Part 1. TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS
Chapter 60. COMPLIANCE ADMINISTRATION
Subchapter A. COMPLIANCE MONITORING
10 TAC §§60.2 - 60.4, 60.6 - 60.13, 60.17, 60.18
The Texas Department of Housing and Community Affairs (the Department) adopts amendments to §§60.2 - 60.4, 60.6 - 60.13, 60.17, and 60.18, concerning monitoring of compliance, with changes to the proposed text, as published in the January 5, 2007, issue of the Texas Register (32 TexReg 14). As a result of public comment and Board direction, changes were made in §§60.2, 60.3, 60.6, 60.7 and 60.13. The Department has also developed new procedures regarding monitoring of Housing Tax Credit developments after the extended use period which are added in §60.7. Provisions of 10 TAC §§1.11, 1.13, and 1.14, which are proposed for repeal, have been incorporated into the compliance rules. Requirements for physical inspection reporting are clarified in §60.12. Clarification of Utility Allowances is incorporated in §60.17. Minor changes have been made throughout to correct grammar, update formatting, and add clarifying language.
The purpose of these amendments is to provide updated policies and procedures for monitoring compliance regarding monitoring of Housing Tax Credit developments after the extended use period; requirements for physical inspection reporting are clarified; and minor changes have been made to correct grammar, update formatting, and add clarifying language. In January of 2007, the Internal Revenue Service released the 8823 Audit Guide. This guide is for use by State Housing Finance Agencies, IRS tax auditors and owners in implementation of the Housing Tax Credit program. Changes in several sections have been made to conform with new IRS requirements contained in the 8823 Audit Guide.
Reasoned Response to Public Comment on the Draft amendments to the Compliance Monitoring Rules, as follows:
Comment regarding §60.6 Section 8 Voucher Holders and Tenant Selection:
Comment was received suggesting that screening criteria relating to the minimum income for households receiving Section 8 assistance being limited to $2,500 annually regardless of the amount of rent paid by the household does not treat all applicants fairly. A minimum income, if utilized at all, must be applied equally.
Staff Response: Staff agrees with comment. To ensure equitable treatment in the screening criteria, §60.6(c)(2) will read that housing sponsors are prohibited from..."using a financial or minimum income standard for an individual or family participating in the voucher program that requires the individual or family to have a monthly income of more than 2.5 times the individual's or family's share of the total monthly rent payable to the owner of the Development. A household participating in the voucher program or receiving any other type of rental assistance may not be required to have a minimum income exceeding $2,500 per year".
Comment regarding §60.7 Monitoring for Compliance: Comment was received that the language prohibiting eviction or non renewal of a lease for other than good cause was too vague.
Staff Response: Staff concurs with this comment and recommends the following language:
§60.7(b)(14) The owner shall not terminate the lease or evict the resident or refuse to renew the lease except for material noncompliance with the lease or other good cause.
Comment:
Comment was received that the Department's policy regarding designation of households at recertification causes an undue hardship on very low income residents in tax credit properties beyond the requirements of §42. Under TDHCA policy, if a household at 30%, 40% or 50% recertifies with an income over the published limit, they must be re-designated according to their current income. Comment suggested that these households are being forced to move if a unit at the higher income limit is not available.
Staff Response: The Department does not intend for these households to have to vacate. Staff believes that as household income increases, their ability to pay increased rent should be recognized. A household that moved in at the 30% level and recertifies at the 50% level should pay the higher rent once another unit on the property is leased to a household with an income and rent under the 30% limit. Staff does not recommend any change to the rules.
Comment regarding §60.13 Inspection Standard:
Comment was received that management companies are experiencing difficulty in obtaining copies of TDHCA notices of upcoming inspections and in obtaining the results of physical inspections from owners. They requested that notices of inspections and copies of reports be provided, not only to the owner, but the property management company as well.
Staff Response: Treasury Regulations require the Department to send notices of upcoming reviews and results of inspections to owners, not management companies. Because of the cost of copying and mailing an additional report and because management companies frequently change, staff is not recommending that the Compliance Monitoring Rules be changed to require a courtesy copy be sent to the management company. It is incumbent on the owners to work closely with their managers.
Portfolio Management and Compliance will change our policy and send a copy of the cover letter that accompanies a final inspection report to the management company on record. A copy of the full report can be obtained either from the owner or from the Department through our open records process.
Commentator's: The Honorable Representative Jose Menendez, Mr. Dana Hoover, Vice President, Hamilton Valley Management, Inc., and Dan Allgeier, NuRock Development.
At the November 9, 2006 meeting, an issue regarding a non-compliance score was presented in relation to a development where the developer did not have a controlling interest in the property. The property received a material non-compliance score that jeopardized additional credits awarded for construction cost increases due to his relationship with the property. At that time, two Board members requested staff to reexamine the rules for this circumstance and postponed voting on the final rules until such a time as staff could address the issue.
Staff looked at the issue and developed modified rules based on the comments received from the Board. The draft Compliance Rules were approved for public comment at the December 2006 Board Meeting and were published in the Texas Register and available for public comment for a 30 day period. Substantial changes are explained below.
Summary explanation of proposed changes since December Board meeting:
§60.3 Development Inspections
Administrative Change: Administrative change based on Board member comment to develop a modification of the time frame for substantial construction.
Staff Response: The definition of commencement of substantial construction has been modified from expending 10% of the construction contract to include both expending 10% of the construction contract and completing 80% of the framing for new construction properties.
In the past, owners requested the initial construction inspection when they were 40% complete. At the Board's request, §60.3(1)(B) was added to require the initial inspection be completed between 45 to 90 days after the earlier of the submittal or the due date of commencement of substantial construction.
The deadline for 2005 HTC properties to meet commencement of substantial construction was December 1, 2006. Between December 2006 and February 2007, PMC conducted 21 construction inspections on properties that had commenced substantial construction, but had not yet requested an initial inspection. The results of those inspections were inconclusive because although they had spent 10% of the construction contract, they had not completed enough construction for a meaningful inspection.
A typical property will be about 60% complete when framing is 80% complete. This is the ideal time to complete this initial inspection. To achieve this goal and ensure that developments will be placed in service and inspected in a timely manner, the definition of commencement of substantial construction has been changed.
The amendments are adopted pursuant to the authority of the Texas Government Code, Chapter 2306 and in accordance with the Texas Government Code §2001.039.
§60.2.Definitions.
