 120 days has expired from
the date of acceptance of such offer without the sale having occurred, provided
that the failure to close within such 120-day period shall not have been caused
by the Sponsor or matters related to the title for the Project.
(iv)
At any time prior to the giving of the Notice of Intent,
the Sponsor may enter into an agreement with one or more specific Qualified
Nonprofit Organizations and/or Tenant Organizations to provide a right of
first refusal to purchase the Project for the Minimum Purchase Price, but
any such agreement shall only permit purchase of the Project by such organization
in accordance with and subject to the priorities set forth in paragraph (ii)
of this section.
(v)
The Department shall, at the request of the Sponsor, identify
in the LURA a Qualified Nonprofit Organization or Tenant Organization which
shall hold a limited priority in exercising a right of first refusal to purchase
the Project at the Minimum Purchase Price, in accordance with and subject
to the priorities set forth in paragraph (ii) of this section. (5 points)
(B)
Application is received within the first ten working days
of the Application Acceptance Period. (2 points)
(d)
Final Ranking. The Department will evaluate Projects according
to the strength of the Project in meeting the Threshold and Selection Criteria.
In the event that two or more Applications receive the same number of points
in any given set-aside category, the Department in addition to factors outlined
in §49.4(h) of this title (relating to Applications; Environmental Assessments;
Market Study; Commitments; Extensions; Carryover Allocations; Agreements and
Elections; Extended Commitments) will utilize the following factors in the
order presented in paragraphs (1)-(7) of this subsection in making a determination
as to which Project will receive a preference in consideration for a tax credit
commitment:
(1)
which demonstrates the highest substantial readiness to
proceed as evidenced by the Selection Criteria, more specifically provided
for in subsection (c)(8) of this section;
(2)
which provide for the most efficient usage of the
low income housing tax credit on a per Unit basis;
(3)
which have substantial community support as evidenced
by the commitment of local public funds toward the construction, rehabilitation
and acquisition and subsequent rehabilitation of the Project;
(4)
Project which is a Special Housing Project as defined
in §49.2 of this title (relating to Definitions);
(5)
which serve the lowest income tenants;
(6)
which serve low income tenants for the longest period
of time, in the form of a longer Compliance Period and/or extended low income
use period (as set forth in the Extended Low Income Housing Commitment Agreement);
and
(7)
whose Unit composition provides the highest percentage
of three bedrooms or greater sized Units.
(e)
Past Performance. In reaching the final ranking of an
Application, the Department will take into consideration the Project Owner's
history in the tax credit program and other affordable housing programs. The
Department may disqualify from this allocation round, any Applicant, Project
Owner, developer and its partners, principals, and/or Affiliates who have
received an allocation of credits in the 1996 round and who have not yet finalized
the closing of the construction loan as of the close of this Application Acceptance
Period. The Department may deduct up to ten points from the final score of
any Applicant (or an Affiliate of which), in the past, has not placed into
service developments for which the Department has made an allocation, or if
a Property Owner has failed to perform under the obligations of any previous
Commitment Notice. The Department may, at its sole discretion disqualify or
impose limitation or disabilities upon an Applicant, Project Owner, developer,
and its partners, principals and/or Affiliates with respect to the competition
for allocations of tax credits as a consequence of material misstatement or
omission, noncompliance with any Code requirements, or any of the terms, conditions
or obligations of the program for any Project that has received a commitment
or allocation, or for failure to place in service buildings for which credits
were allocated. The Department will disqualify an Applicant who has been convicted
of fraud, theft, misappropriation of funds; who has made misrepresentations
to the Department; who is in noncompliance with the LURA or other similar
agreement for any other Project monitored by the Department, or who is in
noncompliance under this program or another program administered by this Department
or other governmental entities. Additionally, Applicants are advised that
the Department reserves the right to reject Applications which include principals
who have been:
(1)
Excluded from federal and non federal procurement programs
(either debarment or suspension);
(2)
Convicted of a felony offense;
(3)
Indicted or subject to enforcement action under state
of federal securities law; and
(4)
Negligent in the physical upkeep of subject Property,
or negligent in the operation of the subject Property, as deemed so by another
federal or state authority. All such rejections of Applications shall be at
the sole discretion of the Department.
(f)
Credit Amount.
(1)
The Department shall issue tax credits only in the amount
needed for the financial feasibility and viability of a Project throughout
the Compliance Period. The issuance of tax credits or the determination of
any allocation amount in no way represents or purports to warrant the feasibility
or viability of the Project by the Department. The Department will limit the
allocation of tax credits to no more than $1.2 million per Project or $2.4
million per Applicant. For these purposes this limitation will apply to all
Affiliates of any Applicant, developer, Project Owner, general partner, sponsor
or their Affiliates or related entities unless otherwise provided for by the
Department.
