10 TAC §§50.1 - 50.23
The Texas Department of Housing and Community Affairs adopts
new §§50.1 - 50.23, with changes to the proposed text as published
in the September 2, 2005, issue of the
Texas Register
(30 TexReg 5166), concerning the 2006 Housing Tax Credit Program Qualified
Allocation Plan and Rules. The new sections are necessary to provide procedures
for the allocation by the Department of certain housing tax credits available
under federal income tax laws to owners of qualified rental housing developments.
At the August 19, 2005, Board Meeting, the Board approved the Proposed
New Title 10, Part 1, Chapter 50 - 2006 Draft Housing Tax Credit Program Qualified
Allocation Plan and the proposed repeal of the Title 10, Part 1, Chapter 50
- 2004 Housing Tax Credit Program Qualified Allocation Plan and Rules for
public comment. The proposals were published in the
Texas Register
on September 2, 2005, for the public to provide comments.
In order to receive additional comments on all proposed rules, the Texas Department
of Housing and Community Affairs staff held public hearings in the cities
of Lubbock, Abilene, Arlington, Mt. Pleasant, Crockett, Houston, Austin, Temple,
San Antonio, Corpus Christi, McAllen, Midland and El Paso. 97 people attended
these hearings.
Reasoned Response to Public Comment on the 2006 Draft Qualified Allocation
Plan (QAP)
The Department received the majority of comments in writing by email, fax
and mail. Copies of the exact comment letters provided are available on the
Department’s website.
§50 - General - (2,8,9,10,11,12,14,18,19,20,21,25,26,27,28)
Comment:
Substantial comment asks that the Board consider creating a subcommittee
with responsibility over the Qualified Allocation Plan. Comment suggested
that the time element for getting a QAP approved is very restrictive and Board
involvement "sooner rather than later" may be valuable (2,8,9,10,11,12,14,19,25,26,27).
Comment was received from an official from the City of Fort Worth requesting
that the draft QAP remain consistent with the 2005 QAP. This next cycle is
going to be very, very important to the City of Fort Worth, with the City
of Dallas having a moratorium on their housing tax credits according to the
commenter; therefore, it is important that municipal officials understand
the complete nature of the program (18).
One comment from the National Housing Trust asserts that the first step
to resolving America’s affordable housing problem is to preserve the
affordable housing we already have. While the demand for affordable rental
housing remains high, the supply of this housing is shrinking. In Texas alone,
approximately 19,300 HUD-assisted apartments were lost between 1995 and 2003.
At this time 385 projectbased Section 8 properties with 31,796 assisted units
will expire in Texas before the end of Fiscal Year 2009. In the wake of Hurricane
Katrina, preservation is especially important. Comment further commends TDHCA
on its successful efforts to preserve and improve existing, affordable housing
in Texas (21).
Comment also request that, when feasible, green technologies and methods
should be integrated into rehabilitation in order to improve energy efficiency,
conserve water and other resources, and use healthy building materials. These
types of improvements benefit both residents and property owners through utility
savings and lower maintenance costs, result in longterm sustainability, and
provide residents with a better and healthier living environment (21).
Other comment asserts that all federal housing programs, including the
tax credit program, must further the national policy of integrated housing
by considering the racial and socio-economic impact of their funding decisions
and that TDHCA is not furthering this policy in its rules. Multiple sources
of law were referenced to indicate that TDHCA is obliged to affirmatively
further the policies of Title VIII by promoting racial integration and collecting
data to permit it to assess its compliance with anti-discrimination housing
laws. The commenter notes that a significant majority of the QAP provisions
are dictated by state legislation, and TDHCA has very little authority to
alter the statutory provisions. However, comment asserts that as an entity
that receives and distributes federal funds, TDCHA is required to act affirmatively
to end racial segregation and to stem the tide of urban "ghettoization" (20).
Staff Response:
Staff appreciates the commendation relating to Department efforts in preservation
and energy efficiency. As it relates to the comment suggesting that the Draft
QAP remain consistent with the 2005 QAP, staff agrees and has worked to limit
significant changes to enable applicants to feel some sense of continuity
between the 2005 and 2006 rules. Regarding the comment received requesting
that TDHCA’s Board create of a subcommittee with responsibility over
the QAP, staff recommends no change to the QAP because the creation of a subcommittee
is at the Board’s discretion and is not an item that would require language
be added to the QAP for it to be accomplished. Staff also does not recommend
any changes relating to fair housing or anti-discrimination because efforts
and incentives to address these issues are already included in the QAP.
Staff has also administratively deleted the term "transitional" as a target
population throughout the QAP (because the points for this population had
been removed), unless specifically relating to the use of the term under §42(i)(3)(B)(iii)
of IRS Code. In cases where the term remains in the QAP, this section of the
Code is now referenced. Additionally, staff added, "Intergenerational Housing"
as a specific population served throughout the QAP consistent with the inclusion
of that term in the Draft QAP. These changes are highlighted as blackline
changes in the QAP, but are not shown throughout this document.
Board Response:
The Board accepted Staff’s recommendation.
§50.2 - Coordination with Rural Agencies (24), Page 3 of 65
Comment:
Comment supports the efforts of the Agency to coordinate its programs with
other rural agencies, especially the Rural Housing Service, United States
Department of Agriculture (24).
Staff Response:
Staff appreciates the positive feedback.
Board Response:
The Board accepted Staff’s recommendation.
§50.3(13) - At-Risk (28), Page 4 and 5 of 65
Comment:
Comment recommends, without a stated rationale, changing the definition
of At-Risk to remove the term "nearing expiration" in subclause (i) and the
clarifying language that defines what "nearing expiration" means and remove
the term "or is nearing the end of the mortgage term" in subclause (ii) and
the clarification that defines "nearing the end."
Staff Response:
Staff does not recommend any revisions to the definition of At-Risk because
the current language is necessary to ensure consistency in administering the
set-aside.
Board Response:
The Board accepted Staff’s recommendation.
§50.3(22) - Community Revitalization Plan (2,6,8,9,10,11,12,14,25,26,27,30),
Page 5 of 65
Comment:
A significant amount of comment was received asserting that the 7 points
for the rehabilitation of a building within a community revitalization plan
in the draft 2006 QAP have become much more difficult to achieve. Many communities
have official plans, but their revitalization needs are outlined as part of
a greater land use plan and they do not have a tool called a "Community Revitalization
Plan." Comment suggests that the 2005 language be used again instead of the
2006 draft language (2,6,8,9,10,11,12,14,25,26,27).
Further comment points to the requirement that the draft definition requires
the plan to target funds to specific geographic areas. In some communities,
such a policy could be found to be in violation of the intent of Fair Housing
laws and encourages clustering of low-income housing in certain areas of a
town or city. A city or county HUD-approved "Community Revitalization Plan"
that encourages the development of low-income housing throughout the city
should be given just as much credence as a plan that designates specific areas
for low-income housing. It is requested that the language barring plans that
preclude an entire town or city as a geographic area to be served by low-income
housing from this definition be removed (30).
Staff Response:
While the Department appreciates that some city or county documents will
not qualify for points requiring Community Revitalization Plans, staff does
not agree that it would be prudent to revert to using an undefined term. Defining
the term provides less subjectivity for administrative reviews and provides
clear requirements for the applicant community. No deletion of the definition
is recommended. However, staff does agree that the term should not preclude
an entire town or city as a geographic area. Therefore, staff recommends the
following language which removes the requirement for local funds and allows
an entire town or city as a geographic target area:
Board Response:
The Board accepted Staff’s recommendation.
§50.3(49) - Definitions - Ineligible Building Types (2,8,9,10,11,12,13,14,19,22,25,26,27,28,30),
Page 7 of 65
Comment:
Substantial comment commends the Board and staff for the revised compromise
definition which allows developers greater flexibility and latitude in determining
a proper unit mix based on local need, including an option for 4 bedrooms.
This is particularly important in the border regions where a need for 2, 3
and 4 bedroom units has been identified. Additionally, to address the needs
of those displaced by Hurricane Katrina, three and four bedroom units are
in high demand (2,8,9,10,11,12,13,14,19,22,25,26,27,30). One comment also
recommends allowing up to 10% of the units as 4 bedroom units; however it
should be noted that this comment was made before the draft QAP allowing 5%
was released (28).
Staff Response:
Staff appreciates the positive feedback relating to the revised definition.
While Staff appreciates the arguments for 10% of the units as 4 bedrooms,
the Department’s Board has indicated that the draft language provides
for appropriate unit mixes. Therefore, staff recommends no change. However,
an administrative change was made to clarify the wording of the Intergeneration
Housing Policy in the definition with the following change:
Board Response:
The Board accepted Staff’s recommendation.
§50.3(60) - Definitions - Persons with Special Needs (2,6,8,9,10,11,12,14,15,19,25,26,27),
Page 8 of 65
Comment:
Substantial comment requests an amendment to this section to address the
housing needs for the many Katrina evacuees. It is requested that the Definition
of Persons with Special Needs be amended to include individuals and families
displaced as a result of Hurricane Katrina (2,6,8,9,10,11,12,14, 15,19,25,26,27).
Staff Response:
Staff concurs with the recommendation, although it recommends less restrictive
language as follows:
Board Response:
The Board did not approve staff’s recommendation to add populations
identified as impacted by federal and state declared disasters and instead
approved the language in the 2006 Draft QAP.
§50.3(73) - Definitions - Rehabilitation (3), Page 10 and 11 of 65
Comment:
Comment refers to the last sentence in the Rehabilitation definition that
states adding a housing unit is considered New Construction. In effect,
for rural applications this means that if a unit is added, the project
is limited to 76 units and no new units can be added to potentially aid with
tenant relocation during rehabilitation. Comment suggests that the definition
of Rehabilitation be revised to either delete the last sentence in the
definition of Rehabilitation or to add an exception to Rehabilitation
projects that add new units to exceed 76 units in rural communities if
the additional housing units are supported by a market study (3).
Staff Response:
Staff does not recommend a change to this definition. The restriction in
rural areas to 76 units or less for developments involving new construction
has been strongly supported over the years. Additionally, this change would
be significant enough to warrant further public comment. In order to truly
evaluate the effects of the proposed revisions, staff recommends that further
research and discussion occur.
Board Response:
The Board accepted Staff’s recommendation.
§50.3(73) - Definitions - Rural Area (30), Page 10 of 65
Comment:
Comment does not believe that the Department’s acceptance of the
"Section 516 Farm Labor Housing Grants for Off-Farm Housing" program into
paragraph (C) of this definition meets the intent of the statute. The program
is not limited to areas typically defined by USDA as rural. It is commented
that these awards in metropolitan areas, as determined by the Department,
fall under the Rural allocation and take credits away from other developments
located in rural areas. Comment requests that the Department disallow Section
516 Housing developments unless they are built in an area of the state that
is generally eligible for other funding by the Texas Rural Development (TX-USDA-RHS)
Office (30).
Staff Response:
Staff recommends no change. The definition for a Rural Area as defined
in §2306.6702 of the Texas Government Code indicates that a Rural Area
includes "an area eligible for new construction or rehabilitation funding
by TX-USDA-RHS." This language does not exclude any RHS programs. In considering
this comment, staff found no support that any TX-USDA-RHS program was intended
to be excluded from the legislated definition. In fact, since many of the
other RHS programs are consistent with the definition, it appears it was intentional
to include all RHS programs. Therefore, staff’s determination is that
any application which could provide evidence that it is a recipient of RHS
funding meets the definition for a Rural Area as recommended by staff.
Board Response:
The Board accepted Staff’s recommendation.
§50.3(87) - Definitions - Unit (15), Page 11 of 65
Comment:
Comment requests clarification of what square footage qualifies for a 4
bedroom loft or studio and points to the fact that the square footages conflict
with the selection criteria in §50.9(i)(4), suggesting that they should
match (15).
Staff Response:
Staff concurs with this comment and recommends the following language:
Board Response:
The Board accepted Staff’s recommendation.
§50.5(a)(10) -Ineligibility (2,6,8,9,10,11,12,14,19,20,25,26,27)
Comment:
This item requires that a local resolution of support is needed if the
application is located in a census tract that has in excess of 500 units supported
by tax credits. Substantial comment suggests deletion of this item because
this is unfair to all applicants in these areas and housing development should
be based on need and not arbitrary tests of location (2,6,8,9,10,11,12,14,19,25,
26,27). One comment supports the draft language because it affirmatively furthers
fair housing with the caveat that TDHCA should amend the draft language to
exempt bond and 4% applications that have already received a bond reservation
prior to the effective date of the new QAP (20).
Staff Response:
While the Department does support any reasonable and narrow efforts to
ensure dispersion, it has been determined that the Department’s underlying
data relating to census tracts is not sufficiently refined due to changes
in census tracts over the past 17 years. Therefore, in order to ensure that
no item of ineligibility under this section would require any unwarranted
termination caused by the unrefined data, staff recommends that this subparagraph
be deleted. However, it should be noted that staff does continue to support
efforts to ensure dispersion and will recommend this or similar language for
the 2007 QAP.
Board Response:
The Board accepted Staff’s recommendation.
§50.5(a)(11) -Ineligibility (2,6,8,9,10,11,12,14,19,20,25,26,27)
Comment:
Comment believes that this rule is unfair and the practical elimination
of any new construction in regions 3,6,7 or 9 because city council approval
would be limited and are required by this proposal. Given the hurricane
evacuee displacement to these major markets and the high occupancies now being
experienced in affordable developments in these markets, it is inadvisable
to have a practical prohibition on new construction in these areas and it
should be deleted. This would be the most devastating proposed change to the
QAP (2,6,8,9,10,11,12,14,19,20,25,26,27).
Staff Response:
Staff appreciates the significant comment received and recognizes the significant
negative impact this restriction will have. Therefore, staff recommends the
deletion of the proposed language.
Board Response:
The Board accepted Staff’s recommendation.
§50.6(d) - Credit Amount (28), Pages 15 and 16 of 65
Comment:
Comment recommends altering the $2 million tax credit cap to allow housing
authorities to count pro rata on a unit/credit basis toward their $2 million
cap. The following language is recommended to be added, "This provision does
not apply to housing authorities as only those units that are reserved for
public housing will count toward the $2 million developer cap for housing
authorities (28)."
Staff Response:
Staff recommends no change to this section. This change would be significant
enough to warrant further public comment. In order to truly evaluate the effects
of the proposed revisions, staff recommends that further research and discussion
occur.
Board Response:
The Board accepted Staff’s recommendation.
§50.6(f) - Limitation on the Location of Developments (7,28), Page
16 of 65
Comment:
Comment recommends increasing the one mile rule to three miles for senior
developments, and exempting At-Risk deals from the one mile rule while making
bond-financed developments comply with the one mile rule (7,28).
Staff Response:
Staff recommends no change. This rule is based on statute and the Department
has no authority to make this change.
Board Response:
The Board accepted Staff’s recommendation.
§50.6(g) - Rehabilitation Costs (2,8,9,10,11,12,14,25,26,27,28,30),
Page 16 of 65
Comment:
Substantial comment suggests that TDHCA should work to encourage rehabilitation,
and the mandatory minimum of $12,000 will do the opposite in cases where the
development warrants significant rehabilitation, but does not warrant such
a high level. Comment suggests adding that the $12,000 be considered met if
a Property Condition assessment states it can be done for less (2,8,9,10,11,12,14,25,26,27).
One comment supports the increase to $12,000 because it will further ensure
that projects actually undergo some substantial rehabilitation, as opposed
to nothing more than painting or other minor cosmetic work being done on existing
buildings (30). An additional comment, received prior to the release of the
draft QAP, encouraged increasing the rehabilitation cost minimum to $10,000
per unit (28).
Staff Response:
Staff recommends no change. Consistent with national trends and other housing
finance agencies, analysis confirms existing rehabilitations generally exceed
the $12,000 limit unless they are USDA-RHS which are already exempt from this
requirement. The Department, as a policy, wants to ensure a thorough and significant
rehabilitation as it contributes resources.
Board Response:
The Board accepted Staff’s recommendation.
§50.7(a) - Regional Allocation Process (30), Page 17 of 65
Comment:
Comment supports the changes being proposed by staff that will require
a TX-USDA-RHS deal to file a notification of "Intent to Request Tax Credits"
by the pre-application deadline. This requirement will allow the development
community to make better decisions about applying for projects in the regional
areas of the state without spending tremendous amounts of money, time and
effort chasing deals in rural areas that really have no chance of being funded
(30).
Staff Response:
No change is recommended. Staff appreciates the positive feedback.
Board Response:
The Board accepted Staff’s recommendation.
§50.7(b) - Set-Asides (2,6,7,8,9,10,11,12,14,20,25,26,27,28), Page
17 of 65
Comment:
One comment was submitted requesting that the State contemplate transferring
5% of credits from the other 12 regions to Beaumont and Port Arthur to offset
potential costs due to Hurricane Rita. The comment also suggests that
TDHCA ask for federal approval to donate an additional 5% of our tax credits
to Louisiana. The net effect would add about 24% to the overall credits available
in Louisiana, enough to allow them to do about 400 more units of affordable
housing, and would increase the credits available in Beaumont/Port Arthur
by almost 150% (20).
Substantial comment requested establishing "Exurban" Set-Asides. Regions
3, 6, 7, and 9 have sufficient allocation to support an exurban Set-Aside
and a 10% Set-Aside in these four regions would ensure that at least one exurban
project in each of these regions would be funded. However, in the other nine
regions an exurban Set-Aside of 10% would prompt the same criticism that accompanies
the At Risk Set-Aside where a single project takes 100% of the funds, far
exceeding the 15% amount. An alternative suggestion is to maximize the number
of credits that can go to an Urban area in Regions 3, 6, 7, and 9 so that
it could require that no more than a certain percentage of the funds in these
Regions go to Urban Projects (2,6,8,9,10,11,12,14,25,26,27).
Additional comment supports TDHCA giving special attention through Set-Asides
(At-Risk and Elderly) because many projects would otherwise be overlooked
and not funded, thus creating greater disparity in housing (7). One comment
recommends the creation of a Set-Aside for non-rural areas where there has
been no tax credit development in the past and where said areas have an income
over the area median family income in an effort to integrate affordable housing
into existing neighborhoods (28).
Staff Response:
Staff does not recommend any changes to this section. In regards to comment
requesting establishing exurban and non-rural set-asides, this change would
be significant enough to warrant further public comment. In order to truly
evaluate the effects of the proposed revisions, staff recommends that further
research and discussion occur. Additionally, staff does not agree that the
Department should transfer any credits to offset national and state disasters
because it is more appropriate to await the federal response to be generated
for hurricane relief. Staff appreciates positive feedback relating to the
At-Risk set-aside. However, it should be noted that, contrary to comment,
there is no elderly set-aside in the draft QAP.
Board Response:
The Board accepted Staff’s recommendation.
§50.7(b)(1) - Nonprofit Set-Aside (10,11,12,22, 28,30), Page 17 of
65
Comment:
Several comments suggest allowing housing agencies to compete in the Nonprofit
Set-Aside without the requirement that the nonprofit retain 80% of the developer
fee because for small-to-medium housing agencies it is necessary to find a
development partner who has experience in the tax credit industry. These agencies
do not have the staff resources to complete an application and continue the
development process on their own (10,11,12).
Another comment also opposes the proposed language because it limits the
number of nonprofits that will be able to participate in the HTC program;
the language will only benefit a handful of the best capitalized nonprofits
around the state. Many nonprofit groups do not have the capability to provide
the financial guarantees necessary to develop large housing projects; however
they do benefit significantly in a partnership with an experienced co-developer
(22).
Another comment supports the change because it defines the Managing General
Partner in a way that clearly states the level of involvement for the nonprofit
in the development process. Further, it is suggested that the Set-Aside be
only for 100% nonprofit applications and that all applications involving joint
ventures be considered in the general application pool (28).
Another comment requests further clarification regarding consulting fees.
The proposed language requires that applications in the nonprofit set-aside
allow at least 80% of the developer fees to go to the non-profit applicant,
but it is unclear as to whether or not the nonprofit applicant will be allowed
to pay out consulting fees that amount to greater than 20% of the developer
fees. If this is the intent of the change, comment requests that language
be added to that affect. If this is not the intent, comment requests further
clarification to that affect, as currently the Real Estate Analysis division
considers all consulting fees part of the developer fee for underwriting,
carryover and cost-certification purposes (30).
Staff Response:
Much of the comment recommended the deletion of the proposed requirement
that 80% of the developers fee be provided to the nonprofit in order to compete
in the nonprofit set-aside as it may exclude some nonprofits with lesser experience.
Based on this rationale, and the Department’s efforts to guarantee that
no types of nonprofits are excluded, staff recommends the deletion of the
language and recommends reverting to the 2005 language.
Board Response:
The Board accepted Staff’s recommendation.
§50.7(b)(2) - At-Risk Set-Aside (5, 21), Page 17 of 65
Comment:
One commenter requested that if there is an At-Risk applicant in a region
that would receive preference over another application that this be made known
at the start of the process so that agencies won’t spend the time and
money to put together a competitive application (5). Additional comment received
from a national organization applauds TDHCA on the specific Set-Aside for
the preservation of at-risk affordable housing, and encourages this Set-Aside
in the 2006 and future rules (21).
Staff Response:
Staff recommends no change. Staff is already recommending the proposed
comment in the current draft QAP. Staff appreciates the positive feedback
as it relates to preservation.
Board Response:
The Board accepted Staff’s recommendation.
§50.8(d)(3) - Pre-Application Threshold Criteria (Administrative change),
Page 18 of 65
Staff Response:
Staff has added administrative changes to the draft language so that a
certification is acceptable evidence for this section which relates to the
pre-application notification process. The language was changed as follows:
Board Response:
The Board accepted Staff’s recommendation.
§50.8(d)(3)(B) - Pre-Application Threshold Criteria Notification Requirements
(2,4,6,8,9,10,11, 12,14,15,19,20,22,25,26,27,28,31), Page 19 of 65
Comment:
Significant comment throughout the state requests that the requirement
to identify and notify "other impacted neighborhood associations" as indicated
under this section be omitted. This is too vague and not required under the
statute (2,6,8,9,10,11,12,14,19,22,25,26,27,31). Similarly, "other impacted
neighborhood organizations" could be organizations for areas of a town substantially
far from the development and that any organization, no matter how far away,
can claim to be impacted. If the language remains in the 2006 QAP, it is requested
that there be clarification as to how to identify these neighborhood organizations
and from whom they would be requested (4, 15).
Comment was also received that asserts that notification provisions in
the QAP contravene any move to decentralize affordable housing into the suburbs.
The effect of the notification provisions is to facilitate negative support
from neighborhoods organizations that do not want affordable housing in their
neighborhoods and to galvanize opposition to affordable apartment developments,
particularly in affluent neighborhoods. It was suggested that the notice requirements
violate the Fair Housing Act (20). Comment was also received that recommends
using the language from H.B. 1167 regarding notification of neighborhood organizations.
Neighborhood organizations should be registered with the state by December
31st (28).
Staff Response:
Staff does not recommend the language from H.B. 1167 regarding the notification
of neighborhood organizations. The language as drafted ensures that current
statutory requirements are met and that all neighborhood organizations that
are on record with the city or county are notified up to the final application
submission. Staff appreciates the extensive comment received relating to "other
impacted neighborhood organizations" and recommends the deletion of the language
throughout the Draft QAP relating to this item to improve the clarity of the
requirement. Staff also has added administrative changes to the draft language
so that a certification is acceptable evidence for all of this section and
to clarify the requirements for neighborhood organizations’ notifications
[note, the deletions and administrative additions apply to both this section
and the notification requirements at full application in §50.9(h)(8).]
Board Response:
The Board accepted Staff’s recommendation.
§50.9(c) - Adherence to Obligations (2,8,9,10,11,12,14,19,25,26,27),
Pages 20 and 21 of 65
Comment:
Substantial comment suggests that, while it is rare, sometimes an applicant
may deliver a product that is significantly different from that proposed.
In this case, language should be added to this section that would result in
one-year debarment, a fine imposed equal to ten percent of the amount of the
annual credit allocation allocated, and the applicant must submit a plan to
incorporate additional amenities to compensate the tenants for the deficiency
which could be approved at the staff level (2,8,9,10,11,12,14,19,25,26,27).
Staff Response:
The Department concurs that a penalty should be applied to applicants that
make significant variations from their proposed product without prior Department
approval. While the following proposed language does not mirror exactly what
comment suggested, staff is recommending a proposed penalty that we feel is
sufficient and can be smoothly administered. Because this clause was not included
in the draft QAP, it is now recommended to be included to essentially "give
notice" to the applicant community that this will become the policy in the
future, but reflects that it will not become effective until December 1, 2006.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(f) - Evaluation for Rural Rescue Applications Under the 2007
Credit Ceiling (16,24), Pages 23 and 24 of 65
Comment:
One comment requests that staff consider expanding the rural rescue program
to the distressed HOME loan tax credit projects around the state. This would
give one more potential tool for solving problems (16). Comment also commends
the Department for maintaining the rural rescue policy. It is strongly encouraged
that the policy be enhanced by using forward commitments against each total
regional allocation for the following year for properties that obtain a commitment
under the rural rescue procedure. This enhancement would be consistent with
the treatment of other forward commitments issued by the Department (24).
Staff Response:
Staff appreciates the positive feedback regarding the rural rescue policy.
Staff does not recommend a change to this section to expand rural rescue to
HOME developments because HOME developments are under a different set of rules
compared to USDA applications and should have the time available to compete
in the 2006 HTC round. Based on the feedback of the rural development community,
Section VI of the Rural Rescue Policy (also on the November 2005 Board agenda)
has been revised to reflect that the Rural Rescue applications will still
be deducted from the Rural Regional Allocation for the following year, but
will not be deducted from the USDA Allocation. This will enable several more
USDA applications to compete for credits during the 2007 application round.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(g) - Experience Pre-Certification (28,30), Page 24 of 65
Comment:
Comment supports the current draft language that allows less-experienced
organizations to qualify for tax credits by adding a new percentage requirement
for smaller tax credit allocations (28). Comment also suggests that the threshold
for the builder’s or developer’s experience requirement should
include a required 50 houses registered with the Texas Residential Construction
Commission (TRCC). As an active participant in the development of the enabling
legislation for the creation of the TRCC, the commenter believes that residents
of low-income housing built with TDHCA funds should receive the benefits of
the TRCC Act by barring anyone from TDHCA programs who is not in good standing
with the TRCC (30).
Staff Response:
Staff recommends no change to this section. This change would be significant
enough to warrant further public comment. In order to truly evaluate the effects
of the proposed revisions, staff recommends that further research and discussion
occur.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(h)(4)(A)(ii)(XX) - Threshold Criteria - Certification of Amenities
(17), Pages 26 of 65
Comment:
Comment was received requesting in a broader array of recreational amenities
for amenities offered to Qualified Elderly Developments to potentially include
lawn bowling, croquet courts, or bocce ball courts (29).
Staff Response: Staff concurred and added language.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(h)(4)(F) - Threshold Criteria - Architect Certification (29),
Pages 27 and 28 of 65
Comment:
Comment was received from the Texas Society of Architects which suggests
that the QAP seems to mistake the responsibilities of architects for those
of contractors. While architects are solely responsible for designing buildings
in conformity with the laws of Texas, their responsibility during the construction
phase of the project is markedly different. Once the architectural plans and
specifications are prepared, the contractor is responsible for implementing
the construction of those plans and specifications. Therefore, comment implies
that this section of the QAP should be changed so that the architect is certifying
the designs and specifications of the buildings, but not the proper completion
of the development. A post-application form may be submitted by another architect
when the buildings are placed in service indicating that the buildings are
compliant with the QAP (29).
Staff Response:
Staff concurs with comment and recommends the following changes to the
QAP:
Board Response:
The Board accepted Staff’s recommendation.
§50.9(h)(4)(J) - Certification of Not Providing Assistance (2,4,6,8,9,10,11,12,14,15,17,19,22,25,
26,27), Page 28 of 65
Comment:
Please note that a full summary of comment relating to this item is found
later in this document in "§50.9(i)(2)(A)(vi) - Quantifiable Community
Participation."
Staff Response:
Due to changes recommended later in this document in "§50.9(i)(2)(A)(vi)
- Quantifiable Community Participation", staff recommends the following language
be added to this section:
Board Response:
The Board accepted Staff’s recommendation.
§50.9(h)(6)(G) - Threshold Criteria - Site Work Costs (22), Page 29
of 65
Comment:
Comment received requests that the $7,500 limit for site work be raised
to a higher amount of between $9,000 and $11,000 to reflect the reality of
the condition of current multi-family sites available for development (i.e.
need for rezoning and greater due diligence). This amount has not been increased
in many years (22).
Staff Response:
Staff does not recommend a change. This safe harbor limit at $7,500
per unit is intended to account for more than the average historical site
work cost on a per unit basis. Anything over that amount will still
be accepted as long as substantiation for the significantly higher than average
site work cost is provided. Relatively few developments exceed this
guideline and the additional administrative work required to process the qualified
third party verification is considered to be an important safeguard in evaluating
costs with difficult site issues.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(h)(7)(A)(iii)(II)(b)(1) - Threshold Criteria - Evidence of Readiness
to Proceed (30), Page 29 of 65
Comment:
Comment supports these changes regarding recognizable costs to be allowed
in an identity of interest land transaction, however it suggests that the
language go further to specifically allow for increased values due to zoning
changes. Currently, if a landowner owns a parcel of land that was zoned Agricultural
or Residential when acquired, the acquisition cost plus only basis costs are
acknowledged for underwriting, carryover and cost certification purposes.
If a land owner chooses to re-zone a parcel of land to apartment or commercial
zoning in a desirable part of a city, the current TDHCA policy discourages
the landowner from placing that parcel into a tax credit deal because any
value added purely from the re-zoning is rejected by the department. Therefore,
the current TDHCA policy discourages developers from putting more valuable
parcels of land into tax credit deals because the developer cannot realize
the true value of the parcel of his/her land in the transaction. This policy
is not in the best interest of the program, as many deals are not presented
on more valuable parcels of land due to this current TDHCA policy (30).
Staff Response:
Staff does not recommend a change to this section. Cost to the related
party seller to rezone the site is allowed as a holding cost that is then
added to the original acquisition cost included in the development cost schedule.
The contract price between the related party seller and applicant may reflect
the perceived value added by the change in zoning; however, for purposes of
calculating the gap-based recommended tax credit allocation, total acquisition
cost will be calculated based on the proposed language of §50.9(h)(7)(A)(iii).
Board Response:
The Board accepted Staff’s recommendation.
§50.9(h)(8)(A) - Threshold Criteria - Notification Requirements (Administrative
Changes), Page 31 of 65
Staff Response:
Staff has added administrative changes to the draft language so that a
certification is acceptable evidence for all of this section in a method consistent
with pre-application. The language was changed as follows:
Board Response:
The Board accepted Staff’s recommendation.
§50.9(h)(8)(ii) -Threshold Criteria - Notification Requirements (2,4,6,8,9,10,11,12,14,15,19,20,
22,25,26,27,28,31), Page 32 of 65
Comment:
Please see §50.8(d)(3)(B) - Pre-Application Threshold Criteria Notification
Requirements, for duplicative comment.
Staff Response:
Staff recommends the following changes based on that comment and administrative
changes:
Board Response:
The Board accepted Staff’s recommendation.
§50.9(h)(8)(B) - Threshold Criteria - Notification Requirements (20),
Page 33 of 65
Comment:
Comment asserts that signage requirements contravene any move to decentralize
affordable housing into the suburbs. The effect of the signage provision is
to facilitate negative support from neighborhoods organizations that do not
want affordable housing in their neighborhoods and galvanize opposition to
affordable apartment developments, particularly in affluent neighborhoods.
It was suggested that the notice requirements violate the Fair Housing Act
(20).
Staff Response:
Staff does not recommend a change to this section. Signage is the best
method of notifying a community of the proposed development and encourage
public participation.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(h)(9)(D) - Threshold Criteria - National Previous Participation
(15), Page 34 of 65
Comment:
One comment suggests that to notify other states, particularly when the
involved agency no longer exists, is a burden for an applicant who has not
had any activity in that other state for many years. It is suggested that
this only be required for transactions during the last ten (no more than fifteen)
years (15).
Staff Response:
Staff recommends no change to this section. Prompted by this public comment,
staff performed a legal review of §2306.057 of Texas Government Code
which requires that a compliance history be performed on all applications.
Staff has determined that it does not have the authority to limit the scope
of the review to any amount of time. Therefore, the review is only limited
to individual states’ retention schedules.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i) - Selection Criteria - General (2,6,8,9,10,11,12,14,19,20,25,26,27),
Pages 38-49 of 65
Comment:
Substantial comment suggests the compression of the scoring range to level
the playing field for applications in areas with no neighborhood associations
on record. It still follows the legislated order of priority, but by lowering
the Community Participation total, it is easier to achieve equity in areas
of discretion to the Board. Suggested point changes are as follows (2,6,8,9,10,11,12,14,19,25,26,27).
Selection Item
§50.9(i)(1) - Financial Feasibility
Points in 2005: 28
Suggested 2006: 20
§50.9(i)(2) - Quantifiable Community Participation
Points in 2005: 24
Suggested 2006: 18/9/0
§50.9(i)(3) - Income Levels of Tenants
Points in 2005: 22/20/18/16/14
Suggested 2006: 16/14/12/10/8
§50.9(i)(4) - Size and Quality of the Units
Points in 2005: 20 (6/14)
Suggested 2006: 15 (3/12)
§50.9(i)(5) -Funding from Local Political Subdivision
Points in 2005: 18/12/6
Suggested 2006: 14/10/6
§50.9(i)(6) -Support from State Elected Officials
Points in 2005: 14 (7 each)
Suggested 2006: 12 (6 each)
§50.9(i)(7) - The Rent Levels of the Units
Points in 2005: 12/10/9/8/7
Suggested 2006: 11/10/9/8/7
§50.9(i)(8) - Cost of the Development by Square Foot
Points in 2005: 10
Suggested 2006: 10
§50.9(i)(9) - Services Provided to Tenants
Points in 2005: 8
Suggested 2006: 9
Comment suggests an option "below the line" to offset QCP points might
be to award 8 points for applications where there is NO neighborhood association
present. In these situations, the applicant could also qualify for the proposed
9 points (previously 12) provided in situations where there is no opposition
from a neighborhood association. This section could be changed to simply address
support/opposition/no response or neutral. This would allow an application
in an area w/o neighborhood associations to achieve 17 points, but not the
full 18 for Neighborhood Organization support (2,6,8,9,10,11,12,14,17,19,25,26,27).
An alternative option would be to keep the point schedule from the Draft 2006
QAP and award 8 points for applications where there is no neighborhood association
present. This would bring applications with no neighborhood associations within
4 points of their competitors with supporting organizations (2,6,8,9,10,11,12,14,17,19,
25,26,27).
Additional comment suggests a point-scoring item for Expired Affordable
Properties which would allow a scoring incentive of approximately 5 points
for developers to acquire and rehabilitate properties that were previously
considered to be affordable (same definition as at-risk), but have already
expired (25).
Comment was also received that requests a selection item which would counter
balance notification requirements and selection criteria which encourage negative
support from neighborhood organizations who do not want affordable housing
in their neighborhoods (20).
Staff Response:
Staff recommends no changes to the QAP based on the comment above because
this change would be significant enough to warrant further public comment.
In order to truly evaluate the effects of the proposed revisions, staff recommends
that further research and discussion occur. Additionally, staff is already
awarding points to expired affordable developments by awarding points to developments
proposed for reconstruction or rehabilitation under paragraph (15) of this
subsection. Regarding comment received requesting a selection criteria item
that would counter balance notifications requirements and negative support,
staff does not have the authority to contravene legislation and cannot make
the recommended change. An administrative change is recommended because of
the scoring changes for QCP addressed below. The language is as follows:
Board Response:
The Board added the correct point minimum and maximum based on the approved
2006 QAP with Board amendments as follows:
§50.9(i)(2) - Quantifiable Community Participation, General (2,6,8,9,10,11,12,14,19,20,25,26,
27,28,31), Page 38 through 40 of 65
Comment:
As indicated in the General Selection Criteria section (above), substantial
comment suggests the compression of the scoring range to level the playing
field for applications in areas with no neighborhood associations on record.
It is recommended that this section would decrease from the draft QAP’s
point value of 24 (+12 for strongest support, 0 for neutral letters or no
letter to -12 for strongest opposition) to a recommended value of 18 for strongest
support, 9 for neutral or no letter and 0 for the strongest opposition (2,6,8,9,10,11,12,14,19,25,26,27,28).
According to the research of one commenter, 29 out of 33 (88%) of the Urban
applications in 2005 were successful on the basis of their QCP scores. Based
upon these results they further predict that there will be some very clever
"discoveries" of neighborhood organizations in rural allocations in 2006 as
well and without some meaningful modifications to the current and proposed
rules regarding QCP, the vast majority of successful HTC applications in Texas
will be determined almost exclusively by their QCP scores. Comment further
questions whether this was the intent of the legislature. Further, the commenter
questions if is it fair for the vast majority of rural communities in Texas
who do not have legitimate neighborhood organizations to be abandoned by the
HTC program (31).
Comment was also received that asserts that point incentives in the QAP
for neighborhood support contravene any move to decentralize affordable housing
into the suburbs. The points facilitate negative support from neighborhood
organizations that do not want affordable housing in their neighborhoods and
galvanizes opposition to affordable apartment developments, particularly in
affluent neighborhoods. A high level of opposition is not normally seen in
the lower income, primarily minority areas and developers choose to avoid
higher income areas with opposition. In a typically tight scoring matrix for
the award of tax credits, the points provide an institutionalized mean for
eliminating affordable housing in certain neighborhoods. It was suggested
that the point incentives violate the Fair Housing Act (20).
Comment recommends giving full community participation points to developments
where there is no qualified community organization. If a qualified organization
exists but does not respond, then the developer should receive full points
(28).
Staff Response:
As it relates to affirmatively furthering fair housing, QCP is a legislated
requirement and staff cannot remove it as a scoring item. Additionally, while
the Department appreciates that a majority of applications who received points
in 2005 were in the urban/exurban allocation, because all rural applications
compete with one another and not the urban/exurban allocations, staff considers
the concerns of rural competing with urban/exurban unwarranted. The Department
does not feel that it can allow points for QCP if a neighborhood organization
does not exist because the statute is clear that these points are for QCP
from neighborhood organizations. However, rather than have a range from +12
to -12, staff is recommending a range from +24 to 0. Therefore staff recommends
the following language change to this section:
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(2)(A)(ii) - Quantifiable Community Participation (2,6,8,9,10,11,12,14,19,25,26,27),
Page 39 of 65
Comment:
Substantial comment requests a "second contact" for the neighborhood organization
since many of these associations use a home fax or phone number as contact.
