10 TAC §9.1, §9.7
The Texas Department of Housing and Community Affairs (TDHCA)
proposes amendments to §9.1 and §9.7 concerning the allocation of
Community Development Block Grant (CDBG) non-entitlement area funds under
the Texas Community Development Program (TCDP).
The amendments are being proposed to establish the standards and procedures
by which TDHCA will allocate 2001 fiscal year economic development funds.
The amendments are being proposed to make changes to the application and selection
criteria for the Texas Capital Fund.
Sandy Mauro, director of the Texas Community Development Program, has determined
that for the period that the sections are in effect there will be no fiscal
implications for state or local government as a result of enforcing or administering
the sections.
Ms. Mauro also has determined that for the period that the sections are
in effect, the public benefit as a result of enforcing the sections will be
the equitable allocation of CDBG non-entitlement area funds to eligible units
of general local government in Texas. There will be no effect on small businesses.
There are no anticipated economic costs to persons who are required to comply
with the sections as proposed.
Comments on the proposal may be submitted to Anne Paddock, Deputy General
Counsel, Texas Department of Housing and Community Affairs, 507 Sabine, P.O.
Box 13941, Austin, Texas 78711-3941 or by e-mail at the following address
apaddock@tdhca.state.tx.us.
The amendments are proposed under Texas Government Code, Chapter
2306, §2306.098, which provides TDHCA with the authority to allocate
Community Development Block Grant non-entitlement area funds to eligible counties
and municipalities according to department rules.
No other code, article, or statute is affected by the proposed amendments
to §9.1 and § 9.7.
§9.1.General Provisions.
(a) - (d)
(No change).
(e)
Ineligible activities. Any type of activity not described
or referred to in the Federal Housing and Community Development Act of 1974, §5305(a)
(42 United States Code §5301 et seq.) is ineligible for funding under
the Texas Community Development Program.
(1)
Specific ineligible activities include, but are not limited
to: construction of buildings and facilities used for the general conduct
of government (e.g., city halls and courthouses); new housing construction,
except as described as eligible under the current Texas Community Development
Program application guides; the financing of political activities; purchases
of construction equipment (except in limited circumstances under the small
towns environment program); income payments, such as housing allowances; most
operation and maintenance expenses; pre-contract costs, except for costs incurred
prior to submittal of an application and paid with local government or other
funds for administrative consultant and engineering/architectural services
and pre-agreement costs described in a Texas Community Development Program
contract;[
prisons/detention centers; government supported facilities;
] and racetracks.
(2)
The following activities and/or uses are specifically ineligible
under the Texas Capital Fund: monies may not be used for speculation, investment
or excess improvements over the minimum improvements needed for the business.
TCF funds may not be utilized for refinancing or to repay the applicant, a
local related economic development entity, the benefitting business or its
owners and related parties for expenditures.[
Educational institutions,
including but not limited to colleges and/or universities, and governmental
entities may not qualify as the benefitting business. Ineligible infrastructure
activities/ improvements include, but are not limited to: landfills, incinerators,
recycling facilities, machinery and equipment. Real estate improvements designed
and/or built for a single, special or limited use or purpose are an ineligible
use of funds.
] Real estate improvements do not include machinery and
equipment used in the production and/or services marketed by the business.
(f) - (k)
(No change).
(l)
Unobligated and recaptured funds.
Deobligated funds,
unobligated funds and program income (except program income recovered from
local revolving loan funds) generated by Texas Capital Fund projects shall
be retained for expenditure in accordance with the Consolidated Plan. Program
income derived from Texas Capital Fund projects will be used by TDHCA for
eligible Texas Community Development Program activities in accordance with
the Consolidated Plan. Any deobligated funds, unobligated funds, program income,
and unused funds from the current year's allocation or from previous years'
allocations derived from any Texas Community Development Program Fund, including
program income recovered from Texas Capital Fund local revolving loan funds,
and any reallocated funds which HUD has recaptured from Small Cities may be
redistributed among the established current program year fund categories,
for otherwise eligible projects. The selection of eligible projects to receive
such funds is approved by the TDHCA Executive Director, or when applicable,
approved of the Board of Directors of the Texas Department of Economic Development
on a priority needs basis with eligible disaster relief and urgent need projects
as the highest priority; and the Department's special targeted activities
(e.g., colonias, special housing projects, Texas Small Town Environment Program
(STEP), Texas Capital Fund, etc.) as the next highest priority.
[
Deobligated funds, unobligated funds and program income (except program income
recovered from local revolving loan funds) generated by Texas Capital Fund
projects shall be retained for expenditure within the Texas Capital Fund subject
to approval of the Board of Directors of the Texas Department of Economic
Development. Any deobligated funds, unobligated funds, program income, and
unused funds from previous years' allocations derived from any Texas Community
Development Program Fund other than the Texas Capital Fund, program income
recovered from Texas Capital Fund local revolving loan funds, and any reallocated
funds which HUD has recaptured from Small Cities may be redistributed among
the established fund categories, except the Texas Capital Fund, for otherwise
eligible projects. The selection of eligible projects to receive such funds
will be approved by the executive director of the Department on a priority
basis with eligible disaster relief and urgent need projects as the highest
priority; and the Department's special targeted activities (e.g., colonias,
special housing projects, Texas Small Town Environment Program (STEP), etc.)
as the next highest priority.
]
(m)
(No change.)