(2)
In making determinations with respect to the limitation
the Department may take into account such factors as the percentage of interest
held by a particular individual or any Affiliate thereof in a Project, the
amount of fees or other compensations paid to a particular individual or any
Affiliate thereof with respect to a Project, any other financial benefits,
either directly or indirectly through Beneficial Ownership received by a particular
individual or any Affiliate thereof with respect to a Project. The Committee,
in its sole discretion, may allocate credits to a Project Owner in addition
to those awarded at the time of the initial Carryover Allocation in instances
where there is bona fide substantiation of cost overruns and the Department
has made a determination that the allocation is needed to maintain the Project's
financial viability as a qualified low income Project. The limitation does
not apply:
(A)
to an entity which raises or provides equity for one or
more Projects, solely with respect to its actions in raising or providing
equity for such Projects (including syndication related activities as agent
on behalf of investors),
(B)
to the provision by an entity of "qualified commercial
financing" within the meaning of the Code, §49(a)(1)(D)(ii) (without
regard to the 80% limitation thereof),
(C)
to a Qualified Nonprofit Organization or other not-for-profit
entity, to the extent that the participation in a Project by such organization
consists of the provision of loan funds or grants, and
(D)
to a Project Consultant with respect to the provision
of consulting services.
(g)
Limitations on the Size of Projects. Rural Projects involving
new construction must not exceed 75 Units. All other Projects involving new
construction or requesting both rehabilitation and new construction tax credits
will be limited to 250 Units.
(h)
Tax Exempt Bond Financed Projects. Applications for Projects
which receive at least 50% of their financing from the proceeds of tax-exempt
bonds which are subject to the state volume cap as described in the Code,
§42(h)(4)(B) are also subject to evaluation under the QAP and Rules.
Such Projects must meet all the Threshold Requirements stipulated in the most
recently approved QAP and Rules. Such Projects must also demonstrate consistency
with the bond issuer's local Consolidated Plan. The issuer, (if other than
the Department) may, at its discretion, enter into a contractual agreement
to allow the Department to underwrite the Project. If the Department does
not underwrite the Project for feasibility, it will require evidence that
such a determination has been made by the issuer of the bonds. If the Department
determines that all requirements have been met, the Ad Hoc Tax Credit Committee,
without further action, shall authorize the Department to issue an appropriate
notice to the Sponsor that the Project satisfies the requirements of the QAP
and Rules in accordance with §42(m)(1)(D).
(i)
Adherence to Obligations. All representations, undertakings
and commitments made by an Applicant in the applications process for a Project,
whether with respect to Threshold Criteria, Selection Criteria or otherwise,
shall be deemed to be a condition to any Commitment Notice and/or Carryover
Allocation for such Project, the violation of which shall be cause for cancellation
of such Commitment Notice or Carryover Allocation by the Department, and if
concerning the ongoing features or operation of the Project, shall be reflected
in the LURA. All such representations are enforceable by the Department, including
enforcement by administrative penalties for failure to perform as stated in
the representation and enforcement by inclusion in deed restrictions to which
the Department is a party.
§49.7.Compliance Monitoring.
(a)
The Code, §42 (m)(1)(B)(iii), requires each State
Allocating Agency to include in its "Qualified Allocation Plan" a procedure
that the agency (or an agent or other private Contractor of such agency) will
follow in monitoring Projects for noncompliance with the provisions of the
Code, §42 and in notifying the Internal Revenue Service (the "Service"),
or its successor, of such noncompliance of which such agency becomes aware.
This procedure does not address forms and other records that may be required
by the Service on examination or audit.
(b)
The Department will also monitor compliance with any additional
covenants made by the Project Owner in the Extended Low Income Housing Commitment
Agreement.
