Texas Register
. Chapter 60 of this title, referenced
in the emergency adoption, has not yet been proposed by the Department.
The new sections are adopted on an emergency basis pursuant to
Chapter 2306, Texas Government Code, which provides the Governing Board of
the Department with the authority to adopt rules necessary for the efficient
administration of the Department's Multifamily Housing Revenue Finance Production.
§33.1.Introduction.
The purpose of this chapter is to state the Texas Department of Housing
and Community Affairs (the "Department") requirements for issuing Bonds, the
procedures for applying for multifamily housing revenue Bond financing, and
the regulatory and land use restrictions imposed upon Housing Developments
financed with the issuance of Bonds. The rules and provisions contained in
this chapter are separate from the rules relating to the Department's administration
of the Housing Tax Credit Program. Applicants seeking a tax credit allocation
should consult the Department's 2004 Qualified Allocation Plan and Rules ("QAP"),
Chapter 50 of this title, as proposed, relating to the Housing Tax Credit
Program.
§33.2.Authority.
The Department receives its authority to issue Bonds from Chapter 2306
of the Texas Government Code (the "Act"). All Bonds issued by the Department
must conform to the requirements of the Act. Notwithstanding anything herein
to the contrary, tax-exempt Bonds which are issued to finance the Housing
Development of multifamily rental housing are specifically subject to the
requirements of the laws of the State of Texas, including but not limited
to the Act, Chapter 1372 of the Texas Government Code relating to Private
Activity Bonds, and to the requirements of the Code (as defined in this chapter).
§33.3.Definitions.
The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise.
(1)
Applicant--means any Person or Affiliate of a Person who
files a Pre-Application or an Application with the Department requesting the
Department issue Bonds to finance a Housing Development.
(2)
Application--means an Application, in the form prescribed
by the Department, filed with the Department by an Applicant, including any
exhibits or other supporting material.
(3)
Board--means the governing Board of the Department.
(4)
Bond--means an evidence of indebtedness or other obligation,
regardless of the sources of payment, issued by the Department under the Act,
including a bond, note, or bond or revenue anticipation note, regardless of
whether the obligation is general or special, negotiable, or nonnegotiable,
in bearer or registered form, in certified or book entry form, in temporary
or permanent form, or with or without interest coupons.
(5)
Code--means 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 by the United States Department of the Treasury or the Internal Revenue
Service.
(6)
Development--means property or work or a development, building,
structure, facility, or undertaking, whether existing, new construction, remodeling,
improvement, or rehabilitation, that meets or is designed to meet minimum
property standards required by the Department for the primary purpose of providing
sanitary, decent, and safe dwelling accommodations for rent, lease, or use
by individuals and families of Low Income and Very Low Income and Families
of Moderate Income in need of housing. The term includes:
(A)
buildings, structures, land, equipment, facilities, or
other real or personal properties that are necessary, convenient, or desirable
appurtenances, including streets, water, sewers, utilities, parks, site preparation,
landscaping, stores, offices, and other non-housing facilities, such as administrative,
community, and recreational facilities the Department determines to be necessary,
convenient, or desirable appurtenances; and
(B)
multifamily dwellings in rural and urban areas.
(7)
Development Owner--means an Applicant that is approved
by the Department as qualified to own, construct, acquire, rehabilitate, operate,
manage, or maintain a Housing Development subject to the regulatory powers
of the Department and other terms and conditions required by the Department
and the Act.
(8)
Eligible Tenants--means
(A)
individuals and families of Extremely Low, Low and Very
Low Income,
(B)
Families of Moderate Income (in each case in the foregoing
subparagraphs (A) and (B) of this paragraph as such terms are defined by the
Issuer under the Act), and
(C)
Persons with Special Needs, in each case, with an Anticipated
Annual Income not in excess of 140% of the area median income for a four-person
household in the applicable standard metropolitan statistical area; provided
that all Low-Income Tenants shall count as Eligible Tenants.
(9)
Extremely Low Income--means the income received by an individual
or family whose income does not exceed thirty percent (30%) of the area median
income or applicable federal poverty line, as determined by the Act.
(10)
Family of Moderate Income--means a family
(A)
that is determined by the Board to require assistance taking
into account
(i)
the amount of total income available for the housing needs
of the individuals and family,
(ii)
the size of the family,
(iii)
the cost and condition of available housing facilities,
(iv)
the ability of the individuals and family to compete successfully
in the private housing market and to pay the amounts required by private enterprise
for sanitary, decent, and safe housing, and
(v)
standards established for various federal programs determining
eligibility based on income; and
(B)
that does not qualify as a family of Low Income.
