Part 1. TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS
Chapter 50. 2006 HOUSING TAX CREDIT PROGRAM QUALIFIED ALLOCATION PLAN AND RULES
The Texas Department of Housing and Community Affairs adopts the repeal of Chapter 50, §§50.1 - 50.23, concerning the 2006 Housing Tax Credit Program Qualified Allocation Plan and Rules. The repeal is adopted without changes to the proposal as published in the September 7, 2007, issue of the Texas Register (32 TexReg 5881) and will not be republished.
The sections are adopted for repeal in order to promulgate new sections conforming to the requirements of laws enacted under the Internal Revenue Code of 1986, §42, as amended, which provides for credits against federal income taxes for owners of qualified low income rental housing and to implement changes enacted during the 80th Regular Session of the Texas Legislature.
Public hearings concerning the repeal were held in El Paso (September 24, 2007), Lubbock (September 28, 2007), Brownsville (October 3, 2007), Houston (September 26, 2007), Dallas (October 1, 2007), and Austin (October 4, 2007). Additionally, written comments on the repeal of the rule were accepted by mail, e-mail, and facsimile through October 10, 2007.
No comments were received regarding this adopted repeal.
The repeal is adopted pursuant to the authority of the Texas Government Code, Chapter 2306 and the Internal Revenue Code of 1986, §42, as amended, which provide the Department with the authority to adopt rules governing the administration of the Department and its programs.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 14, 2008.
TRD-200800148
Michael Gerber
Executive Director
Texas Department of Housing and Community Affairs
Effective date: February 3, 2008
Proposal publication date: September 7, 2007
For further information, please call: (512) 475-3916
The Texas Department of Housing and Community Affairs (the Department) adopts new Chapter 50, §§50.1 - 50.23, concerning the 2008 Housing Tax Credit Program Qualified Allocation Plan and Rules ("QAP"). Sections 50.1 - 50.23 are adopted with changes to the proposed text as published in the September 7, 2007, issue of the Texas Register (32 TexReg 5882).
The new sections are necessary to implement changes made by the 80th Legislature providing procedures for and limits on the allocation by the Department of certain housing tax credits available under federal income tax laws to owners of qualified rental housing developments.
Public hearings on the new rule were held in El Paso (September 24, 2007), Lubbock (September 28, 2007), Brownsville (October 3, 2007), Houston (September 26, 2007), Dallas (October 1, 2007), and Austin (October 4, 2007). Additionally, written comments on the new rule were accepted by mail, e-mail, and facsimile through October 10, 2007.
The adoption of the rule is subject to a statutory requirement that the Governor "approve, reject, or modify and approve the QAP not later than December 1" as provided in Texas Government Code §2306.6724(c). The Governor approved the QAP on December 1, 2007.
REASONED RESPONSE TO PUBLIC COMMENT ON THE 2008 DRAFT QUALIFIED ALLOCATION PLAN AND RULES
The Texas Department of Housing and Community Affairs (the "Department") received the majority of comments to the 2008 Draft Qualified Allocation Plan and Rules (QAP) in writing by email, fax and mail. The comments and responses include both administrative clarifications and corrections made to the QAP by staff, as well as substantive comments on the QAP and the corresponding Departmental response. Comments and responses are presented in the order they appear in the QAP. After each comment title, numbers are shown in parentheses. These numbers refer to the person or entity that made the comment. Copies of the exact comment letters provided are available on the Department's website.
Public comments on the new rule were received by (1) Alamo Housing Authority; (2) Hettig/Kahn Holdings, Inc; (3) - (4) Catellus Development Group; (5) Charter Builders; (6) CHS; (7) Churchill Residential, Inc.; (8) City of Brownsville Planning Department; (10) City of El Paso, Department of Community Development; (11) City of Fort Worth, Housing Program Manager; (12) - (13) Coats/Rose; (14) Community Partnership for the Homeless; (15) The Youngs Company; (16) Doublekaye Corp.; (17) El Paso Coalition for the Homeless; (18) Flores Residential, LC; (19) Foundation Communities; (20) Lancaster Pollard; (21) Greater Greenspoint District; (22) H.A.V.E. Association; (23) Housing Authority of the City of Kingsville; (24) Housing Authority of the City of Pharr; (25) Housing Authority of the City of Texarkana; (26) - (27) Individuals; (28) Harris County MUD 71; (29) Katy Area Economic Development Council; (30) Katy Independent School District, Superintendent; (31) La Joya Housing Authority; (32) Locke Lord Bissell & Liddell LLP; (33) Mark-Dana Corporation; (34) Martin Riley Associates - Architects, P.C.; (35) McAllen Housing Authority; (36) NRP Group; (37) Realtex Development Corporation; (38) Representative Bill Callegari; (39) Representative Eddie Rodriguez; (40) Rural Rental Housing Association of Texas ("RRHA"); (41) San Antonio Housing Authority; (42) S. Anderson Consulting; (43) Shackelford Melton & McKinley; (44) Texas Affiliation of Affordable Housing Providers ("TAAHP"); (45) Texas Legal Services Center ("TLSC"); (46) Texas National Association of Housing and Redevelopment Officials ("Texas NAHRO"); (47) Tropicana Building Corporation; (48) United States Department of Agriculture Rural Development; (49) Individual; and, (50) Texas Association of Community Development Corporations.
The Texas Department of Housing and Community Affairs (the "Department") received the majority of comments to the 2008 Draft Qualified Allocation Plan and Rules (QAP) in writing by email, fax and mail. This document provides the Department's response to all comments received. The comments and responses include both administrative clarifications and corrections made to the QAP by staff, as well as substantive comments on the QAP and the corresponding Departmental response. Comments and responses are presented in the order they appear in the QAP. After each comment title, numbers are shown in parentheses. These numbers refer to the person or entity that made the comment as reflected in the Addendum. If comment resulted in recommended language changes to the Draft QAP as presented to the Board in August, those new language changes are highlighted. Copies of the exact comment letters provided are available on the Department's website.
Chapter 50 - GENERAL COMMENTS (3, 11, 14, 19, 21, 27, 28, 29, 30, 37, 44)
ADMINISTRATIVE CHANGES: Staff has made administrative revisions throughout the QAP to correct spelling, punctuation, and spacing errors; to consistently capitalize defined terms; and to consistently utilize defined terms. In cases where administrative changes propose revisions other than those outlined here, the proposed change will be addressed in the applicable QAP section.
COMMENT (44): Comment commended Department staff for its incorporation of previously expressed comments and concerns of the development community into the 2008 Draft QAP.
STAFF RESPONSE: Staff appreciates the commendation relating to Department efforts to address the comments and concerns of the development community. No change to the QAP is applicable.
BOARD RESPONSE: Accepted staff's recommendation.
COMMENT (29, 30, 28): Comments suggested that the Housing Tax Credit ("HTC") program be modified to provide for compensation to school districts to offset the cost to accommodate new students who enroll as a result of the development of new HTC developments, and the loss of tax revenue as a result of lower property valuations for HTC developments. Additional comment suggested mixed-use developments as a way to compensate the school districts and Municipal Utility Districts ("MUD") for the loss of tax revenue from HTC developments, and to provide increased quality of life to residents.
STAFF RESPONSE: The tax credit program is not federally structured in a way that provides compensation for school districts or other government entities that believe they are being fiscally impacted by the siting of tax credit properties. School districts are tasked with educating all children, regardless of their residence or income, and indicating that "compensation" is necessary to educate the children of tax credit property tenants is not consistent with that mission. No change is recommended.
BOARD RESPONSE: Accepted staff's recommendation.
COMMENT (28): Comment suggested that strong sanctions should be applied to developers that misrepresent themselves or their development plan to members of the public and to the Department. The commenter cited a 2007 application as an example.
STAFF RESPONSE: The current rules do apply sanctions to developer misrepresentations and staff continues to work with the Board on generating policies that strongly discourage and penalize misrepresentations. To the extent necessary further research is being conducted into the specific allegation noted. No change is recommended.
BOARD RESPONSE: Accepted staff's recommendation.
COMMENT (28): Comment suggested that the application process be streamlined so that documents and submissions are not missed by Department staff in the review process.
STAFF RESPONSE: The Multifamily Division handles large volumes of documents and submissions and has altered the program each year to balance the development process with an application process. While those alterations have reduced the submissions necessary, there still remain a variety of deadlines for varying documents. The Division is continuing to make process improvements to its handling of documents to reduce the risk of missing any submissions. No change is recommended.
BOARD RESPONSE: Accepted staff's recommendation.
COMMENT (11): Comment was received that asserted that the majority of the proposed changes in the 2008 QAP are detrimental to the production of affordable housing and to low-income citizens of the City of Fort Worth. Comment asserted that the City of Fort Worth opposes any changes to the QAP from 2007.
STAFF RESPONSE: Specific comments from this commenter have been summarized and responded to in the applicable QAP sections. While staff appreciates the feedback regarding the effect of proposed changes on the City of Fort Worth, the Department is charged with creating rules that address the affordable housing needs of the entire state. No change is recommended.
BOARD RESPONSE: Accepted staff's recommendation.
COMMENT (19): Comment encouraged the Department to continue to invest in supportive services. Additionally, comment supported the Department's efforts to develop quality housing for households at 30% of AMGI, and commented that the Department has helped develop enough housing at the 60% of AMGI level to meet the need in many parts of Texas. Comment also supported the Department's incorporation of green building practices.
STAFF RESPONSE: The Department currently requires the provision of supportive services in Tax-Exempt Bond Developments and offers incentives for the provision of supportive services in Competitive Housing Tax Credit developments. Staff appreciates the feedback regarding the continuation of the effort to bring supportive services to the residents of affordable housing. No change is recommended.
The Department seeks to provide incentives to serve persons at various levels of AMGI throughout the state, and to diversify the income levels of those being served to minimize saturation at any particular income level. Further discussion of staff's efforts to provide these incentives may be found in the response to comment regarding §50.9(i)(3), Income Levels of Tenants. No change is recommended.
Staff appreciates the commendations regarding the incorporation of green building practices. Staff understands the need to have energy efficiencies and green building incorporated in developments. Staff will continue to research green building initiatives and have appropriate recommendations for the 2009 QAP.
BOARD RESPONSE: Accepted staff's recommendation.
COMMENT (21): Comment suggested that more aggressive incentives should be considered by the Department for developments that apply for rehabilitation funding to encourage revitalization within the areas most eligible for Department funding. Additionally, comment suggested that greater emphasis should be placed on placing qualifying low-income persons in existing housing tax credit developments, and in market rate developments where rental rates are comparable to those of existing tax credit developments in the area.
STAFF RESPONSE: The Department currently offers several incentives for the use of existing housing in the development of affordable housing. It is not the role of the Department to direct qualifying low-income persons to live in certain developments; low-income persons are, and should be, able to choose to live in housing that most closely meets their unique needs. No change is recommended.
BOARD RESPONSE: Accepted staff's recommendation.
COMMENT (27, 3, 14, 37): Comment provided general support for the Mueller Airport redevelopment in Austin and encouraged the Department to adopt rule changes that allow for the success of the tax credit portion of the redevelopment, so that other housing of this kind can be replicated in the future. Other comment provided support for mixed-income developments throughout the state, as a way to deconcentrate affordable housing. Comment also provided support for urban infill developments.
STAFF RESPONSE: To the extent that specific rule changes are proposed relating to the Mueller redevelopment and other developments of its type, they are addressed in each specific QAP section. No change is recommended.
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(1) - Definitions - Adaptive Reuse
COMMENT (4, 33, 34, 36, 39, 40, 44, 42, 13): Comment was received indicating that the category "adaptive reuse" under the Rehabilitation definition should be defined separately from the Rehabilitation definition. Commenters suggested the addition of the following definition of adaptive reuse: "The reconstruction or rehabilitation of an existing nonresidential development (e.g., a school, warehouse, hospital, etc.) into a residential development". Other comment suggested the same language, but instead of the reconstruction or rehabilitation of an existing nonresidential development, "nonresidential structure" should instead be used. The commenter stated that the reuse of land without a structure should not be called adaptive reuse. The commenter also requested clarification as to whether the original building may increase in size. Another commenter suggested that adaptive reuse be defined as "The transformation of an existing nonresidential development (e.g. school, warehouse, airport) into a residential development". Comment suggested that an airport runway is something that could be considered a structure because of the significant demolition, cleanup, and infrastructure costs associated with making the non-residential runway into a residential development.
STAFF RESPONSE: Staff agrees the QAP should include a definition for adaptive reuse. Staff suggests that any units built outside the original building footprint, will be considered new construction. Staff proposes the following language:
(1) Adaptive Reuse--The renovation or rehabilitation of an existing non-residential building or structure (e.g., school, warehouse, office, hospital, etc....), including physical alterations that modify the building's previous or original intended use. If any Units are built outside the original building footprint, the Development will be considered New Construction.
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(14) Definitions - At-Risk Development
COMMENT (1, 6, 14, 18, 22, 23, 24, 25, 31, 35, 41, 46): Significant comment was received that suggested that the definition of an At-Risk Development should be revised to include §9 of the National Housing Act. Comment asserted that these properties are at risk of losing their affordability due to continuing reductions in federal funds, and a current capital needs backlog for public housing properties. Comment also suggested that the definition of At-Risk Development be revised to include Section 8 certificates and/or vouchers administered by local Housing Authorities. Other comment suggested that projects developed pursuant to the U.S. Housing Act of 1937, 42 U.S.C.A. §1437 should be eligible under the At-Risk Set-Aside. Additional comment suggested that Section 8 Moderate Rehabilitation Single Room Occupancy Program be added to the definition of At-Risk Development. Comment asserted that sustaining developments financed under this program is crucial to ending long-term homelessness.
STAFF RESPONSE: The sources of funding that qualify under the At-Risk set-aside are established in statute §2306.6702. The Department is unable to make additions to that statutory definition. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(30) - Definitions - Determination Notice
ADMINISTRATIVE CHANGE: Staff proposes the following administrative revision to clarify the period during which the Development will remain rent restricted:
(30) Determination Notice--A notice issued by the Department to the Development Owner of a Tax-Exempt Bond Development which states that the Development may be eligible to claim Housing Tax Credits without receiving an allocation of Housing Tax Credits from the State Housing Credit Ceiling because it satisfies the requirements of this QAP; sets forth conditions which must be met by the Development before the Department will issue the IRS Form(s) 8609 to the Development Owner; and specifies the Department's determination as to the amount of tax credits necessary for the financial feasibility of the Development and its viability as a rent restricted Development throughout the extended use period. (§42(m)(1)(D)).
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(32) - Definitions - Development
ADMINISTRATIVE CHANGE: Staff proposes the following administrative revision to incorporate the new Adaptive Reuse definition, and the deletion of the Reconstruction definition:
(32) Development--A proposed qualified and/or approved low-income housing project, as defined by the Code, §42(g), for Adaptive Reuse, New Construction, reconstruction, or Rehabilitation, that consists of one or more buildings containing multiple Units, and that, if the Development shall consist of multiple buildings, is financed under a common plan and is owned by the same Person for federal tax purposes, and the buildings of which are either:
(A) Located on a single site or contiguous site; or
(B) Located on scattered sites and contain only rent-restricted units. (§2306.6702)
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(35) - Definitions - Development Owner
ADMINISTRATIVE CHANGE: Staff proposes the following administrative revision to clarify the type of Control required for a Development Owner:
(35) Development Owner--Any Person, General Partner, or Affiliate of a Person who owns or proposes a Development or expects to acquire Control of a Development under a purchase contract or ground lease approved by the Department. (§2306.6702)
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(38) - Definitions - Disaster Areas
COMMENT (32): Comment suggested that the definition of a Disaster Area should contain a reference to applicable state or federal statute to add clarity to areas that qualify.
STAFF RESPONSE: Staff believes there should be clarification and proposes the following:
(38) Disaster Area--An area that has been declared as a disaster pursuant to §418.014 of Texas Government Code.
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(56)(C) - Definitions - Ineligible Building Types
COMMENT (1, 18, 22, 23, 24, 25, 31, 35, 41, 46): Significant comment was received that suggested that Qualified Elderly Developments be allowed to include units with more than two bedrooms if the units with more than two bedrooms are occupied by a property manager or maintenance employee.
STAFF RESPONSE: Staff believes this is a reasonable request and proposes the following:
(C) Any Qualified Elderly Development or age restricted buildings in Intergenerational Housing Developments with any Units having more than two bedrooms with the exception of up to three employee Units reserved for the use of the manager, maintenance and/or security officer. These employee Units must be specifically designated as such.
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(56)(G) - Definitions - Ineligible Building Types
ADMINISTRATIVE CHANGE: Staff recommends the following revision to clarify the applicability of the definition to Adaptive Reuse:
(G) Any Development located in an Urban Area involving any New Construction or Adaptive Reuse (excluding New Construction of non-residential buildings) of additional Units (other than a Qualified Elderly Development, a Development composed entirely of single family dwellings, and certain specific types of transitional housing for the homeless and single room occupancy units, as provided in the Code, §42(i)(3)(B)(iii) and (iv)) in which any of the designs in clauses (i) - (iv) of this subparagraph are proposed. For Applications involving a combination of single family detached dwellings and multifamily dwellings, the percentages in this subparagraph do not apply to the single family detached dwellings. For Intergenerational Housing Applications, the percentages in this subparagraph do not apply to buildings that are restricted by the age requirements of a Qualified Elderly Development. An Application may reflect a total of Units for a given bedroom size greater than the percentages in clauses (i) - (iv) of this subparagraph to the extent that the increase is only to reach the next highest number divisible by four.
(i) More than 30% of the total Units are one bedroom Units; or
(ii) More than 55% of the total Units are two bedroom Units; or
(iii) More than 40% of the total Units are three bedroom Units; or
(iv) More than 5% of the total Units in the Development with four or more bedrooms.
(H) Any Development that includes age restricted units that are not consistent with the Intergenerational Housing definition and policy or the definition of a Qualified Elderly Development.
(I) Any Development that contains residential Units either designated for a single occupational group, or through a preference for a single occupational group, violates the general public use requirement under Treasury Regulation §1.42-9.
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(56)(I) - Definitions - Ineligible Building Types
COMMENT (7): Comment suggested that tax credits should be allowed to be used to target specific groups such as single mothers.
STAFF RESPONSE: There is clear federal guidance from the Internal Revenue Service that all tax credit properties must be made available for general public use. The targeting of specific groups or populations is specifically prohibited by the general public use provision in the IRS Code. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(63) - Definitions - Neighborhood Organization
COMMENT (1, 18, 22, 23, 24, 25, 31, 35, 41, 46): Significant comment was received from Housing Authorities that suggested that the definition of Neighborhood Organization should be revised to include Resident Councils.
STAFF RESPONSE: The definition for Neighborhood Organization is statutorily defined in §2306.004. The Department is unable to change that definition. However, it should be noted that resident councils may be eligible to the extent that they meet the definition as provided. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(71) - Definitions - Principal
COMMENT (32): Comment asserted that, by law, no limited partner may control a partnership.
STAFF RESPONSE: The definition of Principal is designed to address not only matters of law, but also what happens in fact. The Department's Counsel feels that the definition, as drafted, effectively addresses matters of law and fact. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(79) - Definitions - Qualified Nonprofit Development
COMMENT (17): Comment requested clarification as to whether the requirements cited in the definition should be connected by "and" or "or".
STAFF RESPONSE: Section 2306.6729 of the Texas Government Code requires that a qualified nonprofit organization must have controlling interest in the development if the application is submitted for the nonprofit set-aside. §42 of the IRS Code requires an ownership interest (directly or through a partnership) and material participation in the development operations. Staff recommends the following clarification:
(79) Qualified Nonprofit Development--A Development in which a Qualified Nonprofit Organization (directly or through a partnership or wholly-owned subsidiary):
(A) holds a controlling interest in the Development proposed to be financed from the nonprofit allocation pool (§2306.6729); and
(B) owns an interest in the Development and materially participates (within the meaning of the Code, §469(h), as it may be amended from time to time) in its development and operation throughout the Compliance Period, and otherwise meets the requirements of the Code, §42(h)(5). (§2306.6729)
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(81) - Definitions - Rehabilitation
COMMENT (1, 18, 22, 23, 24, 25, 31, 35, 36, 41, 46): Significant comment was received that suggested that reconstruction should allow for demolished units to be reconstructed on a new site if the original site has negative environmental features, is located in a floodplain, has factors that make the site unsuitable for housing or the feasible operation of he project, if another location is in the best interest of the residents or for any other reasons acceptable to the Department. Comment also suggested that the definition allow reconstruction developments to exceed the original number of units that were demolished if the site is large enough for the additional units and if the additional units will be restricted to occupancy by renters at 50% of AMGI. Additional comment requested clarification regarding the difference between rehabilitation and reconstruction.
STAFF RESPONSE: Although staff understands the need for replacement of obsolete housing units, staff believes these requested changes create inequity in the competitive process. Housing Authorities may use the HTC program to create new units however they should not have a point advantage for Rehabilitation or reconstruction when they are not actually rehabilitating or reconstructing a development on the same site. Rehabilitation and reconstruction are defined in §50.3. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(82) - Definitions - Related Party
COMMENT (41): Comment suggested that the definition of Related Party be clarified to indicate that individuals who serve as Housing Authority commissioners do not count against the $2 million credit limitation for an entity related to a Housing Authority.
STAFF RESPONSE: The Department's General Counsel has opined that the $2 million limitation does statutorily apply to housing authority board members. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(84) - Definitions - Rural Area
COMMENT (16, 20, 40): Comment suggested that this definition not be changed as proposed, but that the 2007 definition be used. Commerters asserted that the definition, as proposed, would cause a substantial percentage of existing USDA 515s not to be considered to be rural developments because of the 50,000 population maximum.
STAFF RESPONSE: The definition of Rural Area is statutorily defined in §2306.004. The Department is unable to change that definition. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.3(85) - Definitions - Rural Development
COMMENT (16, 20): Comment suggested that if the Rural Area definition is not changed, many existing USDA 515s would not be considered to be rural developments.
STAFF RESPONSE: Staff believes the Department has conformed to the definition as defined in statute, §2306.004. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.5(a) - Ineligibility
COMMENT (1, 18, 22, 23, 24, 25, 31, 35, 41, 46): Significant comment was received that suggested that an application should be considered ineligible if there is participation by a governmental entity that is not legally authorized to operate in the area where the proposed project is located. Comment also suggested that a similar provision should be made for nonprofit organizations when their bylaws and articles of incorporation do not allow participation in a certain area.
STAFF RESPONSE: Staff believes that it is not the role of the Department to limit the areas of the state in which an organization or governmental entity may operate. Additionally, the suggestion would warrant greater staff scrutiny and public input prior to any rule change being recommended by staff. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.5(a)(8) - Ineligibility - One-Mile Three-Year Restriction
COMMENT (1, 11, 18, 22, 23, 24, 25, 31, 35, 41, 46): Comment suggested that an application should not be ineligible under the "one-mile three-year" rule if the proposed development receives funding from the Housing Authority Capital Fund. Other comment asserted that the one-mile limitation affects local communities' ability to encourage redevelopment in downtown and central city areas. Comment suggested that this rule be waived for inner-city areas.
STAFF RESPONSE: The one-mile, three-year restriction is a statutory requirement in §2306.6703 of the Texas Government Code. The parameters of the restriction are specifically identified in the statute. Staff recommends no change in response to comments received.
ADMINISTRATIVE CHANGE: Staff recommends the following revision to clarify the applicability of the restriction to Adaptive Reuse Developments:
(8) The Applicant proposes to construct a new Development proposing New Construction or Adaptive Reuse (excluding New Construction of non-residential buildings) that is located one linear mile (measured by a straight line on a map) or less from a Development that: (§2306.6703(a)(3)).
(A) Serves the same type of household as the new Development, regardless of whether the Development serves families, elderly individuals, or another type of household (Intergenerational Housing is not a type of household as it relates to this restriction); and
(B) Has received an allocation of Housing Tax Credits (including Tax-Exempt Bond Developments) for any New Construction at any time during the three-year period preceding the date the Application Round begins (or for Tax-Exempt Bond Developments the three-year period preceding the date the Volume I is submitted); and
(C) Has not been withdrawn or terminated from the Housing Tax Credit Program.
(D) An Application is not ineligible under this paragraph if:
(i) The Development is using federal HOPE VI funds received through the United States Department of Housing and Urban Development; locally approved funds received from a public improvement district or a tax increment financing district; funds provided to the state under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. §§12701 et seq.); or funds provided to the state and participating jurisdictions under the Housing and Community Development Act of 1974 (42 U.S.C. §§5301 et seq.); or
(ii) The Development is located in a county with a population of less than one million; or
(iii) The Development is located outside of a metropolitan statistical area; or
(iv) The local government where the Development is to be located has by vote specifically allowed the construction of a new Development located within one linear mile or less from a Development described under subparagraphs (A) - (C) of this paragraph. For purposes of this clause, evidence of the local government vote or evidence required by subparagraph (D) of this paragraph must be received by the Department no later than April 1, 2008 (or for Tax-Exempt Bond Developments no later than 14 days before the Board meeting where the credits will be committed) and may not be more than one year old.
(E) In determining the age of an existing Development as it relates to the application of the three-year period, the Development will be considered from the date the Board took action on approving the allocation of tax credits. In dealing with ties between two or more Developments as it relates to this rule, refer to §50.9(j) of this chapter.
BOARD RESPONSE: Accepted staff's recommendation.
§50.5(b)(2) and (3) - Disqualification and Debarment
COMMENT (32): Comment pointed out that the parties identified in the two cited paragraphs are inconsistent, and should be revised for consistency.
STAFF RESPONSE: Staff agrees with comment received. Staff recommends the parties identified in both subparagraphs be combined and included in both subparagraphs. Staff recommends the following:
(2) The Applicant, Development Owner, Developer or Guarantor or anyone that has Controlling ownership interest in the Development Owner, Developer or Guarantor, or any Affiliate of such entities that is active in the ownership or Control of one or more other rent restricted rental housing properties in the state of Texas administered by the Department is in Material Noncompliance with the LURA (or any other document containing an Extended Housing Commitment) or the program rules in effect for such property as further described in Chapter 60 of this title on May 1, 2008 for Competitive Housing Tax Credit Applications or for Tax-Exempt Bond Development Applications or other Applications not applying for Housing Tax Credits, but applying only under other Multifamily Programs (HOME, Housing Trust Fund, etc.) no later than 30 days after Volume III of the Application is submitted; (§2306.6721(c)(3)) or
(3) The Applicant, Development Owner, Developer, or any Guarantor, anyone that has Controlling ownership interest in the Development Owner, Developer or Guarantor, or any Affiliate of such entity that is active in the ownership or Control has been a Principal of any entity that failed to make all loan payments to the Department in accordance with the terms of the loan, as amended, or was otherwise in default with any provisions of any loans from the Department; or
BOARD RESPONSE: Accepted staff's recommendation.
§50.5(b)(4) - Disqualification and Debarment
COMMENT (32): Comment suggested that the requirement in the QAP that any outstanding fees be paid within 30 days is problematic because the timeframes for penalty payment under the Compliance rules are different.
STAFF RESPONSE: Staff in both the Multifamily and Compliance Divisions believes that the 30-day due date requirement, for both fees and penalties, is sufficient and does not pose inconsistencies. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.6(a) - Floodplain
ADMINISTRATIVE CHANGE: Staff recommends the following revision to clarify the applicability of the restriction to Adaptive Reuse Developments:
(a) Floodplain. Any Development proposing New Construction or Reconstruction and located within the 100 year floodplain as identified by the Federal Emergency Management Agency (FEMA) Flood Insurance Rate Maps must develop the site so that all finished ground floor elevations are at least one foot above the flood plain and parking and drive areas are no lower than six inches below the floodplain, subject to more stringent local requirements. If no FEMA Flood Insurance Rate Maps are available for the proposed Development, flood zone documentation must be provided from the local government with jurisdiction identifying the 100 year floodplain. No buildings or roads that are part of a Development proposing Rehabilitation or Adaptive Reuse, with the exception of Developments with federal funding assistance from HUD or TX USDA-RHS, will be permitted in the 100 year floodplain unless they already meet the requirements established in this subsection for New Construction.
BOARD RESPONSE: Accepted staff's recommendation.
§50.6(d) - Credit Limit - $1.2 Million Limitation per Development
COMMENT (2, 6, 14, 33, 42, 47): In conjunction with comment that suggested additional credits be available for the cost of green building materials, comment also suggested that the $1.2 million limitation on tax credits to a single development be increased for the amount of additional tax credits awarded for green building materials. Other comment supported the addition of language allowing the adjustment of the $1.2 million limitation by CPI. Additional comment suggested that in order to encourage rehabilitation and reconstruction, the $1.2 million limitation should apply only to 9% housing tax credits, and not 4% acquisition tax credits. Other comment suggested that the $1.2 million limitation on developments should not apply when the proposed development is a permanent supportive housing project and supports a city's 10-year plan to end homelessness. Comment asserted that the $1.2 million limitation severely restricts the financing options available to these types of developments.
