ADOPTED 
 RULES 
 
 An agency may take final action on a section 30 days after a proposal has been 
published in the  Texas Register. The section becomes effective 20 days after 
the agency files the correct document with the  Texas Register, unless a later 
date is specified or unless a federal statute or regulation requires 
implementation of the action on shorter notice. 
 If an agency adopts the section without any changes to the proposed text, only 
the preamble of the notice and statement of legal authority will be published. 
If an agency adopts the section with changes to the proposed text, the proposal 
will be republished with the changes. 
 
   
  TITLE 1. ADMINISTRATION 
 Part X. Department of Information Resources 
  Chapter 201. Planning and Management of Information Resources Technologies 
  
  1 TAC sec.201.7 
 
  The Department of Information Resources (DIR) adopts new  sec.201.7, 
concerning interagency contracts for information resources technologies, without 
changes to the proposed text as published in the June 6, 1995, issue of the 
Texas Register  (20 TexReg 4109). 
 The section is adopted pursuant to the provisions of Chapter 906, Acts, 73rd 
Legislature (1993), which permits the department to adopt rules defining 
circumstances in which certain interagency contracts are excepted from the 
requirement to solicit bids or proposals from private vendors. 
 The effect of the section is that certain contracts that cost less than a 
minimum amount will be excepted from the public solicitation requirement. 
 The Department received one comment stating that the proposed rule fails to 
provide adequate administrative procedures and due process protection and that 
it is inconsistent with fundamental administrative safeguards. The commenter 
stated that parties to an administrative proceeding must exhaust their 
administrative remedies before appealing to a court of competent jurisdiction. 
According to the commenter, the rule as proposed would effectively prevent 
vendors from appealing adverse decisions because it does not set forth a process 
for appeals, and the Administrative Procedures Act, Texas Government Code, 
Chapter 2001 (APA) requires an aggrieved party to file a motion for rehearing as 
a prerequisite to judicial review. In addition, the commenter stated that the 
proposed rule might prevent vendors from receiving impartial resolution of 
procurement issues because DIR is an interested party in some purchases of 
automated information systems. The commenter stated that the proposed rule would 
give DIR increased authority to award contracts to private vendors pursuant to 
noncompetitive procedures without independent review, thus creating the 
opportunity for conflicts of interest. Finally, the commenter stated that DIR 
would seemingly have authority to exclude vendors from contracts by failing to 
review their contracts for cost effectiveness, or by arbitrarily concluding that 
a private vendor is less cost effective than an interagency contract. 
 Names of interested groups or associations offering comment: GTE Telephone 
Operations 
 The department received one comment against the proposed section. 
 The department disagrees with the comment submitted for several reasons. First, 
the decisions which the commenter would seek to appeal are not "contested cases" 
as defined in the Administrative Procedures Act (APA), and are therefore not 
subject to the requirement of filing a motion for rehearing or the other 
procedural requirements of that Act. The department's decisions are not 
contested cases because they will not determine the legal rights, duties or 
privileges of a private vendor that seeks to sell goods or services to the 
state. 
 More to the point, a vendor seeking to sell goods or services to the state is 
not entitled to procedural or substantive due process protection because the 
vendor has no property right that would be denied or affected by a decision 
under the rule. The only interest mentioned by the commenter that might be 
affected is the prospect of a future contract for the sale of goods or services 
to the state. The vendor's interest in such a sale, although it is a legitimate 
interest, is not a personal or property right. It is therefore not entitled to 
the kinds of due process protection contemplated by the Texas Constitution or 
the APA. 
 Nevertheless, even if the APA were to apply, the language in sec.201.7(c)(4) is 
intended in part to assist a dissatisfied party by making it clear that all 
administrative remedies within the department have been exhausted. The language 
is not meant to imply that a dissatisfied party may not appeal to a trial court 
if such an appeal is authorized by law. The department may not, and does not 
seek to, prohibit the exercise of an interested person's legal rights, if any, 
to seek judicial relief. 
 The department disagrees that the rule would give DIR increased authority to 
award contracts to private vendors. The rule primarily addresses contracts 
between state agencies and does not directly address the award of contracts to 
private vendors. On the other hand, the commenter correctly points out that the 
rule could conceivably be applied unfairly by the department. It is true that 
this rule, just as any other rule by any other administrative agency, could be 
applied unfairly. The hypothetical prospect of future abuse or unfairness is not 
an adequate justification for preventing the adoption of the rule, however. 
Moreover, the APA provides a remedy in such cases: the affected party may file 
suit in Travis County District Court to obtain a declaratory judgment regarding 
the validity or application of a rule if it impairs or threatens to impair the 
party's legal rights or privileges. 
 Notwithstanding the theoretical possibility of abuse of discretion, the 
department nonetheless believes the commenter has greatly overstated the 
potential for such abuse under the rule. Although the department would determine 
cost effectiveness under the rule, as it is required to do by the statute 
authorizing the rule, it would rely upon the receiving agency's certification as 
sufficient evidence of cost effectiveness in virtually every case. The standard 
of review under the rule is whether the proposed contract is clearly 
inconsistent with that agency's biennial operating plan. Such a standard places 
serious constraints on the department's latitude in the exercise of its 
discretion. 
 The section is adopted under the authority of Government Code, Chapter 2054, 
sec.2054.052, which authorizes the Department to adopt rules as necessary to 
carry out its responsibility under the Information Resources Management Act; and 
Chapter 906, Acts, 73rd Legislature (1993), which permits the department to 
adopt rules defining circumstances in which certain interagency contracts are 
excepted from the requirement to solicit bids or proposals from private vendors. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on July 18, 1995. 
 TRD-9509320 
  C. J. Brandt, Jr. 
 General Counsel 
 Department of Information Resources 
    Effective date: August 16, 1995 
 Proposal publication date: June 6, 1995 
 For further information, please call: (512) 475-4714 
         
       
  1 TAC sec.201.13 
 
  The Department of Information Resources adopts an amendment to sec.201.13, 
concerning information resource standards and policies, without changes to the 
proposed text as published in the June 6, 1995, issue of the Texas Register  (20 
TexReg 4110). 
 The amendment is adopted to make TCP/IP the long-term statewide standard 
protocol for data transport, removing its interim status. 
 The section defines standards for data transport networks for computers. 
 The Department received no comments for or against the proposed section. 
 The amendment is adopted under Government Code, sec.2054.052(a), which 
authorizes the Department to adopt rules as necessary to carry out its 
responsibility under the Information Resources Management Act and Government 
Code, and sec.2054.051(b), which authorizes the Department to publish standards 
relating to information resources management. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on July 18, 1995. 
 TRD-9509321 
  C. J. Brandt, Jr. 
 General Counsel 
 Department of Information Resources 
    Effective date: August 16, 1995 
 Proposal publication date: June 6, 1995 
 For further information, please call: (512) 475-4714 
         
             
  TITLE 10. COMMUNITY DEVELOPMENT 
 Part IV. Texas Department of Housing and Community Affairs 
  Chapter 50. Low Income Housing Tax Credit Rules-1995B 
  
  10 TAC sec.sec.50.1-50.15 
 
  The Texas Department of Housing and Community Affairs (the Department) Low 
Income Housing Tax Credit (LIHTC) Program adopts new sec.sec.50.1-50.15, 
concerning low-income housing tax credits, with changes to the proposed text as 
published in the June 9, 1995, issue of the Texas Register  (20 TexReg 4175). 
 The adoption of the new sections will provide procedures for the allocation by 
the Department of the remaining 55% of the state's 1995 per capita low income 
housing tax credits to 1995 applicants under the 1995B Qualified Allocation 
Plan. These tax credits are available under federal income tax laws to owners of 
qualified low-income rental housing projects. 
 On June 9, 1995, the proposed LIHTC rules were published in the Texas Register, 
thereby commencing the required 30-day comment period. Said comment period ended 
on July 10, 1995. 
 During the public comment period and at the June 29, 1995, public hearing, the 
Department received both oral and written comments from the public. Some of the 
issues raised by the commenters have been addressed below by the Department in 
consultation with its tax credit counsel: 
 Prison Communities: Numerous commenters offered comments supporting the 
inclusion of priority for prison communities in the Plan. The Department 
received a number of written comments specifically identifying Liberty County 
with respect to present and greater impending housing shortages in that 
community citing new prisons as the reason. Comment was also offered verbally 
and in writing requesting that the Department designate Liberty County as one of 
the Department's Targeted Counties since priority will not be given to prison 
communities in the proposed Plan. 
 Department Response: During the 1994 round, the Department gave priority for 
developments located within a community which was awarded a state prison. The 
list the Department utilized to designate such communities was obtained from the 
Texas Department of Criminal Justice. Subsequent to receipt of applications in 
1994, it became apparent that some prison communities that are more rural in 
nature and had lower median incomes were not able to compete with those prison 
communities with higher median incomes or which had a "qualified census tract 
(QCT)" or "Difficult Development Area (DDA)" designation, which provides for 
130% increase in eligible basis. Although prison communities are not receiving 
special consideration in the current Plan, the Department will revisit this 
issue during the formation of the Qualified Allocation Plan (QAP) for Program 
Year 1996 in order that the prison communities experiencing the most severe 
shortages of affordable housing and those with lower median incomes may compete 
more favorably. 
 With respect to the inclusion of Liberty County as a "Texas Targeted County", 
the Department recognizes targeted counties only as those counties identified by 
the Texas Water Development Board which have numerous and/or substantial 
colonias, which are subdivision with substantial substandard housing. 
 Sponsor Characteristics: Several commenters stated their concerns with respect 
to Exhibit 215, wherein they specifically identified language in sec.50. 
6(c)(4)(A) of this title (relating to Threshold Criteria; Evaluation Factors; 
Selection Criteria; Final Ranking; Credit Amount; Tax Exempt Bond Financed 
Projects) as too restrictive and contended that it unfairly prohibits developers 
with a successful record of past experience from claiming these points. The 
objections were specifically related to the requirement that an owner have 
"current controlling interest" in at least 150 tax credit units and in 300 units 
under all other affordable housing programs. 
 Department's Response: The Department concurs with certain points made by the 
commenters and to that end sec.50.6(c)(4)(A) of this title (relating to 
Threshold Criteria; Evaluation Factors; Selection Criteria; Final Ranking; 
Credit Amount; Tax Exempt Bond Financed Projects) has been amended to provide a 
range of points from two to eight points depending upon the developer's 
experience in the development and operation of affordable rental housing. 
However, the Department maintains that current ownership and operation of 
affordable housing provides the best the most complete record on which to gauge 
future performance. Several commenters have professed some experience in 
developing affordable housing under mortgage revenue bond programs. Such 
programs have, however, been marked by very minimal compliance monitoring and 
hence provide a poor record on which to measure past performance. 
 Threshold Criteria: Individuals presented comments pertaining to: Exhibit 102, 
proposed the addition of "or a bonded general contractor"; Exhibit 103, zoning 
conflicts within the City of Dallas, and other general comments regarding 
zoning; Exhibit 106, that only interim and gap financing be mandatory at time of 
application submission; Exhibit 112, objections to Certified Public Accountant 
(CPA) certification of costs; and Exhibit 114, that the requirement for public 
notification be deleted because of timing issues and added expense to the 
owners. 
 Department's Response: The Department has taken into consideration comments 
with respect to these threshold criteria and in response to: Exhibit 102: the 
Department concurs and therefore, has included "bonded general contractor" as a 
qualified person to conduct a rehabilitation work write-up; Exhibit 103: the 
increase in demand for tax credits in part, contributes to the mandatory 
threshold criteria which states properties must have appropriate zoning for 
intended use at time of submission and supports the priority of those 
developments which demonstrate a greater degree of readiness to proceed; Exhibit 
106: in order to properly conduct feasibility and long-term viability analysis 
as required under the Code, sec.42(m)(2)(B) documentation with respect to all 
financing is required at time of application; Exhibit 112: Although items that 
are includable in eligible basis are fairly clear, specific items may not be 
included in such basis depending on how that item is treated for tax purposes. 
Therefore, the required certification will help clarify which items are 
includable and which may not be; Exhibit 114: the Department will provide 
instruction for the public notice requirements to all persons on the mailing 
list. The instructions will be included with the initial mail-out of the "Notice 
of Availability of Applications" and will be received by potential applicants 
well in advance of the opening of the Application Acceptance Period. 
 Selection Criteria: Comments pertaining to Selection Criteria were: Exhibits 
208 and 211 with respect to zoning density in general and for townhouses; 
Exhibit 210, a request was made to include the definition of a "qualified non-
profit" in the Rule; Exhibit 217, a commenter suggested adding language with 
respect to Historically Underutilized Businesses (HUB) designation to include 
the "North Texas Commission"; and Exhibit 221, pertaining to an award of 
additional points for developments which set aside one to two units for 
transitional housing. 
 Department's Response: With respect to comments offered regarding Exhibits 208 
and 211 concerning zoning and density issues, the Department recognizes the 
primacy of local authority in matters regarding zoning and relies on such 
authority's determination of local density standards and/or requirements; 
Exhibit 210, the Department concurs with comments requesting a definition of a 
"qualified non-profit" and such has been incorporated into sec.50.2 of this 
title (relating to Definitions); Exhibit 217, language has been added to include 
"or other local government entity" which encompasses such entities and the North 
Texas Commission which may legally qualify and designate a HUB; Exhibit 221, the 
Department has assigned a range of priority to this exhibit which, depending on 
development size, provides the opportunity to set aside as little as 5.0% and 
still receive a score. 
 Developer's Fees: One commenter asked for the reinstatement of the allowance 
for up to 25% developer's fees for developments located within a Targeted Texas 
County, an award of points for development at less than the Housing and Urban 
Development (HUD) limitations, and an award of points for developments located 
in proximity to infrastructure. 
 Department's Response: The Department, in formulating the Plan, has taken all 
comments into consideration in determining the incentives for targeting 
development with in these areas. In surveys conducted over the last two years 
concerning the lack of development of tax credit projects in the targeted Texas 
counties, the development community and most knowledgeable consultants, have 
identified the low median income in these areas as the chief obstacle to the 
development of affordable housing. They have also indicated, and staff concurs, 
that the availability of "soft money" from either a local, state or federal 
source holds the key to long-term viability for projects in these areas. The 
fact that all the successful 1994 applicants from targeted Texas counties had 
substantial rental or financing subsidies confirms this view. Even where a 25% 
developer fee is provided, the additional tax credits generated may not attract 
a high enough yield to generate the needed equity. 
 Development Location: One commenter cautions the Department regarding new 
developments with DDA/QCT areas. 
 Department's Response: The issue of feasibility and long-term viability of 
developments and other pertinent matters which specifically relate to location, 
will be studied as the Department continues to develop guidelines which address 
development location and appropriateness under this program. 
 Forward Commitments: A number of commenters argued that the Department should 
increase the amount of 1996 tax credits that could be committed to 1995B 
applicants. 
 Department's Response: The Department agrees that the 5.0% of 1996 credits 
currently earmarked for potential allocation to 1995 applicants should be 
increased to 15% and will accordingly make such recommend action to the Board. 
 Nonprofits: One commenter requested that the Department change its definition 
of local tax-exempt organization to allow nonprofits whose scope of business is 
not limited to the state to qualify for participation in the program. 
 Department's Response: The Department acknowledges that although the proposed 
definition precludes nonprofits whose scope of business is not limited to the 
state, it has, in the past allowed such entities to participate in the program. 
The Department concurs with the commenter that this would allow experienced 
nonprofits which are based outside the state to joint venture and share their 
expertise with local nonprofits. In addition, nonprofits that own an interest 
will be required to be the managing general partner of such limited 
partnerships. This eliminates the provision which allows the nonprofit to be the 
co-general partner without any managerial or decision making authority; a 
provision that has been much abused in the past. 
 Mixed-income Projects, Exhibit 210: One commenter noted that the Department 
should take nonlow-income units into account where a project owner offers a 
right of first refusal to a nonprofit entity or a tenant. 
 Department's Response: The Department concurs. The right of first refusal 
provision in the Land Use Restrictive Covenants will stipulate that nonlow-
income will be priced at a fair market value. 
 Project Location, Exhibit 201: Several commenters reasoned that the number of 
points allowed for project location, 30 in all, is too high and could lead to 
the unnecessary concentration of low income projects. 
 Department's Response: In assigning points for project location, the Department 
took note of the fact that these targeted areas have generally been overlooked 
in terms of the infusion private capital for real estate or other types of 
investments. For this reason, a huge inventory of substandard housing has 
developed which needs to be rehabilitated and in some areas replaced by new 
construction. However, the Department concedes that there is some overlap among 
these designated areas, and is therefore recommending the reduction of the 
points assigned for Community Development Block Grant (CDBG) areas from ten to 
four. 
 The Department also recognizes that there is some duplication with respect to 
selection items under the Housing Needs Characteristics and is recommending the 
elimination of selection criterion dealing with per capita income. 
 Elderly Project: One commenter suggested that the points assigned for elderly 
housing be curtailed or that a set-aside be established for such projects. 
 Department's Response: The Department agrees that the 15 points assigned for 
elderly housing should be reduced to ten so that family projects would not be 
overly disadvantaged in the selection criteria. 
 Substantial Readiness to Proceed, Exhibit 223: One commenter noted that 
applicants may not be able to provide, at the time of application, a 
construction contract with all parties to the construction. He also argued that 
the Department should allow, as evidence of the availability of a building 
permit, a letter from the city indicating that developer has completed all the 
prerequisites for a building permit. 
 Department's Response: The Department concurs and will accordingly require a 
construction contract only with the general contractor. However, on the issue of 
building permits, the Department believes that the only document that should 
satisfy is the permit itself. 
 Additional Low income Housing Use Period, Exhibit 3(K): After discussion with 
tax credit counsel, the Department has revised this provision to extend the 
initial 15-year "Compliance Period" by either five years for rehabilitation 
projects or ten years for new construction projects. This means that for a 
rehabilitation project, 20 years will be earliest date at which the project may 
elect to offer the project for sale pursuant to a qualified contract, and for 
new construction projects, 25 years. 
 Real Estate Owned (REO), Exhibit 206: The Department's definition of REO will 
apply only to existing residential buildings, and not to unimproved land. The 
reason for this is to emphasize the rehabilitation of existing structures. 
 Energy Conservation, Exhibit 207A: After further review, the Department is 
recommending that roof overhang, heat pumps and heat recovery components not be 
included in the list of energy saving devices. The degree of overhang needed to 
produce any meaningful energy saving, three feet, is thought to be unreasonable 
for most projects. According to opinion from the Department's Energy Assistance 
Division, the other two items are not pivotal in saving energy in a climate such 
as exist in this state. 
 Section 8 tenants, Exhibit 213: The Department has included language requiring 
that at least 5.0% of the units in a project be Section 8 tenants to qualify for 
this selection item. 
 Comprehensive Housing Affordability Strategy (CHAS) and Consolidated Plan, 
Exhibit 214: In recognition of HUD's new requirement that a Consolidated Plan be 
prepared by states and local governments, the Department will accept the 
substitution of a Consolidated Plan where a CHAS is required. 
 HUBs, Exhibit 217: After review of public comments, the Department is 
recommending the deletion of the requirement that HUBs be certified for at least 
a year. Instead, it will require that the HUB must have existed for at least a 
year, have conducted business as such and have been certified by a local entity 
or the General Services Commission. 
 Supportive Services, Exhibit 219: After further review, the Department is 
recommending that the points for supportive services be increased from three to 
a maximum of five points in the hope that applicants will be challenged to come 
up with meaningful services. To get the maximum points, the services will be 
evaluated based on innovation; the duration of the service agreement; the 
experience of the development team; the accessibility and appropriateness of the 
service; and the importance of the service in enhancing the tenants standard of 
living. 
 The new sections are adopted pursuant to the authority of the Texas Government 
Code, Chapter 2306 and Texas Civil Statutes. Article 4413(501) as amended by the 
73rd Legislature, Chapter 725 and 141, and Chapter 2001 and 2002, Texas 
Government Code, Texas Civil Statutes. 
 The Internal Revenue Code of 1986, sec.42, as amended, provides for credits 
against federal income taxes for owners of qualified low income rental housing 
projects. That section provides for the allocation of available tax credit 
amount by state housing credit agencies. Pursuant to Executive Order AWR-91-4 
(June 17, 1991), the Texas Department of Housing and Community Affairs was 
authorized to make housing credit allocation for the State of Texas. As required 
by the Internal Revenue Code, sec.42(m)(1), the Department developed a Qualified 
Allocation Plan which sets forth in sec.50.6 and sec.50.7 of this title 
(relating to Threshold Criteria; Evaluation Factors; Section Criteria; Final 
Rankings; Credit Amount; Tax Exempt Bond Financed Projects; and Compliance 
Monitoring). 
 