(11)
Housing Development--means property or work or a development,
building, structure, facility, or undertaking, whether existing, new construction,
remodeling, improvement, or rehabilitation, that meets or is designed to meet
minimum property standards required by the Department for the primary purpose
of providing sanitary, decent, and safe dwelling accommodations for rent,
lease, or use by individuals and families of Low Income and Very Low Income
and Families of Moderate Income in need of housing. The term includes:
(A)
buildings, structures, land, equipment, facilities, or
other real or personal properties that are necessary, convenient, or desirable
appurtenances, including streets, water, sewers, utilities, parks, site preparation,
landscaping, stores, offices, and other non-housing facilities, such as administrative,
community, and recreational facilities the Department determines to be necessary,
convenient, or desirable appurtenances; and
(B)
multifamily dwellings in rural and urban areas.
(12)
Institutional Buyer--means
(A)
an accredited investor as defined in Regulation D promulgated
under the Securities Act of 1933, as amended (17 CFR §230.501(a)), but
excluding any natural person or any director or executive officer of the Department
(17 CFR §230.501(a)(4) - (6)) or
(B)
a qualified institutional buyer as defined by Rule 144A
promulgated under the Securities Act of 1933, as amended (17 CFR §230.144A).
(13)
Low Income--means the income received by an individual
or family whose income does not exceed eighty percent (80%) of the area median
income or applicable federal poverty line, as determined by the Act.
(14)
Land Use Restriction Agreement (LURA)--means an agreement
between the Department and the Housing Development Owner which is binding
upon the Housing Development Owner's successors in interest that encumbers
the Housing Development with respect to the requirements of law, including
this title, the Act and §42 of the Code.
(15)
Owner--means an Applicant that is approved by the Department
as qualified to own, construct, acquire, rehabilitate, operate, manage, or
maintain a Housing Development subject to the regulatory powers of the Department
and other terms and conditions required by the Department and the Act.
(16)
Persons with Special Needs--means persons who
(A)
are considered to be disabled under a state or federal
law,
(B)
are elderly, meaning 60 years of age or older or of an
age specified by an applicable federal program,
(C)
are designated by the Board as experiencing a unique need
for decent, safe housing that is not being met adequately by private enterprise,
or
(D)
are legally responsible for caring for an individual described
by subparagraph (A), (B) or (C) of this paragraph and meet the income guidelines
established by the Board.
(17)
Private Activity Bonds--means any Bonds described by §141(a)
of the Code.
(18)
Private Activity Bond Program Scoring Criteria--means
the scoring criteria established by the Department for the Department's Multifamily
Housing Revenue Bond Program, §33.6(b) of this title. The Scoring Criteria
are also available on the Department website.
(19)
Private Activity Bond Program Threshold Requirements--means
the threshold requirements established by the Department for the Department's
Multifamily Housing Revenue Bond Program, §33.6(b) of this title. The
Threshold Requirements are also available on the Department's website.
(20)
Program--means the Department's Multifamily Housing Revenue
Bond Program.
(21)
Property--means the real estate and all improvements thereon,
whether currently existing or proposed to be built thereon in connection with
the Housing Development, and including all items of personal property affixed
or related thereto.
(22)
Qualified 501(c)(3) Bonds--means any Bonds described by §145(a)
of the Code.
(23)
Tenant Income Certification--means a certification as
to income and other matters executed by the household members of each tenant
in the Housing Development, in such form as reasonably may be required by
the Department in satisfaction of the criteria prescribed the Secretary of
Housing and Urban Development under §8(f)(3) of the Housing Act of 1937
("the Housing Act") (42 U.S.C. §1437f) for purposes of determining whether
a family is a lower income family within the meaning of the §8(f)(1)
of the Housing Act.
(24)
Tenant Services--means social services, including child
care, transportation, and basic adult education, that are provided to individuals
residing in low income housing under Title IV-A, Social Security Act (42 U.S.C. §601
et seq.), and other similar services.
(25)
Tenant Services Program Plan--means the plan, subject
to approval by the Department, which describes the Tenant Services to be provided
by the Development Owner in a Housing Development.
(26)
Trustee--means a national banking association organized
and existing under the laws of the United States, as trustee (together with
its successors and assigns and any successor trustee).
(27)
Unit--means any residential rental unit in a Housing Development
consisting of an accommodation, including a single room used as an accommodation
on a non-transient basis, that contains complete physical facilities and fixtures
for living, sleeping, eating, cooking and sanitation.
(28)
Very Low Income--means the income received by an individual
or family whose income does not exceed sixty percent (60%) of the area median
income or applicable federal poverty line as determined under the Act.
§33.4.Policy Objectives and Eligible Housing Developments.
The Department will issue Bonds to finance the preservation or construction
of decent, safe and affordable housing throughout the State of Texas. Eligible
Housing Developments may include those which are constructed, acquired, or
rehabilitated and which provide housing for individuals and families of Low
Income, Very Low Income, or Extremely Low Income, and Families of Moderate
Income.
§33.5.Bond Rating and Investment Letter.