STAFF RESPONSE: Staff believes allowing additional tax credits for green building may be a reasonable request. However, it would require further research and input for staff to establish an appropriate recommendation for this year's QAP and would warrant additional public comment. Staff proposes this suggestion be incorporated into the 2009 QAP and commits to further research this issue. Staff recommends no change.
The current draft of the QAP approved by the Board in August addresses the CPI adjustment which staff will include in the 2008 Application Reference Manual. Staff recommends no change.
The $1.2 million limit currently only applies to Applications in the Competitive Application Round awarded from the State Housing Credit Ceiling and does not affect Tax-Exempt Bond Development Applications. The limit is designed to ensure that the Department can allocate Housing Tax Credits from the State Housing Credit Ceiling in a way that aids the maximum number of low-income Texans. Developments in the Competitive Application Round may receive only 4% tax credits for the acquisition of existing buildings even though the Application is in the Competitive Application Round. These 4% acquisition tax credits for Competitive Housing Tax Credit Applications are allocated from the State Housing Credit Ceiling just as 9% tax credits for Competitive Housing Tax Credit Applications are. Therefore, these 4% acquisition credits are included in the $1.2 million limitation. Staff recommends no change.
Although the Department strongly supports the mission and efforts of supportive housing providers, staff believes that excluding any group of Applicants from the $1.2 million limitation will produce inconsistencies in the competitive process. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.6(d) - Credit Limit - $2 Million Limitation to any Applicant, Developer, Related Party or Guarantor
COMMENT (1, 18, 19, 22, 23, 24, 25, 31, 35, 41, 46): Significant comment was received that asserted that it is unfair to evaluate Housing Authorities and nonprofit organizations for the $2 million limitation based on the participation of executive directors and individual board members. Comment suggested that applications by unrelated entities or applicants do not count against the $2 million limitation. Also, comment suggested that the $2 million limitation should not apply to consultants unless the consultant has an ownership interest in the development or will be paid a portion of the developer fee. Other comment suggested that a per unit credit limitation be placed on developments. The comment asserted that this kind of limitation could greatly increase the amount of quality housing that is built and provide a necessary cutoff for developments that are extremely expensive.
STAFF RESPONSE: The Department's General Counsel is of the opinion that the statutory $2 million limitation does apply to nonprofit entities, public housing authorities, publicly traded corporations, individual board members, and executive directors. Staff recommends no change.
Regarding the comment that the limit should not apply to consultants, consultants are already excluded from the $2 million limit, provided the consultant fee does not exceed 10% of the fee paid to the Developer or $150,000. Staff recommends no change.
Regarding the comment suggesting a per Unit tax credit limit, Competitive Housing Tax Credit Applications are already encouraged to limit the costs on which the amount of the tax credit allocation is based under §50.9(i)(8), Cost of the Development By Square Foot. 4% tax credits associated with Tax-Exempt Bond Developments are not allocated from the State Housing Tax Credit Ceiling, and do not affect the amount of tax credits available to other developments. Therefore, the QAP currently provides adequate incentives to encourage applicants to control the costs of developments. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.6(d)(4) - Credit Amount - Development Consultant Fee
COMMENT (36): Comment suggested that the allowable developer fee for Qualified Nonprofit Developments be 20% of the developer fee, as was allowed in the 2007 QAP.
STAFF RESPONSE: Staff believes that reducing the percentage paid to Consultants to 10% from 20% for Qualified Nonprofit Developments may reduce the number of Qualified Nonprofit Developments applying for tax credits and may jeopardize the Department's ability to meet the federal requirement that at least 10% of the Credit Ceiling be allocate to Qualified Nonprofit Developments. Staff therefore concurs with the comment and recommends the following revision that reflects the 2007 QAP language:
(4) To a Development Consultant with respect to the provision of consulting services, provided the Development Consultant fee received for such services does not exceed 10% of the fee to be paid to the Developer (or 20% for Qualified Nonprofit Developments), or $150,000, whichever is greater.
BOARD RESPONSE: Accepted staff's recommendation.
§50.6(e)(2) - Limitations on the Size of Developments, Rural Developments Involving New Construction
COMMENT (33, 36, 40, 44): Comment was received that suggested that Tax-Exempt Bond Developments in Rural Areas be allowed to exceed the 80 Unit new construction limit. The commenters asserted that the number of Units should be determined by market demand rather than an arbitrary number. Other comment suggested that some rural communities demand greater amounts of affordable housing and that this need should be allowed to be met using Tax-Exempt Bond financing. The commenter asserted that rural communities near MSAs may need larger developments, and that, as a compromise, if the market study supports the need for a larger Tax-Exempt Bond development and the development is proposed within 30 or 50 miles of an MSA, the size limitation should not apply. Additional comment requested that Rural Developments involving reconstruction do not have a size limitation.
STAFF RESPONSE: §2306.004, Texas Government Code, specifically defines a Rural Development and imposes a maximum limit of 80 Units for Developments proposed in Rural Areas. The Department has applied this restriction consistently to all Department programs. However, §1372 of the Texas Government Code, which governs the Tax-Exempt Bond program, allows for multiple site Applications (or pooled transactions). Pursuant to multiple site Applications, a rural site that exceeds 80 Units will be allowable.
ADMINISTRATIVE CHANGE: Staff recommends the following revision to clarify the applicability of this limitation to Adaptive Reuse:
(2) Rural Developments involving any New Construction or Adaptive Reuse (excluding New Construction of non-residential buildings) will be limited to 80 Units (this includes individual Tax-Exempt Bond Developments). Rural Developments involving only Rehabilitation (excluding reconstruction) do not have a size limitation.
BOARD RESPONSE: Accepted staff's recommendation.
§50.6(e)(3) - Limitations on the Size of Developments, Urban Developments Involving New Construction
COMMENT (36): Comment requested clarification as to whether Tax-Exempt Bond Developments are restricted to 200 Department administered units.
STAFF RESPONSE: Staff agrees that clarification would be appropriate and proposes the following clarification:
(3) Urban Developments involving any New Construction or Adaptive Reuse (excluding New Construction of non-residential buildings), in the Competitive Housing Tax Credit Application Round will be limited to 252 total Units, wherein the maximum Department administered Units will be limited to 200 Units. Tax-Exempt Bond Developments will be limited to 252 restricted and total Units. These maximum Unit limitations also apply to those Developments which involve a combination of Rehabilitation, Reconstruction, and New Construction. Only Developments that consist solely of acquisition/Rehabilitation or Rehabilitation may exceed the maximum Unit restrictions.
BOARD RESPONSE: Accepted staff's recommendation.
§50.6(e)(4) - Limitations on the Size of Developments, Second Phase Developments
COMMENT (36): Comment requested clarification as to whether the maximum Department administered unit restriction applies to the combined total of the first and second phases of the development, and whether this paragraph applies to Developments that involve Rehabilitation or Reconstruction and exceed the maximum allowable Development size. Comment also requested clarification on the definition of Sustaining Occupancy, and requested clarification regarding the language required for the resolution from the local political authority.
STAFF RESPONSE: Staff concurs with the need for clarification in this regard and recommends the following:
(4) For Applications that are proposing an additional phase to an existing tax credit Development or that are otherwise adjacent to an existing tax credit Development, the combined Unit total for the existing and proposed Developments may not exceed the maximum allowable Development size set forth in this subsection unless:
(A) the first phase of the Development has been completed and has attained Sustaining Occupancy (as defined in §1.31 of this title) for at least six months; or
(B) a resolution from the governing body of the city or county in which the proposed Development is located, dated on or before the date the Application is submitted, is submitted with the Application. Such resolution must state that there is a need for additional Units and that the governing body has reviewed a market study, the conclusion of which supports the need for additional Units; or
(C) the proposed Development is intended to provide replacement of previously existing affordable Units on the Development Site or that were originally located within a one mile radius from the Development Site; provided, however, the combined number of Units in the proposed Development may not exceed the number of Units being replaced. Documentation of such replacement units must be provided.
BOARD RESPONSE: Accepted staff's recommendation.
§50.6(f) - Limitations on the Location of Developments
COMMENT (17, 11): Comment was received that suggested that the Department's concentration policies may be intended to deal with development in Houston. Comment suggested that if a property is zoned for multifamily development, no additional restrictions should be placed on the development. The commenter asserted that Houston's lack of zoning should not be an issue for the rest of the state. Other comment asserted that the one-mile limitation affects local communities' ability to encourage redevelopment in downtown and central city areas. Comment suggested that this rule be waived for inner-city areas.
STAFF RESPONSE: The one-mile rule is a statutory requirement in §2306.6711 and §2306.67021. The Department does not have the authority to waive statute. The one-mile rule only applies in counties over one million in population. Staff agrees with comments that zoning with local authorities is important. However, the Department has a responsibility to ensure that areas are not over-concentrated with affordable housing. The additional concentration concerns will be addressed in the agenda item for the Department's Real Estate Analysis Rules. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.6(g) - Limitations on Development in Certain Census Tracts
COMMENT (17): As noted in the prior comment, it is suggested that the Department's concentration policies may be intended to deal with development in Houston. Comment suggested that if a property is zoned for multifamily development, no additional restrictions should be placed on the development. The commenter asserted that Houston's lack of zoning should not be an issue for the rest of the state.
STAFF RESPONSE: Staff was directed by the Board in 2007 to establish additional requirements related to concentration to reduce over-saturation and promote greater geographic dispersion. The limitation in this section was developed to address the Board concerns. The additional concentration concerns will be addressed in the agenda item for the Department's Real Estate Analysis Rules. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.6(h) - Limitations on Developments Proposing to Qualify for a 30% Increase in Eligible Basis
COMMENT (1, 18, 22, 23, 24, 25, 31, 35, 46): Comment suggested that the limitation on the 30% increase in eligible basis should not apply to rehabilitation and reconstruction developments. Additional comment suggested that staff or the Board have discretion to release the limitation on the 30% increase in eligible basis when there is HOPE VI funding involved or when the local jurisdiction or city request the waiver for the de-concentration of public housing.
STAFF RESPONSE: Staff was directed by the Board in 2007 to establish additional requirements related to concentration. This limitation is recommended to address Board concerns. Additionally, the Board currently has the discretion to waive this requirement. The additional concentration concerns will be addressed in the agenda item for the Department's Real Estate Analysis Rules. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation. §50.7(b) Set-Asides
COMMENT (10): Comment was received that the Department does not have many set-asides. Comment asserted that other states have set-asides for targeting distressed areas and incentivizing neighborhood revitalization strategies. The commenter stated that it would be appropriate to set-aside funding for housing in those areas.
STAFF RESPONSE: It has been the Department's policy in recent years to equalize the availability of credits by not creating any set-asides other than those required by state or federal statute. However, the QAP provides multiple incentives in the selection criteria for developments located in areas that target revitalization, such as points under §50.9(i)(13) for existing housing in areas that are part of a community revitalization plan, points under §50.9(i)(15) for developments in areas targeted for economic development, and points under §50.9(i)(24) for developments in qualified census tracts that are targeted by community revitalization plans. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.7(b)(1) Nonprofit Set-Aside
COMMENT (50): Comment suggested that the language be revised to clearly state the level of compensation a Qualified Nonprofit Organization must receive in order to ensure that Qualified Nonprofit Organizations are fairly compensated for, and have adequate resources to achieve their required level of participation in a development. Comment suggested that Qualified Nonprofit Organizations competing in the Nonprofit Set-Aside must receive 25% of the developer fee in order to be eligible for the Nonprofit Set-Aside.
STAFF RESPONSE: This comment was received prior to the beginning of the public comment period, and was evaluated by staff in the preparation of the Draft 2008 QAP, approved by the Board on August 23, 2007. The level of compensation of different members of an ownership entity is a matter for negotiation between the parties involved in the creation of the partnership agreement. While staff is sensitive to the issues faced by Qualified Nonprofit Organizations, it is not the role of the Department to regulate the terms of partnership agreements. The intent of the Housing Tax Credit program is to create privately-owned and operated housing with limited government involvement. The QAP requires that the Qualified Nonprofit Organization have a controlling interest in the Development, and that it materially participates in the development and operation of the development; the interest and participation are enforceable through the partnership agreement. Staff recommends no change.
BOARD RESPONSE: During the November 8, 2007 Board meeting, the Board instructed staff to include this comment in the Reasoned Response, despite the receipt of the comment outside of the public comment period.
§50.7(b)(2) - Regional Allocation Formula - USDA Set-Aside
COMMENT (16, 40): Comment asserted that the language regarding the exclusion of developments with USDA §538 funding, and the inclusion of developments with USDA §515 funding, regardless of other funding used, in the USDA Set-Aside is unclear. Comment asserted that the language as stated makes it unclear whether a development with both USDA §515 and §538 funding would be included or excluded, and requested clarification.
STAFF RESPONSE: §2306.111 states that any development financed wholly or in part with §538 funding from TRDO-USDA is not eligible under the At-Risk or USDA set-asides. Staff concurs with the need for clarification in the QAP and recommends the following language to ensure the statute is clearly reflected:
(2) At least 5% of the State Housing Credit Ceiling for each calendar year shall be allocated to Developments which are financed through TRDO-USDA, that meet the definition of a Rural Development, do not exceed 80 Units if proposing any New Construction (excluding New Construction of non-residential buildings), and have filed an "Intent to Request 2008 Housing Tax Credits" form by the Pre-Application submission deadline. (§2306.111(d)(2)). If an Application in this Set-Aside involves Rehabilitation it will be attributed to, and come from the, At-Risk Development Set-Aside; if an Application in this Set-Aside involves New Construction it will be attributed to and come from the applicable Uniform State Service Region. Developments financed through TRDO-USDA's §538 Guaranteed Rural Rental Housing Program, in whole or in part, will not be considered under this Set-Aside. Any Rehabilitation or Reconstruction of an existing §515 Development that retains the §515 loan and restrictions will be considered under the At-Risk Development and TRDO-USDA Set-Asides, unless such Development is also financed through TRDO-USDA's §538 Guaranteed Rural Rental Housing Program. Commitments of 2008 Competitive Housing Tax Credits issued by the Board in 2008 will be applied to each Set-Aside, Rural Regional Allocation, Urban Regional Allocation and/or TRDO-USDA Set-Aside for the 2008 Application Round as appropriate.
BOARD RESPONSE: Accepted staff's recommendation.
§50.7(b)(3) - Regional Allocation Formula - At-Risk Set-Aside
COMMENT (1, 17, 18, 22, 23, 24, 25, 31, 35, 46): Comment stated that the 15% At-Risk Set-Aside is correctly reflected in the proposed 2008 QAP. Additional comment suggested that Section 8 vouchers and Section 8 vouchers awarded under HUD's SHP program be eligible under the At-Risk Set-Aside.
STAFF RESPONSE: Staff concurs that the Set-Aside is correctly reflected and appreciates the comment. As noted earlier in this document, statute restricts the funding sources that are eligible under the At-Risk Set-Aside; therefore staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(a) Application Submission
ADMINISTRATIVE CHANGE: Staff proposes the following revision to clarify that required copies are a part of the Application that must be submitted to the Department:
(a) Application Submission. Any Applicant requesting a Housing Credit Allocation or a Determination Notice must submit an Application, and the required Application fee as described in §50.20 of this chapter, to the Department during the Application Acceptance Period. Only complete Applications will be accepted. All required volumes must be appropriately bound as required by the Application Submission Procedures Manual and fully complete for submission with all required copies and received by the Department not later than 5:00 p.m. on the date the Application is due. A searchable electronic copy of all required volumes and exhibits, unless otherwise indicated in the Application Submission Procedures Manual, must be submitted in the format of a single file presented in the order they appear in the hard copy of the complete Application on a CD-R clearly labeled with the report type, Development name, and Development location is required for submission and must be received by the Department not later than 5:00 p.m. on the date the Application is due. Only one Application may be submitted for a site in an Application Round. While the Application Acceptance Period is open, an Applicant may withdraw an Application and subsequently file a new Application utilizing the original Pre-Application Fee that was paid as long as no evaluation was performed by the Department. The Department is authorized, but not required, to request the Applicant to provide additional information it deems relevant to clarify information contained in the Application or to submit documentation for items it considers to be an Administrative Deficiency, including ineligibility criteria, site and development restrictions, and threshold and selection criteria documentation. (§2306.6708) An Applicant may not change or supplement any part of an Application in any manner after the filing deadline, and may not add any Set-Asides, increase the requested credit amount, or revise the Unit mix (both income levels and bedroom mixes), except in response to a direct request from the Department to remedy an Administrative Deficiency as further described in §50.3(2) of this chapter or by amendment of an Application after a commitment or allocation of tax credits as further described in §50.17(d) of this chapter.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(b)(1) and (2), Ex Parte Communications
ADMINISTRATIVE CHANGE: Staff proposes the following revisions to clarify the dates and parties to which these requirements apply:
(1) During the period beginning on the first date of the Application Acceptance Period and ending on the date the Board makes a final decision with respect to the approval of any Application in that Application Round, a member of the Board may not communicate with the following Persons:
(A) an Applicant or Related Party; and
(B) any Person who is:
(i) active in the construction, rehabilitation, ownership, or Control of the proposed Development, including:
(I) a General Contractor; and
(II) a Developer; and
(II) a General Partner, Principal or Affiliate of a General Partner or General Contractor; or
(ii) employed as a consultant, lobbyist, or attorney by an Applicant or a Related Party.
(2) During the period beginning on the first date of the Application Acceptance Period and ending on the date the Board makes a final decision with respect to the approval of any Application in that Application Round, an employee of the Department may communicate about any Application with the following Persons:
(A) the Applicant or a Related Party; and
(B) any Person who is:
(i) active in the construction, rehabilitation, ownership, or Control of the proposed Development, including:
(I) a General Partner or General Contractor; and
(II) a Developer; and
(II) a Principal or Affiliate of a General Partner or General Contractor; or
(ii) employed as a consultant, lobbyist or attorney by the Applicant or a Related Party.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(c) - Adherence to Obligations
COMMENT (1, 12, 18, 22, 23, 24, 25, 31, 32, 33, 35, 36, 37, 40, 44, 46): Significant comment was received related to this subsection. In general, comment suggested that penalties be consistent with the seriousness of the offense, that penalties only be levied when the changes impact the development negatively, that the severity of the penalty increase with each subsequent offense, and that substitution of amenities be allowed. Some comment pointed out that the local jurisdiction may require a developer to make a change, and that going to the Department for approval may cost the development 30-60 days of construction; in addition, in many cases, these changes are value added features with no negative effect. Some specific suggestions are that the Development Owner's application should lose points when necessary evidence of points was not received by the required timeline; no penalties should be assessed if an amendment is submitted to and approved by the Department before placement in service; penalties should only be assessed if an amendment request is submitted after placement in service, threshold criteria are not met, or there is a loss of points for a selection criteria that is not remedied by a substitution of similar items for points; an applicant must provide amenities as alternatives to non-conforming components that represent a decrease to the development cost; a monetary penalty should be imposed for the first violation in a five-year period, $25,000 for example; a $25,000 penalty should be imposed for the first violation, without consideration for the time period; a monetary penalty should be imposed for the second violation in a five-year period, $50,000 for example; a $50,000 penalty should be imposed for the first violation, without consideration for the time period; for the first two instances of violations within a five (5) year period where a penalty is caused by a failure to provide one or more amenities promised in the Application, the Board may impose an alternate penalty of a fine equal to the value of the amenities that were promised but not provided, less the value of alternate amenities provided and approved by Department staff; for third and subsequent violations within five years, the application could be terminated and tax credits rescinded; third and subsequent violations should trigger the penalties currently outlined in the QAP; the penalty related to participation in the Tax-Exempt Bond program should be limited to 12 months rather than 24; the dates used to determine the period of penalties should be revised; the penalty of $1,000 per day should be stricken; for amendments that may be approved by the Executive Director, a fine of $5,000 should be imposed if the amendment has been implemented prior to Department approval.
STAFF RESPONSE: Staff appreciates all the public comment and input received. The draft language presented to the Board in August gives the Board flexibility in the administration of penalties. Currently, the draft allows the Board to impose a penalty of "up to" ten (10) points for the next two (2) consecutive competitive application rounds and/or exclude a Developer or Applicant from participation in the tax-exempt bond/housing tax credit program for "up to" twenty-four (24) months. Additionally, the current draft allows the Board to impose a monetary administrative penalty of "up to" $1,000 per day from the date the non-compliance is identified by the Department. Staff believes the intent of all the suggestions are covered in the current proposed language. The current proposed language does provide the Board the discretion to penalize Applicants for not building the Development as represented in the Application. Therefore, staff recommends no change.
BOARD RESPONSE: The Board amended the proposed language under §50.9(c)(3) of the QAP, as reflected below, based on a request for revision by staff during the Board meeting. This amendment was made to clarify the applicability of penalties to Developments for which amendments are approved by the Executive Director administratively.
(3) For amendments approved administratively by the Executive Director, the penalties in paragraph (2) of this subsection will not be imposed.
§50.9(d)(6) - Underwriting Evaluation and Criteria
COMMENT (2): Comment suggested that in order to encourage green building, applicants should be allowed to request and receive additional tax credits to recover the portion of the cost of green building items that are eligible for energy tax credits, but which are not covered by the energy tax credit.
STAFF RESPONSE: Applicants already have the ability to request tax credits for costs associated with green building materials as long as those costs can be substantiated. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(d)(6)(B)(ii) - Underwriting Evaluation and Criteria - Acquisition Developer Fee
ADMINISTRATIVE CHANGE: Staff proposes the following revision to clarify the maximum Developer fee that can be claimed for Developments of different sizes:
(ii) Acquisition/rehabilitation Developments that are eligible for acquisition credits pursuant to §42(b)(1)(B) U.S.C., the acquisition portion of the Developer fee cannot exceed 15% of the existing structures acquisition basis, less Developer fee if the Development proposes 50 total Units or more, or 20% of the project's Total Eligible Basis, less Developer fees if the Development proposes 49 total Units or less, and will be limited to 4% credits. The rehabilitation portion of the Developer fee cannot exceed 15% of the total rehabilitation basis, less Developer fee if the Development proposes 50 total Units or more, or 20% of the project's Total Eligible Basis, less Developer fees if the Development proposes 49 total Units or less.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(4)(A)(ii)(IX) - Threshold Criteria - Threshold Amenities, Fitness Center
COMMENT (33, 36, 40, 44): Comment suggested that the number of fitness machines required for threshold amenity points be dependent on the number of Units in a Development because a large number of machines is not justifiable for smaller developments. Comment proposed one fitness machine for every forty (40) Units with a minimum of two (2) machines.
STAFF RESPONSE: Staff concurs and recommends the following language:
(IX) Furnished fitness center equipped with a minimum of two of the following fitness equipment options with at least one option per every 40 Units or partial increment of 40 Units: stationary bicycle, elliptical trainer, treadmill, rowing machine, universal gym, multi-functional weight bench, sauna, stair climber, etc. The maximum number of equipment options required for any Development, regardless of number of Units, shall be five (2 points);
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(4)(A)(ii)(XXV) - Threshold Criteria - Threshold Amenities, Green Building
COMMENT (33, 36, 40, 44, 47): Comment requested clarification regarding which features may qualify for green building and suggested that a test of monetary equivalency be applied so that only those features with similar cost be allowed to receive the same amount of points. Additional comment suggested that evaporative coolers be included in this item. The commenter asserted that evaporative coolers are accepted by the EPA, IRS, and RESNET in the federal energy credit.
STAFF RESPONSE: Staff concurs that a test of monetary equivalency is reasonable; however, the development of such a test would involve considerable research by staff and additional public comment. Therefore, staff recommends this issue be addressed for the 2009 QAP, giving the applicant community and staff ample time to conduct the necessary research, and give all parties an opportunity to comment prior to the adoption of the rule. Staff recommends no change.
Staff concurs that evaporative coolers should be included in this item and recommends the following revision:
(XXV) Green Building (for example, evaporative coolers, passive solar heating/cooling, water conserving fixtures, collected water (at least 50%) for irrigation purposes, sub-metered electric meters, exceed Energy Star standards, photovoltaic panels for electricity and design and wiring for the use of such panels, construction waste management, provide recycle service, water permeable walkways and parking areas, or other Department approved items). (3 points); or
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(4)(B) - Threshold Criteria - Threshold Amenities
COMMENT (45): Comment suggested that the amenities provided to tenants free of charge as a part of threshold criteria serve the needs of the disabled. Comment suggested that in developments serving family and elderly populations 10% of units be compliant with the Americans with Disabilities Act of 1990 and that for developments serving elderly populations 20% of units be compliant with the Americans with Disabilities Act of 1990. Comment also suggested that a minimum of 15% of Units should be fully accessible (wheel chair accessible) to those with limited mobility.
STAFF RESPONSE: Staff agrees that all Developments be compliant with ADA requirements, and the QAP currently requires applicants to comply with the Americans with Disabilities Act of 1990 to the extent it applies to residential properties. The QAP also requires that 5% of the Units be accessible. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(4)(B)(iii) - Threshold Criteria - Threshold Amenities, Dishwasher and Disposal
COMMENT (33, 36, 40, 44, 49): Comment stated that requiring new dishwashers is excessive and wasteful for rehabilitation development, particularly in rural areas. Additional comment asserted that disposals do not have energy star ratings and requested clarification on this requirement.
STAFF RESPONSE: The QAP does not require new dishwashers, but rather requires Energy Star or equivalently rated dishwashers. Staff believes that energy efficient dishwashers are a desirable amenity to all tenants, even those in rehabilitation and rural developments and encourages energy efficiency. Staff concurs with the attestation that garbage disposals do not have Energy Star or equivalent ratings. Staff recommends the following language:
(iii) Disposal and Energy-Star or equivalently rated dishwasher (not required for TRDO-USDA or SRO Developments);
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(4)(B)(iv) - Threshold Criteria - Threshold Amenities, Refrigerator
COMMENT (49): Comment stated that requiring new refrigerators is excessive and wasteful for rehabilitation development, particularly in rural areas.
STAFF RESPONSE: The QAP does not require new refrigerators, but rather requires Energy Star or equivalently rated refrigerators. Staff believes that energy efficient refrigerators are a desirable amenity to all tenants, even those in rehabilitation and rural developments and encourages energy efficiency. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(4)(B)(v) - Threshold Criteria - Threshold Amenities, Oven
COMMENT (49): Comment stated that requiring new ovens is excessive and wasteful for rehabilitation development, particularly in rural areas.
STAFF RESPONSE: The QAP does not require new ovens, but rather requires Energy Star or equivalently rated ovens. Staff believes that energy efficient ovens are a desirable amenity to all tenants, even those in rehabilitation and rural developments and encourages energy efficiency. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(4)(B)(vii) - Threshold Criteria - Threshold Amenities, Ceiling Fans
COMMENT (49, 19): Comment stated that requiring new ceiling fans is excessive and wasteful for rehabilitation development, particularly in rural areas. Additional comment suggested that flexibility be allowed for rehabilitation and renovation developments with regard to the ceiling fan requirement.
STAFF RESPONSE: The QAP does not require new ceiling fans, but rather requires Energy Star or equivalently rated ceiling fans. Staff believes that energy efficient ceiling fans are a desirable amenity to all tenants, even those in rehabilitation and rural developments and encourages energy efficiency. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(4)(B)(ix) - Threshold Criteria - Threshold Amenities, Emergency 911 Telephones
COMMENT (49): The comment asserted that requiring 911 telephones could bar development in some rural areas because 911 access is often not available in rural areas.
STAFF RESPONSE: Staff understands the problem with 911 access; however, staff believes that either a public phone or an emergency phone is a necessary amenity. Staff recommends the following change:
(ix) Emergency 911 or public telephone accessible and available to tenants 24 hours a day.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(5)(A)(ii) - Threshold Criteria - Building Floor Plans and Elevations
COMMENT (34): Comment suggested that the requirements for adaptive reuse developments should be modified to accommodate the unique nature of adaptive reuse floor plans. Comment suggested the addition of the following requirements for adaptive reuse developments: "building plans delineating each unit by number, type, and area consistent with those in the Rent Schedule and provide photos of each elevation of the existing building depicting the height of each floor and percentage estimate of the exterior composition."
STAFF RESPONSE: Staff concurs with the commenter. Staff has already incorporated this language into the draft QAP that was approved by the Board in August. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(5)(A)(iii) - Threshold Criteria - Unit Floor Plans
COMMENT (34): Comment suggested that the definition of "each unit type" be modified to accommodate adaptive reuse developments, which typically have multiple, distinct unit types. Comment suggested that the QAP require "unit floor plans for each distinct type of unit (1 Bedroom, 1 Bath; Two Bedroom, One Bath; Two Bedroom, Two Bath; etc.) and for all units that vary in area by 10% (or 50 sf, etc.) from the typical unit."
