10 TAC §9.1, §9.7
The Texas Department of Housing and Community Affairs (TDHCA)
proposes amendments to §9.1 and §9.7 concerning the allocation of
Community Development Block Grant (CDBG) non-entitlement area funds under
the Texas Community Development Program (TCDP).
The amendments are being proposed to establish the standards and procedures
by which TDHCA will allocate 2001 fiscal year economic development funds.
The amendments are being proposed to make changes to the application, repayment,
and selection criteria for the Texas Capital Fund.
Sandy Mauro, director of the Texas Community Development Program, has determined
that for the period that the sections are in effect there will be no fiscal
implications for state or local government as a result of enforcing or administering
the sections.
Ms. Mauro also has determined that for the period that the sections are
in effect, the public benefit as a result of enforcing the sections will be
the equitable allocation of CDBG non-entitlement area funds to eligible units
of general local government in Texas. There will be no effect on microbusinesses
or small businesses. There are no anticipated economic costs to persons who
are required to comply with the sections as proposed.
Comments on the proposal may be submitted to Anne Paddock, Deputy General
Counsel, Texas Department of Housing and Community Affairs, 507 Sabine, P.O.
Box 13941, Austin, Texas 78711-3941 or by e-mail at the following address
apaddock@tdhca.state.tx.us.
The amendments are proposed under Texas Government Code, Chapter
2306, §2306.098, which provides TDHCA with the authority to allocate
Community Development Block Grant non-entitlement area funds to eligible counties
and municipalities according to department rules.
No other code, article, or statute is affected by the proposed amendments
to §9.1 and § 9.7.
§9.1.General Provisions.
(a)-(k)
(No change.)
(l)
Unobligated and recaptured funds.
Deobligated funds,
unobligated funds and program income (except program income recovered from
local revolving loan funds) generated by Texas Capital Fund projects shall
be retained for expenditure in accordance with the Consolidated Plan. Program
income derived from Texas Capital Fund projects will be used by TDHCA for
eligible Texas Community Development Program activities in accordance with
the Consolidated Plan. Any deobligated funds, unobligated funds, program income,
and unused funds from the current year's allocation or from previous years'
allocations derived from any Texas Community Development Program Fund, including
program income recovered from Texas Capital Fund local revolving loan funds,
and any reallocated funds which HUD has recaptured from Small Cities may be
redistributed among the established current program year fund categories,
for otherwise eligible projects. The selection of eligible projects to receive
such funds is approved by the TDHCA Executive Director, or when applicable,
approved of the Board of Directors of the Texas Department of Economic Development
on a priority needs basis with eligible disaster relief and urgent need projects
as the highest priority; and the Department's special targeted activities
(e.g., colonias, special housing projects, Texas Small Town Environment Program
(STEP), Texas Capital Fund, etc.) as the next highest priority.
[
Deobligated funds, unobligated funds and program income (except program income
recovered from local revolving loan funds) generated by Texas Capital Fund
projects shall be retained for expenditure within the Texas Capital Fund subject
to approval of the Board of Directors of the Texas Department of Economic
Development. Any deobligated funds, unobligated funds, program income, and
unused funds from previous years' allocations derived from any Texas Community
Development Program Fund other than the Texas Capital Fund, program income
recovered from Texas Capital Fund local revolving loan funds, and any reallocated
funds which HUD has recaptured from Small Cities may be redistributed among
the established fund categories, except the Texas Capital Fund, for otherwise
eligible projects. The selection of eligible projects to receive such funds
will be approved by the executive director of the Department on a priority
basis with eligible disaster relief and urgent need projects as the highest
priority; and the Department's special targeted activities (e.g., colonias,
special housing projects, Texas Small Town Environment Program (STEP), etc.)
as the next highest priority.
]
(m)-(q)
(No change.)
§9.7.Texas Capital Fund.
(a)-(c)
(No change.)
(d)
Repayment Requirements. TCF awards for real estate improvements
and private infrastructure
[
, private infrastructure, rail improvements,
and most public infrastructure
] require repayment. Infrastructure payments
and real estate lease payments are intended to be paid by the benefitting
business to the applicant/contractor and constitute program income. The repayment
is structured as follows:
(1)
Real estate improvements. These improvements are intended
to be owned by the applicant and leased to the business. Real estate improvements
require full repayment. At a minimum, the lease agreement with the business
must be for a minimum three year period or until the TCF contract between
the applicant and TDED has been satisfactorily closed (whichever is longer).
