TITLE 10.COMMUNITY DEVELOPMENT

Part 5. OFFICE OF THE GOVERNOR, ECONOMIC DEVELOPMENT AND TOURISM DIVISION

Chapter 176. ENTERPRISE ZONE PROGRAM

10 TAC §§176.1 - 176.10

(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the Office of the Governor, Economic Development and Tourism Division or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Office of the Governor, Economic Development and Tourism Division (Office), formerly the Texas Department of Economic Development, proposes the repeal of Chapter 176, §§176.1 - 176.10, setting forth rules of the Enterprise Zone Program.

The repeal of the rules is proposed because Senate Bill 275 of the 78th Legislature made substantive changes to the Program which require substantial changes be made to the existing rules. New rules will be adopted and are proposed in this issue of the Texas Register . New rules are needed because the statutory changes to the Enterprise Zone Program require substantial changes be made to the existing rules.

Tracye McDaniel, Executive Director of the Office, has determined that for the first five-year period that the repeal is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the repeal.

Ms. McDaniel has also determined that each year of the first five years that the repeal is in effect, the public will benefit from a better understanding of the management of the Program. There will be no effect on small business. There is no anticipated economic cost to persons and no private property rights are affected by the repeal.

Comments on the proposed repeal may be submitted within 30 days of the publication of this notice to Katherine Knight, Assistant General Counsel, 1100 San Jacinto, 4th Floor, or P.O. Box 12428, Austin, Texas 78711-2428. Comments may be faxed to Ms. Knight at (512) 463-1932 or e-mailed to kknight@governor.state.tx.us within 30 days.

The repeal is proposed under Texas Government Code, §2303.051(c), which authorizes the executive director of the Office to adopt rules necessary for the Program, and the Texas Government Code, Chapter 2001, Subchapter B, which prescribes the process for rulemaking by state agencies. Texas Government Code, Chapter 481, creating the Office, Texas Government Code, Chapter 489, creating the Economic Development Bank within the Office, and Texas Government Code, Chapter 2303, the Texas Enterprise Zone Act, are affected by the proposed repeal.

§176.1.General Provisions.

§176.2.Filing Requirements for Applications and Claims.

§176.3.Eligibility Requirements for Designation of an Enterprise Zone.

§176.4.Application Contents for Designation of Enterprise Zones.

§176.5.Requirements for Designation of Enterprise Projects.

§176.6.Application Contents for Designation of an Enterprise Project.

§176.7.Certification of Neighborhood Enterprise Associations.

§176.8.Approval Standards.

§176.9.Reporting Requirements.

§176.10.Boundary Amendments.

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 March 24, 2006.

TRD-200601802

Robin Abbott

Assistant General Counsel

Office of the Governor, Economic Development and Tourism Division

Earliest possible date of adoption: May 7, 2006

For further information, please call: (512) 936-0501


10 TAC §§176.1 - 176.5

The Office of the Governor, Economic Development and Tourism Division (Office), formerly the Texas Department of Economic Development, proposes new Chapter 176, §§176.1 - 176.5, setting forth rules of the Office of the Governor, Economic Development and Tourism Division Enterprise Zone Program.

The new rules are proposed because Senate Bill 275 of the 78th Legislature made substantive changes to the Program which require substantial changes be made to the existing rules. The new rules will replace previous rules proposed for repeal in this issue of the Texas Register . New rules are needed because the statutory changes to the Enterprise Zone Program require substantial changes be made to the existing rules.

Proposed §176.1 sets forth the purpose and definitions for the chapter.

Proposed §176.2 sets forth procedures for local government participation in the Program.

Proposed §176.3 sets forth requirements for designation as an Enterprise Project and the number of eligible project designations available for municipalities based on population.

Proposed §176.4 sets forth required elements for Enterprise Project designation applications and authorizes the Bank to approve requests for concurrent project designations, name changes and assignment or assumption of enterprise projects.

Proposed §176.5 sets forth the monitoring and reporting requirements for program participants.

Tracye McDaniel, Executive Director of the Office, has determined that for the first five-year period that the proposed rules are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the new rules.

Ms. McDaniel has also determined that each year of the first five years that the rules are in effect, the public will benefit from a better understanding of the management of the Office and the Program. There will be no effect on small business. There is no anticipated economic cost to persons other than an application fee for entities that choose to participate in the Program and no private property rights are affected by the new rules.

Comments on the proposed rules may be submitted within 30 days of the publication of this notice to Katherine Knight, Assistant General Counsel, 1100 San Jacinto, 4th Floor, or P.O. Box 12428, Austin, Texas 78711-2428. Comments may be faxed to Ms. Knight at (512) 463-1932 or e-mailed to kknight@governor.state.tx.us within 30 days.

The new rules are proposed under the Texas Government Code, §2303.051(c), which authorizes the executive director of the Office to adopt rules necessary for the Program, and the Texas Government Code, Chapter 2001, Subchapter B, which prescribes the process for rulemaking by state agencies. Texas Government Code, Chapter 481, creating the Office, Texas Government Code, Chapter 489, creating the Economic Development Bank within the Office, and Texas Government Code, Chapter 2303 are affected by the proposed rules.

§176.1.General Provisions.

(a) Purpose. It is the purpose of the Texas Enterprise Zone Act to establish a process that clearly identifies distressed areas and provides incentives by both local and state government to induce private investment in those areas by the provision of tax incentives and economic development program benefits for the creation and retention of high quality jobs. Under this program economic development is encouraged by allowing enterprise projects to be designated outside of an enterprise zone, with a higher threshold of hiring economically disadvantaged or enterprise zone residents. The purpose of these sections is to provide standards of eligibility and procedures for designation of applications for qualified businesses as enterprise projects.

(b) Definition of terms. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Act--The Texas Enterprise Zone Act, Chapter 2303, Texas Government Code, as amended.

(2) Active designation--The period of time from the designation date to the ending date of the project or activity as provided in the nominating ordinance, order or resolution.

(3) Applicant--The municipality or county filing an application with the Bank on behalf of a qualified business for designation of an enterprise project under the Act, §2303.405, and this chapter.

(4) Application date--The first business day of the months of September, December, March and June, if there are designations available.

(5) Approval date--The application date of an enterprise project as approved by the Bank.

(6) Capital investment--Money paid to purchase capital assets or fixed assets including but not limited to land, buildings, labor used to construct or renovate a capital asset, furniture, manufacturing machinery, computers and software, or other machinery and equipment. Property that is leased under a capitalized lease is considered a qualified capital investment but property that is leased under an operating lease is not considered a qualified capital investment.