(2,6,8,9,10,11,12,14,19,25,26,27).
Staff Response:
Staff concurs with the comment which adds a second contact, which would
allow for a faster response time from neighborhood organizations. Therefore,
staff recommends the following language:
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(2)(A)(iv) - Quantifiable Community Participation (17,22,28,31),
Page 39 of 65
Comment:
Comment suggests allowing resident councils to be recognized if it is rehabilitation
or demolition/new construction within their existing boundaries (22). Other
comment supports allowing all resident’s councils to be considered for
the points for this item (28).
Additional comment suggests that a property owners association should qualify
for QCP, no matter what the stage of the development of the master-planned
community. QCP points for this kind of situation should not be prohibited
just because the master-planned community may contain some sort of commercial
element or because the community and residences are under development. If
the developer is willing to support an affordable housing complex as part
of the community, that makes a huge statement. To avoid potential abuse, the
QCP points in this scenario should only be permitted if: (1) the developer
of the master-planned community is unrelated to the applicant and (2) the
proposed affordable housing development will take up no more than 10% of the
total land mass of the master-planned community. That way, developers won't
create master-planned communities just to give themselves QCP points (15,17).
Comment recommends the language from HB 1167 from the 79th Legislature
concerning the boundaries of neighborhood associations in relation to elementary
school zones be adopted (28,31). Comment suggests that the use of the language
from HB 1167 eliminates the ambiguities in defining what an acceptable Neighborhood
Organization is. It also removes the responsibility from staff in determining
whether or not a Neighborhood Organization is legitimate. Furthermore, it
eliminates the probability that rural communities without legitimate neighborhood
organizations will be abandoned because points are not attainable (31).
Staff Response:
Staff does not recommend language that would allow master-planned communities
because no "neighbors" live in the development community during the application
phase. Thus, "neighborhood" input from organizations whose boundaries include
the proposed development site is impossible. Additionally, staff has determined
that because HB 1167 did not pass, we are precluded from incorporating the
recommended HB1167 language because it violates current legislation. Staff
does concur with comment that suggests allowing resident councils to be recognized
if it is rehabilitation or demolition with new construction within their existing
boundaries.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(2)(A)(v) - Quantifiable Community Participation (28), Page
39 of 65
Comment:
Comment suggests that neighborhood associations should be on file with
the county or state as of December 31st of the year preceding the year in
which the tax credits will be awarded. If allowable under current statute,
organizations on file with the municipality should qualify for notification
and scoring purposes as well (31).
Staff Response:
While staff recognizes that the requirements may be confusing, it is statutorily
required that an organization be on record with the county or state (not city)
in order to potentially qualify as an eligible neighborhood organization for
the purposes of this section. Staff does not recommend changes to this section.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(2)(A)(vi) - Quantifiable Community Participation (2,4,6,8,9,10,11,12,14,15,17,19,22,
25,26,27), Page 39 of 65
Comment:
Substantial comments request clarification that a Developer can provide
assistance in the form of educating a neighborhood association as to the process
for support (or opposition) and that this can include such nominal forms of
assistance as making available a fax or postage or shipping, provided the
Developer does not exercise control over the association (2,6,8,9,10,11,12,14,17,19,
25,26,27).
Further comment asserts that the proposed language for this section is
too limiting and would not allow neighborhood organizations to obtain necessary
information from the applicant when needed. There need to be opportunities
for the applicant to provide information about the proposed development on
a continuous basis throughout the application process, host neighborhood meetings
as needed, provide the TDHCA Quantifiable Community Participation information
packet to neighborhood organizations, provide samples of support letters,
provide transportation, secretarial services, delivery services, uses of computer,
as needed or requested by neighborhood organizations (22).
Other comment requests that the prohibition of providing assistance to
a neighborhood organization be removed because neighborhoods are very sensitive
to HTC developments and often many meetings are required with board members
and then neighborhood members. Convincing a group to support an HTC development
requires charts, handouts, explanations of the process and sometimes making
changes to the development to satisfy the organization’s requested changes.
Generally the neighborhood organizations are unsophisticated and do not have
counsel (4). Without applicant assistance, very few neighborhood organizations
will positively respond and even fewer will respond to deficiency letters,
a result not intended with the selection criteria points. Perhaps the phrase
needs to be couched in terms of Applicant not being allowed to give assistance
that personally benefits any individual(s), however assistance that benefits
the neighborhood organization is not a prohibited activity (15).
Staff Response:
Staff recognizes that this process will be more successful if the Department
allows some involvement with neighborhood organizations, while not encouraging
improper conduct as it relates to seeking out points for QCP.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(2)(A)(viii) - Quantifiable Community Participation (2,6,8,9,10,11,12,14,19,25,26,27),
Page 40 of 65
Comment:
Substantial comment objects to the requirement that Neighborhood Associations
submit bylaws. The State of Texas does not require an organization to have
bylaws and many of the smaller, less sophisticated Neighborhood Associations
do not have bylaws. It should be sufficient to ask a Neighborhood Association
to produce its organizational documents in whatever form they exist. (2,6,8,9,10,11,12,14,19,25,26,27).
Staff Response:
Staff concurs with the comment and recommends the following language:
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(2)(C) - Quantifiable Community Participation (2,6,8,9,10,11,12,14,19,25,26,27),
Page 40 of 65
Comment:
Substantial comment suggests that the Neighborhood Association be given
10, rather than 7, days to respond. These are not businesses, they are informal
groups and accommodation needs to be made for a slower pace in responding
to requests for information (2,6,8,9,10,11,12,14,19,25,26,27).
Staff Response:
Staff does not recommend a change to the requirement that the neighborhood
organizations be given 10, rather than 7, days to respond to Department because
the suggested extended deadline would delay the Department’s finalization
of scores of applications which would correspondingly delay the administration
of the Application Round. However, staff believes that because a second contact
has been added for neighborhood organizations, the effect will allow for allow
for a sufficient response time from neighborhood organizations.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(4)(B) - Quality of the Units (2,6,7,8,9,10,11,12,14,19,21,22,24,25,26,27,28),
Page 41 of 65
Comment:
Comment supports points for masonry on exterior walls, energy efficient
alternative construction materials, extra insulation, and Energy Star rated
refrigerators and dishwashers. Comment further encourages TDHCA to award points
for plans that incorporate water conservation techniques (21). Comment supports
fire sprinklers in 100% of the units (7,28). Additional comment suggests keeping
current 2005 QAP language regarding ceiling insulation (22). The draft QAP
removes the use of thirty year shingles as a scoring component for the quality
of units. Additional comment recommends that for rehabilitation developments
the 30 year shingles remain as a quality of the unit scoring component. Without
this possibility, it will be extremely difficult for rehabilitation developments
to achieve a competitive score (24).
Staff Response:
Staff appreciates positive feedback relating to this item. While water
conservation techniques are important, this change would be significant enough
to warrant further public comment. In order to truly evaluate the effects
of the proposed revisions, staff recommends that further research and discussion
occur. However, staff does concur that the 30 year shingles remain as a scoring
component in an effort to help Rehabilitation developments achieve a competitive
score and also agrees that the 2005 language relating to ceiling insulation
should be added back into the QAP. Therefore, the following new language is
recommended (note that subsequent items are renumbered accordingly):
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(5) - Commitment of Funding from a Local Political Subdivision
(2,3,4,6,7,8,9,10,11,12,14, 15,19,22,24,25,26,27,28), Pages 42 and 43 of 65
Comment:
Substantial comment requests that the date for proving up local funds continue
to be at the time of the Acceptance of the Commitment Letter rather than May
1, 2006. Many communities do not commit these funds until June and many are
reluctant to commit until they know which applications are actually going
to receive tax credits. The May 1 date is not realistic for a major metropolitan
area like Houston or San Antonio (2,3,6,8,9,10,11,12,14,15,19,22,25,26,27).
Clarification was requested relating to multi-jurisdictional Housing Finance
Corporations (HFCs) and whether or not HFCs that serve multiple (30 or 40)
counties will be considered eligible funding entities under this section.
Additionally, if the Department continues with the interpretation that TDHCA
HOME funds cannot be used in non-Participating Jurisdiction areas as local
funding, can a city apply for HOME funds concurrently with a tax credit application
and state in their application that the funds will be used as local funding
for a particular application (25)?
Comment requests clarification of the draft language for the circumstance
in which the Local Political Subdivision is the Developer. According to the
definition, a housing authority counts as a Local Political Subdivision, but
can they use their Capital Grant funds to get points in this category? In
many rural areas, the PHA is the only public entity that has any funds to
leverage, so this could be a problem if they can’t (6).
Significant comment received suggests that this is a scoring item that
favors the large cities over the smaller ones. Generally, the funds provided
to meet this requirement come from City HOME or CDBG funds, which are only
available in the larger cities, also known as Participating Jurisdictions.
One idea for achieving equity is to allow TDHCA’s HOME Funds to count
for these points in communities that do not have HOME allocations, i.e. non-Participating
Jurisdictions, as was allowed in the 2005 QAP, but stricken in the draft 2006
QAP (4). Substantial comments suggests that if HOME funds, which come from
HUD regardless of whether they go to the City for allocation or to the State
for Allocation, are considered local when distributed by a City, they should
be considered "local" when they are distributed by TDHCA. We understand that
considering TDHCA and ORCA as "Local Political Subdivisions," is odd, however,
they are recognized as the Participating Jurisdiction and Entitlement Area
for the balance of the State. By acting as such, TDHCA and ORCA are fulfilling
the function of a local agency for these areas (2,3,6,8,9,10,11,12,14,19,
25,26,27).
Comment supports the clarification of the points available from local political
subdivisions. However, it recommends that the points be allowed only for substantial
and meaningful development funding. Thus, rather than use a specific dollar
amount for specific points, it is recommend that 6 points be allowed for a
contribution equal to 5% of the total development cost per low-income unit,
12 points for a contribution equal to 10% of the total development cost per
low-income unit, and 18 points for a contribution equal to 15% of the total
development cost per low-income unit (24).
The remaining comment below relates to the section that was §49.9(g)(5)(B),
which is stricken in the current draft:
Substantial comment suggests that TDHCA continue to allow rental vouchers
to qualify for these points because as a group, it is important that the playing
field stays fair and even between nonprofit providers, housing authorities,
and for-profit developers (2,3,6,7,8,9,10,11,12,14,19,22,25,26,27). Other
comment asserts that local commitment Vouchers are the only way that deep
targeted units allow the developments to be financially feasible (22). Further
comment suggests that the majority of our smaller communities have a housing
authority and this is one area where non-urban projects actually stand a chance
of qualifying for some or all of these points. A project-based voucher can
indeed result in reducing the need for outside funds. For instance, in many
communities, the Housing Choice Voucher Rent is higher than the TDHCA 30%
or 50% program rent. In these cases the higher rent can be used to reduce
the need for permanent mortgage funds (2,3,6,8,9,10,11,12, 14,19,25,26,27).
Comment requests that the development based vouchers be kept as part
of the QAP with a due date of November 1, 2006. If the date was
moved to November 1 for complying with the HUD rules and regulations
governing development based vouchers, it would be easier to keep development
based vouchers as a scoring type of funding from local political subdivisions.
(3).
Comment suggests that if the section currently stricken which allows for
points for development-based Housing Choice, rental assistance vouchers, or
rental assistance subsidy approved by the Annual Contributions Contract (ACC)
is added back in that the Section 8 commitment preference for local housing
authorities be made available to all applicants. Project based section 8 should
carry forward for everyone, not just housing authorities (28).
Staff Response:
Staff does not recommend the substantial increase in development funding
because staff considers the current language to be sufficient. Based on the
events of 2005 and the ultimate ease of administration, staff also does not
believe a change is needed relating to multi-jurisdictional Housing Finance
Corporations (HFCs). As with all questions relating to whether or not a specific
entity qualifies, staff recommends that specific questions be addressed to
staff for a determination on the eligibility of the entity. Staff concurs
with the recommendation that the date for proving up local funds continue
to be at the time of the acceptance of the Commitment Letter and recommends
that the associated language relating to this item be re-inserted. Staff also
recommends that TDHCA HOME funds qualify for this item in non-Participating
Jurisdictions as long as a resolution from the Local Political Subdivision
is received at application that authorizes the applicant to act on behalf
of the Local Political Subdivision in applying for HOME funds. Staff also
recommends language that would allow an Applicant to qualify for these points
if the applicant itself is a Local Political Subdivision or its subsidiary.
Staff does not believe that it has the statutory authority to include the
points for vouchers. Therefore, the following recommendation to this section
is as follows:
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(6) - Level of Support from State Elected Officials (2,6,8,9,10,11,12,14,19,20,25,26,27),
Page 43 of 65
Comment:
Comment was also received that asserts that point incentives in the QAP
for elected official support contravene any move to decentralize affordable
housing into the suburbs. In a typically tight scoring matrix for the award
of tax credits, the points provide an institutionalized mean for eliminating
affordable housing in certain neighborhoods. It was suggested that the point
incentives violate the Fair Housing Act (20).
Staff Response:
Staff recommends no changes to the current draft as it relates to this
comment. The Department cannot remove the item because it is statutory. However,
in order to be consistent with the recommended changes for the QCP point structure,
staff does recommend reverting to the original 2005 language for this section.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(8) - Cost of the Development by Square Foot (2,6,8,9,10,11,12,14,19,25,26,27,28),
Page 43 of 65
Comment:
Comment asserts that there are generally two types of elderly housing produced:
1) duplex/fourplex for more mobile seniors and 2) larger buildings with elevators,
interior hall space, etc., for less mobile seniors. Specifically the
larger building types result in approximately 26-28% of community space (compared
to 2 % for general properties), which is used in the calculation of total
costs, but is not considered when determining cost per square foot. When determining
the eligible costs per square foot for scoring item 8, this differential should
be considered and result in a high cost per square foot than is proposed for
elderly developments (25). Another comment recommends increasing construction
costs for new construction by 5 percent (28).
Staff Response:
In order to truly evaluate the effects of the proposed revisions relating
to the two types of elderly households and the calculation of cost per square
foot, staff recommends that further research and discussion occur. Staff also
recommends an administrative change to increase the costs per square foot
limitations equally from 2005 to 2006 in the wake of documented rising construction
costs. Staff recommends the following language:
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(9) - Services to be Provided to Tenants of the Development
(2,6,8,9,10,11,12,14, 19,25,26,27,28), Page 44 and 45 of 65
Comment:
Comment supports the current draft language because it provides additional
services to residences, thus increasing resident retention and fewer vacancies
(28).
Staff Response:
Staff recommends no change. Staff appreciates the positive feedback.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(13) - Development Location (20), Page 45 of 65
Comment:
Comment suggests that TDHCA has failed to establish and implement an institutionalized
method for considering the social and demographic data when making their tax
credit award decisions. Therefore, assuming that point scoring is further
utilized to further integration, the following revisions should be made so
that the scoring item recognizes that the selection of a development site
in a predominately non-minority, suburban area can involve risks for a developer
related to potential community opposition that may not be encountered to the
same degree with other sites, and provides an incentive to a developer to
assume these risks in order to provide a high quality housing opportunity
in such areas for the families that are eligible for tax credit units. Comment
suggests striking all language relating to designated state or federal empowerment
zones, urban enterprise community and urban enhanced enterprise community.
Additionally, comment would strike point incentives for a Development located
in an "Exemplary" or "Recognized" school zone, as well as the section that
awards points for expanding affordable housing opportunities for families
with children outside of poverty areas. Additional language is recommended
that would disperse housing to areas with low minority ratios (20).
Staff Response:
Staff does not recommend a change to this item because the QAP already
addresses dispersion and affirmatively furthers fair housing. Additionally,
this change would be significant enough to warrant further public comment.
In order to truly evaluate the effects of the proposed revisions, staff recommends
that further research and discussion occur.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(13)(F) - Development Location (20), Page 45 of 65
Comment:
Comment supports this item in the QAP for giving preference to high income
census tracts (20).
Staff Response:
Staff recommends no change and appreciates the positive feedback.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(15) - Tenant Populations with Special Needs (2,6,8,9,10,11,12,14,15,19,25,26,27),
Pages 45 and 46 of 65
Comment:
Substantial comment requests that any applicants receiving points for serving
special needs populations should be required to "hold these units open" for
a period of 12 months (2,6,8,9,10,11,12,14,19,25,26,27). Additional comment
requests clarification for a situation when an applicant elects this provision
and then can’t fill the unit. TDHCA should clarify how long this set-aside
is applicable. It also requests a definition of Special Needs be defined (15).
Staff Response:
Staff concurs with comment that clarification is needed for this item,
and staff recommends the following language:
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(17) - Site Characteristics (1,23), Pages 46 and 47 of 65
Comment:
Comment requests that points for a rural health clinic with a full service
medical, dental, and vision be added (23). Another comment requests a change
to the language of this section in order to make the required site characteristics
more accessible to persons with disabilities (1).
Staff Response:
Staff recommends no added language relating to a rural health clinic because
there is already language in the draft QAP as suggested. Staff does recommend
the proposed changes to allow for more accessibility as follows:
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(18) - Development Size (2,6,8,9,10,11,12,14,19,24,25,26,27),
Page 47 of 65
Comment:
Substantial comment requests that the current draft language which allows
3 points for projects not greater than 36 units be increased to the size of
76 units and make this a 5 or 6 point item. This will result in greater dispersion
of the units within the regions and generally developments targeted for smaller
communities are smaller in size (2,6,8,9,10,11,12,14,19,25,26,27). Further
comment from the Rural Rental Housing Association supports maintaining the
36 unit limitation contained in this section for scoring of development size
(24).
Staff Response:
Staff recommends no change. This change would be significant enough to
warrant further public comment. In order to truly evaluate the effects of
the proposed revisions, staff recommends that further research and discussion
occur.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(19) - Qualified Census Tracts with Revitalization (28), Page
47 of 65
Comment:
Comment from a group representing community development corporations recommends
creating general incentives in qualified census tracts for revitalization,
senior, and at risk developments throughout the QAP. The commenter wants to
encourage seniors development and the preservation and rehabilitation of low-income
units in Qualified Census Tracts (QCTs) but does not encourage the construction
of new family developments if the census tract has had new family units awarded
recently (28).
Staff Response:
Staff recommends no change. The QAP already does provide general incentives
for revitalization and At-Risk developments. Staff believes that the market
should determine the target population of a development and that no further
incentives are necessary to provide housing to elderly populations.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(20) - Sponsor Characteristics (2,6,8,9,10,11,12,14,19,25,26,27),
Page 47 of 65
Comment:
Substantial comment received supports any efforts to broaden participation
in the program to Historically Underutilized Businesses (HUBs), but does not
support granting points to inexperienced developers. The comment suggests
adding specific points for specific roles on the development team (2,6,8,9,10,11,12,14,19,20,25,26).
Staff Response:
The comment does not reflect the current draft language. However, staff
recommends the following change that would ensure that points are not awarded
for using HUBs if the applicant has a poor history of placing buildings in
service or not issuing 8609s when awarded tax credits:
Board Response: In an effort to make this section specific only to encouraging
the participation of HUBs in the HTC Program, the Board deleted staff’s
recommended language under (A) of this section. Additionally, the board reinserted
the 2005 language with additional new language stipulating that the HUB must
not meet the experience requirements of §50.9(g) and must partner with
an experienced developer. The Board also added language allowing the experienced
developer to not be subject to the $2 Million credit cap for one application
per Application Round. The Board restructured this section as follows:
Additionally, the Board added the following clarifying language to the
definition of Affiliate under §50.3(2) to allow for the experienced developer
to not be subject to the $2 Million credit cap:
§50.9(i)(21) - Developments Intended for Eventual Tenant Ownership
(7,28), Pages 47 and 48 of 65
Comment:
Comment recommends encouraging Unit Ownership by increasing points to 5
(7,28).
Staff Response:
Staff recommends no change. This change would be significant enough to
warrant further public comment. In order to truly evaluate the effects of
the proposed revisions, staff recommends that further research and discussion
occur.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(22) - Leveraging of Private, State and Federal Resources
(22), Pages 48 and 49 of 65
Comment:
Comment recommends that the date required for the commitment approved by
the governing body of the entity should not be revised to May 1, 2006 and
that the 2005 language remain. Many communities do not make their HOME/CDBG
allocations until after that date. Comment also recommends amending this section
to include a provision for circumstances wherein the Applicant is itself a
local political subdivision or a subsidiary thereof (22).
Staff Response:
Staff cannot recommend that a provision be included that would allow points
for an applicant who is a local political subdivision because a local political
subdivision is not a private, state or federal resource. However, staff concurs
with the recommendation to change the deadline and recommends the following
language:
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(23) - Third Party Funding Commitment Outside of Qualified
Census Tracts (22), Page 49 of 65
Comment:
Comment would like similar language added for this item as suggested in
for item 22 above (22).
Staff Response:
Staff recommends no change because suggested language is not applicable
to this section.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(i)(24)(B) - Scoring Criteria Imposing Penalties (15), Page 49
of 65
Comment:
Comment suggests that this should be limited to a removal with a time period
limitation from the time the investor partnership agreement was executed such
as six or seven years. After that time period, where one had satisfied the
development requirements and guaranty requirements on operations, this penalty
should not apply since situations do occur that are beyond the developer’s
control such as Katrina and Rita occurrences and other adverse market changes.
Also by that time, the note is nonrecourse and the obligations to the investor
are nonrecourse (15).
Staff Response:
Staff recommends no change because suggested language is already applied
to this section. The current limit is five years.
Board Response:
The Board accepted Staff’s recommendation.
§50.9(j) - Tie Breaker Factors (30), Pages 49 and 50 of 65
Comment:
Comment suggests that the proposed tie-breaker policy does not go far enough
in distinguishing between two applications for the same type of construction
in the same city. If two properties score the same, are both new construction
and are both in the same city, the proposed policy will not untie the projects.
It is proposed that a price per square foot or tax credits per square foot
formula be added back in as the last tie-breaker item. It is acknowledged
that many in the development community claim that this is not in the best
interests of the program because it may promote substandard housing to be
developed, however, comment disagrees with this position because the QAP has
plenty of safety measures in place. In addition, there is now a statewide
building code in effect throughout the state to further ensure quality housing
is built (30).
Another item proposed as a tie-breaker is an applicant’s standing
with the Texas Residential Construction Commission as a registered builder,
or an applicant’s status as a "Texas Star Builder" also designated by
the Texas Residential Construction Commission (30).
Staff Response:
Staff does not recommend an imposed tie breaker relating to the applicant’s
standing with the Texas Residential Construction Commission. However, staff
agrees that another tie breaker should be added to the QAP. Staff recommends
the following language which incorporates last year’s language as subparagraph
(C) to this section:
Board Response:
The Board accepted Staff’s recommendation.
§50.12(a)(1) - Filing of Applications for Tax-Exempt Bond Developments
(Administrative), Page 54 of 65
Staff Response:
Staff made an administrative change to the language requiring a December
29th, 2005, 12:00 p.m. submission deadline under this section which is consistent
with the requirement released in the TDHCA Bond Program instructions. Staff
made the following revisions:
Board Response:
The Board accepted Staff’s recommendation.
§50.17(c) - Challenges Regarding Applications (Administrative), Page
61 and 62 of 65
Staff Response:
Staff recommends the following change to revise the term "allegations"
to "challenges" in this section:
Scoring Breakdown in Descending Order of Points for the Draft 2006 QAP
QAP Para.# : 1, Topic: Financial Feasibility, Total Points: 28, Notes:
NA, Legislative Citation - Compare to QAP: §2306.6710(b)(1)(A)
QAP Para.# : 2 , Topic: QCP from Neighborhood Organizations, Total Points:
24, Notes: Max Range of +24 to 0, Legislative Citation - Compare to QAP: §2306.6710(b)(1)(B); §2306.6725(a)(2)
QAP Para.# : 3, Topic: Income Levels of the Tenants, Total Points: 22,
Notes: NA, Legislative Citation - Compare to QAP: §2306.6710(b)(1)(C)
and (e); §2306.111(g)(3)(B) and (E); 42(m)(1)(B)(ii)(I)
QAP Para.# : 4, Topic: Size and Quality of the Units, Total Points: 20,
Notes: NA, Legislative Citation - Compare to QAP: §2306.6710(b)(1)(D);
42(m)(1)(C)(iii)
QAP Para.# : 5, Topic: Commit. of Funds by LPS, Total Points: 18, Notes:
NA, Legislative Citation - Compare to QAP: §2306.6710(b)(1)(E)
QAP Para.# : 6, Topic: State Elected Official Support/Opposition , Total
Points: 14, Notes: Max Range of +14 to -14, Legislative Citation - Compare
to QAP: §2306.6710(b)(1)(F) and (g); §2306.6725(a)(2)
QAP Para.# : 7, Topic: Rent Levels of the Units, Total Points: 12, Notes:
NA, Legislative Citation - Compare to QAP: §2306.6710(b)(1)(G)
QAP Para.# : 8, Topic: Cost Per Square Foot, Total Points: 10, Notes: NA,
Legislative Citation - Compare to QAP: §2306.6710(b)(1)(H); 42(m)(1)(C)(iii)
QAP Para.# : 9, Topic: Services Provided to Tenants, Total Points: 8, Notes:
NA, Legislative Citation - Compare to QAP: §2306.6710(b)(1)(I); Rider
7; §2306.254; §2306.6725(a)(1)
QAP Para.# : 10, Topic: Housing Needs, Total Points: 7, Notes: NA, Legislative
Citation - Compare to QAP: 42(m)(1)(C)(ii)
QAP Para.# : 11, Topic: Existing Housing with Revitalization, Total Points:
7, Notes: NA, Legislative Citation - Compare to QAP: 42(m)(1)(C)(iii)
QAP Para.# : 12, Topic: Pre-Application, Total Points: 6, Notes: NA, Legislative
Citation - Compare to QAP: §2306.6704
QAP Para.# : 13, Topic: Development Location, Total Points: 4, Notes: NA,
Legislative Citation - Compare to QAP: §2306.6725(a)(4) and (b)(2); §2306.127;
Rider 6 42(m)(1)(C)(i) and (vii)
QAP Para.# : 14, Topic: Exurban or Reconstruction or Rehabilitation, Total
Points: 7, Notes: NA, Legislative Citation - Compare to QAP: §2306.6725(a)(4)
and (b)(2); §2306.127; 42(m)(1)(C)(i)
QAP Para.# : 15, Topic: Special Housing Needs Populations, Total Points:
4, Notes: NA, Legislative Citation - Compare to QAP: 42(m)(1)(C)(v)
QAP Para.# : 16, Topic: Length of Affordability, Total Points: 4, Notes:
NA, Legislative Citation - Compare to QAP: §2306.6725(a)(5); §2306.111(g)(3)(C); §2306.185(a)(1)
and (c); §2306.6710(e)(2); 42(m)(1)(B)(ii)(II)
QAP Para.# : 17, Topic: Site Characteristics, Total Points: 4, Notes: Up
to 4 points for positive amenities. Up to -5 points for negative features,
Legislative Citation - Compare to QAP: NA
QAP Para.# : 18, Topic: Development Size, Total Points: 3, Notes: NA, Legislative
Citation - Compare to QAP: NA
QAP Para.# : 19, Topic: Location in QCT with Revitalization, Total Points:
2, Notes: NA, Legislative Citation - Compare to QAP: 42(m)(1)(B)(ii)(III)
QAP Para.# : 20, Topic: Sponsor Characteristics, Total Points: 2, Notes:
NA, Legislative Citation - Compare to QAP: 42(m)(1)(C)(iv)
QAP Para.# : 21, Topic: Right of First Refusal, Total Points: 1, Notes:
NA, Legislative Citation - Compare to QAP: §2306.6725(b) 42(m)(1)(C)(viii)
QAP Para.# : 22, Topic: Leveraging of Private, State and Federal Funds,
Total Points: 1, Notes: NA, Legislative Citation - Compare to QAP: §2306.6725(a)(3)
QAP Para.# : 23, Topic: Third Party Commitment Outside of QCT, Total Points:
1, Notes: NA, Legislative Citation - Compare to QAP: §2306.6710(e)(1)
QAP Para.# : 24, Topic: Penalties, Total Points: NA, Notes: Range, Legislative
Citation - Compare to QAP: §2306.6710(b)(2)
Maximum Number of Points Possible: 209
Tab Number and Organization
1, Accessible Communities, Inc - Coastal Bend Center for Independent Living
2, Individual
3, Campbell & Riggs, P.C.
4, Churchill Residential
5, Individual
6, DMA Development Company
7, Individual
8, Individual
9, Individual
10, Individual
11, Individual
12, Individual
13, Individual
14, Investment Builders, Inc.
15, Individual
16, Individual
17, Locke Liddle & Sapp LLP
18, Individual
19, Individual
20, Munch Hardt Kopf & Harr, P.C.
21, National Housing Trust
22, NRP Group
23, Pilgram's Pride Affordable Housing Corporation
24, Rural Rental Housing Association
25, S. Anderson Consulting
26, SGI Ventures, Inc.
27, Texas Affiliation of Affordable Housing Providers
28, Texas Association of Community Development Corporations
29, Texas Society of Architects
30, Tropicana Builders
31, Individual
The new sections are adopted pursuant to the authority of Chapter
2306, Texas Government Code; and Section 42 of Internal Revenue Code of 1986,
as amended, which provides the Department with the authority to adopt rules
governing the administration of the Department and its programs; and Executive
Order AWR-92-3 (March 4, 1992), which provides this Department with the authority
to make housing tax credit allocations in the State of Texas.
No other code, article or statute is affected by these new sections.
§50.1.Purpose and Authority; Program Statement; Allocation Goals.
(a)
Purpose and Authority. The Rules in this chapter apply
to the allocation by the Texas Department of Housing and Community Affairs
(the Department) of Housing Tax Credits authorized by applicable federal income
tax laws. The Internal Revenue Code of 1986, §42, as amended, provides
for credits against federal income taxes for owners of qualified low-income
rental housing Developments. That section provides for the allocation of the
available tax credit amount by state housing credit agencies. Pursuant to
Chapter 2306, Subchapter DD, Texas Government Code, the Department is authorized
to make Housing Credit Allocations for the State of Texas. As required by
the Internal Revenue Code, §42(m)(1), the Department developed this Qualified
Allocation Plan (QAP) which is set forth in §§50.1 - 50.23 of this
title. Sections in this chapter establish procedures for applying for and
obtaining an allocation of Housing Tax Credits, along with ensuring that the
proper threshold criteria, selection criteria, priorities and preferences
are followed in making such allocations.
(b)
Program Statement. The Department shall administer the
program to encourage the development and preservation of appropriate types
of rental housing for households that have difficulty finding suitable, accessible,
affordable rental housing in the private marketplace; maximize the number
of suitable, accessible, affordable residential rental units added to the
state's housing supply; prevent losses for any reason to the state's supply
of suitable, accessible, affordable residential rental units by enabling the
Rehabilitation of rental housing or by providing other preventive financial
support; and provide for the participation of for-profit organizations and
provide for and encourage the participation of nonprofit organizations in
the acquisition, development and operation of accessible affordable housing
developments in rural and urban communities. (2306.6701)
(c)
Allocation Goals. It shall be the goal of this Department
and the Board, through these provisions, to encourage diversity through broad
geographic allocation of tax credits within the state, and in accordance with
the regional allocation formula; to promote maximum utilization of the available
tax credit amount; and to allocate credits among as many different entities
as practicable without diminishing the quality of the housing that is being
built. The processes and criteria utilized to realize this goal are described
in §50.8 and §50.9 of this title, without in any way limiting the
effect or applicability of all other provisions of this title. (General Appropriation
Act, Article VII, Rider 8(e))
§50.2.Coordination with Rural Agencies.
To ensure maximum utilization and optimum geographic distribution of
tax credits in rural areas, and to provide for sharing of information, efficient
procedures, and fulfillment of Development compliance requirements in rural
areas, the Department has entered into a Memorandum of Understanding (MOU)
with the TX-USDA-RHS to coordinate on existing, Rehabilitation, and New Construction
housing Developments financed by TX-USDA-RHS; and will jointly administer
the Rural Regional Allocation with the Texas Office of Rural Community Affairs
(ORCA). Through participation in hearings and meetings, ORCA will assist in
developing all Threshold, Selection and Underwriting Criteria applied to Applications
eligible for the Rural Regional Allocation. The Criteria will be approved
by that Agency. To ensure that the Rural Regional Allocation receives a sufficient
volume of eligible Applications, the Department and ORCA shall jointly implement
outreach, training, and rural area capacity building efforts. (2306.6723)
§50.3.Definitions.
The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise.
(1)
Administrative Deficiencies--The absence of information
or a document from the Application as is required under §50.5, §50.6, §50.8(d)
and §50.9(g), (h), (i) and (j) of this title.
(2)
Affiliate--An individual, corporation, partnership, joint
venture, limited liability company, trust, estate, association, cooperative
or other organization or entity of any nature whatsoever that directly, or
indirectly through one or more intermediaries, Controls, is Controlled by,
or is under common Control with any other Person, and specifically shall include
parents or subsidiaries. Affiliates also include all General Partners, Special
Limited Partners and Principals with an ownership interest unless the entity
is an experienced developer as described in §50.9(i)(20)(B) of this title.
(3)
Agreement and Election Statement--A document in which the
Development Owner elects, irrevocably, to fix the Applicable Percentage with
respect to a building or buildings, as that in effect for the month in which
the Department and the Development Owner enter into a binding agreement as
to the housing credit dollar amount to be allocated to such building or buildings.
(4)
Applicable Fraction--The fraction used to determine the
Qualified Basis of the qualified low-income building, which is the smaller
of the Unit fraction or the floor space fraction, all determined as provided
in the Code, §42(c)(1).
(5)
Applicable Percentage--The percentage used to determine
the amount of the Housing Tax Credit, as defined more fully in the Code, §42(b).
(A)
For purposes of the Application, the Applicable Percentage
will be projected at 10 basis points above the greater of:
(i)
the current applicable percentage for the month in which
the Application is submitted to the Department, or
(ii)
the trailing 1-year, 2-year or 3-year average rate in
effect during the month in which the Application is submitted to the Department.
(B)
For purposes of making a credit recommendation at any other
time, the Applicable Percentage will be based in order of priority on:
(i)
The percentage indicated in the Agreement and Election
Statement, if executed; or
(ii)
The actual applicable percentage as determined by the
Code, §42(b), if all or part of the Development has been placed in service
and for any buildings not placed in service the percentage will be the actual
percentage as determined by Code, §42(b) for the most current month;
or
(iii)
The percentage as calculated in subparagraph (A) of this
paragraph if the Agreement and Election Statement has not been executed and
no buildings have been placed in service.
(6)
Applicant--Any Person or Affiliate of a Person who files
a Pre-Application or an Application with the Department requesting a Housing
Credit Allocation. (2306.6702)
(7)
Application--An application, in the form prescribed by
the Department, filed with the Department by an Applicant, including any exhibits
or other supporting material. (2306.6702)
(8)
Application Acceptance Period--That period of time during
which Applications for a Housing Credit Allocation from the State Housing
Credit Ceiling may be submitted to the Department as more fully described
in §50.9(a) and §50.21 of this title. For Tax-Exempt Bond Developments
this period is that period of time prior to the deadline stated in §50.12
of this title, and for Rural Rescue Applications this is that period of time
stated in the Rural Rescue Policy.
(9)
Application Round--The period beginning on the date the
Department begins accepting Applications for the State Housing Credit Ceiling
and continuing until all available Housing Tax Credits from the State Housing
Credit Ceiling (as stipulated by the Department) are allocated, but not extending
past the last day of the calendar year. (2306.6702)
(10)
Application Submission Procedures Manual--The manual produced
and amended from time to time by the Department which sets forth procedures,
forms, and guidelines for the filing of Pre-Applications and Applications
for Housing Tax Credits.
(11)
Area--An incorporated place or Census Designated Place
as defined by the U.S. Census Bureau. Developments located outside the boundaries
of a place shall use the Area definition of the closest place.
(12)
Area Median Gross Income (AMGI)--Area median gross household
income, as determined for all purposes under and in accordance with the requirements
of the Code, §42.
(13)
At-Risk Development--a Development that: (2306.6702)
(A)
has received the benefit of a subsidy in the form of a
below-market interest rate loan, interest rate reduction, rental subsidy,
Section 8 housing assistance payment, rental supplement payment, rental assistance
payment, or equity incentive under the following federal laws, as applicable:
(i)
Sections 221(d)(3) and (5), National Housing Act (12 U.S.C.
Section 17151);
(ii)
Section 236, National Housing Act (12 U.S.C. Section 1715z-1);
(iii)
Section 202, Housing Act of 1959 (12 U.S.C. Section 1701q);
(iv)
Section 101, Housing and Urban Development Act of 1965
(12 U.S.C. Section 1701s);
(v)
the Section 8 Additional Assistance Program for housing
developments with HUD-Insured and HUD-Held Mortgages administered by the United
States Department of Housing and Urban Development;
(vi)
the Section 8 Housing Assistance Program for the Disposition
of HUD-Owned Projects administered by the United States Department of Housing
and Urban Development;
(vii)
Sections 514, 515, and 516, Housing Act of 1949 (42 U.S.C.
Sections 1484, 1485, and 1486); and
(viii)
Section 42, of the Internal Revenue Code of 1986 (26
U.S.C. Section 42), and
(B)
is subject to the following conditions:
(i)
the stipulation to maintain affordability in the contract
granting the subsidy is nearing expiration (expiration will occur within two
calendar years of July 31 of the year the Application is submitted); or
(ii)
the federally insured mortgage on the Development is eligible
for prepayment or is nearing the end of its mortgage term (the term will end
within two calendar years of July 31 of the year the Application is submitted).
(C)
An Application for a Development that includes the demolition
of the existing Units which have received the financial benefit described
in subparagraph (A) of this paragraph will not qualify as an At-Risk Development
unless the redevelopment will include the same site.
(D)
Developments must be at risk of losing all affordability
on the site. However, Developments that have an opportunity to retain or renew
any of the financial benefit described in subparagraph (A) of this paragraph
must retain or renew all possible financial benefit to qualify as an At-Risk
Development.