(a)
Bond Ratings. All publicly offered Bonds issued by the
Department to finance Housing Developments shall have and be required to maintain
a debt rating the equivalent of at least an "A" rating assigned to long-term
obligations by Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. or Moody's Investors Service, Inc. If such rating is based
upon credit enhancement provided by an institution other than the Applicant
or Development Owner, the form and substance of such credit enhancement shall
be subject to approval by the Board, which approval shall be evidenced by
adoption by the Board of a resolution authorizing the issuance of the credit-enhanced
Bonds. Remedies relating to failure to maintain appropriate credit ratings
shall be provided in the financing documents relating to the Housing Development.
(b)
Investment Letters. Bonds rated less than "A," or Bonds
which are unrated must be placed with one or more Institutional Buyers and
must be accompanied by an investment letter acceptable to the Department.
Subsequent purchasers of such Bonds shall also be qualified as Institutional
Buyers and shall sign and deliver to the Department an investment letter in
a form acceptable to the Department. Bonds rated less than "A," and Bonds
which are unrated shall be issued in physical form, in minimum denominations
of one hundred thousand dollars ($100,000), and shall carry a legend requiring
any purchasers of the Bonds to sign and deliver to the Department an investment
letter in a form acceptable to the Department.
§33.6.Application Procedures, Evaluation and Approval.
(a)
Application Costs, Costs of Issuance, Responsibility and
Disclaimer. The Applicant shall pay all costs associated with the preparation
and submission of the Application--including costs associated with the publication
and posting of required public notices--and all costs and expenses associated
with the issuance of the Bonds, regardless of whether the Application is ultimately
approved or whether Bonds are ultimately issued. At any stage during the Application
process, the Applicant is solely responsible for determining whether to proceed
with the Application, and the Department disclaims any and all responsibility
and liability in this regard.
(b)
Pre-application. An Applicant who requests financing from
the Department for a Housing Development shall submit a pre-application in
a format prescribed by the Department. Within fourteen (14) days of the Department's
receipt of the pre-application, the Department will be responsible for federal,
state, and local community notifications of the proposed Housing Development.
Upon review of the pre-application, if the Housing Development is determined
to be ineligible for Bond financing by the Department, the Department will
send a letter to the Applicant explaining the reason for the ineligibility.
If the Housing Development is determined to be eligible for Bond financing
by the Department, the Department will score and rank the pre-application
based on the Private Activity Bond Program Scoring Criteria as set out in
Figure 1 of this subsection. The Department will score and rank with higher
scores ranking higher within each priority defined by §1372.0321, Texas
Government Code. All Priority 1 Applications will be ranked above all Priority
2 Application which will be ranked above all Priority 3 Applications, regardless
of score. This ranking will be used throughout the calendar year. In the event
two or more Applications receive the same score, the Department will use,
as a tie-breaking mechanism, the number of points awarded for Quality and
Amenities for the Housing Development. If a tie still exists, the Department
will consider the number of net rentable square feet per bond amount requested.
Pre-Applications must meet the threshold requirements as stated in The Private
Activity Bond Program Threshold Requirements as set out in Figure 2 of this
subsection. The Private Activity Bond Program Threshold Requirements will
be posted on the Department's website. After scoring, the Housing Development
and the proposed financing structure will be presented to the Department's
Board for consideration of a resolution declaring the Department's intent
to issue Bonds (the "inducement resolution") with respect to the Housing Development.
After Board approval of the inducement resolution, the scored and ranked Applications
will be submitted to the Texas Bond Review Board for its lottery processing.
The Texas Bond Review Board will draw the number of lottery numbers that equates
to the number of eligible Applications submitted by the Department. The lottery
numbers drawn will not equate to a specific Housing Development. The Texas
Bond Review Board will thereafter assign the lowest lottery number drawn to
the highest scored and ranked Application as previously submitted by the Department.