 
  sec.50.1. Scope. The rules in this chapter apply to the allocation by the 
Texas Department of Housing and Community Affairs of certain low-income housing 
tax credits authorized by applicable federal income tax laws. The Internal 
Revenue Code of 1986, sec.42, as amended, provides for credits against federal 
income taxes for owners of qualified low-income rental housing projects. That 
section provides for the allocation of the available tax credit amount by state 
housing credit agencies. Pursuant to Executive Order AWR-91-4 (June 17, 1991), 
the Texas Department of Housing and Community Affairs was authorized to make 
housing credit allocations for the State of Texas. As required by the Internal 
Revenue Code, sec.42(m)(1), the Department developed a Qualified Allocation Plan 
which is set forth in sec.50.6 and sec.50. 7 of this title (relating to 
Threshold Criteria; Evaluation Factors; Selection Criteria; Final Ranking; 
Credit Amount; Tax Exempt Bond Financed Projects; and Compliance Monitoring). 
Such Qualified Allocation Plan has not been signed by the Governor. Sections in 
this chapter establish procedures for applying for and obtaining an allocation 
of the low-income housing tax credit, along with insuring that the proper 
threshold criteria, selection criteria, priorities and preferences are followed 
in making such allocations. It is a goal of this Department, through these 
provisions, to encourage diversity through broad geographic allocation of tax 
credits within the state and to promote maximum utilization of the available tax 
credit amount, consistent with ensuring that the tax credits are allocated to 
owners of projects that will serve the Department's public policy objectives and 
federal requirements to provide housing to persons and families of very low and 
low income. It is the policy of the Department to encourage the use of 
historically underutilized businesses in all of the Department's programs. In 
response to this policy, the Department has established a minimum goal of 30% 
participation of historically underutilized businesses in the low income housing 
tax credit program. Project owners are encouraged to achieve these minimum 
goals. 
 
   
  sec.50.2. Definitions.  The following words and terms, when used in this 
chapter, shall have the following meanings, unless the context clearly indicates 
otherwise. 
   
     Ad Hoc Tax Credit Committee-That committee comprised of members of the 
Board of the Texas Department of Housing and Community Affairs charged with the 
direct oversight of the Low Income Housing Tax Credit Program, also referred to 
as the "Committee". 
   
     Agreement and Election Statement-A document in which the project owner 
elects, irrevocably, to fix the applicable credit percentage with respect to a 
building or buildings, as that in effect for the month in which the Department 
and the project owner enter into a binding agreement as to the housing credit 
dollar amount to be allocated to such building or buildings, which Agreement and 
Election Statement shall be executed by the project owner no later than five 
days after the end of the month of execution of the agreement as to housing 
credit dollar amount. 
   
     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, as defined more fully in the Code, sec.42(c)(1). 
   
     Applicable percentage -The percentage used to determine the amount of the 
low-income housing tax credit, as defined more fully in the Code,  sec.42(b). 
   
     Application-An application in the form prescribed by the Department, 
including any required exhibits or other supporting materials, filed with the 
Department by a project owner requesting a low income housing tax credit 
allocation. 
   
     Application acceptance period-That period of time as published in the  
Texas Register during which applications for tax credits may be submitted to the 
Department. 
   
     Application round -The period beginning with the start of the application 
acceptance period and lasting until such time as all available credits (as 
stipulated by the Department) are allocated, provided that the application round 
not extend beyond the last day of the calendar year. 
   
     Application Submission Procedures Manual-That certain manual produced by 
the Department which sets forth procedures, forms, and guidelines for the filing 
of applications for low income housing tax credits, which manual may be amended 
from time to time by the Department. 
   
     Board-The governing body of the Texas Department of Housing and Community 
Affairs and may also denote as used in this chapter, the tax credit ad hoc 
committee. 
   
     Carryover allocation -An allocation of current year tax credit authority by 
the Department pursuant to the provisions of the Code, sec.42(h)(1)(E) and 
Treasury Regulations, sec.1.42-6. 
   
     Carryover allocation document-A carryover allocation document issued by the 
Department to a project owner pursuant to sec.50.4(k) of this title (relating to 
Applications; Environmental Assessments; Market Study; Reservations; 
Notification; Commitments; Extensions; Carryover Allocations; Agreements and 
Elections; Extended Commitments). 
   
     Carryover Allocation Procedures Manual-That certain manual produced by the 
Department which sets forth procedures, forms, and guidelines for the filing of 
request for carryover allocations for low income housing tax credits, which said 
manual may be amended from time to time by the Department. 
   
     Code-The Internal Revenue Code of 1986, as the same may be 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 relating to the Low Income Housing Tax Credit Program authorized 
by the Code, sec.42, and as may be amended from time to time. 
   
     Commitment notice -A commitment notice issued by the Department to a 
project owner pursuant to sec.50.4(h) of this title (relating to Applications; 
Environmental Assessments; Market Study; Reservations; Notification; 
Commitments; Extensions; Carryover Allocations; Agreements and Elections; 
Extended Commitments). 
   
     Compliance period -With respect to a building, the period of 15 taxable 
years, unless a longer period is elected pursuant to sec.50.6(c) (3)(K) of this 
title (relating to Threshold Criteria; Evaluation Factors; Selection Criteria; 
Final Ranking; Credit Amount; Tax Exempt Bond Financed Projects), beginning with 
the first taxable year of the credit period during which the project owner is 
required to maintain a building as a qualified low-income building pursuant to 
the Code, sec.42(c)(2). 
   
     Contractor-One who contracts for the construction, or rehabilitation of an 
entire building or project, rather than a portion of the work. The contractor 
hires subcontractors, such as plumbing contractors, electrical contractors, 
etc., coordinates all work, and is responsible for payment to the said 
subcontractors. This party may also be referred to as the "general contractor". 
   
     Controlling Interest -For a project that is a limited partnership, a 
"controlling interest" is serving as the managing general partner of the limited 
partnership with managerial and decision making authority under the limited 
partnership agreement for the day-to-day operations of the limited partnership. 
For a project owner that is a general partnership, a corporation, or a limited 
liability company, a "controlling interest" is ownership of at least 51% 
interest in the profits and losses of the general partnership, at least 51% of 
the outstanding voting stock of the corporation, or at least 51% of the 
outstanding membership interest, respectively. 
   
     Cost Certification Procedures Manual-That certain manual produced by the 
Department which sets forth procedures, forms, and guidelines for the filing of 
requests for IRS Forms 8609 for projects placed into service under the Low 
Income Housing Tax Credit Program, which said manual may be amended from time to 
time by the Department. 
   
     Credit period-With respect to a building within a project, the period of 
ten taxable years beginning with the taxable year the building is placed in 
service or, at the election of the project owner, the succeeding taxable year, 
as more fully defined in the Code, sec.42(f)(1). 
   
     Department-The Texas Department of Housing and Community Affairs, a public 
and official governmental Department of the State of Texas created and organized 
under the Texas Department of Housing and Community Affairs Act, Texas 
Government Code, Chapter 2306 and Texas Civil Statutes, Article 4413(501) as 
amended by the 73rd Legislature, Chapter 725 and 141. 
   
     Development team -All the individuals, joint venture, partnership, 
corporation, cooperative, trust, or other persons or entities involved in the 
development, construction, rehabilitation, management and/or continuing 
operation of the subject property, which may include any consultant(s) hired by 
the applicant for the purpose of the filing of an application for low income 
housing tax credits with the Department. 
   
     Eligible basis -With respect to a building within a project, the building's 
eligible basis as defined in the Code, sec.42(d). 
   
     Extended Low-Income Housing Commitment Agreement-An agreement between the 
Department, the project owner and all successors in interest to the project 
owner concerning the extended low-income housing use of buildings within the 
project throughout the extended use period as provided in the Code, 
sec.42(h)(6). The extended use period shall commence on the first day of the 
compliance period and end on the date which is 30 years after said commencement 
date plus any additional low income housing use period elected by the project 
owner pursuant to sec.50.6(c)(3)(K) of this title (relating to Threshold 
Criteria; Evaluation Factors; Selection Criteria; Final Ranking; Credit Amount; 
Tax Exempt Bond Financed Projects). A sample copy of this is provided in the 
Reference Manual. 
   
     Governmental entity -Includes federal or state agencies, political 
subdivisions, special districts and related governmental entities. 
   
     Handicapped person -A person having a physical or mental impairment that is 
expected to be of long, continued and indefinite duration, is a substantial 
impediment to his or her ability to live independently, and is of a nature that 
the ability to live independently could be improved by a stable residential 
situation, as more fully defined in Code of Federal Regulation 24, sec.841.1, 
and as may be amended from time to time. 
   
     Historically underutilized businesses-Pursuant to Texas Civil Statutes, 
Article 601b, sec.sec.1.02, 1.03, and 1.04, entitled State Purchasing and 
General Services Act, a business in the form of a corporation, partnership or 
joint venture which is at least 51% owned, or a sole proprietorship which is 
100% is owned by a person or persons who have been historically underutilized 
due to their identification as a member of a certain group. These individuals 
must have a proportionate interest and demonstrate regular, continuous, and 
substantial participation in the control, operation, and management activities 
of the entity. The following are the groups which will be considered pursuant to 
this definition: 
 
  (A) Black Americans-persons having origins in any of the Black racial groups 
of Africa; 
   
  (B) Hispanic Americans-persons of Mexican, Puerto Rican, Cuban, Central or 
South American, or other Spanish or Portuguese culture or origin, regardless of 
race; 
   
  (C) Asian-Pacific Americans-persons whose origins are from Japan, China, 
Taiwan, Korea, Vietnam, Laos, Cambodia, Philippines, Samoa, Guam, U.S. Trust 
Territories of the Pacific and the Northern Marianas; 
   
  (D) Native Americans-persons who are American Indians, Eskimos, Aleuts, or 
Native Hawaiians; or 
   
  (E) Women-includes all women of any ethnicity. 
     
     Homeless person -An individual or family that lacks a fixed, regular, and 
adequate nighttime residence as more fully defined in 24 Code of Federal 
Regulations, sec.841.1, and as may be amended from time to time. 
   
     Housing credit agency-An agency charged with the responsibility of 
allocating low income housing tax credits pursuant to the Code, sec.42. 
   
     Housing credit allocation-An allocation by the Department to a project 
owner of low-income housing tax credit in accordance with sec.50.8 of this title 
(relating to Housing Credit Allocations). 
   
     Housing credit allocation amount-With respect to a project or a building 
within a project, that amount the Department determines to be necessary for the 
financial feasibility of the project and its viability as a qualified low income 
housing project throughout the compliance period and allocated to the project. 
   
     HUD-The United States Department of Housing and Urban Development, or its 
successor. 
   
     Identity of interest-An identity of interests exists if: 
 
  (A) any general or limited partner, shareholder, director, officer, employee 
or authorized representative of the project owner is also a general or limited 
partner, shareholder, director, officer, employee or authorized representative 
of the contractor or vice versa; and/or 
   
  (B) the project owner (or any general or limited partner, shareholder, 
director, officer, employee or authorized representative of the project owner) 
can directly or through one or more intermediaries control or influence the 
decisions or policies of the contractor, including apparent control or influence 
over the decisions or policies of the contractor, or vice versa. Apparent 
control or influence means any relationship that exists between the project 
owner and contractor (or any general or limited partner, shareholder, director, 
officer, employee or authorized representative of the project owner and 
contractor) by blood or marriage. 
     
     Intermediary Costs -Costs associated with the sale or use of tax credits to 
raise equity capital. Such costs include syndication and partnership 
organization costs and fees, filing fees, broker commissions, related attorney 
and accounting fees, etc. 
   
     IRS-The Internal Revenue Service, or its successor. 
   
     Local tax-exempt organization-A project owner which is described in the 
Code, sec.501(c)(3) or (4), as these cited provisions may be amended from time 
to time, and which is registered to conduct business in the State of Texas or 
the governmental unit wherein the project will be situated. 
   
     General projects -Any project which would not be considered Rural as such 
term is defined by the Department. 
   
     Person-Includes an individual, corporation, partnership, joint ventures or 
forms of business entities. 
   
     Project-A low-income rental housing project the owner of which represents 
it to be a qualified low-income housing project within the meaning of the Code, 
sec.42(g). With regards to this definition, the project is that property which 
is the basis for the application for low income housing tax credits. May also be 
referred to as the subject property. 
   
     Project owner-Any individual, joint venture, partnership, corporation, 
cooperative, trust, or other person or entity that owns a project or expects to 
acquire a project pursuant to a purchase contract satisfactory to the 
Department. 
   
     Qualified Allocation Plan-An allocation plan which sets forth the threshold 
criteria, selection criteria, priorities, and preferences as provided in the 
Code, sec.42(m)(1) and as further provided in sec.50.6 and sec.50.7 of this 
title (relating to Threshold Criteria; Evaluation Factors; Selection Criteria; 
Final Ranking; Credit Amount; Tax Exempt Bond Financed Projects; and Compliance 
Monitoring). 
   
     Qualified basis -With respect to a building within a project, the 
building's eligible basis multiplied by the applicable fraction, as more fully 
defined in the Code, sec.42(c)(1). 
   
     Qualified market analyst-An individual designated as an MAI, SRPA, 
Certified General Real Estate Appraiser (Texas) or equivalent training who is 
independent of the development team and has at least five years of experience in 
real estate evaluation. The market analyst must not be related to the project 
consultant, the third party CPA employed for certifying the 10% test or the 
final project cost certification. 
   
     Qualified nonprofit organization-An organization that is described in the 
Code, sec.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, sec.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, as 
more fully defined in the Code, sec.42(h)(5)(C), and Temporary Treasury 
Regulation, sec.1.42-1T(c)(5)(ii). 
   
     Qualified nonprofit project-A project which a qualified nonprofit 
organization is to own an interest (directly or through a partnership) and 
materially participate (within the meaning of the Code, sec.469(h), as may be 
amended from time to time) in its development and operation throughout the 
compliance period. 
   
     RECDS-Rural Economic and Community Development Services (RECDS). 
   
     Real Estate Owned (REO) projects-Any existing residential development that 
is owned or that is being sold by an insured depository institution in default, 
or by receiver or conservator of such an institution, or is a property held by 
Fannie Mae, Freddie Mac, federally chartered banks, or by a federally approved 
mortgage company or savings and loan association or any other federal agency. 
   
     Reference Manual -That certain manual, and any amendments thereto, produced 
by the Department which sets forth reference material pertaining to the Low 
Income Housing Tax Credit Program. 
   
     Rehabilitation expenditure -Amounts incurred in connection with the 
rehabilitation of which the project owner represents to be "rehabilitation 
expenditures" within the meaning of the Code, sec.42(e)(2). 
   
     Reservation notice -A reservation notice issued by the Department to a 
project owner pursuant to sec.50.4(f) of this title (relating Applications; 
Environmental Assessments; Market Study; Reservations; Notification; 
Commitments; Extensions; Carryover Allocations; Agreements and Elections; 
Extended Commitments). 
   
     Residential development -Any project that is comprised of at least one 
"unit" as such term is defined in this title. 
   
     Rules-The Department's low income housing tax credit rules, sec.sec.50.1-
50.15 of this title (relating to Low Income Housing Tax Credit Rules). 
   