(E)
Nearing expiration on a requirement to maintain affordability
includes Developments eligible to request a qualified contract under Section
42 of the Code. Evidence must be provided in the form of a copy of the recorded
LURA, the first years IRS Forms 8609 for all buildings showing Part II completed
and, if applicable, documentation from the original application regarding
the right of first refusal.
(14)
Bedroom--A portion of a Unit set aside for sleeping which
is no less than 100 square feet; has no width or length less than 8 feet;
has at least one window that provides exterior access; and has at least one
closet that is not less than 2 feet deep and 3 feet wide and high enough to
accommodate 5 feet of hanging space.
(15)
Board--The governing Board of the Department. (2306.004)
(16)
Carryover Allocation--An allocation of current year tax
credit authority by the Department pursuant to the provisions of the Code, §42(h)(1)(C)
and Treasury Regulations, §1.42-6.
(17)
Carryover Allocation Document--A document issued by the
Department, and executed by the Development Owner, pursuant to §50.14
of this title.
(18)
Carryover Allocation Procedures Manual--The manual produced
and amended from time to time by the Department which sets forth procedures,
forms, and guidelines for filing Carryover Allocation requests.
(19)
Code--The Internal Revenue Code of 1986, as amended from
time to time, together with any applicable regulations, rules, rulings, revenue
procedures, information statements or other official pronouncements issued
thereunder by the United States Department of the Treasury or the Internal
Revenue Service.
(20)
Colonia--A geographic Area located in a county some part
of which is within 150 miles of the international border of this state and
that:
(A)
has a majority population composed of individuals and families
of low-income and very low-income, based on the federal Office of Management
and Budget poverty index, and meets the qualifications of an economically
distressed Area under §17.921, Water Code; or
(B)
has the physical and economic characteristics of a colonia,
as determined by the Texas Water Development Board.
(21)
Commitment Notice--A notice issued by the Department to
a Development Owner pursuant to §50.13 of this title and also referred
to as the "commitment."
(22)
Community Revitalization Plan--A published document, approved
and adopted by the local governing body by ordinance or resolution, that targets
specific geographic areas for low-income residential Developments (serving
residents at or below 60% of the area median income).
(23)
Compliance Period--With respect to a building, the period
of 15 taxable years, beginning with the first taxable year of the Credit Period
pursuant to the Code, §42(i)(1).
(24)
Control--(including the terms "Controlling," "Controlled
by", and/or "under common Control with") the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies
of any Person, whether through the ownership of voting securities, by contract
or otherwise, including specifically ownership of more than 50% of the General
Partner interest in a limited partnership, or designation as a managing General
Partner of a limited liability company.
(25)
Cost Certification Procedures Manual--The manual produced,
and amended from time to time, by the Department which sets forth procedures,
forms, and guidelines for filing requests for IRS Form(s) 8609 for Developments
placed in service under the Housing Tax Credit Program.
(26)
Credit Period--With respect to a building within a Development,
the period of ten taxable years beginning with the taxable year the building
is placed in service or, at the election of the Development Owner, the succeeding
taxable year, as more fully defined in the Code, §42(f)(1).
(27)
Department--The Texas Department of Housing and Community
Affairs, an agency of the State of Texas, established by Chapter 2306, Texas
Government Code, including Department employees and/or the Board. (2306.004)
(28)
Determination Notice--A notice issued by the Department
to the Development Owner of a Tax-Exempt Bond Development which states that
the Development may be eligible to claim Housing Tax Credits without receiving
an allocation of Housing Tax Credits from the State Housing Credit Ceiling
because it satisfies the requirements of this QAP; sets forth conditions which
must be met by the Development before the Department will issue the IRS Form(s)
8609 to the Development Owner; and specifies the Department's determination
as to the amount of tax credits necessary for the financial feasibility of
the Development and its viability as a rent restricted Development throughout
the affordability period. (42(m)(1)(D))
(29)
Developer--Any Person entering into a contract with the
Development Owner to provide development services with respect to the Development
and receiving a fee for such services (which fee cannot exceed 15% of the
Eligible Basis) and any other Person receiving any portion of such fee, whether
by subcontract or otherwise.
(30)
Development--A proposed qualified and/or approved low-income
housing project, as defined by the Code, §42(g), for New Construction
or Rehabilitation, that consists of one or more buildings containing multiple
Units, and that, if the Development shall consist of multiple buildings, is
financed under a common plan and is owned by the same Person for federal tax
purposes, and the buildings of which are either:
(A)
located on a single site or contiguous site; or
(B)
located on scattered sites and contain only rent-restricted
units. (2306.6702)
(31)
Development Consultant--Any Person (with or without ownership
interest in the Development) who provides professional services relating to
the filing of an Application, Carryover Allocation Document, and/or cost certification
documents.
(32)
Development Owner--Any Person, General Partner, or Affiliate
of a Person who owns or proposes a Development or expects to acquire Control
of a Development under a purchase contract approved by the Department. (2306.6702)
(33)
Development Team--All Persons or Affiliates thereof that
play a role in the development, construction, Rehabilitation, management and/or
continuing operation of the subject Property, which will include any Development
Consultant and Guarantor.
(34)
Economically Distressed Area--Consistent with §17.921
of Texas Water Code, an Area in which:
(A)
water supply or sewer services are inadequate to meet minimal
needs of residential users as defined by Texas Water Development Board rules;
(B)
financial resources are inadequate to provide water supply
or sewer services that will satisfy those needs; and
(C)
an established residential subdivision was located on June
1, 1989, as determined by the Texas Water Development Board.
(35)
Eligible Basis--With respect to a building within a Development,
the building's Eligible Basis as defined in the Code, §42(d).
(36)
Executive Award and Review Advisory Committee ("The Committee")--A
Departmental committee that will develop funding priorities and make funding
and allocation recommendations to the Board based upon the evaluation of an
Application in accordance with the housing priorities as set forth in Chapter
2306 of the Texas Government Code, and as set forth herein, and the ability
of an Applicant to meet those priorities. (2306.1112)
(37)
Extended Housing Commitment--An agreement between the
Department, the Development Owner and all successors in interest to the Development
Owner concerning the extended housing use of buildings within the Development
throughout the extended use period as provided in the Code, §42(h)(6).
The Extended Housing Commitment with respect to a Development is expressed
in the LURA applicable to the Development.
(38)
General Contractor--One who contracts for the construction
or Rehabilitation of an entire Development, rather than a portion of the work.
The General Contractor hires subcontractors, such as plumbing contractors,
electrical contractors, etc., coordinates all work, and is responsible for
payment to the subcontractors. This party may also be referred to as the "contractor."
(39)
General Partner--That partner, or collective of partners,
identified as the general partner of the partnership that is the Development
Owner and that has general liability for the partnership. In addition, unless
the context shall clearly indicate the contrary, if the Development Owner
in question is a limited liability company, the term "General Partner" shall
also mean the managing member or other party with management responsibility
for the limited liability company.
(40)
Governmental Entity--Includes federal or state agencies,
departments, boards, bureaus, commissions, authorities, and political subdivisions,
special districts and other similar entities.
(41)
Governmental Instrumentality--A legal entity such as a
housing authority of a city or county, a housing finance corporation, or a
municipal utility, which is created by a local political subdivision under
statutory authority and which instrumentality is authorized to transact business
for the political subdivision.
(42)
Guarantor--Means any Person that provides, or is anticipated
to provide, a guaranty for the equity or debt financing for the Development.
(43)
Historically Underutilized Businesses (HUB)--Any entity
defined as a historically underutilized business with its principal place
of business in the State of Texas in accordance with Chapter 2161, Texas Government
Code.
(44)
Housing Credit Agency--A Governmental Entity charged with
the responsibility of allocating Housing Tax Credits pursuant to the Code, §42.
For the purposes of this title, the Department is the sole "Housing Credit
Agency" of the State of Texas.
(45)
Housing Credit Allocation--An allocation by the Department
to a Development Owner for a specific Application of Housing Tax Credits in
accordance with the provisions of this title.
(46)
Housing Credit Allocation Amount--With respect to a Development
or a building within a Development, that amount the Department determines
to be necessary for the financial feasibility of the Development and its viability
as a Development throughout the affordability period and which it allocates
to the Development.
(47)
Housing Tax Credit ("tax credits")--A tax credit allocated,
or for which a Development may qualify, under the Housing Tax Credit Program,
pursuant to the Code, §42. (2306.6702)
(48)
HUD--The United States Department of Housing and Urban
Development, or its successor.
(49)
Ineligible Building Types--Those Developments which are
ineligible, pursuant to this QAP, for funding under the Housing Tax Credit
Program, as follows:
(A)
Hospitals, nursing homes, trailer parks, dormitories (or
other buildings that will be predominantly occupied by students) or other
facilities which are usually classified as transient housing (other than certain
specific types of transitional housing for the homeless and single room occupancy
units, as provided in the Code, §42(i)(3)(B)(iii) and (iv)) are not eligible.
However, structures formerly used as hospitals, nursing homes or dormitories
are eligible for Housing Tax Credits if the Development involves the conversion
of the building to a non-transient multifamily residential development. Refer
to IRS Revenue Ruling 98-47 for clarification of assisted living.
(B)
Any Qualified Elderly Development or age restricted buildings
in Intergenerational Housing Developments of two stories or more that does
not include elevator service for any Units or living space above the first
floor.
(C)
Any Qualified Elderly Development or age restricted buildings
in Intergenerational Housing Developments with any Units having more than
two bedrooms.
(D)
Any Development with building(s) with four or more stories
that does not include an elevator.
(E)
Any Development proposing New Construction, other than
a Development (New Construction or Rehabilitation) composed entirely of single-family
dwellings, having more than 5% of the Units in the Development with four or
more bedrooms.
(F)
Any Development that violates the Integrated Housing Policy
of the Department, §1.15 of this title.
(G)
Any Development located in an Urban/Exurban Area involving
any New Construction of additional Units (other than a Qualified Elderly Development
and certain specific types of transitional housing for the homeless and single
room occupancy units, as provided in the Code, §42(i)(3)(B)(iii) and
(iv)) in which any of the designs in clauses (i) - (iii) of this subparagraph
are proposed. For purposes of this limitation, a den, study or other similar
space that could reasonably function as a bedroom will be considered a bedroom.
For Applications involving a combination of single family detached dwellings
and multifamily dwellings, the percentages in this subparagraph do not apply
to the single family detached dwellings. An Application may reflect a total
of Units for a given bedroom size greater than the percentages stated below
to the extent that the increase is only to reach the next highest number divisible
by four.
(i)
more than 30% of the total Units are one bedroom Units;
or
(ii)
more than 55% of the total Units are two bedroom Units;
or
(iii)
more than 40% of the total Units are three bedroom Units.
(H)
Any Development that includes age restricted units that
are not consistent with the Intergenerational Housing definition and policy
or a Qualified Elderly Development.
(50)
Intergenerational Housing--Housing that includes specific
units that are restricted to the age requirements of a Qualified Elderly Development
and specific units that are not age restricted in the same Development that:
(A)
have separate and specific buildings exclusively for the
age restricted units
(B)
have separate and specific leasing offices and leasing
personnel exclusively for the age restricted units
(C)
have separate and specific entrances, and other appropriate
security measures for the age restricted units
(D)
provide shared social service programs that encourage intergenerational
activities but also provide separate amenities for each age group
(E)
share the same Development site
(F)
are developed and financed under a common plan and owned
by the same Person for federal tax purposes; and
(G)
meet the requirements of the federal Fair Housing Act.
(51)
IRS--The Internal Revenue Service, or its successor.
(52)
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 this chapter, Chapter 2306, Texas Government Code,
and the requirements of the Code, §42. (2306.6702)
(53)
Local Political Subdivision--A county or municipality
(city) in Texas. For purposes of §50.9(i)(5) of this title, a local political
subdivision may act through a government instrumentality such as a housing
authority, housing finance corporation, or municipal utility.
(54)
Material Noncompliance--As defined in §60.1 of this
title.
(55)
Minority Owned Business--A business entity at least 51%
of which is owned by members of a minority group or, in the case of a corporation,
at least 51% of the shares of which are owned by members of a minority group,
and that is managed and Controlled by members of a minority group in its daily
operations. Minority group includes women, African Americans, American Indians,
Asian Americans, and Mexican Americans and other Americans of Hispanic origin.
(2306.6734)
(56)
New Construction--Any Development not meeting the definition
of Rehabilitation.
(57)
ORCA--Office of Rural Community Affairs, as established
by Chapter 487 of Texas Government Code. (2306.6702)
(58)
Person--Means, without limitation, any natural person,
corporation, partnership, limited partnership, joint venture, limited liability
company, trust, estate, association, cooperative, government, political subdivision,
agency or instrumentality or other organization or entity of any nature whatsoever
and shall include any group of Persons acting in concert toward a common goal,
including the individual members of the group.
(59)
Persons with Disabilities--A person who:
(A)
has a physical, mental or emotional impairment that:
(i)
is expected to be of a long, continued and indefinite duration,
(ii)
substantially impedes his or her ability to live independently,
and
(iii)
is of such a nature that the disability could be improved
by more suitable housing conditions,
(B)
has a developmental disability, as defined in the Developmental
Disabilities Assistance and Bill of Rights Act (42 U.S.C. Section 15002),
or
(C)
has a disability, as defined in 24 CFR §5.403.
(60)
Persons with Special Needs--Persons with alcohol and/or
drug addictions, Colonia residents, Persons with Disabilities, victims of
domestic violence, persons with HIV/AIDS, homeless populations and migrant
farm workers.
(61)
Pre-Application--A preliminary application, in a form
prescribed by the Department, filed with the Department by an Applicant prior
to submission of the Application, including any required exhibits or other
supporting material, as more fully described in §50.8 and §50.21
of this title. (2306.6704)
(62)
Pre-Application Acceptance Period--That period of time
during which Pre-Applications for a Housing Credit Allocation from the State
Housing Credit Ceiling may be submitted to the Department.
(63)
Principal--the term Principal is defined as Persons that
will exercise Control over a partnership, corporation, limited liability company,
trust, or any other private entity. In the case of:
(A)
partnerships, Principals include all General Partners,
Special Limited Partners and Principals with ownership interest;
(B)
corporations, Principals include any officer authorized
by the board of directors to act on behalf of the corporation, including the
president, vice president, secretary, treasurer and all other executive officers,
and each stock holder having a ten percent or more interest in the corporation;
and
(C)
limited liability companies, Principals include all managing
members, members having a ten percent or more interest in the limited liability
company or any officer authorized to act on behalf of the limited liability
company.
(64)
Property--The real estate and all improvements thereon
which are the subject of the Application (including all items of personal
property affixed or related thereto), whether currently existing or proposed
to be built thereon in connection with the Application.
(65)
Qualified Allocation Plan (QAP)--
(A)
As defined in §42(m)(1)(B): Any plan which sets forth
selection criteria to be used to determine housing priorities of the housing
credit agency which are appropriate to local conditions; which also gives
preference in allocating housing credit dollar amounts among selected projects
to projects serving the lowest-income tenants, projects obligated to serve
qualified tenants for the longest periods, and projects which are located
in qualified census tracts and the development of which contributes to a concerted
community revitalization plan; and which provides a procedure that the agency
(or an agent or other private contractor of such agency) will follow in monitoring
for noncompliance with the provisions of §42 and in notifying the Internal
Revenue Service of such noncompliance which such agency becomes aware of and
in monitoring for noncompliance with habitability standards through regular
site visits.
(B)
As defined in §2306.6702, Texas Government Code: A
plan adopted by the board that provides the threshold, scoring, and underwriting
criteria based on housing priorities of the Department that are appropriate
to local conditions; provides a procedure for the Department, the Department's
agent, or another private contractor of the Department to use in monitoring
compliance with the qualified allocation plan and this subchapter; and consistent
with §2306.6710(e), gives preference in housing tax credit allocations
to Developments that, as compared to the other Developments:
(i)
when practicable and feasible based on documented, committed,
and available third-party funding sources, serve the lowest-income tenants
per housing tax credit; and
(ii)
produce for the longest economically feasible period the
greatest number of high quality units committed to remaining affordable to
any tenants who are income-eligible under the low-income housing tax credit
program.
(66)
Qualified Basis--With respect to a building within a Development,
the building's Eligible Basis multiplied by the Applicable Fraction, within
the meaning of the Code, §42(c)(1).
(67)
Qualified Census Tract--Any census tract which is so designated
by the Secretary of HUD in accordance with the Code, §42(d)(5)(C)(ii).
(68)
Qualified Elderly Development--A Development which meets
the requirements of the federal Fair Housing Act and:
(A)
is intended for, and solely occupied by, individuals 62
years of age or older; or
(B)
is intended and operated for occupancy by at least one
individual 55 years of age or older per Unit, where at least 80% of the total
housing Units are occupied by at least one individual who is 55 years of age
or older; and where the Development Owner publishes and adheres to policies
and procedures which demonstrate an intent by the owner and manager to provide
housing for individuals 55 years of age or older. (See 42 U.S.C. Section 3607(b)).
(69)
Qualified Market Analyst--A real estate appraiser certified
or licensed by the Texas Appraiser Licensing and Certification Board, a real
estate consultant, or other professional currently active in the subject property's
market area who demonstrates competency, expertise, and the ability to render
a high quality written report. The individual's performance, experience, and
educational background will provide the general basis for determining competency
as a Market Analyst. Competency will be determined by the Department, in its
sole discretion. The Qualified Market Analyst must be a Third Party.
(70)
Qualified Nonprofit Organization--An organization that
is described in the Code, §501(c)(3) or (4), as these cited provisions
may be amended from time to time, that is exempt from federal income taxation
under the Code, §501(a), that is not affiliated with or Controlled by
a for profit organization, and includes as one of its exempt purposes the
fostering of low-income housing within the meaning of the Code, §42(h)(5)(C).
A Qualified Nonprofit Organization may select to compete in one or more of
the Set-Asides, including, but not limited to, the nonprofit Set-Aside, the
At-Risk Development Set-Aside and the TX-USDA-RHS Allocation. (2306.6729)
(71)
Qualified Nonprofit Development--A Development in which
a Qualified Nonprofit Organization (directly or through a partnership or wholly-owned
subsidiary) holds a controlling interest, materially participates (within
the meaning of the Code, §469(h), as it may be amended from time to time)
in its development and operation throughout the Compliance Period, and otherwise
meets the requirements of the Code, §42(h)(5). (2306.6729)
(72)
Reference Manual--That certain manual, and any amendments
thereto, produced by the Department which sets forth reference material pertaining
to the Housing Tax Credit Program.
(73)
Rehabilitation--The improvement or modification of an
existing structure through alterations, incidental additions or enhancements.
Rehabilitation includes repairs necessary to correct the results of deferred
maintenance, the replacement of principal fixtures and components, improvements
to increase the efficient use of energy, and installation of security devices.
Rehabilitation may include demolition, reconstruction and adding rooms outside
the existing walls of a structure, but adding a housing unit is considered
New Construction.
(74)
Related Party--As defined, (2306.6702)
(A)
The following individuals or entities:
(i)
the brothers, sisters, spouse, ancestors, and descendants
of a person within the third degree of consanguinity, as determined by Chapter
573, Texas Government Code;
(ii)
a person and a corporation, if the person owns more than
50 percent of the outstanding stock of the corporation;
(iii)
two or more corporations that are connected through stock
ownership with a common parent possessing more than 50 percent of:
(I)
the total combined voting power of all classes of stock
of each of the corporations that can vote;
(II)
the total value of shares of all classes of stock of each
of the corporations; or
(III)
the total value of shares of all classes of stock of
at least one of the corporations, excluding, in computing that voting power
or value, stock owned directly by the other corporation;
(iv)
a grantor and fiduciary of any trust;
(v)
a fiduciary of one trust and a fiduciary of another trust,
if the same person is a grantor of both trusts;
(vi)
a fiduciary of a trust and a beneficiary of the trust;
(vii)
a fiduciary of a trust and a corporation if more than
50 percent of the outstanding stock of the corporation is owned by or for:
(I)
the trust; or
(II)
a person who is a grantor of the trust;
(viii)
a person or organization and an organization that is
taxexempt under the Code, §501(a), and that is controlled by that person
or the person's family members or by that organization;
(ix)
a corporation and a partnership or joint venture if the
same persons own more than:
(I)
50 percent of the outstanding stock of the corporation;
and
(II)
50 percent of the capital interest or the profits' interest
in the partnership or joint venture;
(x)
an S corporation and another S corporation if the same
persons own more than 50 percent of the outstanding stock of each corporation;
(xi)
an S corporation and a C corporation if the same persons
own more than 50 percent of the outstanding stock of each corporation;
(xii)
a partnership and a person or organization owning more
than 50 percent of the capital interest or the profits' interest in that partnership;
or
(xiii)
two partnerships, if the same person or organization
owns more than 50 percent of the capital interests or profits' interests.
(B)
Nothing in this definition is intended to constitute the
Department’s determination as to what relationship might cause entities
to be considered "related" for various purposes under the Code.
(75)
Rules--The Department's Housing Tax Credit Program Qualified
Allocation Plan and Rules as presented in this title.
(76)
Rural Area--An area that is located:
(A)
outside the boundaries of a primary metropolitan statistical
area or a metropolitan statistical area;
(B)
within the boundaries of a primary metropolitan statistical
area or a metropolitan statistical area, if the statistical area has a population
of 20,000 or less and does not share a boundary with an urban area; or
(C)
in an area that is eligible for New Construction or Rehabilitation
funding by TX-USDA-RHS. (2306.6702)
(77)
Rural Development--A Development located within a Rural
Area. A Rural Development may not exceed 76 Units if New Construction.
(78)
Selection Criteria--Criteria used to determine housing
priorities of the State under the Housing Tax Credit Program as specifically
defined in §50.9(i) of this title.
(79)
Set-Aside--A reservation of a portion of the available
Housing Tax Credits under the State Housing Credit Ceiling to provide financial
support for specific types of housing or geographic locations or serve specific
types of Applications or Applicants as permitted by the Qualified Allocation
Plan on a priority basis. (2306.6702)
(80)
State Housing Credit Ceiling--The limitation on the aggregate
amount of Housing Credit Allocations that may be made by the Department during
any calendar year, as determined from time to time by the Department in accordance
with the Code, §42(h)(3)(C).
(81)
Student Eligibility--Per the Code, §42(i)(3)(D),
A unit shall not fail to be treated as a low-income unit merely because it
is occupied:
(A)
by an individual who is:
(i)
a student and receiving assistance under Title IV of the
Social Security Act (42 U.S.C. §§601 et seq.), or
(ii)
enrolled in a job training program receiving assistance
under the Job Training Partnership Act (29 USCS §§1501 et seq.,
generally; for full classification, consult USCS Tables volumes) or under
other similar Federal, State, or local laws, or
(B)
entirely by full-time students if such students are:
(i)
single parents and their children and such parents and
children are not dependents (as defined in section 152) of another individual,
or
(ii)
married and file a joint return.
(82)
Tax-Exempt Bond Development--A Development requesting
or having been awarded housing tax credits and which receives a portion of
its financing from the proceeds of tax-exempt bonds which are subject to the
state volume cap as described in the Code, §42(h)(4), such that the Development
does not receive an allocation of tax credit authority from the State Housing
Credit Ceiling.
(83)
Third Party--A Third Party is a Person who is not an:
(A)
Applicant, General Partner, Developer, or General Contractor,
or
(B)
an Affiliate or a Related Party to the Applicant, General
Partner, Developer or General Contractor, or
(C)
Person(s) receiving any portion of the contractor fee or
developer fee.
(84)
Threshold Criteria--Criteria used to determine whether
the Development satisfies the minimum level of acceptability for consideration
as specifically defined in §50.9(h) of this title. (2306.6702)
(85)
Total Housing Development Cost--The total of all costs
incurred or to be incurred by the Development Owner in acquiring, constructing,
rehabilitating and financing a Development, as determined by the Department
based on the information contained in the Application. Such costs include
reserves and any expenses attributable to commercial areas. Costs associated
with the sale or use of Housing Tax Credits to raise equity capital shall
also be included in the Total Housing Development Cost. Such costs include
but are not limited to syndication and partnership organization costs and
fees, filing fees, broker commissions, related attorney and accounting fees,
appraisal, engineering, and the environmental site assessment.
(86)
TX-USDA-RHS--The Rural Housing Services (RHS) of the United
States Department of Agriculture (USDA) serving the State of Texas (formerly
known as TxFmHA) or its successor.
(87)
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. (2306.6702) For purposes
of completing the Rent Schedule for loft or studio type Units (which still
must meet the definition of Bedroom), a Unit with 649 square feet or less
is considered an efficiency unit, a Unit with 650 to 899 square feet is considered
not more than a one-bedroom Unit, a Unit with 900 to 999 square feet is considered
not more than a two-bedroom Unit, a Unit with 1000 to 1199 square feet is
considered not more than a three-bedroom Unit, and a Unit with 1200 square
feet or more is considered a four bedroom unit.
(88)
Urban/Exurban Area--Non-Rural Areas located within the
boundaries of a metropolitan Area as designated by the US Office of Management
and Budget as of November 1, 2005, or for Tax-Exempt Bond Developments or
other Applications not applying for Housing Tax Credits, but applying only
under other Multifamily Programs (HOME, Housing Trust Fund, etc.), the date
Volume III is submitted to the Department.
§50.4.State Housing Credit Ceiling.
The Department shall determine the State Housing Credit Ceiling for
each calendar year as provided in the Code, §42(h)(3)(C), using such
information and guidance as may be made available by the Internal Revenue
Service. The Department shall publish each such determination in the Texas Register
within 30 days after the receipt
of such information as is required for that purpose by the Internal Revenue
Service. The aggregate amount of commitments of Housing Credit Allocations
made by the Department during any calendar year shall not exceed the State
Housing Credit Ceiling for such year as provided in the Code, §42. As
permitted by §42(h)(4), Housing Credit Allocations made to Tax-Exempt
Bond Developments are not included in the State Housing Credit Ceiling.
§50.5.Ineligibility; Disqualification and Debarment; Certain Applicant and Development Standards; Representation by Former Board Member or Other Person; Due Diligence, Sworn Affidavit; Appeals and Administrative Deficiencies for Ineligibility, Disqualification and Debarment.
(a)
Ineligibility. An Application is ineligible if:
(1)
The Applicant, Development Owner, Developer or Guarantor
has been or is 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, (2306.6721(c)(2))
(2)
The Applicant, Development Owner, Developer or Guarantor
has been convicted of a state or federal crime involving fraud, bribery, theft,
misrepresentation of material fact, misappropriation of funds, or other similar
criminal offenses within fifteen years preceding the Application deadline;
or,
(3)
The Applicant, Development Owner, Developer or Guarantor
at the time of Application is: subject to an enforcement or disciplinary action
under state or federal securities law or by the NASD; is subject to a federal
tax lien; or is the subject of an enforcement proceeding with any Governmental
Entity; or
(4)
The Applicant, Development Owner, Developer or Guarantor
with any past due audits has not submitted those past due audits to the Department
in a satisfactory format. A Person is not eligible to receive a commitment
of Housing Tax Credits from the Department if any audit finding or questioned
or disallowed cost is unresolved as of June 1 of each year, or for Tax-Exempt
Bond Developments or other Applications not applying for Housing Tax Credits,
but applying only under other Multifamily Programs (HOME, Housing Trust Fund,
etc.) no later than 30 days after Volume III of the application is submitted;
or
(5)
(2306.6703(a)(1)) At the time of Application or at any
time during the two-year period preceding the date the Application Round begins
(or for Tax-Exempt Bond Developments any time during the two-year period preceding
the date the Application is submitted to the Department), the Applicant or
a Related Party is or has been:
(A)
a member of the Board; or
(B)
the Executive Director, a Deputy Executive Director, the
Director of Multifamily Finance Production, the Director of Portfolio Management
and Compliance, the Director of Real Estate Analysis, or a manager over housing
tax credits employed by the Department.
(6)
(2306.6703(a)(2)) The Applicant proposes to replace in
less than 15 years any private activity bond financing of the Development
described by the Application, unless:
(A)
the Applicant proposes to maintain for a period of 30 years
or more 100 percent of the Development Units supported by Housing Tax Credits
as rent-restricted and exclusively for occupancy by individuals and families
earning not more than 50 percent of the Area Median Gross Income, adjusted
for family size; and
(B)
at least one-third of all the units in the Development
are public housing units or Section 8 Development-based units; or,
(7)
The Development is located in a municipality or, if located
outside a municipality, a county, that has more than twice the state average
of units per capita supported by Housing Tax Credits or private activity bonds
at the time the Application Round begins (or for Tax-Exempt Bond Developments
at the time the reservation is made by the Texas Bond Review Board) unless
the Applicant: (2306.6703(a)(4))
(A)
has obtained prior approval of the Development from the
governing body of the appropriate municipality or county containing the Development;
and
(B)
has included in the Application a written statement of
support from that governing body referencing this rule and authorizing an
allocation of housing tax credits for the Development;
(C)
For purposes of this paragraph, evidence under subparagraphs
(A) and (B) of this paragraph must be received by the Department no later
than April 1, 2006 (or for Tax-Exempt Bond Developments no later than 14 days
before the Board meeting where the credits will be considered) and may not
be more than one year old; or
(8)
The Applicant proposes to construct a new Development that
is located one linear mile (measured by a straight line on a map) or less
from a Development that: (2306.6703(a)(3))
(A)
serves the same type of household as the new Development,
regardless of whether the Developments serve families, elderly individuals,
or another type of household;
(B)
has received an allocation of Housing Tax Credits (including
Tax-Exempt Bond Developments) for New Construction at any time during the
three-year period preceding the date the application round begins (or for
Tax-Exempt Bond Developments the three-year period preceding the date the
Volume I is submitted); and
(C)
has not been withdrawn or terminated from the Housing Tax
Credit Program.
(D)
An Application is not ineligible under this paragraph if:
(i)
the Development is using federal HOPE VI funds received
through the United States Department of Housing and Urban Development; locally
approved funds received from a public improvement district or a tax increment
financing district; funds provided to the state under the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C. Section 12701 et seq.); or funds
provided to the state and participating jurisdictions under the Housing and
Community Development Act of 1974 (42 U.S.C. Section 5301 et seq.); or
(ii)
the Development is located in a county with a population
of less than one million; or
(iii)
the Development is located outside of a metropolitan
statistical area; or
(iv)
the local government where the Development is to be located
has by vote specifically allowed the construction of a new Development located
within one linear mile or less from a Development described under subparagraphs
(A) - (C) of this paragraph. For purposes of this clause, evidence of the
local government vote or evidence required by subparagraph (D) of this paragraph
must be received by the Department no later than April 1, 2006 (or for Tax-Exempt
Bond Developments no later than 14 days before the Board meeting where the
credits will be committed) and may not be more than one year old.
(E)
In determining the age of an existing development as it
relates to the application of the three-year period, the development will
be considered from the date the Board took action on approving the allocation
of tax credits. In dealing with ties between two or more Developments as it
relates to this rule, refer to §50.9(j).
(9)
A submitted Application has an entire Volume of the application
missing; has excessive omissions of documentation from the Threshold Criteria
or Uniform Application documentation; or is so unclear, disjointed or incomplete
that a thorough review can not reasonably be performed by the Department,
as determined by the Department.
(b)
Disqualification and Debarment. The Department will disqualify
an Application, and/or debar a Person (see §2306.6721, Texas Government
Code), if it is determined by the Department that any issues identified in
the paragraphs of this subsection exist. The Department may debar a Person
for one year from the date of debarment, or until the violation causing the
debarment has been remedied, whichever term is longer, if the Department determines
the facts warrant it. Causes for disqualification and debarment include: (2306.6721)
(1)
The provision of fraudulent information, knowingly falsified
documentation, or other intentional or negligent material misrepresentation
in the Application or other information submitted to the Department at any
stage of the evaluation or approval process; or,
(2)
The Applicant, Development Owner, Developer or Guarantor
or anyone that has ownership interest in the Development Owner, Developer
or Guarantor that is active in the ownership or Control of one or more other
rent restricted rental housing properties in the state of Texas administered
by the Department is in Material Noncompliance with the LURA (or any other
document containing an Extended Housing Commitment) or the program rules in
effect for such property as further described in §60.1 of this title
on May 1, 2006 or for Tax-Exempt Bond Developments or other Applications not
applying for Housing Tax Credits, but applying only under other Multifamily
Programs (HOME, Housing Trust Fund, etc.) no later than 30 days after Volume
III of the application is submitted; (2306.6721(c)(3)) or
(3)
The Applicant, Development Owner, Developer or Guarantor
or anyone that has ownership interest in the Development Owner, Developer
or Guarantor that is active in the ownership or Control of one or more other
rent restricted rental housing properties outside of the state of Texas has
an incidence of Material Noncompliance with the LURA or the program rules
in effect for such tax credit property as further described in §60.1
of this title on May 1, 2006 or for Tax-Exempt Bond Developments or other
Applications not applying for Housing Tax Credits, but applying only under
other Multifamily Programs (HOME, Housing Trust Fund, etc.) no later than
30 days after Volume III of the application is submitted; or
(4)
The Applicant, Development Owner, Developer, or any Guarantor,
or any Affiliate of such entity has been a Principal of any entity that failed
to make all loan payments to the Department in accordance with the terms of
the loan, as amended, or was otherwise in default with any provisions of any
loans from the Department.
(5)
The Applicant or the Development Owner that is active in
the ownership or Control of one or more tax credit properties in the state
of Texas has failed to pay in full any fees within 30 days of when they were
billed by the Department, as further described in §50.20 of this title;
or
(6)
the Applicant or a Related Party and any Person who is
active in the construction, Rehabilitation, ownership, or Control of the proposed
Development, including a General Partner or contractor, and a Principal or
Affiliate of a General Partner or contractor, or an individual employed as
a lobbyist by the Applicant or a Related Party, communicates with any Board
member during the period of time beginning on the date an Application is filed
and ending on the date the Board makes a final decision with respect to any
approval of that Application, unless the communication takes place at any
board meeting or public hearing held with respect to that Application. Communication
with Department staff must be in accordance with §50.9(b) of this title;
violation of the communication restrictions of §50.9(b) is also a basis
for disqualification and/or debarment. (2306.1113)
(7)
It is determined by the Department’s General Counsel
that there is evidence that establishes probable cause to believe that an
Applicant, Development Owner, Developer, or any of their employees or agents
has violated a state revolving door or other standard of conduct or conflict
of interest statute, including §2306.6733, Texas Government Code, or
a section of Chapter 572, Texas Government Code, in making, advancing, or
supporting the Application.
(8)
Applicants may be ineligible as further described in §50.17(d)(8)
of this title.
(9)
The Applicant or a Related Party has failed to comply in
the past with, or materially violates, any condition imposed by the Department
in connection with the allocation of Housing Tax Credits, or has repeatedly
violated a LURA. (2306.6721(b), (c)(1) and (c)(3).
(c)
Certain Applicant and Development Standards. Notwithstanding
any other provision of this section, the Department may not allocate tax credits
to a Development proposed by an Applicant if the Department determines that:
(2306.223)
(1)
the Development is not necessary to provide needed
decent, safe, and sanitary housing at rental prices that individuals or families
of low and very low-income or families of moderate income can afford;
(2)
the Development Owner undertaking the proposed Development
will not supply well-planned and well-designed housing for individuals or
families of low and very low-income or families of moderate income;
(3)
the Development Owner is not financially responsible;
(4)
the Development Owner has contracted, or will contract
for the proposed Development with, a Developer that:
(A)
is on the Department's debarred list, including any
parts of that list that are derived from the debarred list of the United States
Department of Housing and Urban Development;
(B)
has breached a contract with a public agency and
failed to cure that breach; or
(C)
misrepresented to a subcontractor the extent to which
the Developer has benefited from contracts or financial assistance that has
been awarded by a public agency, including the scope of the Developer's participation
in contracts with the agency and the amount of financial assistance awarded
to the Developer by the agency;
(5)
the financing of the housing Development is not a
public purpose and will not provide a public benefit; and
(6)
the Development will be undertaken outside the authority
granted by this chapter to the Department and the Development Owner.
(d)
Representation by Former Board Member or Other Person.
(2306.6733)
(1)
A former Board member or a former executive director, deputy
executive director, director of multifamily finance production, director of
portfolio management and compliance, director of real estate analysis or manager
over housing tax credits previously employed by the Department may not:
(A)
for compensation, represent an Applicant or one of its
Related Parties for an allocation of tax credits before the second anniversary
of the date that the Board member’s, director’s, or manager’s
service in office or employment with the Department ceased;
(B)
represent any Applicant or a Related Party of an Applicant
or receive compensation for services rendered on behalf of any Applicant or
Related Party regarding the consideration of an Application in which the former
board member, director, or manager participated during the period of service
in office or employment with the Department, either through personal involvement
or because the matter was within the scope of the board member’s, director’s,
or manager’s official responsibility; or for compensation, communicate
directly with a member of the legislative branch to influence legislation
on behalf of an Applicant or Related Party before the second anniversary of
the date that the board member’s, director’s, or manager’s
service in office or employment with the Department ceased.
(2)
A Person commits a criminal offense if the Person violates
section 2306.6733. An offense under this section is a Class A misdemeanor.
(e)
Due Diligence, Sworn Affidavit. In exercising due diligence
in considering information of possible ineligibility, possible grounds for
disqualification and debarment, Applicant and Development standards, possible
improper representation or compensation, or similar matters, the Department
may request a sworn affidavit or affidavits from the Applicant, Development
Owner, Developer, Guarantor, or other persons addressing the matter. If an
affidavit determined to be sufficient by the Department is not received by
the Department within seven business days of the date of the request by the
Department, the Department may terminate the Application.
(f)
Appeals and Administrative Deficiencies for Ineligibility,
Disqualification and Debarment. An Applicant or Person found ineligible, disqualified,
debarred or otherwise terminated under subsections (a) - (e) of this section
will be notified in accordance with the Administrative Deficiency process
described in §50.9(d)(4) of this title. They may also utilize the appeals
process described in §50.17(b) of this title. (2306.6721(d))
§50.6.Site and Development Restrictions: Floodplain; Ineligible Building Types; Scattered Site Limitations; Credit Amount; Limitations on the Size of Developments; Limitations no Rehabilitation Costs; Unacceptable Sites; Appeals and Administrative Deficiencies for Site and Development Restrictions.
