Part 1.
TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS
Chapter 1.
ADMINISTRATION
Subchapter A. GENERAL POLICIES AND PROCEDURES
10 TAC §1.17
The Texas Department of Housing and Community Affairs (the
Department) proposes new §1.17, concerning Alternative Dispute Resolution
and Negotiated Rulemaking. The purpose of this section is, in accordance with
Chapter 2306.082, Texas Government Code, to implement a policy to encourage
the use of appropriate alternative dispute resolution procedures under the
Governmental Dispute Resolution Act, Chapter 2009, Texas Government Code,
to assist in the resolution of disputes under the Department's jurisdiction
and the use of negotiated rulemaking procedures under Chapter 2008, Texas
Government Code, for the adoption for Department rules.
Ms. Edwina P. Carrington, Executive Director, has determined that for the
first five-year period the proposed section is in effect there will be no
fiscal implications for state or local government as a result of enforcing
or administering the rule.
Ms. Carrington also has determined that for each year of the first five
years the proposed section is in effect, the public benefit anticipated as
a result of enforcing this section will be a more efficient Alternative Dispute
Resolution process. There will be no effect on persons, small businesses or
micro-businesses. There are no anticipated economic costs to persons, small
businesses or micro-businesses who are required to comply with the section
as proposed. The proposed new rule will not have an impact on any local economy.
Comments may be submitted to Chris Wittmayer, General Counsel, Texas Department
of Housing and Community Affairs, P.O. Box 13941, Austin, Texas, 78711-3941
or by email at the following address: chris.wittmayer@tdhca.state.tx.us.
The new section is proposed pursuant to the authority of the
Texas Government Code, Chapter 2306.
The new section affects no other code, article or statute.
§1.17.Alternative Dispute Resolution and Negotiated Rulemaking.
(a)
Policy. In accordance with §2306.082, Texas Government
Code, it is the Department's policy to encourage the appropriate use of Alternative
Dispute Resolution ("ADR") procedures to assist in the fair and expeditious
resolution of internal and external disputes involving the Department and
the use of negotiated rulemaking procedures for the adoption of Department
rules, consistent with the Governmental Dispute Resolution Act and the Negotiated
Rulemaking Act (Chapters 2009 and 2008, respectively, Texas Government Code).
The Department's ADR procedures must conform, to the extent possible, to model
guidelines issued by the State Office of Administrative Hearings for the use
of ADR by state agencies. (§2306.082(b), Texas Government Code).
(b)
Definitions. For purposes of this rule, terms used herein
shall have the following meaning:
(1)
"Alternative Dispute Resolution" or "ADR"--a procedure
or combination of procedures that uses an impartial third party to assist
individuals in voluntarily resolving disputes, including procedures described
in Sections 154.023-154.027, Civil Practice and Remedies Code. (§2009.003(1),
Governmental Dispute Resolution Act). The Governmental Dispute Resolution
Act does not grant the Department authority to engage in binding arbitration.
(§2009.005(c)).
(2)
"Mediation"--a dispute resolution procedure in which an
impartial person, the mediator, facilitates communication between the parties
to promote resolution of the dispute. The mediator may not impose his or her
own judgment on the issues for that of the parties. (§154.023(a) and
(b), Civil Practice and Remedies Code).
(3)
"Impartial third party"--A person who meets the qualifications
and conditions of §2009.053, Governmental Dispute Resolution Act.
(c)
Dispute Resolution Coordinator. The Executive Director
shall designate a trained person to:
(1)
Coordinate the implementation of the Department's policy
on ADR and negotiated rulemaking;
(2)
Serve as a resource for any training needed to implement
procedures for ADR or negotiated rulemaking; and
(3)
Collect data concerning the effectiveness of ADR and negotiated
rulemaking, as implemented by the Department.
(d)
Informal Communications; Ex Parte Policy; Appeals; Education.
(1)
The Department encourages informal communications between
Department staff and applicants for Department programs, and other interested
persons, to exchange information and informally resolve disputes. When applications
are pending consideration by the Department, applicants should review the
Department's ex parte communications policy to ensure their compliance with
the policy.
(2)
The Department has promulgated rules in accordance with §2306.0321
and §2306.6715, Texas Government Code, concerning administrative appeals
processes. ADR procedures supplement and do not limit any available procedure
for the resolution of disputes. (§2009.052(a), Governmental Dispute Resolution
Act). Pursuing an ADR procedure does not suspend or delay application, appeal,
or other deadlines. For example, if a tax credit applicant desires to appeal
a Department decision using the procedures promulgated under §2306.6715
and also desires to pursue an ADR procedure, the applicant may independently
pursue the two procedures. Each procedure will proceed independently of the
other.
(3)
Consistent with this ADR and Negotiated Rulemaking policy,
the Department shall endeavor to educate its staff and persons who are subject
to the Department's jurisdiction concerning the availability of ADR and negotiated
rulemaking procedures to resolve disputes and to adopt rules.
(e)
ADR Procedure.
(1)
Assessment of the Dispute. In determining whether an ADR
procedure is appropriate, the parties to the dispute, including the Department,
should consider the following factors:
(A)
direct discussions and negotiations between the parties
have been unsuccessful or could be improved with the assistance of an impartial
third party;
(B)
the use of ADR would use less resources and take less time
than other available procedures; there is a reasonable likelihood that the
use of ADR will result in an agreement to resolve the dispute;
(C)
there are potential remedies or solutions that are only
available through ADR; and
(D)
the need for a final decision with precedential value is
less important than other considerations. The parties may also consider additional
factors found in the State Office of Administrative Hearings' ADR Model Guidelines
for assessing whether a dispute is appropriate for mediation.
(2)
Proposing the Use of ADR. Any applicant for Department
programs or other interested person may propose the use of an ADR procedure
to attempt to resolve a dispute with the Department by submitting a written
ADR proposal to the Department's Dispute Resolution Coordinator (fax: (512)
475-3978), with copies sent to any other parties to the dispute.
(3)
ADR Proposal. If at any time an applicant for Department
programs or other interested person would like to engage in an ADR procedure
with the Department, the person may submit by letter a written ADR proposal
to the Department's Dispute Resolution Coordinator stating the nature of the
dispute, the parties involved, any pertinent deadlines, whether all parties
agree to refer the dispute to ADR, proposed times and locations, the preferred
type of ADR procedure, and, if known, one or more potential impartial third
parties. For example, an ADR proposal may propose that a dispute be mediated
using a trained, impartial third party state employee from a state pool of
ADR trained employees at no cost to the parties or other qualified mediator
agreeable to all parties at the shared cost of the parties; that the mediation
take place in person at the Department or other mutually agreeable place or
by telephone; and that it be scheduled for three hours on an agreed date within
seven days. If an applicant or other interested person is uncertain whether
to propose the possible use of ADR or is uncertain about any particular aspect
of a possible proposal, they should contact the Department's Dispute Resolution
Coordinator to discuss the matter.
(4)
Action on ADR Proposal. The Department will review the
ADR proposal, discuss it with the interested parties, as appropriate, and
assess whether ADR would assist in fairly and expeditiously resolving the
dispute. If the parties, including the Department, cannot agree on whether
an ADR procedure should be used or on the particulars of the ADR procedure,
the Department will notify affected parties of that outcome. The Department
will promptly notify all affected parties within five (5) days of receiving
an ADR proposal, or as soon as reasonably possible. If the Department determines
not to refer the dispute to ADR, the Department shall state its reasons in
writing. If the Department determines to refer the dispute to ADR, it will
include the date for the selected ADR process in its notice. In referring
the case to ADR, the Department will carefully consider the selections in
the ADR proposal and follow them as much as is appropriate.
(5)
Department Proposal. Independent of any proposal from interested
parties outside the Department, the Department may propose using ADR procedures
to interested parties to try and resolve a dispute.