     Rural area-A rural area is: 
 
  (A) open country which is not part of or associated with an urban area; 
   
  (B) any town, village, city or place, including the immediately adjacent 
densely settled area which is not part of or associated with an urban area and 
which: 
 
  (i) has a population not in excess of 10,000 if it is rural in character; or 
   
  (ii) has a population in excess of 10,000 but not more than 20,000, and 
 
  (I) is not contained within a MSA; and 
   
  (II) has a serious lack of mortgage credit for low and moderate income 
households as determined by the Secretary of Agriculture and the Secretary of 
Housing and Urban Development; or 
       
  (C) an area classified as a rural areas prior to October 1, 1990, with a 
population exceeding 10,000, but not in excess of 25,000, which is rural in 
character, and has a serious lack of mortgage credit for lower and moderate 
income families. This is effective through receipt of the decennial census data 
in the year 2000. 
     
     Rural project-A project located outside the boundaries of any Metropolitan 
Statistical Area (MSA) and any Primary Metropolitan Statistical Area (PMSA) or 
located within the boundaries of an MSA or a PMSA which is designated by the 
RECDS as an eligible area for purposes of RECDS housing assistance programs. 
Areas eligible for RECD assistance are listed in the Reference Manual. 
   
     Selection criteria -Criteria used to determine housing priorities of the 
Department which are appropriate to conditions in the state. 
   
     Small development -A project consisting of not more than ten single-family 
detached units or 35 multifamily units, which is not a part of, or contiguous 
to, a larger project, and which has or will apply to the Department for a tax 
credit allocation. The definition excludes those projects which would otherwise 
qualify as rural projects. 
   
     Special housing project-Any project developed specifically for special 
housing need groups, including mental health/mental retardation projects, group 
homes, housing for the homeless, transitional housing, elderly projects, 
congregate care facilities, persons with HIV/AIDS, housing in the colonias or as 
defined in the State Low Income Housing Plan or in the Consolidated Plan. 
   
     State housing credit ceiling-The limitation imposed by the Code, sec.42(h), 
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, sec.42(h)(3). 
   
     Sustaining occupancy -The figure at which occupancy income is equal to all 
operating expenses and mandatory debt service requirements for a project. 
   
     Threshold criteria -Criteria used to determine the project's qualifications 
which are the minimum level of acceptability for consideration under the Low 
Income Housing Tax Credit Program. 
   
     Total housing development cost-The total of all costs incurred by the 
project owner in acquiring, constructing, rehabilitating and financing a 
project, as determined by the Department based on the information contained in 
the project owner's application. Such costs include intermediary costs, reserves 
and any expenses attributable to commercial areas. Projects which include 
commercial space must allocate the relative portion of all applicable expenses 
to the commercial space and exclude the same from total development costs. In 
determining the Equity Gap calculation, the Department will not deduct from the 
project's sources of funds the amount of financing associated with the 
commercial use, unless such financing specifically identifies in its terms that 
it is being provided for the commercial use. 
   
     Townhouse-A Single-family dwelling unit constructed in a row of attached 
units sharing a common wall and with open space on at least two sides. 
   
     Unit-Any residential rental unit in a project consisting of an 
accommodation containing separate and complete physical facilities and fixtures 
for living, sleeping, eating, cooking and sanitation. The term "unit" includes a 
single room occupancy housing unit used on a non-transient basis. 
 
   
  sec.50.3. State Housing Credit Ceiling. 
 
  (a) The Department shall determine the state housing credit ceiling for each 
calendar year as provided in the Code, sec.42(h)(3)(C). 
   
  (b) The Department shall publish each such determination in the Texas Register 
within 30 days after notification by the Internal Revenue Service. 
   
  (c) The aggregate amount 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. 
 
     
  sec.50.4. Applications; Environmental Assessments; Market Study; Reservations; 
Notification; Commitments; Extensions; Carryover Allocations; Agreements and 
Elections; Extended Commitments. 
 
  (a) Any project owner requesting a housing credit allocation for a project 
must submit an application to the Department which application shall be 
originally executed by the project owner. This application shall contain full 
and complete information as to each item specified in the Application Submission 
Procedures Manual, as amended. The Department will require, as a part of a 
completed application, information to be submitted by the project owner which 
identifies the number of historically underutilized businesses to be used in the 
development and/or continuous operation of the project, in a form specified 
within the Application Submission Procedures Manual. Further, the Department 
will require the project owner to supply sufficient documentation which will 
represent the means by which these historically underutilized businesses were or 
are to be selected. The project owner is also advised that the Department will 
be requesting information pertaining to the use of historically underutilized 
businesses in the actual development of the project at the time of final 
allocation of tax credits, pursuant to sec.50.8(c) of this title (relating to 
Housing Credit Allocations). When any item is marked "not applicable," the 
project owner shall provide a written explanation why such item is "not 
applicable." Failure to provide a detailed written explanation to will result in 
the application being deemed incomplete and not accepted for filing. The 
Department is also authorized to request the project owner to provide any 
additional information it deems relevant as clarification to the application. 
   
  (b) As part of the complete application the applicant must submit the most 
current Phase I Environmental Assessment of the subject property, dated not more 
than 12 months from the date of application to the Department. In the event that 
a Phase I Environmental Assessment on the project is older than 12 months, the 
project owner may supply the Department with an update letter from the person or 
organization which prepared the initial assessment; provided, however, that the 
Department will not accept any Phase I Environmental Assessment which is more 
than 24 months old. This environmental assessment should include, but is not 
limited to, a review of records, interviews with people knowledgeable about the 
property, a certification that the environmental engineer has conducted an 
inspection of the property, the building(s), and adjoining properties, as well 
as any other industry standards concerning the preparation of this type of 
environmental assessment. If the report establishes that environmental hazards 
currently exist on the property, or are originating off-site but would 
nonetheless affect the property, the project owner must provide either a plan 
for the abatement of the hazard or an operation and maintenance plan for the 
control of the hazard. The environmental assessment shall be conducted by a 
environmental or professional engineer and be prepared at the expense of the 
project owner. For projects which have had a Phase II Environmental Assessment 
performed and hazards identified, the project owner is required to maintain a 
copy of said assessment on site available for review by all persons which either 
occupy the property or are applying for tenancy. Properties financed through the 
RECDS, scattered site projects of 15 units or less in established residential 
neighborhoods or properties with four units or fewer will not be required to 
supply this information; however, the project owners of such projects are hereby 
notified that it is their responsibility to ensure that the property is 
maintained in compliance with all state and federal environmental hazard 
requirements. Those projects which have or are to receive first lien financing 
from HUD may submit HUD's environmental assessment report, provided that it 
conforms with the requirements of this subsection. An environmental report that 
is not submitted with the application will result in the application being 
deemed incomplete and not accepted for filing. 
   
  (c) The Market Study required by the Department shall comply with the Uniform 
Standards of Professional Appraisal Practice and with paragraphs (1) and (2) of 
this subsection and other guidelines provided for the Reference Manual. 
 
  (1) A Market Study prepared by a qualified market analyst who is independent 
of the development team, and which is not dated more than six months prior to 
the date of application, is required as part of the complete application. 
Projects which are comprised of 35 units or fewer or whose funds have been 
obligated by RECDS are not required to provide the Department with a market 
study; provided that the Department may request information with respect to the 
operating expenses, proposed new construction or rehabilitation cost or other 
information. In the event that a Market Study on a project is older than six 
months, a project owner may supply the Department with an updated Market Study 
from the person or organization which prepared the initial report; provided, 
however, the Department will not accept any Market Study which is more than 12 
months old. The Market Study shall be prepared for the Department at the expense 
of the project owner and shall include, at a minimum, the following information: 
 
  (A) an evaluation of the existing occupancy rates in comparable multifamily 
rental residential developments in the same market area as the proposed project; 
   
  (B) project absorption rates for at least one year from the date of the study 
for units in comparable multifamily rental residential developments in the same 
market area as the project. Further, provide a projection of the time necessary 
for the project to achieve sustaining occupancy; 
   
  (C) an evaluation of the current physical condition of existing low income 
rental housing units in the market area; 
   
  (D) an evaluation of the need for affordable housing within the project market 
area, which includes an analysis of any existing federal, state and/or locally 
subsidized rental housing units in the market area; 
   
  (E) an evaluation of the appropriateness of the unit-mix and size in terms of 
market demand; 
   
  (F) an evaluation of the appropriateness of the location and total development 
cost of the project from a market feasibility standpoint; 
   
  (G) an evaluation of the appropriateness of the anticipated operating costs of 
the project for the housing market in which the project is located; 
   
  (H) an evaluation of the appropriateness of the existing or proposed physical 
amenities at the project for the low income target population; 
   
  (I) a summary of qualifications of the individuals who participated in the 
development of the Market Study; 
   
  (J) a statement from the qualified market analyst concerning any identity of 
interest in the development of the property; and 
   
  (K) such other matters as the Department, in its discretion, may determine to 
be relevant to the Department's evaluation of the need for the project and the 
allocation of the requested housing credit allocation amount. 
     
  (2) A written certification is required, from the qualified market analyst who 
prepared the Market Study required under paragraph (1), stating that: 
 
  (A) the projected total housing development costs of the proposed project do 
or do not appear to be reasonable. The qualified market analyst must provide the 
Department with sufficient documentation to support his/her conclusion with 
regards to the reasonableness of the development costs; 
   
  (B) the projected total operating costs of the proposed project do or do not 
appear to be reasonable. The qualified market analyst must provide the 
Department with sufficient documentation to support his/her conclusions with 
regards to the reasonableness of the projected operating costs; 
   
  (C) the proposed project, in light of the vacancy and absorption rates for the 
applicable market area, is or is not likely to result in an unreasonably high 
vacancy rate for comparable units within the market area (i. e., standard, well 
maintained units within such market area that are reserved for occupancy by low 
and very low income tenants). The qualified market analyst must provide the 
Department with sufficient documentation to support his/her conclusion with 
regard to the effects of the project's development on the vacancy rates for 
comparable units within the market area; 
   
  (D) the projected initial rents for the project are or are not below the 
rental range for comparable projects within the market area. The qualified 
market analyst must provide the Department with sufficient documentation to 
support his/her conclusion with respect to the data on comparable rents in the 
project's market area; and 
   
  (E) project reserves are/are not adequate to cover operating shortfalls until 
the project achieves sustaining occupancy. The qualified market analyst must 
provide the Department with sufficient documentation to support his/her 
conclusions with regards to the adequacy of the project reserves. The market 
analyst must provide adequate documentation to support each conclusion stated. 
       
  (d) A project owner may file an application at any time during the application 
acceptance period(s), as published from time to time by the Department in the 
Texas Register. 
   
  (e) The Department will not accept an application that is incomplete or that 
is not filed in accordance with the Application Submission Procedures Manual, as 
amended. The Department will not recommend an application for funding if it 
includes a principal who has been: 
 
  (1) barred, suspended, or terminated from procurement in a state or federal 
program or whose is listed in the List of Parties Excluded from Federal 
Procurement or Nonprocurement Programs, whether in the hardcopy or electronic 
form; 
   
  (2) has been convicted within the past five years of, is under indictment for 
or is on probation for a state or federal crime involving fraud, bribery, theft, 
misrepresentations of materials facts, misappropriation of funds, or other 
similar criminal offenses; 
   
  (3) is subject to enforcement action under state or federal securities law, or 
is the subject of an enforcement proceeding with a state or federal agency or 
another governmental entity; or 
   
  (4) is the owner of a property that is currently out of compliance or has been 
out of compliance with an affordable housing program administered by a local, 
state, or federal entity. 
     
  (f) After eligible applications have been evaluated, ranked and underwritten 
as provided in sec.50.6 of this title (relating to Threshold Criteria; 
Evaluation Factors; Selection Criteria; Final Ranking; Credit Amount; Tax Exempt 
Bond Financed Projects), the Department shall, as applicable, issue a 
reservation notice or notice of denial of credit to the applicant. The 
reservation notice: 
 
  (1) shall confirm that the Department has received the project owner's 
application and has found the application to be in satisfactory form containing 
all required information or shall clearly specify any remaining conditions which 
must be met prior to the presentation of the application to the Ad Hoc Tax 
Credit Committee; and 
   
  (2) shall reserve to the project owner the housing credit allocation amount 
specified therein, subject to the feasibility determination described at 
sec.50.8(a) of this title (relating to Housing Credit Allocations) and 
compliance by the project owner with the remaining requirements of this chapter 
and such other conditions as the Department may set forth in the reservation 
notice, and subject further to approval by the Board of the project owner's 
application. The reservation notice shall expire on the date specified therein. 
   
  (3) The notice of the Department's denial of credits will enumerate the 
reasons why the project is not being recommended for credits and provide 
suggestions as to how the application may be improved. 
   
  (4) If the entire state housing credit ceiling for the applicable calendar 
year has been reserved, committed or allocated in accordance with this chapter, 
the Department shall place all remaining applications on a waiting list. If at 
any time prior to the end of the application round, one or more reservation 
notices, commitment notices or carryover allocation documents expire and a 
sufficient amount of the state housing credit ceiling becomes available, the 
Department shall issue a reservation notice to the project owner in the manner 
and with the effect described in paragraph (1) and (2) of this subsection. In 
the event that the Department makes a reservation or offers a commitment within 
the last month of the calendar year, it will require immediate action by the 
applicant to assure that an allocation or carryover allocation can be issued 
before the end of that same calendar year. 
     
  (g) Within ten business days of the date an application is received, the 
Department shall notify in writing the mayor or other equivalent chief executive 
officer of the municipality, if the project or a part thereof is located in a 
municipality; otherwise the Department shall notify the chief executive officer 
of the county in which the project or a part thereof is located, to advise such 
individual that the project or a part thereof will be located in his/her 
jurisdiction and request any comments which such individual may have concerning 
such project. Such comments shall be part of the documents required to be 
reviewed by the Board under this subsection if received by the Department within 
30 days after receipt of such certified mail notification to said individual; 
otherwise, if comments are received by the Department after 30 days, same may be 
reviewed at the discretion of the Board under this subsection. If the local 
municipal authority expresses opposition to the project, the Department will 
visit the proposed site or project within 30 days of notification. 
   
  (h) Following the issuance of a reservation notice the Department shall place 
the application on the agenda for review by the Board at the next meeting of the 
Board at which applications will be considered. Within ten calendar days after 
the Board makes its determination, the Department shall act upon the application 
in accordance with either paragraph (1) or (2) of this subsection as applicable. 
The Board's decisions shall be based upon its evaluation of the project's 
consistency with the criteria and requirements set forth at sec.50.6 of this 
title (relating to Threshold Criteria; Evaluation Factors; Selection Criteria; 
Final Ranking; Credit Amount; Tax Exempt Bond Financed Projects) and these rules 
and its compliance with the terms and conditions of the reservation notice. In 
making a determination to allocate tax credits, the Department and Board may not 
rely solely on the number of points scored by an applicant. They may, in 
addition, also take into account such factors as the concentration of low income 
projects within specific markets or submarkets, geographic dispersion of the 
credits on a state-wide basis, site conditions, or the type of housing being 
proposed. 
 
  (1) If the Board approves the application, the Department will issue a 
commitment notice to the project owner which commitment notice: 
 
  (A) shall confirm that the Board has approved the application; and 
   
  (B) shall state the Department's commitment to make a housing credit 
allocation to the project owner in a specified amount, subject to the 
feasibility determination described at sec.50.8(a) of this title (relating to 
Housing Credit Allocations), compliance by the project owner with the remaining 
requirements of this chapter, and any other conditions set forth therein by the 
Department. This commitment notice shall expire on the date specified therein, 
unless the commitment has been accepted and the conditions to receipt of an 
allocation set forth therein shall be met. 
   
  (C) The Department shall 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 Boards issuance of a commitment notice. 
     
  (2) If the Board disapproves or fails to act upon the application, the 
Department shall issue to the project owner a written notice stating the reasons 
for the Board's disapproval or failure to act. 
     
  (i) A project owner may request that the Department extend the expiration date 
of a commitment notice which has not expired by submitting a written request for 
such action, accompanied by the extension fee specified in sec.50.11 of this 
title (relating to Program Fees). The request shall specify the term of the 
extension requested and the reason or reasons why the project owner has been 
unable to satisfy the requirements of this chapter prior to the original 
expiration date. The Department may consider and grant such extension requests 
in its discretion; provided, however, that in no event shall the expiration date 
of a commitment notice be extended beyond the last business day of the 
applicable calendar year. 
   
  (j) A project owner must indicate acceptance of the Department's offer of a 
commitment of tax credit authority by executing the commitment notice and paying 
the commitment fee specified in sec.50.11 of this title (relating to Program 
Fees) prior to the expiration date set forth in the notice. Together with or 
following the project owner's acceptance of the commitment, the owner may 
request the Department to execute an Agreement and Election Statement, in the 
form prescribed by the Department, for the purpose of fixing the applicable 
credit percentage for the project as that for the month in which the commitment 
was accepted, as provided in the Code, sec.42(b)(2). Upon receipt of a duly 
dated and executed Agreement and Election Statement and the accepted commitment 
notice, if the project owner is in compliance with the rules of this chapter, 
the Department shall execute the Agreement and Election Statement and return a 
copy to the project owner. The Agreement and Election Statement may be executed 
by the project owner no later than five days after the end of the month in which 
the offer of commitment was accepted. 
   
  (k) Prior to the expiration of the commitment notice a project owner who has 
been issued a commitment notice may request the Department to execute a 
carryover allocation document. The carryover allocation must be properly 
completed, signed, dated and notarized by the project owner and delivered to the 
Department along with any and all other documentation prescribed in the 
Carryover Allocation Procedures Manual, as amended. The commitment fee as 
specified in sec.50.11 of this title (relating to Program Fees) must be received 
by the Department prior to the processing of any carryover allocation 
documentation. 
   