The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Affordability Period--the affordability period commences as specified in the Land Use Restriction Agreement (LURA), or federal regulation or commences on the first day of the compliance period as defined by §42(i)(1) of the Internal Revenue Code (IRC) and continues through the appropriate program's affordability requirements or termination of the LURA, whichever is later. The term of the affordability period shall be imposed by LURA or other deed restriction and may be terminated upon foreclosure. During this period the Department shall monitor to ensure compliance with programmatic rules, regulations, and application representations.
(2) Application--an application, in the form prescribed by the Department, filed with the Department by an Applicant, including any exhibits or other supporting material. (§2306.6702)
(3) Board--the governing board of the Texas Department of Housing and Community Affairs.
(4) Code--the U.S. Internal Revenue Code of 1986, as amended from time-to-time, together with any applicable regulations, rules, rulings, revenue procedures, information statements or other official pronouncements issued by the United States Department of the Treasury or the Internal Revenue Service.
(5) Department--the Texas Department of Housing and Community Affairs, an official and public agency of the State of Texas pursuant to Chapter 2306, Texas Government Code.
(6) Development--a property or work or a project, building, structure, facility, or undertaking, whether existing, new construction, remodeling, improvement, or rehabilitation, that meets or is designed to meet minimum property standards required by the Department and that is financed under the provisions of Chapter 2306, Texas Government Code.
(7) Housing sponsor--
(A) an individual, including an individual or family of low and very low income or family of moderate income, joint venture, partnership, limited partnership, trust, firm, corporation, or cooperative that is approved by the department as qualified to own, construct, acquire, rehabilitate, operate, manage, or maintain a housing Development, subject to the regulatory powers of the department and other laws; or
(B) in an economically depressed or blighted area, or in a federally assisted new community located within a home-rule municipality, the term may include an individual or family whose income exceeds the moderate income level if at least 90% of the total mortgage amount available under a mortgage revenue bond issue is designed for individuals and families of low income or families of moderate income.
(8) HTC Development--A Development using Housing Tax Credits allocated by the Department.
(9) Low Income Unit--a unit that is intended for occupancy by an income eligible household, as defined by the Department or the Code.
(10) Land Use Restriction Agreement (LURA)--an agreement between the Department and the Development Owner which is a binding covenant 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; the Code; and the requirements of the various programs administered or funded by the Department.
(11) Material Noncompliance--
(A) A Housing Tax Credit Development located within the state of Texas will be classified by the Department as being in material noncompliance status if the noncompliance score for such Development is equal to or exceeds a threshold of 30 points in accordance with the material noncompliance provisions, methodology, and point system of this title.
(B) Non HTC Developments monitored by the Department with 1 to 50 low income units will be classified as being in material noncompliance status if the noncompliance score is equal to or exceeds a threshold of 30 points. Non HTC Developments monitored by the Department with 51 to 200 low income units will be classified as being in material noncompliance status if the noncompliance score is equal to or exceeds a threshold of 120 points. Non HTC Developments monitored by the Department with 201 or more low income units will be classified as being in material noncompliance status if the noncompliance score is equal to or exceeds a threshold of 150 points.
(C) For all programs, a Development will be in material noncompliance if the noncompliance is stated in §60.18 of this chapter to be material noncompliance.
(12) Non HTC--any Development not utilizing Housing Tax Credits.
(13) 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.
§60.3.Development Inspections.
The Department shall conduct or may contract for inspections during the construction and rehabilitation process and at final construction completion to monitor for compliance with all program requirements, including construction threshold criteria and application Development characteristics associated with any Development funded or administered by the Department. Development inspections will be conducted by the Department or by an independent third party inspector acceptable to the Department and will include a construction quality evaluation. (§2306.081, Texas Government Code)
(1) Inspection procedures for HTC Developments include:
(A) A review of the evidence of commencement of substantial construction. The minimum activity necessary to meet the requirement of commencement of substantial construction for new Developments will be defined as having 80% of framing completed and expended 10% of the construction contract amount for the Development, adjusted for any change orders, and as documented by both the most recent Application and Certification for Payment (or equivalent) and the inspecting architect. The minimum activity necessary to meet the requirement of commencement of substantial construction for rehabilitation Developments will be defined as having completed 50% of the proposed scope of work and expended 10% of the construction budget as documented by the inspecting architect. Evidence of such activity shall be provided in a format prescribed by the Department.
(B) An initial Development inspection to be conducted between 45 to 90 days after the earlier of the submittal or the due date of commencement of substantial construction.
(C) A final Development inspection performed at construction completion. Evidence of construction completion must be submitted within thirty days of completion and shall be provided in a format prescribed by the Department.
(2) Development inspection procedures for non-HTC multifamily Developments include:
(A) An initial Development inspection to be conducted between 45 to 90 days from issuance of notice to proceed.
(B) A final Development inspection performed at construction completion. Evidence of completion must be submitted within thirty days of completion and shall be provided in a format prescribed by the Department. The inspection is required by the Department in order to release retainage.
(3) The Department may require a copy of all reports from all construction inspections performed on behalf of the Applicant as needed. Those reports must indicate that the Department may rely on the information provided in the reports and the inspector is properly credentialed.
(4) Additional inspections may be conducted by the Department or by an independent third party Inspector acceptable to the Department during the construction process, if necessary, based on the level of risk associated with the Development, as determined by the Department. The Department identifies HTC Developments to be at high risk if inspections identify issues with construction threshold criteria, Development characteristics identified at application or past performance problems. The Department identifies non-HTC Developments to be at high risk if inspections conducted during the construction process identify issues with program requirements or Development characteristics identified at application.
(5) Applicable Laws. An applicant may not receive funds or other assistance from the Department until the Department receives a properly completed certification from the applicant that the housing development is, or will be upon completion of construction, in compliance with the following housing laws:
(A) state and federal fair housing laws, including Chapter 301, Property Code, the Texas Fair Housing Act, Title VIII of the Civil Rights Act of 1968 (42 U.S.C. §3601, et seq.), and the Fair Housing Amendments of 1988 (42 U.S.C. §3601, et seq.);
(B) the Civil Rights Act of 1964 (42 U.S.C. §2000a, et seq.);
(C) the Americans with Disabilities Act of 1990 (42 U.S.C. 12101, et seq.); and
(D) §504, Rehabilitation Act of 1973 (29 U.S.C. §701, et seq.). (§2306.257)
§60.4.Monitoring During the Affordability Period.
(a) The Department will monitor for compliance with representations made by the Development Owner in the Application and in the LURA, whether required by the applicable program rules, regulations, including HOME Final Rule, the Code, the U.S. Department of Housing and Urban Development (HUD) Community Planning and Development (CPD) Notices, the Texas Government Code §2306.001 et seq., or Chapters 51 and 53 of this title.
