Part 1.
TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS
Chapter 1.
ADMINISTRATION
Subchapter A. GENERAL POLICIES AND PROCEDURES
10 TAC §1.19
The Texas Department of Housing and Community Affairs (the
Department) proposes new §1.19, concerning Deobligated Funds. The purpose
of this new section is, in accordance with §2306.052(b)(4), Texas Government
Code, to establish a procedure for use of funds returned to the Department
to make them available to the community.
Mr. Michael Gerber, Executive Director, has determined that for the first
five-year period the proposed new section is in effect there will be no fiscal
implications for state or local government as a result of enforcing or administering
the rule.
Mr. Gerber also has determined that for each year of the first five years
the proposed new section is in effect, the public benefit anticipated as a
result of enforcing this new section will be the more efficient use of Federal
funds. There will be no effect on persons, small businesses or micro-businesses.
There are no anticipated economic costs to persons, small businesses or micro-businesses
who are required to comply with the section as proposed. The proposed new
rule will not have an impact on any local economy.
Comments may be submitted to Kevin Hamby, General Counsel, Texas Department
of Housing and Community Affairs, P.O. Box 13941, Austin, Texas, 78711-3941
or by email at the following address: Kevin.hamby@tdhca.state.tx.us.
The new section is proposed pursuant to the authority of the
Texas Government Code, Chapter 2306.
The new section affects no other code, article or statute.
§1.19.Deobligated Funds.
(a)
Purpose. The Governing Board and the Department seek to
facilitate the use of public funds to provide for safe decent and affordable
housing for Texans in a timely manner. From time-to-time, it becomes necessary
to make changes to previously awarded funds to either expedite the delivery
of the funds, meet state or federal guidelines or statutes, or to meet unexpected
needs like disaster relief or leveraging of additional funds. To best achieve
these goals, the Department has determined that a policy is necessary to provide
the public with clear and consistent rules as to how Deobligated funds occur,
the reporting of Deobligated Funds and how the Department will treat Deobligated
funds after an initial award has been made. The funds covered by this section
are previously awarded funds under a program administered by the Department,
or funds that become available to the Department through program income. The
purposes of this section are:
(1)
To establish procedures and Board policy on the events
creating Deobligated Funds for applicable Department programs,
(2)
To identify standards for reporting and maintaining Deobligated
Fund balances, and
(3)
To provide guidance for the reprogramming and reobligation
of Deobligated or otherwise unexpended funds and program income.
(b)
Definitions.
(1)
Administrator--A unit of government, non-profit entity
or other party who has a written signed Agreement with the Department committing
the Department to provide funds upon the completion of certain actions called
for in the Agreement.
(2)
Agreement--A written executed agreement between the Department
and an Administrator or Contractor outlining the obligations of all parties
involved in the related transaction.
(3)
Contract--A written executed contract between the Department
and an Administrator or Contractor outlining the obligations of all parties
involved in the related transaction.
(4)
Contractor--A party who has a Contract with the Department
to administer a program using funds provided under explicit terms and conditions
in a written Contract with the Department.
(5)
Deobligated Funds--The funds released by an Administrator
or Contractor or recovered by the Department canceling a contract or award
involving some or all of a contractual financial obligation between the Department
and an Administrator or Contractor.
(6)
Department--The Texas Department of Housing and Community
Affairs as authorized in Chapter 2306 of the Texas Government Code.
(7)
Expenditure--Approved expense evidenced by documentation
submitted by the Administrator or Contractor to the Department for purposes
of drawing funds from HUD's Integrated Disbursement and Information System
(IDIS) for work completed, inspected and certified as complete, and as otherwise
required by the Department.
(8)
Executive Director--The person hired by the Governing Board
with administrative duties to manage the affairs of the Department as provided
under Texas Government Code §2306.036.
(9)
Governing Board--The Governing Board of the Department.