  (l) Prior to the issuance of the Form 8609, project owners must date, sign and 
acknowledge before a notary an extended low-income housing commitment agreement. 
The project owner shall then record said extended low-income housing commitment 
agreement, along with any and all exhibits attached thereto, in the real 
property records of the county where the project is located and return the 
original document, duly certified as to recordation by the appropriate county 
official, to the Department. Receipt of such certified recorded original by the 
Department is required prior to issuance of Form 8609. 
 
     
  sec.50.5. Set-Asides, Reservations and Preferences. 
 
  (a) The remainder of the state's annual per capita credit ceiling of 
$12,634,875 will be set-aside as follows: Rural Projects -10%; General Projects-
90%. 
   
  (b) The Department may redistribute the credits depending on the level of 
demand exhibited in each set-aside. After all available per capita credits have 
been reserved, committed or allocated, the Department will group all other 
projects which have not received a reservation, commitment or allocation into 
the General Projects set-aside, from which the Department will select the 
highest prioritized development, pursuant to sec.50.6 of this title (relating to 
Threshold Criteria; Evaluation Factors; Selection Criteria; Final Ranking; 
Credit Amount; Tax Exempt Bond Financed Projects). The Department will provide 
information concerning the appropriate set-aside for each application round in 
the Texas Register. Applicants may submit an application only in one set-aside 
and only one application for each site. 
   
  (c) No reservation notice or commitment notice shall be issued with respect to 
any project, the total development cost of which, as determined by the 
Department, or the acquisition, construction or rehabilitation cost of which 
exceed the limitations established from time to time by the Department and the 
Board as more specifically provided for within the Reference Manual. The 
Department will reduce the applicant's estimate of developer's and/or contractor 
fees in instances where these fees are considered excessive, as more 
specifically provided for within the Application Submission Procedures Manual, 
as amended. In the instance where an identity of interest exists between the 
project owner and the contractor, and both parties are claiming developers fees 
and contractors overhead, profit, and general requirements the Department will 
reduce the total fees estimated to a level that it deems appropriate. Further, 
the Department shall deny or reduce the amount of low income housing tax credits 
on any portion of costs which it deems excessive or unreasonable. The Department 
also may require bids in support of the costs proposed by any applicant. 
 
     
  sec.50.6. Threshold Criteria; Evaluation Factors; Selection Criteria; Final 
Ranking; Credit Amount; Tax Exempt Bond Financed Projects. 
 
  (a) Threshold criteria. To have an application considered for selection 
criteria, a project owner must first supply all required information and 
demonstrate that the project meets all of the requirements of the threshold 
criteria set forth as follows and as more specifically provided for in the 
Application Submission Procedures Manual, as amended. Only those applications 
meeting threshold criteria will be further considered. Project owners whose 
applications do not meet threshold criteria will be so informed in writing. The 
following are the threshold criteria that are mandatory requirements at the time 
of application: 
 
  (1) EXHIBIT 101: Label as EXHIBIT 101, the following documents: 
 
  (A) a letter from the design architect specifying the type of amenities 
proposed at the development; 
   
  (B) original photographs of the signage, existing buildings, and interior 
photographs; and 
   
  (C) original photographs of development site and surrounding area. The 
Department will consider requests for waiver of the following requirement 
pertaining to amenities which must be provided at the development site. All 
waiver requests must be submitted in writing at the time of application 
submission, detailing reasons for the waiver request. Small developments (35 
units or less), scattered site developments, or special housing developments are 
the only development types which will be considered for a waiver. All other 
property owners must provide at least four of the following amenities: limited 
access security fence; designated playground and equipment; community laundry 
room/laundry hook-up in units; furnished community room; recreation facilities; 
public telephone(s); on-site day care, Senior Center, or Community meals room; 
storage areas; or covered parking. All projects must adhere to the Texas 
Property Code statute relating to Security Devices for Residential Tenancies. 
     
  (2) EXHIBIT 102: Label as EXHIBIT 102(A) or (B), according to the development 
type, provide construction costs breakdown associated with the proposed new 
construction or rehabilitation. Additionally, all rehabilitation projects must 
provide a detailed work write-up/physical assessment report with estimated cost 
which is prepared by a registered architect, professional engineer or bonded 
general contractor detailing the scope of work to be performed throughout the 
rehabilitation process. 
   
  (3) EXHIBIT 103: Shall be evidence of readiness to proceed in one of the 
following items under each subparagraphs (A)-(E) of this paragraph. 
 
  (A) Label as EXHIBIT 103(A), evidence of site control through one of the 
following: 
 
  (i) a recorded warranty deed in the name of the ownership entity, or entities 
which comprise the general partner; 
   
  (ii) a contract for sale or lease (the minimum term of the lease must be at 
least 45 years) in the name of the ownership entity, or entities which comprise 
the general partner which is valid for the entire period the development is 
under consideration for tax credits or at least 90 days; which ever is greater; 
or 
   
  (iii) an exclusive option to purchase in the name of the ownership entity, or 
entities which comprise the general partner which is valid for the entire period 
the development is under consideration for tax credits or at least 90 days, 
which ever is greater. 
     
  (B) Label as EXHIBIT 103(B), evidence of current and appropriate zoning in the 
form of a letter from the appropriate municipal authority. If zoning is not 
required, the applicant must submit a letter from the local municipal/county 
authority so stating. If the property is currently a non-conforming use as 
presently zoned, provide the following: 
 
  (i) a detailed narrative of the nature of non-conformance; 
   
  (ii) the applicable destruction threshold; and 
   
  (iii) owners rights to reconstruct in the event of damage. 
     
  (C) Label as EXHIBIT 103(C), evidence of the availability of all necessary 
utilities/services to the development site. Exhibits must be in the form of a 
letter from the appropriate municipal provider/local service provider, or in the 
form or the last monthly bill which must clearly identify the development by 
name and address. Necessary utilities are GAS/ELECTRIC; TRASH; WATER, and SEWER. 
   
  (D) Label as EXHIBIT 103(D), evidence of permanent financing in only one of 
the following forms: 
 
  (i) permanent financing in place in the form of a deed of trust in the name of 
the ownership entity which identifies the mortgagor as the general partner or 
entities which comprise the general partner; 
   
  (ii) conditional commitment or term sheet 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 ownership entity, or entities which 
comprise the general partner and which has been executed and accepted by both 
parties (the term of the loan must be for a minimum of 15 years with a 25-year 
amortization); or 
   
  (iii) if the development will be financed through owner contributions, provide 
a letter from a third party CPA verifying capacity of the property owner to 
proposed financing and that funds are committed solely for such purpose. 
     
  (E) Label as EXHIBIT 103(E), a copy of the current title report which shows 
that the ownership of the land/project is vested in the exact name of the 
applicant, general partner or entities which comprise the general partner 
(purchaser) or the entity/person (seller) with which the applicant, general 
partner or entities which comprise the general partner has executed an option to 
purchase, a purchase and sale agreement, a long-term lease or option to lease. 
     
  (4) EXHIBIT 104: Label as EXHIBIT 104, evidence of pre-application 
notification by the applicant to the local chief executive officer of the 
locality of the development. Such evidence must be in the form of a copy of the 
certified mail receipt, overnight mail receipt, or confirmation letter from said 
official. 
   
  (5) EXHIBIT 105: must be current year's (and also the most current) financial 
statement(s) of the corporation or general partner(s) and its principals which 
is not more than 12 months old prepared and submitted on EXHIBIT 106, which is 
provided as part of this Application Submission Procedures Manual. Audited 
financial statements not more than 12-month old for the general partner and 
corporation, or unaudited financial statement not more than 90 days old, may be 
accepted in lieu of EXHIBIT 106, if prepared by a qualified third party CPA. 
   
  (6) EXHIBIT 106: must be the original copy of the completed and executed 
Previous Participation and Background Certification Form (EXHIBIT 106) which is 
provided as part of the Application Submission Procedures Manual. 
   
  (7) EXHIBIT 107: Label as EXHIBIT 107, a current rent roll for occupied 
projects undergoing rehabilitation. The rent roll must disclose terms and rate 
of lease, tenant names or vacancy, dates of first occupancy and expiration of 
lease. Vacant and proposed new construction projects will, of course, be exempt 
from this requirement. 
   
  (8) EXHIBIT 108: Label as EXHIBIT 108, for rehabilitation developments, 
historical operating statements of the subject development to date for the past 
three years, or since the date of acquisition of the development and for new 
construction, submit 15-year proforma estimates of operating expenses and all 
supporting documentation to support projections. Rehabilitation projects that 
are currently vacant and cannot provide historical operating statements must 
submit a 15-year proforma of operating expenses. 
   
  (9) EXHIBIT 109: Label as EXHIBIT 109 on the cover page only, a Market Study 
addressing all items listed in sec.50.4(c)(1)(A)-(K) of this title (relating to 
Applications; Environmental Assessments; Market Study; Reservations; 
Notification; Commitments; Extensions; Carryover Allocations; Agreements and 
Elections; Extended Commitments) and the Reference Manual. 
   
  (10) EXHIBIT 110: Label as EXHIBIT 110 on the cover page only, a Phase I 
Environmental Study prepared in accordance with sec.50.4(c) of this title 
(relating to Applications; Environmental Assessments; Market Study; 
Reservations; Notification; Commitments; Extensions; Carryover Allocations; 
Agreements and Elections; Extended Commitments). 
   
  (11) EXHIBIT 111: Label as EXHIBIT 111 certification from a tax professional 
(CPA or attorney) who does not have any direct or indirect financial interest in 
the project, certifying that the estimated project costs included in eligible 
basis are properly classified as includable in eligible basis pursuant to IRC, 
sec.42, as amended, and are presented in accordance with standard accounting 
procedures. 
   
  (12) EXHIBIT 112: If applying for acquisition credits, Label as EXHIBIT 112, 
an appraisal of the project apportioning the value of the land and the 
improvements, a valuation report from the local tax appraisal district and a 
valid contract verifying the acquisition cost. 
   
  (13) EXHIBIT 113: Label as EXHIBIT 113, a copy of the public notice published 
in a widely circulated newspaper in the area in which the proposed development 
will be located. Such notice must run for at least twice within a two week 
period, except on holidays, prior to the submission of the application to the 
Department. The notice must be prepared in accordance with the guidelines 
established in the Application Submission Procedures Manual. 
     
  (b) Evaluation factors. The Department will consider applications for a 
housing credit allocation using the evaluation and point system described herein 
and in the Application Submission Procedures Manual: 
 
  (1) Applications will be initially evaluated against the threshold criteria as 
they are accepted for filing in the Department during any application acceptance 
period. Applications not meeting the threshold criteria will be terminated and 
returned to the applicant without further review. 
   
  (2) The applications will then be ranked according to the points scored under 
the selection criteria in accordance with the rules and the Application 
Submission Procedures Manual. 
   
  (3) Applications which receive the highest number of points, in each set-aside 
category during the applicable round, and if a sufficient amount of state 
housing tax credits are available, will be eligible for an evaluation by an 
Underwriter. If such evaluation warrants, and subject to sec.50.4(h) of this 
title (relating to Applications; Environmental Assessments; Market Study; 
Reservations; Notification; Commitments; Extensions; Carryover Allocations; 
Agreements and Elections; Extended Commitments), a reservation notice will be 
issued as provided in sec.50.4(f) of this title (relating to Applications; 
Environmental Assessments; Market Study; Reservations; Notification; 
Commitments; Extensions; Carryover Allocations; Agreements and Elections; 
Extended Commitments), and the Department's recommendation will be submitted to 
the Ad Hoc Tax Credit Committee and to the Board for action. The Department may 
have an outside third party perform the underwriting evaluation to the extent it 
determines appropriate. The expense of any third party underwriting evaluation 
shall be paid by the applicant prior to the commencement of the aforementioned 
evaluation. 
   
  (4) Applications which have not received a reservation notice will be placed 
on waiting list until such time as additional credits become available during 
the application round. 
   
  (5) Applications not receiving a reservation notice at the end of the 
application round are deemed to be terminated. The applicant may re-apply to the 
Department during the next application acceptance period. 
     
  (c) Selection criteria-Pursuant to subsection (b)(1)-(5) of this section, 
applications receiving the highest number of points in each set aside category, 
in each application acceptance period, if a sufficient amount of state housing 
credit ceiling is available, will be eligible for an evaluation by an 
Underwriter. All applications will be ranked according to the selection criteria 
listed in paragraphs (1)-(9) of this subsection. 
 
  (1) DEVELOPMENT LOCATION. 
 
  (A) EXHIBIT 201: Label as EXHIBIT 201, a copy of the census map (may be 
obtained from HUD or the local planning department) if the subject property is 
located within a Qualified Census Tract as defined by the Secretary of HUD and 
qualifies for the 130% increase in eligible basis, pursuant to the Code, 
sec.42(d)(5)(C). The census map must clearly identify the proposed development 
to be located within a Qualified Census Tract. Census tract numbers must be 
clearly marked on the map, and must be identical to the qualified census tract 
number stated in the Department's Reference Manual. Applicants for projects in 
Difficult Development Areas or a targeted Texas county must indicate this 
designation in the space provided in the Application Submission Procedures 
Manual. (10 points) 
   
  (B) EXHIBIT 202: Label as EXHIBIT 202, evidence that the proposed development 
contributes significantly to the economic development of the community by 
location within a targeted Community Development Block Grant area. Such evidence 
must be in the form of a letter from the appropriate municipal authority stating 
the development name and address, and that the subject development is within the 
targeted area. Label as EXHIBIT 202(A) a map clearly indicating development 
location within the CDBG area. (4 points) 
   
  (C) EXHIBIT 203: Label as EXHIBIT 203, evidence that the proposed development 
is located within a city-sponsored neighborhood preservation/redevelopment area 
or a designated state or federal empowerment/enterprise zone. Such evidence must 
be in the form of a letter and a map from a city/county official verifying the 
proposed development to be located within a preservation/redevelopment area or 
empowerment/enterprise zone. In order to qualify for these points, an applicant 
whose project is located within a city-sponsored redevelopment area must submit 
documents evidencing that the designated area was: 
 
  (i) created by the local city council/county commission; 
   
  (ii) targets a specific geographic area; and 
   
  (iii) offers tangible and significant area-specific incentives or benefit over 
and above those normally provided by the city or county. Public Improvement 
Districts (PIDs), Tax Increment Financing Zones (TIFs), or similar districts 
organized under the Texas Local Government Code are prime examples of such 
redevelopment efforts. (10 points) 
       
  (2) HOUSING NEEDS CHARACTERISTICS. 
 
  (A) The proposed development is located in a county in which 10% or more of 
the households are below the poverty level as set forth in the Department's 
"County Data Elements Guide" incorporated into the Reference Manual. Utilize the 
percentages below to assess the appropriate score: 
 
  (i) 10% to 20% of households are below the poverty level (3 points); 
   
  (ii) 21% to 31% of households are below the poverty level (5 ; 
   
  (iii) 32% to 42% of households are below the poverty level (7 points); 
   
  (iv) 42% + of households are below the poverty level (9 points). 
     
  (B) The proposed development is located in a county in which more than 20% of 
the renter households have incomes at 50% or less of the Area Median Income 
(AMGI) as set forth in the County Data Elements Guide. Utilize the following 
percentages to assess the appropriate score: 
 
  (i) 20% to 30% of renter households have incomes at 50% or less of the AMGI (3 
points); 
   
  (ii) 31% to 41% of renter households have incomes at 50% or less of the AMGI 
(5 points); 
   
  (iii) 42% to 52% of renter households have incomes at 50% or less of the AMGI 
(7 points); 
   
  (iv) 53% + of renter households have incomes at 50% or less of the AMGI (9 
points). 
     
  (C) The proposed development is located in a county in which 20% or more of 
the rental units have a cost burden as set forth in the County Data Elements 
guide. Utilize the following percentages to assess the appropriate score: 
 
  (i) 20% to 30% of rental units have a cost burden (4 points); 
   
  (ii) 31% to 41% of rental units have a cost burden (6 points); 
   
  (iii) 42% + of rental units have a cost burden (8 points). 
     
  (D) The proposed development is located in a county in which 10% or more of 
all renters live in overcrowded conditions as set forth in the County Data 
Elements Guide. Utilize the following percentages to assess the appropriate 
score: 
 
  (i) 10% to 15% of renters live in overcrowded conditions (2 points); 
   
  (ii) 16% to 21% of renters live in overcrowded ; 
   
  (iii) 22% to 28% of renters live in overcrowded conditions (5 points); 
   
  (iv) 29% + of renters live in overcrowded conditions (7 points). 
       
  (3) PROJECT CHARACTERISTICS. 
 
  (A) EXHIBIT 204: Label as Exhibit 204, evidence that the proposed development 
to be purchased qualifies as a federally assisted building within the meaning of 
the Code, sec.42(d)(6)(B), and is in danger of having the mortgage assigned to 
HUD, RECDS, or a federal mortgage insurance fund. Such evidence must be a letter 
from the institution to which the development is in danger of being assigned. (5 
points) 
   
  (B) EXHIBIT 205: Label as EXHIBIT 205, evidence that the proposed development 
is a low-income building with mortgage prepayment eligibility as provided for in 
the Code, sec.42(d)(6)(C). Such evidence must be a copy of the HUD regulatory 
agreement which evidences the prepayment clause. (5 points) 
   
  (C) EXHIBIT 206: Label as EXHIBIT 206, evidence that the applicant is 
purchasing(ed) a property (no earlier than 1994) owned by HUD, an insured 
depository institution in default, or a receiver or conservator of such an 
institution, or is an REO property held by FNMA, FHLMC, federally chartered 
banks or by a federally approved mortgage company or savings and loan 
association or any other federal agency. Such evidence must be in the form of a 
binding contract to purchase from such federal or other entity as described 
above, closing statements, or recorded warranty deed. (5 points) 
   
  (D) The proposed development's composition offers a unit mix which is 
conducive to housing large families. To qualify for these points, these units 
must have at least 1000 square feet of living space for three bedrooms or 1200 
square feet for four bedrooms. Three points will be awarded for the first 15% of 
the units in the development that are three or larger. An additional point will 
be awarded in 5.0% increments for every 5.0%, up to 30% of units which are three 
bedrooms or larger, up to a maximum of three points. In computing qualified 
units for this selection item where the project is a mixed-income development, 
only tax credit units should be included. 
 