(c)
The owner of a low income housing Project must keep records
for each qualified low income building in the Project showing:
(1)
the total number of residential rental Units in the building
(including the number of bedrooms and the size in square feet of each residential
rental Unit);
(2)
the percentage of residential rental Units in the
building that are low income Units;
(3)
the rent charged on each residential rental Unit
in the building including documentation to support the utility allowance;
(4)
the number of occupants in each low income Unit;
(5)
the low income Unit vacancies in the building and
information that shows when, and to whom, the next available Units were rented;
(6)
the annual income certification of each low income
tenant per Unit, in the form designated by the Department in the Compliance
Reference Guide, as may be amended;
(7)
documentation to support each low income tenant's
income certification, consistent with the verification procedures required
by HUD under §8 of the United States Housing Act of 1937 (§8). In
the case of a tenant receiving housing assistance payments under §8,
the documentation requirement is satisfied if the public housing authority
provides a statement to the Project Owner declaring that the tenant's income
does not exceed the applicable income limit under the Code, §42(g) as
described in the Compliance Reference Guide;
(8)
the Eligible Basis and Qualified Basis of the building
at the end of the first year of the Credit Period;
(9)
the character and use of the nonresidential portion
of the building included in the building's Eligible Basis under the Code,
§42(d), (e.g. tenant facilities that are available on a comparable basis
to all tenants and for which no separate fee is charged for use of the facilities,
or facilities reasonably required by the Project); and
(10)
additional information as required by the Department.
(d)
Record retention provision. The owner of a low income
housing Project is required to retain the records described in subsection
(c) of this section 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 tax 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.
(e)
Certification and Review.
(1)
On or before February 1st of each year, the Department
will send each Project Owner of a completed Project an Owner's Certification
of Program Compliance to be completed by the Owner and returned to the Department
on or before the first day of March of each year in the Compliance Period.
Any Project for which the certification is not received by the Department,
is received past due, or is incomplete, improperly completed or not signed
by the Project Owner, will be considered not in compliance with the provisions
of the Code. The Owner Certification of Program Compliance shall cover the
proceeding calendar year and shall include the following statements of the
Owner:
(A)
the Project met the minimum set-aside test which was applicable
to the Project;
(B)
there was no change in the Applicable Fraction of any
building in the Project, or that there was a change, and a description of
the change;
(C)
the owner has received an annual income certification
from each low income tenant and documentation to support that certification;
(D)
each low income Unit in the Project was rent-restricted
under the Code, §42(g)(2) and Internal Revenue Service Final Regulation
§1.42 - 10 regarding utility allowances;
(E)
all Units in the Project were for use by the general public
and used on a non-transient basis (except for transitional housing for the
homeless provided under the Code, §42(i)(3)(B)(iii));
(F)
each building in the Project was suitable for occupancy,
taking into account local health, safety, and building codes;
(G)
either there was no change in the Eligible Basis (as defined
in the Code, §42(d)) of any building in the Project, or that there has
been a change, and the nature of the change;
(H)
all tenant facilities included in the Eligible Basis under
the Code, §42(d), of any building in the Project, such as swimming pools,
other recreational facilities, and parking areas, were provided on a comparable
basis without charge to all tenants in the building;
(I)
if a low income Unit in the Project became vacant during
the year, reasonable attempts were, or are being, made to rent that Unit or
the next available Unit of comparable or smaller size to tenants having a
qualifying income before any other Units in the Project were, or will be,
rented to tenants not having a qualifying income;
(J)
if the income of tenants of a low income Unit in the Project
increased above the limit allowed in the Code, §42(g)(2)(D)(ii), the
next available Unit of comparable or smaller size in the Project was, or will
be, rented to tenants having a qualifying income;
(K)
a LURA including an extended low income housing commitment
agreement as described in the Code, §42(h)(6)(B), was in effect for buildings
subject to the Revenue Reconciliation Act of 1989, §7106(c)(1) (generally
any building receiving an allocation after 1989);
(L)
no change in the ownership of a Project has occurred during
the reporting period;
(M)
the Project Owner has not been notified by the Internal
Revenue Service that the Project is no longer "a qualified low income housing
project" within the meaning of the Code, §42; and
(N)
the Project met all terms and conditions which were recorded
in the LURA, or if no LURA was required to be recorded, the Project met all
representations of the Project Owner in the Application for credits.
(2)
Review.
(A)
The Department will review each Owner's Certification
of Program Compliance for compliance with the requirements of the Code, §42.
(B)
Each year, the Department will perform monitoring reviews
of at least 20% of the low income housing Projects. A monitoring review will
include an inspection of the income certification, the documentation the Project
Owner has received to support that certification, the rent record for each
low income tenant, and any additional information that the Department deems
necessary, for at least 20% of the low income Units in those Projects. The
Department shall give reasonable notice to the Project Owner that an inspection
will occur; however, the Projects and records to be reviewed will be selected
by the Department in its discretion. Monitoring reviews will be performed
at the location of the Project, unless the Project is required to have fewer
than ten low income Units.
