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 7. BANKING AND SECURITIES PART VI. Credit Union Department CHAPTER 93. Administrative Proceedings General Rules 7 TAC sec.93.17 The Credit Union Commission adopts an amendment to sec.93.17, concerning administrative procedures associated with hearings to appeal certain administrative actions, without changes to the proposed text as published in the February 7, 1997, issue of the Texas Register (22 TexReg 1365). The amendment deletes any reference to suspension of credit union operations since that enforcement action is no longer authorized by statute. The amendment also conforms the rule to the requirements of sec.10.01 of the Act regarding appeals of conservation orders. There were no comments received regarding adoption of the rule. The amendment is adopted under the Texas Civil Statutes annotated, Article 2461- 11.07, which provides the Credit Union Commission with the authority to adopt reasonable rules necessary for the administration of the Texas Credit Union Act. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 22, 1997. TRD-9705380 Harold E. Feeney Commissioner Credit Union Department Effective date: May 12, 1997 Proposal publication date: February 7, 1997 For further information, please call: (512) 837-9236 CHAPTER 97. Commission Policies and Administrative Rules Fees 7 TAC sec.97.113 The Credit Union Commission adopts an amendment to sec.97.113, concerning the payment, at the time of conversion, of operating fees by a credit union organized under the laws of the United States or of another State that converts to a credit union organized under the laws of this State, without changes to the proposed text as published in the February 21, 1997, issue of the Texas Register (22 TexReg 1871). The amendment is necessary to ensure that converting credit unions pay their fair share of the costs associated with the regulation and supervision of Texas chartered credit unions. There were no comments received regarding the adoption of the rule. The amendment is adopted under the Texas Civil Statutes annotated, Article 2461- 11.07, which provides the Credit Union Commission with the authority to adopt reasonable rules to prescribe all supervision fees, charges, and revenues required to be paid by credit unions authorized to do business under the Texas Credit Union Act. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 22, 1997. TRD-9705381 Harold E. Feeney Commissioner Credit Union Department Effective date: May 12, 1997 Proposal publication date: February 21, 1997 For further information, please call: (512) 837-9236 TITLE 10. COMMUNITY DEVELOPMENT PART I. Texas Department of Housing and Community Affairs CHAPTER 50.Low Income Tax Credit Rules-1996 10 TAC sec.sec.50.1-50.15 The Texas Department of Housing and Community Affairs (the Department) adopts the repeals of sec.sec.50.1-50.15, concerning the Low Income Tax Credit Rules, without changes, to the proposed text as published in the March 21, 1997, issue of the Texas Register (22 TexReg 2923). The sections describe requirements which provides for credits against federal income taxes for owners of qualified low income rental housing. The repeals are necessary in order to comply with the new regulations enacted under the Internal Revenue Code of 1986, sec.42 as amended. No comments have been received regarding adoption of the repeals. The repeals are adopted pursuant to the authority of the Texas Government Code, Chapter 2306; Acts of the 73rd Legislature, Senate Bill 45, Chapter 141, effective May 16, 1993; and Acts of the 73rd Legislature, Senate Bill 1356, Chapter 725, effective September 1, 1993; and the Internal Revenue Code of 1986, sec.42 as amended, which provides the Department with the authority to adopt rules governing the administration of the Department and its programs and Executive Order AWR-91-4 (June 17, 1991). which provide this Department with the authority to make housing credit allocation in the State of Texas. The Texas Government Code, Chapter 2306, if affected by these adopted repeals. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 23, 1997. TRD-9705428 Larry Paul Manley Executive Director Texas Department of Housing and Community Affairs Effective date: May 13, 1997 Proposal publication date: March 21, 1997 For further information, please call: (512) 475-3726 The Texas Department of Housing and Community Affairs proposes the adoption new sec.sec.50.1-50.15, concerning of the Qualification Allocation Plan and Rules (the Rules), with changes to the proposed text as published in the March 21, 1997, issue of the Texas Register (22 TexReg 2924) to provide procedures for the allocation, by the Department, of low income housing tax credits available under federal income tax laws to owners of qualified low income rental housing projects. The new sections are being adopted to provide procedures for the allocation, by the Department, of low income housing tax credits available under federal income tax laws to owners of qualified low income rental housing projects. SUMMARY OF COMMENTS RECEIVED UPON PUBLICATION OF THE PROPOSED RULES IN THE Texas Register ON MARCH 21, 1997, AND COMMENTS MADE AT PUBLIC HEARINGS HELD BY THE DEPARTMENT. On March 21, 1997, the proposed Rules was published in the Texas Register thereby commencing the required 30 day comment period. Said comment period ended on April 20, 1997. The Department distributed over 1,500 Draft Availability Notices of the proposed 1997 Rules. Staff received 400 requests for copies of the proposed Rules from the public. During the public comment period the Department received both oral and written comments from the public. The scope of public comments concerning the Rules pertain to the following issues: Modification of Definitions (Sec. 50.2) Intermediary Costs (Sec. 50.2) It was suggested that the definition be changed to classify appraisal, environmental assessment, and engineering fees as construction soft costs rather than Intermediary Costs. It was argued that these items are associated with construction and debt financing as opposed to the syndication of credits. Department's Response - To the extent that these costs are incurred with the sale of the tax credits, they will be considered Intermediary Costs. Therefore the entity which is incurring the costs becomes the guiding issue. If the costs are incurred by the Owner in the course of constructing the development, then the costs may be classified as construction soft costs. The definition shall remain unchanged. Committee's Recommendation - The Department's response accepted. Prison Community (Sec. 50.2) It was requested that the definition be clarified to explain where information about MSAs and PSAs can be found and what qualifies as a "major" MSA. Department's Response - The Department concurs. It is proposed that the definition read as follows: "A city or town which is located outside of a Metropolitan Statistical Area (MSA) or Primary Metropolitan Statistical Area (PMSA) and was recently awarded a state prison as set forth in the Reference Manual." Committee's Recommendation - The Department's response accepted. Rural Development (Sec. 50.2) It was requested that the 20,000 population limit in the Rural Development definition be changed to 25,000 as TxRD may continue to make loans to cities at the higher population level. Department's Response - The Department believes that the current definition does not preclude any areas to which TxRD would obligate funds. The definition will remain unchanged. Committee's Recommendation - The Department's response accepted. Scattered Site (Sec. 50.2) A great deal of public comment focused on the Scattered Site definition. Representatives with interests in developing projects in rural areas were concerned that rehabilitation of many existing TxRD projects would be prohibited because they would fall under the Scattered Site criteria. The following modifications to the definition were proposed: 1. No project with obligated TxRD financing would be considered a scattered site. 2. The Department would consider a waiver request for this rule from: a. an existing apartment project of at least 16 units that is comprised of duplexes, triplexes, or fourplexes. b. Rural apartment projects. Department's Response - The Department will modify the definition to allow for existing projects that are receiving federal subsidies. It is proposed that the definition read as follows: "A group of buildings, (excluding apartments and townhomes) which would (but for their lack of proximity) qualify as a Project for purposes of the Code and which are all rent restricted, owned by the same Project Owner and financed under a common plan. This shall include all single family detached housing, duplexes, triplexes and fourplexes, except fourplexes in clusters of four or more on contiguous property under common ownership, management and Control. An existing Rural Project that is federally assisted within the meaning of sec.42(d)(6)(B) of the Code and is under common ownership, management and Control shall not be considered as a Scattered Site Project. For qualifying Rural Projects, construction activity must be rehabilitation only with no expansion to the existing development. Rural Projects purchased from HUD will also qualify as being federally assisted." Committee's Recommendation - The Department's response accepted. Modification of Set-asides (Sec. 50.5(a)) A number of comments were made that the Nonprofit set-aside should be increased to 20%. One reason given for this increase was that the federal emphasis on developing the capacity of nonprofit and community development groups has greatly increased the number of nonprofit organizations. It was suggested that in the absence of the HUD construction program, many PHAs are looking for alternate ways to meet the need for affordable housing. It was requested that public housing authorities have a 10% set-aside. Department's Response - The Department believes that the current set-aside percentage is sufficient to accomplish the Program's goals. It should be noted that nonprofit projects can also receive credits from the General Projects Set- aside and the Rural/Prison Community Set-aside. The section will remain unchanged. Committee's Recommendation - The Department's response accepted. Applicants Financial Statements (Sec. 50.6(a)(5)) A concern was raised over the level of expense generated by the requirement that the Applicant's unaudited Financial Statements be prepared by a CPA if their audited statements were over a year old. It was thought that being unaudited, the statement would not provide a higher level of verification than if the applicant submitted their own statement. Department's Response - The Department concurs and has rewritten this section to in favor of Certified Financial Statements. It is proposed that the section read as follows: "(5) EXHIBIT 105: Using Exhibit 105 in the Application Submission Manual, provide a current financial statement for each Applicant (as defined in the QAP). Statement must not be more than 12 months old. If submitting partnership and corporate financials in addition to the individual statements; the Audited Financial Statements must not be older than 12 months and the Certified Statements must not be older than 90 days." Committee's Recommendation - The Department's response accepted. Previous Participation Certificate (Sec. 50.6(a)(6)) It was requested that the section be clarified to describe who is responsible for supplying the Department with the Previous Participation Certificate. The definition of the "Development Team Members" was thought to be too broad in its current form. Department's Response - The Department concurs that the language should be modified. It is proposed that the section read as follows: "(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. This form must be completed with respect to the ownership entity, general partner, general contractor and their principals." Committee's Recommendation - The Department's response accepted. Qualified Nonprofit Organization (Sec. 50.6(a)(11)) It was requested that the Qualified Nonprofit Organization should be specifically designated as a 501(c)(3) or (4) within the body of the IRS determination letter as opposed to being simply described under these sections of the Code. It was also suggested that Sec. 50.6(a)(11) be amended to require the Qualified Nonprofit supply corporate documents that demonstrate that they have development of affordable housing as a specific purpose as required by the Code. Department's Response - The Department concurs with the requested changes to this section and agrees to make the following necessary changes. It is proposed that the section read as follows: "(11) EXHIBIT 111: Label as EXHIBIT 111, for Applicants seeking credits from the Non Profit Set-Aside, documentation that the Applicant is a Qualified Nonprofit Organization pursuant to the Code, sec.42(h)(5)(C), as evidenced by: (A) an IRS determination letter which states that the Qualified Non Profit Organization is a 501(c)(3) or (4) entity, (B) if the project involves a joint-venture between a Qualified Non Profit Organization and a for profit, an agreement which shows that the nonprofit Controls the Project (directly or indirectly) and will materially participate (within the meaning of the Code sec.469(h) in the development and operation of the Project throughout the Compliance Period, and (C) a current list of all directors and officers of the nonprofit organization, along with information pertaining to their primary occupations and disclosing any relationship; as an Affiliate or otherwise, with other members of the Applicant and/or any members or Affiliate of the Development Team, including any market analyst, CPA, appraiser, or other professional performing any services with respect to the Project and/or the subject Property. (D) a copy of the Articles of Incorporation which specifically states the fostering of affordable housing is one of the entities exempt purposes." Committee's Recommendation - The Department's response accepted. QCT (Sec. 50.6(c)(3)(J)) Concern was expressed over the validity of allowing points for mixed income projects located in QCTs. Because of the low median incomes in QCTs it seems unlikely that higher rents than the LIHTC Program allows could be charged. Department's Response - The Department appreciates the public comments received on this issue and has given them consideration. While there are good points to be made on both sides of this issue, the Department believes that the language as currently structured promotes development in federally targeted areas and is consistent with federal policy. Committee's Recommendation - The Department's response accepted. QCT (Sec. 50.6(c)(3)(J)) It was stated that because of the intense competition for tax credits and the application expense, not one investor would take a chance on a project that was not in a QCT. The comment stated that "according to the investors, starting 10 points down was too much risk in the current tax environment." Department's Response - The Department disagrees with this concern as many projects located outside of QCTs earn tax credit allocations. It must be emphasized that points are not the sole determination of allocations. The section will remain unchanged. Committee's Recommendation - The Department's response accepted. Housing Needs Characteristics (Sec. 50.6(c)(2)) Concern was expressed that this section, while providing points for housing in areas that have higher percentages of households living below the poverty level, penalizes groups with housing integration funds (whose goal is to enable persons living in these high poverty areas to gain access to more affluent areas). It was requested that the QAP provide points for "Developments subsidized in part with Court-approved housing desegregation set-aside funds for at least 15% of its units and located in counties in which less than 20% of the households are below the poverty level." It was requested that the Board evaluate, as one of its discretionary factors, whether or not a project is participating in a Court Approved Desegregation Plan. Department's Response - The Department would reiterate that items such as this fall within the Board's discretionary authority and that points are not the only determination in allocating credits. The existing language will remain unchanged. Committee's Recommendation - The Department's response accepted. Development Composition (Sec. 50.6(c)(3)(D)) It was suggested that the language "Demographic/Feasibility should dictate this need" for a unit mix conducive to housing large families should be added to the section. It was also requested that the 15% election for 5 points should be decreased to 10%. Department's Response - The Department conducts an intensive feasibility analysis of every project to ensure that the proposed units are in line with market demand. The current percentage qualification is reasonable. The section will remain unchanged. Committee's Recommendation - The Department's response accepted. Four Plexes (50.6(c)(3)(M)) It was suggested that for aesthetic and cost containment purposes that the item's language be changed to read "Proposed development is comprised of eight- plexes in clusters of 2 of more or clusters of four-plexes in clusters of 4 or more. In addition to the four-plexes, it was suggested that six-plex and eight-plex configurations should also be considered as a way to provide a low density environment. The letter stated that cost savings of $5,000 per unit were gained by changing from a four-plex to an eight-plex plan. The savings came from civil engineering, plumbing, foundation, roofs and end walls. Department's Response - The Department feels that the increase in density allowance to 16 units per acre in the current language will offset the cost associated with four-plexes. The section will remain unchanged. Committee's Recommendation - The Department's response accepted. Energy Efficiency (50.6(c)(3)(E)) Comment was received that evaporative cooling systems should be considered as an energy efficient item in communities where it is appropriate such as El Paso. Department's Response - Department concurs with this request. It is proposed that the section read as follows: (E) EXHIBIT 206: Label as Exhibit 206A, for new Construction, a letter from the architect which certifies that at least four 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) Insulation which exceeds code for walls and ceilings (iii) Solar Screens (iv) Gas heating system with a minimum 80% flue efficiency (v) Energy efficient air conditioning system with a 10 SEER or above (vi) Dual pane insulating windows (vii) Evaporative cooling system Committee's Recommendation - The Department's response accepted. Successful Operation of Affordable Housing (Sec. 50.6(c)(4)(A)) It was suggested the following language be added to this section: " Project Owner or General Partner has participated in the development of at least 100 units of affordable housing or market rate units. (5 points) Another individual commented that it was inequitable to first time participants for such a high level of points to be awarded for previous experience. It was suggested that the points awarded for this item be decreased and reallocated in the housing characteristics, project characteristics and development location categories. Department's Response - Because of the importance that the Department places on previous experience the point value has been increased and consolidated. However the Department will add language to broaden the experience levels for which points may be awarded. This change will provide an opportunity for Applicants to earn points if the owner, general partner or general contractor has completed 100 affordable residential units or a comparable commercial project. It is proposed that the section read as follows: "EXHIBIT 210: Label as EXHIBIT 210, evidence that the ownership entity, general partner, general contractor or its principals have a record of successfully constructing or developing residential/commercial property. Evidence must be in the form of the AIA Document A111 - Standard Form of Agreement Between Owner & Contractor, the AIA Document G704 - Certificate of Substantial Completion, IRS Form 8609, Development Agreements and Partnership Agreements, HUD Form 9822, or other appropriate documentation verifying that the ownership entity, general partner, general contractor or their principals have the required experience. (NOTE: The names on the forms