(a)
Floodplain. Any Development proposing New Construction
located within the 100 year floodplain as identified by the Federal Emergency
Management Agency (FEMA) Flood Insurance Rate Maps must develop the site so
that all finished ground floor elevations are at least one foot above the
flood plain and parking and drive areas are no lower than six inches below
the floodplain, subject to more stringent local requirements. If no FEMA Flood
Insurance Rate Maps are available for the proposed Development, flood zone
documentation must be provided from the local government with jurisdiction
identifying the 100 year floodplain. No buildings or roads that are part of
a Development proposing Rehabilitation, with the exception of developments
with federal funding assistance from HUD or TX USDA-RHS, will be permitted
in the 100 year floodplain unless they already meet the requirements established
in this subsection for New Construction.
(b)
Ineligible Building Types. Applications involving Ineligible
Building Types as defined in §50.3(49) of this title will not be considered
for allocation of tax credits.
(c)
Scattered Site Limitations. Consistent with §50.3(30)
of this title, a Development must be financed under a common plan, be owned
by the same Person for federal tax purposes, and the buildings may be either
located on a single site or contiguous site, or be located on scattered sites
and contain only rent-restricted units.
(d)
Credit Amount. The Department shall issue tax credits only
in the amount needed for the financial feasibility and viability of a Development
throughout the affordability period. The issuance of tax credits or the determination
of any allocation amount in no way represents or purports to warrant the feasibility
or viability of the Development by the Department, or that the Development
will qualify for and be able to claim Housing Tax Credits. The Department
will limit the allocation of tax credits to no more than $1.2 million per
Development. The Department shall not allocate more than $2 million of tax
credits in any given Application Round to any Applicant, Developer, Related
Party or Guarantor; Housing Tax Credits approved by the Board during the 2006
calendar year, including commitments from the 2006 Credit Ceiling and forward
commitments from the 2007 Credit Ceiling, are applied to the credit cap limitation
for the 2006 Application Round. In order to encourage the capacity enhancement
of developers in rural areas, the Department will prorate the credit amount
allocated in situations where an Application is submitted in the Rural Regional
Allocation and the Development has 76 Units or less. To be considered for
this provision, a copy of a Joint Venture Agreement and narrative on how this
builds the capacity of the inexperienced developers is required. Tax-Exempt
Bond Development Applications are not subject to these Housing Tax Credit
limitations, and Tax-Exempt Bond Developments will not count towards the total
limit on tax credits per Applicant. The limitation does not apply (2306.6711(b)):
(1)
to an entity which raises or provides equity for one or
more Developments, solely with respect to its actions in raising or providing
equity for such Developments (including syndication related activities as
agent on behalf of investors);
(2)
to the provision by an entity of "qualified commercial
financing" within the meaning of the Code (without regard to the 80% limitation
thereof);
(3)
to a Qualified Nonprofit Organization or other not-for-profit
entity, to the extent that the participation in a Development by such organization
consists only of the provision of loan funds, grants or social services; and
(4)
to a Development Consultant with respect to the provision
of consulting services, provided the Development Consultant fee received for
such services does not exceed 10% of the fee to be paid to the Developer (or
20% for Qualified Nonprofit Developments), or $150,000, whichever is greater.
(e)
Limitations on the Size of Developments.
(1)
The minimum Development size will be 16 Units if the Development
involves Housing Tax Credits. The minimum Development size will be 4 Units
if the funding source only involves the Housing Trust Fund or HOME Program.
(2)
Rural Developments involving New Construction will be limited
to 76 Units. Rural Developments involving only Rehabilitation do not have
a size limitation.
(3)
Developments involving New Construction, that are not Tax-Exempt
Bond Developments, will be limited to 252 Total Units, wherein the maximum
Department administered Units will be limited to 200 Units. Tax-Exempt Bond
Developments will be limited to 252 Total Units. These maximum Unit limitations
also apply to those Developments which involve a combination of Rehabilitation
and New Construction. Developments that consist solely of acquisition/Rehabilitation
or Rehabilitation only may exceed the maximum Unit restrictions. For those
Developments which are a second phase or are otherwise adjacent to an existing
tax credit Development unless such proposed Development is being constructed
to provide replacement of previously existing affordable multifamily units
on its site (in a number not to exceed the original units being replaced)
or that were originally located within a one mile radius from the proposed
Development, the combined Unit total for the Developments may not exceed the
maximum allowable Development size, unless the first phase has been completed
and has attained Sustaining Occupancy (as defined in §1.31 of this title)
for at least six months.
(f)
Limitations on the Location of Developments. Staff will
only recommend, and the Board may only allocate, housing tax credits from
the Credit Ceiling to more than one Development in the same calendar year
if the Developments are, or will be, located more than one linear mile apart
as determined by the Department. If the Board forward commits credits from
the following year’s allocation of credits, the Development is considered
to be in the calendar year in which the Board votes, not in the year of the
Credit Ceiling. This limitation applies only to communities contained within
counties with populations exceeding one million (which for calendar year 2006
are Harris, Dallas, Tarrant and Bexar Counties). For purposes of this rule,
any two sites not more than one linear mile apart are deemed to be "in a single
community." (2306.6711) This restriction does not apply to the allocation
of housing tax credits to Developments financed through the Tax-Exempt Bond
program, including the Tax-Exempt Bond Developments under review and existing
Tax-Exempt Bond Developments in the Department’s portfolio. (2306.67021)
(g)
Rehabilitation Costs. Rehabilitation Developments must
establish that the Rehabilitation will substantially improve the condition
of the housing and will involve at least $12,000 per Unit in direct hard costs
unless financed with TX-USDA-RHS in which case the minimum is $6,000.
(h)
Unacceptable Sites. Developments will be ineligible if
the Development is located on a site that is determined to be unacceptable
by the Department.
(i)
Appeals and Administrative Deficiencies for Site and Development
Restrictions. An Application or Development found to be in violation under
subsections (a) - (h) of this section will be notified in accordance with
the Administrative Deficiency process described in §50.9(d)(4) of this
title. They may also utilize the appeals process described in §50.17(b)
of this title.
§50.7.Regional Allocation Formula; Set-Asides; Redistribution of Credits.
(a)
Regional Allocation Formula. As required by §2306.111(d),
Texas Government Code, the Department uses a regional distribution formula
developed by the Department to distribute credits from the State Housing Credit
Ceiling to all urban/exurban areas and rural areas. The formula is based on
the need for housing assistance, and the availability of housing resources
in those urban/exurban areas and rural areas, and the Department uses the
information contained in the Department’s annual state low income housing
plan and other appropriate data to develop the formula. This formula establishes
separate targeted tax credit amounts for rural areas and urban/exurban areas
within each of the Uniform State Service Regions. Each Uniform State Service
Region’s targeted tax credit amount will be published on the Department’s
web site. The regional allocation for rural areas is referred to as the Rural
Regional Allocation and the regional allocation for urban/exurban areas is
referred to as the Urban/Exurban Regional Allocation. Developments qualifying
for the Rural Regional Allocation must meet the Rural Development definition.
At least 5% of each region’s allocation for each calendar year shall
be allocated to Developments which are financed through TX-USDA-RHS, that
meet the definition of a Rural Development, do not exceed 76 Units if New
Construction, and have filed an "Intent to Request 2006 Housing Tax Credits"
form by the Pre-Application submission deadline. These Developments will be
attributed to the Rural Regional Allocation in each region where they are
located. Developments financed through TX-USDA-RHS's 538 Guaranteed Rural
Rental Housing Program will not be considered under this set-aside. Commitments
of 2006 Housing Tax Credits issued by the Board in 2005 will be applied to
each Set-Aside, Rural Regional Allocation, Urban/Exurban Regional Allocation
and TX-USDA-RHS Allocation for the 2006 Application Round as appropriate.
(b)
Set-Asides. An Applicant may elect to compete in as many
of the following Set-Asides for which the proposed Development qualifies:
(2306.111(d))
(1)
At least 10% of the State Housing Credit Ceiling for each
calendar year shall be allocated to Qualified Nonprofit Developments which
meet the requirements of the Code, §42(h)(5). Qualified Nonprofit Organizations
must have the Controlling interest in the Qualified Nonprofit Development
applying for this Set-Aside. If the organization’s Application is filed
on behalf of a limited partnership, the Qualified Nonprofit Organization must
be the controlling managing General Partner. If the organization’s Application
is filed on behalf of a limited liability company, the Qualified Nonprofit
Organization must be the controlling Managing Member. Additionally, a Qualified
Nonprofit Development submitting an Application in the nonprofit set-aside
must have the nonprofit entity or its nonprofit affiliate or subsidiary be
the Developer or a co-Developer as evidenced in the development agreement.
(2306.6729 and 2306.6706(b))
(2)
At least 15% of the allocation to each Uniform State Service
Region will be set aside for allocation under the At-Risk Development Set-Aside.
Through this Set-Aside, the Department, to the extent possible, shall allocate
credits to Applications involving the preservation of Developments designated
as At-Risk Developments as defined in §50.3(13) of this title. (2306.6714).
To qualify as an At-Risk Development, the Applicant must provide evidence
that it either is not eligible to renew, retain or preserve any portion of
the financial benefit described in §50.3(13)(A) of this title, or provide
evidence that it will renew, retain or preserve the financial benefit described
in §50.3(13)(A) of this title; and must have filed an "Intent to Request
2006 Housing Tax Credits" form by the Pre-Application submission deadline.
(c)
Redistribution of Credits. (2306.111(d)) If any amount
of housing tax credits remain after the initial commitment of housing tax
credits among the Rural Regional Allocation and Urban/Exurban Regional Allocation
within each Uniform State Service Region and among the Set-Asides, the Department
may redistribute the credits amongst the different regions and Set-Asides
depending on the quality of Applications submitted as evaluated under the
factors described in §50.9(d) of this title, the need to most closely
achieve regional allocation goals and then the level of demand exhibited in
the Uniform State Service Regions during the Allocation Round. However as
described in subsection (b)(1) of this section, no more than 90% of the State's
Housing Credit Ceiling for the calendar year may go to Developments which
are not Qualified Nonprofit Developments. If credits will be transferred from
a Uniform State Service Region which does not have enough qualified Applications
to meet its regional credit distribution amount, then those credits will be
apportioned to the other Uniform State Service Regions.
§50.8.Pre-Application: Submission; Communication with Departments Staff; Evaluation Process; Threshold Criteria and Review; Results. (2306.6704)
(a)
Pre-Application Submission. Any Applicant requesting a
Housing Credit Allocation may submit a Pre-Application to the Department during
the Pre-Application Acceptance Period along with the required Pre-Application
Fee as described in §50.20 of this title. Only one Pre-Application may
be submitted by an Applicant for each site under the State Housing Credit
Ceiling. The Pre-Application submission is a voluntary process. While the
Pre-Application Acceptance Period is open, Applicants may withdraw their Pre-Application
and subsequently file a new Pre-Application utilizing the original Pre-Application
Fee that was paid as long as no evaluation was performed by the Department.
The Department is authorized to request the Applicant to provide additional
information it deems relevant to clarify information contained in the Pre-Application
or to submit documentation for items it considers to be Administrative Deficiencies.
The rejection of a Pre-Application shall not preclude an Applicant from submitting
an Application with respect to a particular Development or site at the appropriate
time.
(b)
Communication with the Department. Applicants that submit
a Pre-Application are restricted from communication with Department staff
as provided in §50.9(b) of this title. (2306.1113)
(c)
Pre-Application Evaluation Process. Eligible Pre-Applications
will be evaluated for Pre-Application Threshold Criteria. A TX-USDA-RHS 515
Development (only for Rehabilitation) will receive the Pre-Application points
further outlined in §50.9(i) of this title upon submission to the Department
of an executed TX-USDA-RHS letter indication TX-USDA-RHS has received a Consent
Request, also referred to as a preliminary Submittal, as described in 7 CFR
3560.406. Applications involving New Construction that are associated with
a TX-USDA-RHS Development are not exempt from Pre-Application and are eligible
to compete for the Pre-Application points further outlined in §50.9(i)
of this title. An Application that has not received confirmation from the
state office of RHS of its financing from TX-USDA-RHS may qualify for Pre-Application
points, but such points shall be withdrawn upon the Development’s receipt
of TX-USDA-RHS financing. Pre-Applications that are found to have Administrative
Deficiencies will be handled in accordance with §50.9(d)(4) of this title.
Department review at this stage is limited and not all issues of eligibility
and threshold are reviewed at Pre-Application. Acceptance by staff of a Pre-Application
does not ensure that an Applicant satisfies all Application eligibility, Threshold
or documentation requirements. The Department is not responsible for notifying
an Applicant of potential areas of ineligibility or threshold deficiencies
at the time of Pre-Application.
(d)
Pre-Application Threshold Criteria and Review. Applicants
submitting a Pre-Application will be required to submit information demonstrating
their satisfaction of the Pre-Application Threshold Criteria. The Pre-Applications
not meeting the Pre-Application Threshold Criteria will be terminated and
the Applicant will receive a written notice to the effect that the Pre-Application
Threshold Criteria have not been met. The Department shall not be responsible
for the Applicant’s failure to meet the Pre-Application Threshold Criteria
and any failure of the Department’s staff to notify the Applicant of
such inability to satisfy the Pre-Application Threshold Criteria shall not
confer upon the Applicant any rights to which it would not otherwise be entitled.
The Pre-Application Threshold Criteria include:
(1)
Submission of a "Pre-Application Submission Form" and "Certification
of Pre-Application Itemized Self-Score" and
(2)
Evidence of property control through March 1, 2006 as evidenced
by the documentation required under §50.9(h)(7)(A) of this title.
(3)
Evidence in the form of a certification that all of the
notifications required under this paragraph have been made. Notifications
under subparagraph (B)(i) of this paragraph must be made by the deadlines
described in that clause; notifications under subparagraphs (B)(ii) - (ix)
of this paragraph must be made prior to the close of the Pre-Application Acceptance
Period. (2306.6704) Evidence of notification must meet the requirements identified
in subparagraph (A) of this paragraph to all of the individuals and entities
identified in subparagraph (B) of this paragraph. Evidence of such notifications
shall include a certification in the format provided by the Department that
the Applicant made the notifications to all required individuals and entities
in the format provided by the Department on or before the deadlines. (2306.6704)
(A)
Each such notice must include, at a minimum, all of the
following:
(i)
The Applicant’s name, address, individual contact
name and phone number;
(ii)
The Development name, address, city and county;
(iii)
A statement informing the entity or individual being
notified that the Applicant is submitting a request for Housing Tax Credits
with the Texas Department of Housing and Community Affairs;
(iv)
Statement of whether the Development proposes New Construction
or Rehabilitation;
(v)
The type of Development being proposed (single family homes,
duplex, apartments, townhomes, highrise etc.) and population being served
(family, Intergenerational Housing, or elderly);
(vi)
The approximate total number of Units and approximate
total number of low-income Units;
(vii)
The approximate percentage of Units serving each level
of AMGI (e.g. 20% at 50% of AMGI, etc.) and the percentage of Units that are
market rate;
(viii)
The number of Units and proposed rents (less utility
allowances) for the low-income Units and the number of Units and the proposed
rents for any market rate Units. Rents to be provided are those that are effective
at the time of the Pre-Application, which are subject to change as annual
changes in the area median income occur; and
(ix)
The expected completion date if credits are awarded.
(B)
Notification must be sent to all of the following individuals
and entities. Officials to be notified are those officials in office at the
time the Pre-Application is submitted.
(i)
Neighborhood Organizations on record with the state or
county. Applicants must provide evidence that neighborhood organizations were
notified pursuant to this subsection. Evidence in the form of a certification
must be provided that a letter requesting information on neighborhood organizations
on record with the state or county in which the Development is to be located
and whose boundaries contain the proposed Development site and meeting the
requirements of "Neighborhood Organization Request" as outlined in the Application
was sent no later than December 20, 2005 to the local elected official for
the city or if located outside of a city, then the county where the Development
is proposed to be located. If the Development is located in a jurisdiction
that has district based local elected officials, or both at-large and district
based local elected officials, the request must be made to the city council
member or county commissioner representing that district; if the Development
is located in a jurisdiction that has only at-large local elected officials,
the request must be made to the mayor or county judge for the jurisdiction.
For urban/exurban areas, entities identified in the letter from the local
elected official whose boundaries include the proposed Development and whose
listed address has the same zip code as the zip code for the Development must
be provided with written notification. If any other zip codes exist within
a half mile of the Development site, then all entities identified in the letters
with those adjacent zip codes must also be provided with written notification.
For rural areas, all entities identified in the letters whose listed address
is within a half mile of the Development site must be provided with written
notification. If the Applicant can certify that there are no neighborhood
organizations on any list from the local elected officials which are required
to be notified pursuant to this subsection, then such certification in lieu
of notification may be acceptable. If no reply letter is received from the
local elected officials by January 1, 2006, (or For Tax-Exempt Bond Developments
or Applications not applying for Tax Credits, but applying only for other
Multifamily Programs such as HOME, Housing Trust Fund, etc., by 7 days prior
to the submission of the Application) then the Applicant must submit a statement
attesting to that fact. If an Applicant has knowledge of any neighborhood
organizations on record with the state or county in which the Development
is to be located and whose boundaries contain the proposed Development site,
the Applicant must notify those organizations. In the event that local elected
officials refer the Applicant to another source, the Applicant must request
neighborhood organizations from that source in the same format. If the Applicant
has no knowledge of neighborhood organizations within whose boundaries the
Development is proposed to be located, the Applicant must attest to that fact
in the format provided by the Department as part of the Application.
(ii)
Superintendent of the school district containing the Development;
(iii)
Presiding officer of the board of trustees of the school
district containing the Development;
(iv)
Mayor of any municipality containing the Development;
(v)
All elected members of the governing body of any municipality
containing the Development;
(vi)
Presiding officer of the governing body of the county
containing the Development;
(vii)
All elected members of the governing body of the county
containing the Development;
(viii)
State senator of the district containing the Development;
and
(ix)
State representative of the district containing the Development.
(e)
Pre-Application Results. Only Pre-Applications which have
satisfied all of the Pre-Application Threshold Criteria requirements set forth
in subsection (d) of this section and §50.9(i)(12) of this title, will
be eligible for Pre-Application points. The order and scores of those Developments
released on the Pre-Application Submission Log do not represent a commitment
on the part of the Department or the Board to allocate tax credits to any
Development and the Department bears no liability for decisions made by Applicants
based on the results of the Pre-Application Submission Log. Inclusion of a
Development on the Pre-Application Submission Log does not ensure that an
Applicant will receive points for a Pre-Application.
§50.9.Application: Submission; Communication with Department Employees; Adherence to Obligations; Evaluation Process for Competitive Applications Under the State Housing Credit Ceiling; Evaluation Process for Tax-Exempt Bond Development Applications; Evaluation Process for Rural Rescue Applications Under the 2007 Credit Ceiling; Experience Pre-Certification Procedures; Threshold Criteria; Selection Criteria; Tiebreaker Factors; Staff Recommendations.
(a)
Application Submission. Any Applicant requesting a Housing
Credit Allocation or a Determination Notice must submit an Application, and
the required Application fee as described in §50.20 of this title, to
the Department during the Application Acceptance Period. Only complete Applications
will be accepted. All required volumes must be appropriately bound as required
by the Application Submission Procedures Manual and fully complete for submission
and received by the Department not later than 5:00 p.m. on the date the Application
is due. Only one Application may be submitted for a site in an Application
Round. While the Application Acceptance Period is open, Applicants may withdraw
their Application and subsequently file a new Application utilizing the original
Pre-Application Fee that was paid as long as no evaluation was performed by
the Department. The Department is authorized, but not required, to request
the Applicant to provide additional information it deems relevant to clarify
information contained in the Application or to submit documentation for items
it considers to be an Administrative Deficiency, including ineligibility criteria,
site and development restrictions, and threshold and selection criteria documentation.
(2306.6708) An Applicant may not change or supplement an Application in any
manner after the filing deadline, and may not add any set-asides, increase
their credit amount, or revise their unit mix (both income levels and bedroom
mixes), except in response to a direct request from the Department to remedy
an Administrative Deficiency as further described in §50.3(1) of this
title or by amendment of an Application after a commitment or allocation of
tax credits as further described in §50.17(d) of this title.
(b)
Communication with Department Employees. Communication
with Department staff by Applicants that submit a Pre-Application or Application
must follow the following requirements. During the period beginning on the
date a Development Pre-Application or Application is filed and ending on the
date the Board makes a final decision with respect to any approval of that
Application, the Applicant or a Related Party, and any Person that is active
in the construction, rehabilitation, ownership or Control of the proposed
Development including a General Partner or contractor and a Principal or Affiliate
of a General Partner or contractor, or individual employed as a lobbyist by
the Applicant or a Related Party, may communicate with an employee of the
Department about the Application orally or in written form, which includes
electronic communications through the Internet, so long as that communication
satisfies the conditions established under paragraphs (1) - (3) of this subsection.
Section 50.5(b)(6) of this title applies to all communication with Board members.
Communications with Department employees is unrestricted during any board
meeting or public hearing held with respect to that Application.
(1)
The communication must be restricted to technical or administrative
matters directly affecting the Application;
(2)
The communication must occur or be received on the premises
of the Department during established business hours;
(3)
a record of the communication must be maintained by the
Department and included with the Application for purposes of board review
and must contain the date, time, and means of communication; the names and
position titles of the persons involved in the communication and, if applicable,
the person's relationship to the Applicant; the subject matter of the communication;
and a summary of any action taken as a result of the communication. (2306.1113)
(c)
Adherence to Obligations. (2306.6720, General Appropriation
Act, Article VII, Rider 8(a)) All representations, undertakings and commitments
made by an Applicant in the application process for a Development, whether
with respect to Threshold Criteria, Selection Criteria or otherwise, shall
be deemed to be a condition to any Commitment Notice, Determination Notice,
or Carryover Allocation for such Development, the violation of which shall
be cause for cancellation of such Commitment Notice, Determination Notice,
or Carryover Allocation by the Department, and if concerning the ongoing features
or operation of the Development, shall be enforceable even if not reflected
in the LURA. All such representations are enforceable by the Department and
the tenants of the Development, including enforcement by administrative penalties
for failure to perform, as stated in the representations and in accordance
with the LURA. Effective December 1, 2006 (meaning this does not apply to
amendments received prior to this effective date and does not apply to 2006
Tax Credit Applications), if a Development Owner does not produce the Development
as represented in the Application and in any amendments approved by the Department
subsequent to the Application, or does not provide the necessary evidence
for points received for the Commitment of Development Funding by Local Political
Subdivisions by the required deadline (unless granted an extension by the
Department):
(1)
the Development Owner must provide a plan to the Department,
for approval and subsequent implementation, that incorporates additional amenities
to compensate for the non-conforming components; and
(2)
the Board will opt either to terminate the Application
and rescind the Commitment Notice, Determination Notice or Carryover Allocation
Agreement as applicable or the Department must:
(A)
Reduce the score by ten points for applications for tax
credits that are submitted by an Applicant or Affiliate related to the Development
Owner of the non-conforming Development by ten points for the two Application
Rounds concurrent to, or following, the date that the non-conforming aspect,
or lack of financing, was identified by the Department; and
(B)
prohibit eligibility to apply for tax credits for a Tax-Exempt
Bond Development that are submitted by an Applicant or Affiliate related to
the Development Owner of the non-conforming Development for 12 months from
the date that the non-conforming aspect, or lack of financing, was identified
by the Department.
(d)
Evaluation Process for Competitive Applications Under the
State Housing Credit Ceiling. Applications submitted for competitive consideration
under the State Housing Credit Ceiling will be reviewed according to the process
outlined in this subsection. An Application, during any of these stages of
review, may be determined to be ineligible as further described in §50.5;
Applicants will be promptly notified in these instances.
(1)
Eligibility and Selection Criteria Review. All Applications
will first be reviewed as described in this paragraph. Applications will be
confirmed for eligibility under §50.5 of this chapter and Set-Aside eligibility
will be confirmed. Then, each Application will be preliminarily scored according
to the Selection Criteria listed in subsection (i) of this section. When a
particular scoring criterion involves multiple points, the Department will
award points to the proportionate degree, in its determination, to which a
proposed Development complied with that criterion. As necessary to complete
this process only, Administrative Deficiencies may be issued to the Applicant.
This process will generate a preliminary Department score for every application.
(2)
Priority Review Assessment. Each Application will be assessed
based on either the Applicant’s self-score or the Department’s
preliminary score, region, and any Set-Asides that the Application indicates
it is eligible for, consistent with paragraph (5) of this subsection. Those
Applications that appear to be most competitive will be designated as "priority"
Applications. Applications that do not appear to be competitive may not be
reviewed in detail for Threshold Criteria during the Application Round.
(3)
Threshold Criteria Review. Applications that are designated
as "priority" from the Priority Review Assessment will be evaluated in detail
for eligibility under §50.6 of this chapter and against the Threshold
Criteria. Applications not meeting Threshold Criteria will be notified of
any Administrative Deficiencies, in which event the Applicant is given an
opportunity to correct such deficiencies. Applications not meeting Threshold
Criteria after receipt and review of the Administrative Deficiency response
will be terminated and the Applicant will be provided a written notice to
that effect. The Department shall not be responsible for the Applicant's failure
to meet the Threshold Criteria, and any failure of the Department's staff
to notify the Applicant of such inability to satisfy the Threshold Criteria
shall not confer upon the Applicant any rights to which it would not otherwise
be entitled. Not all Applications will be reviewed in detail for Threshold
Criteria. To the extent that the review of Threshold Criteria documentation,
or submission of Administrative Deficiency documentation, alters the score
assigned to the Application, Applicants will be notified of their final score.
As Applications are evaluated under this Review process, a final score by
the Department may remove the Application from "priority" status at which
point other Applications may be designated as "priority" and reviewed under
this paragraph.
(4)
Administrative Deficiencies. If an Application contains
deficiencies which, in the determination of the Department staff, require
clarification or correction of information submitted at the time of the Application,
the Department staff may request clarification or correction of such Administrative
Deficiencies. Because the review for Eligibility and Selection, and Threshold
Criteria may occur separately, Administrative Deficiency requests may be made
several times. The Department staff will request clarification or correction
in a deficiency notice in the form of a facsimile, email (if an email address
is provided by the Applicant) and a telephone call to the Applicant and one
other party identified by the Applicant in the Application advising that such
a request has been transmitted. If Administrative Deficiencies are not clarified
or corrected to the satisfaction of the Department within five business days
of the deficiency notice date, then for competitive Applications under the
State Housing Credit Ceiling five points shall be deducted from the Selection
Criteria score for each additional day the deficiency remains unresolved.
If deficiencies are not clarified or corrected within seven business days
from the deficiency notice date, then the Application shall be terminated.
The time period for responding to a deficiency notice begins at the start
of the business day following the deficiency notice date. Deficiency notices
may be sent to an Applicant prior to or after the end of the Application Acceptance
Period.
(5)
Subsequent Evaluation of Prioritized Applications and Methodology
for Award Recommendations to the Board. The Department will assign, as herein
described, Developments for review for financial feasibility by the Department’s
Real Estate Analysis Division - in general these will be those applications
identified as "priority". This prioritization order will also be used in making
recommendations to the Board. Assignments will be determined by first selecting
the Applications with the highest scores in the At-Risk Set-Aside and TX-USDA-RHS
Allocation within each Uniform State Service Region until the minimum requirements
stated in §50.7(b) are attained. Remaining funds within each Uniform
State Service Region will then be selected based on the highest scoring Developments,
regardless of Set-Aside, in accordance with the requirements under §50.7(a)
of this title for a Rural Regional Allocation and Urban/Exurban Regional Allocation.
After this priority review has occurred, staff will review priority applications
to ensure that at least 10% of the priority applications are qualified Nonprofits
to satisfy the Nonprofit Set-Aside. If 10% is not met, then the Department
will add the highest Qualified Nonprofits statewide until the 10% Nonprofit
Set-Aside is met. Selection for each of the Set-Asides will take precedence
over selection for the Rural Regional Allocation and Urban/Exurban Regional
Allocation. Funds for the Rural Regional Allocation or Urban/Exurban Regional
Allocation within a region, for which there are no eligible feasible applications,
will be redistributed as provided in §50.7(c) of this title, Redistribution
of Credits. If the Department determines that an allocation recommendation
would cause a violation of the $2 million limit described in §50.6(d)
of this title, the Department will make its recommendation by selecting the
Development(s) that most effectively satisfies(y) the Department’s goals
in meeting set-aside and regional allocation goals. Based on Application rankings,
the Department shall continue to underwrite Applications until the Department
has processed enough Applications satisfying the Department’s underwriting
criteria to enable the allocation of all available housing tax credits according
to regional allocation goals and Set-Aside categories. To enable the Board
to establish a Waiting List, the Department shall underwrite as many additional
Applications as necessary to ensure that all available housing tax credits
are allocated within the period required by law. (2306.6710(a), (b) and (d);
2306.111)
(6)
Underwriting Evaluation and Criteria. The Department shall
underwrite an Application to determine the financial feasibility of the Development
and an appropriate level of housing tax credits. In determining an appropriate
level of housing tax credits, the Department shall, at a minimum, evaluate
the cost of the Development based on acceptable cost parameters as adjusted
for inflation and as established by historical final cost certifications of
all previous housing tax credit allocations for the county in which the Development
is to be located; if certifications are unavailable for the county, then the
metropolitan statistical area in which the Development is to be located; or
if certifications are unavailable under the county or the metropolitan statistical
area, then the Uniform State Service Region in which the Development is to
be located. Underwriting of a Development will include a determination by
the Department, pursuant to the Code, §42, that the amount of credits
recommended for commitment to a Development is necessary for the financial
feasibility of the Development and its long-term viability as a qualified
rent restricted housing property. In making this determination, the Department
will use the Underwriting Rules and Guidelines, §1.32 of this title.
Receipt of feasibility points under §50.9(i)(1) of this title does not
ensure that an Application will be considered feasible during the feasibility
evaluation by the Real Estate Analysis Division and conversely, a Development
may be found feasible during the feasibility evaluation by the Real Estate
Analysis Division even if it did not receive points under §50.9(i)(1)
of this title. (2306.6711(b); 2306.6710(d))
(A)
The Department may have an external party perform the underwriting
evaluation to the extent it determines appropriate. The expense of any external
underwriting evaluation shall be paid by the Applicant prior to the commencement
of the aforementioned evaluation.
(B)
The Department will reduce the Applicant's estimate of
Developer's and/or Contractor fees in instances where these exceed the fee
limits determined by the Department. In the instance where the Contractor
is an Affiliate of the Development Owner and both parties are claiming fees,
Contractor's overhead, profit, and general requirements, the Department shall
be authorized to reduce the total fees estimated to a level that it determines
to be reasonable under the circumstances. Further, the Department shall deny
or reduce the amount of Housing Tax Credits allocated with respect to any
portion of costs which it deems excessive or unreasonable. Excessive or unreasonable
costs may include developer fee attributable to Related Party acquisition
costs. The Department also may require bids or Third Party estimates in support
of the costs proposed by any Applicant.
(7)
Compliance Evaluation. After the Department has determined
which Developments will be reviewed for financial feasibility, those same
Developments will be reviewed for evaluation of the compliance status by the
Department’s Portfolio Management and Compliance Division, in accordance
with Chapter 60 of this title.
(8)
Site Evaluation. Site conditions shall be evaluated through
a physical site inspection by the Department or its assigns. Such inspection
will evaluate the site based upon the criteria set forth in the Site Evaluation
form provided in the Application and the inspector shall provide a written
report of such site evaluation. The evaluations shall be based on the condition
of the surrounding neighborhood, including appropriate environmental and aesthetic
conditions and proximity to retail, medical, recreational, and educational
facilities, and employment centers. The site's appearance to prospective tenants
and its accessibility via the existing transportation infrastructure and public
transportation systems shall be considered. "Unacceptable" sites include,
without limitation, those containing a non-mitigable environmental factor
that may adversely affect the health and safety of the residents. For Developments
applying under the TX-USDA-RHS Set-Aside, the Department may rely on the physical
site inspection performed by TX-USDA-RHS.
(e)
Evaluation Process for Tax-Exempt Bond Development Applications.
Applications submitted for consideration as Tax-Exempt Bond Developments will
be reviewed according to the process outlined in this subsection. An Application,
during any of these stages of review, may be determined to be ineligible as
further described in §50.5; Applicants will be promptly notified in these
instances.
(1)
Eligibility and Threshold Criteria Review. All Tax-Exempt
Bond Development Applications will first be reviewed as described in this
paragraph. Tax-Exempt Bond Development Applications will be confirmed for
eligibility under §50.5 and §50.6 of this chapter and Applications
will be evaluated in detail against the Threshold Criteria. Tax-Exempt Bond
Development Applications found to be ineligible and/or not meeting Threshold
Criteria will be notified of any Administrative Deficiencies, in which event
the Applicant is given an opportunity to correct such deficiencies. Applications
not meeting Threshold Criteria after receipt and review of the Administrative
Deficiency response will be terminated and the Applicant will be provided
a written notice to that effect. The Department shall not be responsible for
the Applicant's failure to meet the Threshold Criteria, and any failure of
the Department's staff to notify the Applicant of such inability to satisfy
the Threshold Criteria shall not confer upon the Applicant any rights to which
it would not otherwise be entitled. Not all Applications will be reviewed
in detail for Threshold Criteria.
(2)
Administrative Deficiencies. If an Application contains
deficiencies which, in the determination of the Department staff, require
clarification or correction of information submitted at the time of the Application,
the Department staff may request clarification or correction of such Administrative
Deficiencies as further described in subsection (d)(4) of this section.
(3)
Underwriting and Compliance Evaluation and Criteria. The
Department will assign all eligible Tax-Exempt Bond Development Applications
meeting the eligibility and threshold requirements for review for financial
feasibility by the Department’s Real Estate Analysis Division The Department
shall underwrite an Application to determine the financial feasibility of
the Development and an appropriate level of housing tax credits as further
described in subsection (d)(6) of this section. Tax-Exempt Bond Development
Applications will also be reviewed for evaluation of the compliance status
by the Department’s Portfolio Management and Compliance Division in
accordance with Chapter 60 of this title.
(4)
Site Evaluation. Site conditions shall be evaluated through
a physical site inspection by the Department or its assigns as further described
in subsection (d)(8) of this section.
(f)
Evaluation Process for Rural Rescue Applications Under
the 2007 Credit Ceiling. Applications submitted for consideration as Rural
Rescue Applications pursuant to §50.10(c) of this title under the 2007
Credit Ceiling will be reviewed according to the process outlined in this
subsection. A Rural Rescue Application, during any of these stages of review,
may be determined to be ineligible as further described in §50.5 of this
chapter; Applicants will be promptly notified in these instances.
(1)
Eligibility and Threshold Criteria Review. All Rural Rescue
Applications will first be reviewed as described in this paragraph. Rural
Rescue Applications will be confirmed for eligibility under §50.5 and §50.6
of this chapter, Set-Aside and Rural Rescue eligibility will be confirmed,
and Applications will be evaluated in detail against the Threshold Criteria.
Applications found to be ineligible and/or not meeting Threshold Criteria
will be notified of any Administrative Deficiencies, in which event the Applicant
is given an opportunity to correct such deficiencies. Applications not meeting
Threshold Criteria after receipt and review of the Administrative Deficiency
response will be terminated and the Applicant will be provided a written notice
to that effect. The Department shall not be responsible for the Applicant's
failure to meet the Threshold Criteria, and any failure of the Department's
staff to notify the Applicant of such inability to satisfy the Threshold Criteria
shall not confer upon the Applicant any rights to which it would not otherwise
be entitled. Not all Applications will be reviewed in detail for Threshold
Criteria.
(2)
Selection Criteria Review. All Rural Rescue Applications
will be evaluated against the Selection Criteria and a score will be assigned
to the Application. The minimum score for Selection Criteria is not required
to be achieved to be eligible.
(3)
Administrative Deficiencies. If an Application contains
deficiencies which, in the determination of the Department staff, require
clarification or correction of information submitted at the time of the Application,
the Department staff may request clarification or correction of such Administrative
Deficiencies as further described in subsection (d)(4) of this section.
(4)
Underwriting and Compliance Evaluation and Criteria. The
Department will assign all eligible Tax-Exempt Bond Development Applications
meeting the eligibility and threshold requirements for review for financial
feasibility by the Department’s Real Estate Analysis Division The Department
shall underwrite an Application to determine the financial feasibility of
the Development and an appropriate level of housing tax credits as further
described in subsection (d)(6) of this section. Tax-Exempt Bond Development
Applications will also be reviewed for evaluation of the previous participation
by the Department’s Portfolio Management and Compliance Division in
accordance with Chapter 60 of this title.
(5)
Site Evaluation. Site conditions shall be evaluated through
a physical site inspection by the Department or its assigns as further described
in subsection (d)(8) of this section.
(g)
Experience Pre-Certification Procedures. No later than
14 days prior to the close of the Application Acceptance Period, an Applicant
must submit the documents required in this subsection to obtain the required
pre-certification. For Applications submitted for Tax-Exempt Bond Developments
or Applications not applying for Tax Credits, but applying only under other
Multifamily Programs (HOME, Housing Trust Fund, etc.) all of the documents
in this section must be submitted with the Application. Upon receipt of the
evidence required under this section, a certification from the Department
will be provided to the Applicant for inclusion in their Application(s). Evidence
must show that one of the Development Owner's General Partners, the Developer
or their Principals have a record of successfully constructing or developing
residential units (single family or multifamily) in the capacity of owner,
General Partner or Developer. If a Public Housing Authority organized an entity
for the purpose of developing residential units the Public Housing Authority
shall be considered a principal for the purpose of this requirement. If the
individual requesting the certification was not the Development Owner, General
Partner or Developer, but was the individual within one of those entities
doing the work associated with the development of the units, the individual
must show that the units were successfully developed as required below, and
also provide written confirmation from the entity involved stating that the
individual was the person responsible for the development. If rehabilitation
experience is being claimed to qualify for an Application involving new construction,
then the rehabilitation must have been substantial and involved at least $6,000
of direct hard cost per unit.
(1)
The term "successfully" is defined as acting in a capacity
as the owner, General Partner, or Developer of:
(A)
at least 100 residential units or 80 percent of the total
number of Units the applicant is applying to build (e.g. you must have 40
units successfully built to apply for 50 Units); or
(B)
at least 36 residential units if the Development applying
for credits is a Rural Development; or
(C)
at least 25 residential units if the Development applying
for credits has 36 or fewer total Units.