(C)
The Department may, at the time and in the form designated
by the Department, require the Project Owners to submit for compliance review,
information on tenant income and rent for each low income Unit, and may require
a Project Owner to submit for compliance review a copy of the income certification,
the documentation the Project Owner has received to support that certification
and the rent record for any low income tenant.
(3)
Exception. The Department may, at its discretion,
enter into a Memorandum of Understanding with the TxRD, whereby the TxRD agrees
to provide to the Department information concerning the income and rent of
the tenants in buildings financed by the TxRD under its §515 program.
Owners of such buildings may be excepted from the review procedures of paragraph
(2)(B) or (C) of this subsection or both; however, if the information provided
by TxRD is not sufficient for the Department to make a determination that
the income limitation and rent restrictions of the Code, §42(g)(1) and
(2), are met, the Project Owner must provide the Department with additional
information.
(f)
Inspection provision. The Department retains the right
to perform an on site inspection of any low income housing Project including
all books and record pertaining thereto through either the end of the Compliance
Period or the end of the period covered by any Extended Low Income Housing
Commitment Agreement, whichever is later. An inspection under this subsection
may be in addition to any review under subsection (e)(2) of this section.
(g)
Notices to Owner. The Department will provide prompt written
notice to the owner of a low income housing Project if the Department does
not receive the certification described in subsection (e)(1) of this section
or discovers through audit, inspection, review or any other manner, that
the Project is not in compliance with the provisions of the Code, §42.
The notice will specify a correction period which will not exceed 90 days,
during which the owner may respond to the Department's findings, bring the
Property into compliance, or supply any missing certifications. The Department
may extend the correction period for up to six months if it determines there
is good cause for granting an extension. If any communication to the Project
Owner under this section is returned to the Department as unclaimed or undeliverable,
the Project may be considered not in compliance without further notice to
the Project Owner.
(h)
Notice to the Internal Revenue Service.
(1)
Regardless of whether the noncompliance is corrected,
the Department is required to file IRS Form 8823, Low Income Housing Credit
Agencies Report of Noncompliance, with the Internal Revenue Service. IRS
Form 8823 will be filed not later than 45 days after the end of the correction
period specified in the Notice to Owner, but will not be filed before the
end of the correction period. The Department will explain on IRS Form 8823
the nature of the noncompliance and will indicate whether the Project Owner
has corrected the noncompliance or has otherwise responded to the Department's
findings.
(2)
The Department will retain records of noncompliance
or failure to certify for six years beyond the Department's filing of the
respective IRS Form 8823. In all other cases, the Department will retain
the certification and records described in this section for three years from
the end of the calendar year the Department receives the certifications and
records.
(i)
Notices to the Department.
(1)
A Project Owner must notify the Department in writing
prior to any sale, transfer, exchange, or renaming of the Project or any
portion of the Project, and this notification requirement shall be included
in a LURA with respect to each Project. For Rural Projects that are federally
assisted or purchased from HUD, the Department shall not authorize the sale
of any apportionment of the entire tax credit development.
(2)
A Project Owner must notify the Department in writing
of any change of address to which subsequent notices or communications shall
be sent.
(j)
Liability. Compliance with the requirements of the Code,
§42 is the sole responsibility of the owner of the building for which
the credit is allowable. By monitoring for compliance, the Department in no
way assumes any liability whatsoever for any action or failure to act by the
owner including the owner's noncompliance with the Code, §42.
(k)
These provisions apply to all buildings for which a low
income housing credit is, or has been, allowable at any time. The Department
is not required to monitor whether a building or Project was in compliance
with the requirements of the Code, §42, prior to January 1, 1992. However,
if the Department becomes aware of noncompliance that occurred prior to January
1, 1992, the Department is required to notify the Service in a manner consistent
with subsection (g) of this section.
§49.8.Housing Credit Allocations.
(a)
The Housing Credit Allocation Amount shall not exceed
the dollar amount the Department determines is necessary for the financial
feasibility and the long term viability of the Project throughout the Compliance
Period. such determination shall be made by the Department at the time of
issuance of the Commitment Notice; at the time the Department makes a housing
credit allocation; and/or the date the building is placed in service. Any
housing credit allocation amount specified in a Commitment Notice, allocation
and/or Carryover Allocation Document is subject to change by the Department
dependent upon such determination. Such a determination shall be made by the
Department based on its evaluation and procedures, considering the items specified
in the Code, §42(m)(2)(B), AND THE DEPARTMENT IN NO WAY OR MANNER REPRESENTS
OR WARRANTS TO ANY PROJECT OWNER, SPONSOR, INVESTOR, LENDER OR OTHER ENTITY
THAT THE PROJECT IS, IN FACT, FEASIBLE OR VIABLE.