(7) Claim period--A twelve-month period, during the active designation period, for which hours are accumulated by qualified employees to be claimed for benefit.

(8) Concurrent designation--Two or more enterprise project designations for the same qualified business in the same enterprise zone for separate projects or activities, with overlapping designation periods.

(9) Controlled group--A group of businesses as defined in Title 26, Subtitle A, Subchapter B, Part II, Section 1563(a), Internal Revenue Code, or business entities with the same ownership.

(10) Director--The Director of the Texas Economic Development Bank.

(11) Distressed county--A county that has a poverty rate above 15.4 percent based on the most recent decennial census; in which at least 25.4 percent of the adult population does not hold a high school diploma or high school equivalency certificate based on the most recent decennial census; and that has an unemployment rate that has remained above 4.9 percent during the preceding five years, based on Texas Workforce Commission data.

(12) Economic Development and Tourism--Economic Development and Tourism Office in the Governor's Office (Office) as established under Chapter 481, Texas Government Code.

(13) Eligible taxable proceeds--Taxable proceeds generated, paid, or collected by a qualified hotel project or a business at a qualified hotel project including hotel occupancy taxes, ad valorem taxes, sales and used taxes, and mixed beverage taxes.

(14) Enterprise project--A designation given to a qualified business by the Bank under the Act, §2303.406, and §176.3 of this title (relating to Qualification for Designation of Enterprise Projects) making the qualified business eligible for the state tax incentives provided by law for an enterprise project.

(15) Executive Director--The Executive Director of the Office.

(16) Extraterritorial jurisdiction--Territory in the extraterritorial jurisdiction (ETJ) of a municipality that is considered to be in the jurisdiction of the municipality, as defined by Chapter 42, Local Government Code.

(17) Governing body--The governing body of a municipality or county participating in the program.

(18) Governing body liaison--The person who holds the position set out in the ordinance or order indicating participation in the program, for the municipality or county to communicate and negotiate with the Bank or Office, qualified businesses nominated to be enterprise projects and any other entities affected by the enterprise zone.

(19) Local government--A municipality or county.

(20) Local incentive--Each tax incentive, grant, other financial incentive or benefit, or program to be provided by the governing body to business enterprises through the program.

(21) Ninety-day window--The period 90 days prior to the quarterly application deadline date for which an enterprise project is approved. The period of time in which the project may begin making investment and creating jobs for purposes related to the enterprise project designation.

(22) Nominating body--The governing body of a municipality or county that nominated a project or activity of a qualified business for designation as an enterprise project which is located within the jurisdiction of that governing body.

(23) Primary job--A job to be created or retained for benefit by a designated enterprise project, as defined by the Development Corporation Act of 1979.

(24) Qualified property--Any one or more of the following:

(A) tangible personal property located at the qualified business site that was acquired by a taxpayer not earlier than the 90th day before the date of designation as an enterprise project and was or will be used predominantly by the taxpayer in the active conduct of a trade or business;

(B) real property located at a qualified business site that:

(i) was acquired by the taxpayer not earlier than the 90th day before the date of designation of the enterprise project, and used predominantly by the taxpayer in the active conduct of a trade or business; or

(ii) was the principal residence of the taxpayer on the date of the sale or exchange; or

(C) interest in a corporation, partnership, or other entity if, for the most recent taxable year of the entity ending before the date of sale or exchange, the entity was a qualified business.

(25) Staff--The staff of the Texas Economic Development Bank.

(c) Amendment and suspension of the rules. These sections may be amended by the executive director at any time in accordance with the Administrative Procedure Act, Texas Government Code, Subchapter B, as amended. The executive director may suspend or waive a section, not statutorily imposed, in whole or in part, upon the showing of good cause or when, at the discretion of the executive director, the particular facts or circumstances render such waiver of the section appropriate in a given instance.

(d) Written communication with the office. Application and other written communication to the office should be addressed to the attention of the Office of the Governor, Economic Development and Tourism, Texas Economic Development Bank, Attn: Texas Enterprise Zone Program, Post Office Box 12428, Austin, Texas 78711-2428, or by overnight mail to Office of the Governor, Economic Development and Tourism, Texas Economic Development Bank, Attn: Texas Enterprise Zone Program, 1100 San Jacinto Street, Austin, Texas 78701, (512) 936-0100.

§176.2.Participation in the Program.

Participation. A local government wishing to participate in the program must submit to the Bank the following:

(1) A copy of all public hearing notices with regard to all public hearings held in conjunction with the nomination of the proposed enterprise project. Three notices must occur at least seven days prior to each public hearing. Required elements for the postings are the date, time and location of the public hearing, the name and address of the proposed project, the designation being sough and notice that tax incentives will be considered, if applicable. The three notices are in the form of a:

(A) public posting at city hall or county courthouse, as applicable;

(B) notice in a newspaper of general circulation for the area; and

(C) written notice to the Bank.

(2) A certified copy of the ordinance or order, as appropriate, with original signatures that:

(A) states that the governing body is in full compliance with Chapter 2303, Texas Government Code prior to nomination of an eligible business;

(B) lists which enterprise zone block groups, if any, are also reinvestment zones;

(C) outlines the local incentives that are offered in the enterprise zone area or areas within its jurisdiction, with at least one incentive being exclusive to the enterprise zone areas;

(D) outlines additional local incentives that are offered in the governing body's jurisdiction;

(E) identifies, by position, a liaison to oversee, communicate and negotiate with the bank, qualified businesses nominated to be enterprise projects, and any other entities effected by the enterprise zone;

(F) states the date a public hearing was conducted with respect to local incentives offered, prior to passing the ordinance or order;

(G) nominates the qualified business for enterprise project designation;

(H) state the type of project requested, i.e. single, double jumbo or triple jumbo enterprise project;

(I) states whether or not the qualified business is located in an enterprise zone, empowerment zone, enterprise community or renewal community; and

(J) is finally adopted no later than the day of the deadline for which the project will be submitted.

(3) A transcript or, in the absence of a transcript, minutes of all public hearings held with respect to local incentives available to business enterprises within the jurisdiction of the governmental entity wishing to participate in the program.

(4) The name, title, address, telephone number, and electronic mail address of the nominating body's liaison.

(5) Provide a summary of the economic objectives to revitalize the jurisdiction, as well as a description of the efforts made to develop and revitalize the jurisdiction of the governing body.

§176.3.Qualification for Designation of Enterprise Projects.