(2)
One of the following documents must be submitted: American
Institute of Architects (AIA) Document A111 - Standard Form of Agreement Between
Owner & Contractor, AIA Document G704 - Certificate of Substantial Completion,
IRS Form 8609, HUD Form 9822, development agreements, partnership agreements,
or other documentation satisfactory to the Department verifying that the Development
Owner’s General Partner, partner (or if Applicant is to be a limited
liability company, the managing member), Developer or their Principals have
the required experience. If submitting the IRS Form 8609, only one form per
Development is required. The evidence must clearly indicate:
(A)
that the Development has been completed (i.e. Development
Agreements, Partnership Agreements, etc. must be accompanied by certificates
of completion);
(B)
that the names on the forms and agreements tie back to
the Development Owner’s General Partner, partner (or if Applicant is
to be a limited liability company, the managing member), Developer or their
Principals as listed in the Application; and
(C)
the number of units completed or substantially completed.
(h)
Threshold Criteria. The following Threshold Criteria listed
in this subsection are mandatory requirements at the time of Application submission
unless specifically indicated otherwise:
(1)
Completion and submission of the Application, which includes
the entire Uniform Application and any other supplemental forms which may
be required by the Department. (2306.1111)
(2)
Completion and submission of the Site Packet as provided
in the Application.
(3)
Set-Aside Eligibility. Documentation must be provided that
confirms eligibility for all Set-Asides under which the Application is seeking
funding as required in the Application.
(4)
Certifications. The "Certification Form" provided in the
Application confirming the following items:
(A)
A certification of the basic amenities selected for the
Development. All Developments, must meet at least the minimum threshold of
points. These points are not associated with the selection criteria points
in subsection (i) of this section. The amenities selected must be made available
for the benefit of all tenants. If fees in addition to rent are charged for
amenities reserved for an individual tenant's use, then the amenity may not
be included among those provided to satisfy this requirement. Developments
must provide a minimum number of common amenities in relation to the Development
size being proposed. The amenities selected must be selected from clause (ii)
of this subparagraph and made available for the benefit of all tenants. Developments
proposing Rehabilitation or proposing Single Room Occupancy will receive double
points for each item. Applications for scattered site housing, including New
Construction, Rehabilitation, and single-family design, will have the threshold
test applied based on the number of Units per individual site. Any future
changes in these amenities, or substitution of these amenities, must be approved
by the Department in accordance with §50.17(d) of this title and may
result in a decrease in awarded credits if the substitution or change includes
a decrease in cost, or in the cancellation of a Commitment Notice or Carryover
Allocation if all of the Common Amenities claimed are no longer met.
(i)
Applications must meet a minimum threshold of points (based
on the total number of Units in the Development) as follows:
(I)
Total Units are less than 13, 0 points are required to
meet Threshold for Rehabilitation and 1 point is required for New Construction;
(II)
Total Units are between 13 and 24, 1 point is required
to meet Threshold;
(III)
Total Units are between 25 and 40, 3 points are required
to meet Threshold;
(IV)
Total Units are between 41 and 76, 6 points are required
to meet Threshold;
(V)
Total Units are between 77 and 99, 9 points are required
to meet Threshold;
(VI)
Total Units are between 100 and 149, 12 points are required
to meet Threshold;
(VII)
Total Units are between 150 and 199, 15 points are required
to meet Threshold;
(VIII)
Total Units are 200 or more, 18 points are required
to meet Threshold.
(ii)
Amenities for selection include those items listed in
subclauses (I) - (XXIV) of this clause. Both Developments designed for families
and Qualified Elderly Developments can earn points for providing each identified
amenity unless the item is specifically restricted to one type of Development.
All amenities must meet accessibility standards as further described in §50.9(h)(4)(D)
and (F) of this title. An Application can only count an amenity once, therefore
combined functions (a library which is part of a community room) only count
under one category. Spaces for activities must be sized appropriately to serve
the anticipated population.
(I)
Full perimeter fencing (2 points);
(II)
Controlled gate access (1 point);
(III)
Gazebo w/sitting area (1 point);
(IV)
Accessible walking path (1 point);
(V)
Community gardens (1 point);
(VI)
Community laundry room (1 point);
(VII)
Public telephone(s) available to tenants 24 hours a day
(2 points);
(VIII)
Barbecue grills and picnic tables--at least one for
every 50 Units (1 point);
(IX)
Covered pavilion that includes barbecue grills and tables
(2 points);
(X)
Swimming pool (3 points);
(XI)
Furnished fitness center (2 points);
(XII)
Equipped Business Center (computer and fax machine) or
Equipped Computer Learning Center (2 points);
(XIII)
Furnished Community room (1 point);
(XIV)
Library (separate from the community room) (1 point);
(XV)
Enclosed sun porch or covered community porch/patio (2
points);
(XVI)
Service coordinator office in addition to leasing offices
(1 point);
(XVII)
Senior Activity Room (Arts and Crafts, etc.)--Only Qualified
Elderly Developments Eligible (2 points);
(XVIII)
Health Screening Room (1 point);
(XIX)
Secured Entry (elevator buildings only)--(1 point);
(XX)
Horseshoe, Lawn Bowling Courts, Croquet Courts, Bocce
Ball Courts, Putting Green or Shuffleboard Court--Only Qualified Elderly Developments
Eligible (1 point);
(XXI)
Community Dining Room w/full or warming kitchen--Only
Qualified Elderly Developments Eligible (3 points);
(XXII)
Two Children’s Playgrounds Equipped for 5 to 12
year olds, two Tot Lots, or one of each--Only Family Developments Eligible
(2 points) or one point for one playground or one tot lot;
(XXIII)
Sport Court (Tennis, Basketball or Volleyball)--Only
Family Developments Eligible (2 points); or
(XXIV)
Furnished and staffed Children’s Activity Center--Only
Family Developments Eligible (3 points).
(B)
A certification that the Development will have all of the
following Unit Amenities (not required for Single Room Occupancy Developments).
If fees in addition to rent are charged for amenities, then the amenity may
not be included among those provided to satisfy this requirement. Any future
changes in these amenities, or substitution of these amenities, may result
in a decrease in awarded credits if the substitution or change includes a
decrease in cost or in a cancellation of a Commitment Notice or Carryover
Allocation if the Threshold Criteria are no longer met.
(i)
All New Construction Units must be built with three networks:
One network installed for phone using CAT5e or better wiring; a second network
for data installed using CAT5e or better wiring; and a third network for TV
services using COAX cable;
(ii)
Mini blinds or window coverings for all windows;
(iii)
Dishwasher and Disposal (not required for TX-USDA-RHS
Developments);
(iv)
Refrigerator;
(v)
Oven/Range;
(vi)
Exhaust/vent fans in bathrooms; and
(vii)
Ceiling fans in living areas and bedrooms.
(C)
A certification that the Development will adhere to the
Texas Property Code relating to security devices and other applicable requirements
for residential tenancies, and will adhere to local building codes or if no
local building codes are in place then to the most recent version of the International
Building Code.
(D)
A certification that the Applicant is in compliance with
state and federal laws, including but not limited to, fair housing laws, including
Chapter 301, Property Code, Title VIII of the Civil Rights Act of 1968 (42
U.S.C. Section 3601 et seq.), and the Fair Housing Amendments Act of 1988
(42 U.S.C. Section 3601 et seq.); the Civil Rights Act of 1964 (42 U.S.C.
Section 2000a et seq.); the Americans with Disabilities Act of 1990 (42 U.S.C.
Section 12101 et seq.); the Rehabilitation Act of 1973 (29 U.S.C. Section
701 et seq.); Fair Housing Accessibility; the Texas Fair Housing Act; and
that the Development is designed consistent with the Fair Housing Act Design
Manual produced by HUD, the Code Requirements for Housing Accessibility 2000
(or as amended from time to time) produced by the International Code Council
and the Texas Accessibility Standards. (2306.257; 2306.6705(7))
(E)
A certification that the Applicant will attempt to ensure
that at least 30% of the construction and management businesses with which
the Applicant contracts in connection with the Development are Minority Owned
Businesses, and that the Applicant will submit a report at least once in each
90-day period following the date of the Commitment Notice until the Cost Certification
is submitted, in a format prescribed by the Department and provided at the
time a Commitment Notice is received, on the percentage of businesses with
which the Applicant has contracted that qualify as Minority Owned Businesses.
(2306.6734)
(F)
Pursuant to §2306.6722, any Development supported
with a housing tax credit allocation shall comply with the accessibility standards
that are required under Section 504, Rehabilitation Act of 1973 (29 U.S.C.
Section 794), and specified under 24 C.F.R. Part 8, Subpart C. The Applicant
must provide a certification from an accredited architect or Department-approved
third party accessibility specialist, that the Development will comply with
the accessibility standards that are required under Section 504, Rehabilitation
Act of 1973 (29 U.S.C. Section 794), and specified under 24 C.F.R. Part 8,
Subpart C and this subparagraph. This includes that for all New Construction
Developments, a minimum of five percent of the total dwelling Units or at
least one Unit, whichever is greater, shall be made accessible for individuals
with mobility impairments. A Unit that is on an accessible route and is adaptable
and otherwise compliant with sections 3-8 of the Uniform Federal Accessibility
Standards (UFAS), shall be deemed to meet this requirement. An additional
two percent of the total dwelling Units, or at least one Unit, whichever is
greater, shall be accessible for individuals with hearing or vision impairments.
Additionally, in Developments involving New Construction where some Units
are two-stories and are normally exempt from Fair Housing accessibility requirements,
a minimum of 20% of each Unit type (i.e. one bedroom, two bedroom, three bedroom)
must provide an accessible entry level and all common-use facilities in compliance
with the Fair Housing Guidelines, and include a minimum of one bedroom and
one bathroom or powder room at the entry level. A similar certification will
also be required after the Development is completed from an inspector, architect,
or accessibility specialist. Any Developments designed as single family structures
must also satisfy the requirements of §2306.514, Texas Government Code.
(2306.6722 and 2306.6730)
(G)
A certification that the Development will be equipped with
energy saving devices that meet the standard statewide energy code adopted
by the state energy conservation office, unless historic preservation codes
permit otherwise for a Development involving historic preservation. All Units
must be air-conditioned. The measures must be certified by the Development
architect as being included in the design of each tax credit Unit at the time
the 10% Test Documentation is submitted and in actual construction upon Cost
Certification. (2306.6725(b)(1))
(H)
A certification that the Development will be built by a
General Contractor that satisfies the requirements of the General Appropriation
Act, Article VII, Rider 8(c) applicable to the Department which requires that
the General Contractor hired by the Development Owner or the Applicant, if
the Applicant serves as General Contractor, must demonstrate a history of
constructing similar types of housing without the use of federal tax credits.
(I)
A certification that the Development Owner agrees to establish
a reserve account consistent with §2306.186 Texas Government Code and
as further described in §1.37 of this title.
(J)
A certification that the Applicant, Developer, or any employee
or agent of the Applicant has not formed a neighborhood organization for purposes
of subsection 50.9(i)(2) of this title, has not given money or a gift to cause
the neighborhood organization to take its position of support or opposition,
nor has provided any assistance to a neighborhood organization to meet the
requirements under 50.9(i)(2) of this title which are not allowed under that
subsection, as it relates to the Applicant’s Application or any other
Application under consideration in 2006.
(K)
A certification that the Development Owner will cooperate
with the local public housing authority, to the extent there are any, in accepting
tenants from their waiting lists (42(m)(1)(C)(vi).
(5)
Design Items. This exhibit will provide:
(A)
All of the architectural drawings identified in clauses
(i) - (iii) of this subparagraph. While full size design or construction documents
are not required, the drawings must have an accurate and legible scale and
show the dimensions. All Developments involving New Construction, or conversion
of existing buildings not configured in the Unit pattern proposed in the Application,
must provide all of the items identified in clauses (i) - (iii) of this subparagraph.
For Developments involving Rehabilitation for which the Unit configurations
are not being altered, only the items identified in clauses (i) and (ii) of
this subparagraph are required:
(i)
a site plan which:
(I)
is consistent with the number of Units and Unit mix specified
in the "Rent Schedule" provided in the Application;
(II)
identifies all residential and common buildings and amenities;
and
(III)
clearly delineates the flood plain boundary lines and
all easements shown in the site survey;
(ii)
floor plans and elevations for each type of residential
building and each common area building clearly depicting the height of each
floor and a percentage estimate of the exterior composition; and
(iii)
Unit floor plans for each type of Unit showing special
accessibility and energy features. The net rentable areas these Unit floor
plans represent should be consistent with those shown in the "Rent Schedule"
provided in the application; and
(B)
A boundary survey of the proposed Development site and
of the property to be purchased. In cases where more property is purchased
than the proposed site of the Development, the survey or plat must show the
survey calls for both the larger site and the subject site. The survey does
not have to be recent; but it must show the property purchased and the property
proposed for development. In cases where the site of the Development is only
a part of the site being purchased, the depiction or drawing of the Development
portion may be professionally compiled and drawn by an architect, engineer
or surveyor.
(6)
Evidence of the Development’s development costs and
corresponding credit request and syndication information as described in subparagraphs
(A) - (G) of this paragraph.
(A)
A written narrative describing the financing plan for the
Development, including any non-traditional financing arrangements; the use
of funds with respect to the Development; the funding sources for the Development
including construction, permanent and bridge loans, rents, operating subsidies,
and replacement reserves; and the commitment status of the funding sources
for the Development. This information must be consistent with the information
provided throughout the Application. (2306.6705(a)(1))
(B)
All Developments must submit the "Development Cost Schedule"
provided in the Application. This exhibit must have been prepared and executed
not more than 6 months prior to the close of the Application Acceptance Period.
(C)
Provide a letter of commitment from a syndicator that,
at a minimum, provides an estimate of the amount of equity dollars expected
to be raised for the Development in conjunction with the amount of housing
tax credits requested for allocation to the Development Owner, including pay-in
schedules, syndicator consulting fees and other syndication costs. No syndication
costs should be included in the Eligible Basis. (2306.6705(a)(2) and (3))
(D)
For Developments located in a Qualified Census Tract (QCT)
as determined by the Secretary of HUD and qualifying for a 30% increase in
Eligible Basis, pursuant to the Code, §42(d)(5)(C), Applicants must submit
a copy of the census map clearly showing that the proposed Development is
located within a QCT. Census tract numbers must be clearly marked on the map,
and must be identical to the QCT number stated in the Department's Reference
Manual.
(E)
Rehabilitation Developments must submit a Property Condition
Assessment meeting the requirements of paragraph (14)(C) of this subsection.
(F)
If offsite costs are included in the budget as a line item,
or embedded in the site acquisition contract, or referenced in the utility
provider letters, then the supplemental form "Off Site Cost Breakdown" must
be provided.
(G)
If projected site work costs include unusual or extraordinary
items or exceed $7,500 per Unit, then the Applicant must provide a detailed
cost breakdown prepared by a Third Party engineer or architect, and a letter
from a certified public accountant allocating which portions of those site
costs should be included in Eligible Basis and which ones may be ineligible.
(7)
Evidence of readiness to proceed as evidenced by at least
one of the items under each of subparagraphs (A) - (D) of this paragraph:
(A)
Evidence of Property control in the name of the Development
Owner. If the evidence is not in the name of the Development Owner, then the
documentation should reflect an expressed ability to transfer the rights to
the Development Owner. All of the sellers of the proposed Property for the
36 months prior to the first day of the Application Acceptance Period and
their relationship, if any, to members of the Development team must be identified
at the time of Application (not required at Pre-Application). One of the following
items described in clauses (i) - (iii) of this subparagraph must be provided:
(i)
a recorded warranty deed; or
(ii)
a contract for lease (the minimum term of the lease must
be at least 45 years) which is valid for the entire period the Development
is under consideration for tax credits; or
(iii)
a contract for sale, an exclusive option to purchase
or earnest money contract (which must show that the earnest money has been
deposited) which is valid for the entire period the Development is under consideration
for tax credits. If the acquisition can be characterized as an identity of
interest transaction as described in §1.32(e)(1)(B), the following must
be provided:
(I)
documentation of the original acquisition cost in the form
of a settlement statement or, if a settlement statement is not available,
the seller’s most recent audited financial statement indicating the
asset value for the proposed Property, and
(II)
if the original acquisition cost evidenced by subclause
(I) of this clause is less than the acquisition cost claimed in the application,
(-a-)
an appraisal meeting the requirements of paragraph (14)(D)
of this subsection, and
(-b-)
any other verifiable costs of owning, holding, or improving
the Property that when added to the value from subclause (I) of this clause
justifies the Applicant’s proposed acquisition amount.
(-1-)
For land-only transactions, documentation of owning,
holding or improving costs since the original acquisition date may include
Property taxes, interest expense, a calculated return on equity at a rate
consistent with the historical returns of similar risks, the cost of any physical
improvements made to the Property, the cost of rezoning, replatting or developing
the Property, or any costs to provide or improve access to the Property.
(-2-)
For transactions which include existing buildings that
will be rehabilitated or otherwise maintained as part of the Development,
documentation of owning, holding, or improving costs since the original acquisition
date may include capitalized costs of improvements to the Property, a calculated
return on equity at a rate consistent with the historical returns of similar
risks, and allow the cost of exit taxes not to exceed an amount necessary
to allow the sellers to be made whole in the original and subsequent investment
in the Property and avoid foreclosure.
(iv)
As described in clauses (ii) and (iii) of this title,
Property control must be continuous. Closing on the Property is acceptable,
as long as evidence is provided that there was no period in which control
was not retained.
(B)
Evidence from the appropriate local municipal authority
that satisfies one of clauses (i) - (iii) of this subparagraph. Documentation
may be from more than one department of the municipal authority and must have
been prepared and executed not more than 6 months prior to the close of the
Application Acceptance Period. (2306.6705(5))
(i)
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; the letter must also state that the
Development fulfills a need for additional affordable rental housing as evidenced
in a local consolidated plan, comprehensive plan, or other local planning
document; or if no such planning document exists, then the letter from the
local municipal authority must state that there is a need for affordable housing.
(ii)
a letter from the chief executive officer of the political
subdivision or another local official with appropriate jurisdiction stating
that:
(I)
the Development is permitted under the provisions of the
zoning ordinance that applies to the location of the Development or that there
is not a zoning requirement; or
(II)
the Applicant is in the process of seeking the appropriate
zoning and has signed and provided to the political subdivision a release
agreeing to hold the political subdivision and all other parties harmless
in the event that the appropriate zoning is denied, and a time schedule for
completion of appropriate zoning. The Applicant must also provide at the time
of Application a copy of the application for appropriate zoning filed with
the local entity responsible for zoning approval and proof of delivery of
that application in the form of a signed certified mail receipt, signed overnight
mail receipt, or confirmation letter from said official. Final approval of
appropriate zoning must be achieved and documentation of acceptable zoning
for the Development, as proposed in the Application, must be provided to the
Department at the time the Commitment Fee, or Determination Notice Fee, is
paid. If this evidence is not provided with the Commitment Fee, any commitment
of credits will be rescinded. No extensions may be requested for the deadline
for submitting evidence of final approval of appropriate zoning.
(iii)
In the case of a Rehabilitation Development, if the property
is currently a non-conforming use as presently zoned, a letter which discusses
the items in subclauses (I) - (IV) of this clause:
(I)
a detailed narrative of the nature of non-conformance;
(II)
the applicable destruction threshold;
(III)
owner’s rights to reconstruct in the event of damage;
and
(IV)
penalties for noncompliance.
(C)
Evidence of interim and permanent financing sufficient
to fund the proposed Total Housing Development Cost less any other funds requested
from the Department and any other sources documented in the Application. Such
evidence must be consistent with the sources and uses of funds represented
in the Application and shall be provided in one or more of the following forms
described in clauses (i) - (iv) of this subparagraph:
(i)
bona fide financing in place as evidenced by:
(I)
a valid and binding loan agreement;
(II)
deed(s) of trust in the name of the Development Owner
expressly allowing transfer to the Development Owner; and
(III)
for TX-USDA-RHS 515 Developments involving Rehabilitation,
an executed TX-USDA-RHS letter indicating TX-USDA-RHS has received a Consent
Request, also referred to as a Preliminary Submittal, as described in 7 CFR
3560.406; or,
(ii)
bona fide commitment or term sheet for the interim and
permanent loans issued by a lending institution or mortgage company that is
actively and regularly engaged in the business of lending money which is addressed
to the Development Owner and which has been executed by the lender (the term
of the loan must be for a minimum of 15 years with at least a 30 year amortization).
The commitment must state an expiration date and all the terms and conditions
applicable to the financing including the mechanism for determining the interest
rate, if applicable, and the anticipated interest rate and any required Guarantors.
Such a commitment may be conditional upon the completion of specified due
diligence by the lender and upon the award of tax credits; or,
(iii)
any Federal, State or local gap financing, whether of
soft or hard debt, must be identified at the time of Application. At a minimum,
evidence from the lending agency that an application for funding has been
made and a term sheet which clearly describes the amount and terms of the
funding, and the date by which the funding determination will be made and
any commitment issued, must be submitted. Evidence of application for funding
from another Department program is not required except as indicated on the
Uniform Application, as long as the Department funding is on a concurrent
funding period with the Application submitted and the Applicant clearly indicates
that such an application has been filed as required by the Application Submission
Procedures Manual. If the commitment from the other funding source has not
been received by the date the Department’s Commitment Notice is to be
submitted, the Application will be reevaluated for financial feasibility.
If the Application is infeasible without the other funding source, the Commitment
Notice will be rescinded; or
(iv)
if the Development will be financed through Development
Owner contributions, provide a letter from an Third Party CPA verifying the
capacity of the Development Owner to provide the proposed financing with funds
that are not otherwise committed together with a letter from the Development
Owner’s bank or banks confirming that sufficient funds are available
to the Development Owner. Documentation must have been prepared and executed
not more than 6 months prior to the close of the Application Acceptance Period.
(D)
Provide the documents in clauses (i) - (iii) of this subparagraph:
(i)
a copy of the full legal description
(ii)
a current valuation report from the county tax appraisal
district and documentation of the current total property tax rate for the
proposed Property, and
(iii)
a copy of:
(I)
the current title policy which shows that the ownership
(or leasehold) of the land/Development is vested in the exact name of the
Development Owner; or
(II)
a current title commitment with the proposed insured matching
exactly the name of the Development Owner and the title of the Property/Development
vested in the exact name of the seller or lessor as indicated on the sales
contract or lease.
(III)
if the title policy or commitment is more than six months
old as of the day the Application Acceptance Period closes, then a letter
from the title company indicating that nothing further has transpired on the
policy or commitment.
(8)
Evidence in the form of a certification of all of the notifications
described in the subparagraphs of this paragraph. Such notices must be prepared
in accordance with the "Public Notifications" statement provided in the Application.
(A)
Evidence of notification meeting the requirements identified
in clause (i) of this subparagraph to all of the individuals and entities
identified in clause (ii) of this subparagraph. Evidence of such notifications
must be in the form of a certification in the format provided by the Department
that the Applicant made the notifications to all required individuals and
entities in the format provided by the Department on or before the deadlines
Notification must not be older than three months from the first day of the
Application Acceptance Period. (2306.6705(9)) If evidence of these notifications
was submitted with the Pre-Application Threshold for the same Application
and satisfied the Department’s review of Pre-Application Threshold,
then no additional notification is required at Application, except that re-notification
is required by tax credit Applicants who have submitted a change in the Application,
whether from Pre-Application to Application or as a result of a deficiency
that reflects a total Unit increase of greater than 10%, an increase of greater
than 10% for any given level of AMGI, or a change to the population being
served (elderly, Intergenerational Housing or family). For Applications submitted
for Tax-Exempt Bond Developments or Applications not applying for Tax Credits,
but applying only under other Multifamily Programs (HOME, Housing Trust Fund,
etc.), notification and proof thereof must not be older than three months
prior to the date the Volume III of the Application is submitted.
(i)
Each such notice must include, at a minimum, all of the
following:
(I)
The Applicant’s name, address, individual contact
name and phone number;
(II)
The Development name, address, city and county;
(III)
A statement informing the entity or individual being
notified that the Applicant is submitting a request for Housing Tax Credits
with the Texas Department of Housing and Community Affairs;
(IV)
Statement of whether the Development proposes New Construction
or Rehabilitation;
(V)
The type of Development being proposed (single family homes,
duplex, apartments, townhomes, highrise etc.) and population being served
(family, Intergenerational Housing or elderly);
(VI)
The approximate total number of Units and approximate
total number of low-income Units;
(VII)
The approximate percentage of Units serving each level
of AMGI (e.g. 20% at 50% of AMGI, etc.) and the percentage of Units that are
market rate;
(VIII)
The number of Units and proposed rents (less utility
allowances) for the low-income Units and the number of Units and the proposed
rents for any market rate Units. Rents to be provided are those that are effective
at the time of the Application, which are subject to change as annual changes
in the area median income occur; and
(IX)
The expected completion date if credits are awarded.
(ii)
Notification must be sent to all of the following individuals
and entities. Officials to be notified are those officials in office at the
time the Application is submitted.
(I)
Neighborhood Organizations on record with the state or
county. Applicants must provide evidence that neighborhood organizations were
notified pursuant to this subsection. Evidence in the form of a certification
must be provided that a letter requesting information on neighborhood organizations
on record with the state or county in which the Development is to be located
and whose boundaries contain the proposed Development site and meeting the
requirements of "Neighborhood Organization Request" as outlined in the Application
was sent no later than January 15, 2006 (or for Tax-Exempt Bond Applications
or Rural Rescue Applications not later than 21 days prior to submission of
the Threshold documentation) to the local elected official for the city or
if located outside of a city, then the county where the Development is proposed
to be located. If the Development is located in a jurisdiction that has district
based local elected officials, or both at-large and district based local elected
officials, the request must be made to the city council member or county commissioner
representing that district; if the Development is located in a jurisdiction
that has only at-large local elected officials, the request must be made to
the mayor or county judge for the jurisdiction. For urban/exurban areas, entities
identified in the letters from the local elected official whose boundaries
include the proposed Development and whose listed address has the same zip
code as the zip code for the Development must be provided with written notification.
If any other zip codes exist within a half mile of the Development site, then
all entities identified in the letters with those adjacent zip codes must
also be provided with written notification. For rural areas, all entities
identified in the letters whose listed address is within a half mile of the
Development site must be provided with written notification. If the Applicant
can certify that there are no neighborhood organizations on a list from the
local elected officials which are required to be notified pursuant to this
subsection, then such certification in lieu of notification may be acceptable.
If no reply letter is received from the local elected officials by February
25, 2006, (or For Tax-Exempt Bond Developments or Applications not applying
for Tax Credits, but applying only for other Multifamily Programs such as
HOME, Housing Trust Fund, etc., by 7 days prior to the submission of the Application)
then the Applicant must submit a statement attesting to that fact. If an Applicant
has knowledge of any neighborhood organizations on record with the state or
county in which the Development is to be located and whose boundaries contain
the proposed Development site, the Applicant must notify those organizations.
In the event that local elected officials refer the Applicant to another source,
the Applicant must also request neighborhood organizations from that source
in the same format. If the Applicant has no knowledge of neighborhood organizations
within whose boundaries the Development is proposed to be located, the Applicant
must attest to that fact in the format provided by the Department as part
of the Application.
(II)
Superintendent of the school district containing the Development;
(III)
Presiding officer of the board of trustees of the school
district containing the Development;
(IV)
Mayor of the governing body of any municipality containing
the Development;
(V)
All elected members of the governing body of any municipality
containing the Development;
(VI)
Presiding officer of the governing body of the county
containing the Development;
(VII)
All elected members of the governing body of the county
containing the Development;
(VIII)
State senator of the district containing the Development;
and
(IX)
State representative of the district containing the Development.
(B)
Signage on Property or Alternative. A Public Notification
Sign shall be installed on the Development site prior to the date the Application
is submitted. For Tax-Exempt Bond Developments the sign must be installed
no later than 30 days after the Department’s receipt of Volumes I and
II. Evidence submitted with the Application must include photographs of the
site with the installed sign and invoice receipt confirming installation from
the entity that installed the sign. The sign must be at least 4 feet by 8
feet in size and located within twenty feet of, and facing, the main road
adjacent to the site. The sign shall be continuously maintained on the site
until the day that the 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. For Tax-Exempt Bond Developments for which
the Department is not the issuer of the bonds, the Applicant must certify
to the fact that the date, time and location of the TEFRA hearing are indicated
on the sign as soon as the hearing has been scheduled. 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
those addresses described in either clause (i) or (ii) of this subparagraph.
This written notification must include the information otherwise required
for the sign as provided in the Application. 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 distance required by clause
(i) or (ii) of this subparagraph, up to 1,000 feet, 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. If the option
in clause (i) of this subparagraph is used, then evidence must be provided
affirming the local zoning notification requirements.
(i)
All addresses required for notification by local zoning
notification requirements. For example, if the local zoning notification requirement
is notification to all those addresses within 200 feet, then that would be
the distance used for this purpose; or
(ii)
For Developments located in communities that do not have
zoning, communities that do not require a zoning notification, or those located
outside of a municipality, all addresses located within 1,000 feet of any
part of the proposed Development site.
(C)
If any of the Units in the Development are occupied at
the time of Application, then the Applicant must certify that they have notified
each tenant at the Development and let the tenants know of the Department’s
public hearing schedule for comment on submitted Applications.
(9)
Evidence of the Development’s proposed ownership
structure and the Applicant’s previous experience as described in subparagraphs
(A) - (E) of this paragraph.
(A)
Chart which clearly illustrates the complete organizational
structure of the final proposed Development Owner and of any Developer or
Guarantor, providing the names and ownership percentages of all Persons having
an ownership interest in the Development Owner or the Developer or Guarantor,
as applicable, whether directly or through one or more subsidiaries.
(B)
Each Applicant, Development Owner, Developer or Guarantor,
or any entity shown on an organizational chart as described in subparagraph
(A) of this paragraph that has ownership interest in the Development Owner,
Developer or Guarantor, shall provide the following documentation, as applicable:
(i)
For entities that are not yet formed but are to be formed
either in or outside of the state of Texas, a certificate of reservation of
the entity name from the Texas Secretary of State; or
(ii)
For existing entities whether formed in or outside of
the state of Texas, evidence that the entity has the authority to do business
in Texas or has applied for such authority.
(C)
Evidence that each entity shown on the organizational chart
described in subparagraph (A) of this paragraph that has ownership interest
in the Development Owner, Developer or Guarantor, has provided a copy of the
completed and executed Previous Participation and Background Certification
Form to the Department. Nonprofit entities, public housing authorities and
publicly traded corporations are required to submit documentation for the
entities involved; documentation for individual board members and executive
directors is required for this exhibit. Any Person receiving more than 10%
of the Developer fee will also be required to submit documents for this exhibit.
The 2006 versions of these forms, as required in the Uniform Application,
must be submitted. Units of local government are also required to submit this
document. The form must include a list of all developments that are, or were,
previously under ownership or Control of the Person. All participation in
any TDHCA funded or monitored activity, including non-housing activities,
must be disclosed.
(D)
Evidence in the form of a certification from the Applicant,
that each entity shown on the organizational chart described in subparagraph
(A) of this paragraph that has ownership interest in the Development Owner,
Developer or Guarantor, and has, or has had, ownership or Control of affordable
housing, being housing that receives any form of financing and/or assistance
from any Governmental Entity for the purpose of enhancing affordability to
persons of low or moderate income, outside the state of Texas, that such Persons
have submitted the appropriate "National Previous Participation and Background
Certification Form" to the appropriate Housing Credit Agency for each state
in which they have developed or operated affordable housing. Nonprofit entities
and public housing authorities are only required to submit documentation for
the entity itself; documentation for board members and executive directors
is not required for this exhibit. Any Person receiving more than 10% of the
Developer fee will also be required to submit documents for this exhibit.
This form is only necessary when the Developments involved are outside the
state of Texas. An original form is not required.
(E)
Evidence, in the form of a certification, that one of the
Development Owner’s General Partners, the Developer or their Principals
have a record of successfully constructing or developing residential units
in the capacity of owner, General Partner or Developer. Evidence must be a
certification from the Department that the Person with the experience satisfies
this exhibit, as further described under subsection (g)(1) of this section.
Applicants must request this certification at least fourteen days prior to
the close of the Application Acceptance Period. Applicants must ensure that
the Person whose name is on the certification appears in the organizational
chart provided in subparagraph (A) of this paragraph.
(10)
Evidence of the Development’s projected income and
operating expenses as described in subparagraphs (A) - (D) of this paragraph:
(A)
All Developments must provide a 30-year proforma estimate
of operating expenses and supporting documentation used to generate projections
(operating statements from comparable properties).
(B)
If rental assistance, an operating subsidy, an annuity,
or an interest rate reduction payment is proposed to exist or continue for
the Development, any related contract or other agreement securing those funds
must be provided, which at a minimum identifies the source and annual amount
of the funds, the number of Units receiving the funds, and the term and expiration
date of the contract or other agreement. (2306.6705(a)(4))
(C)
Applicant must provide documentation from the source of
the "Utility Allowance" estimate used in completing the Rent Schedule provided
in the Application. This exhibit must clearly indicate which utility costs
are included in the estimate. If there is more than one entity (Section 8
administrator, public housing authority) responsible for setting the utility
allowance(s) in the area of the Development location, then the Utility Allowance
selected must be the one which most closely reflects the actual utility costs
in that Development area. In this case, documentation from the local utility
provider supporting the selection must be provided.
(D)
Occupied Developments undergoing Rehabilitation must also
submit the items described in clauses (i) - (iv) of this subparagraph.
(i)
The items in subclauses (I) and (II) of this clause are
required unless the current property owner is unwilling to provide the required
documentation. In that case, submit a signed statement as to its inability
to provide all documentation as described.
(I)
Submit at least one of the following:
(-a-)
historical monthly operating statements of the subject
Development for 12 consecutive months ending not more than 3 months from the
first day of the Application Acceptance Period;
(-b-)
The two most recent consecutive annual operating statement
summaries;
(-c-)
the most recent consecutive six months of operating statements
and the most recent available annual operating summary;
(-d-)
all monthly or annual operating summaries available and
a written statement from the seller refusing to supply any other summaries
or expressing the inability to supply any other summaries, and any other supporting
documentation used to generate projections may be provided; and
(II)
a rent roll not more than 6 months old as of the first
day the Application Acceptance Period, that discloses the terms and rate of
the lease, rental rates offered at the date of the rent roll, Unit mix, tenant
names or vacancy, and dates of first occupancy and expiration of lease.
(ii)
a written explanation of the process used to notify and
consult with the tenants in preparing the Application; (2306.6705(a)(6))
(iii)
a relocation plan outlining relocation requirements and
a budget with an identified funding source; and (2306.6705(a)(6))
(iv)
if applicable, evidence that the relocation plan has been
submitted to the appropriate legal agency. (2306.6705(a)(6))
(11)
Applications involving Nonprofit General Partners and
Qualified Nonprofit Developments.
(A)
All Applications involving a nonprofit General Partner,
regardless of the Set-Aside applied under, must submit all of the documents
described in clauses (i) and (ii) of this subparagraph: (2306.6706)
(i)
an IRS determination letter which states that the nonprofit
organization is a 501(c)(3) or (4) entity; and
(ii)
the "Nonprofit Participation Exhibit."
(B)
Additionally, all Applications applying under the Nonprofit
Set-Aside, established under §50.7(b)(1) of this title, must also provide
the following information with respect to the Qualified Nonprofit Organization
as described in clauses (i) - (vi) of this subparagraph.
(i)
copy of the page from the articles of incorporation or
bylaws indicating that one of the exempt purposes of the nonprofit organization
is to provide low-income housing;
(ii)
copy of the page from the articles of incorporation or
bylaws indicating that the nonprofit organization prohibits a member of its
board of directors, other than a chief staff member serving concurrently as
a member of the board, from receiving material compensation for service on
the board;
(iii)
a Third Party legal opinion stating:
(I)
that the nonprofit organization is not affiliated with
or Controlled by a for-profit organization and the basis for that opinion,
and
(II)
that the nonprofit organization is eligible, as further
described, for a Housing Credit Allocation from the Nonprofit Set-Aside and
the basis for that opinion. Eligibility is contingent upon the non-profit
organization Controlling the Development, or if the organization’s Application
is filed on behalf of a limited partnership, or limited liability company,
the Qualified Nonprofit Organization must be the controlling Managing Member;
and otherwise meet the requirements of the Code, §42(h)(5);
(iv)
a copy of the nonprofit organization's most recent audited
financial statement; and
(v)
a certification that the Qualified Nonprofit Development
will have the nonprofit entity or its nonprofit affiliate or subsidiary be
the Developer or co-Developer as evidenced in the development agreement.
(vi)
evidence in the form of a certification that a majority
of the members of the nonprofit organization's board of directors principally
reside:
(I)
in this state, if the Development is located in a rural
area; or
(II)
not more than 90 miles from the Development, if the Development
is not located in a rural area.
(12)
Applicants applying for acquisition credits must provide
must provide
(A)
an appraisal meeting the requirements of paragraph (14)(D)
of this subsection, and
(B)
an "Acquisition of Existing Buildings Form."
(13)
Evidence of Financial Statement and Authorization to Release
Credit Information. The financial statements and authorization to release
credit information must be unbound and clearly labeled. A "Financial Statement
and Authorization to Release Credit Information" must be completed and signed
for any General Partner, Developer or Guarantor and any Person that has ownership
interest in the Development Owner, General Partner, Developer, or Guarantor.
Nonprofit entities, public housing authorities and publicly traded corporations
are only required to submit documentation for the entities involved; documentation
for individual board members and executive directors is not required for this
exhibit.
(A)
Financial statements for an individual must not be older
than 90 days from the date of Application submission.
(B)
Financial statements for partnerships or corporations should
be for the most recent fiscal year ended 90 days prior to the date of Application
submission. An audited financial statement should be provided, if available,
and all partnership or corporate financials must be certified. Financial statements
are required for an entity even if the entity is wholly-owned by a Person
who has submitted this document as an individual.
(C)
Entities that have not yet been formed and entities that
have been formed recently but have no assets, liabilities, or net worth are
not required to submit this documentation, but must submit a statement with
their Application that this is the case.