(f)
Selection of Impartial Third Parties. An impartial third
party must possess the qualifications required under §154.052, Civil
Practice and Remedies Code (a minimum of 40 classroom hours of training in
dispute resolution techniques), is subject to the standards and duties prescribed
by §154.053, Civil Practice and Remedies Code, and has the qualified
immunity prescribed by §154.055, Civil Practice and Remedies Code, for
volunteer third parties not receiving compensation in excess of expenses,
if applicable. (§2009.053(d) Governmental Dispute Resolution Act). The
selection of an impartial third party is subject to the approval of the parties
to the dispute. If the parties do not suggest potential third parties, the
Department will provide a list of potential third parties from which to choose.
If all parties agree to use an impartial third party who charges for ADR services,
then the costs for the impartial third party shall be apportioned equally
among all parties, unless otherwise agreed by the parties.
(g)
Good faith; Voluntary Agreement; Public Information. All
parties participating in an ADR procedure are expected to do so in a good
faith effort to reach agreement. All parties participating must have the authority
to enter into an agreement to resolve the dispute. The decision to reach agreement
is voluntary. If the parties reach a resolution and execute a written agreement,
the agreement is enforceable in the same manner as any other written agreement
of the same nature with the State. A written agreement to which the Department
is a signatory resulting from an ADR procedure must be approved by the appropriate
authority and is subject to the Public Information Act, Chapter 552, Texas
Government Code.
(h)
Confidentiality of Records and Communications. The confidentiality
of the communications, records, conduct, and demeanor of an impartial third
party and parties in an ADR procedure are governed by §2009.054 of the
Governmental Dispute Resolution Act.
(i)
Negotiated Rulemaking.
(1)
The Negotiated Rulemaking Act, Chapter 2008 of the Texas
Government Code, prescribes procedures for negotiated rulemaking including
appointment of a convener; publishing notice of proposed negotiated rulemaking
and requesting comments on the proposal; appointing a negotiated rulemaking
committee; appointing an impartial third party facilitator; and proposing
the resulting draft rule for public comment.
(2)
Any person or organization that would like for the Department
to use negotiated rulemaking for the adoption of a Department rule may submit
a proposal to the Department's Dispute Resolution Coordinator. The proposal
should identify the rule proposed for negotiated rulemaking; potential participants
for the negotiated rulemaking committee, possible third party facilitators,
and a timeline for the process. The Department will promptly respond to the
proposal. The Department may also on its own propose to use negotiated rulemaking.
In determining whether a proposed negotiated rulemaking is appropriate in
a particular situation, the Department and interested parties may consider
any relevant factors, including:
(A)
The number of identifiable interests that would be significantly
affected by the proposed rule;
(B)
The probability that those interests would be adequately
represented in a negotiated rulemaking;
(C)
The probable willingness and authority of the representatives
of affected interests to negotiate in good faith;
(D)
The probability that a negotiated rulemaking committee
would reach a unanimous or a suitable general consensus on the proposed rule;
(E)
The probability that negotiated rulemaking will not unreasonably
delay notice and eventual adoption of the proposed rule;
(F)
The adequacy of agency and citizen resources to participate
in negotiated rulemaking;
(G)
The probability that the negotiated rulemaking committee
will provide a balanced representation among all interested and affected parties.
(§2008.052(d) Negotiated Rulemaking Act). If the Department decides to
proceed with a negotiated rulemaking, it shall follow the process outlined
in Chapter 2008 of the Texas Government Code.
(3)
The Department may also use less formal procedures such
as working groups, information exchanges, or policy dialogues (see State Office
of Administrative Hearings, ADR Model Guidelines) facilitated by a Department
employee or a third party to seek the input or consensus, as appropriate,
of interested persons and organizations when drafting proposed rules for public
comment.
(j)
Shared Third Parties. The Department may participate in
intergovernmental efforts to share qualified government employees to act as
impartial third parties and may agree to reimburse the furnishing entity in
kind or monetarily for the full or partial cost of providing the qualified,
impartial third party. (§2009.053(b), Governmental Dispute Resolution
Act).
(k)
Board Waiver. The Governing Board of the Department may
waive, in its discretion and to the extent of its authority, any one or more
of these rules if the Board finds that waiver is appropriate to fulfill the
purposes or policies of Chapter 2306, Texas Government Code, or for other
good cause, as determined by the Board.
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 May 17, 2004.
TRD-200403311
Edwina P. Carrington
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: June 27, 2004
For further information, please call: (512) 475-4595
10 TAC §§35.1 - 35.10
The Texas Department of Housing and Community Affairs (the
"Department") proposes new §§35.1 - 35.10, concerning the Multifamily
Housing Revenue Bond rules. These sections are proposed new in order to implement
changes that will effectively improve the 2005 Private Activity Bond Program.
Edwina P. Carrington, Executive Director, has determined that for the first
five-year period the new sections are in effect, there will be no fiscal implications
for state or local government as a result of enforcing or administering the
repeal.
Ms. Carrington also has determined that for each year of the first five
years the new sections are in effect the public benefit anticipated as a result
of enforcing the new sections will be to permit the adoption of new rules
for multifamily housing revenue bonds within the State of Texas, thereby enhancing
the State's ability to provide decent, safe and sanitary housing for Texans
through the multifamily housing revenue bond program administered by the Department.
There will be no effect on persons, small businesses or micro-businesses.
There are no anticipated economic costs to any person, business or micro-business
required to comply with the new sections as proposed. The proposed new sections
will not have an impact on any local economy.
The Department will conduct public hearings in Dallas on June 14, 2004,
in Austin on June 15, 2004 and in Houston on June 16, 2004 to receive comments
and suggestions from the public concerning these proposed Rules. The Department
will also accept comments concerning the public input process and how to better
inform the public of proposed developments in their neighborhoods specifically
the process and content of the public hearings held for each individual development
that receives an allocation of reservation under the Private Activity Bond
Program.
Comments may be submitted to Robbye Meyer, Multifamily Finance Division,
Texas Department of Housing and Community Affairs, P.O. Box 13941, Austin,
Texas 78711-3941 or email at robbye.meyer@tdhca.state.tx.us no later than
5:00 pm, June 16, 2004.
The proposed new sections are proposed pursuant to the authority
of the Texas Government Code, Chapter 2306.
The proposed new sections affect no other code, article or statute.
§35.1.Introduction.
The purpose of this Chapter 35 is to state the Texas Department of
Housing and Community Affairs (the "Department") requirements for issuing
Bonds, the procedures for applying for multifamily housing revenue Bond financing,
and the regulatory and land use restrictions imposed upon Developments financed
with the issuance of Bonds for the 2005 Private Activity Bond Program Year.
The rules and provisions contained in Chapter 35, of this title are separate
from the rules relating to the Department's administration of the Housing
Tax Credit Program. Applicants seeking a tax credit allocation should consult
the Department's Qualified Allocation Plan and Rules ("QAP"), in effect for
the program year for which the Housing Tax Credit application will be submitted.
§35.2.Authority.
The Department receives its authority to issue Bonds from Chapter 2306
of the Texas Government Code (the "Act"). All Bonds issued by the Department
must conform to the requirements of the Act. Notwithstanding anything herein
to the contrary, tax-exempt Bonds which are issued to finance the Development
of multifamily rental housing are specifically subject to the requirements
of the laws of the State of Texas, including but not limited to the Act, Chapter
1372 of the Texas Government Code relating to Private Activity Bonds, and
to the requirements of the Code (as defined in this chapter).
§35.3.Definitions.
The following words and terms, when used in the chapter, shall have
the following meaning, unless context clearly indicates otherwise.
(1)
Applicant--any Person or Affiliate of a Person who is a
member of the General Partner, who files a Pre-Application or full Application
with the Department requesting the Department issue Bonds to finance a Development.
(2)
Application--an Application, in the form prescribed by
the Department, filed with the Department by an Applicant, including any exhibits
or other supporting material.
(3)
Board--the Governing Board of the Department.