  (i) 15% of the units in the development are three or four bedrooms (3 points). 
   
  will be awarded for every 5.0% of units that are three or four bedrooms up to 
a maximum of points). 
     
  (E) EXHIBIT 207: Label as Exhibit 207A, for new Construction, a letter from 
the architect which certifies that at least three of the following energy saving 
devices will be utilized in the construction of each tax credit unit. The 
devices selected must be certified as included in each tax credit unit of the 
project upon placement in service. 
 
  (i) Ceiling Fans. 
   
  (ii) Low-Emittance-Windows. 
   
  (iii) Insulation which exceeds code for walls and ceilings. 
   
  (iv) Solar Screens (maximum Exhibit 207B for rehabilitation, an energy audit 
of 10% of the tax credit units and common areas, conducted by a local utility 
servicer or a registered architect. Upon placement in service, another audit 
will be required of the same units to certify that the design features and/or 
construction components installed in each tax credit unit exceeds local/regional 
building code with respect to energy efficiency. In the event that an energy 
audit is unobtainable because the units are currently vacant and uninhabitable, 
a certification from a registered architect will suffice. (3 points) 
     
  (F) EXHIBIT 208: Label as EXHIBIT 208, evidence that the proposed 
development's financing involves leveraging of resources from a nonprofit 
private foundation (which is not related to the lender, developer, sponsor, or 
syndicator) federal, state and/or local governmental entity(s). Such evidence 
must be a letter of commitment from the entity which states the terms of the 
loan or grant and all other conditions. The donation of land, waiver of fees or 
tax abatement will also be considered under this criterion provided that value 
of the contribution is quantified and verifiable. 
 
  (i) 5.0% of total residential costs are funded by private nonprofit foundation 
or government resources. (3 points) 
   
  will be awarded for every 2.0% of total residential costs funded from such 
contributions up to a (3 points) 
     
  (G) The proposed development provides low density housing of less than ten 
units per acre or as follows: 
 
  (i) ten units or less per acre (6 points); 
   
  (ii) 11 to 15 units per acre (4 points); 
   
  (iii) 16 to 20 units per acre (2 points). 
     
  (H) The subject project is an existing residential development seeking 
rehabilitation credits. (8 points) 
   
  (I) Project is a mixed-income development comprised of both market rate units 
and qualified tax credit units. Project's applicable fraction is no greater than 
75%. (6 points) Project's applicable fraction is no greater than 60%. (10 
points) 
   
  (J) EXHIBIT 209: Label as EXHIBIT 209, evidence that the proposed historic 
residential development has received an historic property designation by a 
federal, state or local governmental entity. Such evidence must be in the form 
of a letter from the designating entity identifying the development by name and 
address and stating that the project is: 
 
  (i) listed in the National Register of Historic Places under the U. S. 
Department of the Interior in accordance with the National Historic Preservation 
Act of 1966; 
   
  (ii) located in a registered historic district and certified by the U.S. 
Department of the Interior as being of historic significance to that district; 
   
  (iii) identified in a city, county, or state historic preservation list; or 
   
  (iv) designated as a state landmark. (6 points) 
     
  (K) Property owner will provide additional low-income housing use period 
beyond the initial 15-year compliance period. For rehabilitation projects, one 
point will be awarded for every year beyond the 15-year initial compliance 
period that the project owner commits to maintaining the project as a qualified 
low income project pursuant to the Code and the Land Use Restrictive Covenants 
and for new construction projects, one point will be awarded for two years that 
project owner has elected. The effect of committing to additional years of low-
income use in this manner will be to extend by the number of years elected: 
 
  (i) the "Compliance Period" as defined in the Land Use Restrictive Covenants; 
   
  (ii) the 30-year extended use period contemplated by the Code, 
sec.42(h)(6)(D); and 
   
  (iii) the earliest date at which an owner may seek to terminate the extended 
use period pursuant to the "qualified contract" exception found in the Code, 
sec.42(h)(6)(E). For example, by electing five years of additional low income 
use period, the project's total low income use period will be 38 years (i.e., 
the 20-year Compliance Period, plus 15-year Extended Use Period, plus three-year 
Vacancy Decontrol Rule). 
 
  (I) For rehabilitation projects, the property owner elects five years of 
additional low income use period beyond the initial 15-year compliance period (5 
points). 
   
  (II) For new construction projects, the property owner elects ten years of 
additional low income use period beyond the initial 15-year compliance period (5 
points) 
       
  (L) Property owner will set-aside units for households with incomes at 50% or 
less of Area Median Gross Income (AMGI) for occupancy of the tax credit units 
(TCU's) in the development. The rents for these units must not be higher than 
the allowable tax credit rents at the 50% AMGI level. Utilize the percentages 
below to assess the appropriate score. 
 
  be awarded for the first 10% of the units in the development that are set-
aside for tenants with incomes at 50% or less of AMGI. (4 points) 
   
  will be awarded for every 5.0% of additional units set-aside for tenants with 
incomes at 50% or less of AMGI up to a (4 points) 
     
  (M) EXHIBIT 210: Label as EXHIBIT 210, evidence that the property owners have 
committed to offer a right of first refusal to a qualified non profit entity or 
the tenants (for a 90-day period) of the subject property at the end of the 
compliance period (if an election is made under subparagraph (K) of this 
section, the "Compliance Period" will be the initial 15-year period plus the 
five years in the case of a rehabilitation project or ten years for a new 
construction project) for a purchase price no less than the sum of the principal 
amount of outstanding indebtedness secured by the project (other than 
indebtedness incurred within the 5-year period immediately preceding the date of 
said notice); and all Federal, state and local taxes incurred or payable by the 
project owner as a consequence of such sale. (For mixed-income projects, the 
qualified contract for a mixed-use building will specify a price for the nonlow-
income portion equal to the fair market value). Such evidence must be in the 
form of a notarized statement from property owner which clearly states such 
intention. This commitment will also be evidenced in the Land Use Restrictive 
Covenant upon placement in service (3 points); 
   
  (N) Proposed development is comprised of single family detached homes, 
duplexes, triplexes, fourplexes or townhouse. To qualify for these points, the 
single family homes must have a density of not more than ten units per acre and 
the multifamily project a density of not more than 18 units per acre. (5 points) 
   
  (O) EXHIBIT 211: Label as EXHIBIT 211, evidence that a majority of the 
development's residential units, as of the end of the application acceptance 
period, are vacant and uninhabitable. Such evidence must be in the form of a 
letter and report from the local municipal authority citing substantial code 
violations. To qualify for these points, the applicant must not have owned a 
significant or controlling interest in the entity that had title to the project 
during the period in which the such units were rendered uninhabitable. (8 
points) 
   
  (P) EXHIBIT 212: Label as EXHIBIT 212, evidence that at least 5.0% of the 
development's current residents include Section 8 tenants. Such evidence must be 
in the form of the contract between the project owner and the local housing 
authority. (3 points) 
   
  (Q) EXHIBIT 213: Label as EXHIBIT 213, evidence from the local municipal 
authority stating that the proposed development fulfills a need for additional 
affordable rental housing as evidenced in a local CHAS or Consolidated Plan 
(Comprehensive Housing Affordability Strategy). (5 points) 
   
  (R) The project is a Small Development. A Small Development is defined as a 
project consisting of not more than ten single family detached homes or 35 
multifamily units, which is not a part of, or contiguous to, a larger project, 
and which has not or will not apply to the Department for a tax credit 
allocation. This definition excludes those projects which would otherwise 
qualify as a rural project. (5 points) 
     
  (4) SPONSOR CHARACTERISTICS. 
 
  (A) EXHIBIT 214: Label as EXHIBIT 214, evidence that the ownership entity, 
general partner, or its principals have a record in successfully developing and 
operating affordable rental housing under a program operated by HUD, RECDS, RTC, 
HOME, LIHTC or any other verifiable source which provides affordable housing. 
With respect to the properties listed as developed and operated, such ownership 
entity or general partner must be either the project owner or has the 
controlling interest in the project owner. The term "successful" is defined as 
developing, operating, and maintaining current controlling interest of at least 
150 units under the tax credit program, or at least 150 units under all other 
affordable housing programs except RECDS and developments in rural areas. For 
RECDS and rural projects, a minimum of 25 units are required. For the tax credit 
program, evidence in the form of a copy of the IRS Form 8609 for the first 
building is required for projects awarded credits by Texas Department of Housing 
and Community Affairs. For tax credit projects which received an allocation from 
another state, a copy of the development agreement and partnership agreement 
must also be submitted. For HUD subsidized properties, the evidence must include 
the most recent Housing Quality Standards inspection and the Annual Performance 
Review (HUD Form 9822). For other affordable housing programs, documentation 
(including development and partnership agreements) evidencing current ownership 
and operation of the project is required. Applicants whose experience in 
affordable housing was through mortgage revenue bonds, must submit documentation 
which shows that the ownership entity/general partner and its principals have 
developed and had or currently maintain controlling interest in the project 
owner. Such evidence should include a copy of the financing and/or regulatory 
agreements, warranty deed which shows the ownership entity as the grantee, the 
partnership and development agreements, the name, address and contact person of 
the bond trustee, issuer, and compliance agent. Additional information to be 
provided shall include a schedule of properties owned, years of ownership, 
addresses of properties, number of units in the properties, and the percentage 
of direct or indirect ownership of each property. Property owners in non-
compliance with any of the aforementioned programs or have had a pattern of 
defaults and foreclosures are ineligible to claim the points for this item. 
 
  (i) Project owner or general partner has developed and currently maintains a 
controlling interest in at least 150 affordable housing units under the tax 
credit or other affordable housing programs. (8 points) 
   
  (ii) Project owner or general partner has developed and had a controlling 
interest in at least 150 affordable housing units under the tax credit or other 
affordable housing program for a period of not less than five years. (4 points) 
   
  (iii) Project owner or general partner has developed and had or currently 
maintain a controlling interest in at least 150 market-rate units for a period 
if not less than five years. (2 points) 
     
  (B) EXHIBIT 215: Label as EXHIBIT 215, evidence that the local public housing 
authority or its affiliates (operating within its area of jurisdiction) has 
existed for at least 24 months and is either the project owner; or has the 
controlling interest in the project owner. (3 points) 
   
  (C) EXHIBIT 216: Label as EXHIBIT 216, evidence that a HUB, which has 
conducted business as such, has existed for at least one year and has been 
certified by the General Services Commission, and is either the project owner or 
has the controlling interest in the project owner. (5 points) 
     
  (5) PARTICIPATION OF LOCAL TAX EXEMPT ORGANIZATIONS. 
 
  (A) EXHIBIT 217: Label as EXHIBIT 217, evidence that the subject development 
has significant participation by a qualified non profit entity with substantial 
experience in the development and management of affordable housing. To qualify 
under this section, a non profit entity must have existed for at least 24 months 
prior to the date of the application with respect to the subject development, 
and must either be the project owner or hold the controlling interest in the 
project owner. Additional information to be provided with respect to the non 
profit entity shall include a schedule of properties owner (whether directly or 
indirectly) years of ownership, addresses of properties, number of units in the 
properties, and the percentage of direct or indirect ownership of each property. 
(3 points) 
   
  (B) EXHIBIT 218: Label as EXHIBIT 218, evidence that property owner has an 
executed agreement with a local tax exempt organization for the provision of 
special supportive services that would not otherwise be available to the 
tenants. The supportive services will be evaluated based upon the following: 
 
  (i) the duration of the service agreement; 
   
  (ii) the accessibility and appropriateness of the service to the tenants; 
   
  (iii) the experience of the service provider; and 
   
  (iv) the importance of the service in enhancing the tenants standard of 
living. The supportive service will be included in the Land Use Restrictive 
Covenants (Up to 5 points). 
       
  (6) TENANT POPULATIONS WITH SPECIAL HOUSING NEEDS. 
 
  (A) This criterion applies exclusively to elderly projects located in areas 
that are not served by RECDS. In addition, the project must provide significant 
facilities and services specifically designed to meet the physical and social 
needs of the residents. Significant services may include congregate dining 
facilities, social and recreation programs, continuing education, welfare 
information and counseling, referral services, transportation and recreation. 
Other attributes of such projects include providing hand rails along steps and 
interior hallways, grab bars in bathrooms, routes that allow for physical 
handicap accessibility, lever type doorknobs and single lever faucets as well as 
elevators for projects of over two stories. In addition, not more than 20% of 
the units in the project should be larger than two bedroom units. Such a project 
must conform to the Fair Housing Act of 1988 and must be a project in which: 
 
  (i) is intended for, and solely occupied by persons 62 years of age or older; 
or 
   
  (ii) intended and operated for occupancy by at least one person 55 years of 
age or older per unit, where at least 80% of the total housing units are 
occupied by at least one person who is 55 years of age or older; and 
   
  (iii) adheres to policies and procedures which demonstrate an intent by the 
owner and manager to provide housing for persons 55 years of age or older. (10 
points) 
     
  (B) EXHIBIT 219: Label as EXHIBIT 219, evidence verifying that the subject 
development provides units specifically equipped for persons with physical or 
mental disabilities. Such evidence must be in the form of a certification from 
an accredited architect stating the number of units which are/will be designed 
to meet American National Standards for buildings and facilities providing 
accessibility and usability for physically handicapped persons (ANSI A117.1) and 
will conform to the Fair Housing Act of 1988. "Equipped" means that features 
that make the units fully usable to such persons are installed in the units at 
the time of construction. 
 
  (i) 6.0% to 10% of units are equipped for persons with physical/mental 
disabilities. (4 points) 
   
  (ii) 11% to 15% of units are equipped for persons with physical/mental 
disabilities. (6 points) 
   
  (iii) 16% + of units are equipped for persons with physical/mental 
disabilities. (8 points) 
     
  (C) EXHIBIT 220: Label as EXHIBIT 220, evidence that the property owner will 
provide units, or subject development is designed for, transitional housing for 
homeless persons on a non-transient basis, with supportive services designed to 
assist tenants in locating and retaining permanent housing. Such evidence must 
include a detailed narrative describing the type of proposed housing; a referral 
agreement with an established organization which provides services to the 
homeless; and a marketing plan designed to attract qualified tenants and housing 
providers, as well as a list of supportive services. 
 
  (i) 5.0% to 10% of units will be set-aside as transitional housing for the 
homeless. (4 points) 
   
  (ii) 11% to 15% of units will be set-aside as transitional housing for the 
homeless. (6 points) 
   
  (iii) Project is 100% set-aside as transitional housing for the homeless. (15 
points) 
       
  (7) PUBLIC HOUSING WAITING LISTS. EXHIBIT 221: Label as EXHIBIT 221, evidence 
that the property owner has committed in writing to the local public housing 
authority (PHA), the availability of units which also states that the property 
owner agrees to consider as potential tenants, those households on the PHA's 
waiting list. Property owner's letter to the PHA must be accompanied by a 
marketing plan outlining how these units will be marketed to individuals on the 
waiting list. If no PHA is within the locality of the development PHA, property 
owner must utilize the nearest authority or office responsible for administering 
Section 8 programs. Such evidence must include a copy of property owner's letter 
to the local PHA; a copy of the marketing plan submitted with letter to the 
local PHA; verification of receipt by the PHA in the form of certified return 
receipt or overnight mail receipt; and a letter received from an appropriate 
municipal authority, or local PHA stating the need for additional affordable 
housing units within it's jurisdiction. (3 points) 
   
  (8) SUBSTANTIAL READINESS TO PROCEED. EXHIBIT 222: Label as EXHIBIT 222, 
evidence of substantial readiness to proceed. Such evidence must be in the form 
of building permits and construction contracts with the general contractor for 
the construction or rehabilitation of the project (4 points); or if property is 
Rural and financed by RECDS, a copy of the "Obligation of Funds" report issued 
by the RECDS. (4 points) 
   
  (9) BONUS POINTS: Application is received within the first ten days of the 
application acceptance period. (2 points) 
     
  (d) Final Ranking. The Department will evaluate projects according to the 
strength of the project in meeting the threshold and selection criteria. After 
evaluating and scoring all applications received, the Department will rank such 
applications according to the number of points received. In the event that two 
or more applications receive the same number of points in any given set-aside 
category, the Department will utilize the following factors in the order 
presented in paragraphs (1)-(7) of this paragraph in making a determination as 
to which project will receive a preference in consideration for a tax credit 
commitment: 
 
  (1) project which is a special housing project as defined in sec.50.2 of this 
title (relating to Definitions); 
   
  (2) which have substantial community support as evidenced by the commitment of 
local public funds toward the construction, rehabilitation and acquisition and 
subsequent rehabilitation of the project; 
   
  (3) which serve the lowest income tenants; 
   
  (4) which demonstrates the highest substantial readiness to proceed as 
evidenced by the selection criteria, more specifically provided for in 
subsection (c)(8) of this section; 
   
  (5) whose unit composition provides the highest percentage of three bedrooms 
or greater sized units; 
   
  (6) which obligate the project owner (as evidenced by the Declaration of Land 
Use Restrictive Covenant Document) to serve qualified tenants for the longest 
period of time; and 
   
  (7) which provide for the most efficient usage of the low income housing tax 
credit on a per unit basis. 
     