(a) The Bank may not designate a nominated qualified business as an enterprise project unless it determines that:

(1) the business meets the requirements set forth in the Act, §2303.402, and this chapter;

(2) the qualified business is located in, or has made substantial commitment to locate in an enterprise zone or at a qualified business site;

(3) the applicant's governing body has not reached the maximum number of designation allowed during the biennium;

(4) the applicant's governing body has demonstrated that a high level of cooperation exists between public and private entities;

(5) the designation of the qualified business as an enterprise project will contribute significantly to the achievement of the plans of the applicant for development and revitalization of the area; and

(6) the designation of the qualified business as an enterprise project will further the public purposes of the Act and significantly benefit the goals of the program which include, but are not limited to, high impact projects or activities, targeted industry clusters and creation of primary jobs.

(b) For job creation, a qualified business must be seeking to create new jobs, or for an existing business seeking to expand and increase their current level of employment in Texas. The program, however, does not allow benefit for moving existing jobs from one municipality or county in Texas to another within the state.

(c) For job retention, a qualified business must submit to the governing body a written request for the retained job benefit with documentation verifying which criteria is applicable. The governing body must authenticate the documentation. A copy of the request from the qualified business requesting the retained jobs benefit to the governing body, as well as the backup documentation, must be attached to the application under the applicable Tab. The governing body liaison must verify that the documentation meets at least one requirement for the retained jobs benefit on the application form. In any case, for job retention, the qualified business must maintain the same level of employment that existed 90 days prior to the date of designation. Documentation that the level of employment has been maintained must be submitted with the job certification application to the Comptroller of Public Accounts. Any of the retained jobs that are subsequently vacated must meet the 25% or 35% economically disadvantaged or enterprise zone resident hiring requirement, as applicable, when the vacant position is filled. The retained job benefit may not be used to receive benefit for moving existing jobs from one municipality or county in Texas to another within the state.

(d) Municipalities or counties with a population of 250,000 or more, based on the most recent decennial census, are eligible for up to six enterprise project designations during a state biennium based upon availability.

(e) Municipalities or counties with a population of less than 250,000, based on the most recent decennial census, are eligible for up to four enterprise project designations during a state biennium based upon availability. Once a municipality or county of less then 250,000 based on the most recent decennial census has received four enterprise project designations during a state biennium, the nominating body may submit up to two bonus enterprise project nominations, if there are designations available. Bonus projects will be awarded after all other projects received during the round have been determined for designation, and will be allocated to high-impact projects creating new jobs. The bonus project application must include a local economic impact summary, and describe the impact on the nominating body in terms of local economic objectives, as well as the local Return on Investment outlined in terms of a cost benefit analysis.

(f) The Bank may, at its election, withhold up to six enterprise project designations during a round to be disseminated at a later round during the same biennium.

§176.4.Application for Designation of Enterprise Projects.

(a) An application must be filed in the format provided (letter size) and must contain all information and documentation required under the Act and this chapter, as applicable. Each application for enterprise project designation must be typed directly on the form provided by the Bank.

(b) The application must be submitted hole-punched in a three-ring loose-leaf binder with the application form located behind Tab 1, and must include all applicable attachments hole-punched and placed behind the appropriate Tab sections as specified in the application. An application that is submitted with four or more material deficiencies will be declined as incomplete. Material deficiencies are items such as the governing body application certification with an original signature, the qualified business application certification with original signatures, or any other required tabbed item.

(c) The applicant shall file with the Bank one original application for designation as an enterprise project. All application for enterprise project designation must be received by the Office no earlier than one week before, and no later than 5:00 p.m. Central Standard Time, on the first business day of the following months: September, December, March and June. Further, all application must be accompanied by a $500 non-refundable application fee in the form of a certified check or money order made payable to the Texas Economic Development Bank. The application is not considered to be received unless it is received at the physical location of the Office and accompanied by the non-refundable application fee. Applications received after a deadline will be returned to the applicant, and must be resubmitted to the Bank in the prescribed timeframe to be considered for designation during the next application deadline.

(d) Applications received during a quarterly round will be reviewed and scored by the Bank in accordance with the Act, this chapter and the goals of the program.

(e) The application for designation of an enterprise project must contain the following information and documentation, as applicable:

(1) The participants. The application must contain the name, street address, mailing address, telephone number, fax number and electronic mail address for each of the following involved in the designation of a qualified business as an enterprise project:

(A) the applicant governing body and the applicant governing body's liaison; and

(B) the qualified business, the primary business's representative and the local business liaison. The local business liaison must be located at the qualified business site.

(2) The applicant. The application must contain the following information and documentation concerning the applicant:

(A) a statement signed by the governing body liaison certifying that the contents of the application are true and correct to the best information and belief of the liaison, and that he or she has read the Act and this chapter and is familiar with the provisions thereof;

(B) a certified copy of the nominating ordinance or order under §176.2(1) of this title (relating to Participation in the Program), or if an ordinance or order has already been passed nominating a project for designation, a certified copy of a resolution from the applicant governing body nominating the qualified business for designation as an enterprise project and containing:

(i) nomination of the project or activity as an enterprise project;

(ii) a statement as to whether the project or activity is located in an area designated as an enterprise zone, and, if applicable, that the enterprise zone is also a federal empowerment zone, federal enterprise community, or renewal community;

(iii) reference by number to the nominating ordinance or order indicating participation in the program, with a statement that the local incentives described in the previously issued ordinance or order electing to participate in the enterprise zone program are the same as those made available to the project or activity;

(iv) the active designation period of the project; and

(v) if the project or activity is nominated as a double jumbo enterprise project or a triple jumbo enterprise project, a statement that the designation will count as two or three designations, respectively, against the total number of designations allowed, as applicable.

(C) the block group of the primary business address of the qualified business site, verifiable by the local appraisal district, or an enterprise zone approved prior to September 1, 2003, currently still in effect, if applicable, or the federally-designated zone, if applicable;

(D) the poverty rate for the block group of the primary business address of the qualified business site, the poverty rate of the distressed county in which the qualified business site is located or the poverty rate of the enterprise zone approved prior to September 1, 2003, currently still in effect, as applicable;

(E) an official census map, which clearly identifies the location of the proposed project and the census area where it is located, or a map of the enterprise zone approved prior to September 1, 2003, currently still in effect, which clearly identifies the location of the proposed project, as applicable;

(F) a description of the municipality's or county's procedures and efforts to facilitate and encourage participation by and negotiation between all affected entities in the jurisdiction in which the qualified business is located including a description of the business activity that has occurred in the area within the last year. This description must demonstrate the cooperation among the public and private sectors;

(G) a description of the local effort made by the municipality or county and other affected entities to achieve development and revitalization of the area as described in the Act, §2303.405(c). This includes a brief historical description of the trade and business conducted in the area.