The criteria by which a Housing Development may be deemed to be eligible or
ineligible are explained below in subsection (e) of this section, Evaluation
Criteria. Private Activity Bond Program Scoring Criteria form will be posted
on the Department's website. The pre-application shall consist of the following
information:
Figure 1: 10 TAC §33.6(b)
Figure 2: 10 TAC §33.6(b)
(1)
Completed Uniform Application forms in the format required
by the Department;
(2)
Texas Bond Review Board's Residential Rental Attachment;
(3)
Relevant Development Information (form on website);
(4)
Public Notification Information (form on website);
(5)
Certification and agreement to comply with the Department's
rules;
(6)
Agreement of responsibility of all cost incurred;
(7)
An organizational chart showing the structure of the Applicant
and the ownership structure of any principals of the Applicant;
(8)
Evidence that the Applicant and principals are registered
with the Texas Secretary of State, or if the Applicant has not yet been formed,
evidence that the name of the Applicant is reserved with the Secretary of
State;
(9)
Organizational documents such as partnership agreements
and articles of incorporation, as applicable, for the Applicant and its principals;
(10)
Documentation of non-profit status if applicable;
(11)
Evidence of good standing from the Comptroller of Public
Accounts of the State of Texas for the Applicant and its principals;
(12)
Corporate resumes and individual resumes of the Applicant
and any principals;
(13)
A copy of an executed earnest money contract between the
Applicant and the seller of the Property. This earnest money contract must
be in effect at the time of submission of the application and expire no earlier
than December 1 of the year preceding the applicable program year. The earnest
money contract must stipulate and provide for the Applicant's option to extend
the contract expiration date through March 1 of the program year, subject
only to the seller's receipt of additional earnest money or extension fees,
so that the Applicant will have site control at the time a reservation is
granted. If the Applicant owns the Property, a copy of the recorded warranty
deed is required;
(14)
Evidence of zoning appropriate for the proposed use or
application for the appropriate zoning or statement that no zoning is required;
(15)
A local map showing the location of the Property;
(16)
A boundary survey or subdivision plat which clearly identifies
the location and boundaries of the subject Property;
(17)
Name, address and telephone number of the Seller of the
Property;
(18)
Construction draw and lease-up proforma for Housing Developments
involving new construction;
(19)
Past two years' operating statements for existing Housing
Developments;
(20)
Current market information which includes rental comparisons;
(21)
Documentation of local Section 8 utility allowances;
(22)
Verification/Evidence of delivery of federal, state, and
local community notifications;
(23)
Self-Scoring Criteria; and
(24)
Such other items deemed necessary by the Department per
individual application.
(c)
Financing Commitments. After approval by the Board of the
inducement resolution, and before submission of a final application, the Applicant
will be solely responsible for making appropriate arrangements with financial
institutions which are to be involved with the issuance of the Bonds or the
financing of the Housing Development, and to begin the process of obtaining
firm commitments for financing from each of the financial institutions involved.
(d)
Final Application. An Applicant who elects to proceed with
submitting a final Application to the Department must provide a final Application
and such supporting material as is required by the Department at least sixty
(60) days prior to the scheduled meeting of the Board at which the Housing
Development and the Bond issuance are to be considered, unless the Department
directs the Applicant otherwise in writing. The Department may determine that
supporting materials listed in paragraphs (1) - (42) of this subsection shall
be provided subsequent to the final Application deadline in accordance with
a schedule approved by the Department. Failure to provide any supporting materials
in accordance with the approved schedule may be grounds for terminating the
Application and returning the reservation to the Texas Bond Review Board.
The final application and supporting material shall consist of the following
information:
(1)
A Public Notification Sign shall be installed on the Housing
Development site no later than fourteen (14) days after the submission of
Volume I and II of the Tax Credit Application to the Department (pictures
and invoice receipts must be submitted as evidence of installation within
fourteen (14) days of the submission). For minimum signage requirements and
language, as set out in the Figure in this paragraph. As an alternative to
installing a Public Notification Sign and at the same required time, the Applicant
may instead, at the Applicant's Option, mail written notification to all addresses
located within the footage distance required by the local municipality zoning
ordinance or 1,000 feet, if there is no local zoning ordinance or if the zoning
ordinance does not require notification, of any part of the proposed Development
site. This written notification must include the information otherwise required
for the sign, as set out in the Figure in this paragraph. If the Applicant
chooses to provide this mailed notice in lieu of signage, the final Application
must include a map of the proposed Development site and mark the 1,000 foot
or local ordinance area showing street names and addresses; a list of all
addresses the notice was mailed to; an exact copy of the notice that was mailed;
and a certification that the notice was mailed through the U.S. Postal Service
and stating the date of mailing.
Figure: 10 TAC §33.6(d)(1)
(2)
Completed Uniform Application forms in the format required
by the Department;
(3)
Certification of no changes from the pre-application to
the final application. If there are changes to the Application that have an
adverse affect on the score and ranking order and that would have resulted
in the application being placed below another application in the ranking,
the Department will terminate the Application and return the reservation to
the Texas Bond Review Board (with the exception of changes to deferred developer's
fees and support or opposition points) ;
(4)
Certification and agreement to comply with the Department's
rules;
(5)
A narrative description of the Housing Development;
(6)
A narrative description of the proposed financing;
(7)
Firm letters of commitment from any lenders, credit providers,
and equity providers involved in the transaction;
(8)
Documentation of local Section 8 utility allowances;
(9)
Site plan;
(10)
Unit and building floor plans and elevations;
(11)
Complete construction plans and specifications;
(12)
General contractor's contract;
(13)
Completion schedule;
(14)
Copy of a recorded warranty deed if the Applicant already
owns the Property, or a copy of an executed earnest money contract between
the Applicant and the seller of the Property if the Property is to be purchased,
or other form of site control acceptable to the Department;
(15)
A local map showing the location of the Property;
(16)
Photographs of the Site;
(17)
Survey with legal description;
(18)
Flood plain map;
(19)
Evidence of zoning appropriate for the proposed use from
the appropriate local municipality that satisfies one of these subparagraphs
(A) - (C) of this paragraph:
(A)
no later than fourteen (14) days before the Board meets
to consider the transaction, the Applicant must submit to the Department written
evidence that the local entity responsible for initial approval of zoning
has approved the appropriate zoning and that they will recommend approval
of the appropriate zoning to the entity responsible for final approval of
zoning decisions;
(B)
provide a letter the chief executive officer of the political
subdivision or another local official with appropriate jurisdiction stating
that the Development is located within the boundaries of a political subdivision
which does not have a zoning ordinance;
(C)
a letter from the chief executive officer of the political
subdivision or another local official with appropriate jurisdiction stating
the Development is permitted under the provision of the zoning ordinance that
apply to the location of the Development or that there is not a zoning requirement.