(4)
Bond--an evidence of indebtedness or other obligation,
regardless of the sources of payment, issued by the Department under the Act,
including a bond, note, or bond or revenue anticipation note, regardless of
whether the obligation is general or special, negotiable, or nonnegotiable,
in bearer or registered form, in certified or book entry form, in temporary
or permanent form, or with or without interest coupons.
(5)
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
by the United States Department of the Treasury or the Internal Revenue Service.
(6)
Development--property or work or a development, building,
structure, facility, or undertaking, whether existing, new construction, remodeling,
improvement, or rehabilitation, that meets or is designed to meet minimum
property standards required by the Department for the primary purpose of providing
sanitary, decent, and safe dwelling accommodations for rent, lease, or use
by individuals and families of Low Income and Very Low Income and Families
of Moderate Income in need of housing. The term includes:
(A)
buildings, structures, land, equipment, facilities, or
other real or personal properties that are necessary, convenient, or desirable
appurtenances, including streets, water, sewage facilities, utilities, parks,
site preparation, landscaping, stores, offices, and other non-housing facilities,
such as administrative, community, and recreational facilities the Department
determines to be necessary, convenient, or desirable appurtenances; and
(B)
multifamily dwellings in rural and urban areas.
(7)
Development Owner--an Applicant that is approved by the
Department as qualified to own, construct, acquire, rehabilitate, operate,
manage, or maintain a Development subject to the regulatory powers of the
Department and other terms and conditions required by the Department and the
Act.
(8)
Eligible Tenants--
(A)
individuals and families of Extremely Low, Very Low and
Low Income,
(B)
Families of Moderate Income (in each case in the foregoing
subparagraph (A) and (B) of this paragraph as such terms are defined by the
Issuer under the Act), and
(C)
Persons with Special Needs, in each case, with an Anticipated
Annual Income not in excess of 140% of the area median income for a four-person
household in the applicable standard metropolitan statistical area; provided
that all Low-Income Tenants shall count as Eligible Tenants.
(9)
Extremely Low Income--the income received by an individual
or family whose income does not exceed thirty percent (30%) of the area median
income or applicable federal poverty line, as determined by the Act.
(10)
Family of Moderate Income--a family:
(A)
that is determined by the Board to require assistance taking
into account
(i)
the amount of total income available for the housing needs
of the individuals and family,
(ii)
the size of the family,
(iii)
the cost and condition of available housing facilities,
(iv)
the ability of the individuals and family to compete successfully
in the private housing market and to pay the amounts required by private enterprise
for sanitary, decent, and safe housing, and
(v)
standards established for various federal programs determining
eligibility based on income; and
(B)
that does not qualify as a family of Low Income.
(11)
Ineligible Building Type--as defined in the Department's
QAP and Rules in effect for the program year for which the Bond and Housing
Tax Credit applications are submitted.
(12)
Institutional Buyer--
(A)
an accredited investor as defined in Regulation D promulgated
under the Securities Act of 1933, as amended (17 CFR Sec. 230.501(a)), but
excluding any natural person or any director or executive officer of the Department
(17 CFR §§ 230.501(a)(4) through (6)) or
(B)
a qualified institutional buyer as defined by Rule 144A
promulgated under the Securities Act of 1935, as amended (17 CFR Sec. 230.144A).
(13)
Low Income--the income received by an individual or family
whose income does not exceed eighty percent (80%) of the area median income
or applicable federal poverty line, as determined by the Act.
(14)
Land Use Restriction Agreement (LURA)--an agreement between
the Department and the Development Owner which is binding upon the Development
Owner's successors in interest that encumbers the Development with respect
to the requirements of law, including this title, the Act and Section 42 of
the Code.
(15)
Owner--an Applicant that is approved by the Department
as qualified to own, construct, acquire, rehabilitate, operate, manage, or
maintain a Development subject to the regulatory powers of the Department
and other terms and conditions required by the Department and the Act.
(16)
Persons with Special Needs--persons who
(A)
are considered to be disabled under a state or federal
law,
(B)
are elderly, meaning 60 years of age or older or of an
age specified by an applicable federal program,
(C)
are designated by the Board as experiencing a unique need
for decent, safe housing that is not being met adequately by private enterprise,
or
(D)
are legally responsible for caring for an individual described
by subparagraph (A), (B) or (C) of this paragraph above and meet the income
guidelines established by the Board.
(17)
Private Activity Bonds--any Bonds described by §141(a)
of the Code.
(18)
Private Activity Bond Program Scoring Criteria--the scoring
criteria established by the Department for the Department's Multifamily Housing
Revenue Bond Program, §35.6(d) of this title.
(19)
Private Activity Bond Program Threshold Requirements--the
threshold requirements established by the Department for the Department's
Multifamily Housing Revenue Bond Program, §35.6(c) of this title.
(20)
Program--the Department's Multifamily Housing Revenue
Bond Program.
(21)
Proper Site Control--Regarding the legal control of the
land to be used for the Development, means the earnest money contract is in
the name of the Applicant (principal or member of the General Partner); fully
executed by all parties and escrowed by the title company.
(22)
Property--the real estate and all improvements thereon,
whether currently existing or proposed to be built thereon in connection with
the Development, and including all items of personal property affixed or related
thereto.
(23)
Qualified 501(c)(3) Bonds--any Bonds described by §145(a)
of the Code.
(24)
Tenant Income Certification--a certification as to income
and other matters executed by the household members of each tenant in the
Development, in such form as reasonably may be required by the Department
in satisfaction of the criteria prescribed by the Secretary of Housing and
Urban Development under §8(f)(3) of the Housing Act of 1937 ("the Housing
Act") (42 U.S.C. 1437f) for purposes of determining whether a family is a
lower income family within the meaning of the §8(f)(1) of the Housing
Act.
(25)
Tenant Services--social services, including child care,
transportation, and basic adult education, that are provided to individuals
residing in low income housing under Title IV-A, Social Security Act (42 U.S.C. §601
et seq.), and other similar services.
(26)
Tenant Services Program Plan--the plan, subject to approval
by the Department, which describes the Tenant Services to be provided by the
Development Owner in a Development.
(27)
Trustee--a national banking association organized and
existing under the laws of the United States, as trustee (together with its
successors and assigns and any successor trustee).
(28)
Unit--any residential rental Unit in a Development consisting
of an accommodation, including a single room used as an accommodation on a
non-transient basis, that contains complete physical facilities and fixtures
for living, sleeping, eating, cooking and sanitation.
(29)
Very Low Income--the income received by an individual
or family whose income does not exceed sixty percent (60%) of the area median
income or applicable federal poverty line as determined under the Act.
§35.4.Policy Objectives & Eligible Developments.
The Department will issue Bonds to finance the preservation or construction
of decent, safe and affordable housing throughout the State of Texas. Eligible
Developments may include those which are constructed, acquired, or rehabilitated
and which provide housing for individuals and families of Low Income, Very
Low Income, or Extremely Low Income, and Families of Moderate Income.
§35.5.Bond Rating and Investment Letter.
(a)
Bond Ratings. All publicly offered Bonds issued by the
Department to finance Developments shall have and be required to maintain
a debt rating the equivalent of at least an "A" rating assigned to long-term
obligations by Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. or Moody's Investors Service, Inc. If such rating is based
upon credit enhancement provided by an institution other than the Applicant
or Development Owner, the form and substance of such credit enhancement shall
be subject to approval by the Board, which approval shall be evidenced by
adoption by the Board of a resolution authorizing the issuance of the credit-enhanced
Bonds. Remedies relating to failure to maintain appropriate credit ratings
shall be provided in the financing documents relating to the Development.
(b)
Investment Letters. Bonds rated less than "A," or Bonds
which are unrated must be placed with one or more Institutional Buyers and
must be accompanied by an investment letter acceptable to the Department.