(n)
Performance threshold requirements. In addition to the
requirements of subsection (h) of this section, an applicant must satisfy
the following performance requirements in order to be eligible to apply for
program funds. A contract is considered executed for the purposes of this
subsection on the date stated in section 2 of such contract.
(1) - (3)
(No change.)
(4)
Texas Capital Fund (TCF) applicants may not have an existing
contract with an award date in excess of 48 months prior to the application
deadline date, regardless of extensions granted. If an existing contract requires
an extension beyond the initial term, TDED must be in receipt of the request
for extension [
no less than 30 days
]prior to contract expiration
date.[
If an existing contract expires prior to or on the new application
deadline date, without an approved extension, TDED must be in receipt of complete
closeout documentation for the existing contract, no less than 30 days prior
to the new application deadline date (complete closeout documentation is defined
in the most recent version of the Texas Capital Fund Implementation Manual).
]
(5)
(No change.)
(o) - (q)
(No change).
§9.7.Texas Capital Fund.
(a)
General Provisions. This fund covers projects which will
result in either an increase in new, permanent employment within a community
or retention of existing permanent employment. Under the main street improvements
program, projects may also qualify if they meet the national program objective
of aiding in the prevention or elimination of slum or blighted areas.
(1) - (3)
(No change.)
(4)
The leverage ratio between all funding sources to the Texas
Capital Fund (TCF) request may not be less than 1:1 for awards of $750,000
or less (except for the main street improvements program in which case a 0.5:1
match for cities with a population of less than 5,000 is acceptable), 4:1
for awards of
$750,100
[
$750,001
] to $1,000,000, and
9:1 for awards of
$1,000,100
[
$1,000,001
] to $1,500,000.
(5)
In order for an applicant to be eligible, the cost per
job calculation must not exceed $25,000 for awards of $750,000 or less; $10,000
for awards of
$750,100
[
$750,001
] to $1,000,000; and
$5,000 for awards of
$1,000,100
[
$1,000,001
] to $1,500,000.
These requirements do not apply to the Main Street
and Float Loan Programs
[
Program
].
(6) - (8)
(No change.)
(9)
All Texas Capital Fund applications
must support proposed activities of a business. This is the benefiting business,
the business that is proposing to create and/or retain jobs and make capital
expenditures in the jurisdiction of the applicant. This must be a for-profit
or a non-profit business. Non-profits must have language in their corporate
articles and/or by-laws that specifically authorizes them to engage in economic
development activities. Governmental entities/units may not qualify as the
benefiting business.
(10)
The TDED will only consider
applications that provide assistance for one specific business. Projects with
multiple benefiting businesses are not eligible for consideration. Divisions,
branch offices, units of a business with the same ownership or businesses
with a common bond of ownership, where some entity owns at least 50% of the
business(es), are not considered separate businesses. In these scenarios a
parent entity/organization will be considered the benefiting business. Businesses
that have an award and subsequently submit a new application, that have a
common bond of ownership, are not eligible when submitted by the same applicant
community.
(11)
[
(9)
] With the exception of the
main street improvements program, the Texas Department of Economic Development
will only consider applications that provide funding for one business.
(12)
[
(10)
] The Texas Department of Economic
Development will consider a project proposed by a city that is in the city's
corporate limits or its extraterritorial jurisdiction, and will consider a
project proposed by a county that is in the unincorporated area of the county.
Counties may not sponsor an application for a business located in a city,
if that business is currently participating in a TCF project with that city.
Cities may not sponsor an application for a business located in their county,
if that business is currently participating in a TCF project with that county.
TDED may consider providing funding for an economic development project proposed
by a city that is outside the city's corporate limits or extraterritorial
jurisdiction, but within the county that the city is located and will consider
a project proposed by a county that is within an incorporated city.
TDED may consider providing funding for an economic development project proposed
by a city that is outside the city's corporate limits or extraterritorial
jurisdiction, but within the county that the city is located and will consider
a project proposed by a county that is within an incorporated city, if the
applicant demonstrates that the project is appropriate to meet its needs,
if the applicant has the legal authority to engage in such a project and if
at least 51% of the principal beneficiaries reside within the applicant's
jurisdiction.
Note: The project activities and benefiting business may
not be located in an entitlement area.
[
(11)
A business which is currently
being provided assistance from the Texas Capital Fund must create at least
50 permanent jobs in each additional proposed Texas capital fund project in
order for such project to be considered for funding.]
[
(12)
A Texas Capital Fund contractor
must satisfactorily close out a contract in support of a specific business
or main street improvements project in order to be eligible to receive additional
funds under the Texas Capital Fund for the same business or main street city.
The contractor is eligible for an additional Texas Capital Fund award in support
of a specific business, provided that the prerequisite program income choice
has been selected, if the assisted business is not in the designated main
street geographic area or if the main street project selected the elimination
of slums and blight as its national program objective and the assisted business
will create or retain jobs to meet the national program objective.]
[
(13)
The Texas Department of Economic
Development will not consider or accept an application for funding from a
community, in support of a business project that is currently receiving Texas
Capital Fund assistance through that same community.]
(13)
The number of TCF applications
which a city or county may submit (and have funded, if feasible) is determined
by factors affecting both the city/county and business, as follows:
(A)
Applicant components:
(i)
The program income choice selected on a previous
approved application;
(ii)
Contractual compliance on existing contracts;
(iii)
Applicants may not have an existing contract
with an award date in excess of 48 months prior to the application deadline
date, regardless of extensions granted; and
(iv)
The applicant must satisfactorily close-out
an open TCF contract before the applicant can receive another TCF award for
the same business.