(10)
HOME--The HOME Investment Partnership Program at 42 United
States Code §§12701 - 12839 and the regulations promulgated thereafter
at 24 CFR Part 92 and governed by the Rules in 10 Texas Administrative Code §53.50
et seq.
(11)
Housing Trust Fund--The fund created under Texas Government
Code §2306.201 and governed by the Rules found at 10 Texas Administrative
Code §51.1 et seq.
(12)
HUD--United States Department of Housing and Urban Development.
(13)
Program Income--Funds generated through the activities
related to a program that are made available to the Department for use in
funding authorized actions of the Department.
(c)
Events Creating Deobligated Funds.
(1)
The Department reserves the right to release their commitment
to any Administrator or Contractor resulting in Deobligated funds in the event
of any one of the following circumstances:
(A)
Department has notified Administrator or Contractor of
any outstanding compliance issues and the Administrator or Contractor has
failed to either resolve the issue or take sufficient action to correct the
compliance matter;
(B)
Department has notified Administrator or Contractor that
they have failed to meet the required timelines and/or commitment deadlines,
including Expenditure of funds, per the Agreement or Contract and Administrator
or Contractor has not sufficiently corrected the deficiency;
(C)
The Department provides notice of default to Administrator
or Contractor on any Agreement or Contract by and between Administrator and
Contractor and the default has not been cured within the required time frame;
(D)
Applicant materially misrepresents facts to the Department
during an application process, award of contract, request for amendment, or
administration of any contract;
(E)
Department has notified Administrator or Contractor of
their inability to provide adequate financial support to administer the contract
as called for in the Agreement or Contract or meet any other material conditions
and the Administrator or Contractor has failed to sufficiently correct the
matter;
(F)
Department has notified Administrator or Contractor of
their inadequate or insufficient management controls and the Administrator
or Contractor has failed to sufficiently correct the matter;
(G)
Administrator or Contractor declines funds;
(H)
Administrator or Contractor fails to expend all funds awarded
and voluntarily releases the funds;
(I)
Program income received by the Department that is used
in lieu of awarded contract funds; or
(J)
Other circumstances approved by the Board as warranting
Deobligation.
(2)
The Department shall have the sole discretion to determine
whether sufficient progress or cure has been made under paragraph (1)(A) -
(C) of this subsection and the sole discretion to determine what constitutes
materiality in paragraph (1)(D) of this subsection, subject to appeal under
10 Texas Administrative Code §1.7.
(3)
During the pendency of a challenge of an event described
under paragraph (1) of this subsection by Administrator or Contractor, the
Department shall not take any action resulting in Deobligated funds until
an appeal as provided for under 10 TAC §1.7 has been completed. The Department
may suspend reimbursement of funds during the appeal. If an appeal has not
been requested, the Department may take action as allowed under this policy.
(d)
Maintenance of Deobligated funds.
(1)
The Department will produce a report for the Executive
Director and the Board related to Deobligated funds separate from original
balances and program income, including fees earned and loan repayments, as
part of the accounting of program funds at both the program and Department
level.
(2)
The Department will ensure that HOME Deobligated fund balances
are reconciled at least monthly against the unexpended fund balances maintained
by HUD. The Department shall confirm balances with HUD prior to recommendation
to the Board for the use of any Deobligated funds.
(3)
Housing Trust Fund Deobligated funds, or any other Deobligated
funds deriving from a state general revenue source, will be included in the
report in paragraph (1) of this subsection, but shall not be used to establish
reserve balances. The Department will initiate efforts to reprogram and reassign
Deobligated funds from the Housing Trust Fund or any other state general revenue
source within three months of Deobligation upon reaching a cumulative amount
of Deobligated funds that facilitates reprogramming.
(4)
The Department shall not retain Deobligated funds from
any program in any amount that exceeds 15% of the most current annual allocation
for three consecutive months and must initiate efforts to reprogram or reassign
funds in excess of that standard within 90 days of the figure reaching the
15% threshold. For purposes of determining the 15% threshold, funds that are
subject to disbursement under a Notice of Federal Funding, but are not yet
committed are not included in the 15% threshold. Submitting a proposal for
reprogramming or reassigning Funds to the Board for approval shall constitute
an initiation of efforts.