Subsequent purchasers of such Bonds shall also be qualified as Institutional
Buyers and shall sign and deliver to the Department an investment letter in
a form acceptable to the Department. Bonds rated less than "A," and Bonds
which are unrated shall be issued in physical form, in minimum denominations
of one hundred thousand dollars ($100,000), and shall carry a legend requiring
any purchasers of the Bonds to sign and deliver to the Department an investment
letter in a form acceptable to the Department.
§35.6.Application Procedures, Evaluation and Approval.
(a)
Application Costs, Costs of Issuance, Responsibility and
Disclaimer. The Applicant shall pay all costs associated with the preparation
and submission of the Application--including costs associated with the publication
and posting of required public notices--and all costs and expenses associated
with the issuance of the Bonds, regardless of whether the Application is ultimately
approved or whether Bonds are ultimately issued. At any stage during the Application
process, the Applicant is solely responsible for determining whether to proceed
with the Application, and the Department disclaims any and all responsibility
and liability in this regard.
(b)
Pre-application. An Applicant who requests financing from
the Department for a Development shall submit a pre-application in a format
prescribed by the Department. Within fourteen (14) days of the Department's
receipt of the pre-application, the Department will be responsible for federal,
state, and local community notifications of the proposed Development. Upon
review of the pre-application, if the Development is determined to be ineligible
for Bond financing by the Department, the Department will send a letter to
the Applicant explaining the reason for the ineligibility. If the Development
is determined to be eligible for Bond financing by the Department, the Department
will score and rank the pre-application based on the Private Activity Bond
Program Scoring Criteria as described in subsection (d) of this section. The
Department will score and rank the pre-application with higher scores ranking
higher within each priority defined by §1372.0321, Texas Government Code.
All Priority 1 Applications will be ranked above all Priority 2 Applications
which will be ranked above all Priority 3 Applications, regardless of score.
This ranking will be used throughout the calendar year. In the event two or
more Applications receive the same score, the Department will use, as a tie-breaking
mechanism, the number of points awarded for Quality and Amenities for the
Development. If a tie still exists, the Department will grant preference to
the pre-application with the lower number of net rentable square feet per
bond amount requested. Pre-Applications must meet the threshold requirements
as stated in the Private Activity Bond Program Threshold Requirements as set
out in subsection (c) of this section. The Private Activity Bond Program Threshold
Requirements will be posted on the Department's website. After scoring, the
Development and the proposed financing structure will be presented to the
Department's Board for consideration of a resolution declaring the Department's
intent to issue Bonds (the "inducement resolution") with respect to the Development.
After Board approval of the inducement resolution, the scored and ranked Applications
will be submitted to the Texas Bond Review Board for its lottery processing.
The Texas Bond Review Board will draw the number of lottery numbers that equates
to the number of eligible Applications submitted by the Department. The lottery
numbers drawn will not equate to a specific Development. The Texas Bond Review
Board will thereafter assign the lowest lottery number drawn to the highest
scored and ranked Application as previously determined by the Department.
The criteria by which a Development may be deemed to be eligible or ineligible
are explained below in subsection (g) of this section, entitled Evaluation
Criteria. The Private Activity Bond Program Scoring Criteria will be posted
on the Department's website. The pre-application shall consist of the following
information:
(1)
Completed Uniform Application forms in the format required
by the Department;
(2)
Texas Bond Review Board's Residential Rental Attachment;
(3)
Relevant Development Information;
(4)
Public Notification Information;
(5)
Certification and agreement to comply with the Department's
rules;
(6)
Agreement of responsibility of all cost incurred;
(7)
An organizational chart showing the structure of the Applicant
and the ownership structure of any principals of the Applicant;
(8)
Evidence that the Applicant and principals are registered
with the Texas Secretary of State, or if the Applicant has not yet been formed,
evidence that the name of the Applicant is reserved with the Secretary of
State;
(9)
Organizational documents such as partnership agreements
and articles of incorporation, as applicable, for the Applicant and its principals;
(10)
Documentation of non-profit status if applicable; Evidence
of good standing from the Comptroller of Public Accounts of the State of Texas
for the Applicant and its principals; Corporate resumes and individual resumes
of the Applicant and any principals;
(11)
A copy of an executed earnest money contract between the
Applicant and the seller of the Property. This earnest money contract must
be in effect at the time of submission of the application and expire no earlier
than December 1 of the year preceding the applicable program year. The earnest
money contract must stipulate and provide for the Applicant's option to extend
the contract expiration date through March 1 of the program year, subject
only to the seller's receipt of additional earnest money or extension fees,
so that the Applicant will have site control at the time a reservation is
granted. If the Applicant owns the Property, a copy of the recorded warranty
deed is required;
(12)
Evidence of zoning appropriate for the proposed use, application
for the appropriate zoning or statement that no zoning is required;
(13)
A local map showing the location of the proposed Property
site;
(14)
A boundary survey or subdivision plat which clearly identifies
the location and boundaries of the subject Property;
(15)
Name, address and telephone number of the Seller of the
Property;
(16)
Construction draw and lease-up proforma for Developments
involving new construction;
(17)
Past two years' operating statements for existing Developments;
(18)
Current market information which includes rental comparisons;
(19)
Documentation of local Section 8 utility allowances;
(20)
Verification/Evidence of delivery of federal, state, and
local community notifications;
(21)
Self-Scoring Criteria; and
(22)
Such other items deemed necessary by the Department per
individual application.
(c)
Pre-Application Threshold Requirements.
(1)
As the Department reviews the Application, the Department
will use the following assumptions, even if not reflected in the Application.
Prequalification Assumptions:
(A)
Development Feasibility:
(i)
Debt Coverage Ratio must be greater than or equal to 1.10;
(ii)
Annual Expenses must be at least $3,800 per Unit or $3.75
per square foot;
(iii)
Deferred Developer Fees are limited to 80% of Developer's
Fees;
(iv)
Contractor Fee are limited to 6% of direct costs plus
site work cost;
(v)
Overhead are limited to 2% of direct costs plus site work
cost;
(vi)
General Requirements are limited to 6% of direct costs
plus site work cost;
(vii)
Developer Fees cannot exceed 15% of the project's Total
Eligible Basis
(B)
Construction Costs Per Unit Assumption. The acceptable
range is $47 to $61 per Unit (Acquisition / Rehab developments are exempt
from this requirement);
(C)
Interest Rate Assumption. 6.00% for 30 year financing and
6.75% for 40 year financing;
(D)
Size of Units (Acquisition / Rehab developments are exempt
from this requirement);
(i)
One bedroom Unit must be greater than or equal to 650 square
feet for family and 550 square feet for senior Units.
(ii)
Two bedroom Unit must be greater that or equal to 900
square feet for family and 750 square feet for senior Units.
(iii)
Three bedroom Unit must be greater than or equal to 1,000
square feet for family.