(3) The project. The application must contain the following information and documentation concerning the proposed project:

(A) a statement signed by the primary business representative and the local business liaison certifying that the contents of the application are true and correct to their best information and belief, and that they have read the Act and this chapter and are familiar with the provisions thereof;

(B) a description and introduction of the business applying for the project designation, which includes:

(i) a copy of the articles of incorporation, or the dba statement under which the business operates, filed with the Secretary of State of the State of Texas. The name under which the business is applying for designation must be the same as the business paying state taxes and creating and/or retaining jobs to obtain program benefits;

(ii) the principal owners and history of the business;

(iii) a resolution for corporations or a certificate of authority that provides signatory authority to a person or persons to submit the enterprise project application and sign any contracts or forms on behalf of the business for the enterprise project;

(iv) the number of business locations, total sales, and number of employees in the State of Texas, the United States, and outside the United States;

(v) the federal tax identification number, and/or the Texas Comptroller tax identification number, as applicable, for all participating entities of a controlled group;

(vi) a description of the business' products and services, including NAICS code;

(vii) a description of the business' export history, if applicable; and

(viii) an organizational chart that indicates the business structure, as well as the role of each entity participating in the project;

(C) the plans of the business for expansion, revitalization, and other activity at the qualified business site for the designation period of the project including:

(i) a description of the project location and intended use;

(ii) a summary of short and long-term plans for expansion at the qualified business site;

(iii) the amount of capital investment to be made at the qualified business site during the designation period;

(iv) the status of any required local, state or federal permits or licenses that must be obtained to enable the project to be initiated and completed as represented in the enterprise project application;

(v) a tabular summary of the current number of full-time, part-time and seasonal jobs which includes the titles and/or Standard Occupational Classification by six-digit code and salary ranges of jobs to be maintained at the qualified business site. Full-time positions will be used for baseline information;

(vi) a tabular summary of the number of new jobs, the titles and/or Standard Occupational Classification by six-digit code and salary ranges of full-time jobs to be created;

(vii) a tabular summary of the number of new jobs, the titles and/or Standard Occupational Classification by six-digit code and salary ranges of full-time jobs to be retained, if applying for retained job benefit; and

(viii) the total projected annual payroll for the jobs that are being considered for benefit;

(D) commitments from the business that include:

(i) a completed form provided by the Bank, certifying the business as a qualified business;

(ii) a statement from a franchise or subsidiary, if applicable, stating that the business will maintain separate payroll and tax records of the business activity conducted at the qualified business site;

(iii) the percentage of new or additional employees hired to occupy the jobs being claimed for benefit that are residents of any enterprise zone in the state, or that are economically disadvantaged; and

(iv) a description of the efforts of the business to develop and revitalize the area as described in the Act, §2303.405(e);

(f) Multiple concurrent enterprise project designations. A qualified business that currently has an enterprise project designation may apply for an additional enterprise project designation in the same enterprise zone. To receive the additional enterprise project designation the governing body must complete an enterprise project application with all of the required nominations and attachments. Additionally, the application must include a breakdown of capital investment and new and/or retained jobs for each designation, clearly delineating what capital investment and jobs will apply to which designation, with timelines for all.

(g) Name change. If the name of a qualified business that has received an enterprise project designation has changed, the Bank may approve the name change for the enterprise project designation. The designated enterprise project must apply for a name change to the Bank no later than 18 months after the enterprise project designation expires, or the business will not be eligible for program benefits. The name change of a project designation by a qualified business does not extend the original designation period, which is applicable to the original and subsequent designee, and which will end on the last day of the original designation period. The receive Bank approval for a name change, the qualified business must submit through the applicant governing body:

(1) a completed Name Change Application, along with a non-refundable cashiers check or money order made payable to Texas Economic Development Bank, for a processing fee in the amount of $500; and

(2) a written explanation by the designee of the reasons for the name change, the date the name change occurred and any changes to the commitments made by the business in the original enterprise project application, if applicable; and

(3) written acknowledgment from the applicant governing body that it is aware of the name change for the project as a qualified business operating at the qualified business site within its jurisdiction.

(h) Assignment or Assumption. The Bank may approve the assignment or assumption of a state-designated enterprise project that has transferred through a sale to another entity that will commit to continue operations at the qualified business site in the way originally committed within the initial enterprise project application, or which otherwise demonstrates to the satisfaction of the Bank that the assignment or assumption is warranted to avoid disruption of operations and loss of jobs. The transfer of a project designation by a qualified business does not extend the original designation period, which is applicable to the original and subsequent designee and which will end on the last day of the original designation period. The designated enterprise project must apply to the Bank, through the appropriate governing body, for designation assignment or assumption no later than 18 months after the enterprise project designation expires, or the business will not be eligible for program benefits. The following must be submitted through the applicant governing body to the Bank:

(1) official action by the governing body in the form of a resolution approving the transfer of the enterprise designation to the purchaser;

(2) a completed Enterprise Project Assignment Application, along with a non-refundable cashiers check or money order made payable to Texas Economic Development Bank for a processing fee in the amount of $500; and

(3) a written relinquishment from the designated project's qualified business to the governing body and Bank to release all claim to the project designation and any benefits represented thereunder and agreeing to the assignment of the designation as of a specific date by the purchaser seeking to assume the designation; and

(4) a written certification from the purchaser on a form to be provided by the Bank that the purchaser will be a qualified business under the Act, §2303.402; and

(5) a letter of commitment from the purchaser addressed to the governing body and the Bank in the same format as the letter of commitment filed in the original application for project designation by the initial qualified business. The letter should outline any modifications proposed by the purchaser to the original commitments made by the qualified business holding the project designation, including capital investment and jobs to be created or retained, as applicable, and a statement as to why the assignment is essential to their operations at the qualified business site; and

(6) a Comptroller of Public Accounts tax identification number and federal tax identification number for the purchaser; and

(7) a copy of the purchasers' articles of incorporation filed with the State of Texas Secretary of State, or the dba statement under which the business operates.

(i) A qualified business may be designated as an enterprise project for no less than one year and no longer than five years. The designation of a qualified business as an enterprise project shall remain in effect during the period beginning on the date of the designation and ending on the earliest of:

(1) the date requested in the application for designation as an enterprise project as indicated in the nominating ordinance, order or resolution, as applicable; or

(2) five years after the date the designation is made; or

(3) the last day that completes the original project designation period of a qualified business that has assumed the designation of the enterprise project designation through or purchase of a designated qualified business for the purpose of continuing its operations at the applicable qualified business; or

(4) the date the Bank notifies the qualified business and the governing body that the qualified business is not in compliance with any requirement for designation as an enterprise project.