(20)
Evidence of the availability of utilities;
(21)
Copies of any deed restrictions which may encumber the
Property;
(22)
A Phase I Environmental Site Assessment performed in accordance
with the Department's Environmental Site Assessment Rules and Guidelines (§1.35
of this title, as proposed);
(23)
Title search or title commitment;
(24)
Current tax assessor's valuation or tax bill;
(25)
For existing Housing Developments, current insurance bills;
(26)
For existing Housing Developments, past two (2) fiscal
year end development operating statements;
(27)
For existing Housing Developments, current rent rolls;
(28)
For existing Housing Developments, substantiation that
income-based tenancy requirements will be met prior to closing;
(29)
Study performed in accordance with the Department's Market
Analysis Rules and Guidelines (§1.33 of this title, as proposed);
(30)
Appraisal of the existing or proposed Housing Development
performed in accordance with the Department's Underwriting Rules and Guidelines
(§1.32 of this title, as proposed);
(31)
Statement that the Development Owner will accept tenants
with Section 8 or other government housing assistance;
(32)
An organizational chart showing the structure of the Applicant
and the ownership structure of any principals of the Applicant;
(33)
Evidence that the Applicant and principals are registered
with the Texas Secretary of State, as applicable;
(34)
Organizational documents such as partnership agreements
and articles of incorporation, as applicable, for the Applicant and its principals;
(35)
Documentation of non-profit status if applicable;
(36)
Evidence of good standing from the Comptroller of Public
Accounts of the State of Texas for the Applicant and its principals;
(37)
Corporate resumes and individual resumes of the Applicant
and any principals;
(38)
Latest two (2) annual financial statements and current
interim financial statement for the Applicant and its principals;
(39)
Latest income tax filings for the Applicant and its principals;
(40)
Resolutions or other documentation indicating that the
transaction has been approved by the general partner;
(41)
Resumes of the general contractor's and the property manager's
experience; and
(42)
Such other items deemed necessary by the Department per
individual application.
(e)
Evaluation Criteria. The Department will evaluate the Housing
Development for eligibility at the time of pre-application, and at the time
of final Application. If there are changes to the Application that have an
adverse affect on the score and ranking order and that would have resulted
in the Application being placed below another Application in the ranking,
the Department will terminate the Application and return the reservation to
the Texas Bond Review Board. The Housing Development and the Applicant must
satisfy the conditions set out in paragraphs (1) - (6) of this subsection
in order for a Housing Development to be considered eligible:
(1)
The proposed Housing Development must further the public
purposes of the Department as identified in the Act.
(2)
The proposed Housing Development and the Applicant and
its principals must satisfy the Department's Underwriting Rules and Guidelines
(§1.32 of this title, as proposed). The pre-application must include
sufficient information for the Department to establish that the Underwriting
Guidelines can be satisfied. The final Application will be thoroughly underwritten
according to the Underwriting Rules and Guidelines (§1.32 of this title,
as proposed).
(3)
The Housing Development must not be located on a site determined
to be unacceptable for the intended use by the Department.
(4)
Any Housing Development in which the Applicant or principals
of the Applicant have an ownership interest must be found not to be in Material
Non-Compliance under the compliance rules in effect at the time of Application
submission.
(5)
Neither the Applicant nor any principals of the Applicant
is, at the time of Application
(A)
barred, suspended, or terminated from procurement in a
state or federal program or listed in the List of Parties Excluded from Federal
Procurement or Non-Procurement Programs;
(B)
or has been convicted of a state or federal crime involving
fraud, bribery, theft, misrepresentation, misappropriation of funds, or other
similar criminal offenses within fifteen (15) years;
(C)
or is subject to enforcement action under state or federal
securities law, subject to a federal tax lien, or the subject of an enforcement
proceeding with any governmental entity; or
(D)
otherwise disqualified or debarred from participation in
any of the Department's programs.
(6)
Neither the Applicant nor any of its principals may have
provided any fraudulent information, knowingly false documentation or other
intentional or negligent misrepresentation in the Application or other information
submitted to the Department.