(b) The Department periodically monitors Developments for compliance with the fair housing requirements specified in §60.3(5) of this chapter. Monitoring may occur during construction or during the affordability period.
(1) The monitoring level for each housing Development is based on the amount of risk of noncompliance with the requirements specified in §60.3(5) of this chapter associated with the Development.
(2) The Department shall notify the recipient in writing of an apparent violation of fair housing laws and shall afford the recipient a reasonable amount of time, as determined by the Department, to correct the identified violation, if possible, prior to the imposition of any sanction.
(3) The Department shall notify the Texas Workforce Commission, Civil Rights Division as required in the Texas Government Code §2306.257(d), with a copy to the Development owner in the event:
(A) no response to the Department's notice of apparent violation is received during the response period;
(B) the owner concurs with the Department's assessment and indicates they are unable or unwilling to correct the violation(s); or
(C) the owner and the Department are unable to agree if the identified issue is a violation.
(4) If fair housing violations are identified prior to the issuance of forms 8609 (For HTC Developments) or release of final retainage, no forms 8609 will be issued or retainage will not be released until the violations are corrected to the Department's satisfaction.
(c) Sanctions. The Department may impose one or more of the following sanctions depending on the severity of the violation of a law specified in §60.3(5) of this chapter, and as further described in subsections (a) and (b) of this section, by a recipient of housing tax credits, housing funds or other assistance from the Department:
(1) termination of assistance,
(2) deobligation of funds, if available, and
(3) a bar on future eligibility for assistance through a housing program administered by the Department. A bar shall be in place for at least one calendar year from the date of imposition by the Department and may not last for more than three calendar years from the date of correction.
§60.6.Section 8 Voucher Holders and Tenant Selection.
(a) The Department will monitor to ensure Development owners comply with §2306.269 and §2306.6728, Texas Government Code regarding residents receiving rental assistance under Section 8, United States Housing Act of 1937 (42 U.S.C. §1437F).
(b) Applicability. The policies, standards, and sanctions established by this section apply only to:
(1) multifamily housing Developments that receive the following assistance from the Department on or after January 1, 2002: (§2306.185)
(A) a loan or grant in an amount greater than 33% of the market value of the Development on the date the recipient took legal possession of the Development; or
(B) a loan guarantee for a loan in an amount greater than 33% of the market value of the Development on the date the recipient took legal title to the Development;
(2) multifamily rental housing Developments that applied for and were awarded housing tax credits after 1992.
(3) housing Developments that benefit from the incentive program under §2306.805 of the Texas Government Code.
(c) Housing sponsors of multifamily rental housing Developments described in subsection (a) of this section are prohibited from:
(1) excluding an individual or family from admission to the Development because the individual or family participates in the housing choice voucher program under Section 8, United States Housing Act of 1937 (42 U.S.C. §1437f); and
(2) using a financial or minimum income standard for an individual or family participating in the voucher program that requires the individual or family to have a monthly income of more than 2.5 times the individual's or family's share of the total monthly rent payable to the owner of the Development. A household participating in the voucher program or receiving any other type of rental assistance may not be required to have a minimum income exceeding $2,500 per year.
(d) To demonstrate compliance with this section housing sponsors shall:
(1) State in their leasing criteria that Section 8 voucher or certificate holders are welcome to apply and will be provided the same consideration for occupancy as any other prospective tenant;
(2) State in their leasing criteria that the Development will comply with state and federal fair housing and antidiscrimination laws;
(3) Apply all other screening criteria, including employment policies or procedures and other leasing criteria (such as rental history, credit history, criminal history, etc.) uniformly and in a manner consistent with the Texas and Federal Fair Housing Acts, program guidelines, and the Department's rules;
(4) Approve and distribute an Affirmative Marketing Plan. The Affirmative Marketing plan must be provided to the property management and onsite staff. Housing Sponsors are encouraged to use HUD form 935.2 or successors as applicable. The Affirmative Marketing Plan must identify methods to market the property to persons with disabilities. Additionally, the Affirmative Marketing plan must be displayed in the leasing office and available to the public on request.
§60.7.Monitoring for Compliance.
(a) Monitoring after the Compliance Period: Housing Tax Credit properties allocated credit in 1990 and after are required under the Code (§42(h)(6)) to record an Extended Use Agreement as part of the LURA restricting the property for 30 years. Section 42(i)(1) defines the Compliance Period as the first 15 years of the extended use period. Various sections of the Code specify monitoring rules State Housing Finance Agencies must implement during the Compliance Period.
(b) After the first 15 years of the extended use period, the Department will continue to monitor Housing Tax Credit Developments using the rules detailed in paragraphs (1) - (15) of this subsection.
(1) On site monitoring visits will continue to be conducted approximately every three years, unless the Department determines that a more frequent schedule is necessary;
(2) In general, the Department will review 10% of the low income files. No less than 5 files and no more than 20 files will be reviewed;
(3) A minimum of five units will be inspected. Additional units may be inspected if warranted by conditions discovered in the initial units inspected;
(4) A physical inspection of each unit shall be conducted by the owner each year using criteria set forth in the Department of Housing and Urban Development's Housing Quality Standards (HQS). Any deficiencies must be corrected and copies of the inspections and verification of repairs shall be maintained in the unit file;
(5) An inspection of all common spaces, grounds, building exteriors and building systems will be performed annually using HUD's HQS. Deficiencies must be corrected and records of the corrections must be maintained for review by Department staff;
(6) Each Development shall submit an annual report in the format prescribed by the Department;
(7) Reports to the Department must be submitted electronically as required in §60.9 of this chapter;
(8) Compliance monitoring fees will continue to be submitted to the Department annually in the amount stated in the LURA;
(9) All households must be income qualified upon initial occupancy of any low income unit. Proper verifications of income are required, and the Department's Income Certification form must be completed unless the Development participates in the Rural Rental Housing Program or a project based HUD program;
(10) Rents will remain restricted for all low income units. The tenant paid portion of the rent plus the applicable utility allowance must not exceed the applicable limit.
(11) Owners and managers must continue to screen households for income, assets, and household size on an annual basis. In addition, an Income Certification form must be completed on an annual basis;
(12) All additional income and rent restrictions defined in the LURA remain in effect.
(13) Other requirements defined in the LURA, such as the provision of social services or serving special needs households, will remain in effect unless specifically waived by the Department; and
(14) The owner shall not terminate the lease or evict the resident or refuse to renew the lease except for material noncompliance with the lease or other good cause.
(15) The total number of required low income units must be maintained Development wide.
(c) After the first 15 years of the extended use period, certain requirements will not be monitored as detailed in paragraphs (1) - (5) of this subsection.