(B)
Business components:
(i)
Contractual compliance on existing TCF contracts,
leases and loans; and
(ii)
A business or a business with a common bond
of ownership, which is currently being provided assistance through an eligible
applicant from the Texas Capital Fund, must create/retain at least 50 permanent
jobs in each additional proposed location (with a different applicant).
(14)
The minimum and maximum award amount that may be requested/awarded
for a project funded under the Texas Capital Fund infrastructure or real estate
development programs, regardless of whether the application is submitted by
a single applicant or jointly by two or more eligible jurisdictions is addressed
here. Award amounts are directly related to the number of jobs to be created/retained
and the level of matching funds in a project. Projects that will result in
a significantly increased level of jobs created/retained and a significant
increase in the matching capital expenditures may be eligible for a higher
award amount, commonly referred to as jumbo awards. TCF monies are not specifically
reserved for projects that could receive the increased maximum award amount,
however, jumbo awards may not exceed $4,500,000 in total awards during the
program year, unless a jumbo award is deobligated during the program year,
in which case another jumbo award, of up to $1,500,000, may be awarded as
a replacement. Additionally, no more than $3,000,000 in jumbo awards will
be approved in either of the first two rounds. The maximum amount for a jumbo
award is $1.5 million and the minimum award amount is
$750,100
[
$750,001
]. The maximum amount for a normal award is $750,000 and the
minimum award amount is $50,000. These amounts are the maximum funding levels.
The program can fund only the actual, allowable, and reasonable costs of the
proposed project, and may not exceed these amounts. All projects awarded under
the TCF program are subject to final negotiation between TDED and the applicant
regarding the final award amount, but at no time will the award exceed the
amount originally requested in the application.
(15)
TCF will only provide financial
assistance to a community and business that commit to create and/or retain
jobs where at least 51% of the jobs benefit low and moderate income (LMI)
individuals. LMI levels are provided annually by HUD and are the same income
levels used for Section 8 housing. The level of financial assistance is directly
related to the number of created/retained jobs. At no time will this program
consider an application for assistance where the cost per job exceeds $25,000.
Only full-time permanent and part-time permanent created/retained jobs, as
defined below, are eligible for consideration. Credit will only be given for
jobs created/retained at the project site described in the application, which
generally must be within the jurisdiction of the applicant. No credit will
be given for transferred jobs or positions held by principals. A job is defined
as a permanent full-time position held by one employee or two part-time employees.
Jobs must be held/occupied by individuals for a minimum of one (1) month to
be eligible for consideration. The calculation compares the starting and ending
payroll to determine the number of jobs created/retained. For projects creating
jobs, jobs created prior to the award date, but not prior to the application
deadline date for each round, may be counted towards meeting the job creation
requirement. Jobs are further defined below.
(A)
A full-time job is defined as permanent employment
for 1,820 hours or more per year or 35 hours or more per week per person on
an annualized basis.
(B)
A part-time job is generally defined as permanent
employment for at least 1,040 hours per year and 20 hours or more per week
per person on an annualized basis. Two part-time jobs equal one full-time
job. Employees working less than 20 hours per week may be considered individually
or in combination/aggregate towards meeting the job goal of the business.
(C)
Leased employees are eligible to be counted,
but must meet the same requirements as described above, as long as the business
has control over the leased employee(s). Contract labor employees and owners
of the business are not eligible to be counted towards meeting the job creation/retention
requirements.
(D)
In order to consider jobs retained as a result
of TCF assistance, documentation must be submitted providing clear and objective
evidence that permanent jobs will be lost without TCF assistance. For these
purposes, "clear and objective" evidence that jobs will be lost would include:
(i)
Evidence that the business has issued a notice
to affected employees or made a public announcement to that effect, or
(ii)
Analysis of relevant financial records which
clearly and convincingly shows that the business is likely to have to cut
back employment in the near future without the planned intervention.
(E)
Businesses claiming consideration for retained
jobs as part of a project proposal must also provide documentation verifying
that they will meet at least one of the following requirements and provide
income certifications in the application. The income certification must document
that a minimum of 51% of the retained jobs are held by LMI individuals.
(i)
That some or all of the employees will be permanently
laid off; or
(ii)
That the business will close down its existing
operation/facility; or
(iii)
That the business will relocate out of state.
Requires 3rd party documentation.
(F)
No retained jobs will be considered for a minimum
of one year after a contract has been closed out with the same business in
the same community.
(16)
[
(15)
] TDED will allocate the available
funds for the year, less $600,000 for the Main Street program, as follows:
(A)
First round. 50% of the annual allocation plus any deobligated
and program income funds available, as of the application due date.
(B)
Second round. 60% of the remaining allocation plus any
deobligated and program income funds available, as of the application due
date.
(C)
Third round. Any remaining allocation plus any deobligated
and program income funds available, as of the application due date.
(b)
Overview. This fund is distributed to eligible units of
general local government for eligible activities in the following program
areas:
(1)
The infrastructure program. The infrastructure program
provides funds for eligible activities such as the construction or improvement
of water/wastewater facilities, public roads, natural gas-line main, electric-power
services, and railroad
improvements
[
spurs
].
(2)
The real estate program. The real estate program provides
funds to purchase, construct, or rehabilitate real estate that is wholly or
partially owned by the community and leased to a specific benefitting business
(either a for-profit entity or a non-profit entity).