§176.5.Monitoring and Reporting Requirements.

(a) Annual reports and certifications.

(1) Governing Body Annual Report. Each municipality or county that participates in the program must submit an annual report to the Bank on or before October 1 of each year. The report must be in a form prescribed by the Bank and contain the information listed in the Act, §2303.205(c). If this report is not received by October 1, the Bank may not designate any additional enterprise projects in the governing body's jurisdiction until such report is received.

(2) Comptroller Annual Report. No later than October 1 of each year, the Comptroller shall report to the Bank the statewide total of actual jobs created, actual jobs retained and the tax refunds and credits made under this section during the previous fiscal year as required by the Act.

(3) Qualified Business Certification. An enterprise project approved prior to September 1, 2003, must be annually certified by the Bank as a qualified business to receive its state sales and use tax refunds.

(4) Program Annual Report. The information in the governing body annual report, as well as the Comptroller annual report will be used by the Bank to compile an annual report on the program to the governor, legislature and the Legislative Budget Board by January 1 as required by the Act.

(b) Other reports or documents.

(1) Governing Body Designated Project Status Report. The nominating body shall submit a report to the Bank and Comptroller, conducted either at the time a certificate of occupancy is issued, or at the completion of the enterprise project designation period monitoring the qualified business to determine whether the business or project has followed through on any commitments or goals made in the application for enterprise project designation. This information may also be provided through the Governing Body Annual Report.

(2) Qualified Business Benefit Request Status Report. At the time of submittal of a request for a state tax benefit, the qualified business must provide a certified report to the Bank of the actual amount of capital investment, as well as the actual number of new and/or retained jobs by category and title.

(3) Additional Information as requested. The applicant shall furnish additional information, reports or statements as the Bank from time to time may request in connection with the Act and this chapter.

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 March 24, 2006.

TRD-200601803

Robin Abbott

Assistant General Counsel

Office of the Governor, Economic Development and Tourism Division

Earliest possible date of adoption: May 7, 2006

For further information, please call: (512) 936-0501


Part 7. TEXAS RESIDENTIAL CONSTRUCTION COMMISSION

Chapter 303. REGISTRATION

Subchapter A. REGISTRATION OF BUILDERS

10 TAC §§303.1, 303.5, 303.7, 303.9, 303.13, 303.15, 303.17, 303.19

The Texas Residential Construction Commission (the "commission") proposes amendments to §§303.1, 303.5, 303.7, 303.9, 303.13, 303.15, 303.17, and 303.19, relating to the registration of builders in the State of Texas as provided for in Title 16, Property Code. The amendments are proposed to clarify procedures and intent and to add additional requirements for registration to the current rules.

Susan K. Durso, General Counsel, has determined that for each year of the first five-year period the proposed amendments are in effect there will be no fiscal implications for state or local governments as a result of enforcing or administering the proposed amendments.

Ms. Durso has also determined that for each year of the first five-year period the proposed amendments are in effect the public will benefit from the clarification of the procedures and great scrutiny of registered builders.

Ms. Durso has also determined that for each year of the first five-year period the proposed amendments are in effect there will be no significant effect on individuals or large, small and micro-businesses because of the adoption of the proposed amendments.

Ms. Durso has also determined that for each year of the first five-year period the proposed amendments are in effect there should be no effect on a local economy; therefore, no local employment impact statement is required under Administrative Procedure Act §2001.022.

Interested persons may submit written comments (12 copies) on the proposed amendments to Susan K. Durso, General Counsel, Texas Residential Construction Commission, P.O. Box 13144, Austin, Texas 78711. The deadline for submission of comments is thirty (30) days from the date of publication of the proposed sections in the Texas Register . Comments received after that date will not be considered. Comments should be organized in a manner consistent with the organization of the proposed amendment. Comments may be submitted electronically to comments@trcc.state.tx.us. For comments submitted electronically, please include "Registration of Builders" in the subject line. Comments submitted electronically to another electronic address or that do not include "Registration of Builders" in the subject line may not be considered.

The amendments are proposed pursuant to Chapter 416, Property Code, which provides for the registration of builders and, generally, pursuant to Property Code §408.001, which provides authority for the commission to adopt rules necessary for the implementation of Title 16, Property Code.

The statutory provisions affected by these proposed amendments are those set forth in Property Code, Chapters 408 and 416.

No other statutes, articles, or codes are affected by the proposed amendments.

§303.1. Registration Process.

(a) All persons must register with the commission by submitting a Builder/Remodeler Registration Form [ , using a commission-prescribed form ], in order to conduct business as a builder in the state of Texas. A person must submit a completed [ application for ] registration form and filing fee for issuance of a certificate of registration in the name of each entity under which the applicant intends to operate as a builder in this state. The commission shall issue a certificate of registration to an applicant who meets the eligibility requirements for builder registration within fifteen (15) days of receipt of the completed registration [ application form ] and required fee.

(b) A person who submits a registration form as a new builder must also submit a Builder/Remodeler Affidavit form attesting to whether or not that the person has operated as a builder in the State of Texas since March 31, 2004.

(c) If a person submits a registration form as a new builder and has operated as a builder after March 31, 2004 without proper registration the commission may undertake one or more of the following actions as it determines is appropriate:

(1) require the payment of a late fee in addition to the registration fee;

(2) undertake a disciplinary action and impose an administrative penalty;

(3) deny the application; or

(4) refer the matter to the Office of the Attorney General.

(d) If an incomplete application is submitted, the commission will provide the applicant an opportunity to submit complete information. Failure to submit a completed application within fifteen (15) days of the date of notice of a deficiency in the application will result in the administrative withdrawal of the application.

§303.5.[ Application for ] Registration.

(a) A builder must identify on the application the type of business form under which the applicant operates and any assumed names or names under which it is doing business (dba). If the builder has registered any assumed names with the Secretary of State's office, the builder must also submit a copy of the Certificate of Assumed Business Name for each assumed name registered with the Secretary of State.

(b) The applicant must identify any affiliates:

(1) that have applied previously for registration with the commission; or

(2) that have had an application submitted to the commission administratively withdrawn; or

(3) that have allowed a certificate of registration with the commission expire for non-payment of renewal fees.

(4) An affiliate is an individual or entity that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with the applicant.

(c) [ (a) ] The application for registration shall contain a request for information from the applicant that is sufficient for the commission to conduct a criminal background check to determine the applicant's eligibility for registration under the Act.