and agreements must tie back to the ownership entity, general partner, general contractor and their respective principals as listed in the application.) Property Owners in noncompliance with any of the aforementioned programs, but which are not barred from having an Application recommended by sec.50.4(f), or which have had a continuing pattern of defaults and foreclosures are ineligible to claim the points for this item (10 points). The term "successfully" is defined as acting in a capacity as the general contractor or developer of; (i) at least 100 multifamily residential units or comparable commercial property; or (ii) at least 35 multifamily residential units or comparable commercial property if the project applying for credits is a Rural Project." Committee's Recommendation - The Department's response accepted. HUBs (Section 50.6(c)(4)(B)) It was requested that the Department require third party reviews to certify that HUBs receiving HUB points are actually participating in developing the tax credit program. Department's Response - The Department may request third party confirmation if there is reasonable doubt to believe that the HUB has not participated in developing the project. The section will remain unchanged. Committee's Recommendation - The Department's response accepted. HUBs (Section 50.6(c)(4)(B)) Concern was expressed that as a practical matter requiring a HUB to be the sole guarantor effectively eliminates a vast majority of HUBs from participating in the program. The commentator also pointed out than no other members of the development team were required to be the sole guarantor. Department's Response - The Department agrees with the concern and will modify its interpretation so that HUBs may be a co-guarantor. The section will remain unchanged. Committee's Recommendation - The Department's response accepted. Tenant Populations with Special Housing Needs (Sec. 50.6(c)(6)(A)) The Department was urged to re-examine the provision dealing with housing for the elderly. He suggested that, as currently written, the age requirement of 62 years may be a violation of the Fair Housing Act. Department's Response - The Department does not believe the current language is a violation of the Fair Housing Act. The section will remain unchanged. Committee's Recommendation - The Department's response accepted. Tenant Populations with Special Housing Needs (Sec. 50.6(c)(6)) It was requested that the point system be modified to add flexibility to design programs that meet local needs such as El Paso's need for housing for large families. This would be to offset the current system which favors certain needs such as elderly, handicapped and the chronically mentally ill. Department's Response - The Department would reiterate that geographical distribution is one such factor that is taken into consideration when making the determination to allocate the credits. The existing language will remain unchanged. Committee's Recommendation - The Department's response accepted. Tenant Populations with Special Housing Needs (Sec. 50.6(c)(6)(B)) One commentator requested the Department clarify the language dealing with handicapped accessibility. It was suggested that units targeted for tenants with mental disabilities be set-aside as is done for tenants with physical disabilities. Department's Response - The Department concurs with this request. It is proposed that the section shall read as follows: "(B) EXHIBIT 213: Label as EXHIBIT 213, 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 Persons with Disabilities (ANSI A117.1 - 1992 or successor) and will conform to the Fair Housing Act. "Equipped" means that features that make the Units fully usable to such persons are installed in the Units at the time of construction or provisions have been included in construction for easy modification to meet the ANSI A117.1 standards. The Department will require a minimum of two years during which set-aside units must either be occupied by tenants who are physically or mentally disabled or held vacant while being marketed to such tenants. If after this two year period, the Project Owner is unable to locate qualified Persons with disabilities following a good-faith effort, the units may be rented to tenants without disabilities, provided that the next available unit (from among those set-aside for Persons with disabilities) shall first be made available to Persons with disabilities. To comply with this provision, all Project Owners must maintain a waiting list of qualified tenants with disabilities throughout the Compliance Period. When such qualifying Units become available, Project Owners must contact persons on the waiting list and/or provide notice to local service providers that such Units are available." (i) 6% to 10% of Units are set-aside for persons with physical or mental disabilities. (4 points) (ii) 11% to 15% of Units are set-aside for persons with physical/mental disabilities. (6 points) (iii) 16% + of Units are set-aside for persons with physical/mental disabilities. (8 points) Committee's Recommendation - The Department's response accepted. Tenant Populations with Special Housing Needs (Sec. 50.6(c)(6)(B)) It was requested that the use of universal design and visitability standards be encouraged in the QAP. A universal design feature is any component of a house that can be used by everyone regardless of their level of ability or disability. Visitability is the ability of an individual to have access to homes of friends and family. The letter suggested that an additional threshold criteria be added requiring the use of universal design and visitability standards in all ground floor units. An alternative was to add similar language as a new item in the "Tenant Needs with Special Housing Needs" Selection Criteria with an election value of 8 points. It was stipulated that the extra cost incurred by using these design features is minimal. A list of Universal Design Features developed by Concrete Change, an advocacy group in Atlanta, was provided. Department's Response - The Department believes that the current ANSI standards have addressed the requirements of the Universal Design standards. Committee's Recommendation - The Department's response accepted. Public Housing Waiting List (Sec. 50.6(c)(7)) It was requested that points be provided for setting aside a percentage of the units specifically for tenants from the Public Housing Waiting list. Points could be awarded according to the percentage amount committed. This would serve to deconcentrate poverty and promote distribution of households into more economically integrative settings. Department's Response - The Department believes that the current requirement of having the development market the availability of units to PHAs is sufficient to accomplish this goal. Committee's Recommendation - The Department's response accepted. Substantial Readiness to Proceed (Sec. 50.6(c)(8)) Concern was expressed by one correspondent over the requirement that debt commitments must be from regulated financial institutions. The letter explained that the writer's company is an active lender to LIHTC developments of "competitively priced funding with less headaches" due to their level of experience. However they are not a regulated institution. The request was made that debt providers meet an experience threshold as was done in Florida rather than the regulated financial institution standard. Department's Response - The Department will accept commitments from unregulated financial institutions provided they can demonstrate the financial capacity to make such loans. The section will read as follows: "(8) SUBSTANTIAL READINESS TO PROCEED. EXHIBIT 215: Label as EXHIBIT 215, evidence of substantial readiness to proceed. Such evidence must be in the form of an enforceable construction financing commitment from a regulated financial institution that is actively and regularly engaged in the business of lending money or from an unregulated financial institution that has demonstrated the financial capacity to make such loans. Such a commitment must be a written approval of a loan or grant (i.e., preliminary approval by the lender's loan committee) and be subject only to conditions fully under the control of the Applicant to satisfy (excluding the allocation of tax credits)." Committee's Recommendation - The Department's response accepted. Limitations on the Size of Projects (Sec. 50.6(g)) It was suggested that a limit of 200 in the general category and 65 units in the Rural Development/Prison Communities Set-aside be imposed. Department's Response - The Department believes that the current standards provide a good balance between manageable size and economic feasibility. The section will remain unchanged. Committee's Recommendation - The Department's response accepted. Program Fees (Sec. 50.11) It was requested that the Program's Application fee structure should not be excessive and should be based on the actual cost required to run the program. It was also suggested that unused fees from projects that were ineligible or not scored should be refunded. Department's Response - The Department structures all of its fees on the cost required to provide the activity. The Department does not anticipate that any applications will not be reviewed, therefore, the need to return Application Fees will not be an issue. The section will remain unchanged. Committee's Recommendation - The Department's response accepted. Special Preference Requested Border Cities It was requested that border cities, many of which have an extremely low median income and high development costs, be given special consideration in the Application review process. Department's Response - The current QAP takes into account geographical location and local needs. This is a matter where the Board may use its discretionary authority. Committee's Recommendation - The Department's response accepted. Preserving Continued Affordability Priority should be given to applicants which preserve the continued affordability of low income housing at risk of prepayment or conversion. Department's Response - This item is currently addressed in the Draft QAP in Sec. 50.6(c)(3)(A). Committee's Recommendation - The Department's response accepted. Public Housing Authorities It was asked that additional consideration be given to PHAs who have received high scores in HUDs Public Housing Management Assessment Program which determines the ability of agencies to produce and manage affordable housing. Department's Response - Previous experience is already a factor used to allocate credits. Committee's Recommendation - The Department's response accepted. TxRD Obligated Funds There was a great deal of comment requesting that projects with TxRD obligated funds be given preferential treatment. An idea proposed by a number of commentators was to only consider the threshold criteria when evaluating projects with obligated funds. It was implied that this would eliminate duplication of effort and documentation by the Department and TxRD. If the projects were not scored by the Department then the date of obligation or TxRD scoring could be used to determine which projects received allocations. It was requested that all projects with obligated TxRD funds should be granted tax credits. It was requested that a definition for TxRD obligated funds be added. Department's Response - The Department believes that the proposed changes in the QAP are adequate to meet the concerns of TxRD. Committee's Recommendation - The Department's response accepted. It was requested that TxRD and the Department enter into a Memorandum of Understanding (MOU) to: increase sharing of information, reduce processing time, and decrease compliance monitoring requirements. Department's Response - The Department is eager to work more closely with TxRD and a MOU would be a valuable starting point. Committee's Recommendation - The Department's response accepted. Other For clarification purposes the Department is proposing to add the following definition which will read as follows: "Project Consultant - Any Person (without ownership interest in the Project) who provides professional services relating to the filing of an Application, Carryover Allocation Document, and/or cost certification documents. Committee's Recommendation - The Department's response accepted. Resubmission of Applications or Exhibits It was requested that all Applicants should have the same opportunity to submit/resubmit Applications and supporting material. Department's Response - The same opportunity to submit and resubmit Applications is provided to all Applicants who file within the Program's published Application Acceptance Period. Committee's Recommendation - The Department's response accepted. Scoring Issues It was requested in written comment that the Application's Selection Criteria point system be consistent with goals developed in the State's Low Income Housing Plan. Department's Response - The proposed QAP is consistent with the 1997 State's Low Income Housing Plan. Committee's Recommendation - The Department's response accepted. Changes included as a result of the State audit. Departments Response - The proposed section should read as follows: "sec.50.1 It shall be the goal of this Department and the Board, through these provisions, to encourage diversity through broad geographic allocation of tax credits within the state and to promote maximum utilization of the available tax credit amount. The criteria utilized to realize this goal shall include, but are not limited to, evaluation of, geographic location within the state of developments applying for tax credits, concentration of tax credit developments and other affordable housing developments within specific markets and submarkets, site conditions of the developments, and a development's impact on and conformance with the goals and objectives as stated in the QAP and the Rules. The foregoing shall be implemented to be 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." Committee's Recommendation - The Department's response accepted. Sec. 50.6(b)(3) In addition to the number of points scored, the decision to underwrite a Project shall be subject to considerations contained in sec.50.4(h) of this title (relating to Applications; Environmental Assessments; Market Study; Commitments; Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments). The Department, the Committee, and the Board shall evaluate an Application on the basis of additional factors beyond scoring criteria such as underwriting analysis, geographic dispersion of multi-family housing as well as tax credit allocation, site conditions, impact on the Low Income Housing Tax Credit Program's goals and objectives as stated in the QAP and the Rules, and as otherwise provided under this chapter. If such evaluation warrants, the Application will be forwarded to the Committee and to the Board for approval. In making its recommendation to the Board, the Department shall enumerate the reason(s) for the Project's selection, including all discretionary factors used in making its determination. 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. Committee's Recommendation - The Department's response accepted. The new sections are adopted under 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, Section 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, Section 42 (m)(1), the Department developed a Qualified Allocation Plan which sets forth sec.50.3 through sec.50.8 of this title (relating to State Housing Credit Ceiling, Applications; Environmental Assessments; Market Study; Commitments; Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments, Set-Asides, Commitments and Preferences, Threshold Criteria; Evaluation Factors; Selection Criteria; Final Ranking; Credit Amount; Tax Exempt Bond Financed Projects; Compliance Monitoring, Housing Credit Allocations). sec.50.1.Scope. The Rules in this chapter apply to the allocation by the Texas Department of Housing and Community Affairs (the Department) 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 Department 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 (QAP) which is set forth in sec.50.3 through sec.50.8 of this title (relating to State Housing Credit Ceiling, Applications; Environmental Assessments; Market Study; Commitments; Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments, Set- Asides, Commitments and Preferences, Threshold Criteria; Evaluation Factors; Selection Criteria; Final Ranking; Credit Amount; Tax Exempt Bond Financed Projects; Compliance Monitoring, Housing Credit Allocations). 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 shall be the goal of this Department and the Board, through these provisions, to encourage diversity through broad geographic allocation of tax credits within the state and to promote maximum utilization of the available tax credit amount. The criteria utilized to realize this goal shall include, but are not limited to, evaluation of geographic location within the state of developments applying for tax credits, concentration of tax credit developments and other affordable housing developments within specific markets and submarkets, site conditions of the developments, and a development's impact on and conformance with the goals and objectives as stated in the QAP and the Rules. The foregoing shall be implemented to be 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 (HUBs) in all of the Department's programs. In response to this policy, the Department has established a minimum goal of 30% participation of HUBs 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 Department charged with the direct oversight of the Low Income Housing Tax Credit Program, also referred to as the "Committee." Affiliate-An individual, corporation, partnership, joint venture, limited liability company, trust, estate, association, cooperative or other organization or entity of any nature whatsoever that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with any other Person, and specifically shall include parents or subsidiaries. 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). Applicant-Any Person and any Affiliate of such Person, corporation, a partnership, joint venture, association, or other that submits an Application to the Department requesting a tax credit allocation pursuant to the Rules and the QAP. The Applicant is also the Project Owner unless the Applicant transfers or assigns its interest in the Project (which assignment can only occur with the consent of the Department). Each Project Owner, and each of the Project Owner's successors in interest, shall be obligated to carry out the commitments made to the Department by the Applicant. 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. Applications for Projects which receive at least 50% of their financing from the proceeds of tax exempt bonds may be submitted at any time during the 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. Appraiser-A real estate professional certified or licensed by the Texas Appraiser Licensing and Certification Board who has satisfied continuing education requirements. The appraiser must have, at a minimum, five (5) years appraisal experience, preferably in the geographic area of the property to be appraised. It is desirable, but not required, that the appraiser have a professional designation or be an active member of a professional accredited appraisal institution. Beneficial Owner-A "Beneficial Owner" means. (A) Any Person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares; (i) voting power which includes the power to vote, or to direct the voting as any other Person or the securities thereof, and/or (ii) investment power which includes the power to dispose, or direct the disposition of, any Person or the securities thereof. (B) Any Person who, directly or indirectly, creates or uses a trust, proxy, power of attorney, pooling arrangement or any other contract, arrangement or device with the purpose or effect of divesting such Person of Beneficial Ownership (as defined herein) of a security or preventing the vesting of such Beneficial Ownership as part of a plan or scheme to evade inclusion within the definitional terms contained herein; and (C) Any Person who has the right to acquire Beneficial Ownership during the Compliance Period, including but not limited to any right to acquire any such Beneficial Ownership; (i) through the exercise of any option warrant or right, (ii) through the conversion of a security, (iii) pursuant to the power to revoke a trust, discretionary account or similar arrangement, or (iv) pursuant to the automatic termination of a trust, discretionary account, or similar arrangement. (D) Provided, however, that any Person who acquires a security or power specified in clauses (i), (ii) or (iii) of this subparagraph, with the purpose or effect or changing or influencing the control of any other Person, or in connection with or as a participant in any transaction having such purpose or effect, immediately upon such acquisition is deemed to be the Beneficial Owner of the securities which may be acquired through the exercise or conversion of such security or power. Any securities not outstanding which are subject to options, warrants, rights or conversion privileges as deemed to be outstanding for the purpose of computing the percentage of outstanding securities of the class owned by such Person but are not deemed to be outstanding for the purpose of computing the percentage of the class by any other Person. Board-The governing Board of Directors of the Department and may also denote as used in this chapter, the 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 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 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 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; Commitments; Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments) and also referred to as the "commitment". Compliance Period-With respect to a building, the period of 15 taxable years, beginning with the first taxable year of the Credit Period pursuant to the Code, sec.42(i)(1). 