(3)
The main street improvements program. The main street improvements
program provides public improvements in support of Texas main street program
designated municipalities.
(c)
Application Dates. The Texas Capital Fund (except for the
Main Street Program) is available three times during the year, on a competitive
basis, to eligible applicants statewide. Applications for the Main Street
Program are accepted annually. Applications will not be accepted after 5:00
pm on the final day of submission. The application deadline dates are included
in the program guidelines.
(d)
Repayment Requirements. TCF awards for real estate improvements,
private infrastructure, rail improvements, and most public infrastructure
require repayment. Infrastructure payments and real estate lease payments
are intended to be paid by the benefitting business to the applicant/contractor
and constitute program income. The repayment is structured as follows:
(1)
Real estate improvements. These improvements are intended
to be owned by the applicant and leased to the business. Real estate improvements
require full repayment. At a minimum, the lease agreement with the business
must be for a minimum three year period or until the TCF contract between
the applicant and TDED has been satisfactorily closed (whichever is longer).
A minimum monthly lease payment will be required to be collected from the
original business and any subsequent business which occupies the real estate
funded by the TCF, which equates to the principal funded by the TCF divided
over a maximum 20 year period (240 months), or until the entire principal
has been recaptured. The repayment term is determined by TDED and may not
be for the maximum of 20 years for smaller award amounts.
The minimum
monthly payment should not be less than $500.
There is no interest expense
associated with an award. Payments begin the first day of the
third
[
first
] month following the construction completion date or acquisition
date. Payments received 15 calendar days or more late will be assessed a late
charge/fee of 5% of the payment amount. After the contract between the applicant
and the department is satisfactorily closed, the applicant will be responsible
for continuing to collect the minimum lease payments only if a business (any
business) occupies the real estate. The lease agreement may contain a purchase
option, if the option is effective after a
minimum five years after the
contract closeout
[
minimum five year ownership requirement
]
and if the purchase price equals (at a minimum) the remaining principal amount
originally funded by the TCF which has not been recaptured.
(2)
Infrastructure improvements.
(A)
Private Infrastructure is infrastructure that will be located
on the business's site or on adjacent and/or contiguous property, to the site,
that is owned by the business, principals, or related entities. All funds
for private infrastructure improvements require full repayment. Terms for
repayment will be interest free, with repayment not to exceed 20 years and
are intended to be repaid by the business through a repayment agreement. Payments
begin the first day of the
third
[
first
] month following
the construction completion date. Payments received 15 calendar days or more
late will be assessed a late charge/fee of 5% of the payment amount.
(B)
Public Infrastructure is infrastructure located on public
property or right-of-ways and easements granted by entities unrelated to the
business or its owners and not included or identified as private infrastructure.[
Terms for repayment will be interest free, with repayment not to exceed 20
years and are intended to be repaid by the business through a repayment agreement.
Payments begin the first day of the first month following the construction
completion date. Payments received 15 calendar days or more late will be assessed
a late charge/fee of 5% of the payment amount. Funds used for public infrastructure
will comply with the following repayment schedule:
]
[
(i)
Awards of $375,000 or less
require no repayment.]
[
(ii)
Awards of $750,000 or less
require repayment of 25% of the award amount greater than $375,000.]
[
(iii)
Awards in excess of $750,000
require repayment of 25% of the award amount greater than $375,000 and repayment
of 50% of the amount in excess of $750,000.]
(C)
Rail improvements[
, regardless of the location,
]
require full repayment
, only when identified as spurs and/or are located
on the site of the business
. Terms for repayment will be no interest,
with repayment not to exceed 20 years and are intended to be repaid by the
business through a repayment agreement. Payments begin the first day of the
third
[
first
] month following the construction completion
date. Payments received 15 calendar days or more late will be assessed a late
charge/fee of 5% of the payment amount.
(e)
Application process for the
infrastructure and real estate programs. TDED will only accept applications
during the months identified in the Application Dates section of the Guidelines.
After the application deadline, the scores are verified, staff analysis is
performed, recommendation is made by staff and the executive director before
the application is awarded by the TDED Board of Directors (Board). The application
and award procedures consist of the following steps:
(1)
Each applicant must submit a complete application
to TDED. No changes to the application will be allowed after the application
deadline date, unless they are a recommended by TDED.
(2)
After the application deadline TDED staff reviews
application scores for validity and ranks them in descending order. The applications
that rank high enough to receive the available funds are identified.
(3)
TDED staff will then review the application
for eligibility and completeness in descending order based on the scoring.
In those instances where the staff determines that the application has excessive
deficiencies on the Application Checklist, unless an extension is granted,
the applicant will be given 10 business days to rectify all deficiencies.
An application containing excessive deficiencies, unless staff determines
they are minor, will be determined incomplete and returned. In the event staff
determines that the application contains activities that are ineligible for
funding, the application will be restructured or returned to the applicant.
An application resubmitted for future funding rounds will be competing with
those applications submitted for that round. No preferential placement will
be given an application previously submitted and not funded.
(4)
TDED staff then reviews each complete application
to make threshold determinations with respect to:
(A)
The financial feasibility of the business to
be assisted based on a credit analysis;
(B)
The strength of commitments from all other public
and/or private investments identified in the application;
(C)
Whether the use of Texas Capital Funds is appropriate to
carry out the project proposed in the application;
(D)
Whether efforts have been made to maximize other
financial resources. Applicants must document that other funds are unavailable
to fund the project. Cities that collect an economic development sales tax
must document status of funds, including balance available and monthly collections;
(E)
Whether there is evidence that the permanent
jobs created or retained will primarily benefit low-and-moderate income persons;
and
(F)
The ability of the applicant to operate or maintain
any public facility, improvements, or
(5)
Upon TDED staff's determination that an application
supports a feasible and eligible project, staff normally will schedule a visit
to the applicant jurisdiction to discuss the project and program rules with
the chief elected official (or designee), business representative(s), and
to visit the project site.