(1) At recertification verification of income and assets will not be required.
(2) The student restrictions found in §42(i)(3)(D) of the Code. An income qualified household consisting entirely of full time students may occupy a low income unit;
(3) The requirement to treat transfers from building to building as a new move in. Transfers within the Development will not require household requalification;
(4) The Available Unit Rule found in Treasury Regulation §1.42-15; and
(5) The building applicable fraction found in the Development's Cost Certification and/or the LURA. Low income occupancy requirements will be monitored Development wide, not building by building;
(d) Unless specifically noted in this section, all requirements of this chapter and §42 of the Internal Revenue Code remain in effect for the Extended Use Period. These Post Year 15 Monitoring Rules apply only to the Housing Tax Credit Developments administered by the Department. Participation in other programs administered by the Department may require additional monitoring to ensure compliance with the requirements of those programs.
(e) The Department may contract with an independent third party to monitor a Development during construction or rehabilitation and during operation for compliance with any conditions imposed by the Department in connection with funding or other Department oversight and appropriate state and federal laws, as required by other state law or by the Board. (§2306.6719, Texas Government Code).
§60.8.Recordkeeping.
All Development Owners must comply with program recordkeeping requirements. Records must include sufficient information to comply with the Reporting requirements of §60.9 of this chapter and any additional programmatic requirements. Records must be kept for each qualified low income rental unit and building in the Development, commencing with lease up activities and continuing on a monthly basis until the end of the affordability period. Housing Tax Credit owners should refer to Treasury Regulation §1.42-5 for more information about record keeping requirements.
§60.9.Reporting.
(a) Each Development shall submit reports as required by the Department. Each Development that receives financial assistance or is administered by the Department, including the FDIC's Affordable Housing Program (AHP), shall submit the information required under this section which describes the Annual Owner's Compliance Report (AOCR) required by §2306.0724, Texas Government Code. The Department requires this information be submitted electronically and in the format prescribed by the Department. Section 60.10 of this chapter contains rules regarding filing and penalties for failure to file reports. The first AOCR is due the year following award.
(b) Part A, the "Owner's Certification of Program Compliance"; Part B, the "Unit Status Report"; and Part C, "Tenant Services Provided Report" of the AOCR, must be provided to the Department no later than March 1st of each year, reporting data current as of December 31 of the previous year (the reporting year). Part D, "Owner's Financial Certification", which includes the current audited financial statements and income and expenses of the Development for the prior year, shall be delivered to the Department no later than the last day in April each year. A full description of the AOCR is contained in §60.10 of this chapter.
(c) The Department maintains the information reported by the AOCR pursuant to §2306.0724(c), Texas Government Code in electronic and hard-copy formats available at no charge to the public.
(d) Rental Developments funded or administered by the Department, including HOME, Housing Trust Fund (HTF), the FDIC's AHP, and any other rental programs funded or administered through the Department shall provide tenant information provided on Part B, "Unit Status Report," at least quarterly during lease up and until occupancy requirements are achieved. Once the Department has determined that all occupancy requirements are satisfied, the Development shall submit the Unit Status Report at least annually and as required by this section.
(e) Developments financed by tax exempt bonds issued by the Department shall report quarterly throughout the Qualified Project Period unless notified by the Department of a change in the reporting frequency.
(f) Information regarding housing for persons with disabilities: Owners of state or federally assisted housing Developments with 20 or more housing units must report information regarding housing units designed for persons with disabilities pursuant to §2306.078, Texas Government Code. This information will be reported on the Department's website and will include the following:
(1) the name, if any, of the Development;
(2) the street address of the Development;
(3) the number of housing units in the Development that are designed for persons with disabilities and that are available for lease;
(4) the number of bedrooms in each housing unit designed for a person with a disability;
(5) the special features that characterize each housing unit's suitability for a person with a disability;
(6) the rent for each housing unit designed for a person with a disability; and
(7) the telephone number and name of the Development manager or agent to whom inquiries by prospective tenants may be made.
(g) The Department requires all Owners of properties administered by the Department to submit the Unit Status Report in the electronic format developed by the Department. The Electronic Compliance Reporting Filing Agreement and the Owner's Designation of Administrator of Accounts forms must be filed no later than January 31st of the year following the award. The Department will provide general instruction regarding the electronic transfer of data. The Department may, at its discretion, waive the online reporting requirements. In the absence of a written waiver, all Developments are required to submit Reports online.
(h) Data submitted to the Department by the owner of a Development that contains relevant information pursuant to §2306.072(c)(6) and §2306.0724 of the Texas Government Code shall at a minimum include:
(1) the street address and municipality or county in which the property is located;
(2) the telephone number of the property management or leasing agent;
(3) the total number of units, reported by bedroom size;
(4) the move in and move out date for each residential rental unit in the Development;
(5) the number of occupants in each low income unit;
(6) the total number of units, reported by bedroom size, designed for individuals who are physically challenged or who have special needs and the number of these individuals served annually;
(7) the rent for each type of rental unit, reported by bedroom size;
(8) the race or ethnic makeup of the residents of each project;
(9) the number of units occupied by individuals receiving government-supported housing assistance and the type of assistance received;
(10) the number of units occupied by individuals and families of extremely low income, very low income, low income, moderate income, and other levels of income, reported as 30, 40, 50, 60 or 80% of the area median income;
(11) a statement as to whether the property has been notified of a violation of the fair housing law that has been filed with the United States Department of Housing and Urban Development, the Civil Rights Division of the Texas Workforce Commission, or the United States Department of Justice;
(12) a statement as to whether the Development has any instances of material noncompliance with bond indentures or deed restrictions discovered through the normal monitoring activities that include meeting occupancy requirements or rent restrictions imposed by deed restriction or finance agreements; and
(13) the annual number of low income unit vacancies and information that shows when and to whom available units were rented.
§60.10.Annual Owner's Compliance Report Certification and Review.
(a) On or before February 1st of each year of the Affordability Period, the Department will send a reminder that the Report required by §2306.0724 of the Texas Government Code (to be titled the Annual Owner's Compliance Report (AOCR)) must be completed by the Owner and submitted to the Department on or before the applicable deadline. This reminder may be sent via email or by posting on the Department's website. The AOCR shall consist of:
(1) Part A, "Owner's Certification of Program Compliance";
(2) Part B, "Unit Status Report";
(3) Part C, "Tenant Services Provided Report"; and
(4) Part D, "Owner's Financial Certification".