A minimum monthly lease payment will be required to be collected from the
original business and any subsequent business which occupies the real estate
funded by the TCF, which equates to the principal funded by the TCF divided
over a maximum 20 year period (240 months), or until the entire principal
has been recaptured. The repayment term is determined by TDED and may not
be for the maximum of 20 years for smaller award amounts. There is no interest
expense associated with an award. Payments begin the first day of the first
month following the construction completion date or acquisition date. Payments
received 15 calendar days or more late will be assessed a late charge/fee
of 5% of the payment amount. After the contract between the applicant and
the department is satisfactorily closed, the applicant will be responsible
for continuing to collect the minimum lease payments only if a business (any
business) occupies the real estate. The lease agreement may contain a purchase
option, if the option is effective after a minimum five year ownership requirement
and if the purchase price equals (at a minimum) the remaining principal amount
originally funded by the TCF which has not been recaptured.
(2)
Infrastructure improvements.
(A)
Private Infrastructure is infrastructure that will be located
on the business's site or on adjacent and/or contiguous property, to the site,
that is owned by the business, principals, or related entities. All funds
for private infrastructure improvements require full repayment. Terms for
repayment will be interest free, with repayment not to exceed 20 years and
are intended to be repaid by the business through a repayment agreement. Payments
begin the first day of the first month following the construction completion
date. Payments received 15 calendar days or more late will be assessed a late
charge/fee of 5% of the payment amount.
(B)
Public Infrastructure is infrastructure located on public
property or right-of-ways and easements granted by entities unrelated to the
business or its owners and not included or identified as private infrastructure.
All funds for public infrastructure do not require repayment.
[
Terms for repayment will be interest free, with repayment not to exceed 20
years and are intended to be repaid by the business through a repayment agreement.
Payments begin the first day of the first month following the construction
completion date. Payments received 15 calendar days or more late will be assessed
a late charge/fee of 5% of the payment amount. Funds used for public infrastructure
will comply with the following repayment schedule:
]
[
(i)
Awards of $375,000 or less
require no repayment.]
[
(ii)
Awards of $750,000 or less
require repayment of 25% of the award amount greater than $375,000.]
[
(iii)
Awards in excess of $750,000
require repayment of 25% of the award amount greater than $375,000 and repayment
of 50% of the amount in excess of $750,000.]
(C)
Rail improvements
on private property
[
, regardless of the location,
] require full repayment. Terms for repayment
will be no interest, with repayment not to exceed 20 years and are intended
to be repaid by the business through a repayment agreement. Payments begin
the first day of the first month following the construction completion date.
Payments received 15 calendar days or more late will be assessed a late charge/fee
of 5% of the payment amount.
(e)
(No change.)
(f)
Scoring criteria for the infrastructure and real estate
programs. There is a minimum 25-point threshold requirement. Applications
will be reviewed for feasibility in descending order based on the scoring
criteria. There are a total of 100 points possible.
(1)
In the event of a tie score and insufficient funds to approve
all applications, the following tie breaker criteria will be used.
(A)
The tying applications are ranked from lowest to highest
based on poverty rate stated on the score sheet. Thus, preference is given
to the applicant with the higher poverty rate.
(B)
If a tie still exists after applying the first criteria
then applications are ranked from lowest to highest based on unemployment
rate stated on the score sheet. Thus, preference is then given to the applicant
with the higher unemployment rate.
(2)
Depending on availability of
funds, TDED may elect not to make jumbo awards in program year 2001 after
the April 30, 2001 round of applications.
(3)
[
(2)
] Community Need (maximum
40
[
30
] points) Measures the economic distress of the applicant
community.
(A)
Unemployment (maximum 5 points). Awarded if the applicant's
[
average county
]
unemployment
rate
(for cities,
the prior annual city rate will be used; for counties, the prior annual census
tract rate, for where the business site is located will be used)
is
higher than the annual state rate, indicating that the community is economically
below the state average.
(B)
Poverty (maximum 15 points). Awarded if the applicant's
1999
[
average
] county poverty rate
, as provided in Appendix
A of the Application, (for cities, the prior annual city rate will be used;
for counties, the prior annual census tract rate for where the business site
is located will be used)
is higher than the annual state rate, indicating
that the community is economically below the state average.
Applicants
will score 5 points if their rate meets or exceeds the state average of 16.54%;
score 10 points if this figure exceeds 19.02% (15% over the state average);
and score 15 points if this figure exceeds 20.68% (25% over state average).