(f)
Bond Documents. After receipt of the final Application,
bond counsel for the Department shall draft Bond documents which conform to
the state and federal laws and regulations which apply to the transaction.
(g)
Public Hearings; Board Decisions. For every Bond issuance,
the Department will hold a public hearing in accordance with §2306.0661,
Texas Government Code and §147(f) of the Code, in order to receive comments
from the public pertaining to the Housing Development and the issuance of
the Bonds. Publication of all notices required for the public hearing shall
be at the sole expense of the Applicant. The Board's decisions on approvals
of proposed Housing Developments will consider all relevant matters. Any topics
or matters, alone or in combination, may or may not determine the Board's
decision. The Department's Board will consider the following topics in relation
to the approval of a proposed Housing Development:
(1)
The Development Owner market study;
(2)
The location, including supporting broad geographic dispersion;
(3)
The compliance history of the Development Owner;
(4)
The financial feasibility;
(5)
The Housing Development's proposed size and configuration;
(6)
The housing needs of the community in which the Housing
Development is located and the needs of the area, region and state;
(7)
The Housing Development's proximity to other low income
Housing Developments including avoiding over concentration;
(8)
The availability of adequate public facilities and services;
(9)
The anticipated impact on local school districts, giving
due consideration to the authorized land use;
(10)
Fair Housing law;
(11)
Any matter considered by the Board to be relevant to the
approval decision and in furtherance of the Department's purposes and the
policies of Chapter 2306, Texas Government Code.
(h)
Approval of the Bonds. Subject to the timely receipt and
approval of commitments for financing, an acceptable evaluation for eligibility,
the satisfactory negotiation of Bond documents, and the completion of a public
hearing, the Board, upon presentation by the Department's staff, will consider
the approval of the Bond issuance, final Bond documents and, in the instance
of privately placed Bonds, the pricing of the Bonds. The process for appeals
and grounds for appeals may be found under §1.7 and §1.8 of this
title. The Department's conduit housing transactions, will be processed in
accordance with the Texas Bond Review Board rules Title 34, Part 9, Chapter
181, Subchapter A. The Bond issuance must receive an approving opinion from
the Department's bond counsel with respect to the legality and validity of
the Bonds and the security therefore, and in the case of tax-exempt Bonds,
with respect to the excludability from gross income for federal income tax
purposes of interest on the Bonds.
(i)
Local Permits. Prior to the closing of the Bonds, all necessary
approvals, including building permits, from local municipalities, counties,
or other jurisdictions with authority over the Housing Development must have
been obtained or evidence that the permits are obtainable subject only to
payment of certain fees must be provided to the Department.
(j)
Closing. Once all approvals have been obtained and Bond
documents have been finalized to the respective parties' satisfaction, the
Bond transaction will close. Upon satisfaction of all conditions precedent
to closing, the Department will issue Bonds in exchange for payment therefor.
The Department will then loan the proceeds of the Bonds to the Applicant and
disbursements of the proceeds may begin.
§33.7.Regulatory and Land Use Restrictions.
(a)
Filing and Term of LURA. A Regulatory and Land Use Restriction
Agreement or other similar instrument (the "LURA"), will be filed in the property
records of the county in which the Housing Development is located for each
Housing Development financed from the proceeds of Bonds issued by the Department.
For Housing Developments involving new construction, the term of the LURA
will be the longer of 30 years, or the period for which Bonds are outstanding.
For the financing of an existing Housing Development, the term of the LURA
will be the longer of the longest period which is economically feasible in
accordance with the Act, or the period for which Bonds are outstanding.
(b)
Housing Development Occupancy. The LURA will specify occupancy
restrictions for each Housing Development based on the income of its tenants,
and will restrict the rents that may be charged for Units occupied by tenants
who satisfy the specified income requirements. Pursuant to §2306.269,
Texas Government Code, the LURA will prohibit a Development Owner from excluding
an individual or family from admission to the Housing Development because
the individual or family participates in the housing choice voucher program
under Section 8, United States Housing Act of 1937 (the "Housing Act"), and
from using a financial or minimum income standard for an individual or family
participating in the voucher program that requires the individual or family
to have a monthly income of more than two and one half (2.5) times the individual's
or family's share of the total monthly rent payable to the Development Owner
of the Housing Development. Housing Development occupancy requirements must
be met on or prior to the date on which Bonds are issued unless the Housing
Development is under construction. Adequate substantiation that the occupancy
requirements have been met, in the sole discretion of the Department, must
be provided prior to closing. Occupancy requirements exclude units for managers
and maintenance personnel that are reasonably required by the Housing Development.
(c)
Set-Asides.
(1)
Housing Developments which are financed from the proceeds
of Private Activity Bonds or from the proceeds of Qualified 501(c)(3) Bonds
must be restricted under one of the following two set-asides:
(A)
at least twenty percent (20%) of the Units within the Housing
Development that are available for occupancy shall be occupied or held vacant
and available for occupancy at all times by persons or families whose income
does not exceed fifty percent (50%) of the area median income, or
(B)
at least forty percent (40%) of the Units within the Housing
Development that are available for occupancy shall be occupied or held vacant
and available for occupancy at all times by persons or families whose income
does not exceed sixty percent (60%) of the area median income.