(14)
Supplemental Threshold Reports. All Applications must
include documents under subparagraph (A) and (B) of this paragraph. If required
under paragraph (6) of this subsection, a Property Condition Assessment as
described in subparagraph (C) of this paragraph must be submitted. If required
under paragraph (7) or (12) of this subsection, an appraisal as described
in subparagraph (D) of this paragraph must be submitted. All submissions must
meet the requirements stated in subparagraphs (E) - (G) of this paragraph.
(A)
A Phase I Environmental Site Assessment (ESA) report:
(i)
prepared by a qualified Third Party;
(ii)
dated not more than 12 months prior to the first day of
the Application Acceptance Period. In the event that a Phase I Environmental
Site Assessment on the Development is more than 12 months old prior to the
first day of the Application Acceptance Period, the Applicant must supply
the Department with an updated letter or updated report dated not more than
three months prior to the first day of the Application Acceptance Period from
the Person or organization which prepared the initial assessment confirming
that the site has been re-inspected and reaffirming the conclusions of the
initial report or identifying the changes since the initial report; and
(iii)
prepared in accordance with the Department’s Environmental
Site Assessment Rules and Guidelines, §1.35 of this title.
(iv)
Developments whose funds have been obligated by TX-USDA-RHS
will not be required to supply this information; however, the Applicants of
such Developments are hereby notified that it is their responsibility to ensure
that the Development is maintained in compliance with all state and federal
environmental hazard requirements.
(B)
A comprehensive Market Analysis report:
(i)
prepared by a Third Party Qualified Market Analyst approved
by the Department in accordance with the approval process outlined in the
Market Analysis Rules and Guidelines, §1.33 of this title;
(ii)
dated not more than 6 months prior to the first day of
the Application Acceptance Period. In the event that a Market Analysis is
more than 6 months old prior to the first day of the Application Acceptance
Period, the Applicant must supply the Department with an updated Market Analysis
from the Person or organization which prepared the initial report; however
the Department will not accept any Market Analysis which is more than 12 months
old as of the first day of the Application Acceptance Period; and
(iii)
prepared in accordance with the methodology prescribed
in the Department’s Market Analysis Rules and Guidelines, §1.33
of this title.
(iv)
For Applications in the TX-USDA-RHS Set-Aside, the appraisal,
required under paragraph (7) or (12) of this subsection, will satisfy the
requirement for a Market Analysis; however the Department may request additional
information as needed. (2306.67055) (§42(m)(1)(A)(iii))
(C)
A Property Condition Assessment (PCA) report:
(i)
prepared by a qualified Third Party;
(ii)
dated not more than 6 months prior to the first day of
the Application Acceptance Period; and
(iii)
prepared in accordance with the Department’s Property
Condition and Assessment Rules and Guidelines, §1.36 of this title.
(iv)
For Developments which require a capital needs assessment
from TX-USDA-RHS, the capital needs assessment may be substituted and may
be more than 6 months old, as long as TX-USDA-RHS has confirmed in writing
that the existing capital needs assessment is still acceptable.
(D)
An appraisal report:
(i)
prepared by a qualified Third Party;
(ii)
dated not more than 6 months prior to the first day of
the Application Acceptance Period; and
(iii)
prepared in accordance with the Uniform Standards of
Professional Appraisal Practice and the Department’s Appraisal Rules
and Guidelines, §1.34 of this title.
(iv)
For Developments which require an appraisal from TX-USDA-RHS,
the appraisal may be more than 6 months old, as long as TX-USDA-RHS has confirmed
in writing that the existing appraisal is still acceptable.
(E)
Inserted at the front of each of these reports must be
a transmittal letter from the individual preparing the report that states
that the Department is granted full authority to rely on the findings and
conclusions of the report.
(F)
All Applicants acknowledge by virtue of filing an Application
that the Department is not bound by any opinion expressed in the report. The
Department may determine from time to time that information not required in
the Department’s Rules and Guidelines will be relevant to the Department's
evaluation of the need for the Development and the allocation of the requested
Housing Credit Allocation Amount. The Department may request additional information
from the report provider or revisions to the report to meet this need. In
instances of non-response by the report provider, the Department may substitute
in-house analysis.
(G)
The requirements for each of the reports identified in
subparagraphs (A) - (C) of this paragraph can be satisfied in either of the
methods identified in clauses (i) or (ii) of this subparagraph and meet the
requirements of clause (iii) of this subparagraph.
(i)
Upon Application submission, the documentation for each
of these exhibits may be submitted in its entirety; or
(ii)
Upon Application submission, the Applicant may provide
evidence in the form of an executed engagement letter with the party performing
each of the individual reports that the required exhibit has been commissioned
to be performed and that the delivery date will be no later than April 1,
2006. In addition to the submission of the engagement letter with the Application,
a map must be provided that reflects the Qualified Market Analyst’s
intended market area. Subsequently, the entire exhibit must be submitted on
or before 5:00 p.m. CST, April 1, 2006. If the entire exhibit is not received
by that time, the Application will be terminated and will be removed from
consideration.
(iii)
A single hard copy of the report and a searchable soft
copy in the format of a single file containing all information and exhibits
in the hard copy report, presented in the order they appear in the hard copy
report on a CD-R clearly labeled with the report type, Development name, and
Development location are required.
(15)
Self-Scoring. Applicant’s self-score must be completed
on the "Application Self-Scoring Form." An Applicant may not adjust the Application
Self Scoring Form without a request from the Department as a result of an
Administrative Deficiency.
(i)
Selection Criteria. All Applications will be scored and
ranked using the point system identified in this subsection. When applicable,
use normal rounding. All Applications, with the exception of TX-USDA-RHS Applications,
must score a minimum of 125 points to be eligible for an allocation of Housing
Tax Credits. Maximum Total Points: 209.
(1)
Financial Feasibility of the Development. Financial Feasibility
of the Development based on the supporting financial data required in the
Application that will include a Development underwriting pro forma from the
permanent or construction lender. (2306.6710(b)(1)(A)) Applications may qualify
to receive 28 points for this item. Evidence will include the documentation
required for this exhibit in addition to the commitment letter required under
subsection (h)(7)(C) of this section. The supporting financial data shall
include a thirty year pro forma prepared by the permanent or construction
lender specifically identifying each of the first ten years and every fifth
year thereafter. The pro forma must indicate that the development pro forma
maintains a 1.10 debt coverage ratio throughout the initial thirty years proposed
for all third party lenders that require scheduled repayment. In addition,
the commitment letter must state that the lender’s assessment finds
that the Development will be feasible for thirty years. Points will be awarded
if these criteria are met. No partial points will be awarded. For Developments
receiving financing from TX-USDA-RHS, the form entitled "Sources and Uses
Comprehensive Evaluation for Multi-Family Housing Loans" or other form deemed
acceptable by the Department shall meet the requirements of this section.
(2)
Quantifiable Community Participation from Neighborhood
Organizations on Record with the State or County and Whose Boundaries Contain
the Proposed Development Site. Points will be awarded based on written statements
of support or opposition from neighborhood organizations on record with the
state or county in which the Development is to be located and whose boundaries
contain the proposed Development site. (§2306.6710(b)(1)(B); §2306.6725(a)(2)).
It is possible for points to be awarded or deducted based on written statements
from organizations that were not identified by the process utilized for notification
purposes under subsection (h)(8)(A)(ii)(I) of this section if the organization
provides the information and documentation required below. It is also possible
that neighborhood organizations that were initially identified as appropriate
organizations for purposes of the notification requirements will subsequently
be determined by the Department not to meet the requirements for scoring.
(A)
Basic Submission Requirements for Scoring. Each neighborhood
organization may submit one letter (and enclosures) that represents the organization’s
input. In order to receive a point score, the letter (and enclosures) must
be received by the Department no later than April 1, 2006. Letters should
be addressed to the Texas Department of Housing and Community Affairs, "Attention:
Executive Director (Neighborhood Input)." Letters received after April 1,
2006 will be summarized for the Board’s information and consideration,
but will not affect the score for the Application. The organization’s
letter (and enclosures) must:
(i)
state the name and location of the proposed Development
on which input is provided. A letter may provide input on only one proposed
Development; if an organization is eligible to provide input on additional
Developments, each Development must be addressed in a separate letter;
(ii)
be signed by the chairman of the board, chief executive
officer, or comparable head of the organization, and provide the street and/or
mailing addresses, phone numbers, and e-mail addresses and/or facsimile numbers
for the signer of the letter and for one additional contact for the organization;
(iii)
establish that the organization has boundaries, state
what the boundaries are, and establish that the boundaries contain the proposed
development site. A map must be provided with the geographic boundaries of
the organization and the proposed Development site clearly marked within those
boundaries;
(iv)
establish that the organization is a "neighborhood organization."
A "neighborhood organization" is defined as an organization of persons living
near one another within the organization’s defined boundaries that contain
the proposed Development site and that has a primary purpose of working to
maintain or improve the general welfare of the neighborhood. "Neighborhood
organizations" include homeowners associations, property owners associations,
and resident councils (only for Rehabilitation or demolition with New Construction
applications in which the council is commenting on the rehabilitation or demolition/
New Construction of the property occupied by the residents). "Neighborhood
organizations" do not include broader based "community" organizations; organizations
that have no members other than board members; chambers of commerce; community
development corporations; churches; school related organizations; Lions, Rotary,
Kiwanis, and similar organizations; Habitat for Humanity; Boys and Girls Clubs;
charities; public housing authorities; or any governmental entity. Organizations
whose boundaries include an entire county or larger area are not "neighborhood
organizations." Organizations whose boundaries include an entire city are
generally not "neighborhood organizations."
(v)
include documentation showing that the organization is
on record as of March 1, 2006 with the state or county in which the Development
is proposed to be located. A record from the Secretary of State showing that
the organization is incorporated or from the county clerk showing that the
organization is on record with the county is sufficient. For a property owners
association, a record from the county showing that the organization’s
management certificate is on record is sufficient. The documentation must
be from the state or county and be current. If an organization’s status
with the Secretary of State is shown as "forfeited," "dissolved," or any similar
status in the documentation provided by the organization, the organization
will not be considered on record with the state. It is insufficient to be
"on record" to provide only a request to the county or a state entity to be
placed on record or to show that the organization has corresponded with such
an entity or used its services or programs. It is insufficient to show that
the organization is on record with a city. As an option to be considered on
record with the state, a letter including a contact name with a mailing address
and phone number; name and position of officers; and a written description
and map of the organization’s geographical boundaries must be received
by the Department no later than March 1, 2006 to place the organization on
record with the state. The letter should be addressed to the Texas Department
of Housing and Community Affairs, "Attention: Executive Director (Recording
of Neighborhood Organization)". Acceptance of this documentation by the Department
will satisfy the "on record with the state" requirement, but is not a determination
that the organization is a "neighborhood organization" or that other requirements
are met. The Department is permitted to issue a deficiency notice for this
registration process and if satisfied, the organization will still be deemed
to be timely placed on record with the state.
(vi)
accurately state that the neighborhood organization was
not formed by any Applicant, Developer, or any employee or agent of any Applicant
in the 2006 tax credit Application Round, that the organization and any member
did not accept money or a gift to cause the neighborhood organization to take
its position of support or opposition, and has not provided any assistance
other than education and information sharing to the neighborhood organization
to meet the requirements of this subparagraph for any application in the Application
Round (i.e. hosting a public meeting, providing the "TDHCA Information Packet
for Neighborhoods" to the neighborhood organization, or referring the neighborhood
organization to TDHCA staff for guidance). Applicants may not provide any
"production" assistance to meet these requirements for any application in
the Application Round (i.e. use of fax machines owned by the Applicant, use
of legal counsel related to the Applicant, or assistance drafting a letter
for the purposes of this subparagraph).
(vii)
state the total number of members of the organization
and provide a brief description of the process used to determine the members’
position of support or opposition. The organization is encouraged to hold
a meeting to which all the members of the organization are invited to consider
whether the organization should support, oppose, or be neutral on the proposed
Development, and to have the membership vote on whether the organization should
support, oppose, or be neutral on the proposed Development. The organization
is also encouraged to invite the developer to this meeting.
(viii)
include the organization’s articles of incorporation
and/or bylaws and/or organizational documents created on or before March 1,
2006, that, at a minimum, identify the boundaries of the organization, identify
the officers of the organization and clearly indicate the purpose of the organization.
(ix)
The boundaries in effect for the organization on March
1, 2006, will be those boundaries utilized for the purposes of evaluating
these letters and determining eligibility. Annexations occurring after that
time to include a Development site will not be considered eligible. A Development
site must be entirely contained within the boundaries of the organization
to satisfy eligibility for this item; a site that is only partially within
the boundaries will not satisfy the requirement that the boundaries contain
the proposed Development site.
(x)
Letters from organizations, and subsequent correspondence
from organizations, may not be provided via the Applicant which includes facsimile
and email communication.
(B)
Scoring of Letters (and Enclosures). The input must clearly
and concisely state each reason for the organization’s support for or
opposition to the proposed Development.
(i)
The score awarded for each letter for this exhibit will
range from a maximum of +24 for the strongest position of support to +12 for
the neutral position to 0 for the strongest position of opposition. The number
of points to be allocated to each organization’s letter will be based
on the organization’s letter and evidence enclosed with the letter.
The final score will be determined by the Executive Director. The Department
may investigate a matter and contact the Applicant and neighborhood organizations
for more information. The Department may consider any relevant information
specified in letters from other neighborhood organizations regarding a development
in determining a score.
(ii)
The Department highly values quality public input addressed
to the merits of a Development. Input that points out matters that are specific
to the neighborhood, the proposed site, the proposed Development, or Developer
are valued. If a proposed Development is permitted by the existing or pending
zoning or absence of zoning, concerns addressed by the allowable land use
that are related to any multifamily development may generally be considered
to have been addressed at the local level through the land use planning process.
Input concerning positive efforts or the lack of efforts by the Applicant
to inform and communicate with the neighborhood about the proposed Development
is highly valued. If the neighborhood organization refuses to communicate
with the Applicant the efforts of the Applicant will not be considered negative.
Input that evidences unlawful discrimination against classes of persons protected
by Fair Housing law or the scoring of which the Department determines to be
contrary to the Department’s efforts to affirmatively further fair housing
will not be considered.
(iii)
In general, letters that meet the requirements of this
paragraph and
(I)
establish three or more reasons for support or opposition
will be scored the maximum points for either support (+24 points) or opposition
(zero);
(II)
establish two reasons for support or opposition will be
scored up to +18 points for support or +6 points for opposition;
(III)
establish one reason for support or opposition will be
scored +13 points for support or +11 points for opposition;
(IV)
that do not establish a reason for support or opposition
or that are unclear will be scored as neutral (+12 points).
(iv)
Applications for which no letters from neighborhood organizations
are scored will receive a neutral score of +12 points.
(C)
Basic Submission Deficiencies. The Department is authorized
but not required to request that the neighborhood organization provide additional
information or documentation the Department deems relevant to clarify information
contained in the organization’s letter (and enclosures). If the Department
determines to request additional information from an organization, it will
do so by e-mail or facsimile to the e-mail address or facsimile number provided
with the organization’s letter. If the deficiencies are not clarified
or corrected in the Department’s determination within seven business
days from the date the e-mail or facsimile is sent to the organization, the
organization’s letter will not be considered further for scoring and
the organization will be so advised. This potential deficiency process does
not extend any deadline required above for the "Quantifiable Community Participation"
process. An organization may not submit additional information or documentation
after the April 1, 2006 deadline except in response to an e-mail or facsimile
from the Department specifically requesting additional information.
(3)
The Income Levels of Tenants of the Development. Applications
may qualify to receive up to 22 points for qualifying under only one of subparagraphs
(A) - (F) of this paragraph. To qualify for these points, the tenant incomes
must not be higher than permitted by the AMGI level. The Development Owner,
upon making selections for this exhibit, will set aside Units at the levels
of AMGI and will maintain the percentage of such Units continuously over the
compliance and extended use period as specified in the LURA. These income
levels require corresponding rent levels that do not exceed 30% of the income
limitation in accordance with §42(g), Internal Revenue Code. (2306.6710(b)(1)(C);
2306.111(g)(3)(B); 2306.6710(e); 42(m)(1)(B)(ii)(I); 2306.111(g)(3)(E))
(A)
22 points if at least 80% of the Total Units in the Development
are set-aside with incomes at or below 50% of AMGI; or
(B)
22 points if at least 10% of the Total Units in the Development
are set-aside with incomes at or below 30% of AMGI; or
(C)
20 points if at least 60% of the Total Units in the Development
are set-aside with incomes at or below 50% of AMGI; or
(D)
18 points if at least 40% of the Total Units in the Development
are set-aside with incomes at or below a combination of 50% and 30% of AMGI
in which at least 5% of the Total Units are at or below 30% of AMGI; or
(E)
16 points if at least 40% of the Total Units in the Development
are set-aside with incomes at or below 50% of AMGI; or
(F)
14 points if at least 35% of the Total Units in the Development
are set-aside with incomes at or below 50% of AMGI.
(4)
The Size and Quality of the Units (Development Characteristics).
Applications may qualify to receive up to 20 points. Applications may qualify
for points under both subparagraphs (A) and (B) of this paragraph. (2306.6710(b)(1)(D);
42(m)(1)(C)(iii))
(A)
Size of the Units. Applications may qualify to receive
6 points. The Development must meet the minimum requirements identified in
this subparagraph to qualify for points. Six points for this item will be
automatically granted for Applications involving Rehabilitation, Developments
receiving funding from TX-USDA-RHS, or Developments proposing single room
occupancy without meeting these square footage minimums. The square feet of
all of the Units in the Development, for each type of Unit, must be at least
the minimum noted below.
(i)
500 square feet for an efficiency unit;
(ii)
650 square feet for a non-elderly one bedroom unit; 550
square feet for an elderly one bedroom unit;
(iii)
900 square feet for a non-elderly two bedroom unit; 750
square feet for an elderly two bedroom unit;
(iv)
1,000 square feet for a three bedroom unit; and
(v)
1,200 square feet for a four bedroom unit.
(B)
Quality of the Units. Applications may qualify to receive
up to 14 points. Applications in which Developments provide specific amenity
and quality features in every Unit at no extra charge to the tenant will be
awarded points based on the point structure provided in clauses (i) - (xx)
of this subparagraph, not to exceed 14 points in total. Applications involving
scattered site Developments must have at least half of the Units located with
a specific amenity to count for points. Applications involving Rehabilitation
or single room occupancy may double the points listed for each item, not to
exceed 14 points in total.
(i)
Covered entries (1 point);
(ii)
Nine foot ceilings (1 point);
(iii)
Microwave ovens (1 point);
(iv)
Self-cleaning or continuous cleaning ovens (1 point);
(v)
Ceiling fixtures in all rooms (light with ceiling fan in
all bedrooms) (1 point);
(vi)
Refrigerator with icemaker (1 point);
(vii)
Laundry connections (2 points);
(viii)
Storage room or closet, of approximately 9 square feet
or greater, which does not include bedroom, entryway or linen closets - does
not need to be in the Unit but must be on the property site (1 point);
(ix)
Laundry equipment (washers and dryers) for each individual
unit (3 points);
(x)
Thirty year architectural shingle roofing (1 point);
(xi)
Covered patios or covered balconies (1 point);
(xii)
Covered parking (including garages) of at least one covered
space per Unit (2 points);
(xiii)
100% masonry on exterior, which can include stucco,
cementitious board products, concrete brick and mortarless concrete masonry,
but not EIFS or synthetic stucco (3 points);
(xiv)
Greater than 75% masonry on exterior, which can include
stucco and cementitious board products, concrete brick and mortarless concrete
masonry, but not EIFS or synthetic stucco EFIS (1 points);
(xv)
Use of energy efficient alternative construction materials
(for example, Structural Insulated Panel construction) with wall insulation
at a minimum of R-20 (3 points).
(xvi)
R-15 Walls / R-30 Ceilings (rating of wall system) (3
points);
(xvii)
14 SEER HVAC for New Construction or radiant barrier
in the attic for Rehabilitation (3 points);(WG)
(xviii)
Energy Star or equivalently rated refrigerators and
dishwashers (2 points); or
(xix)
High Speed Internet service to all Units at no cost to
residents (2 points).
(xx)
Fire sprinklers in all Units (2 points).
(5)
The Commitment of Development Funding by Local Political
Subdivisions. Applications may qualify to receive up to 18 points for qualifying
under this paragraph. An Applicant may submit several sources to substantiate
points for this section in the Application, but may not substitute any source
after the Application has been submitted to the Department. Use normal rounding
(2306.6710(b)(1)(E)) Evidence that the proposed Development has received an
allocation of funds for on-site development costs from a Local Political Subdivision
or a properly-created governmental instrumentality thereof. An Applicant may
receive points under this subparagraph even if the government instrumentality’s
creating statute states that the entity is not itself a "political subdivision."
An Applicant whose Development receives a commitment from a governmental instrumentality
with the legal authority to act on behalf of a Local Political Subdivision
is also eligible for such points. In addition to loans or grants, in-kind
contributions such as donation of land or waivers of fees such as building
permits, water and sewer tap fees, or similar contributions that benefit the
Development will be acceptable to qualify for these points. Points will be
determined on a sliding scale based on the amount per Unit. Evidence to be
submitted with the Application must include a copy of the commitment of funds;
a copy of the application to the funding entity and a letter from the funding
entity indicating that the application was received; or a certification of
intent to apply for funding that indicates the funding entity and program
to which the application will be submitted, the loan amount to be applied
for and the specific proposed terms. For in-kind contributions, evidence must
be submitted to substantiate the value claimed for points as well as a statement
of how the contribution will benefit the Development. At the time the executed
Commitment Notice is required to be submitted, the Applicant or Development
Owner must provide evidence of a commitment approved by the governing body
of the local political subdivision for the sufficient local funding to the
Department. If the funding commitment from the local political subdivision
has not been received by the date the Department’s Commitment Notice
is to be submitted, the Application will be evaluated to determine if the
loss of these points would have resulted in the Department’s not committing
the tax credits. If the loss of points would have made the Application noncompetitive,
the Commitment Notice will be rescinded and the credits reallocated. If the
Application would still be competitive even with the loss of points and the
loss would not have impacted the recommendation for an award, the Application
will be reevaluated for financial feasibility. If the Application is infeasible
without the local political subdivision’s funds, the Commitment Notice
will be rescinded and the credits reallocated. No funds from TDHCA’s
HOME (with the exception of Developments located in non-Participating Jurisdictions)
or Housing Trust Fund sources will qualify under this category unless a resolution
is submitted with the application from the Local Political Subdivision authorizing
that the Applicant act on behalf of the Local Political Subdivision in applying
for HOME or Housing Trust Funds from TDHCA for the particular application.
The Local Political Subdivision must attest to the fact that any funds committed
were not first provided to the Local Political Subdivision by the Applicant,
the Developer, Consultant, Related Party or any individual or entity acting
on behalf of the proposed Application, unless the Applicant itself is a Local
Political Subdivision or subsidiary.
(A)
A contribution of $500 to $1,000 per Low-income Unit receives
6 points; or
(B)
A contribution of $1,001 to $3,500 per Low-income Unit
receives 12 points; or
(C)
A contribution of $3,501 or more per Low-income Unit receives
18 points; or
(6)
The Level of Community Support from State Elected Officials.
The level of community support for the application, evaluated on the basis
of written statements from state elected officials. (2306.6710(b)(1)(F) and
(f) and (g); 2306.6725(a)(2)) Applications may qualify to receive up to 14
points for this item. Points will be awarded based on the written statements
of support or opposition from state elected officials representing constituents
in areas that include the location of the Development. Letters of support
must identify the specific Development and must clearly state support for
or opposition to the specific Development. This documentation will be accepted
with the Application or through delivery to the Department from the Applicant
or official by April 1, 2005. Officials to be considered are those officials
in office at the time the Application is submitted. Letters of support from
state officials that do not represent constituents in areas that include the
location of the Development will not qualify for points under this Exhibit.
Neutral letters, or letters that do not specifically refer to the Development,
will receive neither positive nor negative points. Letters from State of Texas
Representative or Senator: support letters are 7 points each for a maximum
of 14 points; opposition letters are -7 points each for a maximum of -14 points.
(7)
The Rent Levels of the Units. Applications may qualify
to receive up to 12 points for qualifying under this exhibit. (2306.6710(b)(1)(G))
If 80% or fewer of the Units in the Development (excluding any Units reserved
for a manager) are restricted to having rents plus the allowance for utilities
equal to or below the maximum tax credit rent, then the Development shall
be awarded 7 points. If between 81% and 85% of the Units in the Development
(excluding any Units reserved for a manager) are restricted to having rents
plus the allowance for utilities equal to or below the maximum tax credit
rent, then the Development shall be awarded 8 points. If between 86%
and 90% of the Units in the Development (excluding any Units reserved for
a manager) are restricted to having rents plus the allowance for utilities
equal to or below the maximum tax credit rent, then the Development shall
be awarded 9 points. If between 91% and 95% of the Units in the Development
(excluding any Units reserved for a manager) are restricted to having rents
plus the allowance for utilities equal to or below the maximum tax credit
rent, then the Development shall be awarded 10 points. If greater than 95%
of the Units in the Development (excluding any Units reserved for a manager)
are restricted to having rents plus the allowance for utilities equal to or
below the maximum tax credit rent, then the Development shall be awarded 12
points. Developments that are scattered site will receive the full 12 points
provided that they have received points under paragraph (3) of this subsection.
(8)
The Cost of the Development by Square Foot (Development
Characteristics). Applications may qualify to receive 10 points for this item.
(2306.6710(b)(1)(H); 42(m)(1)(C)(iii)) For this exhibit, costs shall be defined
as construction costs, including site work, contingency, contractor profit,
overhead and general requirements, as represented in the Development Cost
Schedule. This calculation does not include indirect construction costs. The
calculation will be costs per square foot of net rentable area (NRA). The
calculations will be based on the cost listed in the Development Cost Schedule
and NRA shown in the Rent Schedule of the Application. Developments qualify
for 10 points if their costs do not exceed $80 per square foot for Qualified
Elderly, transitional, and single room occupancy Developments (transitional
housing for the homeless and single room occupancy units as provided in the
Code, §42(i)(3)(B)(iii) and (iv)), unless located in a "First Tier County"
in which case their costs do not exceed $82 per square foot; and $70 for all
other Developments, unless located in a "First Tier County" in which case
their costs do not exceed $72 per square foot. For 2005, the First Tier Counties
are Aransas, Calhoun, Chambers, Jefferson, Kleberg, Nueces, San Patricio,
Brazoria, Cameron, Galveston, Kennedy, Matagorda, Refugio and Willacy. (10
points)
(9)
The Services to be Provided to Tenants of the Development.
Applications may qualify to receive up to 8 points. Applications may qualify
for points under both subparagraphs (A) and (B) of this paragraph. (2306.6710(b)(1)(I);
2306.254; 2306.6725(a)(1); General Appropriation Act, Article VII, Rider 7)
(A)
Applicants will receive points for coordinating their tenant
services with those services provided through state workforce development
and welfare programs as evidenced by execution of a Tenant Supportive Services
Certification (2 points).
(B)
The Applicant must certify that the Development will provide
a combination of special supportive services appropriate for the proposed
tenants. The provision of supportive services will be included in the LURA
as selected from the list of services identified in this subparagraph. No
fees may be charged to the tenants for any of the services. Services must
be provided on-site or transportation to off-site services must be provided
(maximum of 6 points).
(i)
Applications will be awarded points for selecting services
listed in clause (ii) of this subparagraph based on the following scoring
range:
(I)
Two points will be awarded for providing two of the services;
or
(II)
Four points will be awarded for providing four of the
services; or
(III)
Six points will be awarded for providing six of the services.
(ii)
Service options include child care; transportation; basic
adult education; legal assistance; counseling services; GED preparation; English
as a second language classes; vocational training; home buyer education; credit
counseling; financial planning assistance or courses; health screening services;
health and nutritional courses; organized team sports programs or youth programs;
scholastic tutoring; any other programs described under Title IV-A of the
Social Security Act (42 U.S.C. §§601 et seq.) which enables children
to be cared for in their homes or the homes of relatives; ends the dependence
of needy families on government benefits by promoting job preparation, work
and marriage; prevents and reduces the incidence of out-of wedlock pregnancies;
and encourages the formation and maintenance of two-parent families; any services
addressed by §2306.254 Texas Government Code; or any other services approved
in writing by the Department.
(10)
Housing Needs Characteristics. (42(m)(1)(C)(ii)) Applications
may qualify to receive up to 7 points. Each Application, based on the Area
or county where the Development is located, will receive a score based on
the Uniform Housing Needs Scoring Component. If a Development is in a place,
the Area score will be used. If a Development is not within a place, then
the county score will be used. The Uniform Housing Needs Scoring Component
scores for each Area and county will be published in the Reference Manual.
(11)
Development Includes the Use of Existing Housing as part
of a Community Revitalization Plan (Development Characteristics). Applications
may qualify to receive 7 points for this item. (42(m)(1)(C)(iii)) The Development
is an existing Residential Development and the proposed Rehabilitation or
demolition and reconstruction is part of a Community Revitalization Plan.
Evidence of the Community Revitalization Plan and a map showing the boundaries
of the Community Revitalization Plan and the location of the Development site
within the boundaries must be submitted.
(12)
Pre-Application Participation Incentive Points. (2306.6704)
Applications which submitted a Pre-Application during the Pre-Application
Acceptance Period and meet the requirements of this paragraph will qualify
to receive 6 points for this item. To be eligible for these points, the Application
must:
(A)
be for the identical site as the proposed Development in
the Pre-Application;
(B)
have met the Pre-Application Threshold Criteria;
(C)
be serving the same target population (family, Intergenerational
Housing, or elderly) as in the Pre-Application;
(D)
be serving the same target Set-Asides as indicated in the
Pre-Application (Set-Asides can be dropped between Pre-Application and Application,
but no Set-Asides can be added); and
(E)
be awarded by the Department an Application score that
is not more than 5% greater or less than the number of points awarded by the
Department at Pre-Application, with the exclusion of points for support and
opposition under subsections (i)(2) and (i)(6) of this title. An Applicant
must choose, at the time of Application either clause (i) or (ii) of this
subparagraph:
(i)
to request the Pre-Application points and have the Department
cap the Application score at no greater than the 5% increase regardless of
the total points accumulated in the scoring evaluation. This allows an Applicant
to avoid penalty for increasing the point structure outside the 5% range from
Pre-Application to Application; or
(ii)
to request that the Pre-Application points be forfeited
and that the Department evaluate the Application as requested in the self-scoring
sheet.
(13)
Development Location. (2306.6725(a)(4)); 42(m)(1)(C)(i))
Applications may qualify to receive 4 points. Evidence, not more than 6 months
old from the date of the close of the Application Acceptance Period, that
the subject Property is located within one of the geographical areas described
in subparagraphs (A) - (H) of this paragraph. Areas qualifying under any one
of the subparagraphs (A) - (H) of this paragraph will receive 4 points. An
Application may only receive points under one of the subparagraphs (A) - (H)
of this paragraph.
(A)
A geographical Area which is an Economically Distressed
Area; a Colonia; or a Difficult Development Area (DDA) as specifically designated
by the Secretary of HUD (2306.1273).
(B)
a designated state or federal empowerment/enterprise zone,
urban enterprise community, or urban enhanced enterprise community. Such Developments
must submit a letter and a map from a city/county official verifying that
the proposed Development is located within such a designated zone. Letter
should be no older than 6 months from the first day of the Application Acceptance
Period. (General Appropriation Act, Article VII, Rider 6; 2306.127)
(C)
a city or county-sponsored area or zone where a city or
county has, through a local government initiative, specifically encouraged
or channeled growth, neighborhood preservation, or redevelopment. Such Developments
must submit all of the following documentation: a letter from a city/county
official verifying that the proposed Development is located within the city
or county-sponsored zone or district; a map from the city/county official
which clearly delineates the boundaries of the district; and a certified copy
of the appropriate resolution or documentation from the mayor, local city
council, county judge, or county commissioners court which documents that
the designated Area was created by the local city council/county commission,
and targets a specific geographic Area which was not created solely for the
benefit of the Applicant.
(D)
the Development is located in a county that has received
an award as of November 15, 2005, within the past three years, from the Texas
Department of Agriculture’s Rural Municipal Finance Program or Real
Estate Development and Infrastructure Program. Cities which have received
one of these awards are categorized as awards to the county as a whole so
Developments located in a different city than the city awarded, but in the
same county, will still be eligible for these points.
(E)
the Development is located in a census tract in which there
are no other existing developments supported by housing tax credits. Applicant
must provide evidence. (2306.6725(b)(2))
(F)
the Development is located in a census tract which has
a median family income (MFI), as published by the United States Bureau of
the Census (U.S. Census), that is higher than the median family income for
the county in which the census tract is located. This comparison shall be
made using the most recent data available as of the date the Application Round
opens the year preceding the applicable program year. Developments eligible
for these points must submit evidence documenting the median income for both
the census tract and the county.
(G)
the proposed Development will serve families with children
(at least 70% of the Units must have an eligible bedroom mix of two bedrooms
or more) and is proposed to be located in an elementary school attendance
zone of an elementary school that has an academic rating of "Exemplary" or
"Recognized," or comparable rating if the rating system changes. The date
for consideration of the attendance zone is that in existence as of the opening
date of the Application Round and the academic rating is the most current
rating determined by the Texas Education Agency as of that same date. (42(m)(1)(C)(vii))
(H)
the proposed Development will expand affordable housing
opportunities for low-income families with children outside of poverty areas.
This must be demonstrated by showing that the Development will serve families
with children (at least 70% of the Units must have an eligible bedroom mix
of two bedrooms or more) and that the census tract in which the Development
is proposed to be located has no greater than 10% poverty population according
to the most recent census data. (42(m)(1)(C)(vii))
(14)
Exurban Developments or Reconstruction or Rehabilitation
of Developments (Development characteristics). (2306.6725(a)(4) and (b)(2);
2306.127; 42(m)(1)(C)(i)) Applications may qualify to receive 7 points if
the Development is located in an incorporated place or census designated place
that is not a Rural Area but has a population no greater than 100,000 based
on the most current available information published by the United States Bureau
of the Census as of October 1 of the year preceding the applicable program
year, or if a Development is proposed for reconstruction or rehabilitation
(in whole or in part, on-site or off-site) that will be financed, in part,
with HOPE VI financing or HUD capital grant financing provided that the Application
is a joint venture partnership between the public housing authority or an
entity formed by the public housing authority and private market interests
(either for profit or nonprofit).
(15)
Tenant Populations with Special Housing Needs. Applications
may qualify to receive 4 points for this item. (42(m)(1)(C)(v)) The Department
will award these points to Applications in which at least 10% of the Units
are set aside for Persons with Special Needs. Throughout the Compliance Period,
unless otherwise permitted by the Department, the Development owner agrees
to affirmatively market Units to Persons with Special needs. In addition,
the Department will require a minimum 12 month period during which units must
either be occupied by persons with Special Needs or held vacant. The 12 month
period will begin on the date each building receives its certificate of occupancy.
For buildings that do not receive a Certificate of Occupancy, the 12 month
period will begin on the placed in service date as provided in the Cost Certification
manual. After the 12 month period, the owner will no longer be required to
hold units vacant for households with special needs, but will be required
to continue to affirmatively market units to household with special needs.
(16)
Length of Affordability Period. Applications may qualify
to receive up to 4 points. (2306.6725(a)(5); 2306.111(g)(3)(C); 2306.185(a)(1)
and (c); 2306.6710(e)(2); 42(m)(1)(B)(ii)(II)) In accordance with the Code,
each Development is required to maintain its affordability for a 15-year compliance
period and, subject to certain exceptions, an additional 15-year extended
use period. Development Owners that are willing to extend the affordability
period for a Development beyond the 30 years required in the Code may receive
points as follows:
(A)
Add 5 years of affordability after the extended use period
for a total affordability period of 35 years (2 points); or
(B)
Add 10 years of affordability after the extended use period
for a total affordability period of 40 years (4 points)
(17)
Site Characteristics. Sites will be evaluated based on
proximity to amenities, the presence of positive site features and the absence
of negative site features. Sites will be rated based on the criteria below.
(A)
Proximity of site to amenities. Developments located on
sites within a one mile radius (two-mile radius for Developments competing
for a Rural Regional Allocation) of at least three services appropriate to
the target population will receive four points. A site located within one-quarter
mile of public transportation that is accessible to persons with disabilities
and/or located within a community that has "on demand" transportation, special
transit service, or specialized elderly transportation for Qualified Elderly
Developments, will receive full points regardless of the proximity to amenities,
as long as the Applicant provides appropriate evidence of the transportation
services used to satisfy this requirement. If a Development is providing its
own specialized van or on demand service, then this will be a requirement
of the LURA. Only one service of each type listed below will count towards
the points. A map must be included identifying the development site and the
location of the services. The services must be identified by name on the map.
If the services are not identified by name, points will not be awarded. All
services must exist or, if under construction, must be at least 50% complete
by the date the Application is submitted. (4 points)
(i)
Full service grocery store or supermarket
(ii)
Pharmacy
(iii)
Convenience Store/Mini-market
(iv)
Department or Retail Merchandise Store
(v)
Bank/Credit Union
(vi)
Restaurant (including fast food)
(vii)
Indoor public recreation facilities, such as civic centers,
community centers, and libraries
(viii)
Outdoor public recreation facilities such as parks,
golf courses, and swimming pools
(ix)
Hospital/medical clinic
(x)
Doctor’s offices (medical, dentistry, optometry)
(xi)
Public Schools (only eligible for Developments that are
not Qualified Elderly Developments)
(xii)
Senior Center (only eligible for Qualified Elderly Developments)
(B)
Negative Site Features. Sites with the following negative
characteristics will have points deducted from their score. For purpose of
this exhibit, the term ‘adjacent’ is interpreted as sharing a
boundary with the Development site. The distances are to be measured from
all boundaries of the Development site. If an Applicant negligently fails
to note a negative feature, double points will be deducted from the score
or the Application may be terminated. If none of these negative features exist,
the Applicant must sign a certification to that effect. (-5 points)
(i)
Developments located adjacent to or within 300 feet of
junkyards will have 1 point deducted from their score.
(ii)
Developments located adjacent to or within 300 feet of
active railroad tracks will have 1 point deducted from their score. Rural
Developments funded through TX-USDA-RHS are exempt from this point deduction.
(iii)
Developments located adjacent to or within 300 feet of
heavy industrial uses such as manufacturing plants will have 1 point deducted
from their score.