STAFF RESPONSE: Staff concurs with the commenter. Staff has already incorporated this language into the draft QAP that was approved by the Board in August. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(7)(A)(iii) - Threshold Criteria - Evidence of Property Control
ADMINISTRATIVE CHANGE: Staff proposes the following revision to clarify the types of documentation acceptable for evidence of property control, and the time period during which the control must be effective:
(iii) A contract for sale, or an exclusive option to purchase or lease which is valid for the entire period the Development is under consideration for tax credits. For Tax Exempt Bond Development Applications, site control must be valid through December 1, 2007 with option to extend through March 1, 2008 (Applications submitted for lottery) or 90 days from the date of the bond reservation with the option to extend through the scheduled TDHCA Board meeting at which the award of Housing Tax Credits will be considered. The potential expiration of site control does not warrant the Application being presented to the TDHCA Board prior to the scheduled meeting.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(7)(A)(iv)(III) - Threshold Criteria - Evidence of Property Control
COMMENT (1, 18, 22, 23, 24, 25, 31, 33, 35, 36, 40, 41, 44, 46): Comment suggested that acquisition costs be allowed to exceed the lesser of the original acquisition cost plus holding costs or the "as is" value identified in the appraisal if the applicant has owned the land for at least five years. In that case, the applicant should be allowed to use the appraised value to substantiate acquisition cost. The commenter assert that this requirement will prevent "flipping" while providing a reasonable alternative to providing years of invoices to substantiate holding costs. Additional comment suggested that the appraised value should be used to substantiate acquisition costs, without placing additional limitations with regard to the period of time an owner has owned the property. Comment asserted that the current requirement places an undue burden on housing authorities that are trying to rebuild dilapidated housing that may have been constructed 60 years ago.
STAFF RESPONSE: Staff does not believe that the fact that a property has been held for five years provides any assurance against the practice of "flipping"; a period of five years holds no particular significance with regard to the value of a property. The purpose of the identity of interest requirements in the QAP is to ensure that an identity of interest transaction does not result in a profit for the seller. Without documentation of holding costs, in addition to an appraisal, the Department cannot evaluate whether the transaction will result in a profit. The period of time that the property has been owned is not relevant in this evaluation. In addition, the proposed language does not represent a new Department requirement, but rather formalizes a process that has been historically used by the Department to evaluate the feasibility of a proposed development. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(7)(B)(i)(I) - (III) - Threshold Criteria - Zoning
COMMENT (36): Comment requests clarification regarding how a letter relating to land use can be required when no zoning exists.
STAFF RESPONSE: Many jurisdictions that do not have zoning ordinances do have comprehensive plans that address issues such as affordable housing and other land uses. In the absence of zoning ordinances, the requirement for a letter of consistency with a consolidated plan or other planning document, or statement of the need for affordable housing allows the Department a level of assurance that the development is consistent with the goals of the local jurisdiction. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(7)(C) - Threshold Criteria - Evidence of Interim and Permanent Financing
COMMENT (1, 18, 22, 23, 24, 25, 31, 35, 46): Comment suggested that if a commitment for development funding is provided by a governmental entity, a governmental instrumentality, or an affiliate of such, that the governmental entity, governmental instrumentality, or affiliate of such must provide evidence that the organization is legally authorized to operate in the area where the development is proposed.
STAFF RESPONSE: Staff feels that it is not the role of the Department to limit the areas of the state in which an organization or governmental entity may operate. This suggestion would warrant greater staff scrutiny and public input prior to any rule change being recommended by staff. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(8)(A)(ii) - Threshold Criteria - Notifications
COMMENT (12, 21, 38): Comment suggested that applicants should be required to mail written notifications to directors of Municipal Utility Districts ("MUD"). The commenter asserted that omitting MUD directors from required notifications negatively affects areas outside of the corporate boundaries of a municipality. Additional comment suggested that notifications should be made to all special districts, such as school districts, college districts, business improvement districts, municipal management districts, tax increment reinvestment zones, in which the applicant's site is located.
STAFF RESPONSE: Notifications required in the QAP are consistent with statute. Beginning in January 2008, the Department will implement an electronic mailing system that allows notification to any email address registered with that system for tax credit applications proposed in any specified zip code. Staff suggests the special management and utility districts subscribe to this service once it is available and will be notifying those districts of the availability of the new system. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(8)(B) - Threshold Criteria - Signage on Property or Alternative
COMMENT (1, 18, 22, 23, 24, 25, 31, 35, 36, 41, 46): Comment requested that the proposed language requiring a sign to be posted unless prohibited by local ordinance be stricken. The commenter asserts that the applicant should be able to choose between posting a sign and mailing notifications, and that written notifications ensure that those most affected by the proposed development are notified. Additional comment suggested that the requirement to post public hearing information should be deleted, or should be revised so that the hearing information must be posted once it is released by the Department. Comment asserted that the public hearing information will not be known by the application deadline.
STAFF RESPONSE: It is the Department's position that the public is better served by the posting of a public sign, as opposed to mailed notifications. A sign provides true public notification. The Department has historically released public hearing information approximately a month in advance of the signage posting date for the Competitive Housing Tax Credit Round, allowing ample time for applicants to include this information on the required posted signage by March 1. The Department will adopt a similar timeline for the release of public hearing information in 2008 so that applicants will have the information needed to meet Department notification requirements by the application submission deadline. Staff recommends no change.
ADMINISTRATIVE CHANGE: Staff recommends the addition of the following sentence to clarify the evidence required when local ordinance prohibits the posting of a sign:
If Public Notification Sign is prohibited by local ordinance or code, evidence of the applicable ordinance or code must be submitted in the Application.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(8)(C) - Threshold Criteria - Notifications for Developments with Occupied Units
ADMINISTRATIVE CHANGE: Staff proposes the following revision to clarify the information that must be provided to current tenants of a Development:
(C) If any of the Units in the Development are occupied at the time of Application, then the Applicant must certify that it has notified each tenant at the Development of all the information otherwise required on the sign, including the Department's public hearing schedule for comment on submitted Applications.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(h)(9) - Threshold Criteria - Evidence of the Development's Proposed Ownership Structure
COMMENT (1, 18, 22, 23, 24, 25, 31, 35, 41, 46): Comment suggested that if the proposed structure of the owner or developer includes a governmental entity, a governmental instrumentality, or an affiliate of such, that the governmental entity, governmental instrumentality, or affiliate of such must provide evidence that the organization is legally authorized to operate in the area where the development is proposed. Similarly, comment suggested that nonprofit entities included in the structure of the owner or developer provide evidence in the form of bylaws or articles of incorporation to show that they are authorized to operate in the area where the development is proposed.
STAFF RESPONSE: Staff believes that it is not the role of the Department to limit the areas of the state in which an organization or governmental entity may operate. This suggestion would warrant greater staff scrutiny and public input prior to any rule change being recommended by staff. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i) - Selection Criteria, General
COMMENT (29, 30, 38, 48): Comment suggested that all input by community stakeholders should impact the score for a development, so that comment is evaluated in the final determination of an award for any particular development. Additional comment suggested that input from MUD directors should impact the score for a development. The commenter asserted that MUD directors represent small constituencies and because of this they are able to provide meaningful input regarding proposed developments. Comment suggested the addition of incentive points for applicants using USDA's §538 Guaranteed Rural Rental Housing Program who submit all required information in order for USDA to receive applications by June 1st. Comment asserted that the timing of application submissions to USDA can be challenging for USDA and that having applications two months earlier would allow USDA to fund more developments.
STAFF RESPONSE: Statute clearly requires that the Department award points for input received from neighborhood organizations and State Representatives and Senators. Staff is sensitive to the needs of the communities and districts impacted by proposed developments and currently offers extensive opportunities for public comment, in the form of public hearings, public comment at monthly board meetings, and written comment. An additional scoring item to allow all community stakeholders to impact scoring would be excessive, considering the existing opportunities for public comment. In addition, such a scoring item may have a disproportionately greater impact on the outcome of awards than the actual merits of a development, as well as increase the ability for communities to prevent the provision of very needed affordable housing in their community. Staff recommends no change.
Staff does not feel that providing incentive points for timely submissions of application materials to other agencies is an appropriate use of selection criteria. If applicants want funding from another agency they should proactively follow that agency's process and should need no incentive from the Department to do so. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(2)(A)(vi) - Selection Criteria - Quantifiable Community Participation
COMMENT (1, 18, 22, 23, 24, 25, 31, 32, 33, 35, 36, 38, 40, 41, 42, 44, 46): Comment suggested deleting the proposed requirement that applicants may not request that a Neighborhood Organization expand their boundaries to include the development site. Commenters asserted that the dialog that must happen for a development to be added to the boundaries of a neighborhood organization promotes exactly the type of interaction the scoring criteria was designed for. Additional comment suggested that Neighborhood Organizations located within two to three miles of a proposed development be allowed to provide comment for points under this paragraph. The commenter asserted that multifamily developments may affect the quality of life in communities located miles from the site, and allowing Neighborhood Organizations located two to three miles from a proposed site provides the opportunity for affected members of the community to provide meaningful input. Other comment suggested that resident councils should be able to comment not only on rehabilitation or reconstruction, but also on new construction if the proposed new construction is within the boundaries of the property in which they reside, or within the boundaries of their organization. The commenters asserted that the Department should not penalize a resident council because they reside in public housing.
STAFF RESPONSE: Staff concurs with the comment regarding the ability for an applicant to request that a Neighborhood Organization to expand its boundaries and recommends the following revision:
(vi) Accurately certify that the Neighborhood Organization was not formed by any Applicant, Developer, or any employee or agent of any Applicant (the seller of land is not considered, with the exception of an identity of interest, to be an agent of the Application) in the 2008 Competitive Housing Tax Credit Application Round, that the organization and any member did not accept money or a gift to cause the Neighborhood Organization to take its position of support or opposition, and has not provided any assistance other than education and information sharing to the Neighborhood Organization to meet the requirements of this subparagraph for any Application in the Application Round (i.e. hosting a public meeting, providing the "TDHCA Information Packet for Neighborhoods" to the Neighborhood Organization, or referring the Neighborhood Organization to TDHCA staff for guidance). Applicants may not provide any "production" assistance to meet these requirements for any Application in the Application Round (i.e. use of fax machines owned by the Applicant, use of legal counsel related to the Applicant, or assistance drafting a letter for the purposes of this subparagraph).
Statute is clear that the Department must award points on the basis of written statements from any neighborhood organizations whose boundaries contain the proposed development; therefore Neighborhood Organizations located two to three miles from a proposed development, whose boundaries do not include the proposed development site are prohibited from providing comment under this scoring item. These organizations may still make comment regarding any proposed Development; such comment will be summarized and presented to the Department's Board. Staff recommends no change.
As noted above, resident councils may be eligible to the extent that they meet the definition as provided. Staff recommends no change.
§50.9(i)(2)(B)(iv)
ADMINISTRATIVE CHANGE: Staff recommends the following revision to §50.9(i)(2)(B)(iv) to clarify the methodology used to establish the score for an Application that receives more than one eligible letter:
(iv) If an Application receives multiple eligible letters the average score of all eligible letters will be applied to the Application.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(3)(B) - Selection Criteria - Income Levels of Tenants
COMMENT (6, 14, 19, 36, 47): Comment suggested that the new language that provided greater incentive to do units at 50% and 30% of AMGI be deleted, and that language from the 2007 QAP be retained. The commenters requested that instead of allowing 22 points for having 40% of Units at or below a combination of 50% and 30% of AMGI with 5% at or below 30% of AMGI, the points be allowed for having 10% of Units at or below 30% of AMGI. Comment suggested that this reversion to 2007 QAP language be instituted for counties along the Texas-Mexico border at the least. Further, comment suggested that Housing Authority applicants who are subsidizing rent and operating expenses with HUD money be excluded from these points. The commenter asserted that Housing Authorities already receive other benefits that give them unfair advantages over the private sector, and an ability to operate less efficiently than private sector developments. Comment applauded the Departments efforts to create housing for households at 30% of AMGI, and asserted that the tax credit program has produced enough housing to meet the needs of households at 60% of AMGI. Other comment applauded the Department's efforts to increase mixed income development through the revision of this subparagraph, but asked for an increase in the percentage of units that must serve households at 30% of AMGI. Comment suggested that 10% of units be set aside for households at 30% of AMGI, rather than 5%.
STAFF RESPONSE: Staff appreciates the comment related to the reversion to the 2007 QAP language; however, the relatively small number of commenters indicates a general satisfaction with the revised language. In addition, the Department seeks to provide incentives to serve persons at various levels of AMGI throughout the state. Furthermore, there is indication that in some markets, units for persons at the 60% AMGI level, are becoming saturated and this shift of the highest points away from that income level range will hopefully diversify the income levels of those being served to minimize saturation. Staff does not recommend different standards for certain counties as the median income level varies by county and already accounts for geographic variances.
Regarding the request to increase the percentage of units serving households at 30% of AMGI to a level greater than that in the draft rule, staff believes this would be a significant change that would warrant additional comment prior to implementation. Staff recommends no change to the 2008 QAP, but will explore the possibility of revising the 2009 QAP to incorporate this comment.
Regarding the request to exclude Housing Authorities from eligibility for this scoring item, statute requires the Department to award points based on the income levels of tenants without limitation. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(4)(B) - Selection Criteria - Quality of Units
ADMINISTRATIVE CHANGE: Staff proposes the following revision to clarify how many points certain development types may receive under this scoring item:
(B) Quality of the Units. Applications may qualify to receive up to 14 points. Applications in which Developments provide specific amenity and quality features in every Unit at no extra charge to the tenant will be awarded points based on the point structure provided in clauses (i) - (xix) of this subparagraph, not to exceed 14 points in total. Applications involving scattered site Developments must have all of the Units located with a specific amenity to count for points. Applications involving Rehabilitation (excluding reconstruction) or single room occupancy may receive 1.5 points for each point item, not to exceed 14 points in total.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(4)(B)(xvii) - Selection Criteria - Quality of Units
ADMINISTRATIVE CHANGE: Staff recommends the following revision to clarify the applicability of this item to Adaptive Reuse:
(xvii) 14 SEER HVAC or evaporative coolers in dry climates for New Construction Adaptive Reuse, and reconstruction or radiant barrier in the attic for Rehabilitation (excluding reconstruction) (3 points);
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(5) - Selection Criteria - Commitment of Development Funding by Local Political Subdivisions
COMMENT (1, 8, 9, 16, 18, 21, 22, 23, 24, 25, 31, 32, 33, 35, 36, 40, 41, 42, 44, 46, 47): Loan Terms: Comment suggested that the proposed requirement that a loan be for a minimum term of five years be deleted. Commenters instead suggested that either a minimum one-year term, or the greater of one year or placement in service dated be required. Commenters asserted that local governments cannot make mid- and long-term loans in today's climate, and that a five-year term has no role in the tax credit financing because it is too long to be short-term construction financing, and is too short to be permanent financing. Other comment asserted that the San Antonio HUD Office has instructed participating jurisdictions to limit HOME loans made in connection with tax credit developments be limited to one year, meaning that applicants who get HOME loans from participating jurisdictions will not be able to receive points under this paragraph. Other comment asserted that Housing Authorities must get the Attorney General's permission for loans with terms longer than one year. Additional comment suggested that the requirement that a loan must be at or below the Applicable Federal Rate ("AFR") at the time of application is problematic, and that the language should be revised so that the loan is at or below AFR on the date of funding.
In-Kind contributions: Further comment requested clarification as to whether the value of an in-kind contribution of the leasehold value of land is restricted to the value between August 1, 2008 and placement in service, rather than the entire value of the leasehold. The commenters asserted that if this is the case, the restriction is unfair and needs to be deleted. Comment instead suggested that the entire value of the contribution of land on a lease value should be allowed to count for points under this paragraph. Other comment suggested that the new language restricting the time period for which an in-kind contribution can count for points is unnecessary and the full value of a contribution should be used. Additional comment stated support for the addition of language clarifying that the value of in-kind contributions can only be claimed for the period between August 1, 2008 and placement in service.
USDA and HOME Funds: Other comment suggested that developments that receive a combination of USDA §§515 and 538 financing should be allowed to receive points under this paragraph for the USDA funding. Other comment suggested that USDA §538 funding, without being combined with USDA §515 funding, should be eligible for points under this paragraph. The commenters asserted that this would provide a benefit to these developments to make up for the fact that they are potentially excluded from the USDA Set-Aside. Additional comment suggested that the Department allow the amount of city HOME funds used for points under this item to be determined using a gap method that determines the tax credit amount first.
Other Comments: Additional comment pointed out that "special districts" are included in the definition of "Local Government" in Chapter 2306 of Texas Government Code, and should be allowed to be involved in the scoring process of an application. Additional comment requested the deletion of this scoring item altogether. The commenter asserted that if a project is feasible without community funding, the criteria should not be imposed.
STAFF RESPONSE: Statute requires the Department to award points for funding from local political subdivisions; therefore this scoring item cannot be deleted.
Staff feels that a change in language to require minimum loan terms of the later of one year or placement in service is reasonable. The Department cannot create policy based on the practices of other agencies; therefore no change is recommended related to HUD's practices for awarding HOME funds. Staff feels that requiring that a loan be at or below AFR at the time of funding is reasonable. Staff recommends the following language related to these comments:
(iv) A loan does not qualify as an eligible source unless it has a minimum term of the later of 1-year or the Placed in Service date, and the interest rate must be at the Applicable Federal Rate (AFR) or below (at the time of loan closing).
In-kind contributions that result in a quantifiable reduction in Total Development Cost may count for points under this paragraph. The limit on the value of contributions between August 1, 2008 and placement in service is a reasonable guideline by which the Department may evaluate the actual impact on Total Housing Development Cost, because this time period is a reasonable estimate of the construction period for a development. Staff recommends no change.
In-kind contributions of land produce a quantifiable reduction in Total Housing Development Cost; therefore, the Department considers the full value of in-kind contributions of land, whether in the form of donation or ground lease, for points under this paragraph. Staff recommends the following language revision to provide additional clarification:
(v) In-kind contributions such as donation of land, tax exemptions, or waivers of fees such as building permits, water and sewer tap fees, or similar contributions are only eligible for points if the in-kind contribution provides a tangible economic benefit that results in a quantifiable Total Housing Development Cost reduction to benefit the Development will be acceptable to qualify for these points. The quantified value of the Total Housing Development Cost reduction may only include the value during the period the contribution or waiver is received and/or assessed. Donations of land must be under the control of the Applicant, pursuant to §50.9(h)(7) of this chapter to qualify. The value of in-kind contributions may only include the time period between award, or August 1, 2008 and the Development's Placed in Service date, with the exception of contributions of land. The full value of land contributions, as established by the appraisal required pursuant to clause (viii) of this subparagraph. Contributions in the form of tax exemptions or abatements may only count for points if the contribution is in addition to any tax exemption or abatement required under statute.
While the Department seeks to encourage developments that use USDA funding, statute specifically requires the Department to award points to developments that receive funding from local political subdivisions; therefore, allowing federal funds not administered by a local political subdivision would represent a violation of statute. Staff recommends no change.
The comment related to the determination of the amount of the tax credit relates to underwriting and will be addressed in the agenda item relating to the Real Estate Analysis Rules.
In reference to the request that "special districts" be allowed to affect the Application selection, "special districts" may already participate if they meet the definition of Local Political Subdivision or Governmental Instrumentality, and can provide evidence to that effect. Staff recommends no change.
ADMINISTRATIVE CHANGE: Staff recommends the following revision to clarify the eligibility of Department HOME funds for this scoring item:
(vi) To the extent that a Notice of Funding Availability (NOFA) is released and funds are available, funds from TDHCA's HOME Investment Partnerships (HOME) Program will qualify if a resolution, dated on or before the date the Application Acceptance Period ends, is submitted with the Application from the Local Political Subdivision authorizing the Applicant to act on behalf of the Local Political Subdivision in applying for HOME Funds from TDHCA for the particular Application. TDHCA's HOME funds may be substituted for a source originally submitted with the Application, provided the HOME funds substituted are from a NOFA released after the Application Acceptance Period ends and a resolution is submitted with the substitution documentation from the Local Political Subdivision authorizing the Applicant to act on behalf of the Local Political Subdivision in applying for HOME Funds from TDHCA for the particular Application.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(6) - Selection Criteria - Support from State Representative or State Senator
COMMENT (1, 18, 22, 23, 24, 25, 31, 35, 36, 41, 46): Comment suggested that in cases where one letter of support and one letter of opposition are received from the State Representative and State Senator, the letters should not cancel each other out and result in a score of zero, but that seven points should be awarded instead. Additional comment requested the addition of language that clarifies that the maximum negative points an application can receive are -14.
STAFF RESPONSE: All comment from State Representatives and State Senators are highly valued by the Department. Giving more weight to comments of support than to opposition does not fairly account for all input from State Representatives and State Senators; therefore staff recommends no language change with regard to this comment. Staff concurs that the maximum negative points should be explicitly stated and recommends the following change:
(6) The Level of Community Support from State Representative or State Senator. The level of community support for the Application, evaluated on the basis of written statements received from the State Representative or State Senator that represents the district containing the proposed Development Site. (§2306.6710(b)(1)(F) and (f); §2306.6725(a)(2)). Applications may qualify to receive 14 points for this item. Letters of support must identify the specific Development and must clearly state support for or opposition to the specific Development. This documentation will be accepted with the Application or through delivery to the Department from the Applicant or the State Representative or Senator by April 1, 2008. State Representatives or Senators to be considered are those State Representatives or Senators in office at the time the Application is submitted. Letters of support from State Representatives or Senators that do not represent the district containing the proposed Development Site will not qualify for points under this Exhibit. Neutral letters, or letters that do not specifically refer to the Development, will receive neither positive nor negative points. Letters from State of Texas Representative or Senator: support letters are +14 points; opposition letters are -14 points for a maximum of either 14 or -14 points. If one letter is received in support and one letter is received in opposition the score would be 0 points.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(7) - Selection Criteria - Rent Levels of Units
COMMENT (11): Comment suggested that the emphasis on 100% rent-restricted developments is often in conflict with the local jurisdiction's initiatives, is harmful to downtown revitalization and contributes to the concentration of affordable housing in certain neighborhoods. Comment suggested that the Department award points to mixed-income developments equal to the points awarded for 100% rent-restricted developments.
STAFF RESPONSE: Staff appreciates the comment regarding the encouragement of mixed-income developments. A revision to this item to provide a new point structure is a material change that would require additional public comment. The Department will explore the possibility of providing additional incentives for mixed-income developments for the 2009 QAP. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(8) - Selection Criteria - Cost of the Development by Square Foot
COMMENT (2, 3, 4, 5, 7, 13, 36, 37, 39, 47): Comment requested that the maximum cost per square foot be increased for all developments and areas of the state to address rising construction costs. Other comment suggested that the limit for elderly, transitional, and single room occupancy ("SRO") developments be increased to $88 from $85; the limit for elderly, transitional, and single room occupancy ("SRO") developments in First Tier Counties be increased to $90 from $87; the limit for all other developments, unless located in a First Tier County, be increased to $78 from $75; and the limit for all other developments located in a First Tier County be increased to $80 from $77. Additional comment suggested that cost per square foot maximums be increased each year commensurate with CPI or some other inflation index, similar to the new language regarding §50.6(d) Credit Amount. Other comment suggested that maximum cost per square foot figures should not apply to parking structures, including parking garages and underground parking. The commenter asserts that applying the maximums to parking structures negatively affects urban developments that seek to provide dense, pedestrian-friendly development, and to combat urban sprawl. Comment also suggested that the applicant not be allowed to claim tax credits for the cost of the parking structure, but in exchange there should not be a point penalty associated with the cost. Additional comment requested that cost per square foot maximums for single family construction be the same as those of elderly developments. Other comment requested that SRO developments be exempt from the $85 per square foot limit, and should qualify for the points under this paragraph automatically to encourage state of the art construction and rehabilitation.
STAFF RESPONSE: This scoring item is designed to provide an incentive for the efficient construction of developments, so that the Department can allocate housing tax credits in a way that aids the maximum number of low-income Texans. The Department increased the cost per square foot by over 6% for 2007 and costs appear to have stabilized. Staff does not believe there is a need to adjust costs at this time. In addition, staff believes that all developments should be encouraged to be built in a cost-effective manner, and does not feel that exempting a particular development type from cost per square foot limits is consistent with this goal. Staff recommends no change.
Regarding the suggestion to exclude the cost of parking structures from this scoring item, this suggestion is inconsistent with the purpose of this scoring item, which is to provide an incentive for the cost-effective construction of Development. The costs of all of the buildings in a development, regardless of their inclusion in eligible basis, impact the total costs of a Development and should be included in the calculation of development cost for this scoring item. Staff recommends no change.
Staff agrees that single family design should be the same as elderly developments and has already incorporated this change into the draft 2008 QAP approved by the Board in August. Staff recommends no change.
BOARD RESPONSE: The Board instructed staff to award amend the language to allow net rentable area to include elevator served interior corridors for single room occupancy Developments, consistent with public comment. The amended language is as follows:
(8) The Cost of the Development by Square Foot (Development Characteristics). Applications may qualify to receive 10 points for this item. (§2306.6710(b)(1)(H); §42(m)(1)(C)(iii)). For this exhibit, costs shall be defined as construction costs, including site work, direct hard costs, contingency, contractor profit, overhead and general requirements, as represented in the Development Cost Schedule. This calculation does not include indirect construction costs. The calculation will be costs per square foot of net rentable area (NRA). For the purposes of this paragraph only, if the proposed Development is an elevator building serving elderly, a single room occupancy Development, or a high rise building serving any population, the NRA may include elevator served interior corridors. The calculations will be based on the cost listed in the Development Cost Schedule and NRA shown in the Rent Schedule of the Application. Developments qualify for 10 points if their costs do not exceed $85 per square foot for Qualified Elderly, single family design, transitional, and single room occupancy Developments (transitional housing for the homeless and single room occupancy units as provided in the Code, §42(i)(3)(B)(iii) and (iv)), unless located in a "First Tier County" in which case their costs do not exceed $87 per square foot; and $75 for all other Developments, unless designated as "First Tier" by the Texas Department of Insurance, in which case their costs do not exceed $77 per square foot. For 2007, the First Tier counties are Aransas, Brazoria, Calhoun, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, San Patricio, and Willacy. There are also specifically designated First Tier communities in Harris County that are east of State Highway 146, and evidence in the Application must include a map with the Development site designated clearly within the community. These communities are Pasadena, Morgan's Point, Shoreacres, Seabrook and La Porte. Intergenerational Developments will receive 10 points if costs described above do not exceed the square footage limit for elderly and non-elderly units as determined by using the NRA attributable to the respective elderly and non-elderly units. The Department will determine if points will be awarded by multiplying the NRA for elderly units by the applicable square footage limit for the elderly units and adding that total to the result of the multiplication of the NRA for family units by the applicable non-elderly square footage limit. If this maximum cost amount is equal to, or greater than the total of the costs identified above for the Application, points will be awarded (10 points).
§50.9(i)(9) - Selection Criteria - Services to be Provided to Tenants
COMMENT (17, 41): Comment suggested that the Department create a mechanism to ensure that applicants who receive points under this paragraph follow through and provide the services they commit to in the application. Comment requested clarification as to why notary public services are deemed more important to tenants than the other services under this paragraph.
STAFF RESPONSE: The Compliance Monitoring Division of the Department already actively monitor for the services committed to in the application and as provided in the Land Use Restriction Agreement. The state legislature specifically directed the Department to provide points for "free notary public services" in addition to other supportive services; therefore, the QAP places a greater importance for these services than other services. Staff recommends no change.
BOARD RESPONSE: The Board denied staff's recommendation and instructed staff to award one point for the provision of notary public services, consistent with public comment. The amended language for §50.9(i)(9)(A)(i)(III) is as follows:
(III) Seven points will be awarded for providing six of the services.
The amended language for §50.9(i)(9)(B) is as follows:
(B) In addition, Applications will receive 1 point for providing Notary Public Services to tenants at no cost to the tenant. This will be included in the LURA.
§50.9(i)(10) - Selection Criteria - Declared Disaster Areas
COMMENT (33, 36, 40, 42, 44): Comment requested clarification regarding which disaster areas will be eligible under this paragraph because, depending on the disaster declarations used, all 254 Texas counties may be eligible for these points. Additional comment requested clarification as to whether a disaster must have been declared within the two-year period before application submission, or whether disaster declarations not declared within this two-year period, but for which the time period covered by the declaration is within this two-year period count for points under this paragraph.
STAFF RESPONSE: As defined in the newly revised §50.3(38), a Disaster Area is an area that has been declared as a federal or state disaster and has specifically experienced the disaster identified in the declaration. The Applicant will be required to provide a copy of the declaration under which the Applicant is seeking to receive points. If proposed location of the Development has not actually experienced the disaster stated in the declaration, the Application will not be eligible for the points. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(11) - Selection Criteria - Rehabilitation (which includes Reconstruction) or Adaptive Reuse
COMMENT (4, 7, 13, 32, 39): Comment suggested that this paragraph be clarified to include adaptive reuse developments in the development types that may qualify for points. Comment asserted that the exclusion of "New Construction of non-residential buildings" may exclude adaptive reuse from this item because this description is used for adaptive reuse elsewhere in the QAP. Additional comment requested that all single room occupancy ("SRO") developments be allowed to qualify for points under this paragraph. The commenter asserted that SRO developments typically are required to build more units and to substantially rebuild spaces to create "state of the art" units. Other comment requested that New Construction be allowed for points under this item with respect to Adaptive Reuse.