(b)
When the Project Owner is in full compliance with the
QAP and the Rules in this chapter, the Commitment Notice, the Carryover Allocation
Procedures Manual and all fees as specified within §49.11 of this title
(relating to Program Fees) have been received by the Department, the Department,
if requested, shall execute a Carryover Allocation Document which has been
properly completed, executed and notarized by the Project Owner. The Department
shall return one executed copy to the Project Owner.
(c)
The General Contractor hired by the Project Owner must
meet specific criteria as defined by the Seventy-fifth Legislature. A general
contractor hired by an applicant or an applicant , if the applicant serves
as general contractor must demonstrate a history of constructing similar types
of housings without the use of federal tax credits. Evidence must be submitted
to the Department which sufficiently documents that the general contractor
has constructed some housing without the use of low income housing credits.
This documentation will be required as a condition of the commitment notice
or carryover agreement, and must be complied with prior to commencement of
construction and at cost certification and final allocation of credits.
(d)
All Carryover Allocations will be contingent upon the
following:
(1)
The Project Owner's closing of the construction loan shall
occur within 150 days from the date of the execution of the Carryover Allocation
Document with a one-time 30 day extension. All requests for extensions by
Applicants shall be submitted to the Department for review. The Committee
may grant extensions, in its sole discretion, on a case-by-case basis. The
Committee may, in its sole discretion, waive related fees. Copies of the closing
documents must be submitted to the Department within two weeks after the closing.
The Carryover Allocation will automatically be revoked if the Project Owner
fails to meet the aforementioned closing deadline, and all credits previously
allocated to that Project will be returned to the general pool for reallocation.
(2)
The Project Owner must commence and continue substantial
construction activities within a year of the execution of the Carryover Allocation
document and evidence such activity in a format prescribed by the Department,
(as more fully defined in the Carryover Allocation Procedures Manual), outlining
progress towards placing the Project in service in an expeditious manner.
All requests for extensions by Applicants shall be submitted to the Department
for review, and the Committee may grant extensions, in its sole discretion,
on a case-by-case basis
(e)
The Department shall not allocate additional credits to
a developer/Project Owner who is unable to provide evidence, satisfactory
to the Department, of progress towards placements in service for a Project(s)
that is in carryover. An allocation will be made in the name of the Applicant
identified in the related Commitment Notice. If an allocation is made in the
name of the party expected to be the general partner in an eventual owner
partnership, the Department may, upon request, approve a transfer of allocation
to such owner partnership in which such party is the sole general partner.
Any other transfer of an allocation will be subject to review and approval
by the Department. The approval of any such transfer does not constitute a
representation to the effect that such transfer is permissible under the Code
or without adverse consequences thereunder, and the Department may condition
its approval upon receipt and approval of complete documentation regarding
the new owner including all the criteria for scoring, evaluation and underwriting,
among others, which were applicable to the original Applicant.
(f)
The Department shall make a housing credit allocation,
either in the form of IRS Form 8609, with respect to current year allocations
for buildings placed in service, or in the Carryover Allocation Document,
for buildings not yet placed in service, to any Project Owner who holds a
Commitment Notice which has not expired, and for which all fees as specified
in §49.11 of this title (relating to Program Fees), have been received
by the Department. In order for an IRS Form 8609 to be issued with respect
to a building in a Project, satisfactory evidence must be received by the
Department that such building is completed and has been placed in service
in accordance with the provisions of the Department's Cost Certification Procedures
Manual. The Department shall mail or deliver IRS Form 8609 (or any successor
form adopted by the Internal Revenue Service) to the Project Owner, with Part
I thereof completed in all respects and signed by an authorized official of
the Department. The delivery of the IRS Form 8609 will only occur only after
the Project Owner has complied with all procedures and requirements listed
within the Cost Certification Procedures Manual. Regardless of the year of
Application to the Department for low income housing tax credits, the current
year's Cost Certification Procedures Manual must be utilized when filing all
cost certification requests. A separate housing credit allocation shall be
made with respect to each building within a Project which is eligible for
a housing credit; provided, however, that where an allocation is made pursuant
to a Carryover Allocation Document on a project basis in accordance with the
Code, §42(h)(1)(F), a housing credit dollar amount shall not be assigned
to particular buildings in the Project until the issuance of IRS Forms 8609
with respect to such buildings.