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". Control-(including the terms "controlling," "controlled by, and/or "under common control with") the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any Person, whether through the ownership of voting securities, by contract or otherwise. 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 in 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). Declaration of Land Use Restrictive Covenants (LURA)-An agreement between the Department, the Project Owner and all successors in interest in the Project Owner which encumbers the Project with respect to provisions stipulated in the Code, sec.42, sec.sec.50.1-50.15 of this title (relating to Low Income Housing Tax Credit Qualified Allocation Plan and Rules), and the Texas Government Code, Chapter 2306 as may be amended from time to time. The LURA includes an Extended Low Income Housing Commitment Agreement. 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 Persons or Affiliates thereof which play(s) a material role 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. Difficult Development Area-Any area which is so designated by the Secretary of the United States Department of Housing and Urban Development (HUD) as an area which has high construction, land, and utility costs relative to area median gross income. Eligible Basis-With respect to a building within a Project, the building's Eligible Basis as defined in the Code, sec.42(d). Equity Gap-The difference between the total sources of financing for the Project and the total Project costs that is to be filled with the proceeds of the credit. 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). Financial Statement-Document(s) which provides information about the Applicant's economic resources, claims against those resources, and the interests of owners at specific dates as more fully described in subparagraphs (A)-(D) of this definition. (A) Statement of Financial Position/Balance Sheet - a listing, as of a particular date, of all assets and claims against those assets (liabilities). The difference is equity. (B) Income Statement - a listing that relates to a specific period of time, presenting an entity's results of operations. (C) Statement of Retained Earnings - reports all changes in retained earnings during the accounting period, reconciles beginning and ending retained earning balances and provides a connecting link between the income statement and the balance sheet. (D) Cash Flow Statement - a report listing the changes in an entity's cash and cash equivalents, classified by principal sources and uses, for a given period. General Projects-Any project which is not a Qualified Nonprofit Project or is not under consideration in the Rural/Prison set-aside as such terms are defined by the Department. General Pool-The pool of credits that have been returned or recovered from prior years' allocations or current year's Commitment Notices after the Board has made its initial allocation of the current year's available credit ceiling. General pool credits will be used to fund Applications on the waiting list without regard to set-aside. Governmental Entity-Includes federal or state agencies, departments, boards, bureaus, commissions, authorities, and political subdivisions, special districts and other similar entities. 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 which is codified at Chapter 2161, Texas Government Code, entitled Historically Underutilized Businesses, 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% owned by a person or persons who have been historically underutilized due to their identification as a member of a certain group. The following are the groups which will be considered pursuant to this definition: (A) African 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-A governmental entity charged with the responsibility of allocating low income housing tax credits pursuant to the Code, sec.42. For the proposes of these Rules, the Department is the sole "Housing Credit Agency" of the State of Texas. 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 allocates to the Project. HUD-The United States Department of Housing and Urban Development, or its successor. Intermediary Costs-Costs associated with the sale or use of tax credits to raise equity capital. Such costs include but are not limited to syndication and partnership organization costs and fees, filing fees, broker commissions, related attorney and accounting fees, appraisal, engineering, environmental site assessment, etc. IRS-The Internal Revenue Service, or its successor. Local Tax Exempt Organization-An entity 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 or qualified to conduct business in the State of Texas and/or the governmental unit wherein the Project will be situated. Person-Means, without limitation, any natural person, corporation, partnership, limited partnership, joint venture, limited liability company, trust, estate, association, cooperative, government, political subdivision, agency or instrumentality or other organization of any nature whatsoever and shall include any group of Persons acting in concert toward a common goal. Persons with Disabilities-A person who: (A) has a physical, mental or emotional impairment that; (i) is expected to be of a long, continued and indefinite duration, (ii) substantially impedes his or her ability to live independently, and (iii) is of such a nature that the ability could be improved by more suitable housing conditions, or (B) has a developmental disability, as defined in section 102(7) of the Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C. 6001- 6007). Prison Community-A city or town which is located outside of a Metropolitan Statistical Area (MSA) or Primary Metropolitan Statistical Area (PMSA) and was recently awarded a state prison as set forth in the Reference Manual. Project-A low income rental housing Property the owner of which represents that it is or will 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 Consultant-Any Person (without ownership interest in the Project) who provides professional services relating to the filing of an Application, Carryover Allocation Document, and/or cost certification documents. Project Owner-Any Person or Affiliate thereof that owns or proposes to develop the Project or expects to acquire Control of the Project pursuant to a purchase contract satisfactory to the Department. Property-The real estate and all improvements thereon which are the subject of the Application (including all items of personal property affixed or related thereto), whether currently existing or proposed to be built thereon in connection with the Application. Qualified Allocation Plan-An allocation plan executed by the Governor of the State of Texas which sets forth the Threshold Criteria, Selection Criteria, priorities, preferences, and compliance and monitoring as provided in the Code, sec.42(m)(1) and as further provided in sec.50.3 through sec.50.8 of this title (relating to State Housing Credit Ceiling, Applications; Environmental Assessments; Market Study; Commitments; Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments, Set-Asides, Commitments and Preferences, Threshold Criteria; Evaluation Factors; Selection Criteria; Final Ranking; Credit Amount; Tax Exempt Bond Financed Projects; Compliance Monitoring, Housing Credit Allocations). Qualified Basis-With respect to a building within a Project, the building's Eligible Basis multiplied by the Applicable Fraction, within the meaning of the Code, sec.42(c)(1). Qualified Census Tract-Any census tract which is so designated by the Secretary of HUD and, for the most recent year for which census data are available on household income in such tract, in which 50% or more of the households have an income which is less than 60% of the area median gross income for such year. Qualified Market Analyst-A real estate appraiser certified or licensed by the Texas Appraiser or Licensing and Certification Board or a real estate consultant or other professional currently active in the subject property's market area who demonstrates competency, expertise, and the ability to render a high quality written report. The individual's experience and educational background will provide the general basis for determining competency as a Market Analyst. Such determination will be at the sole discretion of the Department. The Qualified Market Analyst must not be related to or Affiliated with the Project Consultant, or the independent CPA employed for certifying the 10% test and/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 within the meaning of the Code, sec.42(h)(5)(C). Qualified Nonprofit Project-A Project in which a Qualified Nonprofit Organization has Control (directly or through a partnership or wholly-owned subsidiary) and materially participates (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. 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 a receiver or conservator of such an institution, or is a property owned by HUD, Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), federally chartered bank, savings bank, savings and loan association, Federal Home Loan Bank or a federally approved mortgage company 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 which the Project Owner represents to be "Rehabilitation Expenditures" within the meaning of the Code, sec.42(e)(2). 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 Qualified Allocation Plan and Rules) excluding sec.50.3 through sec.50.8 of this title (relating to State Housing Credit Ceiling, Applications; Environmental Assessments; Market Study; Commitments; Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments, Set-Asides, Commitments and Preferences, Threshold Criteria; Evaluation Factors; Selection Criteria; Final Ranking; Credit Amount; Tax Exempt Bond Financed Projects; Compliance Monitoring, Housing Credit Allocations). Rural Project-A Project located within an area which: (A) is situated outside the boundaries of a PMSA or MSA; or (B) is situated within the boundaries of a PMSA or MSA if it has a population of not more than 20,000 and does not share boundaries with an urbanized area; or (C) is located in an area that is eligible for funding by TxRD. Scattered Site Project-"A group of buildings, (excluding apartments and townhomes) which would (but for their lack of proximity) qualify as a Project for purposes of the Code and which are all rent restricted, owned by the same Project Owner and financed under a common plan. This shall include all single family detached housing, duplexes, triplexes and fourplexes, except fourplexes in clusters of four or more on contiguous property under common ownership, management and Control. An existing Rural Project that is federally assisted within the meaning of sec.42(d)(6)(B) of the Code and is under common ownership, management and Control shall not be considered as a Scattered Site Project. For qualifying Rural Projects, construction activity must be rehabilitation only with no expansion to the existing development. Rural Projects purchased from HUD will also qualify as being federally assisted." Selection Criteria-Criteria used to determine housing priorities of the State under the Low Income Housing Tax Credit Program. 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. 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, projects for persons with HIV/AIDS, or as otherwise defined in the State 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 or to be 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. TxRD-The Texas Department of Rural Development, or its successor. 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.42. sec.50.4.Applications; Environmental Assessments; Market Study; 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. 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 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. The Department will require, as a part of a completed Application, information to be submitted by the Project Owner which identifies the number of HUBs 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 HUBs were or are to be selected. The Project Owner is also advised that the Department will be requesting information pertaining to the use of HUBs 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). (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 be conducted and reported in conformity with the standards of the American Society for Testing and Materials (ASTM) and such other recognized industry standards as a reasonable person would deem relevant in view of the Property's anticipated use for human habitation. The report must 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 recommends further studies or establishes that environmental hazards currently exist on the Property, or are originating off- site but would nonetheless affect the Property, the Project Owner must act on such a recommendation or provide either a plan for the abatement or elimination of the hazard. The environmental assessment shall be conducted by an 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 TxRD 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)-(2) of this subsection and other guidelines provided in the Reference Manual. (1) A Market Study (prepared by a Qualified Market Analyst acceptable to the Department who is independent of the Development Team), 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 12 Units or fewer or whose funds have been obligated by TxRD 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 entity or organization which prepared the initial report; provided, however, that the Department will not accept as having satisfied the condition of this subsection (c) of this section 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 required information. If any of the required information in subparagraghs (A)-(K) is not obtainable, the Market Analyst shall provide a statement to such effect and offer an alternative analysis intended to address the applicable question. (A) an evaluation of the existing occupancy rates in comparable multifamily rental Residential Developments in the same market and submarket area as the proposed Project with special emphasis given to available low income rental housing; (B) Project absorption rates for the three years prior to 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 rental housing Units in the market area, with special emphasis given to available low income rental housing; (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 and low income housing demographics; (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, generally, and specifically for low income housing; (H) an evaluation of the appropriateness of the existing or proposed physical amenities and appliance packages 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 certifying that he/she is not a part of the Development Team, nor Affiliated with any member of the Development Team engaged in the development of the Property; and (K) such other matters as the Department, in its discretion, may determine from time to time 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 opinion is required from the Qualified Market Analyst who prepared the Market Study required under paragraph (1) of this subsection, 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 projected 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 and/or any applicable submarket area, is or is not likely to result in an unreasonably high vacancy rate for comparable Units within the market area and/or any applicable submarket 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 and/or any applicable submarket 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 or 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. (3) All Applicants shall acknowledge by virtue of filing an Application that the Department shall not be bound by any such opinion or the Market Study itself, and may substitute its own analysis and underwriting conclusions for those submitted by the Qualified Market Analyst. (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) An Application that is incomplete or that is not filed in accordance with the Application Submission Procedures Manual, as amended, unless any such requirement has been waived by the Department, will be deemed not to have been timely filed, will be deemed terminated and will be returned to the Applicant. Failure to return the Application shall not affect its status and the Department shall not be deemed to have accepted any such incomplete Application. (f) The Department will not recommend an Application for funding if it includes a member of the Development Team who has been, or is: (1) barred, suspended, or terminated from procurement in a state or federal program or who is listed in the List of Parties Excluded from Federal Procurement or Nonprocurement Programs, whether in the hard copy or electronic form; (2) convicted within the past five years, under indictment for or is on probation for a state or federal crime involving fraud, bribery, theft, misrepresentations of material facts, misappropriation of funds, or other similar criminal offenses; (3) 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 unless any such action has been concluded and no adverse action or finding (or entry into a consent order) has been taken with respect to such member; or (4) active in the ownership or management of any other low income housing tax credit Property (or any Property pursuant to an affordable housing program administered by a local, state or federal entity) that is or was materially out of compliance with the rules or regulations of the appropriate regulatory authority. (g) After eligible Applications have been evaluated, ranked and underwritten in accordance with the QAP and the Rules the Department shall make its recommendations to the Committee and the Board at their next meeting for the issuance of Commitment Notices. (h) The Board's decisions shall be based upon its evaluation of the Project's consistency with the criteria and requirements set forth in the QAP and the Rules. In making a determination to allocate tax credits, the Department and Board shall be authorized not to rely solely on the number of points scored by an Applicant. They shall in addition, be entitled to take into account, as appropriate, such factors as Project feasibility, underwriting, concentration of low income Projects within specific markets or submarkets, geographic dispersion of multifamily housing in any particular market or submarket, as well as dispersion of the credits on a state-wide basis, site conditions, the experience of the Development Team, the type of housing being proposed and/or the Project's impact on the Low Income Housing Tax Credit Program's goals and objectives as stated in the QAP and the Rules and as otherwise provided under this chapter. (1) If the Board approves the Application, the Department will issue a Commitment Notice to the Project Owner which : (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 have been 