(iv)
Developments located adjacent to or within 300 feet of
a solid waste or sanitary landfills will have 1 point deducted from their
score.
(v)
Developments located adjacent to or within 100 feet of
high voltage transmission power lines will have 1 point deducted from their
score.
(18)
Development Size. The Development consists of not more
than 36 Units and is not a part of, or contiguous to, a larger existing tax
credit development (3 points).
(19)
Qualified Census Tracts with Revitalization. Applications
may qualify to receive 2 points for this item. (42(m)(1)(B)(ii)(III)) Applications
will receive the points for this item if the Development is located within
a Qualified Census Tract and contributes to a concerted Community Revitalization
Plan. Evidence of the Community Revitalization Plan and a map showing boundaries
of the Community Revitalization Plan and the location of the Development site
within the boundaries must be submitted.
(20)
Sponsor Characteristics. Applications may qualify to receive
a maximum of 2 points for this item for qualifying under either subparagraph
(A) or (B) of this paragraph. (42(m)(1)(C)(iv))
(A)
An Application will receive these two points for submitting
a plan to use Historically Underutilized Businesses in the development process
consistent with the Historically Underutilized Business Guidelines for contracting
with the State of Texas.
(B)
An Application will receive these points if there is evidence
that a HUB that does not meet the experience requirements under §50.9(g)
of this title, as certified by the Texas Building and Procurement Commission,
has at least 51% ownership interest in the General Partner and materially
participates in the development and operation of the Development throughout
the Compliance Period. To qualify for these points, the Applicant must submit
a certification from the Texas Building and Procurement Commission that the
Person is a HUB at the close of the Application Acceptance Period. The HUB
will be disqualified from receiving these points if any Principal of the HUB
has developed, and received 8609’s for, more than two Developments involving
tax credits. Additionally, to qualify for these points, the HUB must partner
with an experienced developer (as defined by §50.9 of this title); the
experienced developer, as an Affiliate, will not be subject to the credit
limit described under §50.6(d) of this title for one application per
Application Round. For purposes of this section the experienced developer
may not be a Related Party to the HUB.
(21)
Developments Intended for Eventual Tenant Ownership -
Right of First Refusal. Applications may qualify to receive 1 point for this
item. (2306.6725(b)(1)) (42(m)(1)(C)(viii)) Evidence that Development Owner
agrees to provide a right of first refusal to purchase the Development upon
or following the end of the Compliance Period for the minimum purchase price
provided in, and in accordance with the requirements of, §42(i)(7) of
the Code (the "Minimum Purchase Price"), to a Qualified Nonprofit Organization,
the Department, or either an individual tenant with respect to a single family
building, or a tenant cooperative, a resident management corporation in the
Development or other association of tenants in the Development with respect
to multifamily developments (together, in all such cases, including the tenants
of a single family building, a "Tenant Organization"). Development Owner may
qualify for these points by providing the right of first refusal in the following
terms.
(A)
Upon the earlier to occur of:
(i)
the Development Owner’s determination to sell the
Development; or
(ii)
the Development Owner’s request to the Department,
pursuant to §42(h)(6)(E)(II) of the Code, to find a buyer who will purchase
the Development pursuant to a "qualified contract" within the meaning of §42(h)(6)(F)
of the Code, the Development Owner shall provide a notice of intent to sell
the Development ("Notice of Intent") to the Department and to such other parties
as the Department may direct at that time. If the Development Owner determines
that it will sell the Development at the end of the Compliance Period, the
Notice of Intent shall be given no later than two years prior to expiration
of the Compliance Period. If the Development Owner determines that it will
sell the Development at some point later than the end of the Compliance Period,
the Notice of Intent shall be given no later than two years prior to date
upon which the Development Owner intends to sell the Development.
(B)
During the two years following the giving of Notice of
Intent, the Sponsor may enter into an agreement to sell the Development only
in accordance with a right of first refusal for sale at the Minimum Purchase
Price with parties in the following order of priority:
(i)
during the first six-month period after the Notice of Intent,
only with a Qualified Nonprofit Organization that is also a community housing
development organization, as defined for purposes of the federal HOME Investment
Partnerships Program at 24 C.F.R. §92.1 (a "CHDO") and is approved by
the Department,
(ii)
during the second six-month period after the Notice of
Intent, only with a Qualified Nonprofit Organization or a Tenant Organization;
and
(iii)
during the second year after the Notice of Intent, only
with the Department or with a Qualified Nonprofit Organization approved by
the Department or a Tenant Organization approved by the Department.
(iv)
If, during such two-year period, the Development Owner
shall receive an offer to purchase the Development at the Minimum Purchase
Price from one of the organizations designated in clauses (i) - (iii) of this
subparagraph (within the period(s) appropriate to such organization), the
Development Owner shall sell the Development at the Minimum Purchase Price
to such organization. If, during such period, the Development Owner shall
receive more than one offer to purchase the Development at the Minimum Purchase
Price from one or more of the organizations designated in clauses (i) - (iii)
of this subparagraph (within the period(s) appropriate to such organizations),
the Development Owner shall sell the Development at the Minimum Purchase Price
to whichever of such organizations it shall choose.
(C)
After whichever occurs the later of:
(i)
the end of the Compliance Period; or
(ii)
two years from delivery of a Notice of Intent, the Development
Owner may sell the Development without regard to any right of first refusal
established by the LURA if no offer to purchase the Development at or above
the Minimum Purchase Price has been made by a Qualified Nonprofit Organization,
a Tenant Organization or the Department, or a period of 120 days has expired
from the date of acceptance of all such offers as shall have been received
without the sale having occurred, provided that the failure(s) to close within
any such 120-day period shall not have been caused by the Development Owner
or matters related to the title for the Development.
(D)
At any time prior to the giving of the Notice of Intent,
the Development Owner may enter into an agreement with one or more specific
Qualified Nonprofit Organizations and/or Tenant Organizations to provide a
right of first refusal to purchase the Development for the Minimum Purchase
Price, but any such agreement shall only permit purchase of the Development
by such organization in accordance with and subject to the priorities set
forth in subparagraph (B) of this paragraph.
(E)
The Department shall, at the request of the Development
Owner, identify in the LURA a Qualified Nonprofit Organization or Tenant Organization
which shall hold a limited priority in exercising a right of first refusal
to purchase the Development at the Minimum Purchase Price, in accordance with
and subject to the priorities set forth in subparagraph (B) of this paragraph.
(F)
The Department shall have the right to enforce the Development
Owner’s obligation to sell the Development as herein contemplated by
obtaining a power-of-attorney from the Development Owner to execute such a
sale or by obtaining an order for specific performance of such obligation
or by such other means or remedy as shall be, in the Department’s discretion,
appropriate.
(22)
Leveraging of Private, State, and Federal Resources. Applications
may qualify to receive 1 point for this item. (2306.6725(a)(3)) Evidence that
the proposed Development has received an allocation of private, state or federal
resources, including HOPE VI funds, that is equal to or greater than 2% of
the Total Development costs reflected in the Application. The provider of
the funds must attest to the fact that they are not the Applicant, the Developer,
Consultant, Related Party or any individual or entity acting on behalf of
the proposed Application and attest that none of the funds committed were
first provided to the entity by the Applicant, the Developer, Consultant,
Related Party or any individual or entity acting on behalf of the proposed
Application. The Development must have already applied for funding from the
funding entity. Evidence to be submitted with the Application must include
a copy of the commitment of funds or a copy of the application to the funding
entity and a letter from the funding entity indicating that the application
was received. At the time the executed Commitment Notice is required to be
submitted, the Applicant or Development Owner must provide evidence of a commitment
approved by the governing body of the entity for the sufficient financing
to the Department. If the funding commitment from the private, state or federal
source has not been received by the date the Department’s Commitment
Notice is to be submitted, the Application will be evaluated to determine
if the loss of these points would have resulted in the Department’s
not committing the tax credits. If the loss of points would have made the
Application noncompetitive, the Commitment Notice will be rescinded and the
credits reallocated. If the Application would still be competitive even with
the loss of points and the loss would not have impacted the recommendation
for an award, the Application will be reevaluated for financial feasibility.
If the Application is infeasible without the commitment from the private,
state or federal source, the Commitment Notice will be rescinded and the credits
reallocated. Use normal rounding. Funds from the Department’s HOME and
Housing Trust Fund sources will only qualify under this category if there
is a Notice of Funding Availability (NOFA) out for available funds and the
Applicant is eligible under that NOFA. To qualify for this point, the Rent
Schedule must show that at least 3% of all low-income Units are designated
to serve individuals or families with incomes at or below 30% of AMGI.
(23)
Third-Party Funding Commitment Outside of Qualified Census
Tracts. Applications may qualify to receive 1 point for this item. (2306.6710(e)(1))
Evidence that the proposed Development has documented and committed third-party
funding sources and the Development is located outside of a Qualified Census
Tract. The provider of the funds must attest to the fact that they are not
the Applicant, the Developer, Consultant, Related Party or any individual
or entity acting on behalf of the proposed Application and attest that none
of the funds committed were first provided to the entity by the Applicant,
the Developer, Consultant, Related Party or any individual or entity acting
on behalf of the proposed Application. The commitment of funds (an application
alone will not suffice) must already have been received from the third-party
funding source and must be equal to or greater than 2% of the Total Development
costs reflected in the Application. Funds from the Department’s HOME
and Housing Trust Fund sources will not qualify under this category. The third-party
funding source cannot be a loan from a commercial lender.
(24)
Scoring Criteria Imposing Penalties. (2306.6710(b)(2))
(A)
Penalties will be imposed on an Application if the Applicant
has requested an extension of a Department deadline, and did not meet the
original submission deadline, relating to developments receiving a housing
tax credit commitment made in the application round preceding the current
round. The extension that will receive a penalty is an extension related to
the submission of the carryover. For each extension request made, the Applicant
will receive a 5 point deduction for not meeting the Carryover deadline. Subsequent
extension requests for carryover after the first extension request made for
each development from the preceding round will not result in a further point
reduction than already described. No penalty points or fees will be deducted
for extensions that were requested on Developments that involved Rehabilitation
when the Department is the primary lender, or for Developments that involve
TX-USDA-RHS as a lender if TX-USDA-RHS or the Department is the cause for
the Applicant not meeting the deadline.
(B)
Penalties will be imposed on an Application if the Developer
or Principal of the Applicant has been removed by the lender, equity provider,
or limited partners in the past five years for failure to perform its obligations
under the loan documents or limited partnership agreement. An affidavit will
be provided by the Applicant and the Developer certifying that they have not
been removed as described, or requiring that they disclose each instance of
removal with a detailed description of the situation. If an Applicant or Developer
submits the affidavit, and the Department learns at a later date that a removal
did take place as described, then the Application will be terminated and any
Allocation made will be rescinded. The Applicant, Developers or Principals
of the Applicant that are in court proceedings at the time of Application
must disclose this information and the situation will be evaluated on a case-by-case
basis. 3 points will be deducted for each instance of removal.
(j)
Tie Breaker Factors.
(1)
In the event that two or more Applications receive the
same number of points in any given Set-Aside category, Rural Regional Allocation
or Urban/Exurban Regional Allocation, or Uniform State Service Region, and
are both practicable and economically feasible, the Department will utilize
the factors in this paragraph, in the order they are presented, to determine
which Development will receive a preference in consideration for a tax credit
commitment.
(A)
Applications involving any Rehabilitation of existing Units
will win this first tier tie breaker over Applications involving solely New
Construction.
(B)
The Application located in the municipality or, if located
outside a municipality, the county, that has the lowest state average of units
per capita supported by Housing Tax Credits or private activity bonds at the
time the Application Round begins as reflected in the Reference Manual will
win this second tier tie breaker.
(C)
The amount of requested tax credits per net rentable square
foot requested (the lower credits per square foot has preference)
(2)
This clause identifies how ties will be handled when dealing
with the restrictions on location identified in §50.5(a)(8) of this title,
and in dealing with any issues relating to capture rate calculation. When
two Tax-Exempt Bond Developments would violate one of these restrictions,
and only one Development can be selected, the Department will utilize the
reservation docket number issued by the Texas Bond Review Board in making
its determination. When two competitive Housing Tax Credits Applications in
the Application Round would violate one of these restrictions, and only one
Development can be selected, the Department will utilize the tie breakers
identified in paragraph (1) of this subsection. When a Tax-Exempt Bond Development
and a competitive Housing Tax Credit Application in the Application Round
would both violate a restriction, the following determination will be used:
(A)
Tax-Exempt Bond Developments that receive their reservation
from the Bond Review Board on or before April 30, 2006 will take precedence
over the Housing Tax Credit Applications in the 2006 Application Round;
(B)
Housing Tax Credit Applications approved by the Board for
tax credits in July 2006 will take precedence over the Tax-Exempt Bond Developments
that received their reservation from the Bond Review Board on or between May
1, 2006 and July 31, 2006; and
(C)
After July 31, 2006, a Tax-Exempt Bond Development with
a reservation from the Bond Review Board will take precedence over any Housing
Tax Credit Application from the 2006 Application Round on the Waiting List.
However, if no reservation has been issued by the date the Board approves
an allocation to a Development from the Waiting List of Applications in the
2006 Application Round or a forward commitment, then the Waiting List Application
or forward commitment will be eligible for its allocation.
(k)
Staff Recommendations. (2306.1112 and 2306.6731) After
eligible Applications have been evaluated, ranked and underwritten in accordance
with the QAP and the Rules, the Department staff shall make its recommendations
to the Executive Award and Review Advisory Committee. The Committee will develop
funding priorities and shall make commitment recommendations to the Board.
Such recommendations and supporting documentation shall be made in advance
of the meeting at which the issuance of Commitment Notices or Determination
Notices shall be discussed. The Committee will provide written, documented
recommendations to the Board which will address at a minimum the financial
or programmatic viability of each Application and a list of all submitted
Applications which enumerates the reason(s) for the Development's proposed
selection or denial, including all factors provided in §50.10(a) of this
title that were used in making this determination.
§50.10.Board Decisions; Waiting List; Forward Commitments.
(a)
Board Decisions. The Board's decisions shall be based upon
the Department’s and the Board’s evaluation of the proposed Developments’
consistency with the criteria and requirements set forth in this QAP and Rules.
(1)
On awarding tax credits, the Board shall document the reasons
for each Application’s selection, including any discretionary factors
used in making its determination, and the reasons for any decision that conflicts
with the recommendations made by Department staff. The Board may not make,
without good cause, a commitment decision that conflicts with the recommendations
of Department staff. Good cause includes the Board’s decision to apply
discretionary factors. (2306.6725(c); 42(m)(1)(A)(iv); 2306.6731)
(2)
In making a determination to allocate tax credits, the
Board shall be authorized to not rely solely on the number of points scored
by an Application. It shall in addition, be entitled to take into account,
as it deems appropriate, the discretionary factors listed in this paragraph.
The Board may also apply these discretionary factors to its consideration
of Tax-Exempt Bond Developments. If the Board disapproves or fails to act
upon an Application, the Department shall issue to the Applicant a written
notice stating the reason(s) for the Board's disapproval or failure to act.
In making tax credit decisions (including those related to Tax-Exempt Bond
Developments), the Board, in its discretion, may evaluate, consider and apply
any one or more of the following discretionary factors: (2306.111(g)(3); 2306.0661(f))
(A)
the developer market study;
(B)
the location;
(C)
the compliance history of the Developer;
(D)
the Applicant and/or Developer’s efforts to engage
the neighborhood;
(E)
the financial feasibility;
(F)
the appropriateness of the Development’s size and
configuration in relation to the housing needs of the community in which the
Development is located;
(G)
the housing needs of the community, area, region and state;
(H)
the Development’s proximity to other low-income housing
developments;
(I)
the availability of adequate public facilities and services;
(J)
the anticipated impact on local school districts;
(K)
zoning and other land use considerations;
(L)
laws relating to fair housing including affirmatively furthering
fair housing;
(M)
the efficient use of the tax credits;
(N)
consistency with local needs, including consideration of
revitalization or preservation needs;
(O)
the allocation of credits among many different entities
without diminishing the quality of the housing; (General Appropriation Act,
Article VII, Rider 8(e))
(P)
meeting a compelling housing need;
(Q)
providing integrated, affordable housing for individuals
and families with different levels of income;
(R)
the inclusive capture rate as described under §1.32(g)(2);
(S)
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; or
(T)
other good cause as determined by the Board.
(3)
Before the Board approves any Application, the Department
shall assess the compliance history of the Applicant with respect to all applicable
requirements; and the compliance issues associated with the proposed Development,
including compliance information provided by the Texas State Affordable Housing
Corporation. The Committee shall provide to the Board a written report regarding
the results of the assessments. The written report will be included in the
appropriate Development file for Board and Department review. The Board shall
fully document and disclose any instances in which the Board approves a Development
Application despite any noncompliance associated with the Development or Applicant.
(2306.057)
(b)
Waiting List. (2306.6711(c) and (d)) If the entire State
Housing Credit Ceiling for the applicable calendar year has been committed
or allocated in accordance with this chapter, the Board shall generate, concurrently
with the issuance of commitments, a waiting list of additional Applications
ranked by score in descending order of priority based on Set-Aside categories
and regional allocation goals. The Board may also apply discretionary factors
in determining the Waiting List. If at any time prior to the end of the Application
Round, one or more Commitment Notices expire and a sufficient amount of the
State Housing Credit Ceiling becomes available, the Board shall issue a Commitment
Notice to Applications on the waiting list subject to the amount of returned
credits, the regional allocation goals and the Set-Aside categories, including
the 10% Nonprofit Set-Aside allocation required under the Code, §42(h)(5).
At the end of each calendar year, all Applications which have not received
a Commitment Notice shall be deemed terminated. The Applicant may re-apply
to the Department during the next Application Acceptance Period.
(c)
Forward Commitments. The Board may determine to issue commitments
of tax credit authority with respect to Applications from the State Housing
Credit Ceiling for the calendar year following the year of issuance (each
a "forward commitment") to Applications submitted in accordance with the rules
and timelines required under this rule and the Application Submission Procedures
Manual. The Board will utilize its discretion in determining the amount of
credits to be allocated as forward commitments and the reasons for those commitments
considering score and discretionary factors. The Board may utilize the forward
commitment authority to allocate credits to TX-USDA-RHS Developments which
are experiencing foreclosure or loan acceleration at any time during the 2006
calendar year, also referred to as Rural Rescue Developments. Applications
that are submitted under the 2006 QAP and granted a Forward Commitment of
2007 Housing Tax Credits are considered by the Board to comply with the 2007
QAP by having satisfied the requirements of this 2006 QAP, except for statutorily
required QAP changes.
(1)
Unless otherwise provided in the Commitment Notice with
respect to a Development selected to receive a forward commitment, actions
which are required to be performed under this chapter by a particular date
within a calendar year shall be performed by such date in the calendar year
of the Credit Ceiling from which the credits are allocated.
(2)
Any forward commitment made pursuant to this section shall
be made subject to the availability of State Housing Credit Ceiling in the
calendar year with respect to which the forward commitment is made. If a forward
commitment shall be made with respect to a Development placed in service in
the year of such commitment, the forward commitment shall be a "binding commitment"
to allocate the applicable credit dollar amount within the meaning of the
Code, §42(h)(1)(C).
(3)
If tax credit authority shall become available to the Department
in a calendar year in which forward commitments have been awarded, the Department
may allocate such tax credit authority to any eligible Development which received
a forward commitment, in which event the forward commitment shall be canceled
with respect to such Development.
§50.11.Required Application Notifications, Receipt of Public Comment, and Meetings with Applicants; Viewing of Pre-Applications and Applications; Confidential Information.
(a)
Required Application Notifications, Receipt of Public Comment,
and Meetings with Applicants.
(1)
Within approximately seven business days after the close
of the Pre-Application Acceptance Period, the Department shall publish a Pre-Application
Submission Log on its web site. Such log shall contain the Development name,
address, Set-Aside, number of units, requested credits, owner contact name
and phone number. (2306.6717(a)(1))
(2)
Approximately 30 days before the close of the Application
Acceptance Period, the Department will release the evaluation and assessment
of the Pre-Applications on its web site.
(3)
Not later than 14 days after the close of the Pre-Application
Acceptance Period, or Application Acceptance Period for Applications for which
no Pre-Application was submitted, the Department shall: (2306.1114)
(A)
publish an Application submission log on its web site.
(B)
give notice of a proposed Development in writing that provides
the information required under clause (i) of this subparagraph to all of the
individuals and entities described in clauses (ii) - (x) of this subparagraph.
(2306.6718(a) - (c))
(i)
The following information will be provided in these notifications:
(I)
The relevant dates affecting the Application including
the date on which the Application was filed, the date or dates on which any
hearings on the Application will be held and the date by which a decision
on the Application will be made;
(II)
A summary of relevant facts associated with the Development;
(III)
A summary of any public benefits provided as a result
of the Development, including rent subsidies and tenant services; and
(IV)
The name and contact information of the employee of the
Department designated by the director to act as the information officer and
liaison with the public regarding the Application.
(ii)
Presiding officer of the governing body of the political
subdivision containing the Development (mayor or county judge) to advise such
individual that the Development, or a part thereof, will be located in his/her
jurisdiction and request any comments which such individual may have concerning
such Development.
(iii)
If the Department receives a letter from the mayor or
county judge of an affected city or county that expresses opposition to the
Development, the Department will give consideration to the objections raised
and will offer to visit the proposed site or Development with the mayor or
county judge or their designated representative within 30 days of notification.
The site visit must occur before the Housing Tax Credit can be approved by
the Board. The Department will obtain reimbursement from the Applicant for
the necessary travel and expenses at rates consistent with the state authorized
rate (General Appropriation Act, Article VII, Rider 5) (§42(m)(1));
(iv)
Any member of the governing body of a political subdivision
who represents the Area containing the Development. If the governing body
has single-member districts, then only that member of the governing body for
that district will be notified, however if the governing body has at-large
districts, then all members of the governing body will be notified;
(v)
state representative and state senator who represent the
community where the Development is proposed to be located. If the state representative
or senator host a community meeting, the Department, if timely notified, will
ensure staff are in attendance to provide information regarding the Housing
Tax Credit Program; (General Appropriation Act, Article VII, Rider 8(d))
(vi)
United States representative who represents the community
containing the Development;
(vii)
Superintendent of the school district containing the
Development;
(viii)
Presiding officer of the board of trustees of the school
district containing the Development;
(ix)
Any Neighborhood Organizations on record with the city
or county in which the Development is to be located and whose boundaries contain
the proposed Development site or otherwise known to the Applicant or Department
and on record with the state or county; and
(x)
Advocacy organizations, social service agencies, civil
rights organizations, tenant organizations, or others who may have an interest
in securing the development of affordable housing that are registered on the
Department’s email list service.
(C)
The elected officials identified in subparagraph (B) of
this paragraph will be provided an opportunity to comment on the Application
during the Application evaluation process. (§42(m)(1))
(4)
The Department shall hold at least three public hearings
in different Uniform State Service Regions of the state to receive comment
on the submitted Applications and on other issues relating to the Housing
Tax Credit Program for competitive Applications under the State Housing Credit
Ceiling. (2306.6717(c))
(5)
The Department shall make available on the Department’s
website information regarding the Housing Tax Credit Program including notice
of public hearings, meetings, Application Round opening and closing dates,
submitted Applications, and Applications approved for underwriting and recommended
to the Board, and shall provide that information to locally affected community
groups, local and state elected officials, local housing departments, any
appropriate newspapers of general or limited circulation that serve the community
in which a proposed Development is to be located, nonprofit and for-profit
organizations, on-site property managers of occupied Developments that are
the subject of Applications for posting in prominent locations at those Developments,
and any other interested persons including community groups, who request the
information. (2306.6717(b);)
(6)
Approximately forty days prior to the date of the July
Board meeting at which the issuance of Commitment Notices shall be discussed,
the Department will notify each Applicant of the receipt of any opposition
received by the Department relating to his or her Development at that time.
(7)
Not later than the third working day after the date of
completion of each stage of the Application process, including the results
of the Application scoring and underwriting phases and the commitment phase,
the results will be posted to the Department’s web site. (2306.6717(a)(3))
(8)
At least thirty days prior to the date of the July Board
meeting at which the issuance of Commitment Notices shall be discussed, the
Department will:
(A)
provide the Application scores to the Board; (2306.6711(a)
(B)
if feasible, post to the Department’s web site the
entire Application, including all supporting documents and exhibits, the Application
Log as further described in §50.19(b) of this title, a scoring sheet
providing details of the Application score, and any other documents relating
to the processing of the Application. (2306.6717(a)(1) and (2))
(9)
A summary of comments received by the Department on specific
Applications shall be part of the documents required to be reviewed by the
Board under this subsection if it is received 30 business days prior to the
date of the Board Meeting at which the issuance of Commitment Notices or Determination
Notices shall be discussed. Comments received after this deadline will not
be part of the documentation submitted to the Board. However, a public comment
period will be available prior to the Board’s decision, at the Board
meeting where tax credit commitment decisions will be made.
(10)
Not later than the 120th day after the date of the initial
issuance of Commitment Notices for housing tax credits, the Department shall
provide an Applicant who did not receive a commitment for housing tax credits
with an opportunity to meet and discuss with the Department the Application’s
deficiencies, scoring and underwriting. (2306.6711(e))
(b)
Viewing of Pre-Applications and Applications. Pre-Applications
and Applications for tax credits are public information and are available
upon request after the Pre-Application and Application Acceptance Periods
close, respectively. All Pre-Applications and Applications, including all
exhibits and other supporting materials, except Personal Financial Statements
and Social Security numbers, will be made available for public disclosure
after the Pre-Application and Application periods close, respectively. The
content of Personal Financial Statements may still be made available for public
disclosure upon request if the Attorney General’s office deems it is
not protected from disclosure by the Texas Public Information Act.
(c)
Confidential Information. The Department may treat the
financial statements of any Applicant as confidential and may elect not to
disclose those statements to the public. A request for such information shall
be processed in accordance with §552.305 of the Government Code. (2306.6717(d))
§50.12.Tax-Exempt Bond Developments: Filing of Applications; Applicability of Rules; Supportive Services; Financial Feasibility Evaluation; Satisfaction of Requirements.
(a)
Filing of Applications for Tax-Exempt Bond Developments.
Applications for a Tax-Exempt Bond Development may be submitted to the Department
as described in paragraphs (1) and (2) of this subsection:
(1)
Applicants which receive advance notice of a Program Year
2006 reservation as a result of the Texas Bond Review Board's (TBRB) lottery
for the private activity volume cap must file a complete Application not later
than 12:00 p.m. on December 29, 2005. Such filing must be accompanied by the
Application fee described in §50.20 of this title.
(2)
Applicants which receive advance notice of a Program Year
2006 reservation after being placed on the waiting list as a result of the
TBRB lottery for private activity volume cap must submit Volume 1 and Volume
2 of the Application and the Application fee described in §50.20 of this
title prior to the Applicant's bond reservation date as assigned by the TBRB.
Any outstanding documentation required under this section must be submitted
to the Department at least 60 days prior to the Board meeting at which the
decision to issue a Determination Notice would be made unless a waiver is
being requested.
(b)
Applicability of Rules for Tax-Exempt Bond Developments.
Tax-Exempt Bond Development Applications are subject to all rules in this
title, with the only exceptions being the following sections: §50.4 of
this title (regarding State Housing Credit Ceiling), §50.7 of this title
(regarding Regional Allocation and Set-Asides), §50.8 of this title (regarding
Pre-Application), §50.9(d) and (f) of this title (regarding Evaluation
Processes for Competitive Applications and Rural Rescue Applications), §50.9(i)
of this title (regarding Selection Criteria), §50.10(b) and (c) of this
title (regarding Waiting List and Forward Commitments), and §50.14(a)
and (b) of this title (regarding Carryover and 10% Test). Such Developments
requesting a Determination Notice in the current calendar year must meet all
Threshold Criteria requirements stipulated in §50.9(h) of this title.
Such Developments which received a Determination Notice in a prior calendar
year must meet all Threshold Criteria requirements stipulated in the QAP and
Rules in effect for the calendar year in which the Determination Notice was
issued; provided, however, that such Developments shall comply with all procedural
requirements for obtaining Department action in the current QAP and Rules;
and such other requirements of the QAP and Rules as the Department determines
applicable. Consistency with the local municipality's consolidated plan or
similar planning document must be demonstrated in those instances where the
city or county has a consolidated plan. Applicants will be required to meet
all conditions of the Determination Notice by the time the construction loan
is closed unless otherwise specified in the Determination Notice. Applicants
must meet the requirements identified in §50.15 of this title. No later
than 60 days following closing of the bonds, the Development Owner must also
submit a Management Plan and an Affirmative Marketing Plan (as further described
in the Carryover Allocation Procedures Manual), and evidence must be provided
at this time of attendance of the Development Owner or management company
at Department-approved Fair Housing training relating to leasing and management
issues for at least five hours and the Development architect at Department-approved
Fair Housing training relating to design issues for at least five hours. Certifications
must not be older than two years. Applications that receive a reservation
from the Bond Review Board on or before December 31, 2005 will be required
to satisfy the requirements of the 2005 QAP; Applications that receive a reservation
from the Bond Review Board on or after January 1, 2006 will be required to
satisfy the requirements of the 2006 QAP.
(c)
Supportive Services for Tax-Exempt Bond Developments. (2306.254)
Tax-Exempt Bond Development Applications must provide an executed agreement
with a qualified service provider for the provision of special supportive
services that would otherwise not be available for the tenants. The provision
of these services will be included in the LURA. Acceptable services as described
in paragraphs (1) - (3) of this subsection include:
(1)
the services must be in at least one of the following categories:
child care, transportation, basic adult education, legal assistance, counseling
services, GED preparation, English as a second language classes, vocational
training, home buyer education, credit counseling, financial planning assistance
or courses, health screening services, health and nutritional courses, organized
team sports programs, youth programs, scholastic tutoring, social events and
activities, community gardens or computer facilities;
(2)
any other program described under Title IV-A of the Social
Security Act (42 U.S.C. §§601 et seq.) which enables children to
be cared for in their homes or the homes of relatives; ends the dependence
of needy families on government benefits by promoting job preparation, work
and marriage; prevents and reduces the incidence of out-of wedlock pregnancies;
and encourages the formation and maintenance of two-parent families, or
(3)
any other services approved in writing by the Issuer. The
plan for tenant supportive services submitted for review and approval of the
Issuer must contain a plan for coordination of services with state workforce
development and welfare programs. The coordinated effort will vary depending
upon the needs of the tenant profile at any given time as outlined in the
plan.
(d)
Financial Feasibility Evaluation for Tax-Exempt Bond Developments.
Code §42(m)(2)(D) requires the bond issuer (if other than the Department)
to ensure that a Tax-Exempt Bond Development does not receive more tax credits
than the amount needed for the financial feasibility and viability of a Development
throughout the Compliance Period. Treasury Regulations prescribe the occasions
upon which this determination must be made. In light of the requirement, issuers
may either elect to underwrite the Development for this purpose in accordance
with the QAP and the Underwriting Rules and Guidelines, §1.32 of this
title or request that the Department perform the function. If the issuer underwrites
the Development, the Department will, nonetheless, review the underwriting
report and may make such changes in the amount of credits which the Development
may be allowed as are appropriate under the Department’s guidelines.
The Determination Notice issued by the Department and any subsequent IRS Form(s)
8609 will reflect the amount of tax credits for which the Development is determined
to be eligible in accordance with this subsection, and the amount of tax credits
reflected in the IRS Form 8609 may be greater or less than the amount set
forth in the Determination Notice, based upon the Department’s and the
bond issuer’s determination as of each building’s placement in
service. Any increase of tax credits, from the amount specified in the Determination
Notice, at the time of each building’s placement in service will only
be permitted if it is determined by the Department, as required by Code §42(m)(2)(D),
that the Tax-Exempt Bond Development does not receive more tax credits than
the amount needed for the financial feasibility and viability of a Development
throughout the Compliance Period. Increases to the amount of tax credits that
exceed 110% of the amount of credits reflected in the Determination Notice
are contingent upon approval by the Board. Increases to the amount of tax
credits that do not exceed 110% of the amount of credits reflected in the
Determination Notice may be approved administratively by the Executive Director.
(e)
Satisfaction of Requirements for Tax-Exempt Bond Developments.
If the Department staff determines that all requirements of this QAP and Rules
have been met, the Department will recommend that the Board authorize the
issuance of a Determination Notice. The Board, however, may utilize the discretionary
factors identified in §50.10(a) of this title in determining if they
will authorize the Department to issue a Determination Notice to the Development
Owner. The Determination Notice, if authorized by the Board, will confirm
that the Development satisfies the requirements of the QAP and Rules in accordance
with the Code, §42(m)(1)(D).
§50.13.Commitment and Determination Notices; Agreement and Election Statement; Documentation Submission Requirements.
(a)
Commitment and Determination Notices. If the Board approves
an Application, within ten days of approval the Department will:
(1)
if the Application is for a commitment from the State Housing
Credit Ceiling, issue a Commitment Notice to the Development Owner which shall:
(A)
confirm that the Board has approved the Application; and
(B)
state the Department's commitment to make a Housing Credit
Allocation to the Development Owner in a specified amount, subject to the
feasibility determination described at §50.16 of this title, and compliance
by the Development Owner with the remaining requirements of this chapter and
any other terms and conditions set forth therein by the Department. This commitment
shall expire on the date specified therein unless the Development Owner indicates
acceptance of the commitment by executing the Commitment Notice or Determination
Notice, pays the required fee specified in §50.20 of this title, and
satisfies any other conditions set forth therein by the Department. A Development
Owner may request an extension of the Commitment Notice expiration date by
submitting an extension request and associated extension fee as described
in §50.20 of this title. Any such extension must be approved by the Board.
In no event shall the expiration date of a Commitment Notice be extended beyond
the last business day of the applicable calendar year.
(2)
if the Application regards a Tax-Exempt Bond Development,
issue a Determination Notice to the Development Owner which shall:
(A)
confirm the Board’s determination that the Development
satisfies the requirements of this QAP; and
(B)
state the Department's commitment to issue IRS Form(s)
8609 to the Development Owner in a specified amount, subject to the requirements
set forth at §50.12 of this title and compliance by the Development Owner
with all applicable requirements of this title and any other terms and conditions
set forth therein by the Department. The Determination Notice shall expire
on the date specified therein unless the Development Owner indicates acceptance
by executing the Determination Notice and paying the required fee specified
in §50.20 of this title. The Determination Notice shall also expire unless
the Development Owner satisfies any conditions set forth therein by the Department
within the applicable time period.
(3)
notify, in writing, the mayor or other equivalent chief
executive officer of the municipality in which the Property is located informing
him/her of the Board’s issuance of a Commitment Notice or Determination
Notice, as applicable.
(4)
A Commitment or Determination Notice shall not be issued
with respect to any Development for an unnecessary amount or where the cost
for the total development, acquisition, construction or Rehabilitation exceeds
the limitations established from time to time by the Department and the Board,
unless the Department staff make a recommendation to the Board based on the
need to fulfill the goals of the Housing Tax Credit Program as expressed in
this QAP and Rules, and the Board accepts the recommendation. The Department's
recommendation to the Board shall be clearly documented.
(5)
A Commitment or Determination Notice shall not be issued
with respect to the Applicant, the Development Owner, the General Contractor,
or any Affiliate of the General Contractor that is active in the ownership
or Control of one or more other low-income rental housing properties in the
state of Texas administered by the Department, or outside the state of Texas,
that is in Material Noncompliance with the LURA (or any other document containing
an Extended Low-income Housing Commitment) or the program rules in effect
for such property, as described in §60.1 of this title.
(6)
The executed Commitment or Determination Notice must be
returned to the Department within ten days of the effective date of the Notice.
(b)
Agreement and Election Statement. Together with the Development
Owner's acceptance of the Carryover Allocation, the Development Owner may
execute an Agreement and Election Statement, in the form prescribed by the
Department, for the purpose of fixing the Applicable Percentage for the Development
as that for the month in which the Carryover Allocation was accepted (or the
month the bonds were issued for Tax-Exempt Bond Developments), as provided
in the Code, §42(b)(2). Current Treasury Regulations, §1.42-8(a)(1)(v),
suggest that in order to permit a Development Owner to make an effective election
to fix the Applicable Percentage for a Development, the Carryover Allocation
Document must be executed by the Department and the Development Owner within
the same month. The Department staff will cooperate with a Development Owner,
as possible or reasonable, to assure that the Carryover Allocation Document
can be so executed.
(c)
Documentation Submission Requirements at Commitment of
Funds. No later than the date the Commitment Notice or Determination Notice
is executed by the Applicant and returned to the Department with the appropriate
Commitment Fee as further described in §50.20(f) of this title, the following
documents must also be provided to the Department. Failure to provide these
documents may cause the Commitment to be rescinded. For each Applicant all
of the following must be provided:
(1)
Evidence that the entity has the authority to do business
in Texas;
(2)
A Certificate of Account Status from the Texas Comptroller
of Public Accounts or, if such a Certificate is not available because the
entity is newly formed, a statement to such effect; and a Certificate of Organization
from the Secretary of State;
(3)
Copies of the entity’s governing documents, including,
but not limited to, its Articles of Incorporation, Articles of Organization,
Certificate of Limited Partnership, Bylaws, Regulations and/or Partnership
Agreement; and
(4)
Evidence that the signer(s) of the Application have the
authority to sign on behalf of the Applicant in the form of a corporate resolution
or by-laws which indicate same from the sub-entity in Control and that those
Persons signing the Application constitute all Persons required to sign or
submit such documents.
§50.14.Carryover; 10% Test; Commencement of Substantial Construction.
(a)
Carryover. All Developments which received a Commitment
Notice, and will not be placed in service and receive IRS Form 8609 in the
year the Commitment Notice was issued, must submit the Carryover documentation
to the Department no later than November 1 of the year in which the Commitment
Notice is issued. Commitments for credits will be terminated if the Carryover
documentation, or an approved extension, has not been received by this deadline.
In the event that a Development Owner intends to submit the Carryover documentation
in any month preceding November of the year in which the Commitment Notice
is issued, in order to fix the Applicable Percentage for the Development in
that month, it must be submitted no later than the first Friday in the preceding
month. If the financing structure, syndication rate, amount of debt or syndication
proceeds are revised at the time of Carryover from what was proposed in the
original Application, applicable documentation of such changes must be provided
and the Development may be reevaluated by the Department. The Carryover Allocation
format must be properly completed and delivered to the Department as prescribed
by the Carryover Allocation Procedures Manual. All Carryover Allocations will
be contingent upon the following, in addition to all other conditions placed
upon the Application in the Commitment Notice:
(1)
The Development Owner for all New Construction Developments
must have purchased the property for the Development.