(2)
Appropriate Zoning. Evidence of appropriate zoning for
the proposed use or evidence of application made and pending decision;
(3)
Executed Site Control. Properly executed and escrow receipted
site control through 12/1/04 with option to extend through 3/1/05;
(4)
Previous Participation and Authorization to Release Credit
Information (located in the uniform application);
(5)
Current Market Information (must support affordable rents);
(6)
Completed TDHCA Uniform Application and application exhibits;
(7)
Completed Multifamily Rental Worksheets;
(8)
Public Notification Information (see application package);
(9)
Relevant Development Information (see application package);
(10)
Completed 2004 Bond Review Board Residential Rental Attachment;
(11)
Signed letter of Responsibility for All Costs Incurred;
(12)
Signed MRB Program Certification Letter;
(13)
Evidence of Paid Application Fees ($1,000 to TDHCA, $1,500
to Vinson and Elkins and $5,000 to Bond Review Board);
(14)
Boundary Survey or Plat;
(15)
Local Area map showing the location of the Property and
Community Services / Amenities within a three (3) mile radius;
(16)
Utility Allowance from the Appropriate Local Housing Authority;
(17)
Organization Chart with evidence of Entity Registration
or Reservation with the Secretary of State; and
(18)
Required Notification. Evidence of notifications shall
include a copy of the exact letter and other materials that were sent to the
individual or entity and proof of delivery in the form of a signed certified
mail receipt, signed overnight mail receipt or confirmation letter from each
official. Each notice must include the information required for "Community
Notification" within the Application Package. Notification must be sent to
all the following individuals and entities
(If the
QAP and Rules in effect for the program year for which the Bond and Housing
Tax Credit applications are submitted reflect a notification process that
is different from the process listed below, then the QAP and Rules will override
the notification process listed below):
(A)
State Senator and Representative that represents the community
containing the development;
(B)
Presiding Officer of the governing body of any municipality
containing the development and all elected members of that body (Mayor, City
Council members);
(C)
Presiding Officer of the governing body of the county containing
the development and all elected members of that body (County Judge and/or
Commissioners);
(D)
School District Superintendent of the school district containing
the development;
(E)
Presiding Officer of the School Board of Trustees of the
school district containing the development;
(F)
City and County Clerks (Evidence must be provided that
a letter, meeting the requirements of the "Clerk Notification" letter in the
application materials, was sent to the city clerk and county clerk no later
than August 9, 2004. A copy of the return letter from the city and county
clerks must be provided); and
(G)
Neighborhood Organizations on record with the state or
county whose boundaries contain the development (All entities identified in
the letters from the city and county clerks must be provided with written
notification and evidence of that notification must be provided. If the Applicant
can provide evidence that the proposed Development is not located within the
boundaries of an entity on a list from the clerk(s), then such evidence in
lieu of notification may be acceptable. If no letter is received from the
city or county clerk by seven (7) days prior to the date of Application submission,
the Applicant must submit a statement attesting to the fact that no return
letter was received. If the Applicant has knowledge of neighborhood organizations
on record with the state or county within whose boundaries the development
is located, written notification must be provided to them. If the Applicant
has no knowledge of such neighborhood organizations within whose boundaries
the Development is located, they must submit a statement to that effect with
the Application).
(d)
Pre-Application Scoring Criteria.
(1)
Construction Cost Per Unit includes: site work, contractor
profit, overhead, general requirements and contingency. Calculation will be
hard costs per square foot of net rentable area. Must be greater than or equal
to $60 per square foot (1 point) (Acquisition / Rehab will automatically receive
(1 point)).
(2)
Size of Units. Average size of all Units combined in the
development must be greater than or equal to 950 square foot for family and
must be greater than or equal to 750 square foot for elderly (5 points). (Acquisition
/ Rehab developments will automatically receive 5 points).
(3)
Period of Guaranteed Affordability for Low Income Tenants.
Add 10 years of affordability after the extended use period for a total affordability
period of 40 years (1 point).
(4)
Quality and Amenities (maximum 34 points) Acquisition /
Rehab will receive double points not to exceed 34 points).
(A)
Washer / Dryer Connections (1 point);
(B)
Microwave Ovens (in each Unit) (1 point);
(C)
Storage Room (outside the Unit) (1 point);
(D)
Covered Parking (at least one per Unit) (3 points);
(E)
Garages (equal to at least 35% of Units) (5 points);
(F)
Ceiling Fans (living rooms and bedrooms) (1 point);
(G)
Ceramic Tile Flooring (entry way and all bathroom) (2 points);
(H)
75% or Greater Masonry (includes rock, stone, brick, stucco
and cementious board product; excludes EFIS) (5 points);
(I)
Playground and Equipment or Covered Community Porch (3
points);
(J)
BBQ Grills and Tables (one each per 50 Units) or Walking
Trail (minimum length of 1/4 mile) (3 points);
(K)
Full Perimeter Fencing and Gated (3 points);
(L)
Computers with internet access / Business Facilities (8
hour availability) (2 points);
(M)
Game Room or TV Lounge (2 points);
(N)
Workout Facilities or Library (with comparable square footage
as workout facilities) (2 points).
(5)
Tenant Services.
(A)
$10.00 per Unit per month (10 points);
(B)
$7.00 per Unit per month (5 points);
(C)
$4.00 per Unit per month (3 points).
(6)
Zoning appropriate for the proposed use or no zoning required
(appropriate zoning for the intended use must be in place at the time of application
submission date, August 30,2004, in order to receive points) (5 points).
(7)
Proper Site Control (as defined in §35.3(21) of this
title control through 12/01/04 with option to extend through 03/01/05 and
all information correct at the time of application submission date, August
30, 2004, in order to receive points) (5 points).
(8)
Development Support / Opposition (Maximum net points of
+12 to -12. Each letter will receive a maximum of +1.5 to -1.5. All letters
received by 5:00 PM, October 22, 2004 will be used in scoring).
(A)
Texas State Senator and Texas State Representative (maximum
+3 to -3 points);
(B)
Presiding officer of the governing body of any municipality
containing the Development and the elected district member of the governing
body of the municipality containing the Development (maximum +3 to -3 points);
(C)
Presiding officer of the governing body of the county containing
the Development and the elected district member of the governing body of the
county containing the Development (if the site is not in a municipality, these
points will be doubled) (maximum +3 to -3 points);
(D)
Local School District Superintendent and Presiding Officer
of the Board of Trustees for the School district containing the Development
(maximum +3 to -3 points).
(9)
Penalties for Missed Deadlines in the Previous Year's Bond
and / or Tax Credit program year. (This includes approved and used extensions)
(-1 point with maximum 3 point deduction).
(10)
Local Political Subdivision Development Funding Commitment
that enables additional Units for the Very Low Income (CDBG, HOME or other
funds through local political subdivisions) (must be greater than or equal
to 2% of the bond amount requested and must provide at least 5% of the total
Development Units at or below 30% AMFI or an additional 5% of the total Development
Units if the Applicant has chosen category Priority 1B on the residential
rental attachment) (2 points).
(11)
Proximity to Community Services / Amenities (Community
services / amenities within three (3) miles of the site. A map must be included
with the Application showing a three (3) mile radius notating where the services
/ amenities are located) (maximum 12 points)
(A)
Grocery Store (1 point);
(B)
Pharmacy (1 point);
(C)
Convenience store (1 point);
(D)
Retail Facilities (Target, Wal-Mart, Home Depot, etc...)
(1 point);
(E)
Bank / Financial Institution (1 point);
(F)
Restaurant (1 point);
(G)
Public Recreation Facilities (park, civic center, YMCA)
(1 point);
(H)
Fire / Police Station (1 point);
(I)
Medical Facilities (hospitals, minor emergency, etc...)
(1 point);
(J)
Public Library (1 point);
(K)
Public Transportation (1/2 mile from site) (1 point);
(L)
Public School (only one school required for point (1 point).
(12)
Proximity to Negative Features (within 300 feet of any
part of the Development site boundaries. A map must be included with the application
showing where the feature is located. Developer must provide a letter stating
there are none of the negative features listed below within the stated area
if that is correct. (maximum -20 points)
(A)
Junkyards (5points);
(B)
Active Railways (excluding light rail) (5 points);
(C)
Interstate Highways / Service Roads (5 points);
(D)
Solid Waste / Sanitary Landfills (5 points);
(E)
High Voltage Transmission Towers (5 points).
(e)
Financing Commitments. After approval by the Board of the
inducement resolution, and before submission of a final application, the Applicant
will be solely responsible for making appropriate arrangements with financial
institutions which are to be involved with the issuance of the Bonds or the
financing of the Development, and to begin the process of obtaining firm commitments
for financing from each of the financial institutions involved.
(f)
Final Application. An Applicant who elects to proceed with
submitting a final Application to the Department must provide a final Application
and such supporting material as is required by the Department at least sixty
(60) days prior to the scheduled meeting of the Board at which the Development
and the Bond issuance are to be considered, unless the Department directs
the Applicant otherwise in writing. The final application must adhere to the
Department's QAP and Rules in effect for the program year for which the Bond
and Housing Tax Credit applications are submitted. The Department may determine
that supporting materials listed in paragraphs (1) through (42) of this subsection
shall be provided subsequent to the final Application deadline in accordance
with a schedule approved by the Department. Failure to provide any supporting
materials in accordance with the approved schedule may be grounds for terminating
the Application and returning the reservation to the Texas Bond Review Board.