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 reason(s) 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 or the date for the submission of the Carryover Allocation Document 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(s) why the Project Owner has been unable to satisfy the requirements of this chapter prior to the original expiration date. The Department, in its sole discretion, may consider and grant such extension requests; 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 shall 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. Current Treasury Regulations, sec.1.42-8(a)(1)(v), suggest that in order to permit a Project Owner to make an effective election to fix the applicable credit percentage for a Project, the Commitment Notice must be executed by the Department and the Project Owner in the same month. The Department will cooperate with a Project Owner, as needed, to assure that the Commitment Notice can be so executed. (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) If the entire State Housing Credit Ceiling for the applicable calendar year has been, committed or allocated in accordance with this chapter, the Department shall place all remaining Applications which have satisfied all Threshold Criteria on a waiting list. All such waiting list Applications will be weighed one against the other and a priority list shall be developed by the Department and approved by the Committee. If at any time prior to the end of the Application Round, one or more Commitment Notices expire and a sufficient amount of the State Housing Credit Ceiling becomes available, the Department shall issue a Commitment Notice to Applications on the waiting list in order of priority. In the event that the Department makes a Commitment Notice 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. (m) Within 15 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 give consideration to the objections raised and will visit the proposed site or Project within 30 days of notification. (n) Prior to the Department's issuance of the IRS Form 8609 declaring that the Project has been placed in service for purposes of the Code, sec.42, Project Owners must date, sign and acknowledge before a notary public a LURA and send the original to the Department for execution. The Project Owner shall then record said LURA, 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. If any liens (other than mechanics' or materialmen's liens) shall have been recorded against the Project and/or the Property prior to the recording of the LURA, the Project Owner shall obtain the subordination of the rights of any such lienholder, or other effective consent, to the survival of certain obligations contained in the LURA following the foreclosure of any such lien. Receipt of such certified recorded original LURA by the Department is required prior to issuance of IRS Form 8609. A representative of the Department shall physically inspect the Property for compliance with the Application and the representatives, warranties, covenants, agreements and undertakings contained therein before the IRS Form 8609 is issued. sec.50.5.Set-Asides, Commitments and Preferences. (a) At least 10% of the State Housing Credit Ceiling for each calendar year shall be allocated to Qualified Nonprofit Projects which meet the requirements of the Code, sec.42(h)(5). Such organizations may compete in one of the following set-asides: Non Profit 10% Rural Projects/Prison Communities 15% General Projects 75% (b) The Department may redistribute the credits depending on the level of demand exhibited during the Allocation Round; provided that no more than 90% of the State's Housing Credit Ceiling for the calendar year may go to Projects which are not Qualified Nonprofit Projects. The Department will reserve 25% of the 15% Rural Projects/Prison Communities set-aside for projects financed through Rural Development (TxRD) (formerly Farmer's Home). Should there not be sufficient qualified applications submitted for the TxRD set-aside, then the allocations would revert back to the Rural Projects/Prison Communities set-aside pool. Information concerning the appropriate set-aside for each Application Round will be published in the Texas Register. Applicants may submit only one Application for each site. (c) No 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 the Contractor is an Affiliate of the Project Owner and both parties are claiming fees, Contractor's 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 seems excessive or unreasonable. The Department also may require bids in support of the costs proposed by any Applicant. (d) The Department may, at any time and without additional administrative process, determine to award credits to projects previously evaluated and awarded credits if it determines that such previously awarded credits are or may be invalid and the owner was not responsible for such invalidity. To the maximum extent feasible, the Department will use credits carried forward from the prior year or recovered during the current year to make awards pursuant to subparagraphs (a)-(d) of this section. 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. Applications not meeting Threshold Criteria may be terminated as otherwise provided under this chapter. No Scattered Site Project will be considered for allocation of tax credits under this QAP and the Rules, and thus Scattered Site Projects do not satisfy Threshold Criteria. 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 submission: (1) EXHIBIT 101: Label as EXHIBIT 101, the following documents: (A) a letter from the design architect specifying the type of amenities proposed for the development; (B) original photographs of the signage, existing buildings, and interior photographs; and (C) original photographs of the development site and the surrounding area. Property Owners must provide at least four of the following amenities: (i) limited access security fence; (ii) designated playground and equipment; (iii) community laundry room/laundry hook-up in Units; (iv) furnished community room; (v) recreation facilities; (vi) public telephone(s); (vii) on-site day care, Senior Center, or Community meals room; (viii) storage areas; or (ix) covered parking. (D) With respect only to Small Developments (35 Units or less) and Special Housing Projects, the Department will consider requests for waivers of the foregoing amenity requirement. Any such waiver requests shall be submitted in writing at the time of the Application submission, setting forth the reasons for the proposed waiver. (E) All Projects must adhere to the Texas Property Code statute relating to Security Devices and other applicable requirements 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: There shall exist evidence of readiness to proceed in the form of at least one of the items under 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 Applicant; (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 Applicant which is valid for the entire period the development is under consideration for tax credits or at least 90 days, whichever is greater; or (iii) An exclusive option to purchase in the name of the ownership entity, or entities which comprise the Applicant which is valid for the entire period the development is under consideration for tax credits or at least 90 days, whichever 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. In lieu of such documentation the Applicant must submit evidence that a rezoning request has been filed with the appropriate municipal authority as of the date of submission of the Application. Any commitment of tax credits to the Applicant will be contingent upon proper rezoning prior to Carryover Allocation. 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; (iii) owners rights to reconstruct in the event of damage; and (iv) penalties of noncompliance. (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 of 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) Bona Fide permanent financing in place as evidenced by a valid and binding loan agreement and a deed(s) of trust in an amount not less than the projected liens to be placed upon the Project upon completion of construction in the name of the ownership entity which identifies the mortgagor as the Applicant or entities which comprise the general partner; (ii) Bona Fide 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 Applicant 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 an independent CPA verifying the capacity of the Applicant to provide the proposed financing and that funds are committed solely for such purpose with a letter from the Applicant's bank or banks confirming that such funds have been provided for or deposited in a separate account at said bank(s). (E) Label as EXHIBIT 103(E), either: (i) a copy of the current title policy which shows that the ownership of the land/Project is vested in the exact name of the Applicant, or entities which comprise the Applicant; or (ii) a copy of a current title commitment with the proposed insured matching exactly the name of the Applicant or entities which comprise the Applicant and the title of the land/Project vested in the name of the exact name of the seller as indicated on the sales contract. (4) EXHIBIT 104: Label as EXHIBIT 104, evidence of pre-Application notification by the Applicant to the local chief executive officer(s) (i.e., mayor and county judge) 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: Using Exhibit 105 in the Application Submission Manual, provide a current financial statement for each Applicant (as defined in the QAP). Statement must not be more than 12 months old. If submitting partnership and corporate financials in addition to the individual statements; the Audited Financial Statements must not be older than 12 months and the Certified Statements must not be older than 90 days. (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. This form must be completed with respect to the ownership entity, general partner, general contractor and their principals. (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 the lease, "street" rents, Unit mix, 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 monthly operating statements of the subject development to date for the past three full calendar years and for the current year to date as of the end of the month occurring not more than 45 days prior to the date of initial Application, 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 must also submit a 15-year proforma of operating expenses with appropriate supporting documentation. (9) EXHIBIT 109: Label as EXHIBIT 109 on the cover page only, a Market Study addressing all items listed in sec.50.4(c) of this title (relating to Applications; Environmental Assessments; Market Study; Commitments; Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments) and/or required by 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; Commitments; Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments). (11) EXHIBIT 111: Label as EXHIBIT 111, for Applicants seeking credits from the Non Profit Set-Aside, documentation that the Applicant is a Qualified Nonprofit Organization pursuant to the Code, sec.42(h)(5)(C), as evidenced by: (A) an IRS determination letter which states that the Qualified Non Profit Organization is a 501(c)(3) or (4) entity, (B) if the project involves a joint-venture between a Qualified Non Profit Organization and a for profit, an agreement which shows that the nonprofit Controls the Project (directly or indirectly) and will materially participate (within the meaning of the Code sec.469(h) in the development and operation of the Project throughout the Compliance Period, and (C) a current list of all directors and officers of the nonprofit organization, along with information pertaining to their primary occupations and disclosing any relationship; as an Affiliate or otherwise, with other members of the Applicant and/or any members or Affiliate of the Development Team, including any market analyst, CPA, appraiser, or other professional performing any services with respect to the Project and/or the subject Property. (D) a copy of the Articles of Incorporation which specifically states the fostering of affordable housing is one of the entities exempt purposes. (12) EXHIBIT 112: Label as EXHIBIT 112, if applying for acquisition credits or if the Applicant is affiliated with the seller an appraisal of the Property apportioning the value of the land and the improvements where applicable, a valuation report from the local tax appraisal district and a bona fide valid contract verifying the acquisition cost which clearly identifies the selling Persons or entities, and details any relationship with the Applicant or any Affiliation with the Development Team, any Qualified Market Analyst and any other professional or consultant performing services with respect to the Project. (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 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 may be terminated and may, at the Department's discretion, be returned to the Applicant without further review. The Department shall not be responsible for the Applicant's failure to meet the Threshold Criteria, and any oversight or failure of the Department's staff to notify the Applicant of such inability to satisfy the Threshold Criteria shall not confer upon the Applicant any rights to which it would not otherwise be entitled. All Applicants may withdraw and subsequently refile an Application, as well as file a new Application before the filing deadline. (2) 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. Applications not scored by the Department's staff shall be deemed to have the points allocated through self-scoring by the Applicants until actually scored. This shall apply only for ranking purposes. (3) In addition to the number of points scored, the decision to underwrite a Project shall be subject to considerations contained in sec.50.4(h) of this title (relating to Applications; Environmental Assessments; Market Study; Commitments; Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments). The Department, the Committee, and the Board shall evaluate an Application on the basis of additional factors beyond scoring criteria such as underwriting analysis, geographic dispersion of multi-family housing as well as tax credit allocation, site conditions, impact on the Low Income Housing Tax Credit Program's goals and objectives as stated in the QAP and the Rules, and as otherwise provided under this chapter. If such evaluation warrants, the Application will be forwarded to the Committee and to the Board for approval. In making its recommendation to the Board, the Department shall enumerate the reason(s) for the Project's selection, including all discretionary factors used in making its determination. 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 Commitment Notice at the end of the Application Round may be placed on a waiting list to be established by the Department and approved by the Committee and the Board. At the end of each calendar year, all Applications which have not received a Commitment Notice shall be deemed terminated, unless the Department shall determine to retain or act upon such Applications as provided hereinafter at sec.50.15 (relating to Forward Reservations; Binding Commitments). The Applicant may re-apply to the Department during the next Application Acceptance Period. (c) Selection Criteria. Pursuant to subsection (b)(1)(4) 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 the State Housing Credit Ceiling is available, will be eligible for an evaluation by an Underwriter subject to sec.50.4(h) of this title (relating to Applications; Environmental Assessments; Market Study; Commitments; Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments). All Applications will be ranked according to the Selection Criteria listed in paragraphs (1)-(9) of this subsection. If no additional set-aside credits are available, the Application shall be scored and evaluated in the General Pool using the criteria to which such General Pool Applications are subject, without special set-aside scoring points being considered. (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 (QCT) as defined by the Secretary of HUD and qualifies for the 30% 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 QCT. Census tract numbers must be clearly marked on the map, and must be identical to the QCT number stated in the Department's Reference Manual. Applicants for Projects in a Difficult Development Area or a Targeted Texas County must indicate this designation in the space provided in the Application Submission Procedures Manual. (5 points) OR (B) EXHIBIT 202: Label as EXHIBIT 202, 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 a certified copy of the appropriate resolution or documentation from the mayor, local city council, county judge, county commissioners court in support of the Project which documents 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. (5 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 in clauses (i)-(iv) of this subparagraph 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 points) (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 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) (3) PROJECT CHARACTERISTICS (A) EXHIBIT 203: Label as Exhibit 203, 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, TxRD, or creating a claim on 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 204: Label as EXHIBIT 204, 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 205: Label as EXHIBIT 205, evidence that the Applicant is purchasing(ed) a Property (no earlier than 1995) owned by HUD, an insured depository institution in default, or a receiver or conservator of such an institution, or is an REO Property. Such evidence must be in the form of a binding contract to purchase from such federal or other entity as described in subparagraph (A)-(C) of this paragraph, 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. Five points will be awarded for the first 15% of the Units in the development that are three bedrooms or larger. An additional point will be awarded in 5% increments for every 5%, 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 Unit 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. (5 points) (ii) An additional point will be awarded for every 5% of Units that are three or four bedrooms up to a maximum of three points. (3 points) (E) EXHIBIT 206: Label as Exhibit 206A, for new Construction, a letter from the architect which certifies that at least four 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) Insulation which exceeds code for walls and ceilings (iii) Solar Screens (iv) Gas heating system with a minimum 80% flue efficiency (v) Energy efficient air conditioning system with a 10 SEER or above (vi) Dual pane insulating windows (vii) Evaporative cooling system (F) To qualify for these points at least four of the six items listed in subparagraph (E) must be selected. (3 points) (G) Label as Exhibit 206B 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) (H) The proposed development provides low density housing of less than 16 Units per acre or as follows: (i) 16 Units or less per acre (6 points) (ii) 17 to 20 Units per acre (4 points) (I) The subject Project is an existing Residential Development without maximum rent limitations or set-asides for affordable housing seeking rehabilitation credits. (8 points) (J) The subject Project is a mixed-income development comprised of both market rate Units and qualified tax credit Units. (i) Project's Applicable Fraction is no greater than 75%. (6 points) (ii) Project's Applicable Fraction is no greater than 60%. (10 points) (K) EXHIBIT 207: Label as EXHIBIT 207, 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) (L) Property Owner will set-aside Units for households with incomes at 50% or less of Area Median Gross Income (AMFI) 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% AMFI level. Utilize the percentages below to assess the appropriate score: (i) Four points will 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 AMFI. (4 points) (ii) An additional point will be awarded for every 5.0% of additional Units set- aside for tenants with incomes at 50% or less of AMFI up to a maximum of four points. (4 points) (M) Proposed development is comprised of fourplexes in clusters of four or more on contiguous property under common ownership, management and Control or townhome developments of at least 16 Units. To qualify for these points the development must have a density of