(b) Any Development for which the AOCR, Part A, "Owner Certification of Program Compliance," is not received or is received past the due date will be considered not in compliance with these rules. If Part A is incomplete, improperly completed or not signed by the Development Owner, it will be considered not received and not in compliance with these rules. The Department will report to the IRS via form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition, any HTC Development that fails to comply with this section. The AOCR Part A shall include at a minimum the following statements by the Development Owner:
(1) the Development met the minimum set aside test which was applicable to the Development;
(2) there was no change in the Applicable Fraction or low income set aside of any building, or if there was such a change, the actual Applicable Fraction is reported to the Department (HTC only);
(3) the Development Owner has received an annual income certification from each low income resident and documentation to support that certification, in the manner and form required by the Department's Compliance Manual(s), as may be amended from time to time;
(4) documentation is maintained to support each low income tenant's income certification, consistent with the determination of annual income and verification procedures under Section 8 of the United States Housing Act of 1937 (Section 8), notwithstanding any rules to the contrary for the determination of gross income for federal income tax purposes. In the case of a tenant receiving housing assistance payments under Section 8, the documentation requirement is satisfied if the public housing authority provides a statement to the Development Owner declaring that the tenant's income does not exceed the applicable income limit under §42(g) of the IRC as described in the Compliance Manual(s);
(5) each low income unit in the Development was rent-restricted under the LURA and applicable program regulations, including §42(g)(2) of the IRC, or 24 CFR Part 92, and the owner maintained documentation to support the utility allowance applicable to such unit;
(6) all low income units in the Development are and have been for use by the general public and used on a non-transient basis (except for transitional housing for the homeless provided under §42(i)(3)(B)(iii) of the IRC (HTC and BOND only);
(7) no finding of discrimination under the Fair Housing Act, 42 U.S.C. §§3601 - 3619, has occurred for this Development. A finding of discrimination includes an adverse final decision by the Secretary of HUD, 24 CFR §180.680, an adverse final decision by a substantially equivalent state or local fair housing agency, 42 U.S.C. §3616a(a)(1), or an adverse judgment from a federal court;
(8) each unit or building in the Development is, and has been, suitable for occupancy, taking into account Uniform Physical Condition Standards (UPCS) (24 CFR §5.703) or local health, safety, and building codes, and the state or local government unit responsible for making building code inspections did not issue a report of a violation for any building or low income unit in the Development during this reporting period. If a violation report or notice was issued by the governmental unit during this reporting period, the Development Owner must provide the Department with a copy of the violation report or notice. In addition, the Development Owner must state whether the violation has been corrected;
(9) each unit has been inspected annually and each unit meets conditions set by HUD Housing Quality Standards (HOME only);
(10) there has been no change in the Eligible Basis (as defined by the Code for any building in the Development since the last certification or, if change(s), the nature of the change (HTC only);
(11) all tenant facilities included in the original application, such as swimming pools, other recreational facilities, washer/dryer hook ups, appliances and parking areas, were provided on a comparable basis to any tenants in the Development;
(12) Residents have not been charged for the use of any nonresidential portion of the building that was included in the building's Eligible Basis under the Code (HTC only);
(13) if a low income unit in the Development became vacant during the year, reasonable attempts were made, or are made, to rent that unit or the next available unit of comparable or smaller size to a qualifying low income household before any other units in the Development were, or will be, rented to non low income households (HTC and BOND only);
(14) if the income of tenants of a low income unit in the Development increased above the appropriate limit allowed, the next available unit of comparable or smaller size was, or will be, rented to residents having a qualifying income;
(15) a LURA including an Extended Low Income Housing Commitment as described in §42(h)(6) of the Code was in effect for buildings subject to §7108(c)(1) of the Omnibus Budget Reconciliation Act of 1989, 103 Stat. 2106, 2308 - 2311, including the requirement under §42(h)(6)(B)(iv) of the Code, that a Development Owner cannot refuse to lease a unit in the Development to an applicant because the applicant holds a voucher or certificate of eligibility under Section 8 of the United States Housing Act of 1937, 42 U.S.C. §1437f (for buildings subject to §1314c(b)(4) of the Omnibus Budget Reconciliation Act of 1993, 107 Stat. 312, 438 - 439) (HTC only);
(16) the Development Owner has not been notified by the IRS that the Development is no longer "a qualified low income housing Development" within the meaning of the Code (HTC only);
(17) if the Development Owner is required to be a Qualified Nonprofit Organization under §42(h)(5) of the Code, that a Qualified Nonprofit Organization owned an interest in and materially participated in the operation of the Development within the meaning under §469(h) of the Code (HTC only);
(18) no low income units in the Development were occupied by ineligible full time student households (HTC and BOND only);
(19) no change in the ownership of the Development has occurred during the reporting period or changes and transfers were or are reported;
(20) the Development met all representations of the Development Owner in the Application and complied with all terms and conditions which were recorded in the LURA;
(21) the Development has made all required lender deposits, including annual reserve deposits;
(22) the street address and municipality or county in which the Development is located;
(23) the name, address, contact person, and telephone number of the property management or leasing agent;
(24) that no tenants in low income units were evicted or had their tenancies terminated, including non-renewal of a lease, other than for good cause and that no tenants had an increase in the gross rent with respect to a low income unit not otherwise permitted under the Code (HTC and HOME only);
(25) The name and mailing address of the syndicator and lender (HTC only);
(26) any additional information as required by the Department.
(c) Review. Department staff will review Part A of the AOCR for compliance with the requirements of the appropriate program including the Code.
(d) Sanctions.
(1) If the report is not received on or before March 1, a notice of noncompliance will be sent to the owner specifying a reasonable amount of time, as determined by the Department, to submit the report prior to the imposition of any sanction.
(2) If the report is not received on or before the corrective action deadline the Department shall:
(A) For all HTC properties, issue form 8823 notifying the Internal Revenue Service of the violation.
(B) For all properties, score the noncompliance in accordance with §60.18 of this chapter.
(3) In addition, in accordance with the provisions of §2306.0724 of the Texas Government Code, the Executive Director of the Department may assess and enforce the following sanctions against a housing sponsor who fails to submit the AOCR on or before March 1 of each year. These sanctions will only be assessed for multiple, consistent and/or repeated violations of failure to submit the AOCR by March 1 of each year.
(A) Impose a late processing fee in an amount equal to $1,000;
(B) Subject the Housing Sponsor to §1.21 of this title, Action by the Department if Outstanding Balances Exist; or
(C) An HTC Development that three years in a row fails to submit required information to the Department may be reported to the Internal Revenue Service as no longer in compliance and never expected to comply.
§60.11.Record Retention Provisions.
(a) Each Development that is administered by the Department including the FDIC's AHP is required to retain the records as required by the specific funding program rules and regulations. In general, retention schedules include but are not limited to the provision of subsections (b) - (e) of this section.