(g)
In making a housing credit allocation, the Department
shall specify a maximum Applicable Percentage, not to exceed the Applicable
Percentage for the building permitted by the Code, §42(b), and a maximum
Qualified Basis amount. In specifying the maximum applicable percentage and
the maximum Qualified Basis amount, the Department shall disregard the first-year
conventions described in the Code, §42(f)(2)(A) and §42(f)(3)(B).
The housing credit allocation made by the Department shall not exceed the
amount necessary to support the extended low income housing commitment as
required by the Code, §42(h)(6)(C)(i).
(h)
Project inspections shall be required to show that the
Project is built or rehabilitated according to required plans and specifications.
At a minimum, all Project inspections must include an inspection for quality
during the construction process while defects can reasonably be corrected
and a final inspection at the time the Project is placed in service. All such
Project inspections shall be performed by the Department or by an independent,
third party inspector acceptable to the Department. The Project Owner shall
pay all fees and costs of said inspections.
(i)
At the time each building in the Project is placed in service,
the Project Owner shall be responsible for furnishing the Department with
documentation which satisfies the requirements as set forth in the Cost Certification
Procedures Manual. The Department may require copies of invoices and receipts
and statements for materials and labor utilized for the new construction or
rehabilitation and, if applicable, a closing statement for the acquisition
of the Project as well as for the closing of all interim and permanent financing
for the Project.
§49.9.Department Records; Certain Required Filings.
(a)
At all times during each calendar year the Department
shall maintain a record of the following:
(1)
the cumulative amount of the State Housing Credit Ceiling
that has been reserved pursuant to reservation notices during such calendar
year;
(2)
the cumulative amount of the State Housing Credit
Ceiling that has been committed pursuant to Commitment Notices during such
calendar year;
(3)
the cumulative amount of the State Housing Credit
Ceiling that has been committed pursuant to Carryover Allocation Documents
during such calendar year;
(4)
the cumulative amount of housing credit allocations
made during such calendar year; and
(5)
the remaining unused portion of the State Housing
Credit Ceiling for such calendar year.
(b)
Not less frequently than quarterly during each calendar
year, the Department shall publish in the Texas Register each of the items
of information referred to in subsection (a) of this section.
(c)
The Department shall mail to the Internal Revenue Service,
not later than the 28th day of the second calendar month after the close of
each calendar year during which the Department makes housing credit allocations,
the original of each completed (as to Part I) IRS Form 8609, a copy of which
was mailed or delivered by the Department to a Project Owner during such calendar
year, along with a single completed IRS Form 8610, Annual Low Income Housing
Credit Agencies Report. When a Carryover Allocation is made by the Department,
a copy of IRS Form 8609 will be mailed or delivered to the Project Owner by
the Department in the year in which the building(s) is placed in service,
and thereafter the original will be mailed to the Internal Revenue Service
in the time sequence above mentioned. The original of the Carryover Allocation
Document will be filed by the Department with IRS Form 8610 for the year in
which the allocation is made. The original of all executed Agreement and Election
Statements shall be filed by the Department with the Department's IRS Form
8610 for the year a housing credit allocation is made as provided in this
section.
§49.10.Department Responsibilities.
In making a housing credit allocation under this chapter, the Department
shall rely upon information contained in the Project Owner's Application to
determine whether a building is eligible for the credit under the Code, §42.
The Project Owner shall bear full responsibility for claiming the credit and
assuring that the Project complies with the requirements of the Code, §42.
The Department shall have no responsibility for ensuring that a Project Owner
who receives a housing credit allocation from the Department will qualify
for the housing credit. The Department will reject, and consider barring the
Project Owner from future participation in the Department's tax credit program
as a consequence thereof, any Application in which fraudulent information,
knowingly false documentation or other misrepresentation has been provided.
The aforementioned policy will apply at any stage of the evaluation or approval
process.
§49.11.Program Fees.
(a)
Each Project Owner that submits an Application shall submit
to the Department, along with such Application, a non refundable Application
fee, as set forth in the Application Submission Procedures Manual.
(b)
For each Project that is to be evaluated by an independent
third party underwriter in accordance with §49.6(b)(3) of this title
(relating to Threshold Criteria; Evaluation Factors; Selection Criteria; Final
Ranking; Credit Amount; Tax Exempt Bond Financed Projects), the Project Owner
will be so informed in writing prior to the commencement of any reviews by
said underwriter. The cost for the third party underwriting will be set forth
in the Application Submission Procedures Manual, and must be received by the
Department prior to the engagement of the underwriter. The fees paid by the
Project Owner to the Department for the third party underwriting will be credited
against the commitment fee established in subsection (c) of this section,
in the event that a Commitment Notice is issued by the Department to the Project
Owner.