no more than 16 Units per acre. (5 points) (N) EXHIBIT 208: Label as EXHIBIT 208, for rehabilitation 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 or its Affiliates must not have owned a significant interest in, or have had Control of the Project during the period in which such Units were rendered uninhabitable. (4 points) (O) EXHIBIT 209: Label as EXHIBIT 209, evidence from the local municipal authority stating that the proposed development fulfills a need for additional affordable rental housing as evidenced in a local Consolidated Plan, State Low Income Housing Plan, Comprehensive Plan or other planning document and is supported by the local municipal authority. (5 points) (P) The Project is a Small Development. A Small Development is defined as a Project consisting of not more than 35 multifamily Units, which is not a part of, or contiguous to, a larger Project. A Project may not receive points for this characteristic if it would otherwise qualify as a Rural Project. (5 points) (4) SPONSOR CHARACTERISTICS (A) "EXHIBIT 210: Label as EXHIBIT 210, evidence that the ownership entity, general partner, general contractor or its principals have a record of successfully constructing or developing residential/commercial property. Evidence must be in the form of the AIA Document A111 - Standard Form of Agreement Between Owner & Contractor, the AIA Document G704 - Certificate of Substantial Completion, IRS Form 8609, Development Agreements and Partnership Agreements, HUD Form 9822, or other appropriate documentation verifying that the ownership entity, general partner, general contractor or their principals have the required experience. (NOTE: The names on the forms and agreements must tie back to the ownership entity, general partner, general contractor and their respective principals as listed in the application.) Property Owners in noncompliance with any of the aforementioned programs, but which are not barred from having an Application recommended by sec.50.4(f), or which have had a continuing pattern of defaults and foreclosures are ineligible to claim the points for this item (10 points). The term "successfully" is defined as acting in a capacity as the general contractor or developer of; (i) at least 100 multifamily residential units or comparable commercial property (i.e., dormitory and hotel/motel); or (ii) at least 35 multifamily residential units or comparable commercial property if the project applying for credits is a Rural Project." (B) EXHIBIT 211: Label as EXHIBIT 211, evidence that the HUB has been certified by the General Services Commission and is the Project Owner or Controls the Project Owner. With respect to the filing of an Application and the development, operation and ownership of a Project, the historically underutilized person or persons whose ownership interests comprise a majority of a corporation, partnership, joint venture or other business entity, must maintain this majority and must demonstrate regular, continuous, and substantial participation in the operation and management activities of the entity. Likewise, with regard to a sole proprietorship, the individual who comprises the sole proprietorship must demonstrate regular, continuous, and substantial participation in the development, operation and ownership of the Project. The Department shall require evidence of regular, continuous and substantial participation and this evidence shall include, but not limited to, the agreement to personally guarantee the interim construction loan secured (and all other guarantees to the equity investor) relative to the development of a Project by the person or persons upon whose purported ownership interest(s) and participation form the basis for which the designation of a HUB is being claimed. Any such guarantee wherein an Affiliate, partner and or Beneficial Owner of the guarantor agrees to indemnify, in whole or in part, the guarantor from the liability arising from the guarantee, shall not constitute said evidence. The Department shall, during and after the Application Round, monitor those individuals upon whose purported ownership interest(s) and participation form the basis for which the designation of HUB is being claimed and may require the submission of any additional documentation as required to verify said evidence. To qualify for these points, in addition to the certification from the General Services Commission, the historically underutilized person or persons whose ownership interest(s) form the basis of the HUB designation must provide the necessary loan and syndication guarantees to develop the Project. The Department's goal is to have substantive participation by those individuals upon whose purported ownership interest(s) and participation form the basis for which the designation as a HUB is claimed. A determination by the Department that there has been a material misrepresentation as to such participation or that insufficient evidence has been provided to substantiate such participation will be final and points awarded for HUB participation will be withdrawn accordingly. (5 points) (5) PARTICIPATION OF LOCAL TAX EXEMPT ORGANIZATIONS. EXHIBIT 212: Label as EXHIBIT 212, evidence that the 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: (A) the duration of the service agreement, (B) the accessibility and appropriateness of the service to the tenants, (C) the experience of the service provider, and (D) the importance of the service in enhancing the tenants standard of living. The supportive service will be included in the LURA. (Up to 5 points) (6) TENANT POPULATIONS WITH SPECIAL HOUSING NEEDS. (A) This criterion applies to elderly Projects which 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 barrier-free lever type doorknobs and single lever faucets, as well as elevators for Projects of over two stories. Elderly Projects must not contain any Units with three or more bedrooms. Such a Project must conform to the Federal Fair Housing Act and must be a Project which: (i) is constructed for, and occupied by at least one Person who is 62 years of age or older; and (ii) adheres to policies and procedures which demonstrate a firm commitment by the owner and manager to provide housing for Persons 62 years of age or older. (10 points) (B) EXHIBIT 213: Label as EXHIBIT 213, 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 Persons with Disabilities (ANSI A117.1 - 1992 or successor) and will conform to the Fair Housing Act. "Equipped" means that features that make the Units fully usable to such persons are installed in the Units at the time of construction or provisions have been included in construction for easy modification to meet the ANSI A117.1 standards.. The Department will require a minimum of two years during which set-aside units must either be occupied by tenants who are physically or mentally disabled or held vacant while being marketed to such tenants. If after this two year period, the Project Owner is unable to locate qualified Persons with disabilities following a good-faith effort, the units may be rented to tenants without disabilities, provided that the next available unit (from among those set-aside for Persons with disabilities) shall first be made available to Persons with disabilities. To comply with this provision all Project Owners must maintain a waiting list of qualified tenants with disabilities throughout the Compliance Period. When such Units become available, Project Owners must contact persons on the waiting list and/or provide notice to local service providers that such Units are available. (i) 6.0% to 10% of Units are set-aside for persons with physical or mental disabilities. (4 points) (ii) 11% to 15% of Units are set-aside for persons with physical/mental disabilities. (6 points) (iii) 16% + of Units are set-aside for persons with physical/mental disabilities. (8 points) (C) EXHIBIT 214: Label as EXHIBIT 214, evidence that the Project is designed solely 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. (15 points) (7) PUBLIC HOUSING WAITING LISTS. EXHIBIT 215: Label as EXHIBIT 215, 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, the Property owner must utilize the nearest authority or office responsible for administering Section 8 programs. Such evidence must include a copy of the 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 its jurisdiction. (3 points) (8) SUBSTANTIAL READINESS TO PROCEED. EXHIBIT 216: Label as EXHIBIT 216, evidence of substantial readiness to proceed. Such evidence must be in the form of an enforceable construction financing commitment from a regulated financial institution that is actively and regularly engaged in the business of lending money. Such a commitment must be a written approval of a loan or grant (i.e., preliminary approval by the lender's loan committee) and be subject only to conditions fully under the control of the Applicant to satisfy (excluding the allocation of tax credits). (4 Points) (9) BONUS POINTS (A) EXHIBIT 217: Label as EXHIBIT 217, evidence that the sponsor agrees to provide, and provides, to a qualified nonprofit organization (or a tenant organization) a right of first refusal to purchase the Project for the minimum price provided in, and in accordance with the requirements of, sec.42 (i) (7) of the Code. Sponsor may qualify for this bonus in either of the following ways: (i) by entering into an agreement with a specific qualified nonprofit organization (or tenant organization) providing for such right of first refusal, or (ii) by entering into an agreement with the Department providing that upon the earlier of: (I) the Sponsor's determination to sell the Project, or (II) the Sponsor's request to the Department, pursuant to sec.42 (h) (6) (I) of the Code, to find a buyer who will purchase the Project pursuant to a "qualified contract" within the meaning of sec.42 (h) (6) (F) of the Code, the Department shall be authorized to identify a qualified nonprofit organization (or tenant organization) to which the Sponsor shall sell the Project at the minimum price provided in sec.42 (i) (7) (B) of the Code. (5 points) (B) 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. In the event that two or more Applications receive the same number of points in any given set-aside category, the Department in addition to factors outlined in sec.50.4(h) of this title (relating to Applications; Environmental Assessments; Market Study; Commitments; Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments) will utilize the following factors in the order presented in paragraphs (1)-(7) of this subsection in making a determination as to which Project will receive a preference in consideration for a tax credit commitment: (1) 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; (2) which provide for the most efficient usage of the low income housing tax credit on a per Unit basis; (3) 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; (4) Project which is a Special Housing Project as defined in sec.50.2 of this title (relating to Definitions); (5) which serve the lowest income tenants; (6) which serve low income tenants for the longest period of time, in the form of a longer Compliance Period and/or extended low income use period (as set forth in the Extended Low Income Housing Commitment Agreement); and (7) whose Unit composition provides the highest percentage of three bedrooms or greater sized Units. (e) Past Performance. 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 disqualify from this allocation round, any Applicant, Project Owner, developer and its partners, principals, and/or Affiliates who have received an allocation of credits in the 1996 round and who have not yet finalized the closing of the construction loan as of the close of this Application Acceptance Period. The Department may deduct up to ten points from the final score of any Applicant (or an Affiliate of which), in the past, has not placed into service developments 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, at its sole discretion disqualify or impose limitation or disabilities upon an Applicant, Project Owner, developer, and its partners, principals and/or Affiliates 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 commitment 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; who has made misrepresentations to the Department; who is in noncompliance with the LURA or other similar agreement for any other Project monitored by the Department, or who is in 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: (1) Excluded from federal and non federal procurement programs (either debarment or suspension); (2) Convicted of a felony offense; (3) Indicted or subject to enforcement action under state of federal securities law; and (4) 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 shall be at the sole discretion of the Department. (f) Credit Amount. (1) 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 per Project or $2.4 million per Applicant. For these purposes this limitation will apply to all Affiliates of any Applicant, developer, Project Owner, general partner, sponsor or their Affiliates or related entities unless otherwise provided for by the Department. (2) In making determinations with respect to the limitation the Department may take into account such factors as the percentage of interest held by a particular individual or any Affiliate thereof in a Project, the amount of fees or other compensations paid to a particular individual or any Affiliate thereof with respect to a Project, any other financial benefits, either directly or indirectly through Beneficial Ownership received by a particular individual or any Affiliate thereof with respect to a Project. The Committee, in its sole discretion, may allocate credits to a Project Owner in addition to those awarded at the time of the initial Carryover Allocation in instances where there is bona fide substantiation of cost overruns and the Department has made a determination that the allocation is needed to maintain the Project's financial viability as a qualified low income Project. The limitation does not apply: (A) to an entity which raises or provides equity for one or more Projects, solely with respect to its actions in raising or providing equity for such Projects (including syndication related activities as agent on behalf of investors), (B) to the provision by an entity of "qualified commercial financing" within the meaning of the Code, sec.50(a)(1)(D)(ii) (without regard to the 80% limitation thereof), (C) to a Qualified Nonprofit Organization or other not-for-profit entity, to the extent that the participation in a Project by such organization consists of the provision of loan funds or grants, and (D) to a Project Consultant with respect to the provision of consulting services. (g) Limitations on the Size of Projects. Rural Projects involving new construction must not exceed 75 Units. All other Projects involving new construction or requesting both rehabilitation and new construction tax credits 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 QAP and Rules. Such Projects must meet all the Threshold Requirements stipulated in the most recently approved QAP and Rules. Such Projects must also demonstrate consistency with the bond issuer's local Consolidated Plan. The issuer, (if other than the Department) may, at its discretion, enter into a contractual agreement to allow the Department to underwrite the Project. If the Department does not underwrite the Project for feasibility, it will require evidence that such a determination has been made by the issuer of the bonds. If the Department determines that all requirements have been met, the Ad Hoc Tax Credit Committee, without further action, shall authorize the Department to issue an appropriate notice to the Sponsor that the Project satisfies the requirements of the QAP and Rules in accordance with sec.42(m)(1)(D). (i) Adherence to Obligations. All representations, undertakings and commitments made by an Applicant in the applications process for a Project, whether with respect to Threshold Criteria, Selection Criteria or otherwise, shall be deemed to be a condition to any Commitment Notice and/or Carryover Allocation for such Project, the violation of which shall be cause for cancellation of such Commitment Notice or Carryover Allocation by the Department, and if concerning the ongoing features or operation of the Project, shall be reflected in the LURA. 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) On or before February 1st of each year, the Department will send each Project Owner of a completed Project an Owner's Certification of Program Compliance to be completed by the Owner and returned to the Department on or before the first day of March of each year in the Compliance Period. Any Project for which the certification is not received by the Department, is received past due, or is incomplete, improperly completed or not signed by the Project Owner, will be considered not in compliance with the provisions of the Code. The Owner Certification of Program Compliance shall cover the proceeding calendar year and shall include the following statements of the Owner: (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) and Internal Revenue Service Final Regulation sec.1.42 - 10 regarding utility allowances; (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; (K) a LURA including 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); (L) no change in the ownership of a Project has occurred during the reporting period; (M) the Project Owner has not been notified by the Internal Revenue Service that the Project is no longer "a qualified low income housing project" within the meaning of the Code, sec.42; and (N) the Project met all terms and conditions which were recorded in the LURA, or if no LURA was required to be recorded, the Project met all representations of the Project Owner in the Application for credits. (2) Review. (A) The Department will review each Owner's Certification of Program Compliance for compliance with the requirements of the Code, sec.42. (B) Each year, the Department will perform monitoring reviews of at least 20% of the low income housing Projects. A monitoring review will include an inspection of the income certification, the documentation the Project Owner has received to support that certification, the rent record for each low income tenant, and any additional information that the Department deems necessary, for at least 20% of the low income Units in those Projects. The Department shall give reasonable notice to the Project Owner that an inspection will occur; however, the Projects and records to be reviewed will be selected by the Department in its discretion. Monitoring reviews will be performed at the location of the Project, unless the Project is required to have fewer than ten low income Units. (C) The Department may, at the time and in the form designated by the Department, require the Project Owners to submit for compliance review, information on tenant income and rent for each low income Unit, and may require a Project Owner to submit for compliance review a copy of the income certification, the documentation the Project 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 TxRD, whereby the TxRD agrees to provide to the Department information concerning the income and rent of the tenants in buildings financed by the TxRD 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 TxRD 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 Project 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 including all books and record pertaining thereto 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) Notices to Owner. 