The final application and supporting material shall consist of the following
information:
(1)
A Public Notification Sign shall be installed on the Development
site no later than fourteen (14) days after the submission of Volume I and
II of the Tax Credit Application to the Department (pictures and invoice receipts
must be submitted as evidence of installation within fourteen (14) days of
the submission). The sign must be at least four (4) feet by eight (8) feet
in size and be located within twenty (20) feet of, and facing, the main road
adjacent to the site. The sign shall be continuously maintained on the site
until the day the TDHCA Board takes final action on the Application for the
development. The information and lettering on the sign must meet the requirements
identified in the Application. As an alternative to installing a Public Notification
Sign and at the same required time, the Applicant may instead, at the Applicant's
Option, mail written notification to all addresses located within the footage
distance required by the local municipality zoning ordinance or 1,000 feet,
if there is no local zoning ordinance or if the zoning ordinance does not
require notification, of any part of the proposed Development site. This written
notification must include the information otherwise required for the sign.
If the Applicant chooses to provide this mailed notice in lieu of signage,
the final Application must include a map of the proposed Development site
and mark the 1,000 foot or local ordinance area showing street names and addresses;
a list of all addresses the notice was mailed to; an exact copy of the notice
that was mailed; and a certification that the notice was mailed through the
U.S. Postal Service and stating the date of mailing. In addition (within the
14 days), the Applicant must notify any public official that has changed since
the submission of the pre-application and any neighborhood organizations that
are known and were not notified at the time of the pre-application submission.
(2)
Completed Uniform Application forms in the format required
by the Department;
(3)
Certification of no changes from the pre-application to
the final application. If there are changes to the Application that have an
adverse affect on the score and ranking order and that would have resulted
in the application being placed below another application in the ranking,
the Department will terminate the Application and return the reservation to
the Texas Bond Review Board (with the exception of changes to deferred developer's
fees and support or opposition points);
(4)
Certification and agreement to comply with the Department's
rules;
(5)
A narrative description of the Development;
(6)
A narrative description of the proposed financing;
(7)
Firm letters of commitment from any lenders, credit providers,
and equity providers involved in the transaction;
(8)
Documentation of local Section 8 utility allowances;
(9)
Site plan;
(10)
Unit and building floor plans and elevations;
(11)
Complete construction plans and specifications;
(12)
General contractor's contract;
(13)
Completion schedule;
(14)
Copy of a recorded warranty deed if the Applicant already
owns the Property, or a copy of an executed earnest money contract between
the Applicant and the seller of the Property if the Property is to be purchased;
(15)
A local map showing the location of the Property;
(16)
Photographs of the Site;
(17)
Survey with legal description;
(18)
Flood plain map;
(19)
Evidence of zoning appropriate for the proposed use from
the appropriate local municipality that satisfies one of these subparagraphs
(A) through (C) of this paragraph:
(A)
no later than fourteen (14) days before the Board meets
to consider the transaction, the Applicant must submit to the Department written
evidence that the local entity responsible for initial approval of zoning
has approved the appropriate zoning and that they will recommend approval
of the appropriate zoning to the entity responsible for final approval of
zoning decisions;
(B)
provide a letter from the chief executive officer of the
political subdivision or another local official with appropriate jurisdiction
stating that the Development is located within the boundaries of a political
subdivision which does not have a zoning ordinance;
(C)
a letter from the chief executive officer of the political
subdivision or another local official with appropriate jurisdiction stating
the Development is permitted under the provision of the zoning ordinance that
apply to the location of the Development or that there is not a zoning requirement.
(20)
Evidence of the availability of utilities;
(21)
Copies of any deed restrictions which may encumber the
Property;
(22)
A Phase I Environmental Site Assessment performed in accordance
with the Department's Environmental Site Assessment Rules and Guidelines (§1.35
of this title);
(23)
Title search or title commitment;
(24)
Current tax assessor's valuation or tax bill;
(25)
For existing Developments, current insurance bills;
(26)
For existing Developments, past two (2) fiscal year end
development operating statements;
(27)
For existing Developments, current rent rolls;
(28)
For existing Developments, substantiation that income-based
tenancy requirements will be met prior to closing;
(29)
A market study performed in accordance with the Department's
Market Analysis Rules and Guidelines (§1.33 of this title);
(30)
Appraisal of the existing or proposed Development performed
in accordance with the Department's Underwriting Rules and Guidelines (§1.32
of this title);
(31)
Statement that the Development Owner will accept tenants
with Section 8 or other government housing assistance;
(32)
An organizational chart showing the structure of the Applicant
and the ownership structure of any principals of the Applicant;
(33)
Evidence that the Applicant and principals are registered
with the Texas Secretary of State, as applicable;
(34)
Organizational documents such as partnership agreements
and articles of incorporation, as applicable, for the Applicant and its principals;
(35)
Documentation of non-profit status if applicable;
(36)
Evidence of good standing from the Comptroller of Public
Accounts of the State of Texas for the Applicant and its principals;
(37)
Corporate resumes and individual resumes of the Applicant
and any principals;
(38)
Latest two (2) annual financial statements and current
interim financial statement for the Applicant and its principals;
(39)
Latest income tax filings for the Applicant and its principals;
(40)
Resolutions or other documentation indicating that the
transaction has been approved by the general partner;
(41)
Resumes of the general contractor's and the property manager's
experience; and
(42)
Such other items deemed necessary by the Department per
individual application.
(g)
Evaluation Criteria. The Department will evaluate the Development
for eligibility at the time of pre-application, and at the time of final Application.
If there are changes to the Application that have an adverse affect on the
score and ranking order and that would have resulted in the Application being
placed below another Application in the ranking, the Department will terminate
the Application and return the reservation to the Texas Bond Review Board
(with the exception of changes to deferred developer's fees and support or
opposition point). The Development and the Applicant must satisfy the conditions
set out in paragraphs (1) through (6) of this subsection in order for a Development
to be considered eligible:
(1)
The proposed Development must further the public purposes
of the Department as identified in the Act.
(2)
The proposed Development and the Applicant and its principals
must satisfy the Department's Underwriting Rules and Guidelines (§1.32
of this title). The pre-application must include sufficient information for
the Department to establish that the Underwriting Guidelines can be satisfied.
The final Application will be thoroughly underwritten according to the Underwriting
Rules and Guidelines (§1.32 of this title).
(3)
The Development must not be located on a site determined
to be unacceptable for the intended use by the Department.
(4)
Any Development in which the Applicant or principals of
the Applicant have an ownership interest must be found not to be in Material
Non-Compliance under the compliance Rules in effect at the time of pre-application
submission. Any corrective action documentation affecting the Material Non-compliance
status score must be submitted to the Department no later than thirty (30)
days prior to final application submission.
(5)
Neither the Applicant nor any principals of the Applicant
is, at the time of Application:
(A)
barred, suspended, or terminated from procurement in a
state or federal program or listed in the List of Parties Excluded from Federal
Procurement or Non-Procurement Programs; or
(B)
has been convicted of a state or federal crime involving
fraud, bribery, theft, misrepresentation, misappropriation of funds, or other
similar criminal offenses within fifteen (15) years; or
(C)
is subject to enforcement action under state or federal
securities law, action by the NASD, subject to a federal tax lien, or the
subject of an enforcement proceeding with any governmental entity; or
(D)
neither applicant nor any principals of the applicant have
a development under their ownership or control with a Material Non-compliance
score of 30 or more; or
(E)
otherwise disqualified or debarred from participation in
any of the Department's programs.
(6)
Neither the Applicant nor any of its principals may have
provided any fraudulent information, knowingly false documentation or other
intentional or negligent misrepresentation in the Application or other information
submitted to the Department.