(2)
A current original plat or survey of the land, prepared
by a duly licensed Texas Registered Professional Land Surveyor. Such survey
shall conform to standards prescribed in the Manual of Practice for Land Surveying
in Texas as promulgated and amended from time to time by the Texas Surveyors
Association as more fully described in the Carryover Procedures Manual.
(3)
For all Developments involving New Construction, evidence
of the availability of all necessary utilities/services to the Development
site must be provided. Necessary utilities include natural gas (if applicable),
electric, trash, water, and sewer. Such evidence must be a letter or a monthly
utility bill from the appropriate municipal/local service provider. If utilities
are not already accessible, then the letter must clearly state: an estimated
time frame for provision of the utilities, an estimate of the infrastructure
cost, and an estimate of any portion of that cost that will be borne by the
Development Owner. Letters must be from an authorized individual representing
the organization which actually provides the services. Such documentation
should clearly indicate the Development property. If utilities are not already
accessible (undeveloped areas), then the letter should not be older than three
months from the first day of the Application Acceptance Period.
(4)
The Department will not execute a Carryover Allocation
Agreement with any Owner in Material Noncompliance on October 1, 2006.
(b)
10% Test. No later than six months from the date the Carryover
Allocation Document is executed by the Department and the Development Owner,
more than 10% of the Development Owner’s reasonably expected basis must
have been incurred pursuant to §42(h)(1)(E)(i) and (ii) of the Internal
Revenue Code and Treasury Regulations, §1.42-6. The evidence to support
the satisfaction of this requirement must be submitted to the Department no
later than June 30 of the year following the execution of the Carryover Allocation
Document in a format prescribed by the Department. At the time of submission
of the documentation, the Development Owner must also submit a Management
Plan and an Affirmative Marketing Plan as further described in the Carryover
Allocation Procedures Manual. Evidence must be provided at this time of attendance
of the Development Owner or management company at Department-approved Fair
Housing training relating to leasing and management issues for at least five
hours and the Development architect at Department-approved Fair Housing training
relating to design issues for at least five hours on or before the time the
10% Test Documentation is submitted. Certifications must not be older than
two years.
(c)
Commencement of Substantial Construction. The Development
Owner must submit evidence of having commenced and continued substantial construction
activities. The evidence must be submitted not later than December 1 of the
year after the execution of the Carryover Allocation Document with the possibility
of an extension as described in §50.20 of this title.
§50.15.LURA, Cost Certification.
(a)
Land Use Restriction Agreement (LURA). The Development
Owner must request a LURA from the Department no later than the date specified
in §60.1(p)(6), the Department’s Compliance Monitoring Policies
and Procedures. The Development Owner must date, sign and acknowledge before
a notary public the LURA and send the original to the Department for execution.
The initial compliance and monitoring fee must be accompanied by a statement,
signed by the Owner, indicating the start of the Development’s Credit
Period and the earliest placed in service date for the Development buildings.
After receipt of the signed LURA from the Department, the Development Owner
shall then record the LURA, along with any and all exhibits attached thereto,
in the real property records of the county where the Development is located
and return the original document, duly certified as to recordation by the
appropriate county official, to the Department no later than the date that
the Cost Certification Documentation is submitted to the Department. If any
liens (other than mechanics' or materialmen's liens) shall have been recorded
against the Development and/or the Property prior to the recording of the
LURA, the Development Owner shall obtain the subordination of the rights of
any such lienholder, or other effective consent, to the survival of certain
obligations contained in the LURA, which are required by §42(h)(6)(E)(ii)
of the Code to remain in effect following the foreclosure of any such lien.
Receipt of such certified recorded original LURA by the Department is required
prior to issuance of IRS Form 8609. A representative of the Department, or
assigns, shall physically inspect the Development for compliance with the
Application and the representations, warranties, covenants, agreements and
undertakings contained therein. Such inspection will be conducted before the
IRS Form 8609 is issued for a building, but it shall be conducted in no event
later than the end of the second calendar year following the year the last
building in the Development is placed in service. The Development Owner for
Tax-Exempt Bond Developments shall obtain a subordination agreement wherein
the lien of the mortgage is subordinated to the LURA.
(b)
Cost Certification. The Cost Certification Procedures Manual
sets forth the documentation required for the Department to perform a feasibility
analysis in accordance with §42(m)(2)(C)(i)(II), Internal Revenue Code,
and determine the final Credit to be allocated to the Development.
(1)
To request IRS Forms 8609, Developments must have:
(A)
Placed in Service by December 31 of the year the Commitment
Notice was issued if a Carryover Allocation was not requested and received;
or December 31 of the second year following the year the Carryover Allocation
Agreement was executed;
(B)
Scheduled a final construction inspection in accordance
with §60.1(c) of this title;
(C)
Informed the Department of and received written approval
for all Development amendments in accordance with §50.17(c) of this title;
(D)
Submitted to the Department the LURA in accordance with §50.15(a)
of this title;
(E)
Paid all applicable Department fees; and
(F)
Prepared all Cost Certification documentation in the format
prescribed by the Cost Certification Procedures Manual.
(2)
Required Cost Certification documentation must be received
by the Department no later than January 15 following the year the Credit Period
begins. Any Developments issued a Commitment Notice or Determination Notice
that fails to submit its Cost Certification documentation by this deadline
will be reported to the IRS and the Owner will be required to submit a request
for extension consistent with §50.20(l) of this title.
(3)
The Department will perform an initial evaluation of the
Cost Certification documentation within 45 days from the date of receipt and
notify the Owner in a deficiency letter of all additional required documentation.
Any deficiency letters issued to the Owner pertaining to the Cost Certification
documentation will also be copied to the syndicator. The Department will issue
IRS Forms 8609 no later than 90 days from the date that all required documents
have been received.
§50.16.Housing Credit Allocations.
(a)
In making a commitment of a Housing Credit Allocation under
this chapter, the Department shall rely upon information contained in the
Application to determine whether a building is eligible for the credit under
the Code, §42. The Development Owner shall bear full responsibility for
claiming the credit and assuring that the Development complies with the requirements
of the Code, §42. The Department shall have no responsibility for ensuring
that a Development Owner who receives a Housing Credit Allocation from the
Department will qualify for the housing credit.
(b)
The Housing Credit Allocation Amount shall not exceed the
dollar amount the Department determines is necessary for the financial feasibility
and the long term viability of the Development throughout the affordability
period. (2306.6711(b)) Such determination shall be made by the Department
at the time of issuance of the Commitment Notice or Determination Notice;
at the time the Department makes a Housing Credit Allocation; and as of the
date each building in a Development is placed in service. Any Housing Credit
Allocation Amount specified in a Commitment Notice, Determination Notice or
Carryover Allocation Document is subject to change by the Department based
upon such determination. Such a determination shall be made by the Department
based on its evaluation and procedures, considering the items specified in
the Code, §42(m)(2)(B), and the department in no way or manner represents
or warrants to any Applicant, sponsor, investor, lender or other entity that
the Development is, in fact, feasible or viable.
(c)
The General Contractor hired by the Development Owner must
meet specific criteria as defined by the General Appropriation Act, Article
VII, Rider 8(c). A General Contractor hired by a Development Owner or a Development
Owner, if the Development Owner serves as General Contractor must demonstrate
a history of constructing similar types of housing without the use of federal
tax credits. Evidence must be submitted to the Department, in accordance with §50.9(h)(4)(H)
of this title, which sufficiently documents that the General Contractor has
constructed some housing without the use of Housing Tax Credits. This documentation
will be required as a condition of the commitment notice or carryover agreement,
and must be complied with prior to commencement of construction and at cost
certification and final allocation of credits.
(d)
An allocation will be made in the name of the Development
Owner identified in the related Commitment Notice or Determination Notice.
If an allocation is made to a member or Affiliate of the ownership entity
proposed at the time of Application, the Department will transfer the allocation
to the ownership entity as consistent with the intention of the Board when
the Development was selected for an award of tax credits. Any other transfer
of an allocation will be subject to review and approval by the Department
consistent with §50.17(c) of this title. The approval of any such transfer
does not constitute a representation to the effect that such transfer is permissible
under §42 of the Code or without adverse consequences thereunder, and
the Department may condition its approval upon receipt and approval of complete
current documentation regarding the owner including documentation to show
consistency with all the criteria for scoring, evaluation and underwriting,
among others, which were applicable to the original Applicant.
(e)
The Department shall make a Housing Credit Allocation,
either in the form of IRS Form 8609, with respect to current year allocations
for buildings placed in service, or in the Carryover Allocation Document,
for buildings not yet placed in service, to any Development Owner who holds
a Commitment Notice which has not expired, and for which all fees as specified
in §50.20 of this title have been received by the Department and with
respect to which all applicable requirements, terms and conditions have been
met. For Tax-Exempt Bond Developments, the Housing Credit Allocation shall
be made in the form of a Determination Notice. For an IRS Form 8609 to be
issued with respect to a building in a Development with a Housing Credit Allocation,
satisfactory evidence must be received by the Department that such building
is completed and has been placed in service in accordance with the provisions
of the Department's Cost Certification Procedures Manual. The Cost Certification
documentation requirements will include a certification and inspection report
prepared by a Third-Party accredited accessibility inspector to certify that
the Development meets all required accessibility standards. IRS Form 8609
will not be issued until the certifications are received by the Department.
The Department shall mail or deliver IRS Form 8609 (or any successor form
adopted by the Internal Revenue Service) to the Development Owner, with Part
I thereof completed in all respects and signed by an authorized official of
the Department. The delivery of the IRS Form 8609 will occur only after the
Development Owner has complied with all procedures and requirements listed
within the Cost Certification Procedures Manual. Regardless of the year of
Application to the Department for Housing Tax Credits, the current year's
Cost Certification Procedures Manual must be utilized when filing all cost
certification materials. A separate Housing Credit Allocation shall be made
with respect to each building within a Development which is eligible for a
housing credit; provided, however, that where an allocation is made pursuant
to a Carryover Allocation Document on a Development basis in accordance with
the Code, §42(h)(1)(F), a housing credit dollar amount shall not be assigned
to particular buildings in the Development until the issuance of IRS Form
8609s with respect to such buildings. The Department may delay the issuance
of IRS Form 8609 if any Development violates the representations of the Application.
(f)
In making a Housing Credit Allocation, the Department shall
specify a maximum Applicable Percentage, not to exceed the Applicable Percentage
for the building permitted by the Code, §42(b), and a maximum Qualified
Basis amount. In specifying the maximum Applicable Percentage and the maximum
Qualified Basis amount, the Department shall disregard the first-year conventions
described in the Code, §42(f)(2)(A) and §42(f)(3)(B). The Housing
Credit Allocation made by the Department shall not exceed the amount necessary
to support the extended low-income housing commitment as required by the Code, §42(h)(6)(C)(i).
(g)
Development inspections shall be required to show that
the Development is built or rehabilitated according to construction threshold
criteria and Development characteristics identified at application. At a minimum,
all Development inspections must include an inspection for quality during
the construction process while defects can reasonably be corrected and a final
inspection at the time the Development is placed in service. All such Development
inspections shall be performed by the Department or by an independent Third
Party inspector acceptable to the Department. The Development Owner shall
pay all fees and costs of said inspections as described in §50.20 of
this title. For properties receiving financing through TX-USDA-RHS, the Department
shall accept the inspections performed by TX-USDA-RHS in lieu of having other
Third party Inspections. Details regarding the construction inspection process
are set forth in the Department Rule §60.1 of this title (2306.081; General
Appropriation Act, Article VII, Rider 8(b)).
(h)
After the entire Development is placed in service, which
must occur prior to the deadline specified in the Carryover Allocation Document
and as further outlined in §50.15 of this title, the Development Owner
shall be responsible for furnishing the Department with documentation which
satisfies the requirements set forth in the Cost Certification Procedures
Manual. For purposes of this title, and consistent with IRS Notice 88-116,
the placed in service date for a new or existing building used as residential
rental property is the date on which the building is ready and available for
its specifically assigned function and more specifically when the first Unit
in the building is certified as being suitable for occupancy in accordance
with state and local law and as certified by the appropriate local authority
or registered architect as ready for occupancy. The Cost Certification must
be submitted for the entire Development; therefore partial Cost Certifications
are not allowed. The Department may require copies of invoices and receipts
and statements for materials and labor utilized for the New Construction or
Rehabilitation and, if applicable, a closing statement for the acquisition
of the Development as well as for the closing of all interim and permanent
financing for the Development. If the Development Owner does not fulfill all
representations and commitments made in the Application, the Department may
make reasonable reductions to the tax credit amount allocated via the IRS
Form 8609, may withhold issuance of the IRS Form 8609s until these representations
and commitments are met, and/or may terminate the allocation, if appropriate
corrective action is not taken by the Development Owner.
(i)
The Board at its sole discretion may allocate credits to
a Development Owner in addition to those awarded at the time of the initial
Carryover Allocation in instances where there is bona fide substantiation
of cost overruns and the Department has made a determination that the allocation
is needed to maintain the Development's financial viability.
(j)
The Department may, at any time and without additional
administrative process, determine to award credits to Developments previously
evaluated and awarded credits if it determines that such previously awarded
credits are or may be invalid and the owner was not responsible for such invalidity.
§50.17.Board Reevaluation, Appeals Process; Provision of Information or Challenges Regarding Applications; Amendments; Housing Tax Credit and Ownership Transfers; Sale of Tax Credit Properties; Withdrawals; Cancellations; Alternative Dispute Resolution.
(a)
Board Reevaluation. (2306.6731(b)) Regardless of development
stage, the Board shall reevaluate a Development that undergoes a substantial
change between the time of initial Board approval of the Development and the
time of issuance of a Commitment Notice or Determination Notice for the Development.
For the purposes of this subsection, substantial change shall be those items
identified in subsection (d)(4) of this section. The Board may revoke any
Commitment Notice or Determination Notice issued for a Development that has
been unfavorably reevaluated by the Board.
(b)
Appeals Process. (2306.6715) An Applicant may appeal decisions
made by the Department as follows.
(1)
The decisions that may be appealed are identified in subparagraphs
(A) - (D) of this paragraph.
(A)
a determination regarding the Application’s satisfaction
of:
(i)
Eligibility Requirements;
(ii)
Disqualification or debarment criteria;
(iii)
Pre-Application or Application Threshold Criteria;
(iv)
Underwriting Criteria;
(B)
the scoring of the Application under the Application Selection
Criteria; and
(C)
a recommendation as to the amount of housing tax credits
to be allocated to the Application.
(D)
Any Department decision that results in termination of
an Application.
(2)
An Applicant may not appeal a decision made regarding an
Application filed by another Applicant.
(3)
An Applicant must file its appeal in writing with the Department
not later than the seventh day after the date the Department publishes the
results of any stage of the Application evaluation process identified in §50.9
of this title. In the appeal, the Applicant must specifically identify the
Applicant's grounds for appeal, based on the original Application and additional
documentation filed with the original Application. If the appeal relates to
the amount of housing tax credits recommended to be allocated, the Department
will provide the Applicant with the underwriting report upon request.
(4)
The Executive Director of the Department shall respond
in writing to the appeal not later than the 14th day after the date of receipt
of the appeal. If the Applicant is not satisfied with the Executive Director's
response to the appeal, the Applicant may appeal directly in writing to the
Board, provided that an appeal filed with the Board under this subsection
must be received by the Board before:
(A)
the seventh day preceding the date of the Board meeting
at which the relevant commitment decision is expected to be made; or
(B)
the third day preceding the date of the Board meeting described
by subparagraph (A) of this paragraph, if the Executive Director does not
respond to the appeal before the date described by subparagraph (A) of this
paragraph.
(5)
Board review of an appeal under paragraph (4) of this subsection
is based on the original Application and additional documentation filed with
the original Application. The Board may not review any information not contained
in or filed with the original Application. The decision of the Board regarding
the appeal is final.
(6)
The Department will post to its web site an appeal filed
with the Department or Board and any other document relating to the processing
of the appeal. (2306.6717(a)(5))
(c)
Provision of Information or Challenges Regarding Applications
from Unrelated Entities to the Application. The Department will address information
or challenges received from unrelated entities to a 2006 Application, utilizing
a preponderance of the evidence standard, in the following manner.
(1)
Within seven days of the receipt of the information
or challenge, the Department will post all information and challenges received
(including any identifying information) to the Department’s website.
(2)
Within seven days of the receipt of the information
or challenge, the Department will notify the Applicant related to the information
or challenge. The Applicant will then have seven days to respond to all information
and challenges provided to the Department.
(3)
Within 14 days of the receipt of the response from the
Applicant, the Department will evaluate all information submitted and other
relevant documentation related to the investigation. This information may
include information requested by the Department relating to this evaluation.
The Department will post its determination to its website. Any determinations
made by the Department cannot be appealed by any party unrelated to the Applicant.
(d)
Amendment of Application Subsequent to Allocation by Board.
(2306.6712 and 2306.6717(a)(4))
(1)
If a proposed modification would materially alter a Development
approved for an allocation of a housing tax credit, or if the Applicant has
altered any selection criteria item for which it received points, the Department
shall require the Applicant to file a formal, written request for an amendment
to the Application.
(2)
The Executive Director of the Department shall require
the Department staff assigned to underwrite Applications to evaluate the amendment
and provide an analysis and written recommendation to the Board. The appropriate
party monitoring compliance during construction in accordance with §50.18
of this title shall also provide to the Board an analysis and written recommendation
regarding the amendment. For amendments which require Board approval, the
amendment request must be received by the Department at least 30 days prior
to the Board meeting where the amendment will be considered.
(3)
The Board must vote on whether to approve an amendment.
The Board by vote may reject an amendment and, if appropriate, rescind a Commitment
Notice or terminate the allocation of housing tax credits and reallocate the
credits to other Applicants on the Waiting List if the Board determines that
the modification proposed in the amendment:
(A)
would materially alter the Development in a negative manner;
or
(B)
would have adversely affected the selection of the Application
in the Application Round.
(4)
Material alteration of a Development includes, but is not
limited to:
(A)
a significant modification of the site plan;
(B)
a modification of the number of units or bedroom mix of
units;
(C)
a substantive modification of the scope of tenant services;
(D)
a reduction of three percent or more in the square footage
of the units or common areas;
(E)
a significant modification of the architectural design
of the Development;
(F)
a modification of the residential density of the Development
of at least five percent;
(G)
an increase or decrease in the site acreage of greater
than 10% from the original site under control and proposed in the Application;
and
(H)
any other modification considered significant by the Board.
(5)
In evaluating the amendment under this subsection, the
Department staff shall consider whether the need for the modification proposed
in the amendment was:
(A)
reasonably foreseeable by the Applicant at the time the
Application was submitted; or
(B)
preventable by the Applicant.
(6)
This section shall be administered in a manner that is
consistent with the Code, §42.
(7)
Before the 15th day preceding the date of Board action
on the amendment, notice of an amendment and the recommendation of the Executive
Director and monitor regarding the amendment will be posted to the Department’s
web site.
(8)
In the event that an Applicant or Developer seeks to be
released from the commitment to serve the income level of tenants targeted
in the original Application, the following procedure will apply. For amendments
that involve a reduction in the total number of low-income Units being served,
or a reduction in the number of low-income Units at any level of AMGI represented
at the time of Application, evidence must be presented to the Department that
includes written confirmation from the lender and syndicator that the Development
is infeasible without the adjustment in Units. The Board may or may not approve
the amendment request, however, any affirmative recommendation to the Board
is contingent upon concurrence from the Real Estate Analysis Division that
the Unit adjustment (or an alternative Unit adjustment) is necessary for the
continued feasibility of the Development. Additionally, if it is determined
by the Department that the allocation of credits would not have been made
in the year of allocation because the loss of low-income targeting points
would have resulted in the Application not receiving an allocation, and the
amendment is approved by the Board, the approved amendment will carry a penalty
that prohibits the Applicant and all persons or entities with any ownership
interest in the Application (excluding any tax credit purchaser/syndicator),
from participation in the Housing Tax Credit Program (4% or 9%) for 24 months
from the time that the amendment is approved.
(e)
Housing Tax Credit and Ownership Transfers. (2306.6713)
A Development Owner may not transfer an allocation of housing tax credits
or ownership of a Development supported with an allocation of housing tax
credits to any Person other than an Affiliate of the Development Owner unless
the Development Owner obtains the Executive Director's prior, written approval
of the transfer. The Executive Director may not unreasonably withhold
approval of the transfer.
(1)
Transfers will not be approved prior to the issuance of
IRS Forms 8609 unless the Development Owner can provide evidence that a hardship
is creating the need for the transfer (potential bankruptcy, removal by a
partner, etc.). A Development Owner seeking Executive Director approval of
a transfer and the proposed transferee must provide to the Department a copy
of any applicable agreement between the parties to the transfer, including
any third-party agreement with the Department.
(2)
A Development Owner seeking Executive Director approval
of a transfer must provide the Department with documentation requested by
the Department, including but not limited to, a list of the names of transferees
and Related Parties; and detailed information describing the experience
and financial capacity of transferees and related parties. All transfer requests
must disclose the reason for the request. The Development Owner shall certify
to the Executive Director that the tenants in the Development have been notified
in writing of the transfer before the 30th day preceding the date of submission
of the transfer request to the Department. Not later than the fifth working
day after the date the Department receives all necessary information under
this section, the Department shall conduct a qualifications review of a transferee
to determine the transferee's past compliance with all aspects of the Housing
Tax Credit Program, LURAs; and the sufficiency of the transferee's experience
with Developments supported with Housing Credit Allocations. If the viable
operation of the Development is deemed to be in jeopardy by the Department,
the Department may authorize changes that were not contemplated in the Application.
(3)
As it relates to the Credit Cap further described in §50.6(d)
of this title, the credit cap will not be applied in the following circumstances:
(A)
in cases of transfers in which the syndicator, investor
or limited partner is taking over ownership of the Development and not merely
replacing the general partner; or
(B)
in cases where the general partner is being replaced if
the award of credits was made at least five years prior to the transfer request
date.
(f)
Sale of Certain Tax Credit Properties. Consistent with §2306.6726,
Texas Government Code, not later than two years before the expiration of the
Compliance Period, a Development Owner who agreed to provide a right of first
refusal under §2306.6725(b)(1), Texas Government Code and who intends
to sell the property shall notify the Department of its intent to sell.
(1)
The Development Owner shall notify Qualified Nonprofit
Organizations and tenant organizations of the opportunity to purchase the
Development. The Development Owner may:
(A)
during the first six-month period after notifying the Department,
negotiate or enter into a purchase agreement only with a Qualified Nonprofit
Organization that is also a community housing development organization as
defined by the federal home investment partnership program;
(B)
during the second six-month period after notifying the
Department, negotiate or enter into a purchase agreement with any Qualified
Nonprofit Organization or tenant organization; and
(C)
during the year before the expiration of the compliance
period, negotiate or enter into a purchase agreement with the Department or
any Qualified Nonprofit Organization or tenant organization approved by the
Department.
(2)
Notwithstanding items for which points were received consistent
with §50.9(i) of this title, a Development Owner may sell the Development
to any purchaser after the expiration of the compliance period if a Qualified
Nonprofit Organization or tenant organization does not offer to purchase the
Development at the minimum price provided by §42(i)(7), Internal Revenue
Code of 1986 (26 U.S.C. Section 42(i)(7)), and the Department declines to
purchase the Development.
(g)
Withdrawals. An Applicant may withdraw an Application prior
to receiving a Commitment Notice, Determination Notice, Carryover Allocation
Document or Housing Credit Allocation, or may cancel a Commitment Notice or
Determination Notice by submitting to the Department a notice, as applicable,
of withdrawal or cancellation, and making any required statements as to the
return of any tax credits allocated to the Development at issue.
(h)
Cancellations. The Department may cancel a Commitment Notice,
Determination Notice or Carryover Allocation prior to the issuance of IRS
Form 8609 with respect to a Development if:
(1)
The Applicant or the Development Owner, or the Development,
as applicable, fails to meet any of the conditions of such Commitment Notice
or Carryover Allocation or any of the undertakings and commitments made by
the Development Owner in the Applications process for the Development;
(2)
Any statement or representation made by the Development
Owner or made with respect to the Development Owner or the Development is
untrue or misleading;
(3)
An event occurs with respect to the Applicant or the Development
Owner which would have made the Development's Application ineligible for funding
pursuant to §50.5 of this title if such event had occurred prior to issuance
of the Commitment Notice or Carryover Allocation; or
(4)
The Applicant or the Development Owner or the Development,
as applicable, fails to comply with these Rules or the procedures or requirements
of the Department.
(i)
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.
For additional information on the Department’s ADR Policy, see the Department’s
General Administrative Rule on ADR at §1.17 of this title.
§50.18.Compliance Monitoring and Material Noncompliance.
The Code, §42(m)(1)(B)(iii), requires the Department as the housing
credit agency to include in its QAP a procedure that the Department will follow
in monitoring Developments for compliance with the provisions of the Code, §42
and in notifying the IRS of any noncompliance of which the Department becomes
aware. Detailed compliance rules and procedures for monitoring are set forth
in Department Rule §60.1 of this title.
§50.19.Department Records; Application Log; IRS Filings.
(a)
Department Records. At all times during each calendar year
the Department shall maintain a record of the following:
(1)
the cumulative amount of the State Housing Credit Ceiling
that has been committed pursuant to Commitment Notices during such calendar
year;
(2)
the cumulative amount of the State Housing Credit Ceiling
that has been committed pursuant to Carryover Allocation Documents during
such calendar year;
(3)
the cumulative amount of Housing Credit Allocations made
during such calendar year; and
(4)
the remaining unused portion of the State Housing Credit
Ceiling for such calendar year.
(b)
Application Log. (2306.6702(a)(3) and 2306.6709) The Department
shall maintain for each Application an Application Log that tracks the Application
from the date of its submission. The Application Log will contain, at a minimum,
the information identified in paragraphs (1) - (9) of this subsection.
(1)
the names of the Applicant and all General Partners of
the Development Owner, the owner contact name and phone number, and full contact
information for all members of the Development Team;
(2)
the name, physical location, and address of the Development,
including the relevant Uniform State Service Region of the state;
(3)
the number of Units and the amount of housing tax credits
requested for allocation by the Department to the Applicant;
(4)
any Set-Aside category under which the Application is filed;
(5)
the requested and awarded score of the Application in each
scoring category adopted by the Department under the Qualified Allocation
Plan;
(6)
any decision made by the Department or Board regarding
the Application, including the Department's decision regarding whether to
underwrite the Application and the Board's decision regarding whether to allocate
housing tax credits to the Development;
(7)
the names of individuals making the decisions described
by paragraph (6) of this subsection, including the names of Department staff
scoring and underwriting the Application, to be recorded next to the description
of the applicable decision;
(8)
the amount of housing tax credits allocated to the Development;
and
(9)
a dated record and summary of any contact between the Department
staff, the Board, and the Applicant or any Related Parties.
(c)
IRS Filings. The Department shall mail to the Internal
Revenue Service, not later than the 28th day of the second calendar month
after the close of each calendar year during which the Department makes Housing
Credit Allocations, the original of each completed (as to Part I) IRS Form
8609, a copy of which was mailed or delivered by the Department to a Development
Owner during such calendar year, along with a single completed IRS Form 8610,
Annual Low-income Housing Credit Agencies Report. When a Carryover Allocation
is made by the Department, a copy of the Carryover Allocation Agreement will
be mailed or delivered to the Development Owner by the Department in the year
in which the building(s) is placed in service, and thereafter the original
will be mailed to the Internal Revenue Service in the time sequence in this
subsection. The original of the Carryover Allocation Document will be filed
by the Department with IRS Form 8610 for the year in which the allocation
is made. The original of all executed Agreement and Election Statements shall
be filed by the Department with the Department's IRS Form 8610 for the year
a Housing Credit Allocation is made as provided in this section. The Department
shall be authorized to vary from the requirements of this section to the extent
required to adapt to changes in IRS requirements.
§50.20.Program Fees; Refunds; Public Information Requests; Adjustments of Fees and Notification of Fees; Extensions; Penalties.
(a)
Timely Payment of Fees. All fees must be paid as stated
in this section. Any fees, as further described in this section, that are
not timely paid will cause an Applicant to be ineligible to apply for tax
credits and additional tax credits and ineligible to submit extension requests,
ownership changes and Application amendments. Payments made by check, for
which insufficient funds are available, may cause the Application, commitment
or allocation to be terminated.
(b)
Pre-Application Fee. Each Applicant that submits a Pre-Application
shall submit to the Department, along with such Pre-Application, a non refundable
Pre-Application fee, in the amount of $10 per Unit. Units for the calculation
of the Pre-Application Fee include all Units within the Development, including
tax credit, market rate and owner-occupied Units. Pre-Applications without
the specified Pre-Application Fee in the form of a check will not be accepted.
Pre-Applications in which a CHDO or Qualified Nonprofit Organization intends
to serve as the managing General Partner of the Development Owner, or Control
the managing General Partner of the Development Owner, will receive a discount
of 10% off the calculated Pre-Application fee. (General Appropriation Act,
Article VII, Rider 7; 2306.6716(d))
(c)
Application Fee. Each Applicant that submits an Application
shall submit to the Department, along with such Application, an Application
fee. For Applicants having submitted a Pre-Application which met Pre-Application
Threshold and for which a Pre-Application fee was paid, the Application fee
will be $20 per Unit. For Applicants not having submitted a Pre-Application,
the Application fee will be $30 per Unit. Units for the calculation of the
Application Fee include all Units within the Development, including tax credit,
market rate and owner-occupied Units. Applications without the specified Application
Fee in the form of a check will not be accepted. Applications in which a CHDO
or Qualified Nonprofit Organization intends to serve as the managing General
Partner of the Development Owner, or Control the managing General Partner
of the Development Owner, will receive a discount of 10% off the calculated
Application fee. (General Appropriation Act, Article VII, Rider 7; 2306.6716(d))
(d)
Refunds of Pre-Application or Application Fees. (2306.6716(c))
The Department shall refund the balance of any fees collected for a Pre-Application
or Application that is withdrawn by the Applicant or that is not fully processed
by the Department. The amount of refund on Applications not fully processed
by the Department will be commensurate with the level of review completed.
Intake and data entry will constitute 20% of the review, the site visit will
constitute 20% of the review, Eligibility and Selection review will constitute
20%, and Threshold review will constitute 20% of the review, and underwriting
review will constitute 20%. The Department must provide the refund to the
Applicant not later than the 30th day after the date the last official action
is taken with respect to the Application.
(e)
Third Party Underwriting Fee. Applicants will be notified
in writing prior to the evaluation of a Development by an independent external
underwriter in accordance with §50.9(d)(6) of this title if such a review
is required. The fee must be received by the Department prior to the engagement
of the underwriter. The fees paid by the Development Owner to the Department
for the external underwriting will be credited against the commitment fee
established in subsection (f) of this section, in the event that a Commitment
Notice or Determination Notice is issued by the Department to the Development
Owner.
(f)
Commitment or Determination Notice Fee. Each Development
Owner that receives a Commitment Notice or Determination Notice shall submit
to the Department, not later than the expiration date on the commitment notice,
a non-refundable commitment fee equal to 5% of the annual Housing Credit Allocation
amount. The commitment fee shall be paid by check.
(g)
Compliance Monitoring Fee. Upon receipt of the cost certification,
the Department will invoice the Development Owner for compliance monitoring
fees. The amount due will equal $40 per tax credit unit. The fee will be collected,
retroactively if applicable, beginning with the first year of the credit period.
The invoice must be paid prior to the issuance of form 8609. Subsequent anniversary
dates on which the compliance monitoring fee payments are due shall be determined
by the beginning month of the compliance period.
(h)
Building Inspection Fee. The Building Inspection Fee must
be paid at the time the Commitment Fee is paid. The Building Inspection Fee
for all Developments is $750. Inspection fees in excess of $750 may be charged
to the Development Owner not to exceed an additional $250 per Development.
Developments receiving financing through TX-USDA-RHS that will not have construction
inspections performed through the Department will be exempt from the payment
of an inspection fee.
(i)
Tax-Exempt Bond Credit Increase Request Fee. As further
described in §50.12 of this title, requests for increases to the credit
amounts to be issued on IRS Forms 8609 for Tax-Exempt Bond Developments must
be submitted with a request fee equal to one percent of the first year’s
credit amount.
(j)
Public Information Requests. Public information requests
are processed by the Department in accordance with the provisions of the Government
Code, Chapter 552. The Department uses the guidelines promulgated by The Texas
Building and Procurement Commission to determine the cost of copying, and
other costs of production.
(k)
Periodic Adjustment of Fees by the Department and Notification
of Fees. (2306.6716(b)) All fees charged by the Department in the administration
of the tax credit program will be revised by the Department from time to time
as necessary to ensure that such fees compensate the Department for its administrative
costs and expenses. The Department shall publish each year an updated schedule
of Application fees that specifies the amount to be charged at each stage
of the Application process. Unless otherwise determined by the Department,
all revised fees shall apply to all Applications in process and all Developments
in operation at the time of such revisions.
(l)
Extension and Amendment Requests. All extension requests
relating to the Commitment Notice, Carryover, Documentation for 10% Test,
Substantial Construction Commencement, Placed in Service or Cost Certification
requirements and amendment requests shall be submitted to the Department in
writing and be accompanied by a non-refundable extension fee in the form of
a check in the amount of $2,500. Such requests must be submitted to the Department
no later than the date for which an extension is being requested. For extensions
which require Board approval, the extension request must be received by the
Department at least 15 business days prior to the Board meeting where the
extension will be considered. The extension request shall specify a requested
extension date and the reason why such an extension is required. Carryover
extension requests shall not request an extended deadline later than December
1st of the year the Commitment Notice was issued. The Department, in its sole
discretion, may consider and grant such extension requests for all items.
If an extension is required at Cost Certification, the fee of $2,500 must
be received by the Department to qualify for issuance of Forms 8609. Amendment
requests must be submitted consistent with §50.17(d) of this title. The
Board may waive related fees for good cause.
(m)
Penalties. Development Owners who have more tax credits
allocated to them than they can substantiate through Cost Certification will
return those excess tax credits prior to issuance of 8609's. For non
tax-exempt bond funded developments, a penalty fee equal to the one year credit
amount of the lost credits (10% of the total unused tax credit amount) will
be required to be paid by the Owner prior to the issuance of form 8609's if
the tax credits are not returned, and 8609's issued, within 60 days of the
end of the first year of the credit period. This penalty fee may be
waived without further Board action if the Department recaptures and re-issues
the returned tax credits in accordance with Section 42, Internal Revenue Code.
§50.21.Manner and Place of Filing All Required Documentation.
(a)
All Applications, letters, documents, or other papers filed
with the Department must be received only between the hours of 8:00 a.m. and
5:00 p.m. on any day which is not a Saturday, Sunday or a holiday established
by law for state employees.
(b)
All notices, information, correspondence and other communications
under this title shall be deemed to be duly given if delivered or sent and
effective in accordance with this subsection. Such correspondence must reference
that the subject matter is pursuant to the Tax Credit Program and must be
addressed to the Housing Tax Credit Program, Texas Department of Housing and
Community Affairs, P.O. Box 13941, Austin, TX 78711-3941 or for hand delivery
or courier to 507 Sabine, Suite 400, Austin, Texas 78701 or more current address
of the Department as released on the Department’s website. Every such
correspondence required or contemplated by this title to be given, delivered
or sent by any party may be delivered in person or may be sent by courier,
telecopy, express mail, telex, telegraph or postage prepaid certified or registered
air mail (or its equivalent under the laws of the country where mailed), addressed
to the party for whom it is intended, at the address specified in this subsection.
Regardless of method of delivery, documents must be received by the Department
no later than 5:00 p.m. for the given deadline date. Notice by courier, express
mail, certified mail, or registered mail will be considered received on the
date it is officially recorded as delivered by return receipt or equivalent.
Notice by telex or telegraph will be deemed given at the time it is recorded
by the carrier in the ordinary course of business as having been delivered,
but in any event not later than one business day after dispatch. Notice not
given in writing will be effective only if acknowledged in writing by a duly
authorized officer of the Department.
(c)
If required by the Department, Development Owners must
comply with all requirements to use the Department’s web site to provide
necessary data to the Department.
§50.22.Waiver and Amendment of Rules.
(a)
The Board, in its discretion, may waive 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.
(b)
The Department may amend this chapter and the Rules contained
herein at any time in accordance with the Government Code, Chapter 2001.
§50.23.Deadlines for Allocation of Housing Tax Credits. (2306.6724)
(a)
Not later than September 30 of each year, the Department
shall prepare and submit to the Board for adoption the draft QAP required
by federal law for use by the Department in setting criteria and priorities
for the allocation of tax credits under the Housing Tax Credit program.
(b)
The Board shall adopt and submit to the Governor the QAP
not later than November 15 of each year.
(c)
The Governor shall approve, reject, or modify and approve
the QAP not later than December 1 of each year. (2306.67022)(§42(m)(1))
(d)
The Board shall annually adopt a manual, corresponding
to the QAP, to provide information on how to apply for housing tax credits.
(e)
Applications for Housing Tax Credits to be issued a Commitment
Notice during the Application Round in a calendar year must be submitted to
the Department not later than March 1.
(f)
The Board shall review the recommendations of Department
staff regarding Applications and shall issue a list of approved Applications
each year in accordance with the Qualified Allocation Plan not later than
June 30.
(g)
The Board shall approve final commitments for allocations
of housing tax credits each year in accordance with the Qualified Allocation
Plan not later than July 31, unless unforeseen circumstances prohibit action
by that date. In any event, the Board shall approve final commitments for
allocations of housing tax credits each year in accordance with the Qualified
Allocation Plan not later than September 30. Department staff will subsequently
issue Commitment Notices based on the Board’s approval. Final commitments
may be conditioned on various factors approved by the Board, including resolution
of contested matters in litigation.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on December 22, 2005.
TRD-200506096
Edwina Carrington
Executive Director
Texas Department of Housing and Community Affairs
Effective date: January 11, 2006
Proposal publication date: September 2, 2005
For further information, please call: (512) 475-4595