(e)
Reassignment of Funds. Under this policy, the Governing
Board and the Department, intend to create a policy to direct staff and the
public on the uses of funds that are either characterized as Deobligated Funds
under this policy or Program funds.
(1)
The Department shall not recommend to reprogram or reassign
Deobligated funds from the HOME Program or other programs with Deobligated
funds other than state general revenue funds described in subsection (d)(3)
of this section for purposes other than disaster relief unless the remaining
Deobligated fund balance after reprogramming of funds is an amount equivalent
to or greater than 5% of the most current annual allocation of such funds,
for example the annual allocation of HOME funds from HUD.
(2)
It is the policy of the Department that funds not reserved
for disaster relief may be used for any of the activities listed below as
needed in the Department's discretion subject to the approval of the Governing
Board:
(A)
Successful appeals related directly to the program funds
available as allowable under program rules and regulations;
(B)
Leveraging of funds with other local, state or federal
resources for applications made to the Department for any one or more of the
programs operated by the Department;
(C)
Funding of projects identified as beneficial by the Department
and identified in a Notice of Funding Availability approved by the Board;
(D)
Disaster relief including but not limited to disaster declarations
or documented extenuating circumstances such as imminent threat to health
and safety;
(E)
Funding of applications for program funds on existing Department
waiting lists or reservation systems;
(F)
Funding to existing previously awarded eligible contracts
in need of additional resources for circumstances considered unique or extenuating
by the Department's Board;
(G)
Funding of applications or programs that serve individuals
with special needs;
(H)
Settlement of litigation or HUD compliance matters;
(I)
Use in Asset Resolution/Enforcement Rule activities;
(J)
Funding applications or programs that serve Colonias; or
(K)
Other projects/uses as determined by the Executive Director
and/or Board including the next year's funding cycle for each respective program.
(f)
After adoption in final form and publication in the
(g)
Any portion of this rule may be waived for good cause by
the Governing Board of the Department.
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 February 16, 2007.
TRD-200700588
Michael Gerber
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: April 1, 2007
For further information, please call: (512) 475-4595
10 TAC §1.20
The Texas Department of Housing and Community Affairs (the
Department) proposes new §1.20, concerning Asset Resolution and Enforcement.
The purpose of this new section is, in accordance with §2306.052(b)(4),
Texas Government Code, to streamline and centralize the asset resolution and
enforcement process and to fill in where gaps were determined to exist in
our ability to protect the interests of the public served and meeting the
requirements set forth by rule, policy and statute.
Mr. Michael Gerber, Executive Director, has determined that for the first
five-year period the proposed new section is in effect there will be no fiscal
implications for state or local government as a result of enforcing or administering
the rule.
Mr. Gerber also has determined that for each year of the first five years
the proposed new section is in effect, the public benefit anticipated as a
result of enforcing this new section will be to allow the Department greater
management of its assets and to provide a mechanism to assure long term compliance
benefiting residents of TDHCA assisted properties. There will be no effect
on persons, small businesses or micro-businesses. There are no anticipated
economic costs to persons, small businesses or micro-businesses who are required
to comply with the section as proposed. The proposed new rule will not have
an impact on any local economy.
Comments may be submitted to Kevin Hamby, General Counsel, Texas Department
of Housing and Community Affairs, P.O. Box 13941, Austin, Texas, 78711-3941
or by email at the following address: Kevin.hamby@tdhca.state.tx.us.
The new section is proposed pursuant to the authority of the
Texas Government Code, Chapter 2306.
The new section affects no other code, article or statute.
§1.20.Asset Resolution and Enforcement.