(c)
Each Project Owner that receives a Commitment Notice shall
submit to the Department, not later than the expiration date on the commitment
billing notice, a non refundable commitment fee, as set forth in the Application
Submission Procedures Manual. The commitment fee shall be paid by cashier's
check. Projects located within one of the targeted Texas counties, as indicated
in the Reference Manual, will be exempt from the requirement to pay a commitment
fee, in the event that Commitment Notice is issued.
(d)
Each Project Owner that requests an extension of the expiration
date of a Commitment Notice, shall submit to the Department, along with such
request, a non refundable extension fee, as set forth in the Application Submission
Procedures Manual and shall be paid by cashier's check. Such extension shall
be granted at the discretion of the Department.
(e)
Upon the Project being placed in service, the Project
Owner will pay a compliance monitoring fee in the form of a cashier's check,
as set forth in the Application Submission Procedures Manual. The compliance
monitoring fee must be received by the Department prior to the release of
the IRS Form 8609 on the Project.
(f)
Public information requests are processed by the Department
in accordance with the provisions of Texas Civil Statutes, Article 6252-17a,
codified as Government Code, Chapter 552, and as amended by the Acts during
the 73rd Legislature, and as may be amended from time to time. The General
Services Commission and the Department determine the cost of copying, and
other costs of production.
(g)
The amounts of the Application fee, commitment fee, compliance
monitoring fee, administrative fees, extension fee, and other applicable fees
as specified in the Application Submission Procedures Manual will 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.
§49.12.Manner and Place of Filing Applications.
(a)
All Applications, letters, documents, or other papers
filed with the Department will be received only between the hours of 8:00
a.m. and 5:00 p.m. on any day which is not a Saturday, Sunday or a holiday
established by law for state employees.
(b)
All Applications and related documents submitted to the
Department shall be mailed or delivered to Low Income Housing Tax Credit Program,
Texas Department of Housing and Community Affairs, 507 Sabine, Suite 400,
Austin, Texas 78701.
§49.13.Withdrawals, Cancellations, Amendments.
(a)
A Project Owner may withdraw an Application prior to receiving
a commitment, Carryover Allocation Document or Housing Credit Allocation,
or may cancel a Commitment Notice by submitting to the Department a notice,
as applicable, of withdrawal or cancellation.
(b)
The Department may consider an amendment to a Commitment
Notice, Carryover Allocation or other requirement with respect to a Project
if the revisions:
(1)
are consistent with the Code and the tax credit program;
(2)
do not occur while the Project is under consideration
for tax credits;
(3)
do not involve a change in the number of points scored
(unless the Project's ranking is adjusted because of such change);
(4)
do not involve a change in the Project's site; or
(5)
do not involve a change in the set-aside election.
(c)
The Department may cancel a Commitment Notice or Carryover
Allocation prior to the issuance of IRS Form 8609 with respect to a Project
if:
(1)
the Project Owner or any member of the Development Team,
or the Project, as applicable, fails to meet any of the conditions of such
Commitment Notice or Carryover Allocation or any of the undertakings and commitments
made by the Project Owner in the applications process for the Project;
(2)
any statement or representation made by the Project
Owner or made with respect to the Project Owner, the Development Team or the
Project is untrue or misleading;
(3)
an event occurs with respect to any member of the
Development Team which would have made the Project's Application ineligible
for funding pursuant to §49.4(f) of this title (relating to Applications;
Environmental Assessments; Market Study; Commitments; Extensions; Carryover
Allocations; Agreements and Elections; Extended Commitments), if such event
had occurred prior to issuance of the Commitment Notice or Carryover Allocation;
or
(4)
the Project Owner, any member of the Development
Team, or the Project, as applicable, fails to comply with these Rules or the
procedures or requirements of the Department.
§49.14.Waiver and Amendment of Rules.
(a)
The Board, in its discretion, may waive any one or more
of these Rules in cases of natural disasters such as fires, hurricanes, tornadoes,
earthquakes, or other acts of nature as declared by Federal or State authorities.
(b)
The Department may amend this chapter and the Rules contained
herein at any time in accordance with the provisions of Texas Civil Statutes,
Article 6252-13a, codified as Government Code, Chapter 2001, and as amended
by the Acts of the Seventy-third Legislature, and as may be amended from time
to time.