STAFF RESPONSE: Staff concurs that the paragraph should clarify that adaptive reuse developments are eligible to receive the points; this clarification will also address the language that restricts "New Construction of non-residential buildings". This criterion is designed to promote the use of existing housing or structures in the development of housing tax credit developments; therefore a revision to allow new construction SRO developments to qualify under this item would not be consistent with the intent of the scoring item. SRO developments may qualify for points to the extent that they meet the requirements of this paragraph. Staff recommends no change related to this comment. Staff recommends the following language revisions for Adaptive Reuse:
(11) Rehabilitation, (which includes reconstruction) or Adaptive Reuse. Applications may qualify to receive 6 points. Applications proposing to build solely Rehabilitation (excluding New Construction of non-residential buildings), solely reconstruction (excluding New Construction of non-residential buildings), or solely Adaptive Reuse qualify for points.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(13) - Selection Criteria - Development Includes the Use of Existing Housing as Part of a Community Revitalization Plan
COMMENT (4, 7, 13, 39): The commenter asserted that adaptive reuse development encourage rebuilding in targeted community revitalization zones, just like existing housing does, and that adaptive reuse developments should qualify for points under this paragraph. Other comment supported the addition of Adaptive Reuse to this paragraph. Additional comment suggested that single room occupancy ("SRO") developments be allowed to qualify for points under this paragraph if rehabilitation or reconstruction is involved in the revitalization area.
STAFF RESPONSE: This selection criterion addresses a federal selection criteria requirement and was developed specifically to provide incentives for the use of existing housing in conjunction with revitalization. Adaptive reuse, by definition, is not existing housing; therefore the addition of that class of development would be inconsistent with the intent of this scoring item. A SRO development can already qualify under this paragraph, as long as it meets the definition of Existing Residential Development. SRO developments that propose the adaptive use of non-residential buildings do not meet the requirement of the scoring item. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(15) - Selection Criteria - Economic Development Initiatives
COMMENT (3, 4, 13, 32, 33, 36, 37, 39, 40, 42, 44): Comment suggested that points should not be prohibited if more than three Housing Tax Credit developments have been awarded in the area in the past seven years, but that a limitation that considers the size of the developments and the size of the community be used. Some comment suggested that the same tests used in §50.6(g) and (h) be used, limiting points to developments in census tracts with less than 30% or 40% Housing Tax Credit units per total households. Other comment opposed the new scoring criteria because it will be difficult to receive points under this paragraph and §50.9(i)(16), Development Location. Additional comment requested that tax increment reinvestment zones, pursuant to Chapter 311 of the Texas Tax Code, be added to the list of areas that are eligible for points under this paragraph. Other comment requested clarification as to how the area will be defined, for example, will the area be the location of the organization that receives funding, the service area of an organization that receives funding, or the location of the residence of the individual that receives services. Further comment pointed out that this new scoring item does not require the types of evidence of funding required under §50.9(i)(5) of the QAP. The commenter suggested that additional language be added to clarify evidence required regarding the amount and type of funding in order to substantiate the points awarded.
STAFF RESPONSE: Regarding the limitation for areas with existing Housing Tax Credit Developments, staff feels that limiting points to areas in which more than three tax credit awards have not been made in the past seven years is reasonable. The limitations in §50.6(g) and (h) are already applied to all Developments, and would therefore offer no meaningful additional limitations, and would be duplicative in nature. Staff recommends no change.
While staff appreciates that Applicants desire to qualify under as many scoring items as possible, challenges related to the ability to qualify under multiple items do not provide sufficient basis for the inclusion or exclusion of any particular scoring item. Staff recommends no change.
This scoring item was designed to provide incentives for the development of housing in the areas targeted for economic development by the state and federal funding sources. Tax increment reinvestment zones are designated at the local level and are not consistent with the intent of this item to provide incentives for development in areas targeted at the state and federal levels. Staff recommends no change.
Staff concurs that additional clarification regarding the interpretation of "area" for this scoring item is needed and recommends the following revision:
(15) Economic Development Initiatives. A Development that is located in one of the following two areas may qualify to receive 4 points. For the purpose of this paragraph, "area" shall mean the boundaries of any zone or community in subparagraph (A) or the area in which funds in subparagraph (B) must be used:
Staff concurs that additional clarification regarding the evidence required for this item is needed. Specific requirements will be included in the 2008 application materials. In addition, staff recommends the following revision:
(C) Points under subparagraphs (A) and (B) of this paragraph will not be granted if more than 3 tax credit Developments have been awarded in that area in the last 7 years. The Applicant must provide evidence of the boundaries of the area, as required in the Application and Application Submission Procedures Manual.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(16)(F) - Selection Criteria - Development Location
COMMENT (15, 32, 43): Comment suggested that the use of the word "area" to describe the locations eligible for points under this subparagraph is not sufficiently descriptive. Comment suggested that a more specific description such as "city," "census tract," or "zip code" be used. Other comment suggested that this subparagraph be deleted so that Qualified Elderly Developments eligible for points under this subparagraph are instead eligible for points under §50.9(i)(19). Further comment asserted that this subparagraph contemplates the same concept as §50.9(i)(19).
STAFF RESPONSE: Staff concurs with comment that suggested that this subparagraph contemplates the same concept as §50.9(i)(19). In addition, staff concurs that a better description of area is needed. Staff recommends the deletion of this subparagraph in conjunction with the recommended language change to §50.9(i)(19). Deleting §50.9(16)(F) and revising §50.9(i)(19) resolves the issue of a broad description of area by using census tracts as the defined location; and eliminates scoring criteria that are conceptually duplicative. Staff recommends the earlier proposed revision to §50.9(16)(F) be deleted.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(17) - Selection Criteria - Development Location in Non-Urban Areas
COMMENT (1, 18, 22, 23, 24, 25, 31, 35, 41, 46, 47): Comment requested clarification regarding the reason for the decrease in point value from 7 point in 2007 to 6 points in 2008. Comment asserted that there is no justifiable basis for awarding six points merely because a development is in a location with a population less than 100,000. Comment suggested that this scoring item be deleted from the QAP, or be lowered to three points.
STAFF RESPONSE: The Department's governing statute requires the use of ten scoring criteria, which must be given point values in specific descending order. In the 80th legislative session, the tenth of these items was added making it necessary to adjust the point value of some of the criteria that had ranked below the initial first nine of the ten items to make "room" for the insertion of the tenth highest item. In an effort to geographically disperse developments within the Urban area of regions, the Department has created a selection criteria to encourage locations in non-rural areas with populations less than 100,000. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(18) - Selection Criteria - Demonstration of Community Support Other than Quantifiable Community Participation
COMMENT (47): Comment provided support for the language additions in this paragraph. Comment also requested clarification regarding the reason for the decrease in point value from 7 point in 2007 to 6 points in 2008.
STAFF RESPONSE: The Department's governing statute requires the use of ten scoring criteria, which must be given point values in specific descending order. In the 80th legislative session, the tenth of these items was added making it necessary to adjust the point value of some of the criteria that had ranked below the initial first nine of the ten items to make "room" for the insertion of the tenth highest item. Staff appreciates the feedback regarding the revised language.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(19) - Selection Criteria - Developments in Census Tracts with No Other Existing Developments Supported by Tax Credits
COMMENT (43, 47): Comment requested clarification regarding the reason for the decrease in point value from 7 points in 2007 to 6 points in 2008. Additional comment suggested that language be revised so that points are awarded under this paragraph if there are no other housing tax credit developments in the census tract or if there are no other housing tax credit developments in the area that serve the same population. Further comment asserted that this paragraph contemplates the same concept as §50.9(i)(16)(F).
STAFF RESPONSE: The reasoning for the reduction in points has been described on each of the prior comments. Awarding points based on the presence of other developments that serve the same population is reasonable. Staff recommends the following language:
(19) Developments in Census Tracts with No Other Existing Same Type Developments Supported by Tax Credits: The Application may receive 6 points if the proposed Development is located in a census tract in which there are no other existing Developments supported by Housing Tax Credits that serve the same type of household, regardless of whether the development serves families, or elderly individuals (Intergenerational Housing is not a type of household as it relates to this paragraph). Applicant must provide evidence of the census tract in which the Development is located. (§2306.6725(b)(2)). These Census Tracts are outlined in the 2008 Housing Tax Credit Site Demographic Characteristics Report.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(22)(B) - Selection Criteria - Negative Site Features
COMMENT (26, 33): Comment expressed concern over the location of a proposed 2007 development across the street from a county jail. The commenter suggested that the location of a development in close proximity to a jail is not consistent with the Department's mission to provide safe housing. Additional comment suggested that the distance from the development to the negative feature be measured from the closest residential building, rather than site boundary. The commenter asserted that the current language penalizes developments on large sites.
STAFF RESPONSE: The Department appreciates the comment regarding proximity to criminal justice facilities, and the safety of potential tenants. Although staff understands the concern, it is important to consider that proximity to a criminal justice facility may also be seen as a positive in providing needed housing for workers in the facility. Regarding the location from which measurements should be made, staff feels that measuring from the development site's boundaries is more reasonable. The entire development site is available for use by tenants, and it is therefore reasonable to consider the site boundaries, rather than the closest building's boundaries, proximity to negative features. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(22)(B)(vi) - Selection Criteria - Negative Site Features, Sexually Oriented Businesses
COMMENT (33, 36, 40, 44): Comment requested clarification of what constitutes a sexually oriented business.
STAFF RESPONSE: Staff concurs and proposes the following language which utilizes the legislative definition for a sexually oriented business:
(vi) Developments where the buildings are located adjacent to or within 300 feet of a sexually oriented business will have 1 point deducted from their score. For the purpose of this clause, sexually oriented business shall be defined as stated in §243.002 of the Texas Government Code.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(22)(B)(vii) - Selection Criteria - Negative Site Features, Accident Zones or Flight Paths of Airports
COMMENT (4, 13, 32, 33, 36, 39, 40, 42, 44): Comment suggested that "flight path" is too broad a term and that a development's location in an airport "clear zone" should trigger a point deduction under negative site features. Additional comment suggested that point deductions for location in a "flight path" be deleted from the QAP, and pointed out that flight path maps are not available to the public, or as an alternative, that a definition for flight path be established. The commenter asserted that sites within flight paths, but far from active airports are not at risk of accidents and excessive noise. Further comment asserts that the environmental assessment required by the Department includes a noise study that is a good indicator of the impact of noise, and is more appropriate than deducting points. Other comment suggested that the term "flight path" lacks specificity and that some FAA standard should be used. Comment suggested that a limitation on the location of a development in the flight patch closest to the airport, for example within a 1 mile radius, in urban areas. Comment also suggested that if there is existing residential development near the development proposed in a flight path, the development should be permitted.
STAFF RESPONSE: The Department has conducted research regarding a definition for "flight path" and concurs with comment that a clear definition or list of such areas is not readily available from any agency that regulates air traffic or local airports. Therefore, staff recommends the following revision:
(vii) Developments where the buildings are located within the accident zones or clear zones for commercial or military airports will have 1 point deducted from their score.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(25)(B) - Selection Criteria, Sponsor Characteristics
COMMENT (32): Comment expressed concern about the requirement that a Historically Underutilized Business ("HUB") materially participate in the development throughout the compliance period. The commenter asserted that a HUB should be allowed to sell its general partner interest in year 10 if it so desires. The commenter also asserted that requiring a HUB to stay in a deal or sell its interest to another HUB restricts the pool of purchasers of the general partner interest.
STAFF RESPONSE: Although staff appreciates the comment, the participation of a HUB is not a threshold requirement and may be selected at the option of the applicant. However, once selected the Department wants to ensure that the participation of a HUD continues for the development. It is the goal of the Department to encourage meaningful participation by HUBs, not to award points for participation that may easily be terminated. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(i)(29)(B) - Selection Criteria - Scoring Imposing Penalties
COMMENT (2, 32): Comment suggested that penalty points with regard to removal by a lender, equity provider, or limited partners be limited to removals occurring within six years of an allocation of tax credits. Comment asserted that flat rents, increasing utility allowances, increasing operating expense, and other uncontrollable market conditions may cause good, qualified developers to be in default on an older property. The commenter suggested that the penalty period should correspond to the typical guarantee period. Additional comment suggested that the language be revised to assess the penalty on the Applicant and that in order for the penalty to be imposed, a party must have served as the general partner or managing member of a limited partnership or limited liability company owning a tax credit property.
STAFF RESPONSE: The requirement to apply this penalty is statutory and statute does not provide for a limitation on the time during which a removal may have occurred to warrant the penalty, nor does it limit penalties only to those with a certain level of participation. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.9(j)(1)(A) - Tie Breaker Factors
ADMINISTRATIVE CHANGE: Staff recommends the following revision to clarify the applicability of this subparagraph to Adaptive Reuse:
(A) Applications involving any Rehabilitation or Reconstruction of existing Units will win this first tier tie breaker over Applications involving solely New Construction or Adaptive Reuse.
BOARD RESPONSE: Accepted staff's recommendation.
§50.11(a)(4) - Public Hearings
COMMENT (28): Comment suggested that public hearings should be held in locations that are more convenient for members of the community that are impacted by proposed developments. The commenter asserted that a large number of community members were present at a meeting regarding a 2007 development that was held in the community, but that a smaller group attended the Department's public hearing because the location was less convenient.
STAFF RESPONSE: Staff is sensitive to the needs of the communities impacted by proposed developments and the Department currently offers extensive opportunities for public input, in the form of public hearings, public comment at monthly board meetings, and written comment. The Department does hold public hearings near the proposed development site for specific Tax-Exempt Bond Developments that use the Department as the bond issuer. In an effort to make public hearings more accessible to the public, the Department holds a greater number of public hearings than is required by statute for Competitive Housing Tax Credit applications. Due to the large number of applications and the variety of locations covered by these applications, it is infeasible for staff to hold public hearings near every location that could be impacted by a housing tax credit development. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.12(b) - Applicability of Rules for Tax-Exempt Bond Developments
COMMENT (36): Comment requested clarification as to whether a letter of consistency with the local consolidated plan, or a statement affirming the need for affordable housing is required in the 2008 QAP.
STAFF RESPONSE: To be consistent with this requirement under the Competitive Housing Tax Credit program the letter of consistency with the local consolidated plan, or a statement affirming the need for affordable housing will only be required in instances where the development is located within the boundaries of a political subdivision that does not have a zoning ordinance. This requirement is already outlined in §50.9(h)(7)(B) of the QAP. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.14(a)(1) and (3) - Carryover
ADMINISTRATIVE CHANGE: Staff recommends the following revisions to clarify the applicability of these paragraphs to Adaptive Reuse:
(1) The Development Owner for all New Construction and Adaptive Reuse Developments must have purchased the Development Site.
(3) For all Developments involving New Construction or Adaptive Reuse, evidence of the availability of all necessary utilities/services to the Development site must be provided. Necessary utilities include natural gas (if applicable), electric, trash, water, and sewer. Such evidence must be a letter or a monthly utility bill from the appropriate municipal/local service provider. If utilities are not already accessible, then the letter must clearly state: an estimated time frame for provision of the utilities, an estimate of the infrastructure cost, and an estimate of any portion of that cost that will be borne by the Development Owner. Letters must be from an authorized individual representing the organization which actually provides the services. Such documentation should clearly indicate the Development property. If utilities are not already accessible (undeveloped areas), then the letter should not be older than three months from the first day of the Application Acceptance Period.
BOARD RESPONSE: Accepted staff's recommendation.
§50.15(b)(4) - Cost Certification
COMMENT (2, 33, 36, 44): Comment suggested that IRS Forms 8609 should not be withheld for a development for which the applicant is in material noncompliance on other properties. Commenters assert that this penalty would ultimately affect the investor community, possibly resulting in a decrease in the number of investors willing to do business in Texas.
STAFF RESPONSE: Staff appreciates the comment with regard to the issuance of IRS Forms 8609. The QAP does not state that IRS Forms 8609 will be withheld as a result of the compliance evaluation, but merely that the evaluation will be performed. It is the intent of staff that should an event such as this occur, the information would be shared with the Executive Director and possibly the Board prior to issuance of the IRS Forms 8609. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.16(k) Return of Credits
COMMENT (47): Comment provided support for the new language penalizing applicants who return tax credits after the Carryover deadline. Comment asserted that returns negatively affect the community in which the award was made, and affects future tax credits that the Department is able to receive from National Pool.
STAFF RESPONSE: Staff concurs and appreciates the feedback regarding the revised language.
BOARD RESPONSE: Accepted staff's recommendation.
§50.17(c) - Challenges
COMMENT (33, 36, 40, 44): Comment supported the imposition of submission deadlines for challenges to active applications.
STAFF RESPONSE: Staff concurs and appreciates the feedback regarding the revised language.
BOARD RESPONSE: Accepted staff's recommendation.
§50.17(d) - Amendment of Applications
COMMENT (32): Comment asserted that it is imperative that this paragraph be revised to accommodate changes to §50.9(c), Adherence to Obligations.
Staff Response: Refer to Staff Response for §50.9(c). Staff recommends no change at this time.
BOARD RESPONSE: Accepted staff's recommendation.
§50.20(h) - Building Inspection Fees
COMMENT (40): Comment requested that the language from the 2006 QAP be reinstated. The commenter requested that developments that receive financing through USDA not have construction inspections performed by the Department, and as a result, not be required to pay a building inspection fee.
STAFF RESPONSE: Although it may be more efficient to use the same inspections, the two agencies tend to inspect for different items. Therefore, to ensure that the Development is being completed as presented, the Department does require construction inspections. The 2006 QAP language provided that "Developments receiving financing through TX-USDA-RHS that will not have construction inspections performed through the Department will be exempt from the payment of an inspection fee" (emphasis added). The 2006 language is no longer applicable because the Department does perform construction inspections for all developments financed through USDA. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
§50.20(l) - Extension and Amendment Requests
COMMENT (32): Comment suggested that the fees required under this paragraph be examined to provide relief to applicants who, because of recent requirements to submit amendment requests in advance of the action for which the amendment is being requested, may be subject to multiple amendment fees. The commenter suggested that perhaps amendments that must go before the Board are subject to a higher fee than those that may be processed administratively; or amendments requested in advance are subject to a lower fee than those not requested in advance; or that the first amendment be subject to a higher fee than subsequent amendments.
STAFF RESPONSE: Staff appreciates the comment related to the issue of multiple amendment fee payments. However, the Department is committed to processes that ensure that applicants adhere to those obligations made in the application. Providing relief to applicants that repeatedly deviate from the representations made in the application is not consistent with the goal of minimizing those deviations. Staff recommends no change.
BOARD RESPONSE: Accepted staff's recommendation.
The new sections are adopted pursuant to authority granted in Chapter 2306, Texas Government Code, Subchapter DD ("Low Income Housing Tax Credit Program"), which requires the Department to administer the low income housing tax credit program; and specifically §2306.67022, which requires the Department to adopt annually a qualified allocation plan.
§50.1.Purpose and Authority; Program Statement; Allocation Goals.
(a) Purpose and Authority. The Rules in this chapter apply to the allocation by the Texas Department of Housing and Community Affairs (the Department) of Housing Tax Credits authorized by applicable federal income tax laws. The Internal Revenue Code of 1986, §42, (the "Code") as amended, provides for credits against federal income taxes for owners of qualified low-income rental housing Developments. That section provides for the allocation of the available tax credit amount by state housing credit agencies. Pursuant to Chapter 2306, Subchapter DD, Texas Government Code, the Department is authorized to make Housing Credit Allocations for the State of Texas. As required by the Internal Revenue Code, §42(m)(1), the Department developed this Qualified Allocation Plan (QAP) which is set forth in §§50.1 - 50.23 of this chapter. Sections in this chapter establish procedures for applying for and obtaining an allocation of Housing Tax Credits, along with ensuring that the proper threshold criteria, selection criteria, priorities and preferences are followed in making such allocations.
(b) Program Statement. The Department shall administer the program to encourage the development and preservation of appropriate types of rental housing for households that have difficulty finding suitable, accessible, affordable rental housing in the private marketplace; maximize the number of suitable, accessible, affordable residential rental units added to the state's housing supply; prevent losses for any reason to the state's supply of suitable, accessible, affordable residential rental units by enabling the Rehabilitation of rental housing or by providing other preventive financial support; and provide for the participation of for-profit organizations and provide for and encourage the participation of nonprofit organizations in the acquisition, development and operation of accessible affordable housing developments in rural and urban communities. (§2306.6701)
(c) Allocation Goals. It shall be the goal of this Department and the Board, through these provisions, to encourage diversity through broad geographic allocation of tax credits within the state, and in accordance with the regional allocation formula; to promote maximum utilization of the available tax credit amount; and to allocate credits among as many different entities as practicable without diminishing the quality of the housing that is being built. The processes and criteria utilized to realize this goal are described in §§50.7, 50.8 and 50.9 of this chapter, without in any way limiting the effect or applicability of all other provisions of this title. (General Appropriation Act, Article VII, Rider 8(e))
§50.2.Coordination with Rural Agencies.
To ensure maximum utilization and optimum geographic distribution of tax credits in rural areas, and to provide for sharing of information, efficient procedures, and fulfillment of Development requirements in rural areas, the Department will coordinate on existing, Rehabilitation, and New Construction housing Developments financed by TRDO-USDA; and will administer the Rural Regional Allocation with the Texas Office of Rural Community Affairs (ORCA). Through participation in hearings and meetings, ORCA will assist in developing all Threshold, Selection and Underwriting Criteria applied to Applications eligible for the Rural Regional Allocation. The Criteria will be approved by that Agency. To ensure that the Rural Regional Allocation receives a sufficient volume of eligible Applications, the Department and ORCA shall jointly implement outreach, training, and rural area capacity building efforts. (§2306.6723)
§50.3.Definitions.
The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Adaptive Reuse--The renovation or rehabilitation of an existing non-residential building or structure (e.g., school, warehouse, office, hospital, etc., including physical alterations that modify the building's previous or original intended use. If any Units are built outside the original building footprint, the Development will be considered New Construction.
(2) Administrative Deficiencies--The absence of information or inconsistent information in the Application as is required under §§50.5, 50.6, 50.8 and 50.9 of this chapter, unless determined by the Department as unable to be corrected.
(3) Affiliate--An individual, corporation, partnership, joint venture, limited liability company, trust, estate, association, cooperative or other organization or entity of any nature whatsoever that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with any other Person, and specifically shall include parents or subsidiaries. Affiliates also include all General Partners, Special Limited Partners and Principals with an ownership interest unless the entity is an experienced Developer as described in §50.9(h)(9)(D) of this chapter.
(4) Agreement and Election Statement--A document in which the Development Owner elects, irrevocably, to fix the Applicable Percentage with respect to a building or buildings, as that in effect for the month in which the Department and the Development Owner enter into a binding agreement as to the housing credit dollar amount to be allocated to such building or buildings.
(5) Applicable Fraction--The fraction used to determine the Qualified Basis of the qualified low-income building, which is the smaller of the Unit fraction or the floor space fraction, all determined as provided in the Code, §42(c)(1).
(6) Applicable Percentage--The percentage used to determine the amount of the Housing Tax Credit for any Development (New Construction, Reconstruction, and/or Rehabilitation), as defined more fully in the Code, §42(b).
(A) For purposes of the Application, the Applicable Percentage will be projected at:
(i) 40 basis points over the current applicable percentage for 70% present value credits, pursuant to §42(b) of the Code for the month in which the Application is submitted to the Department, or
(ii) 15 basis points over the current applicable percentage for 30% present value credits, pursuant to §42(b) of the Code for the month in which the Application is submitted to the Department.
(B) For purposes of making a credit recommendation at any other time, the Applicable Percentage will be based in order of priority on:
(i) The percentage indicated in the Agreement and Election Statement, if executed; or
(ii) The actual applicable percentage as determined by the Code, §42(b), if all or part of the Development has been placed in service and for any buildings not placed in service the percentage will be the actual percentage as determined by the Code, §42(b) for the most current month; or
(iii) The percentage as calculated in subparagraph (A) of this paragraph if the Agreement and Election Statement has not been executed and no buildings have been placed in service.
(7) Applicant--Any Person or Affiliate of a Person who files a Pre-Application or an Application with the Department requesting a Housing Credit Allocation. (§2306.6702)
(8) Application--An application, in the form prescribed by the Department, filed with the Department by an Applicant, including any exhibits or other supporting material. (§2306.6702)
(9) Application Acceptance Period--That period of time during which Applications for a Housing Credit Allocation from the State Housing Credit Ceiling may be submitted to the Department, December 3, 2007 through February 29, 2008, as more fully described in §§50.8 - 50.12 of this chapter. For Tax-Exempt Bond Developments this period is the date the Volumes 1 and 2 are submitted or the date the reservation is issued by the Texas Bond Review Board, whichever is earlier.
(10) Application Round--The period beginning on the date the Department begins accepting Applications for the State Housing Credit Ceiling and continuing until all available Housing Tax Credits from the State Housing Credit Ceiling (as stipulated by the Department) are allocated, but not extending past the last day of the calendar year. (§2306.6702)
(11) Application Submission Procedures Manual--The manual produced and amended from time to time by the Department which sets forth procedures, forms, and guidelines for the filing of Pre-Applications and Applications for Housing Tax Credits.
(12) Area--
(A) The geographic area contained within the boundaries of:
(i) An incorporated place or
(ii) Census Designated Place (CDP) as established by the U.S. Census Bureau for the most recent Decennial Census.
(B) For Developments located outside the boundaries of an incorporated place or CDP, the Development shall take up the Area characteristics of the incorporated place or CDP whose boundary is nearest to the Development site.
(13) Area Median Gross Income (AMGI)--Area median gross household income, as determined for all purposes under and in accordance with the requirements of the Code, §42.
(14) At-Risk Development--A Development that: (§2306.6702)
(A) has received the benefit of a subsidy in the form of a below-market interest rate loan, interest rate reduction, rental subsidy, Section 8 housing assistance payment, rental supplement payment, rental assistance payment, or equity incentive under at least one of the following federal laws, as applicable:
(i) Sections 221(d)(3) and (5), National Housing Act (12 U.S.C. §17151);
(ii) Section 236, National Housing Act (12 U.S.C. §1715z-1);
(iii) Section 202, Housing Act of 1959 (12 U.S.C. §1701q);
(iv) Section 101, Housing and Urban Development Act of 1965 (12 U.S.C. §1701s);
(v) The Section 8 Additional Assistance Program for housing Developments with HUD-Insured and HUD-Held Mortgages administered by the United States Department of Housing and Urban Development;
(vi) The Section 8 Housing Assistance Program for the Disposition of HUD-Owned Projects administered by the United States Department of Housing and Urban Development;
(vii) Sections 514, 515, and 516, Housing Act of 1949 (42 U.S.C. §§1484, 1485, and 1486); or
(viii) Section 42, of the Internal Revenue Code of 1986 (26 U.S.C. §42), and
(B) Is subject to the following conditions:
(i) The stipulation to maintain affordability in the contract granting the subsidy is nearing expiration (expiration will occur within two calendar years of July 31 of the year the Application is submitted); or
(ii) The federally insured mortgage on the Development is eligible for prepayment or is nearing the end of its mortgage term (the term will end within two calendar years of July 31 of the year the Application is submitted).
(C) An Application for a Development that includes the demolition of the existing Units which have received the financial benefit described in subparagraph (A) of this paragraph will not qualify as an At-Risk Development unless the redevelopment will include the same site.
(D) Developments must be at risk of losing all affordability from all of the financial benefits available on the Development, provided such benefit constitutes a subsidy, described in subparagraph (A) of this paragraph on the site. However, Developments that have an opportunity to retain or renew any of the financial benefit described in subparagraph (A) of this paragraph must retain or renew all possible financial benefit to qualify as an At-Risk Development.
(E) Nearing expiration on a requirement to maintain affordability includes Developments eligible to request a qualified contract under §42 of the Code. Evidence must be provided in the form of a copy of the recorded LURA, the first years' IRS Forms 8609 for all buildings showing Part II completed and, if applicable, documentation from the original application regarding the right of first refusal.
(15) Bedroom--A portion of a Unit which is no less than 100 square feet; has no width or length less than 8 feet; has at least one window that provides exterior access; and has at least one closet that is not less than 2 feet deep and 3 feet wide and high enough to accommodate 5 feet of hanging space. A den, study or other similar space that could reasonably function as a bedroom and meets this definition is considered a bedroom.
(16) Board--The governing Board of the Department. (§2306.004)
(17) Carryover Allocation--An allocation of current year tax credit authority by the Department pursuant to the provisions of the Code, §42(h)(1)(C) and Treasury Regulations, §1.42-6.
(18) Carryover Allocation Document--A document issued by the Department, and executed by the Development Owner, pursuant to §50.14(a) of this chapter.
(19) Carryover Allocation Procedures Manual--The manual produced and amended from time to time by the Department which sets forth procedures, forms, and guidelines for filing Carryover Allocation requests.
(20) Code--The Internal Revenue Code of 1986, as amended from time to time, together with any applicable regulations, rules, rulings, revenue procedures, information statements or other official pronouncements issued thereunder by the United States Department of the Treasury or the Internal Revenue Service.