(d) The applicant must disclose on the application for registration:

(1) whether the applicant has entered a plea of guilty or nolo contendere (no contest) to any felony charge or to any misdemeanor charge for a crime involving moral turpitude; or

(2) whether the applicant has been convicted of any felony charge or of a misdemeanor charge for a crime involving moral turpitude and that the time for appeal of the conviction has elapsed or that the conviction was affirmed on appeal.

(e) [ (b) ] In reviewing an application to determine if an applicant is eligible for registration under this subchapter, the commission shall consider, among other things, whether the applicant has a criminal history and if so:

(1) the nature and seriousness of any crimes to which the applicant has pled guilty or pled no contest, or for which the applicant has a prior conviction or convictions, including whether such a crime involves moral turpitude;

(2) the extent to which acting as a registered builder might offer the applicant an opportunity to engage in further criminal activity of a same or similar nature as that for which the applicant has a prior conviction;

(3) the extent and nature of the applicant's past criminal activity;

(4) the age of the applicant when any criminal activity discovered occurred;

(5) the remoteness in time between the submission of the application and the date of the applicant's last criminal conviction;

(6) the applicant's overall work history in relation to the dates of any criminal convictions;

(7) evidence of the applicant's successful rehabilitation efforts while incarcerated or after release, including but not limited to, restitution to the victim, completion of probationary requirements and completion of community service; and

(8) other evidence of the applicant's eligibility to serve as a registered builder, as requested by the commission.

(f) The commission will conduct a criminal background check of each designated agent and may conduct a criminal background check on any other person responsible for the registration if the commission determines it necessary to further the purposes of the Act.

(g) Any information obtained from an applicant as a result of the criminal background check that is not a public record at the time the commission obtains the information is deemed confidential. The commission may not release or otherwise disclose the confidential information except pursuant to a court order, subpoena or with the written consent of the applicant.

(h) For purposes of this section, an applicant who has received a deferred adjudication for any felony charge or for any misdemeanor charge for a crime involving moral turpitude shall disclose that charge on the application for registration, regardless of whether the applicant has completed the conditions of the order of deferred adjudication.

(i) An individual must respond completely and truthfully regarding criminal history information. Failure to respond completely and truthfully will be considered evidence that the applicant is not honest and trustworthy and does not have integrity, and may result in denial of the application.

(j) [ (c) ] An applicant must respond timely to any [ a ] commission request for further information in reviewing the completed application in order to complete the application process.

(k) Failure to respond truthfully and completely to requests for information to process a completed application may result in the denial of the application.

§303.7.Designated Agents.

(a) To be eligible to receive a certificate of registration under this subchapter all applicants must designate an individual as the primary designated [ an ] agent.

(b) Each designated agent must adhere to the same registration requirements and meet the same eligibility requirements as any person applying for builder registration under this subchapter. There is no separate builder registration application form or fee required to register the primary agent designated by a registered builder.

(c) The primary designated agent of a sole proprietorship is limited to the individual proprietor.

(d) [ (b) ] A corporation must designate one [ or more of its officers ] as the primary designated agent [ agent(s) ].

(e) [ (c) ] A limited liability company must designate one [ or more of its managers ] as the primary designated agent [ agent(s) ].

(f) [ (d) ] A partnership, limited partnership or limited liability partnership must designate one of its managing partners as the primary designated agent or, if there are no individuals serving as a managing partner, a partnership, limited partnership or limited liability partnership must designate an individual officer from among its managing partner entities [ partners ] as the designated agent.

(g) [ (e) ] A corporation, limited liability company, partnership, limited partnership or limited liability partnership is not eligible for registration as a builder and may not act as a builder unless the entity's primary designated agent is individually eligible for registration as a builder.

(h) Individuals who are approved as registered designated agents of a corporation, limited liability company, partnership, limited partnership, limited liability partnership or other entity registered as builder, are registered builders.

(i) A corporation, limited liability company, partnership, limited partnership or limited liability partnership may submit a Secondary Agent Registration Form and fee to register one or more qualified individuals to serve as a secondary registered agent(s).

§303.9.Eligibility Requirements.

(a) At the time the application for registration is filed with the commission : [ , ]

(1) individual applicants [ an applicant ] must be at least 18 years of age and a citizen of the United States or a lawfully admitted alien and must demonstrate to the satisfaction of the commission that the applicant is honest, trustworthy and has integrity.

(2) individuals who apply as the designated agents of a corporation, limited liability company, partnership, limited partnership, limited liability partnership or other entity must be at least 18 years age and citizen of the United States of a lawfully admitted alien and must demonstrate to the satisfaction of the commission that the individual is honest, trustworthy and has integrity.

(3) a corporation, limited liability company, partnership, limited partnership, limited liability partnership or other entity must demonstrate that it is properly registered and in good standing with the Secretary of State and must demonstrate to the satisfaction of the commission that the entity has acted honestly, with trustworthiness and with integrity in its business dealings.

(b) The commission may consider a registered builder's complaint history, history of homeowner-filed requests for participation in the SIRP, compliance with state and federal law, compliance with the commission rules and requests for information, history of unsatisfied judgments and unpaid arbitration awards, history of bankruptcies, compliance history with the Secretary of State regulations and payment of taxes, and history of use of corporate and partnership structures as a means to avoid liability in evaluating whether an applicant is honest, trustworthy and has integrity.

§303.13.Designated Address.

(a) Each builder shall designate in the application for registration a fixed physical address located in this state to serve as its principal place of business.

(b) Each designated agent shall provide in the application for registration a fixed physical address in Texas.

(c) The commission will use the fixed physical address provided as the mailing address for the registered builder in order to verify that the address is valid. If the postmaster will not deliver to a physical address for the builder or if delivery to the physical address is not advisable because of theft, and the builder is required to maintain a Post Office Box, the builder may submit a post office box waiver form in order to utilize a Post Office Box address in lieu of a physical address for the receipt of mail only. A designated agent may submit a Post Office Box as a mailing address in addition to the physical address provided pursuant to subsection (b) of this section.

(d) [ (c) ] If the builder moves from the physical address designated on its certificate of registration, or if the builder has been authorized to utilize a Post Office Box for the receipt of mail, the [ Each ] builder shall submit a [ commission-prescribed ] change of information form and the required fee not later than thirty (30) days from the date of the address change [ the builder moves from the address designated on its certificate of registration ].

(e) [ (d) ] Each designated agent shall submit a [ commission-prescribed ] change of information form and the required fee not later than thirty (30) days from the date the designated agent moves from the address provided on its application.