§49.15.Forward Reservations; Binding Commitments.
(a)
Anything in §49.4 of this title (relating to Applications;
Environmental Assessments; Market Study; Commitments; Extensions; Carryover
Allocations; Agreements and Elections; Extended Commitments) or elsewhere
in this chapter to the contrary notwithstanding, the Department with approval
of the Board may determine to issue commitments of tax credit authority with
respect to Projects from the State Housing Credit Ceiling for the calendar
year following the year of issuance (each a "forward commitment"). The Department
may make such forward commitments:
(1)
with respect to Projects placed on a waiting list in any
previous Application Round during the year; or
(2)
pursuant to an additional Application Round.
(b)
If the Department determines to make forward commitments
pursuant to a new Application Round, it shall provide information concerning
such round in the Texas Register. In inviting and evaluating Applications
pursuant to an additional Allocation Round, the Department may waive or modify
any of the set-asides set forth in §49.5(a) and (b) of this title (relating
to Set-Asides, Commitments and Preferences) and make such modifications as
it determines appropriate in the Threshold Criteria, evaluation factors and
Selection Criteria set forth in §49.6 of this title (relating to Threshold
Criteria, Evaluation Factors; Selection Criteria; Final Ranking; Credit Amount;
Tax Exempt Bond Financed Projects) and in the dates and times by which actions
are required to be performed under this chapter. The Department may also,
in an additional Application Round, include Projects previously evaluated
within the calendar year and rank such Projects together with those for which
Applications are newly received.
(c)
Unless otherwise provided in the Commitment Notice with
respect to a Project selected to receive a forward commitment or in the announcement
of an Application Round for Projects seeking a forward commitment, actions
which are required to be performed under this chapter by a particular date
within a calendar year shall be performed by such date in the calendar year
of the anticipated allocation rather than in the calendar year of the forward
commitment.
(d)
Any forward commitment made pursuant to this section shall
be made subject to the availability of State Housing Credit Ceiling in the
calendar year with respect to which the forward commitment is made. No more
than 15% of the per capita component of State Housing Credit Ceiling anticipated
to be available in the State of Texas in a particular year shall be allocated
pursuant to forward commitments to Project Applications carried forward without
being ranked in the new Application Round pursuant to subsection (f) of this
section. If a forward commitment shall be made with respect to a Project placed
in service in the year of such commitment, the forward commitment shall be
a "binding commitment" to allocate the applicable credit dollar amount within
the meaning of the Code, §42(h)(1)(C).
(e)
If tax credit authority shall become available to the
Department later in a calendar year in which forward commitments have been
awarded, the Department may allocate such tax credit authority to any eligible
Project which received a forward commitment, in which event the forward commitment
shall be canceled with respect to such Project.
(f)
In addition to or in lieu of making forward commitments
pursuant to subsection (a) of this section, the Department may determine to
carry forward Project Applications on a waiting list or otherwise received
and ranked in any Application Round within a calendar year to the subsequent
calendar year, requiring such additional information, Applications and/or
fees, if any, as it determines appropriate. Project Applications carried forward
may, within the discretion of the Department, either be awarded credits in
a separate allocation round on the basis of rankings previously assigned or
may be ranked together with Project Applications invited and received in a
new Application Round. The Department may determine in a particular calendar
year to carry forward some Project Applications under the authority provided
in this subsection, while issuing forward commitments pursuant to subsection
(a) of this section with respect to others.
§49.16.Deadlines for Allocation of Low Income Housing Tax Credits.
(a)
Not later than November 15 of each year, the Department
shall prepare and submit to the Board for adoption the draft Qualified Allocation
Plan required by federal law for use by the Department in setting criteria
and priorities for the allocation of tax credits under the low income housing
tax credit program.
(b)
The Board shall adopt and submit to the governor the Qualified
Allocation Plan not later than January 31.
(c)
The governor shall approve, reject, or modify and approve
the Qualified Allocation Plan not later than February 28.
(d)
An Applicant for a low income housing tax credit to be
issued a Commitment Notice during the initial Application Round in a calendar
year must submit an Application to the Department not later than May 15.
(e)
The Board shall authorize the Department to issue a Commitment
Notice for allocation for the initial Application Round of low income housing
tax credits each year in accordance with the Qualified Allocation Plan not
later than July 31.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on February
9, 1998.
TRD-9801837
Larry Paul Manley
Executive Director
Texas Department of Housing and Community Affairs
Effective date: March 1, 1998
Proposal publication date: November 24, 1997
For further information, please call: (512) 475-3726