(6)
TDED staff prepares a project report with recommendations
(for approval or denial) for credit committee. TDED staff may initiate the
need to negotiate some elements of the application that would be in the TCF
contract if it is awarded. Then credit committee makes a recommendation to
TDED's executive director.
(7)
The TDED executive director reviews the recommendation
and forwards it for the final decision of award to be made by the Board.
(8)
TDED staff works with the award recipient to
execute the TCF contract. The TCF contract must be based on the information
provided to the Board that resulted in the award.
(9)
Contracts will be drafted and then reviewed
by management and the legal department prior to being mailed to award recipients.
Upon receipt, the award recipient has 30 days to review and execute both copies.
Once returned to TDED, the contract will be fully executed by the executive
director and then a single copy is returned to contractor.
[
(e)
Application process for the
infrastructure and real estate programs. The Texas Department of Economic
Development will only accept applications during the months identified in
the program guidelines. Applications are reviewed after they have been competitively
scored. Staff makes recommendation for award to TDED executive director. TDED
executive director makes the final decision. The application and selection
procedures consist of the following steps:]
[
(1)
Each applicant must submit a complete application
to TDED's Trade and Investment Division. No changes to the application will
be allowed after the application deadline date, unless they are a result of
TDED staff recommendations. Any change that occurs will only be considered
through the amendment/modification process after the contract is signed.]
[
(2)
Upon receipt of applications, TDED staff reviews
scores for validity and ranks them in descending order.]
[
(3)
TDED staff will then review the applications
for eligibility and completeness in descending order based on the scoring.
In those instances where the staff determines that the application has 12
or less deficiencies on the Application Checklist, unless an extension is
granted, the applicant will be given 10 business days to rectify all deficiencies.
An application containing more than 12 deficiencies will be determined incomplete
and returned. In the event staff determines that an application contains activities
that are ineligible for funding, the application will be restructured or returned
to the applicant. An application resubmitted for future funding cycles will
be competing with those applications submitted for that cycle. No preferential
placement will be given an application previously submitted and not funded.]
[
(4)
TDED staff then conducts a review of each complete
application to make threshold determinations with respect to:]
[
(A)
The financial feasibility of the business to
be assisted based on a credit analysis;]
[
(B)
The strength of commitments from all other
public and/or private investments identified in the application;]
[
(C)
Whether the use of Texas Capital Funds is appropriate
to carry out the project proposed in the application;]
[
(D)
Whether efforts have been made to maximize
other financial resources. The applicant must document that other funds are
unavailable to fund the project. Cities that collect an economic development
sales tax must document status of funds, including balance available, monthly
collections and a detailed list of outstanding commitments;]
[
(E)
Whether there is evidence that the permanent
jobs created or retained will primarily benefit low-and-moderate income persons;
and]
[
(F)
The ability of the applicant to operate or
maintain any public facility, improvements, or services funded with Texas
Community Development Program funds.]
[
(5)
A copy of a complete application must be provided
to the appropriate Regional Review Committee (RRC). Proposals submitted for
funding under the Texas Capital Fund require regional review "from the standpoint
of consistency with regional plans and other such considerations" as provided
for under the Texas Review and Comment System and Chapter 391, Texas Local
Government Code. It has been determined that the participation by the RRC,
as defined in the TCDP Annual Action Plan, meets the intent and purpose of
these statutes through this concurrent review process. Each regional review
committee may, at its option, review and comment on an economic development
proposal from a jurisdiction within its state planning region. These comments
become part of the application file and are considered by the staff provided,
such comments are received by the staff prior to a recommendation to management.]
[
(6)
Upon TDED staff determination that an application
supports a feasible and eligible project, staff normally will schedule a visit
to the applicant jurisdiction to discuss the project and program rules with
the chief elected official (or designee), business representative(s), and
to visit the project site.]
[
(7)
TDED staff prepares a project report with recommendations
(for approval or denial) to TDED's executive director.]
[
(8)
TDED executive director reviews the recommendation
and announces the final decision.]
[
(9)
TDED staff works with the recipient to execute
the contract agreement. While the contract award must be based on the information
provided in the application, TDED staff may negotiate some elements of the
final contract agreement with the recipient.]
[
(10)
The contract is drafted and then reviewed
by management and legal prior to two copies being mailed to award recipient.
Upon receipt, the award recipient has 30 days to review and execute both copies.
Once returned to TDED, the contract will be fully executed by the executive
director and then a single copy is returned to contractor.]
(f)
Scoring criteria for the infrastructure and real estate
programs. There is a minimum 25-point threshold requirement. Applications
will be reviewed for feasibility in descending order based on the scoring
criteria. There are a total of 100 points possible.
(1)
In the event of a tie score and insufficient funds to approve
all applications, the following tie breaker criteria will be used.
(A)
The tying applications are ranked from lowest to highest
based on poverty rate stated on the score sheet. Thus, preference is given
to the applicant with the higher poverty rate.