(a)
Purpose. The purposes of this section are:
(1)
To provide guidance to interested parties on potential
actions available to the Department when a party that has obligated itself
to carry out a contract or construct or operate an asset is not performing
or operating according to the agreed upon terms and
(2)
To establish appropriate procedures to implement the general
policy of requiring compliance with all contractual undertakings made in connection
with the receipt of funds or other support provided by the Department pursuant
to the various state and federal programs that it administers.
(b)
Definitions.
(1)
Administrator--The Person responsible for performing under
a Contract with the Department.
(2)
Affiliated Party--A Person in a relationship with the Administrator
on a Contract with the Department. Does not apply to an Affiliated Party for
Application purposes.
(3)
Asset--A property covered by a LURA, Contract, grant agreement,
or Commitment or any other property acquired, improved, or subsidized, directly
or indirectly, in whole or in part with funds provided by any program(s) administered
by the Department.
(4)
Audit--An audit required to be performed by a third party
or performed by the Department relating to a Contract.
(5)
Board--The Governing Board of the Department.
(6)
Commitment--A legally binding agreement between the Department
and another party providing for funds, tax credits, or other financial support.
(7)
Compliance Monitoring Fees--The fees identified in a LURA
or other Contract payable by Project Owner related to an Asset.
(8)
Compliance Rules--The rules found in 10 Texas Administrative
Code Chapter 60.
(9)
Contract--Any executed written agreement between the Department
and an Administrator, Home Owner, Mortgagor, Project Owner, Subrecipient,
Subrecipient Organization, or other beneficiary of a Department program.
(10)
Deed-in-lieu of Foreclosure--A deed to a lender given
by an owner/borrower conveying mortgaged property to prevent a lender from
bringing Foreclosure proceedings or to eliminate the need for Foreclosure.
(11)
Deed of Trust--An instrument used to create a lien or
mortgage by which the Mortgagor transfers his or her title to a trustee who
holds it as security for the benefit of a lender.
(12)
Default--As defined in a LURA or Contract.
(13)
Delinquent Loan--Any mortgage loan in which the scheduled
payment has not been received by the due date.
(14)
Department--The Texas Department of Housing and Community
Affairs.
(15)
Development--Any Project that has a construction component,
either in the form of new construction or the rehabilitation of residential
housing.
(16)
Eligible Household--A household that meets the requirements
associated with a Department Contract or LURA and applicable law, as in effect
from time to time.
(17)
Event of Default--As defined in a LURA or Contract.
(18)
Executive Director--As defined under Texas Government
Code §2306.036 and/or §2306.038.
(19)
Finding--A report or other communication from the Department
indicating a need for corrective action by an Administrator, Project Owner,
Recipient, Subrecipient or other beneficiary of a Department program.
(20)
Forbearance--The act of agreeing, either conditionally
or unconditionally, in reliance upon express representations, to refrain from
enforcing one or more legal obligations, such as making scheduled payments
on a debt or complying with one or more non-monetary provisions of a Contract.
A relief provision that provides for a period of reduced or suspended payments
to enable the Mortgagor to cure a delinquency is an example of a forbearance.
(21)
Foreclosure--A legal proceeding, in or out of court, to
gain title or to force a sale of a mortgaged property in order to satisfy
unpaid amounts due under the debt secured by such mortgaged property on the
property.
(22)
Loan Modification--A written agreement to a change in
one or more terms of the Contract or contractual documents relating to an
existing loan between the Department and Mortgagor.
(23)
LURA--A Land Use Restriction Agreement that has been executed
by the Department and a Person related to a specific property or properties
and filed with required recording authorities.
(24)
Mortgagor--The party (a ''borrower'') who borrows the
money and uses his or her real property as collateral and security for the
payment of the debt.
(25)
Person--Any individual, partnership, corporation, association,
trust, unit of government, community action agency, or public or private organization
of any character, however organized.
(26)
Real Estate Owned--Property acquired by the Department
as the lender, usually through foreclosure or acceptance of a deed-in-lieu.