(h)
Bond Documents. After receipt of the final Application,
bond counsel for the Department shall draft Bond documents which conform to
the state and federal laws and regulations which apply to the transaction.
(i)
Public Hearings; Board Decisions. For every Bond issuance,
the Department will hold a public hearing in accordance with §2306.0661,
Texas Government Code and §147(f) of the Code, in order to receive comments
from the public pertaining to the Development and the issuance of the Bonds.
Publication of all notices required for the public hearing shall be at the
sole expense of the Applicant. The Board's decisions on approvals of proposed
Developments will consider all relevant matters. Any topics or matters, alone
or in combination, may or may not determine the Board's decision. The Department's
Board will consider the following topics in relation to the approval of a
proposed Development:
(1)
The Development Owner market study;
(2)
The location, including supporting broad geographic dispersion;
(3)
The compliance history of the Development Owner;
(4)
The financial feasibility;
(5)
The Development's proposed size and configuration in relation
to the housing needs of the community in which the Development is located
and the needs of the area, region, and state;
(6)
The Development's proximity to other low income Developments
including avoiding over concentration;
(7)
The availability of adequate public facilities and services;
(8)
The anticipated impact on local school districts, giving
due consideration to the authorized land use;
(9)
Zoning and other land use considerations;
(10)
Fair Housing law, including affirmatively furthering fair
housing;
(11)
Any matter considered by the Board to be relevant to the
approval decision and in furtherance of the Department's purposes and the
policies of Chapter 2306, Texas Government Code.
(j)
Approval of the Bonds.
(1)
Subject to the timely receipt and approval of commitments
for financing, an acceptable evaluation for eligibility, the satisfactory
negotiation of Bond documents, and the completion of a public hearing, the
Board, upon presentation by the Department's staff, will consider the approval
of the Bond issuance, final Bond documents and, in the instance of privately
placed Bonds, the pricing of the Bonds. The process for appeals and grounds
for appeals may be found under §§1.7 and 1.8 of this title. The
Department's conduit housing transactions will be processed in accordance
with the Texas Bond Review Board rules Title 34, Part 9, Chapter 181, Subchapter
A. The Bond issuance must receive an approving opinion from the Department's
bond counsel with respect to the legality and validity of the Bonds and the
security therefore, and in the case of tax-exempt Bonds, with respect to the
excludability from gross income for federal income tax purposes of interest
on the Bonds.
(2)
Alternative Dispute Resolution Policy. In accordance with §2306.082,
Texas Government Code, it is the Department's policy to encourage the use
of appropriate alternative dispute resolution procedures ("ADR") under the
Governmental Dispute Resolution Act, Chapter 2009, Texas Government Code,
to assist in resolving disputes under the Department's jurisdiction. As described
in Chapter 154, Civil Practices and Remedies Code, ADR procedures include
mediation. Except as prohibited by the Department's ex parte communications
policy, the Department encourages informal communications between Department
staff and applicants, and other interested persons, to exchange information
and informally resolve disputes. The Department also has administrative appeals
processes to fairly and expeditiously resolve disputes. If at anytime an applicant
or other person would like to engage the Department in an ADR procedure, the
person may send a proposal to the Department's Dispute Resolution Coordinator
(fax: (512) 475-3978). For additional information on the Department's ADR
Policy, see the Department's General Administrative Rule on ADR at 10 Texas
Administrative Code §1.17.
(k)
Local Permits. Prior to the closing of the Bonds, all necessary
approvals, including building permits, from local municipalities, counties,
or other jurisdictions with authority over the Development must have been
obtained or evidence that the permits are obtainable subject only to payment
of certain fees must be provided to the Department.
(l)
Closing. Once all approvals have been obtained and Bond
documents have been finalized to the respective parties' satisfaction, the
Bond transaction will close. Upon satisfaction of all conditions precedent
to closing, the Department will issue Bonds in exchange for payment therefor.
The Department will then loan the proceeds of the Bonds to the Applicant and
disbursements of the proceeds may begin.
§35.7.Regulatory and Land Use Restrictions.
(a)
Filing and Term of LURA. A Regulatory and Land Use Restriction
Agreement or other similar instrument (the "LURA"), will be filed in the property
records of the county in which the Development is located for each Development
financed from the proceeds of Bonds issued by the Department. For Developments
involving new construction, the term of the LURA will be the longer of 30
years, the period of guaranteed affordability or the period for which Bonds
are outstanding. For the financing of an existing Development, the term of
the LURA will be the longer of the longest period which is economically feasible
in accordance with the Act, or the period for which Bonds are outstanding.
(b)
Development Occupancy. The LURA will specify occupancy
restrictions for each Development based on the income of its tenants, and
will restrict the rents that may be charged for Units occupied by tenants
who satisfy the specified income requirements. Pursuant to §2306.269,
Texas Government Code, the LURA will prohibit a Development Owner from excluding
an individual or family from admission to the Development because the individual
or family participates in the housing choice voucher program under Section
8, United States Housing Act of 1937 (the "Housing Act"), and from using a
financial or minimum income standard for an individual or family participating
in the voucher program that requires the individual or family to have a monthly
income of more than two and one half (2.5) times the individual's or family's
share of the total monthly rent payable to the Development Owner of the Development.
Development occupancy requirements must be met on or prior to the date on
which Bonds are issued unless the Development is under construction. Adequate
substantiation that the occupancy requirements have been met, in the sole
discretion of the Department, must be provided prior to closing. Occupancy
requirements exclude Units for managers and maintenance personnel that are
reasonably required by the Development.
(c)
Set Asides.
(1)
Developments which are financed from the proceeds of Private
Activity Bonds or from the proceeds of Qualified 501(c)(3) Bonds must be restricted
under one of the following two set-asides:
(A)
at least twenty percent (20%) of the Units within the Development
that are available for occupancy shall be occupied or held vacant and available
for occupancy at all times by persons or families whose income does not exceed
fifty percent (50%) of the area median income, or
(B)
at least forty percent (40%) of the Units within the Development
that are available for occupancy shall be occupied or held vacant and available
for occupancy at all times by persons or families whose income does not exceed
sixty percent (60%) of the area median income.
(2)
The Development Owner must designate at the time of Application
which of the two set-asides will apply to the Development and must also designate
the selected priority for the Development in accordance with §1372.0321,
Texas Government Code. Units intended to satisfy set-aside requirements must
be distributed evenly throughout the Development, and must include a reasonably
proportionate amount of each type of Unit available in the Development.
(3)
No tenant qualifying under either of the set-asides shall
be denied continued occupancy of a Unit in the Development because, after
commencement of such occupancy, such tenant's income increases to exceed the
qualifying limit; provided, however, that, should a tenant's income, as of
the most recent determination thereof, exceed 140% of the then applicable
income limit and such tenant constitutes a portion of the set-aside requirement
of this section, then such tenant shall only continue to qualify for so long
as no Unit of comparable or smaller size is rented to a tenant that does not
qualify as a Low-Income Tenant. (These are the federal set-aside requirements)
(d)
Global Income Requirement. All of the Units that are available
for occupancy in Developments financed from the proceeds of Private Activity
Bonds or from the proceeds of Qualified 501(c)(3) Bonds shall be occupied
or held vacant (in the case of new construction) and available for occupancy
at all times by persons or families whose income does not exceed one hundred
and forty percent (140%) of the area median income for a four-person household.
(e)
Qualified 501(c)(3) Bonds. Developments which are financed
from the proceeds of Qualified 501(c)(3) Bonds are further subject to the
restriction that at least seventy-five percent (75%) of the Units within the
Development that are available for occupancy shall be occupied (or, in the
case of new construction, held vacant and available for occupancy until such
time as initial lease-up is complete) at all times by individuals and families
of Low Income (less than or equal to 80% of Area Median Family Income).
(f)
Taxable Bonds. The occupancy requirements for Developments
financed from the issuance of taxable Bonds will be negotiated, considered
and approved by the Department on a case by case basis.