(b) HTC records, as described in §60.8 of this chapter, must be retained for at least six years after the due date (with extensions) for filing the federal income tax return for that year; however, the records for the first year of the Credit Period must be retained for at least six years beyond the due date (with extensions) for filing the federal income tax return for the last year of the Compliance Period of the building.
(c) Retention of records for HOME rental Developments must comply with the provisions of 24 CFR §92.508(c) which generally requires retention of rental housing records for five years after the affordability period terminates.
(d) Housing Trust Fund (HTF) rental Developments must retain tenant files for at least three years beyond the date the tenant moves from the Development. Records pertinent to the funding of the award, including but not limited to the application, development costs and documentation, must be retained for at least five years after the affordability period terminates.
(e) Other rental Developments funded or administered in whole or in part by the Department must comply with record retention requirements as required by rule or deed restriction.
§60.12.Inspection Provision.
(a) The Department retains the right to perform an on-site inspection of any low income Development, and review and photocopy all documents and records supporting compliance with Departmental programs through the end of the Compliance Period or the end of the period covered by any Extended Low Income Housing Commitment, whichever is later.
(b) The Department will perform on-site inspections and file reviews of each low income Development. The Department will conduct the first review of HTC Developments by the end of the second calendar year following the year the last building in the Development is placed in service. The Department will schedule the first review of all other Developments as leasing commences. Subsequent reviews will occur at least once every three years during the Affordability Period. The Department will monitor a sampling of the low income resident files in each Development, and review the income certifications, the documentation the Development Owner has received to support the certifications, the rent records and any additional information that the Department deems necessary. The Department will also conduct a physical inspection of the Development including the exterior of the Development, development amenities, and an interior inspection of a sample of units.
(c) The Department may, at the time and in the form designated by the Department, require the Development Owners to submit information on tenant income and rent for each low income unit and may require a Development Owner to submit copies of the tenant files, including copies of the income certification, the documentation the Development Owner has received to support that certification, and the rent record for any low income tenant.
(d) The Department will select the low income units and tenant records that are to be inspected and reviewed. Original records are required for review. The Department will not give Development Owners advance notice that a particular unit, tenant records, or a particular year will be inspected or reviewed. However, the Department will give reasonable notice to the Development Owner that an on-site inspection or a tenant record review will occur so the Development Owner may notify tenants of the inspection or assemble original tenant records for review.
(e) The Department will conduct a limited inspection for compliance with accessibility requirements under the Fair Housing Act or §504 of the Rehabilitation Act of 1973. If determined necessary the Department may make referrals to appropriate federal and state agencies or order third-party inspections to be paid for by the Development owner.
(f) Exception: The Department may, at its discretion, enter into a Memorandum of Understanding with the TX-USDA-RHS, whereby the TX-USDA-RHS agrees to provide to the Department information concerning the income and rent of the tenants in buildings financed under its Section 515 program. Owners of such buildings may be exempted from the inspection provisions; however, if the information provided by TX-USDA-RHS is not sufficient for the Department to make a determination that the income limitation and rent restrictions are met, the Development Owner must provide the Department with additional information, or the Department will inspect according to the provisions contained herein. TX-USDA-RHS Developments satisfy the definition of Qualified Elderly Development if they meet the definition for elderly used by TX-USDA-RHS, which includes persons with disabilities.
§60.13.Inspection Standard.
(a) Developments must be maintained to be decent, safe, sanitary and in good repair throughout the affordability period. For all programs, the Department will use HUD's Uniform Physical Condition Standards (UPCS) to determine compliance with property condition. In addition, Developments must comply with all local heath, safety, and building codes. The Department may contract with a third party to complete UPCS inspections. HTC Developments that fail to comply with local codes or UPCS must be reported to the IRS.
(b) To determine compliance with property condition standards the Department will review any local health, safety, or building code violation reports, or notices in the absence of local health, safety and building code violation reports. If deemed necessary by the Department, inspections by third-party inspectors may be requested and will be relied upon to determine compliance with property condition standards. In addition to the review of any local health, safety or building code violation reports, the Department may conduct inspections of the units using HUD's Housing Quality Standards or UPCS and may use those standards to determine compliance with property condition standards. Developments must be maintained to be decent, safe, sanitary and in good repair throughout the affordability period. HTC Developments that fail to comply with local codes or UPCS must be reported to the IRS.
(c) The Department will evaluate UPCS reports in the following manner:
(1) A finding of Major Violations will be assessed if:
(A) Any life threatening health, safety, or fire safety hazards are reported on the Notification of Exigent and Fire Safety Hazards Observed form in any building exterior, building system, common area, site, or dwelling unit; or
(B) 25% or more of buildings or dwelling units inspected have the same reported health or safety deficiencies.
(2) A finding of Minor Violations will be assessed if:
(A) The same Level two or Level three deficiency (not a health or safety deficiency) is listed for 25% or more of the buildings or dwelling units inspected; or
(B) An overall UPCS score of less than 60% (59% or below) is reported.
(3) Findings of both Major and Minor Violations may be assessed if deficiencies reported meet the criteria for both.
(4) Pursuant to the 8823 Audit Guide, the Department must report if a property fails to comply with the requirements of the UPCS or local codes at any time. Accordingly, the Department will submit forms 8823 for any UPCS violation. However, if the violation(s) do not meet the conditions described in paragraph (1) or (2) of this subsection, no points will be assigned in the Department's compliance status evaluation of the property.
(5) Property representatives will have an opportunity to correct deficiencies while the inspector is on site. Such corrected items will not be assessed a finding unless there is a pattern of the same violation (25% or more of dwelling units or buildings inspected with the same deficiency).
(6) Acceptable evidence of correction of deficiencies is a certification from an appropriate licensed professional that the item now complies with the inspection standard or other documentation that the violation has been corrected.
(7) For Developments with no findings of Major or Minor Violations, the review letter will state that the owner is responsible for correcting any items noted in the report. However, the letter will not require the owner to report back that the items have been cured.
(8) If there are findings of noncompliance, the Department will provide a standard 90 day corrective action period. The Department will grant up to an additional 90 day extension if there is good cause and the owner clearly requests an extension.
§60.17.Utility Allowances.
(a) The Department will monitor to determine if HTC and BOND properties comply with published rent limits, which include an allowance for utilities. If residents are responsible for some or all utilities, Development owners must use a Utility Allowance that complies with §1.42-10 of the IRC and/or the IRS 8823 Audit Guide.
(b) Until further guidance is provided by the IRS through administrative ruling or guidance, the election to use a local utility company estimate is permanent; i.e. owners cannot switch back and forth between the local PHA and utility company estimates unless written approval is given by the Department.