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. The notice 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. If any communication to the Project Owner under this section is returned to the Department as unclaimed or undeliverable, the Project may be considered not in compliance without further notice to the Project Owner. (h) Notice to the Internal Revenue Service. (1) Regardless of whether the noncompliance is corrected, the Department is required to file IRS Form 8823, Low Income Housing Credit Agencies Report of Noncompliance, with the Internal Revenue Service. IRS Form 8823 will be filed not later than 45 days after the end of the correction period specified in the Notice to Owner, but will not be filed before the end of the correction period. The Department will explain on IRS Form 8823 the nature of the noncompliance and will indicate whether the Project Owner has corrected the noncompliance or has otherwise responded to the Department's findings. (2) The Department will retain records of noncompliance or failure to certify for six years beyond the Department's filing of the respective IRS 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. (i) Notices to the Department. (1) A Project Owner must notify the Department in writing prior to any sale, transfer, exchange, or renaming of the Project or any portion of the Project, and this notification requirement shall be included in a LURA with respect to each Project. For Rural Projects that are federally assisted or purchased from HUD, the Department shall not authorize the sale of any apportionment of the entire tax credit development. (2) A Project Owner must notify the Department in writing of any change of address to which subsequent notices or communications shall be sent. (j) 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. (k) 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 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 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 QAP and 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 Carryover Allocations will be contingent upon the following: (1) The Project Owner's closing of the construction loan shall occur within 150 days from the date of the execution of the Carryover Allocation Document with a one-time 30 day extension. All requests for extensions by Applicants shall be submitted to the Department for review. The Committee may grant extensions, in its sole discretion, on a case-by-case basis. The Committee may, in its sole discretion, waive related fees. Copies of the closing documents must be submitted to the Department within two weeks after the closing. The Carryover Allocation will automatically be revoked if the Project Owner fails to meet the aforementioned closing deadline, and all credits previously allocated to that Project will be returned to the general pool for reallocation. (2) The Project Owner must commence and continue substantial construction activities within a year of the execution of the Carryover Allocation document and evidence such activity 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 in an expeditious manner. All requests for extensions by Applicants shall be submitted to the Department for review, and the Committee may grant extensions, in its sole discretion, on a case-by- case basis (d) The Department shall not allocate additional credits to a developer/Project Owner who is unable to provide evidence, satisfactory to the Department, of progress towards placements in service for a Project(s) that is in carryover. An allocation will be made in the name of the Applicant 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 may, upon request, approve a 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 review and approval by the Department. The approval of any such transfer does not constitute a representation to the effect that such transfer is permissible under the Code or without adverse consequences thereunder, and the Department may condition its approval upon receipt and approval of complete documentation regarding the new owner including all the criteria for scoring, evaluation and underwriting, among others, which were applicable to the original Applicant. (e) The Department shall make a housing credit allocation, either in the form of IRS Form 8609, with respect to current year allocations for buildings placed in service, or in the Carryover Allocation Document, for buildings not yet placed in service, to any 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. In order for an IRS Form 8609 to be issued with respect to a building in a Project, satisfactory evidence must be received by the Department that such building is completed and has been placed in service in accordance with the provisions of the Department's Cost Certification Procedures Manual. The Department shall mail or deliver 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 only 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; provided, however, that where an allocation is made pursuant to a Carryover Allocation Document on a project basis in accordance with the Code, sec.42(h)(1)(F), a housing credit dollar amount shall not be assigned to particular buildings in the Project until the issuance of IRS Forms 8609 with respect to such buildings. (f) In making a housing credit allocation, the Department shall specify a maximum Applicable Percentage, not to exceed the Applicable Percentage for the building permitted by the Code, 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). (g) Project inspections shall be required to show that the Project is built or rehabilitated according to required plans, and specifications. Subject to the following requirement contained in this subsection, 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, all Project 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 will require inspections to be made of the Project from time to time as determined at the sole discretion the Department. All such Project inspections shall be performed by an independent, third party inspector acceptable to the Department. The Project Owner shall pay all fees and costs of said inspections. (h) 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 invoices and receipts and statements for materials and labor utilized for the new construction or rehabilitation and, if applicable, a closing statement for the acquisition of the Project as well as for the closing of all interim and permanent financing for 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 IRS 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 that 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, 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 the Department from time to time as necessary to ensure that such fees compensate the Department for its administrative costs and 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 Applications and related documents submitted to the Department shall be mailed or delivered to Low Income Housing Tax Credit Program, Texas Department of Housing and Community Affairs, 507 Sabine, Suite 400, Austin, Texas 78701. sec.50.13.Withdrawals, Cancellations, Amendments. (a) A Project Owner may withdraw an Application prior to receiving a commitment, Carryover Allocation Document or Housing Credit Allocation, or may cancel a Commitment Notice by submitting to the Department a notice, as applicable, of withdrawal or cancellation. (b) The Department may consider an amendment to a Commitment Notice, Carryover Allocation or other requirement with respect to a Project if the revisions: (1) are 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 (unless the Project's ranking is adjusted because of such change); (4) do not involve a change in the Project's site; or (5) do not involve a change in the set-aside election. (c) The Department may cancel a Commitment Notice or Carryover Allocation prior to the issuance of IRS Form 8609 with respect to a Project if: (1) the Project Owner or any member of the Development Team, or the Project, as applicable, fails to meet any of the conditions of such Commitment Notice or Carryover Allocation or any of the undertakings and commitments made by the Project Owner in the applications process for the Project; (2) any statement or representation made by the Project Owner or made with respect to the Project Owner, the Development Team or the Project is untrue or misleading; (3) an event occurs with respect to any member of the Development Team which would have made the Project's Application ineligible for funding pursuant to sec.50.4(f) of this title (relating to Applications; Environmental Assessments; Market Study; Commitments; Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments), if such event had occurred prior to issuance of the Commitment Notice or Carryover Allocation; or (4) the Project Owner, any member of the Development Team, or the Project, as applicable, fails to comply with these Rules or the procedures or requirements of the Department. 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) The Department may amend this chapter and the Rules contained herein 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. sec.50.15.Forward Reservations; Binding Commitments. (a) Anything in sec.50.4 of this title (relating to Applications; Environmental Assessments; Market Study; Commitments; Extensions; Carryover Allocations; Agreements and Elections; Extended Commitments) or elsewhere in this chapter to the contrary notwithstanding, the Department with approval of the Board may determine to issue 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, Commitments 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 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) of this section. 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 adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 23, 1997. TRD-9705429 Larry Paul Manley Executive Director Texas Department of Housing and Community Affairs Effective date: May 13, 1997 Proposal publication date: March 21, 1997 For further information, please call: (512) 475-3726 TITLE 22. EXAMINING BOARDS PART XXXV. Board of Examiners for Speech- Language Pathology and Audiology CHAPTER 741.Speech-Language Pathologists and Audiologists The State Board of Examiners for Speech-Language Pathology and Audiology (board) adopts amendments to sec.sec.741.2, 741.32, 741.33, 741.41, 741.62, 741.65, 741.82, 741.85, 741.103, 741.142, 741.162, 741.163, 741.165, and 741.193, concerning speech-language pathology and audiology. Sections 741.41, 741.62, 741.65, 741.82, 741.85, 741.162, 741.163, and 741.165 are adopted with changes to the proposed text published in the December 6, 1996, issue of the Texas Register (21 TexReg 11714). However, a correction of error was published in the December 27, 1996, issue of the Texas Register (21 TexReg 12593). Sections 741.2, 741.32, 741.33, 741.103, 741.142, and 741.193 are adopted without changes and will not be republished. The adopted amendments require that licensed speech-language pathologists, individuals trained by the Texas Department of Health screening program, and registered nurses conduct hearing screening at 20 dB instead of 25 dB and defines criterion for failure; clarify that the section on stationary acoustical enclosures is for the purpose of fitting and dispensing hearing instruments; expand the code of ethics to prohibit practice solely by correspondence, to protect client's professional or personal information, to correct the section number of the reference to the Family Code, to define who may present speech- language pathology to an Admission, Review and Dismissal committee meeting, to establish supervisory responsibility and to include "any violation of this chapter"; expand and clarify the internship procedures, including requirements for supervisors and license/registration that must be applied for once the internship has been completed; expand and clarify requirements for the assistant license, including how an applicant who does not possess a baccalaureate degree in communicative sciences and disorders may meet this requirement, how an alternative plan to obtain the 25 hours of clinical observation and/or 25 hours of clinical assisting experience is approved, duties that may or may not be performed and the responsibility of the licensed speech-language pathologist or audiologist who assumed responsibility for the practice of the assistant; establish an audit for compliance with sec.sec.741.41, 741.65 and sec.741.85 relating to Code of Ethics, Requirements for an Assistant in Speech-Language Pathology License and Requirements for an Assistant in Audiology License, respectively, concerning the scope of practice and supervision of assistants; correct issuance of a license to include how the expiration date of the registration to fit and dispense hearing instruments is calculated and add issuance of the limited license to practice speech-language pathology in the public schools; clarify the renewal of a registration to fit and dispense hearing instruments, including expiration date; establish method to renew an intern license if the intern is currently not practicing; clarify procedures for renewal due to medical hardship; correct how the number of continuing education hours required for renewal of an initial license is calculated and that an original or certified copy of a passing examination score must be submitted if the licensee wishes to use this as meeting the continuing education requirement for renewal; establish procedures for late renewal of a license and add language to resolve a complaint by informal methods such as cease and desist order or an informal agreement. In addition, editorial changes were made to sec.sec.741.41, 741.62, 741.82, 741.85, and 741.163. The comments concerning sec.741.65, relating to the Requirements for an Assistant in Speech-Language Pathology License, and sec.741.85, relating to the Requirements for an Assistant in Audiology License, were directed specifically to speech-language pathology; however, the comments also apply to the assistant in audiology. There was one exception, the comment to sec.741.85(f)(1) concerning the cleaning of a hearing instrument. The following comments were received concerning the proposed sections. Comment: Concerning sec.sec.741.41(a)(8), 741.65(f)(2)(D)-(E) and 741.85(f)(2)(D)-(E), several commenters asked that the licensed assistant be allowed to attend an Admission, Review and Dismissal (ARD) meeting without the supervising speech-language pathologist being present. Because of the shortage of licensed speech-language pathologists practicing in the public schools, it is difficult for the licensed speech-language pathologist to attend every ARD. Wouldn't it be better to allow the assistant to present speech-language pathology on an ARD if the licensed speech-language pathologist is not available? Response: The board disagrees. If an assistant were allowed to attend the ARD without his or her supervisor being present, a parent may assume the assistant could respond to any questions he or she may have. An assistant does not have the academic preparation or experience required to conduct an evaluation or to interpret tests and may not respond to such questions. In most instances, incomplete or incorrect information is more detrimental than no information. However, an assistant may attend an ARD if the licensed supervising speech- language pathologist is also present. Section 741.41(a)(8) has been amended to remove the reference to the written report being presented by a voting member of an ARD because the board has no authority to regulate individuals not licensed by this board. Comment: Concerning sec.741.65 (e)(1) and (f) and sec.741.85(e)(1) and (f), a commenter asked that the required two hours per weeks of supervision be reduced for licensed assistants who have practiced for more than one year. Furthermore, the commenter stated that as the rule now stands, the assistant gets no credit for the experience he or she has gained. Another commenter stated that assistants with 4-5 years of experience should be allowed to have less supervision and to perform more tasks as opposed to an assistant who had just graduated or had only been practicing for 1-2 years. Also, what about the assistant who holds a master's degree in communication disorders, completed the post-graduate experience but has been unable to pass the examination for full licensure. Shouldn't this assistant be allowed to practice without as much supervision as the assistant with only a baccalaureate degree? Response: The board disagrees. The two hours per week of supervision is the minimum and this minimum should be maintained as long as the assistant holds the license. A licensed assistant who has little or no experience may require 50- 100% of supervision at first. Once the supervisor is confident in the assistant's ability to perform specific tasks, the amount of supervision may decrease but never less than the two hours per week. This would hold true for the assistant with a master's degree. If the assistant is unable to pass the national examination, he or she is not competent to practice without appropriate supervision. The duties an assistant may preform are assigned by the licensed supervisor but must conform to the requirements of sec.741.65(f) and sec.741.85(f) of the board rules. Comment: Concerning sec.741.65(f) and sec.741.85(f), a commenter stated the last paragraph is unclear. Does it mean only job descriptions and performance records should be current and made available within 30 days or does it also include "supervisory or other records"? Response: The board agrees that this sentence is not clear and has revised the rule to include all records. Comment: Concerning sec.741.65(f)(1) and sec.741.85(f)(1), a commenter asked if the assistant may administer structured instruments to record responses accurately and consistently according to the publisher's directions as well as the recording of observed behavior through structured methods for data collection purposes such as the "Goldman Fristoe". The assistant could in turn provide this data to his or her supervisor to be used in the assessment process. Response: The board agrees that if the assistant has been appropriately trained as determined by the licensed supervising speech-language pathologist, the assistant may do so. However, it should be noted that an assistant may not use published material that specifically requires graduate level training. The board does not believe a rule change is necessary. Comment: Concerning the previous comment, the same commenter asked whether an assistant may administer these structured instruments if the assistant did not acquire the appropriate training at a college or university. Should the assistant be required to complete the training at a college or university or could the school district or the licensed supervising speech-language pathologist provide structured training? Response: The board agrees that the training is necessary before the assistant may administer the tests; however, the licensed supervising speech-language pathologist must determine if the assistant has received the appropriate training before assigning the tasks. If the supervisor determines the assistant has not been adequately trained to perform the specific tasks, the supervisor may not assign the tasks to the assistant. The supervisor may provide appropriate training or the assistant may acquire training through another source such as a college/university. The board does not believe a rule change is required. Comment: Concerning sec.741.85(f)(1), a commenter asked that the duties assigned to an assistant in audiology include the cleaning of a hearing instrument? Response: The board disagrees because the cleaning of a hearing instrument is not considered the practice of audiology nor is it regulated under Article 4566- 1.01, et al, V.T.C.S. An individual who happened to be licensed as an assistant may perform this task but he or she would not be practicing as an assistant in audiology while doing so. Comment: Concerning sec.741.65(f)(1)-(2) and sec.741.85(f)(1)-(2), a commenter asked if the licensed assistant may administer such tests as the "Preschool Language Scale", the "Peabody Picture Vocabulary Test" or the "Goldman-Fristoe Test of Articulation", leaving the supervisor to score the responses, interpret the findings, and write the report. The testing session would be taped for later review. Response: The board agrees that under these specific circumstances an assistant may administer the test but may not diagnose or evaluate the results. The board does not believe a rule change is required. Comment: Concerning sec.741.65(f)(2)(H) and sec.741.85(f)(2)(H), a commenter stated that an assistant should be allowed to complete progress reports for student report cards. Response: The board disagrees because this is a determination of progress and the assistant does not have the education or experience to make this determination. Comment: Concerning the first sentence in sec.741.65(g) and sec.741.85(g), a commenter stated it is unclear whether the assistant could practice if the license were renewed without the submission of the supervisory responsibility statement. Response: The board agrees that this language is unclear. An assistant may never practice without the appropriate supervisory responsibility form on file in the board office. The board revised these subsections by adding language (final subsection (h)), moving the current third sentence