  (e) In reaching the final ranking of an application, the Department will take 
into consideration the project owner's history in the tax credit program and 
other affordable housing programs. The Department may deduct up to ten points 
from the final score of any applicant which, in the past, has not placed 
developments into service for which the Department has made an allocation, OR if 
a property owner has failed to perform under the obligations of any previous 
commitment notice. The Department may disqualify or impose limitation or 
disabilities upon a project owner, developer, and its partners or principals 
with respect to the competition for allocations of tax credits as a consequence 
of material misstatement or omission, noncompliance with any Code requirements, 
or any of the terms, conditions or obligations of the program for any project 
that has received a reservation or allocation, or for failure to place in 
service buildings for which credits were allocated. The Department will 
disqualify an applicant who has been convicted of fraud, theft, misappropriation 
of funds, misrepresentation to the Department, noncompliance under this program 
or another program administered by this Department or other governmental 
entities. Additionally, applicants are advised that the Department reserves the 
right to reject applications which include principals who have been excluded 
from federal and non federal procurement programs (either debarment or 
suspension); been convicted of a felony offense; been indicted or subject to 
enforcement action under state of federal securities law; and negligent in the 
physical upkeep of subject property, or negligent in the operation of the 
subject property, as deemed so by another federal or state authority. All such 
rejections of applications are at the sole discretion of the Department. 
   
  (f) Credit Amount. The Department shall issue tax credits only in the amount 
needed for the financial feasibility and viability of a project throughout the 
compliance 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 project by the Department. The Department will limit the 
allocation of tax credits to no more than $1.2 million to each developer, 
project owner, general partner, sponsor or related entities unless otherwise 
provided for by the Department. In making determinations under the preceding 
sentence, the Department may take into account such factors as the percentage of 
interest held by a particular individual or entity in a project, the amount of 
fees or other compensations paid to a particular individual or entity with 
respect to a project, any other financial benefits received by a particular 
individual or entity with respect to a project, and such definitions of the 
concept of "related entity" as the Department determines to be appropriate under 
the circumstances. 
   
  (g) Limitations on the size of projects. Rural projects involving new 
construction must not exceed 50 units. Non-rural projects involving new 
construction will be limited to 250 units. 
   
  (h) Tax Exempt Bond Financed Projects. Applications for projects which receive 
at least 50% of their financing from the proceeds of tax-exempt bonds which are 
subject to the state volume cap as described in the Code, (sec.42(h) (4)(B) are 
also subject to evaluation under the Qualified Allocation Plan. Such projects 
must meet all the threshold requirements stipulated in the qualified allocation 
plan, demonstrate consistency with local CHAS or Consolidated Plan, and meet the 
underwriting guidelines established by the Department. 
 
     
  sec.50.7. Compliance Monitoring. 
 
  (a) The Code, sec.42(m)(1)(B)(iii), requires each State Allocating Agency to 
include in its "Qualified Allocation Plan" a procedure that the agency (or an 
agent or other private contractor of such agency) will follow in monitoring 
projects for noncompliance with the provisions of the Code, sec.42 and in 
notifying the Internal Revenue Service (the Service), or its successor, of such 
noncompliance of which such agency becomes aware. This procedure does not 
address forms and other records that may be required by the Service on 
examination or audit. 
   
  (b) The Department will also monitor compliance with any additional covenants 
made by the project owner in the extended low-income housing commitment 
agreement. 
   
  (c) The owner of a low-income housing project must keep records for each 
qualified low-income building in the project showing: 
 
  (1) the total number of residential rental units in the building (including 
the number of bedrooms and the size in square feet of each residential rental 
unit); 
   
  (2) the percentage of residential rental units in the building that are low 
income units; 
   
  (3) the rent charged on each residential rental unit in the building including 
documentation to support the utility allowance; 
   
  (4) the number of occupants in each low-income unit; 
   
  (5) the low-income unit vacancies in the building and information that shows 
when, and to whom, the next available units were rented; 
   
  (6) the annual income certification of each low-income tenant per unit, in the 
form designated by the Department in the Compliance Reference Guide, as may be 
amended; 
   
  (7) documentation to support each low-income tenant's income certification, 
consistent with the verification procedures required by HUD under sec.8 of the 
United States Housing Act of 1937 (sec.8). In the case of a tenant receiving 
housing assistance payments under sec.8, the documentation requirement is 
satisfied if the public housing authority provides a statement to the project 
owner declaring that the tenant's income does not exceed the applicable income 
limit under the Code, sec.42(g) as described in the Compliance Reference Guide; 
   
  (8) the eligible basis and qualified basis of the building at the end of the 
first year of the credit period; 
   
  (9) the character and use of the nonresidential portion of the building 
included in the building's eligible basis under the Code, sec.42(d), (e.g. 
tenant facilities that are available on a comparable basis to all tenants and 
for which no separate fee is charged for use of the facilities, or facilities 
reasonably required by the project); and 
   
  (10) additional information as required by the Department. 
     
  (d) Record retention provision. The owner of a low-income housing project is 
required to retain the records described in subsection (c) of this section 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 
tax 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. 
   
  (e) Certification and Review. 
 
  (1) Certification. Annually, at the time and in the form designated by the 
Department, the owner of a low-income housing project must certify that for the 
preceding 12-month period: 
 
  (A) the project met the minimum set-aside test which was applicable to the 
project; 
   
  (B) there was no change in the applicable fraction of any building in the 
project, or that there was a change, and a description of the change; 
   
  (C) the owner has received an annual income certification from each low-income 
tenant and documentation to support that certification; 
   
  (D) each low-income unit in the project was rent-restricted under the Code, 
sec.42(g)(2); 
   
  (E) all units in the project were for use by the general public and used on a 
non-transient basis (except for transitional housing for the homeless provided 
under the Code, sec.42(i)(3)(B)(iii)); 
   
  (F) each building in the project was suitable for occupancy, taking into 
account local health, safety, and building codes; 
   
  (G) either there was no change in the eligible basis (as defined in the Code, 
sec.42(d)) of any building in the project, or that there has been a change, and 
the nature of the change; 
   
  (H) all tenant facilities included in the eligible basis under the Code, 
sec.42(d), of any building in the project, such as swimming pools, other 
recreational facilities, and parking areas, were provided on a comparable basis 
without charge to all tenants in the building; 
   
  (I) if a low-income unit in the project became vacant during the year, 
reasonable attempts were, or are being, made to rent that unit or the next 
available unit of comparable or smaller size to tenants having a qualifying 
income before any other units in the project were, or will be, rented to tenants 
not having a qualifying income; 
   
  (J) if the income of tenants of a low-income unit in the project increased 
above the limit allowed in the Code,  sec.42(g)(2)(D)(ii), the next available 
unit of comparable or smaller size in the project was, or will be, rented to 
tenants having a qualifying income; and 
   
  (K) an extended low-income housing commitment agreement as described in the 
Code, sec.42(h)(6)(B), was in effect for buildings subject to the Revenue 
Reconciliation Act of 1989, sec.7106(c)(1) (generally any building receiving an 
allocation after 1989). 
     
  (2) Review. 
 
  (A) At least annually, at the time designated by the Department, the owner of 
a low-income housing project must send to the Department for its review for 
compliance with the requirements of the Code, sec.42, the certification 
described in paragraph (1) of this subsection. 
   
  (B) The Department will inspect, at a minimum, 20% of low-income housing 
projects each year, including inspection of each income certification, the 
documentation the owner has received to support that certification, the rent 
record for each low-income tenant and any additional information that the 
Department deems necessary in at least 20% of the low income units in those 
projects. The Department shall give reasonable notice to the owner that an 
inspection will occur; however, the projects and records to be reviewed will be 
chosen by the Department in its discretion. 
   
  (C) The Department may, at the time and in the form designated by the 
Department, require the owners of low-income housing projects to submit for 
compliance review, information on tenant income and rent for each low-income 
unit, and may require an owner to submit for compliance review a copy of the 
income certification, the documentation the owner has received to support that 
certification and the rent record for any low-income tenant. 
     
  (3) Exception. The Department may, at its discretion, enter into a Memorandum 
of Understanding with the RECDS, whereby the RECDS agrees to provide to the 
Department information concerning the income and rent of the tenants in 
buildings financed by the RECDS under its sec.515 program. Owners of such 
buildings may be excepted from the review procedures of paragraph (2)(B) or (C) 
of this subsection or both; however, if the information provided by RECDS is not 
sufficient for the Department to make a determination that the income limitation 
and rent restrictions of the Code, sec.42(g)(1) and (2), are met, the owner must 
provide the Department with additional information. 
     
  (f) Inspection provision. The Department retains the right to perform an on 
site inspection of any low-income housing project through either the end of the 
compliance period or the end of the period covered by any extended low-income 
housing commitment agreement, whichever is later. An inspection under this 
subsection may be in addition to any review under subsection (e)(2) of this 
section. 
   
  (g) Notification of Noncompliance. 
 
  (1) Notice to owner. 
 
  (A) The Department will provide prompt written notice to the owner of a low-
income housing project if the Department does not receive the certification 
described in subsection (e)(1) of this section or discovers through audit, 
inspection, review or any other manner, that the project is not in compliance 
with the provisions of the Code, sec.42. 
   
  (B) The Department will specify a correction period which will not exceed 90 
days, during which the owner may respond to the Department's findings, bring the 
property into compliance, or supply any missing certifications. The Department 
may extend the correction period for up to six months if it determines there is 
good cause for granting an extension. 
     
  (2) Notice to the Internal Revenue Service. 
 
  (A) The Department is required to file Form 8823, Low Income Housing Credit 
Agencies Report of Noncompliance, with the Internal Revenue Service no later 
than 45 days after the end of the correction period including any extension, and 
no earlier than the end of the correction period, whether or not the 
noncompliance or failure to certify is corrected. The Department will explain on 
Form 8823 the nature of the noncompliance or failure to certify and will 
indicate whether the owner has corrected the noncompliance or failure to 
certify. 
   
  (B) The Department will retain records of noncompliance or failure to certify 
for six years beyond the Department's filing of the respective Form 8823. In all 
other cases, the Department will retain the certification and records described 
in this section for three years from the end of the calendar year the Department 
receives the certifications and records. 
       
  (h) Notices to the Department. 
 
  (1) An owner of a low-income housing project must notify the Department in 
writing prior to any sale, transfer, exchange, or renaming of the project or any 
portion of the project. 
   
  (2) An owner of a low-income housing project must notify the Department in 
writing of any change of address to which subsequent notices or communications 
shall be sent. 
     
  (i) Liability. Compliance with the requirements of the Code, sec.42, is the 
sole responsibility of the owner of the building for which the credit is 
allowable. By monitoring for compliance, the Department in no way assumes any 
liability whatsoever for any action or failure to act by the owner including the 
owner's noncompliance with the Code, sec.42. 
   
  (j) These provisions apply to all buildings for which a low-income housing 
credit is, or has been, allowable at any time. The Department is not required to 
monitor whether a building or project was in compliance with the requirements of 
the Code, sec.42, prior to January 1, 1992. However, if the Department becomes 
aware of noncompliance that occurred prior to January 1, 1992, the Department is 
required to notify the Service in a manner consistent with subsection (g) of 
this section. 
 
     
  sec.50.8. Housing Credit Allocations. 
 
  (a) 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 project throughout the compliance period. Such 
determination shall be made by the Department at the time of issuance of the 
reservation notice; at the time of review by the Board prior to issuance of 
commitment notice; at the time the Department makes a housing credit allocation; 
and/or the date the building is placed in service. Any housing credit allocation 
amount specified in a reservation notice, commitment notice, allocation and/or 
carryover allocation document is subject to change by the Department dependent 
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, sec.42(m)(2)(B), and the Department in no way or manner represents or 
warrants to any project owner, sponsor, investor, lender or other entity that 
the project is, in fact, feasible or viable. 
   
  (b) When the project owner is in full compliance with the rules in this 
chapter, the commitment notice, the Carryover Allocation Procedures Manual and 
all fees as specified within sec.50.11 of this title (relating to Program Fees) 
have been received by the Department, the Department, if requested, shall 
execute a carryover allocation document which has been properly completed, 
executed and notarized by the project owner. The Department shall return one 
executed copy to the project owner. 
   
  (c) All projects receiving a carryover allocation will be required to provide 
regular reports, in a format prescribed by the Department as more fully defined 
in the Carryover Allocation Procedures Manual, outlining progress towards 
placing the project in service. The Department may not allocate additional 
credits to a developer/project owner that is unable to provide evidence, 
satisfactory to the Department, of progress towards placement in service for a 
project(s) that is in carryover. An allocation will be made in the name of the 
project owner identified in the related commitment notice. If an allocation is 
made in the name of the party expected to be the general partner in an eventual 
owner partnership, the Department will, upon request, approve one transfer of 
allocation to such owner partnership in which such party is the sole general 
partner. Any other transfer of an allocation will be subject to approval by the 
Department in its discretion. The approval of any such transfer by the 
Department does not constitute a representation to the effect that such transfer 
is permissible under the Code or without adverse consequences thereunder. 
   
  (d) The Department shall make a housing credit allocation to any project owner 
who holds a commitment notice which has not expired, and for which all fees as 
specified in sec.50.11 of this title (relating to Program Fees), have been 
received by the Department. Satisfactory evidence must be received by the 
Department that one or more buildings within the project is completed and been 
placed in service in accordance with the provisions of the Department's Cost 
Certification Procedures Manual. The Department shall make each such housing 
credit allocation by mailing or delivering IRS Form 8609 (or any successor form 
adopted by the Internal Revenue Service) to the project 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 only occur after the project 
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 low income housing tax credits, the current year's Cost 
Certification Procedures Manual must be utilized when filing all cost 
certification requests. A separate housing credit allocation shall be made with 
respect to each building within a project which is eligible for a housing 
credit. 
   
  (e) 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, sec.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, sec.42(f)(2)(A) and sec.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, 
sec.42(h)(6)(C)(i). 
   
  (f) Project inspections may be required to show that the project is built or 
rehabilitated according to required plans and specifications. A copy of all 
project inspections required and accepted by the lender financing the project 
shall be acceptable to the Department as a certification that the project is 
built to plans and specifications if such inspections are required by the lender 
during the construction of the project. At a minimum, such inspections must 
include an inspection at the start-up phase and the interim phase, and a final 
inspection at the time the project is placed in service. If no project 
inspections are required by the lender financing the project, the Department may 
require inspections to be made of the project; such inspections may be at the 
start-up phase, the interim phase, or a final inspection at the time the project 
is placed in service, and shall be performed by an independent, third party 
inspector. The project owner shall pay all fees and costs of said inspections. 
   
  (g) At the time each building in the project is placed in service, the project 
owner shall be responsible for furnishing the Department with documentation 
which satisfies the requirements as set forth in the Cost Certification 
Procedures Manual. The Department may require copies of 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 project. 
 
     
  sec.50.9. Department Records; Certain Required Filings. 
 
  (a) 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 
reserved pursuant to reservation notices during such calendar year; 
   
  (2) the cumulative amount of the state housing credit ceiling that has been 
committed pursuant to commitment notices during such calendar year; 
   
  (3) the cumulative amount of the state housing credit ceiling that has been 
committed pursuant to carryover allocation documents during such calendar year; 
   
  (4) the cumulative amount of housing credit allocations made during such 
calendar year; and 
   
  (5) the remaining unused portion of the state housing credit ceiling for such 
calendar year. 
     
  (b) Not less frequently than quarterly during each calendar year, the 
Department shall publish in the Texas Register each of the items of information 
referred to in subsection (a) of this section. 
   
  (c) 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 project 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 Form 
8609 will be mailed or delivered to the project 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 above 
mentioned. 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. 
 
     
  sec.50.10. Department Responsibilities.  In making a housing credit allocation 
under this chapter, the Department shall rely upon information contained in the 
project owner's application to determine whether a building is eligible for the 
credit under the Code, sec.42. The project owner shall bear full responsibility 
for claiming the credit and assuring that the project complies with the 
requirements of the Code, sec.42. The Department shall have no responsibility 
for ensuring that a project owner who receives a housing credit allocation from 
the Department will qualify for the housing credit. The Department will reject, 
and consider barring the project owner from future participation in the 
Department's tax credit program as a consequence thereof, any application in 
which fraudulent information, knowingly false documentation or other 
misrepresentation has been provided. The aforementioned policy will apply at any 
stage of the evaluation or approval process. 
 
   
  sec.50.11. Program Fees. 
 
  (a) Each project owner that submits an application shall submit to the 
Department, along with such application, a non refundable application fee, as 
set forth in the Application Submission Procedures Manual. 
   
  (b) For each project which is to be evaluated by an independent third party 
underwriter in accordance with sec.50.6(b)(3) of this title (relating to 
Threshold Criteria; Evaluation Factors; Selection Criteria; Final Ranking; 
Credit Amount; Tax Exempt Bond Financed Projects), the project owner will be so 
informed in writing prior to the commencement of any reviews by said 
underwriter. The cost for the third party underwriting will be set forth in the 
Application Submission Procedures Manual, and must be received by the Department 
prior to the engagement of the underwriter. The fees paid by the project owner 
to the Department for the third party underwriting will be credited against the 
commitment fee established in subsection (c) of this section, in the event that 
a commitment notice is issued by the Department to the project owner. 
   
  (c) Each project owner that receives a commitment notice shall submit to the 
Department, not later than the expiration date on the commitment billing notice, 
a non refundable commitment fee, as set forth in the Application Submission 
Procedures Manual. The commitment fee shall be paid by cashier's check. Projects 
located within one of the targeted Texas counties, as indicated in the Reference 
Manual, will be exempt from the requirement to pay a commitment fee, in the 
event that commitment notice is issued. 
   
  (d) Each project owner that requests an extension of the expiration date of a 
commitment notice, reservation notice, or wait list notice shall submit to the 
Department, along with such request, a non refundable extension fee, as set 
forth in the Application Submission Procedures Manual and shall be paid by 
cashier's check. Such extension shall be granted at the discretion of the 
Department. 
   
  (e) Upon the project being placed in service, the project owner will pay a 
compliance monitoring fee in the form of a cashier's check, as set forth in the 
Application Submission Procedures Manual. The compliance monitoring fee must be 
received by the Department prior to the release of the IRS Form 8609 on the 
project. 
   
  (f) Public information requests are processed by the Department in accordance 
with the provisions of Texas Civil Statutes, Article 6252-17a, codified as 
Government Code, Chapter 552, and as amended by the Acts during the 73rd 
Legislature, and as may be amended from time to time. The General Services 
Commission and the Department determine the cost of copying, and other costs of 
production. 
   