(21) Colonia--A geographic Area that is located in a county some part of which is within 150 miles of the international border of this state, that consists of 11 or more dwellings that are located in close proximity to each other in an area that may be described as a community or neighborhood, and that (§2306.581):
(A) Has a majority population composed of individuals and families of low-income and very low-income, based on the federal Office of Management and Budget poverty index, and meets the qualifications of an economically distressed Area under §17.921, Water Code; or
(B) Has the physical and economic characteristics of a colonia, as determined by the Department.
(22) Commitment Notice--A notice issued by the Department to a Development Owner pursuant to §50.13 of this chapter and also referred to as the "commitment."
(23) Community Revitalization Plan--A published document under any name, approved and adopted by the local governing body by ordinance or resolution, that targets specific geographic areas for revitalization and development of residential developments.
(24) Competitive Housing Tax Credits--Tax credits available from the State Housing Credit Ceiling.
(25) Compliance Period--With respect to a building, the period of 15 taxable years, beginning with the first taxable year of the Credit Period pursuant to the Code, §42(i)(1).
(26) Control--(including the terms "Controlling," "Controlled by", and/or "under common Control with") the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any Person, whether through the ownership of voting securities, by contract or otherwise, including specifically ownership of more than 50% of the General Partner interest in a limited partnership, or designation as a managing General Partner of a limited liability company.
(27) Cost Certification Procedures Manual--The manual produced, and amended from time to time, by the Department which sets forth procedures, forms, and guidelines for filing requests for IRS Form(s) 8609 for Developments placed in service under the Housing Tax Credit Program.
(28) Credit Period--With respect to a building within a Development, the period of ten taxable years beginning with the taxable year the building is placed in service or, at the election of the Development Owner, the succeeding taxable year, as more fully defined in the Code, §42(f)(1).
(29) Department--The Texas Department of Housing and Community Affairs, an agency of the State of Texas, established by Chapter 2306, Texas Government Code, including Department employees and/or the Board. (§2306.004)
(30) Determination Notice--A notice issued by the Department to the Development Owner of a Tax-Exempt Bond Development which states that the Development may be eligible to claim Housing Tax Credits without receiving an allocation of Housing Tax Credits from the State Housing Credit Ceiling because it satisfies the requirements of this QAP; sets forth conditions which must be met by the Development before the Department will issue the IRS Form(s) 8609 to the Development Owner; and specifies the Department's determination as to the amount of tax credits necessary for the financial feasibility of the Development and its viability as a rent restricted Development throughout the extended use period. (§42(m)(1)(D))
(31) Developer--Any Person entering into a contract with the Development Owner to provide development services with respect to the Development and receiving a fee for such services (which fee cannot exceed the limits identified in §50.9(d)(6)(B) of this chapter) and any other Person receiving any portion of such fee, whether by subcontract or otherwise.
(32) Development--A proposed qualified and/or approved low-income housing project, as defined by the Code, §42(g), for Adaptive Reuse, New Construction, reconstruction, or Rehabilitation, that consists of one or more buildings containing multiple Units, and that, if the Development shall consist of multiple buildings, is financed under a common plan and is owned by the same Person for federal tax purposes, and the buildings of which are either:
(A) Located on a single site or contiguous site; or
(B) Located on scattered sites and contain only rent-restricted units. (§2306.6702)
(33) Development Consultant--Any Person (with or without ownership interest in the Development) who provides professional services relating to the filing of an Application, Carryover Allocation Document, and/or cost certification documents.
(34) Development Funding--Means:
(A) a loan or grant; or
(B) an in-kind contribution, including a donation of real property, a fee waiver for a building permit or for water or sewer service, or a similar contribution that:
(i) provides an economic benefit; and
(ii) results in a quantifiable cost reduction for the applicable Development. (§2306.004(4-a))
(35) Development Owner--Any Person, General Partner, or Affiliate of a Person who owns or proposes a Development or expects to acquire Control of a Development under a purchase contract or ground lease approved by the Department. (§2306.6702)
(36) Development Site--The area, or if scattered site areas, for which the Development is proposed to be located and is to be under control pursuant to §50.9(h)(7)(A) of this chapter.
(37) Development Team--All Persons or Affiliates thereof that play a role in the Development, construction, Rehabilitation, management and/or continuing operation of the subject Property, which will include any Development Consultant and Guarantor.
(38) Disaster Area--An area that has been declared as a disaster pursuant to §418.014 of Texas Government Code.
(39) Economically Distressed Area--Consistent with §17.921 of Texas Water Code, an Area in which:
(A) Water supply or sewer services are inadequate to meet minimal needs of residential users as defined by Texas Water Development Board rules;
(B) Financial resources are inadequate to provide water supply or sewer services that will satisfy those needs; and
(C) An established residential subdivision was located on June 1, 1989, as determined by the Texas Water Development Board.
(40) Eligible Basis--With respect to a building within a Development, the building's Eligible Basis as defined in the Code, §42(d).
(41) Executive Award and Review Advisory Committee ("The Committee")--A Departmental committee that will develop funding priorities and make funding and allocation recommendations to the Board based upon the evaluation of an Application in accordance with the housing priorities as set forth in Chapter 2306 of the Texas Government Code, and as set forth herein, and the ability of an Applicant to meet those priorities. (§2306.1112)
(42) Existing Residential Development--Any Development Site which contains 4 or more existing residential Units at the time the Volume I is submitted to the Department.
(43) Extended Housing Commitment--An agreement between the Department, the Development Owner and all successors in interest to the Development Owner concerning the extended housing use of buildings within the Development throughout the extended use period as provided in the Code, §42(h)(6). The Extended Housing Commitment with respect to a Development is expressed in the LURA applicable to the Development.
(44) General Contractor--One who contracts for the construction or Rehabilitation of an entire Development, rather than a portion of the work. The General Contractor hires subcontractors, such as plumbing contractors, electrical contractors, etc., coordinates all work, and is responsible for payment to the subcontractors. This party may also be referred to as the "contractor."
(45) General Partner--That partner, or collective of partners, identified as the general partner of the partnership that is the Development Owner and that has general liability for the partnership. In addition, unless the context shall clearly indicate the contrary, if the Development Owner in question is a limited liability company, the term "General Partner" shall also mean the managing member or other party with management responsibility for the limited liability company.
(46) Governmental Entity--Includes federal or state agencies, departments, boards, bureaus, commissions, authorities, and political subdivisions, special districts and other similar entities.
(47) Governmental Instrumentality--A legal entity such as a housing authority of a city or county, a housing finance corporation, or a municipal utility, which is created by a local political subdivision under statutory authority and which instrumentality is authorized to transact business for the political subdivision.
(48) Grant--Financial assistance that is awarded in the form of money to a housing sponsor or Development for a specific purpose and that is not required to be repaid. A Grant includes a forgivable loan. (§2306.004)
(49) Guarantor--Any Person that provides, or is anticipated to provide, a guaranty for the equity or debt financing for the Development.
(50) Historically Underutilized Businesses (HUB)--Any entity defined as a historically underutilized business with its principal place of business in the State of Texas in accordance with Chapter 2161, Texas Government Code.
(51) Housing Credit Agency--A Governmental Entity charged with the responsibility of allocating Housing Tax Credits pursuant to the Code, §42. For the purposes of this chapter, the Department is the sole "Housing Credit Agency" of the State of Texas.
(52) Housing Credit Allocation--An allocation by the Department to a Development Owner for a specific Application of Housing Tax Credits in accordance with the provisions of this chapter.
(53) Housing Credit Allocation Amount--With respect to a Development or a building within a Development, that amount the Department determines to be necessary for the financial feasibility of the Development and its viability as a Development throughout the affordability period and which it allocates to the Development.
(54) Housing Tax Credit ("tax credits")--A tax credit allocated, or for which a Development may qualify, under the Housing Tax Credit Program, pursuant to the Code, §42. (§2306.6702)
(55) HUD--The United States Department of Housing and Urban Development, or its successor.
(56) Ineligible Building Types--Those Developments which are ineligible, pursuant to this QAP, for funding under the Housing Tax Credit Program, as follows:
(A) Hospitals, nursing homes, trailer parks, dormitories (or other buildings that will be predominantly occupied by students) or other facilities which are usually classified as transient housing (other than certain specific types of transitional housing for the homeless and single room occupancy units, as provided in the Code, §42(i)(3)(B)(iii) and (iv)) are not eligible. However, structures formerly used as hospitals, nursing homes or dormitories are eligible for Housing Tax Credits if the Development involves the conversion of the building to a non-transient multifamily residential Development. Refer to IRS Revenue Ruling 98-47 for clarification of assisted living.
(B) Any Qualified Elderly Development or age restricted buildings in Intergenerational Housing Developments of two stories or more that does not include elevator service for any Units or living space above the first floor.
(C) Any Qualified Elderly Development or age restricted buildings in Intergenerational Housing Developments with any Units having more than two bedrooms with the exception of up to three employee Units reserved for the use of the manager, maintenance, and/or security officer. These employee Units must be specifically designated as such.
(D) Any Development with building(s) with four or more stories that does not include an elevator.
(E) Any Qualified Elderly Development or age restricted buildings in Intergenerational Housing Developments proposing more than 70% two-bedroom Units.
(F) Any Development that violates the Integrated Housing Rule of the Department, §1.15 of this title.
(G) Any Development located in an Urban Area involving any New Construction or Adaptive Reuse (excluding New Construction of non-residential buildings) of additional Units (other than a Qualified Elderly Development, a Development composed entirely of single family dwellings, and certain specific types of transitional housing for the homeless and single room occupancy units, as provided in the Code, §42(i)(3)(B)(iii) and (iv)) in which any of the designs in clauses (i) - (iv) of this subparagraph are proposed. For Applications involving a combination of single family detached dwellings and multifamily dwellings, the percentages in this subparagraph do not apply to the single family detached dwellings. For Intergenerational Housing Applications, the percentages in this subparagraph do not apply to buildings that are restricted by the age requirements of a Qualified Elderly Development. An Application may reflect a total of Units for a given bedroom size greater than the percentages in clauses (i) - (iv) of this subparagraph to the extent that the increase is only to reach the next highest number divisible by four.
(i) More than 30% of the total Units are one bedroom Units; or
(ii) More than 55% of the total Units are two bedroom Units; or
(iii) More than 40% of the total Units are three bedroom Units; or
(iv) More than 5% of the total Units in the Development with four or more bedrooms.
(H) Any Development that includes age restricted units that are not consistent with the Intergenerational Housing definition and policy or the definition of a Qualified Elderly Development.
(I) Any Development that contains residential Units either designated for a single occupational group, or through a preference for a single occupational group, violates the general public use requirement under Treasury Regulation §1.42-9.
(57) Intergenerational Housing--Housing that includes specific Units that are restricted to the age requirements of a Qualified Elderly Development and specific Units that are not age restricted in the same Development that:
(A) Have separate and specific buildings exclusively for the age restricted Units,
(B) Have separate and specific leasing offices and leasing personnel exclusively for the age restricted Units,
(C) Have separate and specific entrances, and other appropriate security measures for the age restricted Units,
(D) Provide shared social service programs that encourage intergenerational activities but also provide separate amenities for each age group,
(E) Share the same Development Site,
(F) Are developed and financed under a common plan and owned by the same Person for federal tax purposes; and
(G) Meet the requirements of the federal Fair Housing Act.
(58) IRS--The Internal Revenue Service, or its successor.
(59) Land Use Restriction Agreement (LURA)--An agreement between the Department and the Development Owner which is binding upon the Development Owner's successors in interest, that encumbers the Development with respect to the requirements of this chapter, Chapter 2306, Texas Government Code, and the requirements of the Code, §42. (§2306.6702)
(60) Local Political Subdivision--A county or municipality (city) in Texas. For purposes of §50.9(i)(5) of this chapter, a local political subdivision may act through a Government Instrumentality such as a housing authority, housing finance corporation, or municipal utility even if the Government Instrumentality's creating statute states that the entity is not itself a "political subdivision."
(61) Material Noncompliance--As defined in Chapter 60, Subchapter A of this title.
(62) Minority Owned Business--A business entity at least 51% of which is owned by members of a minority group or, in the case of a corporation, at least 51% of the shares of which are owned by members of a minority group, and that is managed and Controlled by members of a minority group in its daily operations. Minority group includes women, African Americans, American Indians, Asian Americans, and Mexican Americans and other Americans of Hispanic origin. (§2306.6734)
(63) Neighborhood Organization--An organization that is composed of persons living near one another within the organization's defined boundaries for the neighborhood and that has a primary purpose of working to maintain or improve the general welfare of the neighborhood. A neighborhood organization includes a homeowners' association or a property owners' association. (§2306.001(23-a))
(64) New Construction--Any construction of a Development or a portion of a Development that does not meet the definition of Rehabilitation (which includes Reconstruction).
(65) ORCA--Office of Rural Community Affairs, as established by Chapter 487 of Texas Government Code.
(66) Person--Without limitation, any natural person, corporation, partnership, limited partnership, joint venture, limited liability company, trust, estate, association, cooperative, government, political subdivision, agency or instrumentality or other organization or entity of any nature whatsoever and shall include any group of Persons acting in concert toward a common goal, including the individual members of the group.
(67) Persons with Disabilities--A person who:
(A) Has a physical, mental or emotional impairment that:
(i) Is expected to be of a long, continued and indefinite duration,
(ii) Substantially impedes his or her ability to live independently, and
(iii) Is of such a nature that the disability could be improved by more suitable housing conditions,
(B) Has a developmental disability, as defined in the Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C. §15002), or
(C) Has a disability, as defined in 24 CFR §5.403.
(68) Persons with Special Needs--Persons with alcohol and/or drug addictions, Colonia residents, Persons with Disabilities, victims of domestic violence, persons with HIV/AIDS, homeless populations and migrant farm workers.
(69) Pre-Application--A preliminary application, in a form prescribed by the Department, filed with the Department by an Applicant prior to submission of the Application, including any required exhibits or other supporting material, as more fully described in this title. (§2306.6704)
(70) Pre-Application Acceptance Period--That period of time during which Competitive Housing Tax Credit Pre-Applications for a Housing Credit Allocation from the State Housing Credit Ceiling may be submitted to the Department.
(71) Principal--The term Principal is defined as Persons that will exercise Control over a partnership, corporation, limited liability company, trust, or any other private entity. In the case of:
(A) Partnerships, Principals include all General Partners, Special Limited Partners and Principals with ownership interest;
(B) Corporations, Principals include any officer authorized by the board of directors to act on behalf of the corporation, including the president, vice president, secretary, treasurer and all other executive officers, and each stock holder having a 10% or more interest in the corporation; and
(C) Limited liability companies, Principals include all managing members, members having a 10% or more interest in the limited liability company or any officer authorized to act on behalf of the limited liability company.
(72) Property--The real estate and all improvements thereon which are the subject of the Application (including all items of personal property affixed or related thereto), whether currently existing or proposed to be built thereon in connection with the Application.
(73) Qualified Allocation Plan (QAP)--
(A) As defined in the Code, §42(m)(1)(B): Any plan which sets forth selection criteria to be used to determine housing priorities of the housing credit agency which are appropriate to local conditions; which also gives preference in allocating housing credit dollar amounts among selected projects to projects serving the lowest-income tenants, projects obligated to serve qualified tenants for the longest periods, and projects which are located in qualified census tracts and the development of which contributes to a concerted community revitalization plan; and which provides a procedure that the agency (or an agent or other private contractor of such agency) will follow in monitoring for noncompliance with the provisions of the Code, §42 and in notifying the Internal Revenue Service of such noncompliance which such agency becomes aware of and in monitoring for noncompliance with habitability standards through regular site visits.
(B) As defined in §2306.6702, Texas Government Code: A plan adopted by the board that provides the threshold, scoring, and underwriting criteria based on housing priorities of the Department that are appropriate to local conditions; provides a procedure for the Department, the Department's agent, or another private contractor of the Department to use in monitoring compliance with the qualified allocation plan and this subchapter; and consistent with §2306.6710(e), gives preference in Housing Tax Credit allocations to Developments that, as compared to the other Developments:
(i) When practicable and feasible based on documented, committed, and available third-party funding sources, serve the lowest-income tenants per Housing Tax Credit; and
(ii) Produce for the longest economically feasible period the greatest number of high quality units committed to remaining affordable to any tenants who are income-eligible under the low-income housing tax credit program.
(74) Qualified Basis--With respect to a building within a Development, the building's Eligible Basis multiplied by the Applicable Fraction, within the meaning of the Code, §42(c)(1).
(75) Qualified Census Tract--Any census tract which is so designated by the Secretary of HUD in accordance with the Code, §42(d)(5)(C)(ii).
(76) Qualified Elderly Development--A Development which meets the requirements of the federal Fair Housing Act and:
(A) Is intended for, and solely occupied by, individuals 62 years of age or older; or
(B) Is intended and operated for occupancy by at least one individual 55 years of age or older per Unit, where at least 80% of the total housing Units are occupied by at least one individual who is 55 years of age or older; and where the Development Owner publishes and adheres to policies and procedures which demonstrate an intent by the owner and manager to provide housing for individuals 55 years of age or older. (See 42 U.S.C. §3607(b))
(77) Qualified Market Analyst--A real estate appraiser certified or licensed by the Texas Appraiser Licensing and Certification Board, a real estate consultant, or other professional currently active in the subject property's market area who demonstrates competency, expertise, and the ability to render a high quality written report. The individual's performance, experience, and educational background will provide the general basis for determining competency as a Market Analyst. Competency will be determined by the Department, in its sole discretion. The Qualified Market Analyst must be a Third Party.
(78) Qualified Nonprofit Organization--An organization that is described in the Code, §501(c)(3) or (4), as these cited provisions may be amended from time to time, that is exempt from federal income taxation under the Code, §501(a), that is not affiliated with or Controlled by a for profit organization, and includes as one of its exempt purposes the fostering of low-income housing within the meaning of the Code, §42(h)(5)(C). A Qualified Nonprofit Organization may select to compete in one or more of the Set-Asides, including, but not limited to, the nonprofit Set-Aside, the At-Risk Development Set-Aside and the TRDO-USDA Allocation. (§2306.6729)
(79) Qualified Nonprofit Development--A Development in which a Qualified Nonprofit Organization (directly or through a partnership or wholly-owned subsidiary):
(A) Holds a controlling interest in the Development proposed to be financed from the nonprofit allocation pool (§2306.6729); and
(B) Owns an interest in the Development and materially participates (within the meaning of the Code, §469(h), as it may be amended from time to time) in its development and operation throughout the Compliance Period, and otherwise meets the requirements of the Code, §42(h)(5). (§2306.6729)
(80) Reference Manual--That certain manual, and any amendments thereto, produced by the Department which sets forth reference material pertaining to the Housing Tax Credit Program.
(81) Rehabilitation--The improvement or modification of an Existing Residential Development through alteration, incidental addition or enhancement. The term includes the demolition of an Existing Residential Development and the reconstruction of a Development on the Development Site, but does not include Adaptive Reuse. Rehabilitation includes repairs necessary to correct the results of deferred maintenance, the replacement of principal fixtures and components, improvements to increase the efficient use of energy, and installation of security devices. Reconstruction, for these purposes, includes the demolition of one or more residential buildings in an Existing Residential Development and the re-construction of the Units on the Development Site. Developments proposing Adaptive Reuse or proposing to increase the total number of Units in the Existing Residential Development are not considered reconstruction.
(82) Related Party--As defined, (§2306.6702)
(A) The following individuals or entities:
(i) The brothers, sisters, spouse, ancestors, and descendants of a person within the third degree of consanguinity, as determined by Chapter 573, Texas Government Code;
(ii) A person and a corporation, if the person owns more than 50% of the outstanding stock of the corporation;
(iii) Two or more corporations that are connected through stock ownership with a common parent possessing more than 50% of:
(I) The total combined voting power of all classes of stock of each of the corporations that can vote;
(II) The total value of shares of all classes of stock of each of the corporations; or
(III) The total value of shares of all classes of stock of at least one of the corporations, excluding, in computing that voting power or value, stock owned directly by the other corporation;
(iv) A grantor and fiduciary of any trust;
(v) A fiduciary of one trust and a fiduciary of another trust, if the same person is a grantor of both trusts;
(vi) A fiduciary of a trust and a beneficiary of the trust;
(vii) A fiduciary of a trust and a corporation if more than 50% of the outstanding stock of the corporation is owned by or for:
(I) The trust; or
(II) A person who is a grantor of the trust.
(viii) A person or organization and an organization that is tax-exempt under the Code, §501(a), and that is controlled by that person or the person's family members or by that organization;
(ix) A corporation and a partnership or joint venture if the same persons own more than:
(I) 50% of the outstanding stock of the corporation; and
(II) 50% of the capital interest or the profits' interest in the partnership or joint venture.
(x) An S corporation and another S corporation if the same persons own more than 50% of the outstanding stock of each corporation;
(xi) An S corporation and a C corporation if the same persons own more than 50% of the outstanding stock of each corporation;
(xii) A partnership and a person or organization owning more than 50% of the capital interest or the profits' interest in that partnership; or
(xiii) Two partnerships, if the same person or organization owns more than 50% of the capital interests or profits' interests.
(B) Nothing in this definition is intended to constitute the Department's determination as to what relationship might cause entities to be considered "related" for various purposes under the Code.
(83) Rules--The Department's Housing Tax Credit Program Qualified Allocation Plan and Rules as presented in this title.
(84) Rural Area--An Area that is located:
(A) Outside the boundaries of a primary metropolitan statistical area or a metropolitan statistical area;
(B) Within the boundaries of a primary metropolitan statistical area or a metropolitan statistical area, if the statistical area has a population of 25,000 or less and does not share a boundary with an Urban Area; or
(C) In an Area that is eligible for funding by Texas Rural Development Office or the United States Department of Agriculture (TRDO-USDA), other than an Area that is located in a municipality with a population of more than 50,000. (§2306.004)
(85) Rural Development--A Development or proposed Development that is located in a Rural Area, other than rural New Construction Developments with more than 80 Units.
(86) Selection Criteria--Criteria used to determine housing priorities of the State under the Housing Tax Credit Program as specifically defined in §50.9(i) of this chapter.
(87) Set-Aside--A reservation of a portion of the available Housing Tax Credits under the State Housing Credit Ceiling to provide financial support for specific types of housing or geographic locations or serve specific types of Applications or Applicants as permitted by the Qualified Allocation Plan on a priority basis. (§2306.6702)
(88) State Housing Credit Ceiling--The limitation on the aggregate amount of Housing Credit Allocations that may be made by the Department during any calendar year, as determined from time to time by the Department in accordance with the Code, §42(h)(3)(C).
(89) Student Eligibility--Per the Code, §42(i)(3)(D), A Unit shall not fail to be treated as a low-income Unit merely because it is occupied:
(A) By an individual who is:
(i) A student and receiving assistance under Title IV of the Social Security Act (42 U.S.C. §§601 et seq.), or
(ii) Enrolled in a job training program receiving assistance under the Job Training Partnership Act (29 USCS §§1501 et seq., generally; for full classification, consult USCS Tables volumes) or under other similar Federal, State, or local laws, or
(B) Entirely by full-time students if such students are:
(i) Single parents and their children and such parents and children are not dependents (as defined by the Code §152) of another individual, or
(ii) Married and file a joint return.
(90) Tax-Exempt Bond Development--A Development requesting or having been awarded Housing Tax Credits and which receives a portion of its financing from the proceeds of tax-exempt bonds which are subject to the state volume cap as described in the Code, §42(h)(4), such that the Development does not receive an allocation of tax credit authority from the State Housing Credit Ceiling.
(91) Third Party--A Third Party is a Person who is not:
(A) An Applicant, General Partner, Developer, or General Contractor, or
(B) An Affiliate or a Related Party to the Applicant, General Partner, Developer or General Contractor, or
(C) Receiving any portion of the contractor fee or Developer fee.
(92) Threshold Criteria--Criteria used to determine whether the Development satisfies the minimum level of acceptability for consideration as specifically defined in §50.9(h) of this chapter. (§2306.6702)
(93) Total Housing Development Cost--The total of all costs incurred or to be incurred by the Development Owner in acquiring, constructing, rehabilitating and financing a Development, as determined by the Department based on the information contained in the Application. Such costs include reserves and any expenses attributable to commercial areas. Costs associated with the sale or use of Housing Tax Credits to raise equity capital shall also be included in the Total Housing Development Cost. Such costs include but are not limited to syndication and partnership organization costs and fees, filing fees, broker commissions, related attorney and accounting fees, appraisal, engineering, and the environmental site assessment.
(94) TRDO-USDA--Texas Rural Development Office (TRDO) of the United States Department of Agriculture (USDA) serving the State of Texas (also known as USDA Rural Development and formerly known as TxFmHA) or its successor.
(95) Unit--Any residential rental unit 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 (such as a microwave), and sanitation. (§2306.6702) For purposes of completing the Rent Schedule for loft or studio type Units (which still must meet the definition of Bedroom), a Unit with 649 square feet or less is considered an efficiency Unit, a Unit with 650 to 899 square feet is considered not more than a one-bedroom Unit, a Unit with 900 to 999 square feet is considered not more than a two-bedroom Unit, a Unit with 1000 to 1199 square feet is considered not more than a three-bedroom Unit, and a Unit with 1200 square feet or more is considered a four bedroom Unit.
(96) Urban Area--The Area that is located within the boundaries of a primary metropolitan statistical area or a metropolitan statistical area other than an Area described in paragraph (84)(B) or eligible for funding as described in paragraph (84)(C) of this section.
§50.4.State Housing Credit Ceiling.
The Department shall determine the State Housing Credit Ceiling for each calendar year as provided in the Code, §42(h)(3)(C), using such information and guidance as may be made available by the Internal Revenue Service. The Department shall publish each such determination in the Texas Register within 30 days after the receipt of such information as is required for that purpose by the Internal Revenue Service. The aggregate amount of commitments of Housing Credit Allocations made by the Department during any calendar year shall not exceed the State Housing Credit Ceiling for such year as provided in the Code, §42. As permitted by the Code, §42(h)(4), Housing Credit Allocations made to Tax-Exempt Bond Developments are not included in the State Housing Credit Ceiling.
§50.5.Ineligibility; Disqualification and Debarment; Certain Applicant and Development Standards; Representation by Former Board Member or Other Person; Due Diligence, Sworn Affidavit; Appeals and Administrative Deficiencies for Ineligibility, Disqualification and Debarment.
(a) Ineligibility. An Application is ineligible if:
(1) The Applicant, Development Owner, Developer or Guarantor has been or is 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; or (§2306.6721(c)(2))
(2) The Applicant, Development Owner, Developer or Guarantor has been convicted of a state or federal felony crime involving fraud, bribery, theft, misrepresentation of material fact, misappropriation of funds, or other similar criminal offenses within fifteen years preceding the Application deadline; or
(3) The Applicant, Development Owner, Developer or Guarantor at the time of Application is: subject to an enforcement or disciplinary action under state or federal securities law or by the NASD; is subject to a federal tax lien; or is the subject of an enforcement proceeding with any Governmental Entity; or
(4) The Applicant, Development Owner, Developer or Guarantor with any past due audits has not submitted those past due audits to the Department in a satisfactory format. A Person is not eligible to receive a commitment of Housing Tax Credits from the Department if any audit finding or questioned or disallowed cost is unresolved as of June 1 of each year, or for Tax-Exempt Bond Developments or other Applications not applying for Housing Tax Credits, but applying only under other Multifamily Programs (HOME, Housing Trust Fund, etc.) no later than 30 days after Volume III of the Application is submitted; or
(5) (§2306.6703(a)(1)). At the time of Application or at any time during the two-year period preceding the date the Application Round begins (or for Tax-Exempt Bond Developments any time during the two-year period preceding the date the Application is submitted to the Department), the Applicant or a Related Party is or has been:
(A) A member of the Board; or
(B) The Executive Director, a Deputy Executive Director, the Director of Multifamily Finance Production, the Director of Portfolio Management and Compliance, the Director of Real Estate Analysis, or a manager over Housing Tax Credits employed by the Department.
(6) (§2306.6703(a)(2)). The Applicant proposes to replace in less than 15 years any private activity bond financing of the Development described by the Application, unless:
(A) The Applicant proposes to maintain for a period of 30 years or more 100% of the Development Units supported by Housing Tax Credits as rent-restricted and exclusively for occupancy by individuals and families earning not more than 50% of the Area Median Gross Income, adjusted for family size; and
(B) At least one-third of all the units in the Development are public housing units or Section 8 Development-based units; or,
(7) The Development is located in a municipality or in a valid Extra Territorial Jurisdiction (ETJ) of a municipality, or if located completely outside a municipality, a county, that has more than twice the state average of units per capita supported by Housing Tax Credits or private activity bonds at the time the Application Round begins (or for Tax-Exempt Bond Developments at the time the reservation is made by the Texas Bond Review Board) unless the Applicant: (§2306.6703(a)(4))
(A) Has obtained prior approval of the Development from the governing body of the appropriate municipality or county containing the Development; and
(B) Has included in the Application a written statement of support from that governing body. This statement must reference this rule and authorize an allocation of Housing Tax Credits for the Development;
(C) For purposes of this paragraph, evidence under subparagraphs (A) and (B) of this paragraph must be received by the Department no later than April 1, 2008 (or for Tax-Exempt Bond Developments no later than 14 days before the Board meeting where the credits will be considered) and may not be more than one year old from the date the Volume 1 is submitted to the Department; or
(8) The Applicant proposes to construct a new Development proposing New Construction or Adaptive Reuse (excluding New Construction of non-residential buildings) that is located one linear mile (measured by a straight line on a map) or less from a Development that: (§2306.6703(a)(3))
(A) Serves the same type of household as the new Development, regardless of whether the Development serves families, elderly individuals, or another type of household (Intergenerational Housing is not a type of household as it relates to this restriction); and
(B) Has received an allocation of Housing Tax Credits (including Tax-Exempt Bond Developments) for any New Construction at any time during the three-year period preceding the date the Application Round begins (or for Tax-Exempt Bond Developments the three-year period preceding the date the Volume I is submitted); and
(C) Has not been withdrawn or terminated from the Housing Tax Credit Program.