(B)
If a tie still exists after applying the first criteria
then applications are ranked from lowest to highest based on unemployment
rate stated on the score sheet. Thus, preference is then given to the applicant
with the higher unemployment rate.
(2)
Award amounts from $750,100
to $1,500,000 are referred to as jumbo awards. These require a significantly
higher job creation/retention commitment and capital investment/match. Texas
Capital Funds are not specifically reserved for projects that could receive
up to the $1,500,000 increased maximum amount, however, projects that receive
an amount greater than $750,000 may not exceed $4,500,000 in total awards
during the program year (only three jumbo awards are normally permitted each
year), unless a jumbo award is deobligated during the program year, in which
case another jumbo award, of up to $1,500,000, may be awarded as a replacement.
No more than two jumbo awards may be made in either of the first two application
rounds. Jumbo award requirements follow:
(A)
For a jumbo award from $750,100
to $1,000,000:
(i)
The maximum cost-per-job is $10,000.
(ii)
The minimum number of jobs is 75 to 100 jobs.
(iii)
The maximum amount of award funds for administration
is $60,000.
(iv)
The minimum amount of matching funds must be
at least 400% or more of the TCF funds requested.
(B)
For a jumbo award from $1,000,100
to $1,500,000:
(i)
The maximum cost-per-job is $5,000.
(ii)
The minimum number of jobs is 200 to 300 jobs.
(iii)
The maximum amount of award funds for administration
is $70,000.
(iv)
The minimum amount of matching funds must be
at least 900% or more of the TCF funds requested.
(3)
[
(2)
] Community Need (maximum
35
[
30
] points) Measures the economic distress of the applicant
community.
(A)
Unemployment (maximum 5 points). Awarded if the applicant's[
average county
] rate
(for cities the prior annual city rate will
be used; for counties the prior annual census tract rate, for where the business
site is located will be used)
is higher than the annual state rate,
indicating that the community is economically below the state average.
(B)
Poverty (maximum 15 points). Awarded if the applicant's
[
average county
]poverty rate
(for cities the prior annual
city rate will be used; for counties the prior annual census tract rate, for
where the business site is located will be used)
is higher than the
annual state rate, indicating that the community is economically below the
state average.
(C)
Enterprise/Empowerment/Defense Zone (maximum 5 points).
A project located in a state designated enterprise zone, federal enterprise
community, federal empowerment zone, or defense zone receives these five points.
(D)
Open Contracts (Maximum 5 Points). Awarded to applicants
that have
no
[
two (2) or less
] open TCF contracts.
(E)
Community Population (maximum
5 points). Points are awarded to applying cities with populations of 3,000
or less and counties with a population of 30,000 or less, using 1990 census
data.
(4)
[
(3)
] Jobs (maximum 30 points).
(A)
Job Impact (maximum 15 points). Awarded by taking the Business'
total job commitment, created & retained, and dividing by applicant's
1990 unadjusted population. This equals the job impact ratio. Score 5 points
if this figure exceeds the median job impact ratio for prior years; score
10 points if this figure exceeds 200% of the ratio; and score 15 points if
this figure exceeds 400% of the ratio. County applicants should deduct the
1990 census population amounts for all incorporated cities, except in the
case where the county is sponsoring an application for a business that is
or will be located in an incorporated city. In this case the city's population
would be used, rather than the county's.
(B)
Cost per Job (maximum 15 points). Awarded by dividing the
amount of TCF monies requested (including administration) by the number of
full-time job equivalents to be created and/or retained. Points are then awarded
in accordance with the following scale:
(i)
Below $10,000--15 points.
(ii)
Below $15,000--10 points.
(iii)
Below $20,000-- 5 points.
(5)
[
(4)
] Business Emphasis (maximum
25
[
20
] points).
(A)
Manufacturers (max
15
[
10
] points).
Awarded if the Business' primary Standard Industrial Classification (SIC)
code number starts with 20-39 or if their primary North American Industrial
Classification System (NAICS) code number starts with 31-33. This is based
on the SIC number reported on the Business' Texas Workforce Commission (TWC)
Quarterly Contribution Report, Form C-3 or their IRS business tax return.
Foreign
or start-up
businesses that have not had an SIC/NAICS code
number assigned to them by either the TWC or IRS may submit alternative documentation
to support manufacturing as their primary business activity to be eligible
for these points.
(B)
Small businesses (maximum 5 Points). Awarded if the Business
employs no more than 100 employees for all locations both in and out of state.
This number is determined by the business and any related entities, such as
parent companies, subsidiaries & common ownership. Common ownership is
considered 51% or more of the same owners.
(C)
HUB-Historically Underutilized Business (maximum 5 Points).
Awarded if a business is certified by the state General Services Commission
(GSC) as a Historically Underutilized Business (HUB). Provide a copy of GSC's
certification in
order to earn these points
[
the application
].
(6)
Match (maximum 10 points).
Awarded by dividing the total amount of other funds committed to this project
divided by the requested TCF amount, including administration. An applicant
is awarded 5 points if the ratio of matching funds to TCF funds is at least
1.25 to 1 (125%). An applicant is awarded 10 points if the ratio of matching
funds to TCF funds is at least 2.00 to 1 (200%).
[(5)
Leverage/Match (maximum 20 points).]
[(A)
Match Ratio (maximum 10 points). Awarded by dividing the
total amount of other funds committed to this project divided by the requested
TCF amount, including administration. Points are then awarded in accordance
with the following scale: ]
[(i)
1.25 : 1 (125 percent)-- 5 points. ]
[(ii)
2.00 : 1 (200 percent)--10 points.]