(C)
Enterprise/Empowerment/Defense Zone (maximum 5 points).
A project located in a state designated enterprise zone, federal enterprise
community, federal empowerment zone, or defense zone receives these five points.
(D)
Open Contracts (Maximum 5 Points). Awarded to applicants
that have
no
[
two (2) or less
] open TCF contracts.
(E)
Community Population (maximum
10 points). Points are awarded to applying cities with populations of 3,000
or less and counties with a population of 32,343 or less, using 1990 census
data. For cities: score 5 points if the city population is less that 3,000
and score 10 points if the city population is less than 1,177. For counties:
score 5 points if the county population is less than 32,343 and score 10 points
if the county population is less than 15,072.
(4)
[
(3)
] Jobs (maximum 30 points).
(A)
Job Impact (maximum 15 points). Awarded by taking the Business'
total job commitment, created & retained, and dividing by applicant's
1990 unadjusted population. This equals the job impact ratio. Score 5 points
if this figure exceeds the median job impact ratio for prior years; score
10 points if this figure exceeds 200% of the ratio; and score 15 points if
this figure exceeds 400% of the ratio. County applicants should deduct the
1990 census population amounts for all incorporated cities, except in the
case where the county is sponsoring an application for a business that is
or will be located in an incorporated city. In this case the city's population
would be used, rather than the county's.
(B)
Cost per Job (maximum 15 points). Awarded by dividing the
amount of TCF monies requested (including administration) by the number of
full-time job equivalents to be created and/or retained. Points are then awarded
in accordance with the following scale:
(i)
Below $10,000--15 points.
(ii)
Below $15,000--10 points.
(iii)
Below $20,000--5 points.
(5)
[
(4)
] Business Emphasis (maximum
20 points).
(A)
Manufacturers (max 10 points). Awarded if the Business'
primary Standard Industrial Classification (SIC) code number starts with 20-39
or if their primary North American Industrial Classification System (NAICS)
code number starts with 31-33. This is based on the SIC number reported on
the Business' Texas Workforce Commission (TWC) Quarterly Contribution Report,
Form C-3 or their IRS business tax return. Foreign businesses that have not
had an SIC/NAICS code number assigned to them by either the TWC or IRS may
submit alternative documentation to support manufacturing as their primary
business activity to be eligible for these points.
(B)
Small businesses (maximum 5 Points). Awarded if the Business
employs no more than 100 employees for all locations both in and out of state.
This number is determined by the business and any related entities, such as
parent companies, subsidiaries & common ownership. Common ownership is
considered 51% or more of the same owners.
(C)
HUB--Historically Underutilized Business (maximum 5 Points).
Awarded if a business is certified by the state General Services Commission
(GSC) as a Historically Underutilized Business (HUB). Provide a copy of GSC's
certification in the application.
(6)
[
(5)
] Leverage/Match (maximum
10
[
20
] points).
[
(A)
Match Ratio (maximum 10 points).
]
Awarded by dividing the total amount of other funds committed to this project
divided by the requested TCF amount, including administration. Points are
then awarded in accordance with the following scale:
(A)
[
(i)
] 1.25 : 1 (125 percent)--5 points.
(B)
[
(ii)
] 2.00 : 1 (200 percent)--10
points
[
(B)
Community Match Ratio (maximum
10 points). Points are awarded based on the following criteria.]
[
(i)
By dividing the total amount of community funds
(ie. funds from the applicant and/or their economic/industrial development
organizations only) committed to this project by the requested TCF amount,
including administration. Points are then awarded for each full 1% of the
community match and the 10 maximum points are awarded if the community commits
at least 10% of community matching funds. Example: $50,000/$750,000=.066=6%,
thus 6 points would be awarded.]
[
(ii)
Cities earn 5 points if they have passed the
Economic Development sales tax and if annual receipts are less than $50,000.
These points are earned whether or not the city makes a financial contribution
to the project. If the city makes a contribution the city can receive an additional
1 point for each full 1% of community contribution, not to exceed 5 additional
points.]
[
(iii)
Counties earn 5 points if they have passed
the County Development District Tax and if annual receipts are less than $50,000.
These points are earned whether or not the county makes a financial contribution
to the project. If the county makes a contribution the county can receive
an additional 1 point for each full 1% of community contribution, not to exceed
5 additional points.]
(g)-(j)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State, on August 15, 2001.
TRD-200104714
Daisy A. Stiner
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: September 30, 2001
For further information, please call: (512) 475-3726