(D) An Application is not ineligible under this paragraph if:
(i) The Development is using federal HOPE VI funds received through the United States Department of Housing and Urban Development; locally approved funds received from a public improvement district or a tax increment financing district; funds provided to the state under the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. §§12701 et seq.); or funds provided to the state and participating jurisdictions under the Housing and Community Development Act of 1974 (42 U.S.C. §§5301 et seq.); or
(ii) The Development is located in a county with a population of less than one million; or
(iii) The Development is located outside of a metropolitan statistical area; or
(iv) The local government where the Development is to be located has by vote specifically allowed the construction of a new Development located within one linear mile or less from a Development described under subparagraphs (A) - (C) of this paragraph. For purposes of this clause, evidence of the local government vote or evidence required by this subparagraph must be received by the Department no later than April 1, 2008 (or for Tax-Exempt Bond Developments no later than 14 days before the Board meeting where the credits will be committed) and may not be more than one year old.
(E) In determining the age of an existing Development as it relates to the application of the three-year period, the Development will be considered from the date the Board took action on approving the allocation of tax credits. In dealing with ties between two or more Developments as it relates to this rule, refer to §50.9(j) of this chapter.
(9) A submitted Application has an entire Volume of the Application missing; has excessive omissions of documentation from the Threshold Criteria or Uniform Application documentation; or is so unclear, disjointed or incomplete that a thorough review can not reasonably be performed by the Department, as determined by the Department. If an Application is determined ineligible pursuant to this section, the Application will be terminated without being processed as an Administrative Deficiency. To the extent that a review was able to be performed, specific reasons for the Department's determination of ineligibly will be included in the termination letter to the Applicant.
(b) Disqualification and Debarment. The Department will disqualify an Application, and/or debar a Person, if it is determined by the Department that any issues identified in the paragraphs of this subsection exist. The Department may debar a Person for one year from the date of debarment, or until the violation causing the debarment has been remedied, whichever term is longer, if the Department determines the facts warrant it. Causes for disqualification and debarment include: (§2306.6721)
(1) The provision of fraudulent information, knowingly falsified documentation, or other intentional or negligent material misrepresentation in the Application or other information submitted to the Department at any stage of the evaluation or approval process; or
(2) The Applicant, Development Owner, Developer or Guarantor or anyone that has Controlling ownership interest in the Development Owner, Developer or Guarantor, or any Affiliate of such entities that is active in the ownership or Control of one or more other rent restricted rental housing properties in the state of Texas administered by the Department is in Material Noncompliance with the LURA (or any other document containing an Extended Housing Commitment) or the program rules in effect for such property as further described in Chapter 60 of this title on May 1, 2008 for Competitive Housing Tax Credit Applications or for Tax-Exempt Bond Development Applications or other Applications not applying for Housing Tax Credits, but applying only under other Multifamily Programs (HOME, Housing Trust Fund, etc.) no later than 30 days after Volume III of the Application is submitted (§2306.6721(c)(3)); or
(3) The Applicant, Development Owner, Developer, or any Guarantor, anyone that has Controlling ownership interest in the Development Owner, Developer or Guarantor, or any Affiliate of such entity that is active in the ownership or Control has been a Principal of any entity that failed to make all loan payments to the Department in accordance with the terms of the loan, as amended, or was otherwise in default with any provisions of any loans from the Department; or
(4) The Applicant or the Development Owner that is active in the ownership or Control of one or more tax credit properties in the state of Texas has failed to pay in full any fees or penalties within 30 days of when they were billed by the Department, as further described in §50.20 of this chapter; or
(5) An Applicant or a Related Party and any Person who is active in the construction, Rehabilitation, ownership, or Control of the proposed Development, including a General Partner or contractor, and a Principal or Affiliate of a General Partner or contractor, or an individual employed as a consultant, lobbyist or attorney by an Applicant or a Related Party, communicates with any Board member during the period of time beginning on the date Applications are filed in an Application Round and ending on the date the Board makes a final decision with respect to the approval of any Application in that Application Round, unless the communication takes place at any board meeting or public hearing held with respect to that Application but not during a recess or other non-record portion of the meeting or hearing. Communication with Department staff must be in accordance with §50.9(b) of this chapter; violation of the communication restrictions of §50.9(b) is also a basis for disqualification and/or debarment. (§2306.1113)
(6) It is determined by the Department's General Counsel that there is evidence that establishes probable cause to believe that an Applicant, Development Owner, Developer, or any of their employees or agents has violated a state revolving door or other standard of conduct or conflict of interest statute, including §2306.6733, Texas Government Code, or a section of Chapter 572, Texas Government Code, in making, advancing, or supporting the Application.
(7) Applicants may be ineligible as further described in §50.5 of this chapter.
(8) The Applicant, Development Owner, Developer, Guarantor, or any Affiliate of such entity whose previous funding contracts or commitments have been partially or fully deobligated due to a failure to meet contractual obligations during the 12 months prior to the submission of the applications.
(9) The Applicant, Development Owner, Developer, Guarantor, or any Affiliate of such entity whose pre-development award from the Department has not been repaid for the Development at the time of Carryover Allocation or Bond closing.
(c) Certain Applicant and Development Standards. Notwithstanding any other provision of this section, the Department may not allocate tax credits to a Development proposed by an Applicant if the Department determines that: (§2306.223)
(1) The Development is not necessary to provide needed decent, safe, and sanitary housing at rental prices that individuals or families of low and very low-income or families of moderate income can afford;
(2) The Development Owner undertaking the proposed Development will not supply well-planned and well-designed housing for individuals or families of low and very low-income or families of moderate income;
(3) The Development Owner is not financially responsible;
(4) The Development Owner has contracted, or will contract for the proposed Development with, a Developer that:
(A) Is on the Department's debarred list, including any parts of that list that are derived from the debarred list of the United States Department of Housing and Urban Development;
(B) Has breached a contract with a public agency and failed to cure that breach; or
(C) Misrepresented to a subcontractor the extent to which the Developer has benefited from contracts or financial assistance that has been awarded by a public agency, including the scope of the Developer's participation in contracts with the agency and the amount of financial assistance awarded to the Developer by the agency;
(5) The financing of the housing Development is not a public purpose and will not provide a public benefit; and/or
(6) The Development will be undertaken outside the authority granted by this chapter to the Department and the Development Owner.
(d) Representation by Former Board Member or Other Person. (§2306.6733)
(1) A former Board member or a former executive director, deputy executive director, director of multifamily finance production, director of portfolio management and compliance, director of real estate analysis or manager over Housing Tax Credits previously employed by the Department may not:
(A) For compensation, represent an Applicant or one of its Related Parties for an allocation of tax credits before the second anniversary of the date that the Board member's, director's, or manager's service in office or employment with the Department ceased;
(B) Represent any Applicant or a Related Party of an Applicant or receive compensation for services rendered on behalf of any Applicant or Related Party regarding the consideration of an Application in which the former board member, director, or manager participated during the period of service in office or employment with the Department, either through personal involvement or because the matter was within the scope of the board member's, director's, or manager's official responsibility; or for compensation, communicate directly with a member of the legislative branch to influence legislation on behalf of an Applicant or Related Party before the second anniversary of the date that the board member's, director's, or manager's service in office or employment with the Department ceased.
(2) A Person commits a criminal offense if the Person violates §2306.6733. An offense under this section is a Class A misdemeanor.
(e) Due Diligence, Sworn Affidavit. In exercising due diligence in considering information of possible ineligibility, possible grounds for disqualification and debarment, Applicant and Development standards, possible improper representation or compensation, or similar matters, the Department may request a sworn affidavit or affidavits from the Applicant, Development Owner, Developer, Guarantor, or other Persons addressing the matter. If an affidavit determined to be sufficient by the Department is not received by the Department within seven business days of the date of the request by the Department, the Department may terminate the Application.
(f) Appeals and Administrative Deficiencies for Ineligibility, Disqualification and Debarment. An Applicant or Person found ineligible, disqualified, debarred or otherwise terminated under subsections (a) - (e) of this section will be notified in accordance with the Administrative Deficiency process described in §50.9(d)(4) of this chapter. They may also utilize the appeals process described in §50.17(b) of this chapter. (§2306.6721(d))
§50.6.Site and Development Restrictions: Floodplain; Ineligible Building Types; Scattered Site Limitations; Credit Amount; Limitations on the Size of Developments; Limitations on Rehabilitation Costs; Unacceptable Sites; Appeals and Administrative Deficiencies for Site and Development Restrictions.
(a) Floodplain. Any Development proposing New Construction or Reconstruction and located within the 100 year floodplain as identified by the Federal Emergency Management Agency (FEMA) Flood Insurance Rate Maps must develop the site so that all finished ground floor elevations are at least one foot above the flood plain and parking and drive areas are no lower than six inches below the floodplain, subject to more stringent local requirements. If no FEMA Flood Insurance Rate Maps are available for the proposed Development, flood zone documentation must be provided from the local government with jurisdiction identifying the 100 year floodplain. No buildings or roads that are part of a Development proposing Rehabilitation or Adaptive Reuse, with the exception of Developments with federal funding assistance from HUD or TX USDA-RHS, will be permitted in the 100 year floodplain unless they already meet the requirements established in this subsection for New Construction.
(b) Ineligible Building Types. Applications involving Ineligible Building Types as defined in §50.3(56) of this chapter will not be considered for allocation of tax credits.
(c) Scattered Site Limitations. Consistent with §50.3(32) of this chapter, a Development must be financed under a common plan, be owned by the same Person for federal tax purposes, and the buildings may be either located on a single site or contiguous site, or be located on scattered sites and contain only rent-restricted units. Tax-Exempt Bond Developments are permitted to be located on multiple sites consistent with Chapter 1372, Texas Government Code and as further clarified by the Texas Bond Review Board.
(d) Credit Amount. The Department shall issue tax credits only in the amount needed for the financial feasibility and viability of a Development throughout the affordability period. The issuance of tax credits or the determination of any allocation amount in no way represents or purports to warrant the feasibility or viability of the Development by the Department, or that the Development will qualify for and be able to claim Housing Tax Credits. The Department will limit the allocation of tax credits to no more than $1.2 million per Development, adjusted annually for CPI (consumer price index) and published once each year in the Application Reference Manual prior to the Application Round. The Department shall not allocate more than $2 million of tax credits in any given Application Round to any Applicant, Developer, Related Party or Guarantor; Competitive Housing Tax Credits approved by the Board during the 2008 calendar year, including commitments from the 2008 Credit Ceiling and forward commitments from the 2009 Credit Ceiling, are applied to the credit cap limitation for the 2008 Application Round. In order to evaluate this $2 million limitation, Nonprofit entities, public housing authorities, publicly traded corporations, individual board members, and executive directors must provide the documentation required in the Application with regard to this requirement. In order to encourage the capacity enhancement of inexperienced Developers, the Department will prorate the credit amount allocated in situations where an Application is submitted in the either the Rural Regional Allocation or the Urban Regional Allocation. The Department will prorate the credits based on the percentage ownership, if there is an ownership interest, or the proportional percentage of the Developer fee received, if this applies to a Developer without an ownership interest. To be considered for this provision, a copy of a Joint Venture Agreement and narrative on how this builds the capacity of the inexperienced Developers is required. Tax-Exempt Bond Development Applications are not subject to these Housing Tax Credit limitations, and Tax-Exempt Bond Development Applications will not count towards the total limit on tax credits per Applicant. The limitation does not apply (§2306.6711(b)):
(1) To an entity which raises or provides equity for one or more Developments, solely with respect to its actions in raising or providing equity for such Developments (including syndication related activities as agent on behalf of investors);
(2) To the provision by an entity of "qualified commercial financing" within the meaning of the Code (without regard to the 80% limitation thereof);
(3) To a Qualified Nonprofit Organization or other not-for-profit entity, to the extent that the participation in a Development by such organization consists only of the provision of loan funds, grants or social services; and
(4) To a Development Consultant with respect to the provision of consulting services, provided the Development Consultant fee received for such services does not exceed 10% of the fee to be paid to the Developer (or 20% for Qualified Nonprofit Developments), or $150,000, whichever is greater.
(e) Limitations on the Size of Developments.
(1) The minimum Development size will be 16 Units if the Development involves Housing Tax Credits. The minimum Development size will be 4 Units if the funding source only involves the Housing Trust Fund or HOME Program.
(2) Rural Developments involving any New Construction or Adaptive Reuse (excluding New Construction of non-residential buildings) will be limited to 80 Units (this includes individual Tax-Exempt Bond Developments). Rural Developments involving only Rehabilitation (excluding reconstruction) do not have a size limitation.
(3) Urban Developments involving any New Construction or Adaptive Reuse (excluding New Construction of non-residential buildings), in the Competitive Housing Tax Credit Application Round will be limited to 252 total Units, wherein the maximum Department administered Units will be limited to 200 Units. Tax-Exempt Bond Developments will be limited to 252 restricted and total Units. These maximum Unit limitations also apply to those Developments which involve a combination of Rehabilitation, Reconstruction, and New Construction. Only Developments that consist solely of acquisition/Rehabilitation or Rehabilitation may exceed the maximum Unit restrictions.
(4) For Applications that are proposing an additional phase to an existing tax credit Development or that are otherwise adjacent to an existing tax credit Development, the combined Unit total for the existing and proposed Developments may not exceed the maximum allowable Development size set forth in this subsection unless:
(A) the first phase of the Development has been completed and has attained Sustaining Occupancy (as defined in §1.31 of this title) for at least six months; or
(B) a resolution from the governing body of the city or county in which the proposed Development is located, dated on or before the date the Application is submitted, is submitted with the Application. Such resolution must state that there is a need for additional Units and that the governing body has reviewed a market study, the conclusion of which supports the need for additional Units; or
(C) the proposed Development is intended to provide replacement of previously existing affordable Units on the Development Site or that were originally located within a one mile radius from the Development Site; provided, however, the combined number of Units in the proposed Development may not exceed the number of Units being replaced. Documentation of such replacement units must be provided.
(f) Limitations on the Location of Developments. Staff will only recommend, and the Board may only allocate, Housing Tax Credits from the State Housing Credit Ceiling to more than one Development from the State Housing Credit Ceiling in the same calendar year if the Developments are, or will be, located more than one linear mile apart as determined by the Department. If the Board forward commits credits from the following year's State Housing Credit Ceiling, the Development is considered to be in the calendar year in which the Board votes, not in the year of the State Housing Credit Ceiling. This limitation applies only to communities contained within counties with populations exceeding one million (which for calendar year 2008 are Harris, Dallas, Tarrant and Bexar Counties). For purposes of this rule, any two sites not more than one linear mile apart are deemed to be "in a single community." (§2306.6711(f)). This restriction does not apply to the allocation of Housing Tax Credits to Developments financed through the Tax-Exempt Bond program, including the Tax-Exempt Bond Development Applications under review and existing Tax-Exempt Bond Developments in the Department's portfolio. (§2306.67021)
(g) Limitations of Development in Certain Census Tracts. Staff will not recommend and the Board will not allocate Housing Tax Credits for a Competitive Housing Tax Credit or Tax-Exempt Bond Development located in a census tract that has more than 30% Housing Tax Credit Units per total households in the census tract as established by the U.S. Census Bureau for the most recent Decennial Census unless the Applicant:
(1) In an Area whose population is less than 100,000;
(2) Proposes only reconstruction or Rehabilitation (excluding New Construction of non-residential buildings); or,
(3) Submits to the Department an approval of the Development referencing this rule in the form of a resolution from the governing body of the appropriate municipality or county containing the Development. For purposes of this paragraph, evidence of the local government approval must be received by the Department no later than April 1, 2008 for Competitive Housing Tax Credit Applications (or for Tax-Exempt Bond Development Applications no later than 14 days before the Board meeting where the credits will be committed). These ineligible census tracts are outlined in the 2008 Housing Tax Credit Site Demographic Characteristics Report.
(h) Limitations on Developments Proposing to Qualify for a 30% increase in Eligible Basis. Staff will only recommend a 30% increase in Eligible Basis:
(1) If the Development proposing to build in a Hurricane Rita Gulf Opportunity Zone (Rita GO Zone), which was designated as a Difficult to Develop Area as determined by H.B. 4440, is able to be placed in service by December 31, 2010 (or date as revised by the Internal Revenue Service) as certified in the Application; or,
(2) The Development is located in a Qualified Census Tract that has less than 40% Housing Tax Credit Units per households in the tract as established by the U.S. Census Bureau for the most recent Decennial Census. Developments located in a Qualified Census Tract that has in excess of 40% Housing Tax Credit Units per households in the tract are not eligible to qualify for a 30% increase in Eligible Basis, which would otherwise be available for the Development Site pursuant to the Code, §42(d)(5)(C), unless the Development is proposing only Reconstruction or Rehabilitation (excluding New Construction of non-residential buildings). These ineligible Qualified Census Tracts are outlined in the 2008 Housing Tax Credit Site Demographic Characteristics Report.
(i) Rehabilitation Costs. Developments involving Rehabilitation must establish that the Rehabilitation will substantially improve the condition of the housing and will involve at least $12,000 per Unit in direct hard costs (including site work, contingency, contractor profit, overhead and general requirements) unless financed with TRDO-USDA in which case the minimum is $6,000.
(j) Unacceptable Sites. Developments will be ineligible if the Development is located on a site that is determined to be unacceptable by the Department.
(k) Appeals and Administrative Deficiencies for Site and Development Restrictions. An Application or Development found to be in violation under subsections (a) - (j) of this section will be notified in accordance with the Administrative Deficiency process described in §50.9(d)(4) of this chapter. They may also utilize the appeals process described in §50.17(b) of this chapter.
§50.7.Regional Allocation Formula; Set-Asides; Redistribution of Credits.
(a) Regional Allocation Formula. §2306.1115 as required by §2306.111(d), Texas Government Code, the Department uses a regional distribution formula developed by the Department and commented on by the public to distribute credits from the State Housing Credit Ceiling to all Urban Areas and Rural Areas. This formula establishes separate targeted tax credit amounts for Rural Areas and Urban Areas within each of the Uniform State Service Regions. Each Uniform State Service Region's targeted tax credit amount will be published on the Department's web site. The regional allocation for Rural Areas is referred to as the Rural Regional Allocation and the regional allocation for Urban Areas is referred to as the Urban Regional Allocation. Developments qualifying for the Rural Regional Allocation must meet the Rural Development definition. The Regional Allocation target will reflect that at least 20% of the State Housing Credit Ceiling for each calendar year shall be allocated to Developments in Rural Areas with a minimum of $500,000 for each Uniform State Service Region. (§2306.111(d)(3))
(b) Set-Asides. An Applicant may elect to compete in as many of the following Set-Asides for which the proposed Development qualifies (§2306.111(d)):
(1) At least 10% of the State Housing Credit Ceiling for each calendar year shall be allocated to Qualified Nonprofit Developments which meet the requirements of the Code, §42(h)(5). Qualified Nonprofit Organizations must have the Controlling interest in the Qualified Nonprofit Development applying for this Set-Aside. If the Application is filed on behalf of a limited partnership, the Qualified Nonprofit Organization must be the controlling managing General Partner. If the Application is filed on behalf of a limited liability company, the Qualified Nonprofit Organization must be the controlling Managing Member. Additionally, a Qualified Nonprofit Development submitting an Application in the nonprofit Set-Aside must have the nonprofit entity or its nonprofit Affiliate or subsidiary be the Developer or a co-Developer as evidenced in the development agreement. (§2306.6729 and §2306.6706(b))
(2) At least 5% of the State Housing Credit Ceiling for each calendar year shall be allocated to Developments which are financed through TRDO-USDA, that meet the definition of a Rural Development, do not exceed 80 Units if proposing any New Construction (excluding New Construction of non-residential buildings), and have filed an "Intent to Request 2008 Housing Tax Credits" form by the Pre-Application submission deadline. (§2306.111(d)(2) If an Application in this Set-Aside involves Rehabilitation it will be attributed to, and come from the, At-Risk Development Set-Aside; if an Application in this Set-Aside involves New Construction it will be attributed to and come from the applicable Uniform State Service Region. Developments financed through TRDO-USDA's §538 Guaranteed Rural Rental Housing Program, in whole or in part, will not be considered under this Set-Aside. Any Rehabilitation or Reconstruction of an existing §515 Development that retains the §515 loan and restrictions will be considered under the At-Risk Development and TRDO-USDA Set-Asides, unless such Development is also financed through TRDO-USDA's §538 Guaranteed Rural Rental Housing Program. Commitments of 2008 Competitive Housing Tax Credits issued by the Board in 2008 will be applied to each Set-Aside, Rural Regional Allocation, Urban Regional Allocation and/or TRDO-USDA Set-Aside for the 2008 Application Round as appropriate.
(3) At least 15% of the State Housing Credit Ceiling for each calendar year will be allocated under the At-Risk Development Set-Aside and will be deducted from the State Housing Credit Ceiling prior to the application of the regional formula required under subsection (a) of this section. Through this Set-Aside, the Department, to the extent possible, shall allocate credits to Applications involving the preservation of Developments designated as At-Risk Developments as defined in §50.3(14) of this chapter. (§2306.6714). To qualify as an At-Risk Development, the Applicant must provide evidence that it either is not eligible to renew, retain or preserve any portion of the financial benefit described in §50.3(14)(A) of this chapter, or provide evidence that it will renew, retain or preserve the financial benefit described in §50.3(14)(A) of this chapter; and must have filed an "Intent to Request 2008 Housing Tax Credits" form by the Pre-Application submission deadline. Up to 5% of the State Credit Ceiling associated with this Set-Aside may be given priority to Rehabilitation Developments funded with TRDO.
(c) Redistribution of Credits. (§2306.111(d)). If any amount of Housing Tax Credits remain after the initial commitment of Housing Tax Credits among the Set-Asides, Rural Regional Allocation and Urban Regional Allocation, the Department may redistribute the credits amongst the different regions and Set-Asides depending on the quality of Applications submitted as evaluated under the factors described in §50.9(d) of this chapter, the need to most closely achieve regional allocation goals and then the level of demand exhibited in the Uniform State Service Regions during the Application Round, except that, if there are any tax credits set aside for Developments in a Rural Area in a specific Uniform State Service Region that remain after the allocation under §50.9(d)(5)(C) of this chapter, those tax credits shall be made available in any other Rural Area in the state, first, and then to Developments in Urban areas of any uniform state service region. (§2306.111(d)(3)). As described in subsection (b)(1) and (2) of this section, no more than 90% of the State's Housing Credit Ceiling for the calendar year may go to Developments which are not Qualified Nonprofit Developments. If credits will be transferred from a Uniform State Service Region which does not have enough qualified Applications to meet its regional credit distribution amount, then those credits will be apportioned to the other Uniform State Service Regions.
§50.8.Pre-Applications for Competitive Housing Tax Credits: Submission; Communication with Departments Staff; Evaluation Process; Threshold Criteria and Review; Results. (§2306.6704)
(a) Pre-Application Submission. Any Applicant requesting a Housing Credit Allocation may submit a Pre-Application to the Department during the Pre-Application Acceptance Period along with the required Pre-Application Fee as described in §50.20 of this chapter. Only one Pre-Application may be submitted by an Applicant for each site under the State Housing Credit Ceiling. The Pre-Application submission is a voluntary process. While the Pre-Application Acceptance Period is open, Applicants may withdraw their Pre-Application and subsequently file a new Pre-Application utilizing the original Pre-Application Fee that was paid as long as no evaluation was performed by the Department. The Department is authorized though not required to request the Applicant to provide additional information it deems relevant to clarify information contained in the Pre-Application or to submit documentation for items it considers to be Administrative Deficiencies. The rejection of a Pre-Application shall not preclude an Applicant from submitting an Application with respect to a particular Development or site at the appropriate time.
(b) Communication with the Department. Applicants that submit a Pre-Application are restricted from communication with Department staff as provided in §50.9(b) of this chapter. (§2306.1113)
(c) Pre-Application Evaluation Process. Eligible Pre-Applications will be evaluated for Pre-Application Threshold Criteria. Applications that are associated with a TRDO-USDA Development are not exempt from Pre-Application and are eligible to compete for the Pre-Application points further outlined in §50.9(i)(14) of this chapter. Pre-Applications that are found to have Administrative Deficiencies will be handled in accordance with §50.9(d)(4) of this chapter. Department review at this stage is limited and not all issues of eligibility and threshold are reviewed at Pre-Application. Acceptance by staff of a Pre-Application does not ensure that an Applicant satisfies all Application eligibility, Threshold or documentation requirements. The Department is not responsible for notifying an Applicant of potential areas of ineligibility or threshold deficiencies at the time of Pre-Application.
(d) Pre-Application Threshold Criteria and Review. Applicants submitting a Pre-Application will be required to submit information demonstrating their satisfaction of the Pre-Application Threshold Criteria. The Pre-Applications not meeting the Pre-Application Threshold Criteria will be terminated and the Applicant will receive a written notice to the effect that the Pre-Application Threshold Criteria have not been met. The Department shall not be responsible for the Applicant's failure to meet the Pre-Application Threshold Criteria and any failure of the Department's staff to notify the Applicant of such inability to satisfy the Pre-Application Threshold Criteria shall not confer upon the Applicant any rights to which it would not otherwise be entitled. The Pre-Application Threshold Criteria include:
(1) Submission of a "Pre-Application Submission Form" and "Certification of Pre-Application Itemized Self-Score". The Applicant may not change the Self-Score unless requested by the Department in a Deficiency Notice;
(2) Evidence of property control through February 29, 2008 as evidenced by the documentation required under §50.9(h)(7)(A) of this chapter; and
(3) Evidence in the form of a certification that all of the notifications required under this paragraph have been made. Requests for Neighborhood Organizations under subparagraph (A) of this paragraph must be made by the deadlines described in that clause; notifications under subparagraph (C) of this paragraph must be made prior to the close of the Pre-Application Acceptance Period. (§2306.6704) Evidence of notification must meet the requirements identified in subparagraph (B) of this paragraph to all of the individuals and entities identified in subparagraph (B) of this paragraph. (§2306.6704)
(A) The Applicant must request a list of Neighborhood Organizations on record with the county and state whose boundaries include the proposed Development Site as follows:
(i) No later than December 7, 2007, the Applicant must e-mail, fax or mail with registered receipt a completed "Neighborhood Organization Request" letter as provided in the Pre-Application to the local elected official for the city and county where the Development is proposed to be located. If the Development is located in an Area that has district based local elected officials, or both at-large and district based local elected officials, the request must be made to the city council member or county commissioner representing that district; if the Development is located an Area that has only at-large local elected officials, the request must be made to the mayor or county judge for the jurisdiction. If the Development is not located within a city or is located in the Extra Territorial Jurisdiction (ETJ) of a city, the county local elected official must be contacted. In the event that local elected officials refer the Applicant to another source, the Applicant must request Neighborhood Organizations from that source in the same format.
(ii) If no reply letter is received from the local elected officials by January 1, 2008, then the Applicant must certify to that fact in the "Pre-Application Notification Certification Form" provided in the Pre-Application.
(iii) The Applicant must list all Neighborhood Organizations on record with the county or state whose boundaries include the proposed Development Site as provided by the local elected officials, or that the Applicant has knowledge of as of Pre-Application Submission in the "Pre-Application Notification Certification Form" provided in the Pre-Application.
(B) Not later than the date the Pre-Application is submitted, notification must be sent to all of the following individuals and entities by e-mail, fax or mail with registered receipt return or similar tracking mechanism in the format required in the "Pre-Application Notification Template" provided in the Pre-Application. Developments located in an Extra Territorial Jurisdiction (ETJ) of a city are not required to notify city officials. Evidence of Notification is required in the form of a certification in the "Pre-Application Notification Certification Form" provided in the Pre-Application, although it is encouraged that Applicants retain proof of notifications in the event that the Department requires proof of Notification. Officials to be notified are those officials in office at the time the Pre-Application is submitted.
(i) Neighborhood Organizations on record with the city, state or county whose boundaries include the proposed Development Site as identified in subparagraph (A)(iii) of this paragraph;
(ii) Superintendent of the school district containing the Development;
(iii) Presiding officer of the board of trustees of the school district containing the Development;
(iv) Mayor of any municipality containing the Development;
(v) All elected members of the governing body of any municipality containing the Development;
(vi) Presiding officer of the governing body of the county containing the Development;
(vii) All elected members of the governing body of the county containing the Development;
(viii) State senator of the district containing the Development; and
(ix) State representative of the district containing the Development.