[
(B)
Community Match Ratio (maximum
10 points). Points are awarded based on the following criteria.]
[
(i)
By dividing the total amount of community funds
(ie. funds from the applicant and/or their economic/industrial development
organizations only) committed to this project by the requested TCF amount,
including administration. Points are then awarded for each full 1% of the
community match and the 10 maximum points are awarded if the community commits
at least 10% of community matching funds. Example: $50,000/$750,000=.066=6%,
thus 6 points would be awarded.]
[
(ii)
Cities earn 5 points if they have passed the
Economic Development sales tax and if annual receipts are less than $50,000.
These points are earned whether or not the city makes a financial contribution
to the project. If the city makes a contribution the city can receive an additional
1 point for each full 1% of community contribution, not to exceed 5 additional
points.]
[
(iii)
Counties earn 5 points if they have passed
the County Development District Tax and if annual receipts are less than $50,000.
These points are earned whether or not the county makes a financial contribution
to the project. If the county makes a contribution the county can receive
an additional 1 point for each full 1% of community contribution, not to exceed
5 additional points.]
(g)
Equity requirement by the business. All businesses are
required to make financial contributions to the proposed project. A cash injection
of a minimum of 2.5% of the total project cost is required. Total equity participation
must be no less than 10% of the total project cost. This equity participation
may be in the form of cash and/or net equity value in fixed assets utilized
within the proposed project. A minimum of a 33% equity injection (of the total
projects costs) in the form of cash and/or net equity value in fixed assets
is required, if the business has been operating for less than three (3) years
and is accessing the R/E program. TDED staff will consider a business to have
been operating for at least three years if:
(1)
The business or principals have been operating for at least
three years with comparable product lines or services;
(2)
The parent company (100% ownership of the business) has
been operating for at least three years with comparable product lines or services;
or
(3)
An individual or partnership (100% ownership of the business)
has been in existence/operation for at least three years with comparable product
lines or services.
(h)
Contract extensions: TCF contracts
allow a three year period to complete the activities identified in the Performance
Statement (Exhibit A) of the contract. Sometimes, however. extenuating circumstances
prevent the completion of contract activities within the prescribed contract
period. If a contractor Is reasonably assured that contract costs will be
incurred beyond the contract ending date and that incurring these costs is
beyond the control of the locality and/or other contract activities, such
as job creation, have not been completed yet an amendment may be requested
from the TDED to extend the original contract ending date.
(i)
Cost savings: The amount of
the award is based on the cost estimates provided in the application and staff's
determination of what constitutes the "minimum necessary" activities/improvements.
The "minimum necessary" activities/improvements include only those improvements
needed to adequately serve the benefiting business. If the actual costs for
these "minimum necessary" improvements/activities come in under the proposed
budget, the cost savings for these improvements/activities shall be shared
on a pro-rate basis with other sources of match funds, for those same improvements/activities.
It is program policy that reductions in local match will not be approved and
that each funding source will be expected to expend substantially the same
ratio of funds to TCF funds as specified in the original application. Waivers
of this policy will be reviewed on a case-by-case basis, but reductions can
only be approved for projects that included a match in excess of the TCF grant
funds, with possible reduction to only a 50/50 ratio (i.e., equal amounts
of grant funds and match funds to fund the total project costs), If, however,
any reduction in the amount of match funds would adversely affect the application
score, to the extent the locality would not have been originally funded, a
reduction will not be approved. Any attempt to address over-sizing or activities/improvements
in addition to the "minimum necessary" shall be separate from the basic bid
for the minimum necessary activities/improvements, since these additional
improvements/activities are ineligible for payment with program funds. The
awarded locality is responsible for the cost of any activities/improvements
exceeding the "minimum necessary" and any cost overruns.
(j)
[
(h)
] Application process for the
main street program. The application and selection procedures consist of the
following steps:
(1)
Each applicant must submit two complete applications to
Texas Historical Commission (THC). No changes to the application are allowed
after the application deadline date, unless they are a result of TDED staff
recommendations. Any change that occurs will only be considered through the
amendment/modification process after the contract is signed.
(2)
Upon receipt of the applications, THC evaluates applications
based on the scoring criteria and ranks them in descending order.
(3)
TDED staff will then review the four highest ranking applications
for eligibility and completeness in descending order based on the scoring.
Applications with
excessive
[
13 or more
] deficiencies
will be considered ineligible
, unless staff determines that they are
minor
. If that occurs than the next highest ranking application will
be substituted. In those instances where the staff determines that the application
does not contain excessive
[
has 12 or less
] deficiencies on
the Application Checklist, unless an extension is granted, the applicant will
be given 10 business days to rectify all deficiencies. In the event staff
determines the application contains activities that are ineligible for funding,
the application will be restructured or considered ineligible. An application
resubmitted for future funding cycles will be competing with those applications
submitted for that cycle. No preferential placement will be given an application
previously submitted and not funded.
(4)
TDED staff then conducts a review of each complete application
to make threshold determinations with respect to:
(A)
The project feasibility;
(B)
The strength of commitments from all other public and/or
private investments identified in the application;
(C)
Whether the use of Texas Capital Funds is appropriate to
carry out the project proposed in the application;
(D)
Whether efforts have been made to maximize other financial
resources. The applicant must document that other funds are unavailable to
fund the project. Cities that collect an economic development sales tax must
document status of funds, including balance available, monthly collections
and a detailed list of outstanding commitments; and
(E)
The ability of the applicant to operate or maintain any
public facility, improvements, or services funded with Texas Community Development
Program funds.