of subsection (g) to a new subsection (i), and renumbering the subsequent subsections accordingly. Comment: Concerning sec.741.65(h) and sec.741.85(i) as proposed, a commenter stated this section does not specify what information will be required, how the licensees will be notified or how this information is to be documented. Does the board have plans to prepare more detailed information on the process? The commenter requested that the assistant and supervisor be provided specifics or a check list. In addition, the commenter asked what documentation would be required to safeguard the supervisor if questions of ethics arise? Response: The board agrees that more information is required but does not believe a rule change is necessary. The board office is in the process of developing this documentation and shall make it available to licensees as soon as possible. Concerning the question of ethical practices, the board believes that each licensee is personally responsible for his or her practice. Comment: Concerning sec.741.162(c), a commenter stated that since the report of completed internship must also be signed by the intern, shouldn't the third sentence be changed to reflect this? Response: The board agrees and has added language to this effect. Comment: Concerning sec.741.163(1)(B) (which was not proposed for change), a commenter stated that if the intent of the language refers only to college/university coursework or events approved by the American Medical Association that it be clarified to state this. Response: The board agrees and has added language to this effect. This change is consistent with proposed amendments and is made for clarification purposes. Comment: Concerning sec.741.165(c)(1), a commenter asked if the registration to fit and dispense hearing instruments should be included. Response: The board disagrees because fitting and dispensing of hearing instruments is within the scope of practice of an audiologist. Comment: Concerning sec.741.165(c)(3)(E), a commenter asked if this sentence meant that the hours must be currently available for use at the time of the request to renew the expired license? Response: The board agreed that this was the intent and has added language to clarify this requirement. In addition: the Correction of Error notice published in the December 27, 1996, issue of the Texas Register (21 TexReg 12593) was incorrect as follows: "The correction stated the "Texas Department of Health" proposed the amendments but actually, the State Board of Examiners for Speech-Language Pathology and Audiology proposed the amendments. Also, the correction to sec.741.65(e)(1) published in the December 6, 1996, issue of the Texas Register (21 TexReg 11718) which added the words "speech-language" between "licensed" and "audiologist" was incorrect. It should have stated replace the term "audiologist" with "speech- language pathologist" in the second and third sentences. The final rules as published will hopefully reflect the corrections." Groups and associations that commented on sec.741.41 and sec.741.65 were the Harris County Department of Education; the Faculty at Our Lady of the Lake University; the Mexia State School; and Abilene State School. Other comments were received from individuals. The commenters were neither for or against the sections in their entirety; however, they had questions and offered suggestions regarding changes. SUBCHAPTER A.Introduction 22 TAC sec.741.2 The amendment is adopted under the Texas Civil Statutes, Article 4512j, sec.5 and sec.9A, which provide the State Board of Examiners for Speech-Language Pathology and Audiology with the authority to adopt rules necessary to administer and enforce Article 4512j, and to regulate licensees who fit and dispense hearing instruments. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 23, 1997. TRD-9705420 Charles P. Kuratko Chairperson State Board of Examiners of Speech-Language Pathology and Audiology Effective date: May 13, 1997 Proposal publication date: December 6, 1996 For further information, please call: (512) 458-7236 SUBCHAPTER C.Testing Procedures and Equipment 22 TAC sec.sec.741.32-741.33 The amendments are adopted under the Texas Civil Statutes, Article 4512j, sec.5 and sec.9A, which provide the State Board of Examiners for Speech-Language Pathology and Audiology with the authority to adopt rules necessary to administer and enforce Article 4512j, and to regulate licensees who fit and dispense hearing instruments. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 23, 1997. TRD-9705419 Charles P. Kuratko Chairperson State Board of Examiners of Speech-Language Pathology and Audiology Effective date: May 13, 1997 Proposal publication date: December 6, 1996 For further information, please call: (512) 458-7236 SUBCHAPTER D.The Standards of Professional and Ethical Conduct 22 TAC sec.741.41 The amendment is adopted under the Texas Civil Statutes, Article 4512j, sec.5 and sec.9A, which provide the State Board of Examiners for Speech-Language Pathology and Audiology with the authority to adopt rules necessary to administer and enforce Article 4512j, and to regulate licensees who fit and dispense hearing instruments. sec.741.41.Code of Ethics. (a) The purpose of this subchapter is to establish the standards of professional and ethical conduct required of a speech-language pathologist, an audiologist, an intern, and an assistant licensed or registered under Texas Civil Statutes, Article 4512j (Act), and constitutes a code of ethics as authorized by the Act, sec.17(a)(3). It is the responsibility of all speech-language pathologists, audiologists, interns, and assistants licensed or registered under the Act to uphold the highest standards of integrity and ethical principles. An individual licensed or registered under the Act: (1) shall honor his or her professional responsibility to each client; (A) (No change.) (B) The licensee or registrant shall not: (i) - (v) (No change.) (vi) engage in sexual contact, including intercourse, kissing, or fondling, with a client or an assistant, intern, or student supervised by the licensee or registrant; (vii) use alcohol or drugs when the use adversely affects or could adversely affect the licensee's or registrant's provision of professional services; (viii) evaluate or treat speech, language, or hearing disorders solely by correspondence; and (ix) reveal, without authorization, any professional or personal information about the person served professionally, unless required by law to do so, or unless doing so is necessary to protect the welfare of the person or of the community; (2)-(4) (No change.) (5) shall inform the board of violations of this code of ethics or of any other provision of the chapter. A licensee or registrant: (A)-(B) (No change.) (C) having cause to believe that a child's physical or mental health or welfare has been or may be adversely affected by abuse or neglect by any person shall report in accordance with the Family Code, sec.261.101(b); and (D) (No change.) (6) (No change.) (7) who supervise assistants shall be responsible for evaluations, interpretation and case management; (8) shall not designate anyone other than a licensed speech-language pathologist to represent speech-language pathology to an Admission, Review and Dismissal (ARD); (9) shall not intentionally or knowingly offer to pay or agree to accept any remuneration directly or indirectly, overtly or covertly, in cash or in kind, to or from any person, firm, association of persons, partnership, or corporation for securing or soliciting patients or patronage for or from any health care professional. The provisions of the Health and Safety Code, sec.161.091, et seq., concerning the prohibition of illegal remuneration apply to licensees; (10) who provides direct patient care must comply with Health and Safety Code, Chapter 85, Subchapter I, concerning the prevention of the transmission of HIV or Hepatitis B virus by infected health care workers; (11) shall be subject to disciplinary action by the board if the licensee or registrant is issued a public letter of reprimand, is assessed a civil penalty by a court, or has an administrative penalty imposed by the attorney general's office under the Crime Victims Compensation Act, Texas Civil Statutes, Article 8309-1; and (12) shall make a reasonable attempt to notify each client of the name, mailing address, and telephone number of the board for the purpose of directing complaints to the board by providing notification: (A) on a sign prominently displayed in the primary place of business of each licensee; and (B) on a written document such as a written contract, a bill for service, or office information brochure provided by a licensee or registrant to a client or third party. (b) (No change.) This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 23, 1997. TRD-9705422 Charles P. Kuratko Chairperson State Board of Examiners of Speech-Language Pathology and Audiology Effective date: May 13, 1997 Proposal publication date: December 6, 1996 For further information, please call: (512) 458-7236 SUBCHAPTER E.Requirements for Licensure and Registration of Speech-Language Pathologists 22 TAC sec.741.62, sec.741.65 The amendments are adopted under the Texas Civil Statutes, Article 4512j, sec.5 and sec.9A, which provide the State Board of Examiners for Speech-Language Pathology and Audiology with the authority to adopt rules necessary to administer and enforce Article 4512j, and to regulate licensees who fit and dispense hearing instruments. sec.741.62.Requirements for an Intern in Speech-Language Pathology License. (a) An applicant who has completed the requirements of sec.741.61(1)-(11) of this title (relating to Requirements for a Speech-Language Pathology License) must be licensed as an intern in order to commence the supervised professional experience. (b) An applicant who has successfully completed all academic and clinical requirements of sec.741.61(1)-(11) of this title but who has not had the degree officially conferred may be licensed as an intern in order to commence the supervised professional experience but must submit an original or certified copy of a letter from the program director verifying that the applicant has met all academic coursework, clinical practicum requirements, and completed a thesis or passed a comprehensive examination, if required, and is awaiting the date of next graduation for the degree to be conferred. This letter is in addition to transcripts required in subsection (h) of this section. (c)-(f) (No change.) (g) The internship must be completed under the supervision of an individual who holds a valid Texas license in speech-language pathology and who possesses a minimum of a master's degree with a major in one of the areas of communication sciences or disorders. (h) An original or certified copy of the transcripts is required and will be evaluated under sec.741.61(9) of this title. (i)-(l) (No change.) (m) An original intern plan and agreement of supervision form signed by the supervisor and applicant must be submitted. If a major change in the plan occurs, such as a change of supervisor, the intern must cease practicing. A new form must be submitted and approved by the board office. The board office shall notify the intern when he or she may resume practice. To continue to practice without a current intern plan and agreement of supervision form on file in the board office may result in revocation of the intern's license. (n)-(p) (No change.) (q) Once the intern has completed the 36 weeks of full-time, or its part-time equivalent, of supervised professional experience as defined in subsection (d) of this section, the individual may apply for a speech-language pathology license under sec.741.61 of this title or the temporary certificate of registration under sec.741.66 of this title (relating to Requirements for a Temporary Certificate of Registration in Speech-Language Pathology). (r) The intern may continue to practice under supervision if he or she holds a valid intern license while awaiting the processing of the speech-language pathology license or the temporary certificate of registration in speech- language pathology. The current supervisor must submit a letter stating he or she will continue to supervise the intern from the "Ending Date of Internship" as shown on the Report of Completed Internship form until the intern receives either the speech- language pathology license or the temporary certificate of registration. However, if the intern changes supervisor, the new supervisor must submit the Intern Plan and Agreement of Supervision form instead of the letter. sec.741.65.Requirements for an Assistant in Speech-Language Pathology License. (a) (No change.) (b) An applicant for an assistant in speech-language pathology license must meet the following requirements: (1) a baccalaureate degree in communication sciences and disorders; (2)-(5) (No change.) (c) An applicant must possess a baccalaureate degree as required in subsection (b)(1) of this section; however, an applicant who does not possess a baccalaureate degree in communicative sciences or disorders but who completed 24 graduate hours in communicative sciences or disorders, which may include some leveling hours, may meet this requirement. The board or the board's designee will evaluate transcripts on a case-by-case basis to ensure equivalent academic preparation. (d) If an applicant has not obtained the hours required in subsection (b)(3) of this section, the applicant may file a written request for an alternative method to obtain the hours. A deficiency plan for the clinical observation and/or assisting experience designed and signed by an appropriate sponsor must be submitted with the application and fee. Such a plan must be approved by board staff and the license issued before any observation or clinical assisting experience clock hours may begin. The board may ask for further information or revisions before approving or disapproving the plan. If approved, an assistant license shall be issued upon payment of the initial license fee. The individual shall then complete the hours in accordance with the board approved plan within 60 days. If the board office does not receive proof of successful completion of the hours by the end of the 60 days, the individual shall be considered to have voluntarily surrendered the assistant license. (e) Direct supervision of speech-language pathology duties assigned to the assistant shall be provided by a licensed speech-language pathologist. (1) The assistant's initial client contact shall be directly supervised. Thereafter, the minimum supervision requirements for an assistant by the licensed speech-language pathologist shall be no less than two hours a week, at least half of which is direct on site supervision at the location where the assistant is employed. If an alternative arrangement is needed, the licensed speech-language pathologist must submit a proposed plan for review by the board or the appropriate committee to determine if the plan is acceptable. Indirect methods of supervision such as audio and/or video tape recording, telephone communication, numerical data, or other means of reporting may be utilized. (2) Supervisory records shall be maintained by the licensed speech-language pathologist which verify regularly scheduled monitoring, assessment, and evaluation of the assistant's and client's performance. Such documentation may be requested by the board. (A) An assistant may conduct assessments which includes data collection, clinical observation and routine test administration if the assistant has been appropriately trained and the assessments are conducted under the direction of the supervisor. (B) An assistant may not conduct an evaluation which includes diagnostic testing, test and observation interpretation, diagnosis, decision making, statement of severity or implication, case selection or case load decisions. (3) If a change in the supervisory responsibility occurs, a new supervisory responsibility statement must be submitted and approved by the board office before the assistant may resume practice. (f) Although the licensed speech-language pathologist may delegate specific clinical tasks to an assistant, the responsibility to the client for all services provided cannot be delegated. The licensed speech-language pathologist must ensure that all services provided are in compliance with this chapter. The assistant may execute specific components of the clinical speech, language, and/or hearing program if the licensed speech-language pathologist determines that the assistant has received the training and has the skill to accomplish that task, and the licensed speech- language pathologist provides sufficient supervision to ensure appropriate completion of the task assigned to the assistant. The licensed speech-language pathologist need not be present when the assistant is completing the assigned tasks, however, the licensed speech- language pathologist must document all services provided and direct on-site supervision of the assistant. The licensed speech-language pathologist must keep job descriptions and performance records. Records must be current and must be made available to the board within 30 days of the date of the board's request for such records. (1) Examples of duties which an assistant may be assigned by the speech-language pathologist who agreed to accept responsibility for the services provided by the assistant, provided appropriate training has been received, are to: (A) conduct or participate in speech, language, and/or hearing screening; (B) implement the treatment program or the individual education plan (IEP) designed by the licensed speech-language pathologist; (C) provide carry-over activities which are the therapeutically designed transfer of a newly acquired communication ability to other contexts and situations; (D) collect data; (E) administer routine tests as defined by the board; (F) maintain clinical records; (G) prepare clinical materials; and (H) participate with the licensed speech-language pathologist in research projects, staff development, public relations programs, or similar activities as designated and supervised by the licensed speech-language pathologist. (2) The assistant must not: (A) conduct evaluations even under supervision since this is a diagnostic and decision making activity; (B) interpret results of routine tests; (C) interpret observations or data into diagnostic statements, clinical management strategies, or procedures; (D) present speech-language pathology at staff meetings or on an admission, review and dismissal (ARD); (E) attend staffing meeting or ARD without the supervisor being present; (F) design a treatment program or individual education plan (IEP); (G) determine case selection; (H) present written or oral reports of client information; (I) refer a client to other professionals or other agencies; (J) use any title which connotes the competency of a licensed speech-language pathologist; or (K) practice as an assistant in speech-language pathology without a valid supervisory responsibility statement on file in the board office. (3) Any reference to the licensee's title shall state clearly that the license status is that of an assistant. (g) An assistant may renew a license without submitting a current supervisory responsibility statement completed by the licensed speech-language pathologist. However, the assistant may not practice until a licensed speech-language pathologist agrees to accept responsibility for the services provided by the assistant and a new supervisory responsibility statement is submitted and approved by the board office. (h) If at any time, the assistant loses his or her licensed speech-language pathologist, the assistant may not practice until another licensed speech- language pathologist agrees to accept responsibility for the services provided by the assistant and a new supervisory responsibility statement is submitted and approved by the board office. (i) To practice without a current supervisory responsibility statement on file in the board office may result in revocation of the assistant's license. (j) The board will audit 10% of licensed assistants each month for compliance with this section and sec.741.41 of this title (relating to the Code of Ethics). The board shall notify an assistant by mail that he or she has been selected for an audit. Upon receipt of an audit notification, the assistant and the licensed speech-language pathologist who agreed to accept responsibility for the services provided by the assistant must mail the requested proof of compliance to the board. All licensees shall comply with any board requests for documentation and information concerning compliance with the board audit. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 23, 1997. TRD-9705421 Charles P. Kuratko Chairperson State Board of Examiners of Speech-Language Pathology and Audiology Effective date: May 13, 1997 Proposal publication date: December 6, 1996 For further information, please call: (512) 458-7236 SUBCHAPTER F.Requirements for Licensure and Registration of Audiologists 22 TAC sec.741.82, sec.741.85 The amendments are adopted under the Texas Civil Statutes, Article 4512j, sec.5 and sec.9A, which provide the State Board of Examiners for Speech-Language Pathology and Audiology with the authority to adopt rules necessary to administer and enforce Article 4512j, and to regulate licensees who fit and dispense hearing instruments. sec.741.82.Requirements for an Intern in Audiology License. (a) An applicant who has completed the requirements of sec.741.81(1)-(11) of this title (relating to Requirements for an Audiology License) must be licensed as an intern in order to commence the supervised professional experience. (b) An applicant who has successfully completed all academic and clinical requirements of sec.741.81(1)-(11) of this title but who has not had the degree officially conferred may be licensed as an intern in order to commence the supervised professional experience but must submit an original or certified copy of a letter from the program director verifying that the applicant has met all academic coursework, clinical practicum requirements and completed a thesis or passed a comprehensive examination, if required, and is awaiting the date of next graduation for the degree to be conferred. This letter is in addition to transcripts referenced in subsection (h) of this section. (c)-(f) (No change.) (g) The internship must be completed under supervision of an individual who holds a valid Texas license in audiology and who possesses a minimum of a master's degree with a major in one of the areas of communication sciences or disorders. (h) An original or certified copy of the transcripts is required and will be evaluated under sec.741.81(11) of this title. (i)-(l) (No change.) (m) An original intern plan and agreement of supervision form signed by the supervisor and applicant must be submitted. If a major change in the plan occurs, such as a change of supervisor, the intern must cease practicing. A new form must be submitted and approved by the board office. The board office shall notify the intern when he or she may resume practice. To continue to practice without a current intern plan and agreement of supervision form on file in the board office may result in revocation of the intern's license. (n)-(p) (No change.) (q) Once the intern has completed the 36 weeks of full-time, or its part-time equivalent, of supervised professional experience as defined in subsection (d) of this section, the individual may apply for an audiology license under sec.741.81 of this title or the temporary certificate of registration under sec.741.86 of this title (relating to Requirements for a Temporary Certificate of Registration in Audiology). (r) The intern may continue to practice under supervision if he or she holds a valid intern license while awaiting the processing of the audiology license or the temporary certificate of registration in audiology. The current supervisor must submit a letter stating he or she will continue to supervise the intern from the "Ending Date of Internship" as shown on the Report of Completed Internship form until the intern receives either the audiology license or the temporary certificate of registration. However, if the intern changes supervisors, the new supervisor must submit the Intern Plan and Agreement of Supervision form instead of the letter. sec.741.85.Requirements for an Assistant in Audiology License. (a) (No change.) (b) An applicant for an assistant in audiology license must meet the following requirements: (1) a baccalaureate degree in communication sciences and disorders; (2)-(5) (No change.) (c) An applicant must possess a baccalaureate degree as required in subsection (b)(1) of this section; however, an applicant who does not possess a baccalaureate degree in communicative sciences or disorders but who completed 24 graduate hours in communicative sciences or disorders, which may include some leveling hours, may meet this requirement. The board or the board's designee will evaluate transcripts on a case-by-case basis to ensure equivalent academic preparation. (d) If an applicant has not obtained the hours referenced in subsection (b)(3) of this section, the applicant may file a written request for an alternative method to obtain the hours. A deficiency plan for the clinical observation and/or assisting experience designed and signed by the appropriate sponsor must be submitted with the application and fee. Such a plan must be approved by board staff and the license issued before any observation or clinical assisting experience clock hours may begin. The board may ask for further information or revisions before approving or disapproving the plan. If approved, an assistant license shall be issued upon payment of the initial license fee. The individual shall then complete the hours in accordance with the board approved plan within 60 days. If the board office does not receive proof of successful completion of the hours by the end of the 60 days, the individual shall be considered to have voluntarily surrendered the assistant license. (e) Direct supervision of speech-language pathology duties assigned to the assistant shall be provided by a licensed audiologist. (1) The assistant's initial client contact shall be directly supervised. Thereafter, the minimum supervision requirements for an assistant by the licensed audiologist shall be no less than two hours a week, at least half of which is direct on site supervision at the location where the assistant is employed. If an alternative arrangement is needed, the licensed audiologist must submit a proposed plan for review by the board or the appropriate committee to determine if the plan is acceptable. Indirect methods of supervision such as audio and/or video tape recording, telephone communication, numerical data, or other means of reporting may be utilized. (2) Supervisory records shall be maintained by the licensed audiologist which verify regularly scheduled monitoring, assessment, and evaluation of the assistant's and client's performance. Such documentation may be requested by the board. (A) An assistant may conduct assessments which includes data collection, clinical observation and routine test administration if the assistant has been appropriately trained and the assessments are conducted under the direction of the supervisor. (B) An assistant may not conduct an evaluation which includes diagnostic testing, test and observation interpretation, diagnosis, decision making, statement of severity or implication, case selection or case load decisions. (3) If a change in the supervisory responsibility occurs, a new supervisory responsibility statement must be submitted and approved by the board office before the assistant may resume practice. (f) Although the licensed audiologist may delegate specific clinical tasks to an assistant, the responsibility to the client for all services provided cannot be delegated. The licensed audiologist must ensure that all services provided are in compliance with this chapter. The assistant may execute specific components of the clinical speech, language, and/or hearing program if the licensed audiologist determines that the assistant has received the training and has the skill to accomplish that task, and the licensed audiologist provides sufficient supervision to ensure appropriate completion of the task assigned to the assistant. The licensed audiologist need not be present when the assistant is completing the assigned tasks, however, the licensed audiologist must document all services provided and direct on-site supervision of the assistant. The licensed audiologist must keep job descriptions and performance records. Records must be current and must be made available to the board within 30 days of the date of the board's request for such records. (1) Examples of duties which an assistant may be assigned by the audiologist who agreed to accept responsibility for the services provided by the assistant, provided appropriate training has been received, are to: (A) conduct or participate in speech, language, audiometric and/or hearing screening; (B) conduct aural habilitation or rehabilitation; (C) provide carry-over activities which are the therapeutically designed transfer of a newly acquired communication ability to other contexts and situations; (D) collect data; (E) administer routine tests as defined by the board; (F) maintain clinical records; (G) prepare clinical materials; and (H) participate with the licensed audiologist in research projects, staff development, public relations programs, or similar activities as designated and supervised by the licensed audiologist. (2) The assistant must not: (A) conduct evaluations even under supervision since this is a diagnostic and decision making activity; (B) interpret results of routine tests; (C) interpret observations or data into diagnostic statements, clinical management strategies, or procedures; (D) present audiology at staff meetings or on an admission, review and dismissal (ARD); (E) attend staffing meeting or ARD without the supervisor being present; (F) design a treatment program; (G) determine case selection; (H) present written or oral reports of client information; (I) refer a client to other professionals or other agencies; (J) use any title which connotes the competency of a licensed audiologist; or (K) practice as an assistant in audiology without a valid supervisory responsibility statement on file in the board office. (3) Any reference to the licensee's title shall state clearly that the license status is that of an assistant. (g) An assistant may renew a license without submitting a current supervisory responsibility statement completed by the licensed audiologist. However, the assistant may not practice until a licensed audiologist agrees to accept responsibility for the services provided by the assistant and a new supervisory responsibility statement is submitted and approved by the board office. (h) If at any time, the assistant loses his or her licensed audiologist, the assistant may not practice until another licensed audiologist agrees to accept responsibility for the services provided by the assistant and a new supervisory responsibility statement is submitted and approved by the board office. (i) To practice without a current supervisory responsibility statement on file in the board office may result in revocation of the assistant's license. (j) An assistant may not engage in tasks for the fitting, dispensing or sale of a hearing instrument; however, an assistant who is licensed under Texas Civil Statutes, Article 4566-1.01, et seq., may engage in activities as allowed by that law and is not considered to be functioning under his or her assistant license when performing those activities. (k) The board will audit 10% of licensed assistants each month for compliance with this section and sec.741.41 of this title (relating to the Code of Ethics). The board shall notify an assistant by mail that he or she has been selected for an audit. Upon receipt of an audit notification, the assistant and the licensed audiologist who agreed to accept responsibility for the services provided by the assistant must mail the requested proof of compliance to the board. All licensees shall comply with any board requests for documentation and information concerning compliance with the board audit. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 23, 1997. TRD-9705425 Charles P. Kuratko Chairperson State Board of Examiners of Speech-Language Pathology and Audiology Effective date: May 13, 1997 Proposal publication date: December 6, 1996 For further information, please call: (512) 458-7236 SUBCHAPTER H.Application Procedures 22 TAC sec.741.103 The amendment is adopted under the Texas Civil Statutes, Article 4512j, sec.5 and sec.9A, which provide the State Board of Examiners for Speech-Language Pathology and Audiology with the authority to adopt rules necessary to administer and enforce Article 4512j, and to regulate licensees who fit and dispense hearing instruments. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 23, 1997. TRD-9705424 Charles P. Kuratko Chairperson State Board of Examiners of Speech-Language Pathology and Audiology Effective date: May 13, 1997 Proposal publication date: December 6, 1996 For further information, please call: (512) 458-7236 SUBCHAPTER J.Licensing and Registration Procedures 22 TAC sec.741.142 The amendment is adopted under the Texas Civil Statutes, Article 4512j, sec.5 and sec.9A, which provide the State Board of Examiners for Speech-Language Pathology and Audiology with the authority to adopt rules necessary to administer and enforce Article 4512j, and to regulate licensees who fit and dispense hearing instruments. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 23, 1997. TRD-9705423 Charles P. Kuratko Chairperson State Board of Examiners of Speech-Language Pathology and Audiology Effective date: May 13, 1997 Proposal publication date: December 6, 1996 For further information, please call: (512) 458-7236 SUBCHAPTER K.License and Registration Renewal 22 TAC sec.sec.741.162, 741.163, 741.165 The amendments are adopted under the Texas Civil Statutes, Article 4512j, sec.5 and sec.9A, which provide the State Board of Examiners for Speech-Language Pathology and Audiology with the authority to adopt rules necessary to administer and enforce Article 4512j, and to regulate licensees who fit and dispense hearing instruments. sec.741.162.General. (a) Each licensed speech-language pathologist, audiologist, intern or assistant is responsible for license renewal before the expiration date. The board shall use the following system to determine the date on which the license expires. (1)-(2) (No change.) (3) An audiologist or intern in audiology registered to fit and dispense hearing instruments must renew the registration at the time the license is renewed. The registration will expire the same day as that of either the audiology or the intern in audiology license. (b) (No change.) (c) Each licensee shall annually pay the nonrefundable fee for license renewal. The executive secretary shall not consider a license to be renewed until the licensee has completed, dated and signed the renewal form in the presence of a notary public and submitted this form with proof of earned continuing education and the renewal fee to the board office. In addition, an intern must submit the report of completed internship form signed by the intern and the supervisor verifying the professional experience completed and the intern plan and agreement of supervision form for the following year's experience. If the intern is currently not practicing, the intern must submit a signed statement explaining why he or she is not currently practicing. An assistant must provide an updated supervisory responsibility statement signed by the assistant's supervisor. The post-marked date is the date of mailing. (d)-(i) (No change.) (j) Prior to expiration of a license, a licensee may request inactive status and, if accepted, shall remain in this status until renewed or deleted in accordance with sec.741.164 of this title (relating to Inactive Status). (k)-(m) (No change.) (n) In case of medical hardship, a licensee may: (1) request that the license be renewed without a penalty being assessed but the issue date shall reflect the actual date of reactivation if the following is submitted: (A)-(B) (No change.) (C) the renewal form and fee; or (2) (No change.) (o)-(q) (No change.) sec.741.163.Requirements for Continuing Professional Education. Continuing professional education requirements must be met for renewal of a speech-language pathology, audiology, intern or assistant license. (1) Continuing professional education in speech-language pathology and audiology consists of a series of planned individual learning experiences beyond the basic educational program which has led to a degree or qualifies one for licensure. (A) (No change.) (B) University/college coursework or events approved by the American Medical Association under subparagraph (A)(iv) of this paragraph shall be considered if the licensee submits a description of the continuing education activity; prior approval is advised. Review by the board or the appropriate committee to determine that the activity is in a related area may require the submission of additional information. Any continuing education hours earned in a related area must further the knowledge of speech-language pathology or audiology or enhance service delivery. Partial credit may be awarded. (2)-(3) (No change.) (4) Ten clock hours (one CEU) will be required for yearly renewal; provided, however, 15 clock hours (1.5 CEU's) will be required for holders of dual speech- language pathology and audiology licenses. When renewing an initial license, the licensee must submit the following continuing education hours based upon the number of months for which the initial license was approved: (A)-(L) (No change.) (5)-(6) (No change.) (7) The taking and passing of the licensure examination in speech-language pathology or audiology as referenced in sec.741.122 of this title (relating to Administration) within the renewal period, will meet the continuing education requirement for license renewal for three consecutive years. The licensee must submit an original or certified copy of a passing examination score. (8)-(10) (No change.) sec.741.165.Late Renewal of a License. (a)-(b) (No change.) (c) The licensee must submit the following if he or she wishes to renew the license: (1) the Late Renewal of a License form that includes a statement as to whether or not the licensee has practiced under Texas Civil Statutes, Article 4512j (Act) as a speech-language pathologist, audiologist, intern in speech-language pathology, intern in audiology, assistant in speech-language pathology or assistant in audiology since expiration of the 60-day grace period; (2) payment of the late renewal penalty fee; and (3) proof of having earned or accrued continuing education as follows: (A) if renewing an initial license before the end of the first year of the inactive status, the number of continuing education hours that must be earned are listed under sec.741.163(4) of this title (relating to Requirements for Continuing Professional Education); (B) if renewing before the end of the first year of inactive status, at least 10 continuing education hours or 15 for holders of dual speech-language pathology and audiology licenses; (C) if renewing at the end of the first year of inactive status but before the end of the second year, at least 20 continuing education hours or 30 hours for holders of dual speech-language pathology and audiology licenses; (D) if renewing at the end of the second year of inactive status, at least 30 continuing education hours or 45 hours for holders of dual speech-language pathology and audiology licenses; and (E) the hours earned or accrued before expiration of the license shall count toward meeting these hours as long as the hours are still available for use when the request for renewal is received. (d)-(f) (No change.) This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 23, 1997. TRD-9705426 Charles P. Kuratko Chairperson State Board of Examiners of Speech-Language Pathology and Audiology Effective date: May 13, 1997 Proposal publication date: December 6, 1996 For further information, please call: (512) 458-7236 SUBCHAPTER M.Denial, Probation, Suspension, or Revocation of Licensure or Registration 22 TAC sec.741.193 The amendment is adopted under the Texas Civil Statutes, Article 4512j, sec.5 and sec.9A, which provide the State Board of Examiners for Speech-Language Pathology and Audiology with the authority to adopt rules necessary to administer and enforce Article 4512j, and to regulate licensees who fit and dispense hearing instruments. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 23, 1997. TRD-9705427 Charles P. Kuratko Chairperson State Board of Examiners of Speech-Language Pathology and Audiology Effective date: May 13, 1997 Proposal publication date: December 6, 1996 For further information, please call: (512) 458-7236