(C) Each such notice must include, at a minimum, all of the following:
(i) The Applicant's name, address, individual contact name and phone number;
(ii) The Development name, address, city and county;
(iii) A statement informing the entity or individual being notified that the Applicant is submitting a request for Housing Tax Credits with the Texas Department of Housing and Community Affairs;
(iv) Statement of whether the Development proposes New Construction, reconstruction, Adaptive Reuse or Rehabilitation;
(v) The type of Development being proposed (single family homes, duplex, apartments, townhomes, high-rise etc.) and population being served (family, Intergenerational Housing, or elderly);
(vi) The approximate total number of Units and approximate total number of low-income Units;
(vii) The approximate percentage of Units serving each level of AMGI (e.g. 20% at 50% of AMGI, etc.) and the approximate percentage of Units that are market rate;
(viii) The number of Units and proposed rents (less utility allowances) for the low-income Units and the number of Units and the proposed rents for any market rate Units. Rents to be provided are those that are effective at the time of the Pre-Application, which are subject to change as annual changes in the area median income occur; and
(ix) The expected completion date if credits are awarded.
(e) Pre-Application Results. Only Pre-Applications which have satisfied all of the Pre-Application Threshold Criteria requirements set forth in subsection (d) of this section and §50.9(i)(14) of this chapter, will be eligible for Pre-Application points. The order and scores of those Developments released on the Pre-Application Submission Log do not represent a commitment on the part of the Department or the Board to allocate tax credits to any Development and the Department bears no liability for decisions made by Applicants based on the results of the Pre-Application Submission Log. Inclusion of a Development on the Pre-Application Submission Log does not ensure that an Applicant will receive points for a Pre-Application.
§50.9.Application: Submission; Ex Parte Communications; Adherence to Obligations; Evaluation Process for Competitive Applications Under the State Housing Credit Ceiling; Evaluation Process for Tax-Exempt Bond Development Applications; Evaluation Process for Rural Rescue Applications Under the 2009 Credit Ceiling; Experience Pre-Certification Procedures; Threshold Criteria; Selection Criteria; Tiebreaker Factors; Staff Recommendations.
(a) Application Submission. Any Applicant requesting a Housing Credit Allocation or a Determination Notice must submit an Application, and the required Application fee as described in §50.20 of this chapter, to the Department during the Application Acceptance Period. Only complete Applications will be accepted. All required volumes must be appropriately bound as required by the Application Submission Procedures Manual and fully complete for submission with all required copies and received by the Department not later than 5:00 p.m. on the date the Application is due. A searchable electronic copy of all required volumes and exhibits, unless otherwise indicated in the Application Submission Procedures Manual, must be submitted in the format of a single file presented in the order they appear in the hard copy of the complete Application on a CD-R clearly labeled with the report type, Development name, and Development location is required for submission and must be received by the Department not later than 5:00 p.m. on the date the Application is due. Only one Application may be submitted for a site in an Application Round. While the Application Acceptance Period is open, an Applicant may withdraw an Application and subsequently file a new Application utilizing the original Pre-Application Fee that was paid as long as no evaluation was performed by the Department. The Department is authorized, but not required, to request the Applicant to provide additional information it deems relevant to clarify information contained in the Application or to submit documentation for items it considers to be an Administrative Deficiency, including ineligibility criteria, site and development restrictions, and threshold and selection criteria documentation. (§2306.6708) An Applicant may not change or supplement any part of an Application in any manner after the filing deadline, and may not add any Set-Asides, increase the requested credit amount, or revise the Unit mix (both income levels and bedroom mixes), except in response to a direct request from the Department to remedy an Administrative Deficiency as further described in §50.3(2) of this chapter or by amendment of an Application after a commitment or allocation of tax credits as further described in §50.17(d) of this chapter.
(b) Ex Parte Communications.
(1) During the period beginning on the first date of the Application Acceptance Period and ending on the date the Board makes a final decision with respect to the approval of any Application in that Application Round, a member of the Board may not communicate with the following Persons:
(A) an Applicant or Related Party; and
(B) any Person who is:
(i) active in the construction, rehabilitation, ownership, or Control of the proposed Development, including:
(I) a General Contractor; and
(II) a Developer; and
(III) a General Partner, Principal or Affiliate of a General Partner or General Contractor; or
(ii) employed as a consultant, lobbyist, or attorney by an Applicant or a Related Party.
(2) During the period beginning on the first date of the Application Acceptance Period and ending on the date the Board makes a final decision with respect to the approval of any Application in that Application Round, an employee of the Department may communicate about any Application with the following Persons:
(A) the Applicant or a Related Party; and
(B) any Person who is:
(i) active in the construction, rehabilitation, ownership, or Control of the proposed Development, including:
(I) a General Partner or General Contractor; and
(II) a Developer; and
(III) a Principal or Affiliate of a General Partner or General Contractor; or
(ii) employed as a consultant, lobbyist or attorney by the Applicant or a Related Party.
(3) A communication under paragraph (2) of this subsection may be oral or in any written form, including electronic communication through the Internet, and must satisfy the following conditions:
(A) the communication must be restricted to technical or administrative matters directly affecting the Application;
(B) the communication must occur or be received on the premises of the Department during established business hours; and
(C) a record of the communication must be maintained and included with the Application for purposes of Board review and must contain the following information:
(i) the date, time, and means of communication;
(ii) the names and position titles of the Persons involved in the communication and, if applicable, the Person's relationship to the Applicant;
(iii) the subject matter of the communication; and
(iv) a summary of any action taken as a result of the communication.
(4) Notwithstanding paragraphs (1) or (2) of this subsection, a Board member or Department employee may communicate without restriction with a Person listed in paragraphs (1) or (2) during any Board meeting or public hearing held with respect to the Application, but not during a recess or other non-record portion of the meeting or hearing.
(5) Paragraph (1) of this subsection does not prohibit the Board from participating in social events at which a Person with whom communications are prohibited may or will be present, provided that all matters related to Applications to be considered by the Board will not be discussed.
(c) Adherence to Obligations. (§2306.6720, General Appropriation Act, Article VII, Rider 8(a)). All representations, undertakings and commitments made by an Applicant in the Application process for a Development, whether with respect to Threshold Criteria, Selection Criteria or otherwise, shall be deemed to be a condition to any Commitment Notice, Determination Notice, or Carryover Allocation for such Development, the violation of which shall be cause for cancellation of such Commitment Notice, Determination Notice, or Carryover Allocation by the Department, and if concerning the ongoing features or operation of the Development, shall be enforceable even if not reflected in the LURA. All such representations are enforceable by the Department and the tenants of the Development, including enforcement by administrative penalties for failure to perform, as stated in the representations and in accordance with the LURA. If a Development Owner does not produce the Development as represented in the Application; does not receive approval for an amendment to the Application by the Department prior to implementation of such amendment; or does not provide the necessary evidence for any points received by the required deadline:
(1) The Development Owner must provide a plan to the Department, for approval and subsequent implementation, that incorporates additional amenities to compensate for the non-conforming components; and
(2) The Board will opt either to terminate the Application and rescind the Commitment Notice, Determination Notice or Carryover Allocation Agreement as applicable or the Department must:
(A) Reduce the score for Applications for Competitive Housing Tax Credits that are submitted by an Applicant or Affiliate related to the Development Owner of the non-conforming Development by up to ten points for the two Application Rounds concurrent to, or following, the date that the non-conforming aspect, or lack of financing, was recognized by the Department of the need for the amendment; the placed in service date; or the date the amendment is accepted by the Board.
(B) Prohibit eligibility to apply for Housing Tax Credits for a Tax-Exempt Bond Development that are submitted by an Applicant or Affiliate related to the Development Owner of the non-conforming Development for up to 24 months from the date that the non-conforming aspect, or lack of financing, was recognized by the Department of the need for the amendment; the placed in service date; or the date the amendment is accepted by the Board, less any time delay caused by the Department.
(C) In addition to, or in lieu of, the penalty in subparagraph (A) or (B) of this paragraph, the Board may assess a penalty fee of up to $1,000 per day for each violation.
(3) For amendments approved administratively by the Executive Director, the penalties in paragraph (2) of this subsection will not be imposed.
(d) Evaluation Process for Competitive Applications Under the State Housing Credit Ceiling. Applications submitted for competitive consideration under the State Housing Credit Ceiling will be reviewed according to the process outlined in this subsection. An Application, during any of these stages of review, may be determined to be ineligible as further described in §50.5 of this chapter; Applicants will be promptly notified in these instances.
(1) Set-Aside and Selection Criteria Review. All Applications will first be reviewed as described in this paragraph. Applications will be confirmed for eligibility for Set-Asides. Then, each Application will be preliminarily scored according to the Selection Criteria listed in subsection (i) of this section. When a particular scoring criterion involves multiple points, the Department will award points to the proportionate degree, in its determination, to which a proposed Development complied with that criterion. As necessary to complete this process only, Administrative Deficiencies may be issued to the Applicant. This process will generate a preliminary Department score for every Application.
(2) Application Review Assessment. Each Application will be assessed based on either the Applicant's self-score or the Department's preliminary score, region, and any Set-Asides that the Application indicates it is eligible for, consistent with paragraph (5) of this subsection. Those Applications that appear to be most competitive will be reviewed in detail for Eligibility and Threshold Criteria during the Application Round.
(3) Eligibility and Threshold Criteria Review. Applications that appear to be most competitive will be evaluated for eligibility under §50.5(a)(7) - (9), (b) - (f), and §50.6 of this chapter. The remaining portions of the Eligibility Review under §50.5 of this chapter will be performed in the Compliance Evaluation and Eligibility Review as described under paragraph (7) of this subsection. The most competitive Applications will also be evaluated against the Threshold Criteria under subsection (h) of this section. The same portions of the Threshold Criteria review may be performed in the Underwriting Evaluation and Criteria review for financial feasibility by the Department's Real Estate Analysis Division as described under paragraph (6) of this subsection. Applications not meeting Threshold Criteria will be notified of any Administrative Deficiencies, in each event the Applicant will be given an opportunity to correct such deficiencies. Applications not meeting Threshold Criteria after receipt and review of the Administrative Deficiency response will be terminated and the Applicant will be provided a written notice to that effect. The Department shall not be responsible for the Applicant's failure to meet the Threshold Criteria, and any failure of the Department's staff to notify the Applicant of such inability to satisfy the Threshold Criteria shall not confer upon the Applicant any rights to which it would not otherwise be entitled. Not all Applications will be reviewed in detail for Threshold Criteria. To the extent that the review of Threshold Criteria documentation, or submission of Administrative Deficiency documentation, alters the score assigned to the Application, an Applicant will be notified of its final score.
(4) Administrative Deficiencies. If an Application contains Administrative Deficiencies pursuant to §50.3(2) of this chapter which, in the determination of the Department staff, require clarification or correction of information submitted at the time of the Application, the Department staff may request clarification or correction of such Administrative Deficiencies. Because the review for Eligibility, Selection, Threshold Criteria, and review for financial feasibility by the Department's Real Estate Analysis Division may occur separately, Administrative Deficiency requests may be made several times. The Department staff will request clarification or correction in a deficiency notice in the form of an email, or if an e-mail address is not provided in the Application, by facsimile, and a telephone call to the Applicant and one other party identified by the Applicant in the Application advising that such a request has been transmitted. If Administrative Deficiencies are not clarified or corrected to the satisfaction of the Department by 5:00 p.m. on the fifth business day following the date of the deficiency notice, then for competitive Applications under the State Housing Credit Ceiling, five points shall be deducted from the Selection Criteria score for each additional day the deficiency remains unresolved. If Administrative Deficiencies are not clarified or corrected by 5:00 p.m. on the seventh business day following the date of the deficiency notice, then the Application shall be terminated. The time period for responding to a deficiency notice begins at the start of the business day following the deficiency notice date. Deficiency notices may be sent to an Applicant prior to or after the end of the Application Acceptance Period. This Administrative Deficiency process applies to requests for information made by the Real Estate Analysis Division review.
(5) Subsequent Evaluation of Applications and Methodology for Award Recommendations to the Board. The Department will assign, as herein described, Developments for review for financial feasibility by the Department's Real Estate Analysis Division--in general these will be those Applications identified as most competitive and that meet the requirements of Eligibility and Threshold. This procedure will also be used in making recommendations to the Board as follows:
(A) Assignments will be determined by separately selecting the Applications with the highest scores in the At-Risk Set-Aside Statewide until the minimum requirements stated in §50.7(b) of this chapter are attained.
(B) Assignments will then be determined by selecting the Applications with the highest scores in the TRDO-USDA Allocation until the minimum requirements stated in §50.7(b) of this chapter are attained. If an Application in this Set-Aside involves Rehabilitation it will be attributed to, and come from the, At-Risk Set-Aside; if an Application in this Set-Aside involves New Construction it will be attributed to and come from the applicable Uniform State Service Region.
(C) Remaining funds within each Uniform State Service Region will then be selected based on the highest scoring Developments in each of the 26 sub-regions, regardless of Set-Aside, in accordance with the requirements under §50.7(a) of this chapter, without exceeding the credit amounts available for a Rural Regional Allocation and Urban Regional Allocation in each region. To the extent that Applications in the At-Risk and TRDO-USDA Set-Asides are not competitive enough within their respective Set-Asides, they will also be able to compete, with no Set-Aside preference, within their appropriate sub-region.
(D) If there are any tax credits set-aside for Developments in a Rural Area in a specific Uniform State Service Region that remain after allocation under subparagraph (C) of this paragraph those tax credits shall then be made available in any other Rural Area in the state to the Application in the most underserved Rural sub-region as compared to the Region's Rural Allocation. (§2306.111(d)(3)). This will be referred to as the Rural collapse.
(E) If there are any tax credits remaining in any sub-region after the Rural collapse, in the Rural Regional Allocation or Urban Regional Allocation, they then will be combined and made available to the Application in the most underserved sub-region as compared to the sub-region's allocation. This will be referred to as the statewide collapse.
(F) Staff will ensure that at least 10% of the State Housing Credit Ceiling is allocated to Qualified Nonprofit Organizations to satisfy the Nonprofit Set-Aside. If 10% is not met, then the Department will add the highest scoring Application by a Qualified Nonprofit Organization statewide until the 10% Nonprofit Set-Aside is met. Staff will ensure that at least 20% of the State Housing Credit Ceiling is allocated to Rural Developments. If this 20% minimum is not met, then the Department will add the highest scoring Rural Development Application statewide until the 20% Rural Development Set-Aside is met. Selection for each of the Set-Asides will take precedence over selection for the Rural Regional Allocation and Urban Regional Allocation. Funds for the Rural Regional Allocation or Urban Regional Allocation within a region, for which there are no eligible feasible Applications, will be redistributed as provided in §50.7(c) of this chapter, Redistribution of Credits. If the Department determines that an allocation recommendation would cause a violation of the $2 million limit described in §50.6(d) of this chapter, the Department will make its recommendation by selecting the Development(s) that most effectively satisfies(y) the Department's goals in meeting Set-Aside and regional allocation goals. Based on Application rankings, the Department shall continue to underwrite Applications until the Department has processed enough Applications satisfying the Department's underwriting criteria to enable the allocation of all available Housing Tax Credits according to regional allocation goals and Set-Aside categories. To enable the Board to establish a Waiting List, the Department shall underwrite as many additional Applications as necessary to ensure that all available Competitive Housing Tax Credits are allocated within the period required by law. (§2306.6710(a)-(f); §2306.111)
(6) Underwriting Evaluation and Criteria. The Department shall underwrite an Application to determine the financial feasibility of the Development and an appropriate level of Housing Tax Credits. In determining an appropriate level of Housing Tax Credits, the Department shall, at a minimum, evaluate the cost of the Development based on acceptable cost parameters as adjusted for inflation and as established by historical final cost certifications of all previous Housing Tax Credit allocations for the county in which the Development is to be located; if certifications are unavailable for the county, then the metropolitan statistical area in which the Development is to be located; or if certifications are unavailable under the county or the metropolitan statistical area, then the Uniform State Service Region in which the Development is to be located. Underwriting of a Development will include a determination by the Department, pursuant to the Code §42, that the amount of Housing Tax Credits recommended for commitment to a Development is necessary for the financial feasibility of the Development and its long-term viability as a qualified rent restricted housing property. In making this determination, the Department will use the Underwriting Rules and Guidelines, §1.32 of this title. An Applicant may not change or supplement any part of an Application in any manner after the filing deadline, and may not add any set-asides, increase their credit amount, or revise their unit mix (both income levels and bedroom mixes), except in response to a direct request from the Real Estate Analysis Division to remedy an Administrative Deficiency as further described in §50.3(2) of this chapter or by amendment of an Application after a commitment or allocation of tax credits as further described in §50.17(d) of this chapter. To the extent that the review of Administrative Deficiency documentation during this review alters the score assigned to the Application, Applicants will be re-notified of their final score. Receipt of feasibility points under §50.9(i)(1) of this chapter does not ensure that an Application will be considered feasible during the feasibility evaluation by the Real Estate Analysis Division and conversely, a Development may be found feasible during the feasibility evaluation by the Real Estate Analysis Division even if it did not receive points under subsection (i)(1) of this section. (§2306.6710 and §2306.11)
(A) The Department may have an external party perform the underwriting evaluation to the extent it determines appropriate. The expense of any external underwriting evaluation shall be paid by the Applicant prior to the commencement of the aforementioned evaluation.
(B) The Department will reduce the Applicant's estimate of Developer's and/or General Contractor fees in instances where these exceed the fee limits determined by the Department. In the instance where the General Contractor is an Affiliate of the Development Owner and both parties are claiming fees, General Contractor's overhead, profit, and general requirements, the Department shall be authorized to reduce the total fees estimated to a level that it determines to be reasonable under the circumstances. Further, the Department shall deny or reduce the amount of Housing Tax Credits allocated with respect to any portion of costs which it deems excessive or unreasonable. Excessive or unreasonable costs may include Developer fee attributable to Related Party acquisition costs. The Department also may require bids or Third Party estimates in support of the costs proposed by any Applicant. The Developer's fee limits will be calculated as follows:
(i) New construction pursuant to §42(b)(1)(A) U.S.C, the Developer fee cannot exceed 15% of the project's Total Eligible Basis, less Developer fees, or 20% of the project's Total Eligible Basis, less Developer fees if the Development proposes 49 total Units or less; and
(ii) Acquisition/rehabilitation Developments that are eligible for acquisition credits pursuant to §42(b)(1)(B) U.S.C, the acquisition portion of the Developer fee cannot exceed 15% of the existing structures acquisition basis, less Developer fee if the Development proposes 50 total Units or more, or 20% of the project's Total Eligible Basis, less Developer fees if the Development proposes 49 total Units or less, and will be limited to 4% credits. The rehabilitation portion of the Developer fee cannot exceed 15% of the total rehabilitation basis, less Developer fee if the Development proposes 50 total Units or more, or 20% of the project's Total Eligible Basis, less Developer fees if the Development proposes 49 total Units or less.
(7) Compliance Evaluation and Eligibility Review. After the Department has determined which Developments will be reviewed for financial feasibility, those same Developments will be reviewed for evaluation of the compliance status by the Department's Portfolio Management and Compliance Division, in accordance with Chapter 60 of this title, and will be evaluated in detail for eligibility under §50.5(a) - (f) of this chapter.
(8) Site Evaluation. Site conditions shall be evaluated through a physical site inspection by the Department or its assigns. Such inspection will evaluate the Development Site based upon the criteria set forth in the Site Evaluation form provided in the Application and the inspector shall provide a written report of such site evaluation. The evaluations shall be based on the condition of the surrounding neighborhood, including appropriate environmental and aesthetic conditions and proximity to retail, medical, recreational, and educational facilities, and employment centers. The site's appearance to prospective tenants and its accessibility via the existing transportation infrastructure and public transportation systems shall be considered. "Unacceptable" sites include, without limitation, those containing a non-mitigable environmental factor that may adversely affect the health and safety of the residents. For Developments applying under the TRDO-USDA Set-Aside, the Department may rely on the physical site inspection performed by TRDO-USDA.
(e) Evaluation Process for Tax-Exempt Bond Development Applications. Applications submitted for consideration as Tax-Exempt Bond Developments will be reviewed according to the process outlined in this subsection. An Application, during any of these stages of review, may be determined to be ineligible as further described in §50.5 of this chapter; Applicants will be promptly notified in these instances.
(1) Eligibility and Threshold Criteria Review. All Tax-Exempt Bond Development Applications will first be reviewed as described in this paragraph. Tax-Exempt Bond Development Applications will be confirmed for eligibility under §50.5 and §50.6 of this chapter and Applications will be evaluated in detail against the Threshold Criteria. Tax-Exempt Bond Development Applications found to be ineligible and/or not meeting Threshold Criteria will be notified of any Administrative Deficiencies, in each event the Applicant will be given an opportunity to correct such deficiencies. Applications not meeting the Threshold Criteria after receipt and review of the Administrative Deficiency response will be terminated and the Applicant will be provided a written notice to that effect. The Department shall not be responsible for the Applicant's failure to meet the Threshold Criteria, and any failure of the Department's staff to notify the Applicant of such inability to satisfy the Threshold Criteria shall not confer upon the Applicant any rights to which it would not otherwise be entitled.
(2) Administrative Deficiencies. If an Application contains deficiencies which, in the determination of the Department staff, require clarification or correction of information submitted at the time of the Application, the Department staff may request clarification or correction of such Administrative Deficiencies. Because the review for Eligibility, Threshold Criteria, and review for financial feasibility by the Department's Real Estate Analysis Division may occur separately, Administrative Deficiency requests may be made several times. The Department staff will request clarification or correction in a deficiency notice in the form of an e-mail, or if an e-mail address is not provided in the Application, by facsimile, and a telephone call to the Applicant and one other party identified by the Applicant in the Application advising that such a request has been transmitted. All Administrative Deficiencies shall be clarified or corrected to the satisfaction of the Department within five business days. Failure to resolve all outstanding deficiencies by 5:00 p.m. on the fifth business day following the date of the deficiency notice will result in a penalty fee of $500 for each business day the deficiency remains unresolved. Applications with unresolved deficiencies after 5:00 p.m. on the tenth day following the date of the deficiency notice will be terminated. The Applicant will be responsible for the payment of fees accrued pursuant to this section regardless of any termination pursuant to §50.5(b)(4) of this chapter. The time period for responding to a deficiency notice begins at the start of the business day following the deficiency notice date. Deficiency notices may be sent to an Applicant prior to or after the end of the Application Acceptance Period. The Application will not be presented to the Board for consideration until all outstanding fees have been paid. This Administrative Deficiency process applies equally to the Real Estate Analysis Division review and feasibility evaluation and the same penalty and termination will be assessed.
(3) Underwriting and Compliance Evaluation and Criteria. The Department will assign all eligible Tax-Exempt Bond Development Applications meeting the eligibility and threshold requirements for review for financial feasibility by the Department's Real Estate Analysis Division, or the Department may have an external party perform the underwriting evaluation to the extent it determines appropriate. The expense of any external underwriting evaluation shall be paid by the Applicant prior to the commencement of the aforementioned evaluation. The Department or external party shall underwrite an Application to determine the financial feasibility of the Development and an appropriate level of Housing Tax Credits as further described in subsection (d)(6) of this section. Tax-Exempt Bond Development Applications will also be reviewed for evaluation of the compliance status by the Department's Portfolio Management and Compliance Division in accordance with Chapter 60, Subchapter A of this title.
(4) Site Evaluation. Site conditions shall be evaluated through a physical site inspection by the Department or its assigns as further described in subsection (d)(8) of this section.
(f) Evaluation Process for Rural Rescue Applications Under the 2009 Credit Ceiling. Applications submitted for consideration as Rural Rescue Applications pursuant to §50.10(c) of this chapter under the 2009 Credit Ceiling will be reviewed according to the process outlined in this subsection. A Rural Rescue Application, during any of these stages of review, may be determined to be ineligible as further described in §50.5 of this chapter; Applicants will be promptly notified in these instances.
(1) Procedures for Intake and Review.
(A) Applications for Rural Rescue deals may be submitted between March 2, 2008 and November 15, 2008 and must be submitted in accordance with §50.21 of this chapter. A complete Application must be submitted at least 40 days prior to the date of the Board meeting at which the Applicant would like the Board to act on the proposed Development. Applications must include the full Application Fee as further described in §50.20(c) of this chapter. Applicants must submit documents in accordance with the procedures set out in the 2008 Application Submission Procedures Manual for Volumes I, II, III and IV. Volume IV, evidencing Selection Criteria, MUST be submitted.
(B) Applicants do not need to participate in the Pre-Application process outlined in §50.8 of this chapter, nor will they need to submit pre-certification documents identified in subsection (g) of this section.
(C) Applications will be processed on a first-come, first-served basis. Applications unable to meet all deficiency and underwriting requirements within 30 days of the request by the Department, will remain under consideration, but will lose their submission status and the next Application in line will be moved ahead in order to expedite those Applications most able to proceed. Applications for Rural Rescue will be processed and evaluated as described in this paragraph. Applications will be reviewed to ensure that the Application is eligible as a rural "rescue" Development as described in paragraph (2) of this subsection.
(D) Prior to the Development being recommended to the Board, TRDO-USDA must provide the Department with a copy of the physical site inspection report performed by TRDO-USDA, as provided in subsection (d)(8) of this section.
(2) Eligibility Review. All Rural Rescue Applications will first be reviewed as described in this paragraph and eligibility will be confirmed pursuant to §50.5 and §50.6 of this chapter and the criteria listed in subparagraphs (A) - (C) of this paragraph. Applications found to be ineligible will be notified.
(A) Applications must be funded through TRDO-USDA;
(B) Applications must able to provide evidence that the loan:
(i) has been foreclosed and is in the TRDO-USDA inventory; or
(ii) is being foreclosed; or
(iii) is being accelerated; or
(iv) is in imminent danger of foreclosure or acceleration; or
(v) is for an Application in which two adjacent parcels are involved, of which at least one parcel qualifies under clauses (i) - (iv) of this subparagraph and for which the Application is submitted under one ownership structure, one financing plan an for which there are no market rate units; and
(C) Applicants must be identified as in compliance with TRDO-USDA regulations.
(3) Threshold Review. Applications will be evaluated in detail against the Threshold Criteria. Applications found to be ineligible and/or not meeting Threshold Criteria will be notified of any Administrative Deficiencies, in which event the Applicant is given an opportunity to correct such deficiencies. Applications not meeting Threshold Criteria after receipt and review of the Administrative Deficiency response will be terminated and the Applicant will be provided a written notice to that effect. The Department shall not be responsible for the Applicant's failure to meet the Threshold Criteria, and any failure of the Department's staff to notify the Applicant of such inability to satisfy the Threshold Criteria shall not confer upon the Applicant any rights to which it would not otherwise be entitled. Not all Applications will be reviewed in detail for Threshold Criteria.
(4) Selection Criteria Review. All Rural Rescue Applications will be evaluated against the Selection Criteria and a score will be assigned to the Application. The minimum score for Selection Criteria is not required to be achieved to be eligible.
(5) Administrative Deficiencies. If an Application contains deficiencies which, in the determination of the Department staff, require clarification or correction of information submitted at the time of the Application, the Department staff may request clarification or correction of such Administrative Deficiencies as further described in subsection (d)(4) of this section.
(6) Underwriting and Compliance Evaluation and Criteria. The Department will assign all eligible Rural Rescue Applications meeting the eligibility and threshold requirements for review for financial feasibility by the Department's Real Estate Analysis Division, or the Department may have an external party perform the underwriting evaluation to the extent it determines appropriate. The expense of any external underwriting evaluation shall be paid by the Applicant prior to the commencement of the aforementioned evaluation. The Department or external party shall underwrite an Application to determine the financial feasibility of the Development and an appropriate level of Housing Tax Credits as further described in subsection (d)(6) of this section. Rural Rescue Development Applications will also be reviewed for evaluation of the previous participation by the Department's Portfolio Management and Compliance Division in accordance with Chapter 60 of this title.
(7) Site Evaluation. Site conditions shall be evaluated through a physical site inspection by the Department or its assigns as further described in subsection (d)(8) of this section.
(8) Credit Ceiling and Applicability of this Chapter. All Rural Rescue Applicants will receive their credit allocation out of the 2009 Credit Ceiling and therefore, will be required to follow the rules and guidelines identified in the 2009 Qualified Allocation Plan and Rules (QAP). However, because the 2009 QAP will not be in effect during the time period that the Rural Rescue Applications can be submitted, Applications submitted and eligible under the Rural Rescue Set-Aside will be considered by the Board to have satisfied the requirements of the 2009 QAP and are waived from 2009 QAP requirements that are changes from the 2008 QAP, to the extent permitted by statute.