(5)
A copy of a complete application must be provided to the
appropriate Regional Review Committee (RRC). Proposals submitted for funding
under the Texas Capital Fund require regional review "from the standpoint
of consistency with regional plans and other such considerations" as provided
for under the Texas Review and Comment System and Chapter 391, Texas Local
Government Code. It has been determined that the participation by the RRC,
as defined in the TCDP Annual Action Plan, meets the intent and purpose of
these statutes through this concurrent review process. Each regional review
committee may, at its option, review and comment on an economic development
proposal from a jurisdiction within its state planning region. These comments
become part of the application file and are considered by THC and TDED provided,
such comments are received by TDED prior to a recommendation to management.
(6)
Upon TDED staff determination that an application supports
a feasible and eligible project, an on-site visit to the four highest scoring
applicants may be conducted by THC and TDED staff to discuss the project and
program rules with the chief elected official, as applicable, or their designee
and to visit the Main Street area.
(7)
TDED staff prepares a project report with recommendations
(for approval or denial) for credit committee and then credit committee makes
a recommendation to TDED's executive director for the final decision.
(8)
TDED executive director reviews the recommendation and
announces the project selected for funding.
(9)
TDED staff works with the recipient to execute the contract
agreement. While the contract award must be based on the information provided
in the application, TDED staff may negotiate some elements of the final contract
agreement with the recipient.
(10)
The contract is drafted and then reviewed by management
and legal prior to two copies being mailed to award recipient. Upon receipt,
unless an extension is granted, award recipient has 30 days to review and
execute both copies. Once returned to TDED, the contract will be fully executed
by the executive director and then a single copy is returned to contractor.
(k)
[
(i)
] Scoring criteria for the main
street program. There is a minimum 25-point threshold requirement. Applications
will be reviewed for feasibility and placed in descending order based on the
scoring criteria. There is a total of 100 points possible.
(1)
In the event of a tie score, applications are ranked from
the lowest to the highest based on the current aggregate available balance,
from all existing open TCF contracts. Thus, an applicant that has a TCF project
balance of $250,000 in existing projects would be ranked above one having
a balance of $600,000.
(2)
Project Feasibility (maximum 70 points). Measures the applicant's
potential for a successful project. Each applicant must submit detailed and
complete support documentation for each category. Compliance with the ten
criteria for Main Street Recognition is required. First year Main Street Cities
must receive prior approval from THC to apply and must submit the Main Street
Criteria for Recognition Survey with the TCF application. The ten criteria
include the following:
(A)
Broad-based public support for commercial district revitalization--(10
points)
(B)
Local Main Street program's organization's vision and mission--(5
points)
(C)
Main Street work/marketing plan--(5 points)
(D)
Historic preservation ethic--(10 points)
(E)
Involvement of board of directors and committees--(10 points)
(F)
Main Street operating budget--(5 points)
(G)
Professional Main Street program manager experience--(10
points)
(H)
Local Main Street program training--(5 points)
(I)
Reinvestment statistics related to financial reinvestment,
job creation, and new business creation--(5 points)
(J)
Participation in the National Main Street Network--(5 points)
(3)
Applicant (maximum 10 points).
(A)
Applicant has not received a TCF main street grant--(5
points)
(B)
Applicant has not received a TCF main street grant and
the applicant has been an Official Texas Main Street City for more than 5
years--(10 points)
(4)
Leverage (5 points). Score 5 points if matching dollars
are greater than or equal to the following ratios based on two separate population
categories:
(A)
Applicant's population less than 5,000 persons--0.75:1
(B)
Applicant's population equal to or greater than 5,000 persons--1.5:1
(5)
Minority Hiring (maximum 5 points). Measures applicant's
hiring practices. Percentage of minorities presently employed by the applicant
divided by the percentage of minority residents within the local community.
In the event 10% or less of the applicant's population base is composed of
minority residents, the applicant has seven or fewer non-seasonal full-time
employees, or 5% or more of the applicant's population base is living in quarters
or institutions, the applicant is assigned the average score on this factor
for all applicants for the previous program year or the score based on the
actual figures, whichever is higher.
(6)
Main Street Reinvestment Statistics (maximum 10 points).
(Private Sector Reinvestment) Formulates amount based on per capita, per year
in program.
(l)
[
(j)
] Threshold criteria for the
main street improvements program. In order for its application to be considered,
an applicant must meet the requirements of either paragraph (1) or (2) and
paragraph (3) of this subsection.
(1)
The national objective of aiding in the prevention or elimination
of Slum or Blight on a spot basis. To show how this objective will be met,
the applicant must:
(A)
document that the project qualifies as slum or blighted
on a spot basis under local law; and
(B)
describe the specific condition of blight or physical decay
that is to be treated.
(2)
Area slums/blight objective. Document the boundaries of
the area designated as a slum or blighted, document the conditions which qualified
it under the definition in §9.1(a)(14) of this title (relating to General
Provisions), and the way in which the assisted activity addressed one or more
of the conditions which qualified the area as slum or blighted.
(3)
Main street designation. The applicant must be designated
by the Texas Historical Commission as a Main Street City prior to submitting
a Texas Capital Fund application for main street improvements.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State, on March 14, 2001.
TRD-200101507
Daisy A. Stiner
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: April 29, 2001
For further information, please call: (512) 475-3726