  (g) The amounts of the application fee, commitment fee, compliance monitoring 
fee, administrative fees, extension fee, and other applicable fees as specified 
in the Application Submission Procedures Manual will be revised by Board 
resolution from time to time as necessary to ensure that such fees cover the 
Department's administrative expenses. 
 
     
  sec.50.12. Manner and Place of Filing Applications. 
 
  (a) All applications, letters, documents, or other papers filed with the 
Department will 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 items submitted to the Department shall be mailed or delivered to Low 
Income Housing Tax Credit Program, Texas Department of Housing and Community 
Affairs, 811 Barton Springs Road, Suite 300, Austin, Texas 78704. 
 
     
  sec.50.13. Withdrawals, Cancellations, Amendments. 
 
  (a) A project owner may withdraw an application prior to receiving a 
reservation, commitment, carryover allocation document or housing credit 
allocation, or may cancel a reservation notice or commitment notice by 
submitting to the Department a notice, as applicable, of withdrawal or 
cancellation. 
   
  (b) The Department may consider an amendment to a project if the revisions 
are: 
 
  (1) consistent with the Code and the tax credit program; 
   
  (2) do not occur while the project is under consideration for tax credits; 
   
  (3) do not involve a change in the number of points scored; 
   
  (4) do not involve a change in the project's site; or 
   
  (5) do not involve a change in the set-aside election. 
 
       
  sec.50.14. Waiver and Amendment of Rules. 
 
  (a) The Board, in its discretion, may waive any one or more of these rules in 
cases of natural disasters such as fires, hurricanes, tornadoes, earthquakes, or 
other acts of nature as declared by Federal or State authorities. 
   
  (b) For purposes of sec.50.8(b) of this title (relating to Housing Credit 
Allocations), the requirements for making a housing credit allocation, as set 
forth in the Cost Certification Procedures Manual, shall apply to all project 
owners which received an executed carryover allocation document from the 
Department on, before or after January 1, 1993. 
   
  (c) The Department may amend this chapter at any time in accordance with the 
provisions of Texas Civil Statutes, Article 6252-13a, codified as Government 
Code, Chapter 2001, and as amended by the Acts of the 73rd Legislature, and as 
may be amended from time to time. 
   
  (d) The Department will waive the requirement for an application fee, as set 
forth in sec.50.11(a) of this title (relating to Program Fees), in the event of 
a resubmission of a project which received a conditional commitment of tax 
credits, but due to the lack of available tax credit authority the Department 
was unable to issue a commitment notice. 
 
     
  sec.50.15. Forward Reservations; Binding Commitments. 
 
  (a) Anything in sec.50.4 of this title (relating to Applications; 
Environmental Assessments; Market Study; Reservations; Notification; 
Commitments; Extensions; Carryover Allocations; Agreements and Elections; 
Extended Commitments) or elsewhere in this chapter to the contrary 
notwithstanding, the Department may determine to issue reservations and 
commitments of tax credit authority with respect to projects from the state 
housing credit ceiling for the calendar year following the year of issuance 
(each a "forward commitment"). The Department may make such forward commitments: 
 
  (1) with respect to projects placed on a waiting list in any previous 
application round during the year; or 
   
  (2) pursuant to an additional application round. 
     
  (b) If the Department determines to make forward commitments pursuant to a new 
application round, it shall provide information concerning such round in the 
Texas Register . In inviting and evaluating applications pursuant to an 
additional allocation round, the Department may waive or modify any of the set-
asides set forth in sec.50.5(a) and (b) of this title (relating to Set-Asides, 
Reservations and Preferences) and make such modifications as it determines 
appropriate in the threshold criteria, evaluation factors and selection criteria 
set forth in sec.50.6 of this title (relating to Threshold Criteria, Evaluation 
Factors; Selection Criteria; Final Ranking; Credit Amount; Tax Exempt Bond 
Financed Projects) and in the dates and times by which actions are required to 
be performed under this chapter. The Department may also, in an additional 
application round, include projects previously evaluated within the calendar 
year and rank such projects together with those for which applications are newly 
received. 
   
  (c) Unless otherwise provided in the reservation notice or commitment notice 
with respect to a project selected to receive a forward commitment or in the 
announcement of an application round for projects seeking 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 anticipated allocation rather than in the calendar year of the forward 
commitment. 
   
  (d) 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. No more than 15% of the per 
capita component of state housing credit ceiling anticipated to be available in 
the State of Texas in a particular year shall be allocated pursuant to forward 
commitments to project applications carried forward without being ranked in the 
new application round pursuant to subsection (f) below. If a forward commitment 
shall be made with respect to a project 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, 
sec.42(h)(1)(C). 
   
  (e) If tax credit authority shall become available to the Department later in 
a calendar year in which forward commitments have been awarded, the Department 
may allocate such tax credit authority to any eligible project which received a 
forward commitment, in which event the forward commitment shall be canceled with 
respect to such project. 
   
  (f) In addition to or in lieu of making forward commitments pursuant to 
subsection (a) of this section, the Department may determine to carry forward 
project applications on a waiting list or otherwise received and ranked in any 
application round within a calendar year to the subsequent calendar year, 
requiring such additional information, applications and/or fees, if any, as it 
determines appropriate. Project applications carried forward may, within the 
discretion of the Department, either be awarded credits in a separate allocation 
round on the basis of rankings previously assigned or may be ranked together 
with project applications invited and received in a new application round. The 
Department may determine in a particular calendar year to carry forward some 
project applications under the authority provided in this subsection, while 
issuing forward commitments pursuant to subsection (a) of this section with 
respect to others. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on July 26, 1995. 
 TRD-9509330 
  Henry Flores 
 Executive Director 
 Texas Department of Housing and Community Affairs 
    Effective date: August 16, 1995 
 Proposal publication date: June 9, 1995 
 For further information, please call: (512) 475-3916 
         
                 
  TITLE 31. NATURAL RESOURCES AND CONSERVATION 
 Part II. Texas Parks and Wildlife Department 
  Chapter 53. Finance 
  
  License Fees and Boat and Motor Fees 
 
  31 TAC sec.53.8 
 
  The Texas Parks and Wildlife Commission, in a regularly scheduled public 
hearing held June 1, 1995, adopts an amendment to sec.53.8, with changes to the 
proposed text as published in the April 28, 1995, issue of the Texas Register  
(20 TexReg 3131). 
 The retail fish dealer's license, proposed at $86.25, was set at $86. The 
rounding down in the license fee is expected to facilitate ease of purchase of 
the license and to facilitate collection and accounting of this license fee. The 
nonresident five day special hunting license, proposed as $50, was set at $35. 
The special resident sportfishing license was proposed at $1.50-$6.00 and 
Commission set the fee at $6.00. 
 The Commission did not adopt proposed fee increases including: resident 
combination hunting and fishing license; resident hunting license; lifetime 
combination hunting and fishing license; lifetime hunting license; lifetime 
fishing license; turkey stamp; conservation permit; exempt and duplicate exempt 
red drum tags; and sportsman's license. All other proposed fee changes were 
adopted as proposed. 
 Increases in the fees are necessary to continue current levels of service 
directed to the public good and to adjust temporary license fees for consistency 
with other fixed period license fees. This rule action also implements the 
provisions of Senate Bill 750 relating to shrimp license management. 
 Adoption of this rule increases fees in several licenses related to the Texas 
shrimping industry. Senate Bill 750 directs the Commission to increase the 
amount of these licenses by 15% up to $25 and earmark these funds for activities 
related to shrimp license management. The rule also sets new fees for 
nonresident hunting activities, bringing these fees into more close 
correspondence to similar fees in other surrounding states. 
 Public comment on the adopted increases in non-resident hunting license fees 
was received from 13 individuals. Eleven phone calls, one letter via facsimile, 
and one personal public comment at the Commission Meeting were received. All 
eleven phone calls and the letter received via facsimile were from individuals 
expressing concern about the $25 increase (from $25 to $50) for the Non-Resident 
Five-Day Special Hunting License. All expressed concern about a 100% increase in 
the fee and the anticipated negative effect on the number of hunters who would 
be willing to pay such an increase. They were also concerned about the effect on 
local economies from loss of the lucrative non-resident hunting business, 
particularly waterfowl hunting guides and related businesses. Public comment was 
received from the Texas Wildlife Association, which was generally supportive of 
the need for non-resident hunting license fee increases; but also expressed 
concern about the economic impact of the anticipated reductions in hunter 
participation due to the fee increases. All individuals submitting public 
comment positively endorsed the discounted fee ($6.00) for non-resident hunters 
under 17 years of age. 
 The Texas Wildlife Association spoke in support of some fee increases and in 
opposition to others. 
 The department agreed with the suggestion that the fee increases for resident 
hunting and fishing activities should be more closely considered. The Commission 
deferred action on these items. The Department agreed with comments concerning 
the Non-Resident Five Day Hunting License and increased the fee by only $10 
instead of the $25 originally proposed as the upper range limit for this 
license. The fee increase is necessary to continue the present level of services 
and brings this license into price correspondence with the non-resident licenses 
in surrounding states. 
 The amendment is adopted under the authority of Parks and Wildlife Code, 
sec.11.027, which provides the Parks and Wildlife Commission authority to set 
certain license fees. 
 
 
  sec.53.8. License Fees Set by Commission. The following license fee amounts 
are effective for the licensing period beginning September 1, 1995: 
 
  (1) resident combination hunting and fishing-$25; 
   
  (2)  resident hunting-$13; 
   
  (3) special resident hunting-$6.00. Nonresident hunters who are under 17 years 
of age on the date of license purchase are designated as residents and may 
purchase a special resident hunting license; 
   
  (4) duplicate hunting-$6.00; 
   
  (5) general nonresident hunting-$250; 
   
  (6) resident trapper-$15; 
   
  (7)  nonresident special hunting-$100; 
   
  (8) resident retail fur buyer-$75; 
   
  (9) resident wholesale fur dealer-$150; 
   
  (10)  nonresident banded bird hunting-$10; 
   
  (11) game breeder-$15; 
   
  (12) hunting boat-$75; 
   
  (13) scientific breeder's permit-$150; 
   
  (14) fur-bearing animal propagation-$75; 
   
  (15)  nonresident trapper-$250; 
   
  (16) commercial game bird breeder-Class I-$150; 
   
  (17) apprentice falconer's permit-$50; 
   
  (18) general falconer's permit-$100; 
   
  (19) master falconer's permit-$150; 
   
  (20) falconer's renewal permit-$50; 
   
  (21) nonresident five-day falconer's permit-$20; 
   
  (22) white-winged dove stamp-$7.00; 
   
  (23) commercial game bird breeder-Class 2-$15; 
   
  (24) wild caught alligator hide tag-$10; 
   
  (25) hunting lease-small-$25; 
   
  (26) hunting lease-medium-$50; 
   
  (27) hunting lease-large-$75; 
   
  (28) archery hunting stamp-$7.00; 
   
  (29) waterfowl hunting stamp-$7.00; 
   
  (30) nonresident retail fur buyer's-$300; 
   
  (31) nonresident wholesale fur dealer's-$500; 
   
  (32) resident fishing-$13; 
   
  (33) special resident sportfishing-$6.00; 
   
  (34) nonresident fishing-$30; 
   
  (35) fishing duplicate-$6.00; 
   
  (36) temporary nonresident fishing-$20; 
   
  (37) Lake Texoma fishing-$7.50; 
   
  (38) saltwater sportfishing stamp-$7.00; 
   
  (39) freshwater trout stamp-$7.00; 
   
  (40) retail fish dealer's-$46; 
   
  (41) saltwater trotline tags-$3.00; 
   
  (42) fishing guide-$75; 
   
  (43) resident commercial fishing boat-$15; 
   
  (44) bait dealer's-$30; 
   
  (45) wholesale fish dealer's-$525; 
   
  (46) wholesale fish dealer's-truck-$325; 
   
  (47) retail fish dealer's-truck-$86; 
   
  (48) commercial fishing boat-Menhaden Only-$3,500; 
   
  (49) Menhaden Fish Plant Permit-$150; 
   
  (50) resident commercial gulf shrimp boat-$275; 
   
  (51) shrimp house operator-$425; 
   
  (52) individual bait shrimp trawl tags-$23; 
   
  (53) bait shrimp dealer's-$115; 
   
  (54) commercial bay shrimp boat license transfer-$195; 
   
  (55) resident commercial bait shrimp boat-$195; 
   
  (56) nonresident general commercial fisherman-$150; 
   
  (57) nonresident general commercial finfish fisherman -$150; 
   
  (58) resident commercial finfish fisherman-$75; 
   
  (59) resident general commercial fisherman-$20; 
   
  (60) nonresident commercial gulf shrimp boat-$1,025; 
   
  (61) finfish import-$75; 
   
  (62) resident and non-resident fishing under 17-no charge; 
   
  (63) resident lifetime combination hunting and fishing -$800; 
   
  (64) resident lifetime hunting-$500; 
   
  (65) resident lifetime fishing-$400; 
   
  (66) resident commercial oyster boat captain's-$25; 
   
  (67) nonresident commercial oyster boat captain's-$100; 
   
  (68) nonresident commercial bait shrimp boat-$525; 
   
  (69) duplicate resident commercial bay shrimp boat license plates-$5. 00; 
   
  (70) duplicate resident commercial bait shrimp boat license plates-$5. 00; 
   
  (71) duplicate resident commercial gulf shrimp boat license plates-$5. 00; 
   
  (72) duplicate nonresident commercial bay shrimp boat license plates-$5.00; 
   
  (73) duplicate nonresident commercial bait shrimp boat license plates-$5.00; 
   
  (74) duplicate nonresident commercial gulf shrimp boat license plates-$5.00; 
   
  (75) duplicate resident commercial fishing boat license plates-$5.00; 
   
  (76) duplicate resident commercial oyster boat license plates-$5.00; 
   
  (77) duplicate nonresident commercial fishing boat license plates-$5. 00; 
   
  (78) duplicate nonresident commercial oyster boat license plates-$5. 00; 
   
  (79) commercial bait shrimp boat license transfer-$195; 
   
  (80) transfer of any licenses (except commercial bay shrimp boat and 
commercial bait shrimp boat licenses) authorized by Chapter 47, 66, 76, or 77, 
Parks and Wildlife Code-$5.00; 
   
  (81) resident commercial mussel and clam fisherman's -$30; 
   
  (82) nonresident commercial mussel and clam fisherman's -$800; 
   
  (83) resident shell buyer's-$100; 
   
  (84) nonresident shell buyer's-$1,500; 
   
  (85) mussel dredge fee-$30; 
   
  (86) muzzleloader stamp-$10; 
   
  (87) nonresident five day special hunting-$35; 
   
  (88) nonresident spring turkey hunting-$100; 
   
  (89) resident commercial bay shrimp boat-$195; 
   
  (90) nonresident commercial bay shrimp boat-$525; 
   
  (91) tarpon tag fee-$100; 
   
  (92) duplicate tarpon tag fee-$25; 
   
  (93) temporary resident sportfishing-$10. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on June 30, 1995. 
 TRD-9509256 
  Paul M. Shinkawa 
 Acting General Counsel 
 Texas Parks and Wildlife Department 
    Effective date: August 14, 1995 
 Proposal publication date: April 28, 1995 
 For further information, please call: (512) 389-4642 
         
               Chapter 65. Wildlife 
  
  Subchapter A. Statewide Hunting and Fishing Proclamation 
 
  The Texas Parks and Wildlife Commission in a regularly scheduled public 
hearing, July 6, 1995, adopts amendments to sec.65.3 and 65.78, concerning the 
use of the sand pump as a legal device for the taking of aquatic organisms, 
without changes to the proposed text as published in the May 30, 1995, issue of 
the Texas Register (20 TexReg 3966). 
 Regulations concerning taking and possession of aquatic species did not provide 
a legal means and method or a possession limit for taking of ghost shrimp 
(Callichirus islagrande) for use as live bait. Department staff ascertained that 
the sand pump and its use, as defined in these rules, in combination with a 
possession limit of 20 ghost shrimp would have minimal negative impact on 
populations of the ghost shrimp. 
 The amendments provide parameters for use of sand pumps in taking of ghost 
shrimp and set the possession limit at 20 ghost shrimp per fisherman. 
 The department conducted a series of eight public hearings regarding use of 
sand pumps as a legal means for taking of ghost shrimp. One respondent spoke in 
favor of the sand pump at the public hearing held in Nueces County. The 
department received no other comment concerning the sand pump as a legal means 
and method for taking of ghost shrimp. 
 The department received no public comment from an association or other group 
concerning the proposed amendments. 
 Department staff ascertained that the sand pump constitutes a biologically 
sound means for collection of ghost shrimp and that a possession limit of 20 
ghost shrimp would have no negative impact on populations of this aquatic 
organism. 
   