(c) Owners that want to switch from using a PHA allowance to a written estimate or vice versa must have written approval from TDHCA.
(d) If an owner or the Department believes that the published PHA allowance does not accurately reflect the costs of utilities, the owner may be required to calculate utility allowances for rent restricted units in the building based upon an average cost of the actual use of similarly constructed and sized units in the building using actual usage data and rates.
(e) If an owner computes the utility allowance estimate based on the expected or historical use by HTC buildings/units, the estimate must be calculated in a reasonable manner and contemporaneously documented to show how the estimate was determined.
(f) The Department will monitor to determine if HOME and HTF Developments comply with published rent limits, which include an allowance for utilities. Unless otherwise approved by the Department, HOME and HTF Developments must use the utility allowance established by the applicable housing authority. Changes in utility allowances must be implemented on the published effective date.
(g) If the applicable Public Housing Authority allowance lists flat fees for any utility, those flat fees must be included in the calculation of the utility allowance if the resident is responsible for that utility. This does not apply if the Development uses a written local estimate in accordance with Treasury Regulation §1.42.10.
§60.18.Material Noncompliance.
(a) For all programs, a Development will be in material noncompliance if the noncompliance is stated in this section to be material noncompliance. Developments with more than one program administered by the Department will be scored by program. The Development will be considered in material noncompliance if the score for any single program exceeds the noncompliance limit for that program. The Department may take into consideration the representations of the Applicant regarding compliance violations; however, the records of the Department are controlling.
(b) Each Development that is funded or administered by the Department will be scored according to the type and number of noncompliance events as it relates to the HTC program or other Department programs. All Developments, regardless of status, that are or have been administered, funded, or monitored by the Department are scored even if the Development no longer actively participates in the program. Unless otherwise specified below, under the HTC program, noncompliance events issued on Form 8823 are assigned point values. For other programs administered by the Department, unless otherwise specified below, noncompliance events identified during on-site monitoring reviews are assigned point values.
(c) Uncorrected noncompliance, if applicable to the Development, will carry the maximum number of points until the noncompliance event has been reported corrected by the Department. Once reported corrected by the Department, the score will be reduced to the "corrected value". Corrected noncompliance will no longer be included in the Development score three years after the date the noncompliance was reported corrected by the Department.
(1) Under the HTC program, noncompliance events that occurred and were identified by the Department through the issuance of the IRS Form 8823 prior to January 1, 1998, are assigned corrected point values to each noncompliance event. The score for these events will no longer be included in the Development's score.
(2) The score in effect on May 1st of the year the HTC program application is submitted, during final application for Developments applying for participation in the BOND program, HOME program or HTF program, or during application review of any other program funded or administered by the Department will determine if any Development disclosed on previous participation forms is in material noncompliance.
(3) The Department will not execute a Carryover Allocation Agreement with any Owner in Material Noncompliance on October 1, 2007.
(4) Any corrective action documentation affecting the compliance status score must be received by the Department thirty days prior to the application deadline for HTC applications, thirty days prior to the submission of Volume I of the application for a BOND Development, or thirty days before the submission of an application for any other program funded or administered by the Department.
(5) The Department will not approve the transfer of ownership of any property regulated by the Department to a party in Material Noncompliance.
(d) A Development's score will be reduced by the number of points needed to be one point under the Material Noncompliance threshold under the following circumstances:
(1) The Development has no uncorrected issues of noncompliance, and
(2) All issues of noncompliance were corrected during the corrective action period, and
(3) All corrective action documentation was provided to the Department during the corrective action period.
(e) Treatment of previously owned Developments during a Previous Participation review:
(1) The Department will not take into consideration the score of a Development transferred by the applicant over three years ago.
(2) The Department will not take into consideration the score of a Development whose affordability period ended over three years ago.
(3) If the property was transferred less than three years ago, the Department will determine the score for the noncompliance events with a date of noncompliance identified during the applicant's period of ownership. If the points associated with the noncompliance events identified during the applicant's period of ownership exceed the threshold for Material Noncompliance, the application will not be recommended.
(f) Events of noncompliance are categorized as either "development events" or "unit/building events". Development events of noncompliance affect some or all the buildings in the Development; however, the Development will receive only one score for the event rather than a score for each building. Other types of noncompliance are identified individually by unit. This type of noncompliance will receive the appropriate score for each unit cited with an event. The unit scores and the Development scores accumulate towards the total score of the Development. Violations under the HTC program are identified by unit; however, the building is scored rather than the unit and the building will receive the noncompliance score if one or more of the units are in noncompliance.
(g) Each type of noncompliance is assigned a point value. The point value for noncompliance is reduced upon correction of the noncompliance. The scoring point system and values are as described in subsections (f) and (g) of this section. The point system weighs certain types of noncompliance more heavily than others; therefore certain noncompliance events automatically place the Development in Material Noncompliance. However, other types of noncompliance, by themselves, do not warrant the classification of Material Noncompliance. Multiple occurrences of these types of noncompliance events may produce enough points to cause the Development to be in Material Noncompliance.
(h) Development Noncompliance items are identified in paragraphs (1) - (27) of this subsection .
(1) Major property condition violations. The property condition does not meet Uniform Physical Condition Standards as described in §60.13 of this chapter or displays major violations of health, safety and building codes. Uncorrected, this is material noncompliance. Uncorrected is equal to the material noncompliance status threshold score as defined in §60.2(11) of this chapter. Corrected is 10 points.
(2) Owner refused to lease to a holder of rental assistance certificate/voucher because of the status of the prospective tenant as such a holder. Uncorrected, this is material noncompliance. Uncorrected is equal to the material noncompliance status threshold score as defined in §60.2(11) of this chapter. Corrected is 10 points.
(3) Development is not available to general public. The IRS will be notified of HTC Developments reported to the Department, according to the Memorandum of Understanding among the U.S. Department of Treasury, the Department of Housing and Urban Development, and the Department of Justice, to be under investigation of possible violations of the Fair Housing Act. No points are imposed.
(4) Determination of a violation under the Fair Housing Act. Uncorrected, this is material noncompliance. Uncorrected is equal to the material noncompliance status threshold score as defined in §60.2(11) of this chapter. Corrected is 10 points.
(5) Development is out of compliance and never expected to comply. Uncorrected, this is material noncompliance. Uncorrected is equal to the material noncompliance status threshold score as defined in §60.2(11) of this chapter. No correction is possible; no corrected score assigned.