(2)
The Development Owner must designate at the time of Application
which of the two set-asides will apply to the Housing Development and must
also designate the selected priority for the Housing Development in accordance
with §1372.0321, Texas Government Code. Units intended to satisfy set-aside
requirements must be distributed evenly throughout the Housing Development,
and must include a reasonably proportionate amount of each type of unit available
in the Housing Development.
(3)
No tenant qualifying under either of the set-asides shall
be denied continued occupancy of a Unit in the Housing Development because,
after commencement of such occupancy, such tenant's income increases to exceed
the qualifying limit; provided, however, that, should a tenant's income, as
of the most recent determination thereof, exceed 140% of the then applicable
income limit and such tenant constitutes a portion of the set-aside requirement
of this section, then such tenant shall only continue to qualify for so long
as no Unit of comparable or smaller size is rented to a tenant that does not
qualify as a Low-Income Tenant. (These are the federal set-aside requirements)
(d)
Global Income Requirement. All of the Units that are available
for occupancy in Housing Developments financed from the proceeds of Private
Activity Bonds or from the proceeds of Qualified 501(c)(3) Bonds shall be
occupied or held vacant (in the case of new construction) and available for
occupancy at all times by persons or families whose income does not exceed
one hundred and forty percent (140%) of the area median income for a four-person
household.
(e)
Qualified 501(c)(3) Bonds. Housing Developments which are
financed from the proceeds of Qualified 501(c)(3) Bonds are further subject
to the restriction that at least seventy-five percent (75%) of the Units within
the Housing Development that are available for occupancy shall be occupied
(or, in the case of new construction, held vacant and available for occupancy
until such time as initial lease-up is complete) at all times by individuals
and families of Low Income.
(f)
Taxable Bonds. The requirements for Housing Developments
financed from the issuance of taxable Bonds will be negotiated and considered
on a case by case basis.
(g)
Special Needs. At least five percent (5%) of the Units
within each Housing Development must be designed to be accessible to Persons
with Special Needs and hardware and cabinetry must be stored on site or provided
to be installed on an as needed basis in such Units. The Development Owner
will use its best efforts (including giving preference to Persons with Special
Needs) to:
(1)
make at least five percent (5%) of the Units within the
Housing Development available for occupancy by Persons with Special Needs;
(2)
make reasonable accommodations for such persons; and
(3)
allow reasonable modifications at the tenant's sole expense
pursuant to the Housing Act. During the term of the LURA, the Development
Owner shall maintain written policies regarding the Development Owner's outreach
and marketing program to Persons with Special Needs.
(h)
Fair Housing. All Housing Developments financed by the
Department must comply with the Fair Housing Act which prohibits discrimination
in the sale, rental, and financing of dwellings based on race, color, religion,
sex, national origin, familial status, and disability. The Fair Housing Act
also mandates specific design and construction requirements for multifamily
housing built for first occupancy after March 13, 1991, in order to provide
accessible housing for individuals with disabilities.
(i)
Tenant Services. The LURA will require that the Development
Owner offer a variety of services for residents of the Housing Development
through a Tenant Services Program Plan which is subject to annual approval
by the Department.
(j)
The LURA will require the Development Owner:
(1)
To obtain, complete and maintain on file Tenant Income
Certifications from each Eligible Tenant, including:
(A)
a Tenant Income Certification dated immediately prior to
the initial occupancy of each new Eligible Tenant in the Housing Development
and
(B)
thereafter, annual Tenant Income Certifications which must
be obtained on or before the anniversary of such Eligible Tenant's occupancy
of the Unit, and in no event less than once in every 12-month period following
each Eligible Tenant's occupancy of a Unit in the Housing Development. For
administrative convenience, the Development Owner may establish the first
date that a Tenant Income Certification for the Housing Development is received
as the annual recertification date for all tenants. The Development Owner
will obtain such additional information as may be required in the future by §142(d)
of the Code, as the same may be amended from time to time, or in such other
form and manner as may be required by applicable rules, rulings, policies,
procedures, Regulations or other official statements now or hereafter promulgated,
proposed or made by the Department of the Treasury or the Internal Revenue
Service with respect to obligations which are tax-exempt private activity
bonds described in §142(d) of the Code. The Development Owner shall make
a diligent and good-faith effort to determine that the income information
provided by an applicant in a Tenant Income Certification is accurate by taking
steps required under §142(d) of the Code pursuant to provisions of the
Housing Act.