§303.15.Change of Registered Name.

(a) Within forty-five (45) days from the date a builder commences operation under a name different from the builder name designated on its current certificate of registration, the registered builder shall submit written notice to the commission of the new entity name under which it is operating with supporting documentation from the Secretary of State, if appropriate .

(b) A change in the name of the registered builder resulting from a change in the form of business organization for that builder requires the submission of a new application for a certificate of registration.

§303.17.Material Change in Information.

(a) Except as otherwise expressly provided in this subchapter, each builder and designated agent shall report in writing to the commission [ in writing ] using a Change of Information Form [ commission-prescribed form ] any material change in the information [ provided to the commission ] in the application for certificate of registration provided to the commission within thirty (30) days of the change.

(b) A material change in information includes:

(1) information regarding the refusal, denial, revocation or suspension of a professional or occupational license or certification; or,

(2) an order of conviction, guilty plea, plea of nolo contender (no contest) or deferred adjudication entered against a designated agent; or,

(3) information regarding judgments and arbitration awards entered against the registered agent, builder or an affiliated entity; or,

(4) any other information supplied to the commission by the applicant upon which the commission may have reasonably relied in determining the eligibility of an applicant or whether to approve an application for registration.

§303.19.Renewal.

(a) After March 1, 2004, a person operating as a builder in this state must keep a current certificate of registration and must timely renew its certificate of registration [ prior to the expiration of the effective period shown on the certificate of registration ].

(b) A builder that has been issued an even-numbered builder registration certificate must renew its registration by the last day of February of each even-numbered year. A builder that has been issued an odd-number certificate of registration must renew its registration by February 28 of each odd-numbered year.

(c) A builder who fails to maintain a current certificate of registration may be subject to a late fee and an administrative penalty or other disciplinary action as determined by the commission.

(d) [ (b) ] In order to renew a certificate of registration, a builder shall submit a completed application for renewal of a certificate of registration and the required fee to the commission not later than thirty (30) days prior to the end of the applicable registration period as provided in subsection (b) of this section [ expiration of the effective period shown on the current certificate of registration ].

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 March 23, 2006.

TRD-200601790

Susan K. Durso

General Counsel

Texas Residential Construction Commission

Earliest possible date of adoption: May 7, 2006

For further information, please call: (512) 463-2886


10 TAC §303.3, §303.11

(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Texas Residential Construction Commission or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Texas Residential Construction Commission (the "commission") proposes the repeal of §303.3, regarding issuance of a provisional registration certificate to builders and §303.11, regarding information related to criminal histories of applicants for builder registration.

Section 303.3 provides by its own terms that it expired on January 1, 2005. The repeal of §303.3 is proposed specifically pursuant to Property Code §416.003, which provides for a provisional registration opportunity to expire January 1, 2005 and, generally, pursuant to Property Code §408.001, which provides authority for the commission to adopt rules necessary for the implementation of Title 16, Property Code.

The repeal of §303.11 is proposed because the language contained therein is being subsumed into another section in this chapter by amendments proposed in this same issue of the Texas Register .

Ms. Susan Durso, General Counsel for the commission, has determined that for each year of the first five-year period that the proposed repeals are in effect there will be no increase in expenditures or revenue for state government and no fiscal impact for state or local government as a result of enforcing or administering the sections.

Ms. Durso has also determined that for the first five years following the repeals the public will benefit from the conformity of the agency's rules with the statutory language and clarity in the agency rules resulting from consolidation. There is no anticipated economic cost to persons as a result of the proposed repeals.

Ms. Durso has also determined that for each year of the first five-year period the proposed repeals are in effect there should be no effect on a local economy; therefore, no local employment impact statement is required under the Administrative Procedure Act, §2001.022.

Comments on the proposed repeals may be submitted to Susan K. Durso, General Counsel, Texas Residential Construction Commission, 311 E. 14th Street, Austin, Texas 78701 or by fax to (512) 475.2453. Comments may also be submitted electronically to susan.durso@trcc.state.tx.us. For comments submitted electronically, please include "Repeal of 303.3 and 303.11" in the subject line. The deadline for submission of comments is thirty (30) days from the date of publication of the proposed rule in the Texas Register . Comments should be organized in a manner consistent with the organization of the rule repeal proposed.

The statutory provisions affected by the repeal of these rules are those set forth in Property Code, Chapters 408 and 416.

No other statutes, articles, or codes are affected by the proposed repeals.

§303.3.Provisional Registration.

§303.11.Information Regarding Past Criminal History.

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 March 23, 2006.

TRD-200601773

Susan K. Durso

General Counsel

Texas Residential Construction Commission

Earliest possible date of adoption: May 7, 2006

For further information, please call: (512) 463-2886


Chapter 305. PRACTICE AND PROCEDURES FOR HEARINGS AND DISCIPLINARY ACTIONS

Subchapter D. POST-SETTLEMENT AND POST-HEARING MATTERS

10 TAC §305.41

The Texas Residential Construction Commission proposes amendments to §305.41, regarding the procedures for motions for rehearing. Specifically, the proposed amendments will conform the language of the rule to the language of the Administrative Procedure Act (Act) so that the time for taking action is calculated from the same date as stated in the Act. This will eliminate any confusion as to the date upon which the commission must take action.

Ms. Susan Durso, General Counsel for the commission, has determined that for each year of the first five-year period that the proposed amended rule is in effect there will be no increase in expenditures or revenue for state government and no fiscal impact for state or local government as a result of enforcing or administering the section.

Ms. Durso has also determined that for the first five years the amended rule is in effect the public will benefit from the conformity of the agency's rules with the statutory language on the same procedure. There is no anticipated economic cost to small businesses or persons who are required to comply with the proposed amendments.

Ms. Durso has also determined that for each year of the first five-year period the proposed amended rule is in effect there should be no effect on a local economy; therefore, no local employment impact statement is required under the Administrative Procedure Act, §2001.022.

Comments on the proposed amendments may be submitted to Susan K. Durso, General Counsel, Texas Residential Construction Commission, 311 E. 14th Street, Austin, Texas 78701 or by fax to (512) 475.2453. Comments may also be submitted electronically to susan.durso@trcc.state.tx.us. For comments submitted electronically, please include "Amended Rule 305.41" in the subject line. The deadline for submission of comments is thirty (30) days from the date of publication of the proposed rule in the Texas Register . Comments should be organized in a manner consistent with the organization of the rule under consideration.