(27)
Receivership--Legal action as defined in Contract or LURA.
(28)
Responsible Party--The Administrator, Home Owner, Mortgagor,
Project Owner, Subrecipient, Subrecipient Organization, or other beneficiary
of a Department program subject to this rule for purposes of asset resolution
or enforcement.
(29)
Review Committee--The committee, chaired by the Executive
Director and comprised of the Deputy Executive Director for Programs, the
Deputy Executive Director for Administration, the Director of PMC, the Director
of Real Estate Analysis and two additional rotating members appointed by the
Chair. The Review Committee will determine asset resolutions or enforcement
recommendations.
(30)
Workout Program--A written agreement as an alternative
to foreclosure that the Department may offer to the Mortgagor of a defaulted
mortgage.
(c)
Potential Actions Related to Home Ownership.
(1)
Early Delinquency Intervention. According to the terms
of a Contract between the Department and a Mortgagor the Department will provide
a loan billing statement to the Mortgagor or Home Owner as payments are due.
A Contract will be identified as delinquent unless the mortgage payment is
made on the 16th day after the due date. A late fee will be assessed on all
identified delinquent loans. A computer generated ''Friendly Reminder'' notice
of default is mailed to the Mortgagor on any loan for which payment has not
been received by the 16th day of the month payment was due. A ''Late Payment''
notice of default is mailed to the Mortgagor on any loan that is past due
more than forty-five (45) days. An ''Urgent'' notice of default is mailed
to the Mortgagor on all loans that are more than sixty (60) days past due.
The status of all mortgage loans serviced in-house by the Loan Servicing section
will be reported monthly to the Credit Bureau through the Department's credit
reporting processes, including delinquencies.
(2)
Workout Program. The Department supports delinquent Mortgagors'
efforts to meet their mortgage obligations so they can avoid Foreclosure and
remain in their homes when feasible. That means, among other things, using
available tools that are appropriate under the circumstances to avoid Foreclosure;
being judicious in approaching loss mitigation efforts and promoting open
and effective communication with Mortgagors, including giving reasonable opportunity
to resolve legitimate disputes. The Department after consultation with the
Review Committee may, but is not required to, perform one or more of the following
alternatives to cure the delinquency:
(A)
Phone Contact. Delinquent Mortgagors identified as more
than forty-five (45) days past due may be contacted by phone to determine
why the Mortgagor has not made the required payment(s). The Mortgagor is encouraged
to contact the Department prior to this call to notify the Department of circumstances
for the delinquencies.
(B)
Face-to-Face Interviews. Face-to-face interviews may be
conducted when phone contact is not possible with the Mortgagor, and/or the
Mortgagor is unresponsive to various attempts by the Department to establish
communication and discuss the delinquency. Face-to-face interviews are done
to determine the condition of the Department's collateral and discuss workout
options available to the Mortgagor. If the Mortgagor is unavailable at the
time a face-to-face interview is attempted, the Department will leave a ''Collection
Flyer'' notice of default, marked ''confidential,'' addressed to the Mortgagor
at the property location.
(C)
Written Repayment Agreement. Once a Mortgagor's ability
to pay has been assessed, if the period necessary to cure the delinquency
will exceed forty-five (45) days from the time contact is made, the Department
will require the Mortgagor to enter into a formal written repayment agreement
specifying the terms of repayment for the delinquent amount. Only in exceptional
cases will a repayment period exceed twelve (12) months. If the Mortgagor
abides by the terms of the written repayment agreement, the Department may
suspend accrual of late fees for the duration of the agreement.
(D)
Forbearance. The Review Committee may recommend a Forbearance
agreement if the Mortgagor is temporarily unable to make any amount of payment
due because of documented evidence of illness, death of a co-mortgagor, or
loss of employment. Forbearance agreements will not exceed three (3) months.
Any suspended payments will be made up as an additional single payment upon
maturity. All accrued unpaid principal and interest amounts will be added
to the end of the loan as a balloon payment. This will not result in a change
of terms, and no recording fees or T-38 Endorsement will be necessary.