(6) Owner failed to pay fees or allow on-site monitoring review. Points will be assigned to this event after written notification to the Development owner. Uncorrected, this is material noncompliance. Uncorrected is equal to the material noncompliance status threshold score as defined in §60.2(11) of this chapter. Corrected is 5 points.
(7) LURA not in effect. The LURA was not executed within the required time period. Uncorrected, this is material noncompliance. This event will be assigned points upon written notification to the owner. Uncorrected is equal to the material noncompliance status threshold score as defined in §60.2(11) of this chapter. Corrected is 5 points.
(8) Developments awarded HTC January 1, 2004, or later, that are foreclosed by a lender, or the General Partner is removed by a syndicator due to reasons other than market conditions. Points associated with a foreclosure will be assigned at the time the 8823 is sent to the IRS. Points associated with the removal of the General Partner will be assigned upon written notification to the former General Partner. 25 points. No correction is possible; no corrected score assigned.
(9) Development failed to meet minimum low income occupancy levels. Development failed to meet required minimum low income occupancy levels of 20/50 (20% of the units occupied by tenants with household incomes of less than or equal to 50% of Area Median Gross Income) or 40/60. Uncorrected is 20 points. Corrected is 10 points. (HTC and BOND only)
(10) No evidence of, or failure to certify to, non-profit material participation for an Owner having received an allocation from the Nonprofit Set-Aside. Uncorrected is 10 points. Corrected is 3 points.
(11) The Development failed to meet additional State required rent and occupancy restrictions. The LURA requires the Development to lease units to low income households at multiple income and rent tiers. This event refers to the condition when the lower tiers are not satisfied. Uncorrected is 10 points. Corrected is 3 points.
(12) The Development failed to provide required supportive services as promised at Application. Uncorrected is 10 points. Corrected is 3 points.
(13) The Development failed to provide housing to the elderly as promised at Application. Uncorrected is 10 points. Corrected is 3 points.
(14) Failure to provide special needs housing. Development has failed to provide housing for tenants with special needs as promised at Application. Uncorrected is 10 points. Corrected is 3 points.
(15) Changes in Eligible Basis. Changes occur when common areas become commercial, fees are charged for facilities, etc. Uncorrected is 10 points. Corrected is 3 points. (HTC only)
(16) Failure to submit part or all of the AOCR or failure to submit any other annual, monthly, or quarterly report required by the Department. Uncorrected is 10 points. Corrected is 3 points.
(17) Owner failed to approve and distribute an Affirmative Marketing Plan as required under §60.6 of this chapter. Uncorrected is 3 points. Corrected is 1 point.
(18) Pattern of minor property condition violations. Development does not meet Uniform Physical Condition Standards as described in §60.13 of this chapter or displays a pattern of property violations; however, those violations do not impair essential services and safeguards for tenants. Uncorrected is 10 points. Corrected is 5 points.
(19) Development failed to comply with requirements limiting minimum income standards for Section 8 residents. Complaints verified by the Department regarding violations of the income standard which cause exclusion from admission of Section 8 resident(s) results in a violation. Uncorrected score 10 points. Corrected 3 points.
(20) Owner defaults on payments of Department loans for a period exceeding 90 days. Uncorrected, this is material noncompliance. Points will be assigned under this event after written notice to the Development Owner. Uncorrected is equal to the material noncompliance status threshold score as defined in §60.2(11) of this chapter. Corrected is 10 points.
(21) Utility Allowance not calculated properly. Uncorrected 3 points. Corrected 1 point.
(22) Failure to comply with the Next Available Qualifying Unit Rule. Uncorrected 3 points. Corrected 1 point.
(23) Owner failed to execute required lease provisions or exclude prohibited lease language. Uncorrected 3 points. Corrected 1 point (All programs except HTC)
(24) Failure to provide annual Housing Quality Standards inspection. Uncorrected 10 points. Corrected 3 points. (HOME and post compliance period HTC properties Only)
(25) Development has failed to establish and maintain a reserve account in accordance with §1.37 of this title. Points will be assigned under this event after written notice to the Development Owner. Uncorrected, this is material noncompliance. Uncorrected is equal to the material noncompliance status threshold score as defined in §60.2(11) of this chapter. Corrected is 10 points.
(26) Development substantially changed the scope of services as presented at initial application without prior department approval. Uncorrected 4 points. Corrected 0 points.
(27) Change in ownership or General Partner without proper notification to and approval of Department. Uncorrected 4 points. Corrected 0 points.
(28) Administrative reporting of property condition violations. 0 points.
(i) Unit Noncompliance items are identified in paragraphs (1) - (12) of this subsection.
(1) Unit not leased to Low Income Household. Development has units that are leased to households whose income was above the income limit upon initial occupancy. Uncorrected is 5 points. Corrected is 1 point.
(2) Low income units occupied by nonqualified full-time students. Uncorrected is 3 points. Corrected is 1 point. (HTC Developments during the Compliance Period and BOND only)
(3) Low income units used on transient basis. Uncorrected is 3 points. Corrected is 1 point. (HTC and BOND only)
(4) Household income increased above the re-certification limit and an available Unit was rented to a market tenant. (HTC Developments during the Compliance Period). Uncorrected is 3 points. Corrected is 1 point.
(5) Gross rent exceeds the highest rent allowed under the LURA or other deed restriction. Uncorrected is 5 points. Corrected is 1 point.
(6) Failure to maintain or provide tenant income certification and documentation. Uncorrected is 3 points. Corrected is 1 point.
(7) Casualty loss. Units not available for occupancy due to natural disaster or hazard due to no fault of the Owner. This carries no point value. Casualty losses are reported to the IRS on HTC Developments.
(8) When a low income Unit became vacant, owner failed to lease (or make reasonable efforts to lease) to a low income household before any units were rented to tenants not having a qualifying income. Uncorrected is 3 points. Corrected is 1 point.
(9) Unit not available for rent. Unit is used for nonresidential purposes excluding unavailable Units due to casualty and manager-occupied Units. Uncorrected is 3 points. Corrected is 1 point.
(10) Qualifying unit designation removed from household. Uncorrected is 3 points. Corrected is 1 point. (FDIC's AHP only)
(11) Development evicted or terminated the tenancy of a low income tenant for other than good cause. Uncorrected is 10 points. Corrected is 3 points. (HTC and HOME only)
(12) Household income increased above 80% at recertification and owner failed to properly determine rent. (HOME only) Uncorrected 3 points. Corrected 1 point.
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 April 9, 2007.
TRD-200701312
Michael Gerber
Executive Director
Texas Department of Housing and Community Affairs
Effective date: April 29, 2007
Proposal publication date: January 5, 2007
For further information, please call: (512) 475-4595