The amendments are proposed pursuant to Property Code §408.001, which provides general authority for the commission to adopt rules necessary for the implementation of Title 16 of the Property Code, the commission's enabling act and the Administrative Procedures Act, Texas Government Code, Chapter 2001.

The proposed amendment is cross-referenced to Texas Property Code §408.001 and Texas Government Code §2001.146 and §2001.147.

§305.41.Motions for Rehearing.

(a) Filing times. A motion for rehearing must be filed with the commission within 20 days after a party has been notified, either in person or by mail, of the order of the commission pursuant to §305.40 of this chapter .

(b) Commission action. Commission action on the motion for rehearing must be taken within 45 days after the date a party has been notified of the commission's order pursuant to subsection (a) of this section [ the final order is signed ]. If commission action is not taken within the 45-day period, the motion for rehearing is overruled by operation of law. The commission may rule on a motion for rehearing at a meeting or by mail, telephone, telegraph, or another suitable means of communication. The commission may by written order extend the period of time for filing the motions and replies and taking commission action, except that an extension may not extend the period for commission action beyond 90 days from the date the party was notified pursuant to §305.40 of this chapter [ order was signed ]. In the event of an extension, the motion for rehearing is overruled by operation of law on the date fixed by the order, or in the absence of a fixed date, 90 days after the date the party was notified pursuant to §305.40 of this chapter [ of the final decision or order ]. The parties may by agreement, with the approval of the commission, provide for a modification of the times provided in this section.

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 March 23, 2006.

TRD-200601789

Susan K. Durso

General Counsel

Texas Residential Construction Commission

Earliest possible date of adoption: May 7, 2006

For further information, please call: (512) 463-2886


Chapter 306. COMPLAINTS

10 TAC §306.1

The Texas Residential Construction Commission ("commission") proposes new §306.1, relating to the complaint process. The proposed new rule sets forth the commission procedures for processing complaints filed against a registrant or other person.

The new section is proposed to inform both the complainant and respondent of the procedure that the commission will follow during the complaint process.

The new section is proposed under Property Code §408.001, which provides general authority for the commission to adopt rules necessary for the implementation of Title 16 and Property Code, Chapter 416, and §409.1 which requires the commission to prepare information about the procedures by which complaints are filed with and resolved by the commission.

Susan Durso, General Counsel, has determined that for each year of the first five-year period the proposed new section is in effect there will be no fiscal implications for state or local governments as a result of enforcing or administering the proposed new section.

Ms. Durso has also determined that for each year of the first five-year period the proposed new section is in effect the public will benefit from knowing that the procedure the commission follows when it receives a complaint against a registrant.

Ms. Durso has also determined that for each year of the first five-year period the proposed new section is in effect there will be no significant effect on individuals or large, small and micro-businesses as a result of the adoption of the proposed rule. There may be a minimal effect on registered builders and remodelers who are required to provide copies of written correspondence to the commission as a result of the new section.

Ms. Durso has also determined that for each year of the first five-year period the proposed new section is in effect there should be no effect on a local economy; therefore, no local employment impact statement is required under Administrative Procedure Act §2001.022.

Interested persons may submit written comments (12 copies) on the proposed rule to Susan K. Durso, General Counsel, Texas Residential Construction Commission, P.O. Box 13144, Austin, Texas 78711. The deadline for submission of comments is thirty (30) days from the date of publication of the proposed section in the Texas Register . Comments received after that date will not be considered. Comments should be organized in a manner consistent with the organization of the proposed rule. Comments may be submitted electronically to comments@trcc.state.tx.us. For comments submitted electronically, please include "complaint rule" in the subject line. Comments submitted electronically to another electronic address or that do not include "complaint rule" in the subject line may not be considered.

The new section is proposed to implement Property Code §408.001, §409.001 and Chapter 416.

No other statutes, articles, or codes are affected by the proposal.

§306.1.Complaint Process.

(a) All complaints shall be submitted in writing, preferably on the commission's Complaint Form, to the Texas Residential Construction Commission, Attn: Complaints, Post Office Box 13144, Austin, Texas 78711, by fax to (512) 463-9507, or by email to info@trcc.state.tx.us. The commission's Complaint Form may be obtained by calling the agency toll free at 1-877-651-8722 or from the commission's web site at www.trcc.state.tx.us.

(b) All complaints, whether or not submitted on the commission complaint form, must include the following information in order that the commission may make a preliminary determination as to whether the complaint is within the commission's jurisdiction:

(1) the name and contact information for complainant;

(2) the name and contact information of the party against which the complaint is made;

(3) a description of the basis for the complaint;

(4) the date the information forming the basis of the complaint was discovered;

(5) the names and contact information for any witnesses;

(6) any sources of other pertinent information; and

(7) copies of any documents that support the allegations that form the basis of the complaint.

(c) All complaints, whether or not submitted on the commission complaint form, should include the following information, if known to the complainant and relevant to the complaint:

(1) whether there is a construction contract and if so, the nature of the construction work (new home, remodel) and total contract price;

(2) the start and completion date of the construction; and

(3) if the respondent is a commission registrant, the respondent's registration number.

(d) Upon receipt of a written complaint, the commission will make a preliminary determination as to whether the basis of the complaint is a matter within the commission's jurisdiction. If the complaint information provided is insufficient to make a preliminary determination, the agency will contact the complainant in an effort to develop additional information. If the complainant fails to respond to an information request within 30 days, the commission may close the complaint without prejudice.

(e) If the preliminary determination shows that the commission is the appropriate forum for the subject matter of the complaint, the commission will provide the respondent with a copy of the complaint and request a written response within 30 days of receipt of the letter.

(f) If the preliminary determination shows that the complaint is unwarranted or that another entity has authority over the matter, the commission will notify the complainant and respondent of the intent to close the complaint file and if appropriate, the commission will refer the matter to the proper authority.

(g) If a response is received from the respondent, the commission will evaluate the information received and provide a copy of the response to the complainant.

(h) If the facts supplied by the complainant and any response received from the respondent indicate that a further investigation may lead to evidence of a violation of Title 16 of the Property Code or commission rules, the commission will transfer the complaint to an investigator to conduct an investigation.

(i) If an investigation leads to sufficient evidence to support a disciplinary action, the commission will take disciplinary action pursuant to Chapter 418 of the Property Code and commission rules.

(j) The commission shall report quarterly to both parties on the status of a complaint until the commission closes the complaint or assigns the complaint to an investigator.

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 March 22, 2006.

TRD-200601765

Susan K. Durso

General Counsel

Texas Residential Construction Commission

Earliest possible date of adoption: May 7, 2006

For further information, please call: (512) 463-2886