(g)
Special Needs. At least five percent (5%) of the Units
within each Development must be designed to be accessible to Persons with
Special Needs and hardware and cabinetry must be stored on site or provided
to be installed on an as needed basis in such Units. The Development will
comply with accessibility requirements in the Fair Housing Act Design manual.
The Development Owner will use its best efforts (including giving preference
to Persons with Special Needs) to:
(1)
make at least five percent (5%) of the Units within the
Development available for occupancy by Persons with Special Needs;
(2)
make reasonable accommodations for such persons; and
(3)
allow reasonable modifications at the tenant's sole expense
pursuant to the Housing Act. During the term of the LURA, the Development
Owner shall maintain written policies regarding the Development Owner's outreach
and marketing program to Persons with Special Needs.
(h)
Fair Housing. All Developments financed by the Department
must comply with the Fair Housing Act which prohibits discrimination in the
sale, rental, and financing of dwellings based on race, color, religion, sex,
national origin, familial status, and disability. The Fair Housing Act also
mandates specific design and construction requirements for multifamily housing
built for first occupancy after March 13, 1991, in order to provide accessible
housing for individuals with disabilities.
(i)
Tenant Services. The LURA will require that the Development
Owner offer a variety of services for residents of the Development through
a Tenant Services Program Plan which is subject to annual approval by the
Department.
(j)
The LURA will require the Development Owner:
(1)
To obtain, complete, and maintain on file Tenant Income
Certifications from each Eligible Tenant, including:
(A)
a Tenant Income Certification dated immediately prior to
the initial occupancy of each new Eligible Tenant in the Development; and
(B)
thereafter, annual Tenant Income Certifications which must
be obtained on or before the anniversary of such Eligible Tenant's occupancy
of the Unit, and in no event less than once in every 12-month period following
each Eligible Tenant's occupancy of a Unit in the Development. For administrative
convenience, the Development Owner may establish the first date that a Tenant
Income Certification for the Development is received as the annual recertification
date for all tenants. The Development Owner will obtain such additional information
as may be required in the future by §142(d) of the Code, as the same
may be amended from time to time, or in such other form and manner as may
be required by applicable rules, rulings, policies, procedures, Regulations
or other official statements now or hereafter promulgated, proposed or made
by the Department of the Treasury or the Internal Revenue Service with respect
to obligations which are tax-exempt private activity bonds described in §142(d)
of the Code. The Development Owner shall make a diligent and good-faith effort
to determine that the income information provided by an applicant in a Tenant
Income Certification is accurate by taking steps required under §142(d)
of the Code pursuant to provisions of the Housing Act.
(C)
The Development shall comply with Title 10, Part 1, Chapter
60, Subchapter A.
(2)
As part of the verification, such steps may include the
following, provided such action meets the requirements of §142(d) of
the Code and the gross income of individuals shall be determined in a manner
consistent with the determinations of low income families under section 8
of the United States Housing Act of 1937:
(A)
obtain pay stubs sufficient to annualize income;
(B)
obtain third party written verification of income;
(C)
obtain an income verification from the applicant's current
employer;
(D)
obtain an income verification from the Social Security
Administration; or
(E)
if the applicant is self-employed, unemployed, does not
have income tax returns or is otherwise not reasonably able to provide other
forms of verification as required above, obtain another form of independent
verification as would, in the Development Owner's reasonable commercial judgment,
enable the Development Owner to determine the accuracy of the applicant's
income information. The Development Owner shall retain all Tenant Income Certifications
obtained in compliance with subsection (b) of this section until the date
that is six years after the last Bond is retired.
(3)
To obtain from each tenant in the Development, at the time
of execution of the lease pertaining to the Unit occupied by such tenant,
a written certification, acknowledgment, and acceptance in such form as provided
by the Department to the Development Owner from time to time that:
(A)
such lease is subordinate to the Mortgage and the LURA;
(B)
all statements made in the Tenant Income Certification
submitted by such tenant are accurate;
(C)
the family income and eligibility requirements of the LURA
and the Loan Agreement are substantial and material obligations of tenancy
in the Development;
(D)
such tenant will comply promptly with all requests for
information with respect to such requirements from the Development Owner,
the Trustee and the Department; and
(E)
failure to provide accurate information in the Tenant Income
Certification or refusal to comply with a request for information with respect
thereto will constitute a violation of a substantial obligation of the tenancy
of such tenant in the Development;
(4)
To maintain complete and accurate records pertaining to
the Low-Income Units and to permit, at all reasonable times during normal
business hours and upon reasonable notice, any duly authorized representative
of the Department, the Trustee, the Department of the Treasury or the Internal
Revenue Service to enter upon the Development Site to examine and inspect
the Development and to inspect the books and records of the Development Owner
pertaining to the Development, including those records pertaining to the occupancy
of the Low-Income Units;
(5)
On or before each February 15 during the qualified development
period, to submit to the Department (to the attention of the Portfolio Management
and Compliance Division) a draft of the completed Internal Revenue Service
Form 8703 or such other annual certification required by the Code to be submitted
to the Secretary of the Treasury as to whether the Development continues to
meet the requirements of §142(d) of the Code and on or before each March
31 during the qualified development period, to submit such completed form
to the Secretary of the Treasury and the Department;
(6)
To prepare and submit the compliance monitoring report.
To cause to be prepared and submitted to the Department and the Trustee on
the first day of the state restrictive period, and thereafter by the tenth
calendar day of each March, June, September, and December, or other quarterly
schedule as determined by the Department with written notice to the Development
Owner, a certified compliance monitoring report and Development Owner's certification
in such form as provided by the Departments to the Development Owner from
time to time; and
(7)
To provide regular maintenance to keep the Development
sanitary, decent, and safe.
(8)
To establish a reserve account consistent with the requirements
of §2306.186, Texas Government Code.
(9)
To prepare and submit the Housing Sponsor Report to the
Department no later than March 1st of each year.
§35.8.Fees.
(a)
Application and Issuance Fees. The Department shall set
fees to be paid by the Applicant in order to cover the costs of pre-application
review, Application and Development review, the Department's expenses in connection
with providing financing for a Development, and as required by law. (§1372.006(a),
Texas Government Code)
(b)
Administration and Portfolio Management and Compliance
Fees. The Department shall set ongoing fees to be paid by Development Owners
to cover the Department's costs of administering the Bonds and portfolio management
and compliance with the program requirements applicable to each Development.
§35.9.Waiver of Rules.
Provided all requirements of the Act, the Code, and any other applicable
law are met, the Board may waive any one or more of the Rules set forth in §§35.3
- 35.8 of this title relating to the Multifamily Housing Revenue Bond Program
in order to further the purposes and the policies of Chapter 2306, Texas Government
Code; to encourage the acquisition, construction, reconstruction, or rehabilitation
of a Development that would provide decent, safe, and sanitary housing, including,
but not limited to, providing such housing in economically depressed or blighted
areas, or providing housing designed and equipped for Persons with Special
Needs; or for other good cause, as determined by the Board.
§35.10.No Discrimination.
The Department and its staff or agents, Applicants, Development Owners,
and any participants in the Program shall not discriminate under this Program
against any person or family on the basis of race, creed, national origin,
age, religion, handicap, family status, or sex, or against persons or families
on the basis of their having minor children, except that nothing herein shall
be deemed to preclude a Development Owner from selecting tenants with Special
Needs, or to preclude a Development Owner from selecting tenants based on
income in renting Units to comply with the set asides under the provisions
of this Chapter.
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 May 17, 2004.
TRD-200403313
Edwina P. Carrington
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: June 27, 2004
For further information, please call: (512) 475-4595
Chapter 255.
TEXAS COMMUNITY DEVELOPMENT PROGRAM
Subchapter A. ALLOCATION OF PROGRAM FUNDS
Chapter 35.
MULTIFAMILY HOUSING REVENUE BOND RULES
Part 6.
OFFICE OF RURAL COMMUNITY AFFAIRS