(2)
As part of the verification, such steps may include the
following, provided such action meets the requirements of §142(d) of
the Code:
(A)
obtain pay stubs for the most recent one-month period;
(B)
obtain income tax returns for the most recent two tax years;
(C)
conduct a consumer credit search;
(D)
obtain an income verification from the applicant's current
employer;
(E)
obtain an income verification from the Social Security
Administration, or
(F)
if the applicant is self-employed, unemployed, does not
have income tax returns or is otherwise not reasonably able to provide other
forms of verification as required above, obtain another form of independent
verification as would, in the Development Owner's reasonable commercial judgment,
enable the Development Owner to determine the accuracy of the applicant's
income information. The Development Owner shall retain all Tenant Income Certifications
obtained in compliance with this subsection (b) of this section until the
date that is six years after the last Bond is retired;
(3)
To obtain from each tenant in the Housing Development,
at the time of execution of the lease pertaining to the Unit occupied by such
tenant, a written certification, acknowledgment and acceptance in such form
as provided by the Department to the Development Owner from time to time that
(A)
such lease is subordinate to the Mortgage and the LURA;
(B)
all statements made in the Tenant Income Certification
submitted by such tenant are accurate;
(C)
the family income and eligibility requirements of the LURA
and the Loan Agreement are substantial and material obligations of tenancy
in the Housing Development;
(D)
such tenant will comply promptly with all requests for
information with respect to such requirements from the Development Owner,
the Trustee and the Department; and
(E)
failure to provide accurate information in the Tenant Income
Certification or refusal to comply with a request for information with respect
thereto will constitute a violation of a substantial obligation of the tenancy
of such tenant in the Housing Development;
(4)
To maintain complete and accurate records pertaining to
the Low-Income Units and to permit, at all reasonable times during normal
business hours and upon reasonable notice, any duly authorized representative
of the Department, the Trustee, the Department of the Treasury or the Internal
Revenue Service to enter upon the Housing Development Site to examine and
inspect the Housing Development and to inspect the books and records of the
Development Owner pertaining to the Housing Development, including those records
pertaining to the occupancy of the Low-Income Units;
(5)
On or before each February 15 during the qualified development
period, to submit to the Department (to the attention of the Portfolio Management
and Compliance Division) a draft of the completed Internal Revenue Service
Form 8703 or such other annual certification required by the Code to be submitted
to the Secretary of the Treasury as to whether the Housing Development continues
to meet the requirements of §142(d) of the Code and on or before each
March 31 during the qualified development period, to submit such completed
form to the Secretary of the Treasury and the Department;
(6)
To prepare and submit the compliance monitoring report.
To cause to be prepared and submitted to the Department and the Trustee on
the first day of the state restrictive period, and thereafter by the tenth
calendar day of each March, June, September, and December, or other quarterly
schedule as determined by the Department with written notice to the Development
Owner, a certified compliance monitoring report and Development Owner's certification
in such form as provided by the Department to the Development Owner from time
to time; and
(7)
To provide regular maintenance to keep the Housing Development
sanitary, decent and safe.
(8)
To establish a reserve account consistent with the requirements
of §2306.186, Texas Government Code.
§33.8.Fees.
(a)
Application and Issuance Fees. The Department shall set
fees to be paid by the Applicant in order to cover the costs of pre-application
review, Application and Development review, the Department's expenses in connection
with providing financing for a Housing Development, and as required by law.
(§1372.006(a), Texas Government Code)
(b)
Administration and Portfolio Management and Compliance
Fees. The Department shall set ongoing fees to be paid by Development Owners
to cover the Department's costs of administering the Bonds and portfolio management
and compliance with the program requirements applicable to each Housing Development.
§33.9.Waiver of Rules.
Provided all requirements of the Act, the Code, and any other applicable
law are met, the Board may waive any one or more of the rules set forth in §§33.3
- 33.8 of this title relating to the Multifamily Housing Revenue Bond Program
in order to further the purposes and the policies of Chapter 2306, Texas Government
Code; to encourage the acquisition, construction, reconstruction, or rehabilitation
of a Housing Development that would provide decent, safe, and sanitary housing,
including, but not limited to, providing such housing in economically depressed
or blighted areas, or providing housing designed and equipped for Persons
with Special Needs; or for other good cause, as determined by the Board.
§33.10.No Discrimination.
The Department and its staff or agents, Applicants, Development Owners,
and any participants in the Program shall not discriminate under this Program
against any person or family on the basis of race, creed, national origin,
age, religion, handicap, family status, or sex, or against persons or families
on the basis of their having minor children, except that nothing herein shall
be deemed to preclude a Development Owner from selecting tenants with Special
Needs, or to preclude a Development Owner from selecting tenants based on
income in renting Units to comply with the set asides under the provisions
of this chapter.
This agency hereby certifies that the emergency adoption
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 August 18, 2003.
TRD-200305305
Edwina P. Carrington
Executive Director
Texas Department of Housing and Community Affairs
Effective Date: August 20, 2003
Expiration Date: December 18, 2003
For further information, please call: (512) 475-3726