(E)
Loan Modification. The Review Committee may recommend a
loan modification to alter the terms of the note including, but are not limited
to, the interest rate, principal balance, payment amount, and the maturity
date. This is a formal change in the original terms of the note. Any principal,
escrow shortages, and fees such as recording fees, title policy fees, and
pre-foreclosure fees will be included in the new terms.
(F)
Pre-foreclosure Sale. If the Mortgagor is unable to cure
its delinquency, and the Mortgagor's desire is to avoid Foreclosure by the
Department, the Department may consent to the sale of the property by the
Mortgagor to a third (3rd) party buyer within a reasonable time as determined
by the Department. If the proceeds from the Pre-foreclosure Sale are insufficient
to extinguish the Mortgage Lien, the remaining outstanding balance under the
Note secured by the Mortgage Lien will be converted to an Unsecured Note executed
by the original Mortgagor payable to the Department unless other provisions
are stated in the Note and/or Deed of Trust.
(G)
Deed-in-lieu of Foreclosure. On a seriously delinquent
mortgage where other options have been unsuccessful and/or the Mortgagor intends
to abandon the property, the Department may consent to a Deed-in-lieu of Foreclosure.
As a condition of the Department accepting a Deed-in-lieu of Foreclosure,
the property must be free and clear of all encumbrances and liens other than
liens of the Department.
(3)
Final Resolution. In the event that a workout as described
in paragraph (2) of this subsection is unsuccessful, the Department upon recommendation
of the Review Committee may take one of more of the following actions:
(A)
Creditor Claim in Bankruptcy. When a Mortgagor files for
bankruptcy, the Department will take all actions that are necessary to protect
its interests. All collection efforts outside the bankruptcy courts by the
Department will cease during the bankruptcy period. The Department will file
a proof of claim when appropriate. In a bankruptcy case that has been dismissed,
all normal collection efforts will resume. In a bankruptcy case that has been
Discharged in Bankruptcy, the Mortgagor will either reaffirm the debt in accordance
with the bankruptcy or the Department may proceed to foreclose on the mortgage
lien.
(B)
Foreclosure. After all workout options have been exhausted,
the Review Committee will review the loan for possible recommendation to foreclose
on the property used as collateral to secure the Mortgage Lien. If the Department
is in an inferior lien position, and the value of the property warrants it,
the Department may elect to purchase a superior lien loan in order to proceed
with Foreclosure and protect its interest.
(C)
Debt Forgiveness. In exceptional circumstances, the Review
Committee may recommend the forgiveness based on hardship conditions. The
Committee shall consider the following conditions as hardships: documented
long term disability resulting in a permanent inability to pay, and a permanent
inability to pay where it would not be in the best interest of the Department
to foreclose based on economic conditions of the property and/or continued
expenses which are incurred due to escrow responsibilities. The ability to
forgive will also be contingent upon the method of funding. All hardship cases
will be considered on a case by case basis. In cases where program guidelines
allow for forgiveness based on death of borrower(s), the Department will take
the appropriate steps to forgive these loans.
(D)
Charge-offs. When the Department determines that all collection
efforts have been exhausted on delinquent loans and there is no economic value
in foreclosure the loan may be charged off. A charge-off will be reported
to the credit bureau through the Department's normal credit reporting processes
and to any appropriate agencies including the IRS. When a debt has been charged
off, the Mortgagor will be placed on the Department's Debarment list and will
not be eligible to apply for future programs.
(d)
Potential Actions Related to Multi-family Properties
(1)
Financial Delinquency Issues. Owner/managers who fail to
perform under the terms of the loan documents leading to an event of default
will be provided timely notice of the default. For purposes of this rule a
financial delinquency occurs when the responsible party fails to pay loan
payments or fees due in a timely manner, fails to maintain adequate insurance
and/or fails to pay taxes on a timely basis. When an event of default occurs,
the Department will:
(A)
Notice. The Department will provide notice according to
terms of the Loan Documents and or LURA to the obligor that a potential event
of default has occurred. For events of default that are curable, the notice
will provide a reasonable time period for correction, not to exceed sixty
(60) days from the date notice or such longer period as may be required by
the Contract.