  General Provisions 
 
  31 TAC sec.65.3 
 
  The amendment is adopted under the Parks and Wildlife Code, Chapter 61, 
Uniform Wildlife Regulatory Act (Wildlife Conservation Act of 1983), which 
provides the Parks and Wildlife Commission with the authority to establish 
wildlife resource regulations for this state. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on July 14, 1995. 
 TRD-9509296 
  Paul M. Shinkawa 
 Acting General Counsel 
 Texas Parks and Wildlife Department 
    Effective date: August 14, 1995 
 Proposal publication date: May 30, 1995 
 For further information, please call: (512) 389-4642 
         
       
  31 TAC sec.65.72 
 
  The Texas Parks and Wildlife Commission in a regularly scheduled public 
hearing, July 6, 1995, adopts an amendment to sec.65.72, concerning the bag, 
possession, and size limits of red snapper, without changes to the proposed text 
as published in the May 30, 1995, issue of the Texas Register  (20 TexReg 3967). 
 The amendment is necessary to adequately protect the marine resources of the 
state. 
 The amendment implements regulations developed by the Gulf of Mexico Fishery 
Management Council for federal waters where most of the red snapper fishing 
occurs. The amendment insures consistency in regulation and enforcement, and 
reduces confusion for red snapper anglers. In addition, the yield per recruit 
and spawning success of the overfished red snapper stocks would be improved. 
 The department conducted a series of eight public hearings regarding the 
proposed changes in minimum size limit, bag and possession limits for red 
snapper. The department received a total of ten public comments in opposition to 
the proposed changes in red snapper size and bag limits. 
 Commenters opposing the proposed rules questioned the validity of fishery data 
used in making the recommendation; suggested that a five-fish bag limit for red 
snapper did not justify the expense of the fishing trip; and were concerned 
about inconsistency between the commercial and sportfishing interests. 
 The department responds that it works closely with the Gulf Council and the 
National Marine Fisheries Service on the scientific assessment of red snapper 
stocks. While questions are routinely raised concerning the best data sets and 
models for use in these assessments, the department believes the current 
conditions in the red snapper fishery justifies more conservative harvest 
regulations; the red snapper recovery efforts to date have actually led to an 
increased success rate for anglers, so that while keeping more than five red 
snapper will not be allowed, the probability of catching five red snapper on a 
trip will be improved; and the new size and bag limits apply equally to 
recreational and commercial fishermen in Texas waters. Commercial fishermen in 
federal waters are restricted by quotas and closed seasons. The department made 
no changes as a result of the comments. 
 The department received no comment from an association or other group 
concerning the proposed amendment. 
 The amendment is adopted under the Parks and Wildlife Code, Chapter 61, Uniform 
Wildlife Regulatory Act (Wildlife Conservation Act of 1983) which provides the 
Parks and Wildlife Commission with the authority to establish wildlife resource 
regulations for this state. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on July 14, 1995. 
 TRD-9509298 
  Paul M. Shinkawa 
 Acting General Counsel 
 Texas Parks and Wildlife Department 
    Effective date: August 14, 1995 
 Proposal publication date: May 30, 1995 
 For further information, please call: (512) 389-4642 
         
         
  Seasons and Bag Limits-Fishing Provisions 
 
  31 TAC sec.65.78 
 
  The amendment is adopted under the Parks and Wildlife Code, Chapter 61, 
Uniform Wildlife Regulatory Act (Wildlife Conservation Act of 1983), which 
provides the Parks and Wildlife Commission with the authority to establish 
wildlife resource regulations for this state. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on July 14, 1995. 
 TRD-9509297 
  Paul M. Shinkawa 
 Acting General Counsel 
 Texas Parks and Wildlife Department 
    Effective date: August 14, 1995 
 Proposal publication date: May 30, 1995 
 For further information, please call: (512) 389-4642 
         
                 
  Title 37. PUBLIC SAFETY AND CORRECTIONS 
 Part VI. Texas Department of Criminal Justice 
  
  The Texas Department of Criminal Justice adopts the repeal of sec.sec.152.1, 
152.9, 152.21, and 152.31 and new sec.152.6, concerning general allocation 
provisions. Section 152.6 is adopted with changes to the proposed text as 
published in the May 16, 1995, issue of the Texas Register  (20 TexReg 3633). 
Sections 152.1, 152.9, 152.21, and 152.31 are adopted without changes and will 
not be republished. 
 This rule adoption takes affect due to the amendment of Texas Government Code, 
sec.499.071, 74th Legislature, Regular Session, to repeal the admissions 
allocation formula and require a scheduled admissions policy. 
 The adopted sections will enable timely acceptance into state facilities of 
persons with felony convictions. 
 For clarification purposes, the agency is changing the chapter title and 
incorporating subchapters for the remaining sections that are not being 
repealed. 
 No comments were received regarding adoption of the repeals and new section. 
   Chapter 152. General Allocation Provisions 
  
  37 TAC sec.sec.152.1, 152.9, 152.21, 152.31 
 
  The repeals are adopted under the Government Code, sec.492.013, which grants 
general rulemaking authority to the Board, sec.499.071 (as amended by the 74th 
Legislature, Regular Session), and  sec.499.121(c), which requires the 
institutional division to accept inmates from county jails within 45 days of 
reaching paper-ready status. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on July 24, 1995. 
 TRD-9509323 
  Carl Reynolds 
 General Counsel 
 Texas Department of Criminal Justice 
    Effective date: August 16, 1995 
 Proposal publication date: May 16, 1995 
 For further information, please call: (512) 463-9693 
         
       
  Subchapter A. Prison Admissions 
 
  37 TAC sec.152.6 
 
  The new section is adopted under the Government Code, sec.492.013, which 
grants general rulemaking authority to the Board, sec.499.071 (as amended by the 
74th Legislature, Regular Session), and  sec.499.121(c), which requires the 
institutional division to accept inmates from county jails within 45 days of 
reaching paper-ready status. 
 
 
  sec.152.6. Transfer Facility Admissions and Transfers.  The institutional 
division shall apply the prison admissions policy to admissions into transfer 
facilities. The division shall transfer inmates from transfer facilities into 
prison units of the institutional division within the time period required by 
state law. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on July 24, 1995. 
 TRD-9509324 
  Carl Reynolds 
 General Counsel 
 Texas Department of Criminal Justice 
    Effective date: August 16, 1995 
 Proposal publication date: May 16, 1995 
 For further information, please call: (512) 463-9693 
         
             Chapter 163. Community Justice Assistance Division Standards 
  
  The Texas Department of Criminal Justice-Community Justice Assistance Division 
(TDCJ-CJAD) adopts amendments to sec. sec.163.3, 163.5, 163.21, 163.25, 163.31, 
163.33, 163.35, 163.37, 163.39, 163.41, 163.43, and 163.45, new sec.163. 42 and  
sec.163.47 and the repeal of sec.163.23, concerning Community Justice Assistance 
Division Standards, without changes to the proposed text as published in the May 
16, 1995, issue of the Texas Register (20 TexReg 3634). 
 These amendments provide for: complaint notices to be placed in CSCDs; a 
description of what constitutes core services; methods for measuring the success 
of programs; elimination of four tier supervision; and increasing the deadline 
from 45 days to 60 days to complete case classification and strategies for case 
supervision. 
 The amendments also provide a 90 day extension in which to attain the required 
40 hours annual training; Substance Abuse Felony Punishment (SAFPF) training for 
officers who supervise SAFPF participants; and TDCJ-CJAD to provide CSCDs with 
information on HIV-AIDS. The residential standards provide for feasibility 
studies; requirements for public meetings; placement and discharge criteria; and 
the criteria for residential policies and procedures manual. The term 
"probation" is changed to "community supervision," "probation officer" is 
changed to "community supervision officer," "probationers" is changed to 
"offenders," and "CJAD" is changed to "TDCJ-CJAD," in order to provide 
consistent and updated terminology known statewide. These sections are being 
amended as part of the recodification process required for implementing 
legislative mandates. The TDCJ-CJAD proposes new sec.163.42 and sec.163.47, 
concerning what constitutes substantial noncompliance with TDCJ-CJAD standards 
and a procedure for contested matters with TDCJ-CJAD. These new standards are 
part of the recodification process required for implementing legislative 
mandates. The TDCJ-CJAD proposes the repeal of sec.163.23 concerning the 
membership of Community Justice Councils and Community Justice Task Forces. This 
prior standard of TDCJ-CJAD is being repealed as part of the recodification 
process as redundant of statutory language. 
 The adoption of the sections represent an effort to improve community 
supervision resulting in increased efficiency of operations of the TDCJ-CJAD for 
the next five years. 
 No comments were received regarding adoption of the proposed sections. 
   
  37 TAC sec.sec.163.3, 163.5, 163.21,  163.25, 163.31, 163.33, 163.35, 163.37, 
163.39, 163.41, 163.42, 163.43, 163.45, 163.47 
 
  The new sections and amendments are permitted by Code of Criminal Procedure, 
Article 42.13, sec.2(a), which gives the Board of Criminal Justice authority to 
adopt reasonable rules establishing: minimum standards for programs, community 
corrections facilities and other facilities, equipment, and other aspects of the 
operation of community supervision and corrections departments; a list and 
description of core services that should be provided by each department; methods 
for measuring the success of community supervision and corrections programs; and 
a format for community justice plans. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on July 24, 1995. 
 TRD-9509325 
  Carl Reynolds 
 General Counsel 
 Texas Department of Criminal Justice 
    Effective date: August 16, 1995 
 Proposal publication date: May 16, 1995 
 For further information, please call: (512) 463-9693 
         
       
  37 TAC sec.163.23 
 
  The repeal is permitted by Code of Criminal Procedure, Article 42.13, 
sec.2(a), which gives the Board of Criminal Justice authority to adopt 
reasonable rules establishing: minimum standards for programs, community 
corrections facilities and other facilities, equipment, and other aspects of the 
operation of community supervision and corrections departments; a list and 
description of core services that should be provided by each department; methods 
for measuring the success of community supervision and corrections programs; and 
a format for community justice plans. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on July 24, 1995. 
 TRD-9509326 
  Carl Reynolds 
 General Counsel 
 Texas Department of Criminal Justice 
    Effective date: August 16, 1995 
 Proposal publication date: May 16, 1995 
 For further information, please call: (512) 463-9693 
         
         Chapter 165. State Aid Distribution and Monitoring 
  
  37 TAC sec.sec.165.41, 165.43, 165.60-165.67 
 
  The Texas Department of Criminal Justice-Community Justice Assistance Division 
(TDCJ-CJAD) adopts the repeal of sec. sec.165.41, 165.43, and 165.60-165. 67, 
concerning the administration and funding of Community Corrections Programs and 
all aspects of the Performance Reward Program, without changes to the proposed 
text as published in the May 16, 1995, issue of the Texas Register (20 TexReg 
3651). 
 The repeals are adopted as part of the recodification process to eliminate 
obsolete or redundant standards. 
 The adopted repeals represent an effort to improve community supervision 
resulting in increased efficiency of operations of the TDCJ-CJAD for the next 
five years. 
 No comments were received regarding adoption of the repeals. 
 The repeals are permitted by Code of Criminal Procedure, Article 42.13, 
sec.2(a), which gives the Board of Criminal Justice authority to adopt 
reasonable rules establishing: minimum standards for programs, community 
corrections facilities and other facilities, equipment, and other aspects of the 
operation of community supervision and corrections departments; a list and 
description of core services that should be provided by each department; methods 
for measuring the success of community supervision and corrections programs; and 
a format for community justice plans. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on July 24, 1995. 
 TRD-9509327 
  Carl Reynolds 
 General Counsel 
 Texas Department of Criminal Justice 
    Effective date: August 16, 1995 
 Proposal publication date: May 16, 1995 
 For further information, please call: (512) 463-9693 
         
             
  TITLE 40. SOCIAL SERVICES AND ASSISTANCE 
 Part I. Texas Department of Human Services 
  Chapter 11. Food Distribution and Processing 
  
  Food Distribution Program 
 
  40 TAC sec.11.107 
 
  The Texas Department of Human Services (DHS) adopts an amendment to sec.11. 
107, with changes to the proposed text as published in the May 19, 1995, issue 
of the Texas Register  (20 TexReg 3706). 
 The justification for the amendment is to allow recipient agencies who meet the 
criteria to receive commodities by direct shipment instead of commercial 
distribution. Except for recipient agencies that were already receiving direct 
shipments when commercial distribution was implemented, all recipient agencies 
must use commercial distribution. 
 The amendment will function by reducing the warehousing and distribution costs 
of recipient agencies who qualify for direct shipment. However, because 
distributors will probably increase their rates to make up for lost volume, 
costs for recipient agencies who must continue to use commercial distribution 
will probably increase. 
 No written comments were received regarding adoption of the amendment. Special 
Nutrition Program (SNP) staff received a comment by telephone from an individual 
representing Affiliated Foods, the commercial distributor of commodities in 
Amarillo and the surrounding area. The individual strongly opposed the proposed 
change, stating that allowing direct shipments of donated foods will hurt the 
commercial distributors and, perhaps, drive some smaller schools out of the 
commodity program. Before publication in the Texas Register, SNP staff received 
several comments from interested parties. Three school districts (Angleton ISD, 
Nederland ISD, and Beaumont ISD) commented in support of the proposed change. 
Also commenting in support of the proposed change, on behalf of 20 Rio Grande 
Valley school districts, was the Valley Association of District Managed Food 
Service Administrators. In supporting the proposed rule, the Valley Association 
recommended that DHS allow each school district the option of whether or not 
they wish their diverted commodity product to be shipped to their designated 
commercial warehousing and distribution system or to their choice of storage 
facilities. 
 Two commercial distributors and three school districts opposed the proposed 
change. Professional Food Systems (PFS), serving the Houston, Arlington, and El 
Paso areas, and Grocery Supply Company, serving the San Antonio area, agreed 
with Affiliated Foods' comments that the direct shipment of commodities to 
school districts would adversely affect their businesses and could cause smaller 
school districts to leave the program. The school districts expressing negative 
comments were Aransas Pass ISD, Los Fresnos CSD, and Kingsville ISD. Their 
concern is that schools which do not meet criteria for direct shipments will 
incur increased costs. 
 DHS is adopting paragraph (d)(7) with a change. DHS has deleted the phrase 
"designate in its agreement with DHS only one facility to receive shipments of 
commodities." 
 The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 
and 33, which provides the department with the authority to administer public 
and nutritional assistance programs. 
 The amendment implements the Human Resources Code, sec. sec.22.001-22-024 and 
sec.sec.33.001-33.024. 
 
 
  sec.11.107. Warehousing and Distribution of Donated Foods. 
 
  (a)-(b)  (No change.) 
   
  (c) DHS has contracted for a commercial warehousing and distribution system. 
Recipient agencies must operate under the commercial warehousing and 
distribution system, unless they qualify for direct shipments of donated food as 
specified in subsections (d)-(f) of this section. 
   
  (d)  For an individual recipient agency to qualify for direct shipments of 
United States Department of Agriculture (USDA)-donated commodities, the 
recipient agency must: 
 
  (1) enter into a written agreement with DHS to receive direct shipments of 
donated food; 
   
  (2) accept delivery of a single product in a quantity of no less than one 
truckload. DHS will allocate the food USDA makes available to Texas on a "fair-
share" basis; a fair share that is less than 1/2 a truckload will be rounded to 
zero and a fair-share that is at least 1/2 of a truckload will be rounded to a 
truckload; 
   
  (3)  have storage facilities for dry, chilled, and frozen products; 
   
  (4)  meet USDA and DHS requirements for receiving and storing commodities, 
including requirements for sanitation, odor control, and temperature; 
   
  (5)  ensure availability of storage facility staff to schedule appointments 
and receive shipments throughout the year, including summer and holidays; 
   
  (6)  provide DHS with three months advance notice when ordering or changing 
orders for commodities; 
   
  (7) provide DHS with four months advance notice before changing a direct 
shipment destination; 
   
  (8) process and submit receiving orders (ONRRs) to DHS daily; 
   
  (9) comply with the requirements of Food and Nutrition Services (FNS) 
Instruction 709-5, titled "Shipment and Receipt of Food," and comply with other 
requirements for receiving and storing commodities as specified by DHS; 
   
  (10) allow USDA, DHS, and their representatives to inspect and monitor 
warehousing operations and to conduct inventories and audits; 
   
  (11) provide to DHS, during the warehouse approval process, a copy of a 
current health inspection certificate for the warehouse facility; 
   
  (12) maintain a physical and book inventory of all commodities; 
   
  (13) maintain records for processed foods according to DHS specifications; 
   
  (14) retain DHS-required records for three years and 90 days after the date 
the contract ends or, if applicable, until all litigation, claims, and audits 
are resolved; 
   
  (15) submit all reports required by DHS; 
   
  (16) accept all scheduled shipments, regardless of the shipment or loading 
method; 
   
  (17) have sufficient warehouse space to accommodate all inbound freight; and 
   
  (18) assume responsibility for all commodities in the recipient agency's care 
and control, including financial responsibility and bearing the risk of loss, 
damage, and theft. 
     
  (e) For a cooperative representing recipient agency schools, such as school 
co-ops, to qualify for direct shipments of USDA-donated commodities, the co-op 
must: 
 
  (1) meet the requirements for individual recipient agencies specified in 
subsection (d) of this section; 
   
  (2) provide to DHS a copy of a legal agreement, signed by representatives of 
each recipient agency and meeting the requirements of state laws governing 
interlocal cooperation contracts; 
   
  (3) agree to use DHS specifications to equitably allocate USDA-donated 
commodities to each member of the school co-op; 
   
  (4) follow DHS specifications for submitting worksheets for ordering 
commodities; 
   
  (5) maintain for each recipient agency in the school co-op an ongoing planned 
assistance level (PAL) balance and to report it monthly, as specified by DHS; 
   
  (6) provide proof of purchase of "all risk" escalating insurance with coverage 
equal to or greater than the cost value of commodities on hand at any time or, 
as a condition of ongoing eligibility, provide proof that such insurance remains 
in effect; and 
   
  (7) meet local, state, and federal requirements for temperature and sanitation 
when delivering commodities. 
     
  (f) For an organization, association, or a combination of two or more non-
school, recipient agencies, such as a non-school co-op, to qualify for direct 
shipments of USDA- donated commodities, the non-school co-op must: 
 
  (1)  meet the requirements for individual recipient agencies specified in 
subsection (d) of this section; 
   
  (2) agree to use DHS specifications to equitably allocate USDA-donated 
commodities to each member of the non-school co-op; 
   
  (3) follow DHS specifications for submitting worksheets for ordering 
commodities; 
   
  (4) provide proof of purchase of "all risk" escalating insurance with coverage 
equal to or greater than the cost value of commodities on hand at any time or, 
as a condition of ongoing eligibility, provide proof that such insurance remains 
in effect; and 
   
  (5)  meet local, state, and federal requirements for temperature and 
sanitation when delivering commodities. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on July 25, 1995. 
 TRD-9509284 
  Nancy Murphy 
 Section Manager, Media and Policy Services 
 Texas Department of Human Services 
    Effective date: September 1, 1995 
 Proposal publication date: May 19, 1995 
 For further information, please call: (512) 450-3765