(B)
Workout. In the event the Responsible Party contacts the
Department within the corrective period and provides sufficient evidence of
the cause for a failure to pay, the Department may enter into a workout plan
that may include: Forbearance of the payment of loans or fees; Loan modification;
a payment of taxes or a placement of insurance at additional cost to the Responsible
Party. Workouts must address those factors that the Department, in its sole
discretion, deems appropriate to address the cause of the problems that required
the workout, such as a requirement of a change of management for a property
where multiple events of default occur or a repeated pattern of defaults occur.
Only in exceptional cases, approved by the Board on the recommendation of
the Review Committee, will a Forbearance period exceed twelve (12) months.
Not more than one year of taxes or one year of insurance premium shall be
added to the principal amount of the note during the workout period without
further corrective action being taken. If a loan modification is recommended
by staff, the extension of the note or reduction of the interest to be paid
will be consistent with then existing policies of the Department. The Review
Committee will approve any modifications to Contract or LURAs.
(C)
Final Resolution. In the event the Responsible Party and
the Department cannot agree upon terms of a workout within six (6) months,
the Department will consider all legal action available to it at the end of
the six months. All legal action includes litigation up to and including placing
the property in Receivership or Foreclosure on the property.
(D)
Waiver and Actions Consistent with Other Law. Any failure
to act by the Department does not constitute a waiver of this rule. Where
applicable, the Department will seek to protect the interests of the Department
on behalf of the State of Texas. Nothing in this rule is intended to conflict
with the laws of the United States and the State of Texas and where any conflicts
arise, the rule will defer to the existing laws.
(2)
Monitoring During Compliance Period (Tax Credit Properties).
During the compliance period, any tax credit property found to be in violation
of 10 Texas Administrative Code Chapter 60 will be covered by this Rule in
addition to the Internal Revenue Service Code, Code of Federal Regulations
and related revenue rulings and any other official guidance provided by the
Internal Revenue Service.
(3)
Monitored Properties (Tax Credit Properties After Original
Compliance Period, HTF or HOME Properties Subject to a LURA). Properties failing
to comply with the rules of the Department and/or the terms of the related
LURAs are subject to the following actions:
(A)
Because of the additional staff time and additional record
keeping requirements associated with non-compliance with the agreed upon terms
the following table is established as a compliance penalty structure as indicated:
(B)
Compliance Penalty Enforcement. In determining the compliance
penalty, the Department will use a list of published factors to assess the
amount of the penalty. Compliance penalties will continue to be assessed until
such time as the corrective action has been taken. In the event that corrective
action is not taken, the Department will take the following actions:
(i)
Provide notice to the last known address of the party against
whom the penalty has been assessed;
(ii)
A description of the violations and the governing authority
for application of the compliance penalty;
(iii)
The procedures for appealing the compliance penalty assessed
including the provisions under 10 Texas Administrative Code §§ 1.7,
1.8 and 1.17.
(iv)
If the party either does not respond or fails to take
corrective action, the Department will refer the matter to the Attorney General
for determination of the legal remedies available and action to be taken.
(e)
Potential Actions Related to Contract Administration on
Awarded Funds.
(1)
Contracts Involving Department Awards. The Department is
responsible for numerous awards of funds intended to benefit Texans who qualify
for programs administered by the Department. Frequently these programs are
administered by Subrecipients--some of whom directly perform the work and
others who hire others to assist them in service delivery. These rules either
repeat or supplement the language included in individual contracts. When a
contractor fails to perform adequately, the Department may take any of the
following actions:
(2)
Special Conditions for Contract Involving Construction
Awards. In addition to the contract actions found in paragraph (1) of this
subsection, the following are potential actions specifically related to construction
related awards:
(f)
Administration of Section.
(1)
Program and Compliance staff will be the first line reviewers
for performance with Department policies and procedures related to Contracts
and/or LURA's. After providing initial notice to the Responsible Party and
time for response, the involved staff will refer non-resolved matters to identified
asset resolution and enforcement staff. The asset resolution and enforcement
staff will review and develop a recommended action plan and timeline to the
Review Committee, including final resolution if other efforts are not successful.
The Review Committee will approve, approve with modifications or reject the
submitted plan. The Executive Director will evaluate to determine if Board
action is required.
(2)
The asset resolution and enforcement staff will implement
the approved plan including any required referrals to the Office of the Attorney
General or other parties.
(3)
Unless otherwise indicated, Responsible Parties will have
access to Department procedures for appealing actions taken under this rule
including the provisions under 10 Texas Administrative Code §§1.7,
1.8 and 1.17.
(4)
If the Department has determined that a provision of this
rule must be expedited to protect the assets of the State of Texas, any non-statutory
timeline may be reduced by the Department.
(5)
Any section of this rule may be waived for just cause by
the Executive Director or the Governing Board except for notice provisions
and federal and state statutory provisions.
(g)
Debarment for Failure to Perform.
(1)
Any Administrator, Affiliated Party, Person or Responsible
Party receiving funds (including Housing Tax Credits) directly or indirectly
may be subject to debarment under this section.
(2)
Procedures for Placement in Debarment.
(A)
Recommendation for inclusion on the debarment list is done
by referral from Department Division Directors. An Administrator, Affiliated
Party, Person or Responsible Party may also submit a referral to a Department
Division Director for consideration.
(B)
Once referred the Administrator, Affiliated Party, Person
or Responsible Party will be placed in Suspension status. While in Suspension
the entity can continue to be reviewed for participation in the application
or allocation cycle, but a review by the Review Committee must be completed
prior to the award of Department funds (or allocation of Housing Tax Credits).
A determination of inclusion on the debarment list will preclude the entity
from participation for the term determined by the Review Committee, beginning
with any current application or allocation award request. The following actions
will be taken by the referring Department Division Director:
(i)
Notice will be provided to the Administrator, Affiliated
Party, Person or Responsible Party of the referral to the Department's Review
Committee for inclusion on the debarment list.
(ii)
The Administrator, Affiliated Party, Person or Responsible
Party will be given an opportunity to provide information for consideration
by the Review Committee. This information must be submitted within 14 working
days from the date of notice.
(C)
The Department Division Director will present the Review
Committee with the following for consideration of the referral:
(i)
Documentation to support the action that the Administrator,
Affiliated Party, Person or Responsible Party has taken to warrant referral
for placement on the debarment list.
(ii)
A copy of the notice provided to Administrator, Affiliated
Party, Person or Responsible Party.
(iii)
A copy of any information provided in response by the
Administrator, Affiliated Party, Person or Responsible Party to the notice.
(D)
The Review Committee may determine based on the information
provided that the entity does not warrant being placed on the debarment list.
The Review Committee may recommend placement on the debarment list and will
recommend a term for debarment based on the following structure:
(E) Agreement of Appeal. 10 days appeal or invoke the Alternative
Dispute Resolution Rule, §1.17.
(F)
The Board of Directors will provide final approval for
placement on the Debarment list. The board will review the Review Committees'
determination and recommended term of debarment. The Administrator, Affiliated
Party, Person or Responsible Party will be given opportunity to appeal during
the Board Meeting.
(G)
Once approved by the Department's Board of Directors the
entity will be placed on the Debarment List for the determined term.
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 February 16, 2007.
TRD-200700589
Michael Gerber
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: April 1, 2007
For further information, please call: (512) 475-4595
Chapter 53.
HOME INVESTMENT PARTNERSHIP PROGRAM