(9) Procedures for Recommendation to the Board. Consistent with subsection (k) of this section, staff will make its recommendation to the Committee. The Committee will make commitment recommendations to the Board. Staff will provide the Board with a written, documented recommendation which will address at a minimum the financial and programmatic viability of each Application and a breakdown of which Selection Criteria were met by the Applicant. The Board will make its decision based on §50.10(a) of this chapter. Any award made to a Rural Rescue Development will be credited against the TRDO-USDA Set-Aside for the 2009 Application Round, as required under subsection (d)(5) of this section.
(10) Limitation on Allocation. No more than $350,000 in credits will be forward committed from the 2009 State Housing Credit Ceiling. To the extent Applications are received that exceed the maximum limitation, staff will prepare the award for Board consideration noting for the Board that the award would require a waiver of this limitation.
(g) Experience Pre-Certification Procedures. No later than 14 days prior to the close of the Application Acceptance Period for Competitive Housing Tax Credit Applications, an Applicant must submit the documents required in this subsection to obtain the required pre-certification. For Applications submitted for Tax-Exempt Bond Applications or Applications not applying for Competitive Housing Tax Credits, but applying only under other Multifamily Programs (HOME, Housing Trust Fund, etc.) all of the documents in this section must be submitted with the Application. Upon receipt of the evidence required under this section, a certification from the Department will be provided to the Applicant for inclusion in its Application(s). Evidence must show that one of the Development Owner's General Partners, the Developer or their Principals have a record of successfully constructing or developing residential units (single family or multifamily) in the capacity of owner, General Partner or Developer. If a Public Housing Authority organized an entity for the purpose of developing residential units the Public Housing Authority shall be considered a Principal for the purpose of this requirement. If the individual requesting the certification was not the Development Owner, General Partner or Developer, but was the individual within one of those entities doing the work associated with the development of the Units (responsibility for work associated with the development of Units includes, but is not limited to, application submission, third-party engagement, post award activities, construction, cost certification, etc.), the individual must show that the units were successfully developed as required in paragraphs (1) and (2) of this subsection, and also provide written confirmation from the entity involved stating that the individual was the person responsible for the development. If rehabilitation experience is being claimed to qualify for an Application involving New Construction, then the rehabilitation must have been substantial and involved at least $12,000 of direct hard cost per unit.
(1) The term "successfully" is defined as acting in a capacity as the owner, General Partner, or Developer of:
(A) At least 100 residential units or, if less than 100 residential units, 80% of the total number of Units the Applicant is applying to build (e.g. you must have 40 units successfully built to apply for 50 Units); or
(B) At least 36 residential units if the Development is a Rural Development; or
(C) At least 25 residential units if the Development has 36 or fewer total Units.
(2) One or more of the following documents must be submitted: American Institute of Architects (AIA) Document A111 - Standard Form of Agreement Between Owner & Contractor, AIA Document G704 - Certificate of Substantial Completion, IRS Form 8609, HUD Form 9822, development agreements, partnership agreements, or other documentation satisfactory to the Department verifying that the Development Owner's General Partner, partner (or if Applicant is to be a limited liability company, the managing member), Developer or their Principals have the required experience. If submitting the IRS Form 8609, only one form per Development is required. The evidence must clearly indicate:
(A) That the Development has been completed (i.e. Development Agreements, Partnership Agreements, etc. must be accompanied by certificates of completion);
(B) That the names on the forms and agreements tie back to the Development Owner's General Partner, partner (or if Applicant is to be a limited liability company, the managing member), Developer or their Principals as listed in the Application; and
(C) The number of units completed or substantially completed.
(h) Threshold Criteria. The following Threshold Criteria listed in this subsection are mandatory requirements that must be submitted at the time of Application submission unless specifically indicated otherwise:
(1) Completion and submission of the Application, which includes the entire Uniform Application and any other supplemental forms which may be required by the Department. (§2306.1111)
(2) Completion and submission of the Site Packet as provided in the Application.
(3) Set-Aside Eligibility. Documentation must be provided that confirms eligibility for all Set-Asides under which the Application is seeking funding as required in the Application.
(4) Certifications. The "Certification Form" provided in the Application confirming the following items:
(A) A certification of the basic amenities selected for the Development. All Developments must meet at least the minimum threshold of points. These points are not associated with the selection criteria points in subsection (i) of this section. The amenities selected must be made available for the benefit of all tenants. If fees in addition to rent are charged for amenities reserved for an individual tenant's use, then the amenity may not be included among those provided to satisfy this requirement. Developments must provide a minimum number of common amenities in relation to the Development size being proposed. The amenities selected must be selected from clause (ii) of this subparagraph and made available for the benefit of all tenants. Developments proposing Rehabilitation (excluding Reconstruction) or proposing Single Room Occupancy will receive 1.5 points for each point item. Applications for non-contiguous scattered site housing, including New Construction, reconstruction, Adaptive Reuse Rehabilitation, and single-family design, will have the threshold test applied based on the number of Units per individual site, and must submit a separate certification for each individual site under control by the Applicant. Any future changes in these amenities, or substitution of these amenities, must be approved by the Department in accordance with §50.17(d) of this chapter and may result in a decrease in awarded credits if the substitution or change includes a decrease in cost, or in the cancellation of a Commitment Notice or Carryover Allocation if all of the Common Amenities claimed are no longer met.
(i) Applications must meet a minimum threshold of points (based on the total number of Units in the Development) as follows:
(I) Total Units are less than 13, 0 points are required to meet Threshold for Single Room Occupancy and 1 point is required to meet threshold for all other Developments;
(II) Total Units are between 13 and 24, 1 point is required to meet Threshold;
(III) Total Units are between 25 and 40, 3 points are required to meet Threshold;
(IV) Total Units are between 41 and 76, 6 points are required to meet Threshold;
(V) Total Units are between 77 and 99, 9 points are required to meet Threshold;
(VI) Total Units are between 100 and 149, 12 points are required to meet Threshold;
(VII) Total Units are between 150 and 199, 15 points are required to meet Threshold;
(VIII) Total Units are 200 or more, 18 points are required to meet Threshold.
(ii) Amenities for selection include those items listed in subclauses (I) - (XXVI) of this clause. Both Developments designed for families and Qualified Elderly Developments can earn points for providing each identified amenity unless the item is specifically restricted to one type of Development. All amenities must meet accessibility standards as further described in subparagraphs (D) and (F) of this paragraph. An Application can only count an amenity once, therefore combined functions (a library which is part of a community room) only count under one category. Spaces for activities must be sized appropriately to serve the anticipated population.
(I) Full perimeter fencing (2 points);
(II) Controlled gate access (1 point);
(III) Gazebo w/sitting area (1 point);
(IV) Accessible walking/jogging path separate from a sidewalk (1 point);
(V) Community laundry room with at least one front loading washer (1 point);
(VI) Barbecue grill and picnic table-at least one of each for every 50 Units (1 point);
(VII) Covered pavilion that includes barbecue grills and tables (2 points);
(VIII) Swimming pool (3 points);
(IX) Furnished fitness center equipped with a minimum of two of the following fitness equipment options with at least one option per every 40 Units or partial increment of 40 Units: stationary bicycle, elliptical trainer, treadmill, rowing machine, universal gym, multi-functional weight bench, sauna, stair climber, etc. The maximum number of equipment options required for any Development, regardless of number of Units, shall be five (2 points);
(X) Equipped and functioning business center or equipped computer learning center with 1 computer for every 30 Units proposed in the Application, 1 printer for every 3 computers (with minimum of one printer), and 1 fax machine (2 points);
(XI) Furnished Community room (1 point);
(XII) Library with an accessible sitting area (separate from the community room) (1 point);
(XIII) Enclosed sun porch or covered community porch/patio (2 points);
(XIV) Service coordinator office in addition to leasing offices (1 point);
(XV) Senior Activity Room (Arts and Crafts, etc.) (2 points);
(XVI) Health Screening Room (1 point);
(XVII) Secured Entry (elevator buildings only) (1 point);
(XVIII) Horseshoe pit, putting green or shuffleboard court (1 point);
(XIX) Community Dining Room w/full or warming kitchen (3 points);
(XX) One Children's Playscape Equipped for 5 to 12 year olds, or one Tot Lot (1 Point);
(XXI) Two Children's Playscapes Equipped for 5 to 12 year olds, two Tot Lots, or one of each (2 points);
(XXII) Sport Court (Tennis, Basketball or Volleyball) (2 points);
(XXIII) Furnished and staffed Children's Activity Center (3 points);
(XXIV) Community Theater Room equipped with a 52 inch or larger screen with surround sound equipment; DVD player; and theater seating (3 points);
(XXV) Green Building (for example, evaporative coolers, passive solar heating/cooling, water conserving fixtures, collected water (at least 50%) for irrigation purposes, sub-metered electric meters, exceed Energy Star standards, photovoltaic panels for electricity and design and wiring for the use of such panels, construction waste management, provide recycle service, water permeable walkways and parking areas, or other Department approved items). (3 points); or
(XXVI) Hot Tub/Jacuzzi Spa (1 point).
(B) A certification that the Development will have all of the following Amenities at no charge to the tenants. All New Construction or Reconstruction Units must provide the amenities in clauses (i) - (ix) of this subparagraph. Rehabilitation (excluding Reconstruction) and Adaptive Reuse must provide the amenities in clauses (ii) - (ix) of this subparagraph unless expressly identified as not required. (§2306.187)
(i) All New Construction Units must be wired with 6 pair CAT5e wiring or better to provide phone and data service to each unit and wired with COAX cable to provide TV and high speed internet data service to each unit;
(ii) Blinds or window coverings for all windows;
(iii) Disposal and Energy-Star or equivalently rated dishwasher (not required for TRDO-USDA or SRO Developments);
(iv) Energy-Star or equivalently rated (not required for SRO Developments) Refrigerator;
(v) Energy-Star or equivalently rated Oven/Range (not required for SRO Developments);
(vi) Exhaust/vent fans in bathrooms;
(vii) Energy-Star or equivalently rated ceiling fans in living areas and bedrooms;
(viii) Energy-Star or equivalently rated lighting in all Units;
(ix) Emergency 911 or public telephone accessible and available to tenants 24 hours a day.
(C) A certification that the Development will adhere to the Texas Property Code relating to security devices and other applicable requirements for residential tenancies, and will adhere to local building codes or if no local building codes are in place then to the most recent version of the International Building Code.
(D) A certification that the Applicant is in compliance with state and federal laws, including but not limited to, fair housing laws, including Chapter 301, Property Code, Title VIII of the Civil Rights Act of 1968 (42 U.S.C. §§3601 et seq.), and the Fair Housing Amendments Act of 1988 (42 U.S.C. §§3601 et seq.); the Civil Rights Act of 1964 (42 U.S.C. §§2000a et seq.); the Americans with Disabilities Act of 1990 (42 U.S.C. §§12101 et seq.); the Rehabilitation Act of 1973 (29 U.S.C. §§701 et seq.); Fair Housing Accessibility; the Texas Fair Housing Act; and that the Development is designed consistent with the Fair Housing Act Design Manual produced by HUD, the Code Requirements for Housing Accessibility 2000 (or as amended from time to time) produced by the International Code Council and the Texas Accessibility Standards. (§2306.257; §2306.6705(7))
(E) A certification that the Applicant will attempt to ensure that at least 30% of the construction and management businesses with which the Applicant contracts in connection with the Development are Minority Owned Businesses, and that the Applicant will submit a report at least once in each 90-day period following the date of the Commitment Notice until the Cost Certification is submitted, in a format prescribed by the Department and provided at the time a Commitment Notice is received, on the percentage of businesses with which the Applicant has contracted that qualify as Minority Owned Businesses. (§2306.6734)
(F) Pursuant to §2306.6722, any Development supported with a Housing Tax Credit allocation shall comply with the accessibility standards that are required under §504, Rehabilitation Act of 1973 (29 U.S.C. §794), and specified under 24 C.F.R. Part 8, Subpart C. The Applicant must provide a certification from the Development engineer, an accredited architect or Department-approved third party accessibility specialist, that the Development will comply with the accessibility standards that are required under §504, Rehabilitation Act of 1973 (29 U.S.C. §794), and specified under 24 C.F.R. Part 8, Subpart C and this subparagraph. (§2306.6722 and §2306.6730)
(G) For Developments involving New Construction (excluding New Construction of non-residential buildings) where some Units are two-stories or single family design and are normally exempt from Fair Housing accessibility requirements, a minimum of 20% of each Unit type (i.e. one bedroom, two bedroom, three bedroom) must provide an accessible entry level and all common-use facilities in compliance with the Fair Housing Guidelines, and include a minimum of one bedroom and one bathroom or powder room at the entry level. A similar certification will also be required after the Development is completed from an inspector, architect, or accessibility specialist.
(H) A certification that the Development will be equipped with energy saving devices that meet the standard statewide energy code adopted by the state energy conservation office, unless historic preservation codes permit otherwise for a Development involving historic preservation. All Units must be air-conditioned. The measures must be certified by the Development architect as being included in the design of each tax credit Unit at the time the 10% Test Documentation is submitted and in actual construction upon Cost Certification. (§2306.6725(b)(1))
(I) A certification that the Development will be built by a General Contractor that satisfies the requirements of the General Appropriation Act, Article VII, Rider 8(c) applicable to the Department which requires that the General Contractor hired by the Development Owner or the Applicant, if the Applicant serves as General Contractor, must demonstrate a history of constructing similar types of housing without the use of federal tax credits.
(J) A certification that the Development Owner agrees to establish a reserve account consistent with §2306.186 Texas Government Code and as further described in §1.37 of this title.
(K) A certification that the Applicant, Developer, or any employee or agent of the Applicant has not formed a Neighborhood Organization for purposes of subsection (i)(2) of this section, has not given money or a gift to cause the Neighborhood Organization to take its position of support or opposition, nor has provided any assistance to a Neighborhood Organization to meet the requirements under subsection (i)(2) of this section which are not allowed under that subsection, as it relates to the Applicant's Application or any other Application under consideration in 2008.
(L) Operate in accordance with the requirements pertaining to rental assistance in Chapter 60 of this title.
(M) A certification that the Development Owner will contract with a Management Company throughout the Compliance Period that will perform criminal background checks on all adult tenants, head and co head of households.
(5) Design Items. This exhibit will provide:
(A) All of the architectural drawings identified in clauses (i) - (iii) of this subparagraph. While full size design or construction documents are not required, the drawings must have an accurate and legible scale and show the dimensions. All Developments involving New Construction, or conversion of existing buildings not configured in the Unit pattern proposed in the Application, must provide all of the items identified in clauses (i) - (iii) of this subparagraph. For Developments involving Rehabilitation for which the Unit configurations are not being altered, only the items identified in clauses (i) and (iii) of this subparagraph are required:
(i) A site plan which:
(I) Is consistent with the number of Units and Unit mix specified in the "Rent Schedule" provided in the Application;
(II) Identifies all residential and common buildings and amenities; and
(III) Clearly delineates the flood plain boundary lines and all easements shown in the site survey;
(ii) Floor plans and elevations for each type of residential building and each common area building clearly depicting the height of each floor and a percentage estimate of the exterior composition. Adaptive Reuse Developments, are only required to provide building plans delineating each unit by number, type and area consistent with those in the "Rent Schedule" and pictures of each elevation of the existing building depicting the height of each floor and percentage estimate of the exterior composition; and
(iii) Unit floor plans for each type of Unit showing special accessibility and energy features. The net rentable areas these Unit floor plans represent should be consistent with those shown in the "Rent Schedule" provided in the Application. Adaptive Reuse Developments, are only required to provide Unit floor plans for each distinct typical Unit type (i.e. one-bedroom, two-bedroom) and for all Units types that vary in area by 10% from the typical Unit; and
(B) A boundary survey of the proposed Development Site and of the property to be purchased. In cases where more property is purchased than the proposed Development Site, the survey or plat must show the survey calls for both the larger site and the Development Site. The survey does not have to be recent; but it must show the property purchased and the property proposed for the Development Site. In cases where the Development Site is only a part of the site being purchased, the depiction or drawing of the Development Site may be professionally compiled and drawn by an architect, engineer or surveyor.
(6) Evidence of the Development's development costs and corresponding credit request and syndication information as described in subparagraphs (A) - (G) of this paragraph.
(A) A written narrative describing the financing plan for the Development, including any non-traditional financing arrangements; the use of funds with respect to the Development; the funding sources for the Development including construction, permanent and bridge loans, rents, operating subsidies, and replacement reserves; and the commitment status of the funding sources for the Development. This information must be consistent with the information provided throughout the Application. (§2306.6705(1))
(B) All Developments must submit the "Development Cost Schedule" provided in the Application. This exhibit must have been prepared and executed not more than 6 months prior to the close of the Application Acceptance Period.
(C) Provide a letter of commitment from a syndicator that, at a minimum, provides an estimate of the amount of equity dollars expected to be raised for the Development in conjunction with the amount of Housing Tax Credits requested for allocation to the Development Owner, including pay-in schedules, syndicator consulting fees and other syndication costs. No syndication costs should be included in the Eligible Basis. (§2306.6705(2) and (3))
(D) For Developments located in a Qualified Census Tract (QCT) as determined by the Secretary of HUD and qualifying for a 30% increase in Eligible Basis, pursuant to the Code, §42(d)(5)(C), if permitted under §50.6(h) of this chapter, Applicants must submit a copy of the census map clearly showing that the proposed Development is located within a QCT. Census tract numbers must be clearly marked on the map, and must be identical to the QCT number stated in the Department's Reference Manual.
(E) Rehabilitation Developments must submit a Property Condition Assessment meeting the requirements of paragraph (14)(C) of this subsection.
(F) If offsite costs are included in the budget as a line item, or embedded in the site acquisition contract, or referenced in the utility provider letters, then the supplemental form "Off Site Cost Breakdown" must be provided.
(G) If projected site work costs include unusual or extraordinary items or exceed $9,000 per Unit, then the Applicant must provide a detailed cost breakdown prepared by a Third Party engineer or architect, and a letter from a certified public accountant allocating which portions of those site costs should be included in Eligible Basis and which ones may be ineligible.
(7) Evidence of readiness to proceed as evidenced by at least one of the items under each of subparagraphs (A) - (D) of this paragraph:
(A) Evidence of Property control in the name of the Development Owner. If the evidence is not in the name of the Development Owner, then the documentation should reflect an expressed ability to transfer the rights to the Development Owner. All of the sellers of the proposed Property for the 36 months prior to the first day of the Application Acceptance Period and their relationship, if any, to members of the Development team must be identified at the time of Application (not required at Pre-Application). One of the following items described in clauses (i) - (iii) of this subparagraph must be provided, and if the acquisition can be characterized as an identity of interest transaction as described in §1.32 of this title, items described in clause (iv) of this subparagraph must also be provided:
(i) A recorded warranty deed with corresponding executed settlement statement, unless required to submit items under clause (iv) of this subparagraph; or
(ii) A contract for lease (the minimum term of the lease must be at least 45 years) which is valid for the entire period the Development is under consideration for tax credits; or
(iii) A contract for sale, or an exclusive option to purchase or lease which is valid for the entire period the Development is under consideration for tax credits. For Tax Exempt Bond Development Applications, site control must be valid through December 1, 2007 with option to extend through March 1, 2008 (Applications submitted for lottery) or 90 days from the date of the bond reservation with the option to extend through the scheduled TDHCA Board meeting at which the award of Housing Tax Credits will be considered. The potential expiration of site control does not warrant the Application being presented to the TDHCA Board prior to the scheduled meeting.
(iv) If the acquisition can be characterized as an identity of interest transaction as described in §1.32 of this title, subclauses (I), (II) and (III) of this clause will be required (not required at Pre-Application):
(I) Documentation of the original acquisition cost in the form of a settlement statement or, if a settlement statement is not available, the seller's most recent audited financial statement indicating the asset value for the Development Site, and
(II) If the original acquisition cost evidenced by subclause (I) of this clause is less than the acquisition cost claimed in the Application,
(-a-) An appraisal meeting the requirements of paragraph (14)(D) of this subsection, and
(-b-) Any other verifiable costs of owning, holding, or improving the Property that when added to the value from subclause (I) of this clause justifies the Applicant's proposed acquisition amount.
(-1-) For land-only transactions, documentation of owning, holding or improving costs since the original acquisition date may include property taxes, interest expense, a calculated return on equity at a rate consistent with the historical returns of similar risks, the cost of any physical improvements made to the property, the cost of rezoning, replatting or developing the property, or any costs to provide or improve access to the property.
(-2-) For transactions which include existing buildings that will be rehabilitated or otherwise maintained as part of the Development, documentation of owning, holding, or improving costs since the original acquisition date may include capitalized costs of improvements to the property, a calculated return on equity at a rate consistent with the historical returns of similar risks, and allow the cost of exit taxes not to exceed an amount necessary to allow the sellers to be made whole in the original and subsequent investment in the property and avoid foreclosure.
(III) In no instance will the acquisition cost utilized by the underwriter exceed the lesser of the original acquisition cost evidenced by subclause (I) of this clause plus costs identified in subclause (II)(-b-) of this clause, or the "as-is" value conclusion evidenced by subclause (II)(-a-) of this clause.
(v) As described in clauses (ii) and (iii) of this subparagraph, property control must be continuous. Closing on the property is acceptable, as long as evidence is provided that there was no period in which control was not retained.
(B) Evidence from the appropriate local municipal authority that satisfies one of clauses (i) - (iii) of this subparagraph. Documentation may be from more than one department of the municipal authority and must have been prepared and executed not more than 6 months prior to the close of the Application Acceptance Period. (§2306.6705(5))
(i) For New Construction or reconstruction Developments, a letter from the chief executive officer of the political subdivision or another local official with appropriate jurisdiction stating that:
(I) The Development is located within the boundaries of a political subdivision which does not have a zoning ordinance; and either subclauses (II) or (III) of this clause;
(II) The letter must state that the Development is consistent with a local consolidated plan, comprehensive plan, or other local planning document that addresses affordable housing; or
(III) The letter must state that there is a need for affordable housing, if no such planning document exists.
(ii) For New Construction or reconstruction Developments, a letter from the chief executive officer of the political subdivision or another local official with appropriate jurisdiction stating that:
(I) The Development is permitted under the provisions of the zoning ordinance that applies to the location of the Development; or
(II) The Applicant is in the process of seeking the appropriate zoning and has signed and provided to the political subdivision a release agreeing to hold the political subdivision and all other parties harmless in the event that the appropriate zoning is denied, and a time schedule for completion of appropriate zoning. The Applicant must also provide at the time of Application a copy of the application for appropriate zoning filed with the local entity responsible for zoning approval and proof of delivery of that application in the form of a signed certified mail receipt, signed overnight mail receipt, or confirmation letter from said official. Final approval of appropriate zoning must be achieved and documentation of acceptable zoning for the Development, as proposed in the Application, must be provided to the Department at the time the Commitment Fee, or Determination Notice Fee, is paid. If this evidence is not provided with the Commitment Fee, any commitment of credits will be rescinded. No extensions may be requested for the deadline for submitting evidence of final approval of appropriate zoning.
(iii) For Rehabilitation Developments, if the property is currently a non-conforming use as presently zoned, a letter from the chief executive officer of the political subdivision or another local official with appropriate jurisdiction which addresses the items in subclauses (I) - (IV) of this clause:
(I) A detailed narrative of the nature of non-conformance;
(II) The applicable destruction threshold;
(III) Owner's rights to reconstruct in the event of damage; and
(IV) Penalties for noncompliance.
(C) Evidence of interim and permanent financing sufficient to fund the proposed Total Housing Development Cost less any other funds requested from the Department and any other sources documented in the Application. Any local, state or federal financing identified in this section which restricts household incomes at any AMGI lower than restrictions required pursuant to the Rules must be identified in the Rent Schedule and the local, state or federal income restrictions must include corresponding rent levels that do not exceed 30% of the income limitation in accordance with §42(g) of the Code. The income and corresponding rent restrictions will be imposed by the Housing Tax Credit LURA and monitored throughout the extended use period. Such evidence must be consistent with the sources and uses of funds represented in the Application and shall be provided in one or more of the following forms described in clauses (i) - (iv) of this subparagraph:
(i) Bona fide financing in place as evidenced by:
(I) A valid and binding loan agreement;
(II) Deed(s) of trust in the name of the Development Owner expressly allowing transfer to the Development Owner; and
(III) For TRDO-USDA §515 Developments involving, an executed TRDO-USDA letter indicating TRDO-USDA has received a Consent Request, also referred to as a Preliminary Submittal, as described in 7 CFR §3560.406 and a copy of the original loan documents; or,
(ii) Bona fide commitment or term sheet for the interim and permanent loans issued by a lending institution or mortgage company that is actively and regularly engaged in the business of lending money which is addressed to the Development Owner and which has been executed by the lender (the term of the loan must be for a minimum of 15 years with at least a 30 year amortization). The commitment must state an expiration date and all the terms and conditions applicable to the financing including the mechanism for determining the interest rate, if applicable, and the anticipated interest rate and any required Guarantors. Such a commitment may be conditional upon the completion of specified due diligence by the lender and upon the award of tax credits; or,
(iii) Any Federal, State or local gap financing, whether of soft or hard debt, must be identified at the time of Application as evidenced by:
(I) Evidence from the lending agency that an application for funding has been made or from the Applicant indicating an intent to apply for funding; and
(II) A term sheet which clearly describes the amount and terms of the funding, and the date by which the funding determination will be made and any commitment issued, must be submitted; and
(III) Evidence of application for funding from another Department program is not required except as indicated on the Uniform Application, as long as the Department funding is on a concurrent funding period with the Application submitted and the Applicant clearly indicates that such an Application has been filed as required by the Application Submission Procedures Manual; and
(IV) If the commitment from any funding source identified in this subparagraph has not been received by the date the Department's Commitment Notice is to be submitted, the Application will be reevaluated for financial feasibility. If the Application is infeasible without the funding source, the Commitment Notice may be rescinded; or
(iv) If the Development will be financed through more than 5% of Development Owner contributions, provide a letter from an Third Party CPA verifying the capacity of the Development Owner to provide the proposed financing with funds that are not otherwise committed together with a letter from the Development Owner's bank or banks confirming that sufficient funds are available to the Development Owner. Documentation must have been prepared and executed not more than 6 months prior to the close of the Application Acceptance Period.
(D) Provide the documents in clauses (i) - (iii) of this subparagraph:
(i) A copy of the full legal description for the Development Site; and
(ii) A current valuation report from the county tax appraisal district and documentation of the current total property tax rate for the Development Site, and
(iii) A copy of:
(I) The current title policy which shows that the ownership (or leasehold) of the Development Site is vested in the exact name of the Development Owner; or
(II) a current title commitment with the proposed insured matching exactly the name of the Development Owner and the title of the Development Site vested in the exact name of the seller or lessor as indicated on the sales contract, option or lease.
(III) If the title policy or commitment is more than six months old as of the day the Application Acceptance Period closes, then a letter from the title company indicating that nothing further has transpired on the policy or commitment.
(8) Evidence in the form of a certification of all of the notifications described in the subparagraphs of this paragraph. Such notices must be prepared in accordance with the "Public Notifications" certification provided in the Application.
(A) Evidence in the form of a certification that the Applicant met the requirements and deadlines identified in clauses (i) - (iii) of this subparagraph. Notification must not be older than three months from the first day of the Application Acceptance Period. (§2306.6705(9)). If evidence of these notifications was submitted with the Pre-Application Threshold for the same Application and satisfied the Department's review of Pre-Application Threshold, then no additional notification is required at Application, except that re-notification is required by tax credit Applicants who have submitted a change in the Application, whether from Pre-Application to Application or as a result of an Administrative Deficiency that reflects a total Unit increase of greater than 10%, a total increase of greater than 10% for any given level of AMGI, or a change to the population being served (elderly, Intergenerational Housing or family). For Applications submitted for Tax-Exempt Bond Developments or Applications not applying for Tax Credits, but applying only under other Multifamily Programs (HOME, Housing Trust Fund, etc.), notifications and proof thereof must not be older than three months prior to the date the Volume III of the Application is submitted.
(i) The Applicant must request a list of Neighborhood Organizations on record with the county and state whose boundaries include the proposed Development Site from local elected officials as follows:
(I) No later than January 15, 2008 for Competitive Housing Tax Credit Applications (or for Tax-Exempt Bond Applications, Rural Rescue, or Applications not applying for Tax Credits, but applying only for other Multifamily Programs such as HOME, Housing Trust Fund, etc., not later than 21 days prior to submission of the Threshold documentation), the Applicant must e-mail, fax or mail with registered receipt a completed "Neighborhood Organization Request" letter as provided in the Application to the local elected official for the city and county where the Development is proposed to be located. If the Development is located in an Area that has district based local elected officials, or both at-large and district based local elected officials, the request must be made to the city council member or county commissioner representing that district; if the Development is located an Area that has only at-large local elected officials, the request must be made to the mayor or county judge for the jurisdiction. If the Development is not located within a city or is located in the Extra Territorial Jurisdiction (ETJ) of a city, the county local elected official must be contacted. In the event that local elected officials refer the Applicant to another source, the Applicant must request Neighborhood Organizations from that source in the same format.
(II) If no reply letter is received from the local elected officials by February 21, 2008, (or For Tax-Exempt Bond Developments or Applications not applying for Tax Credits, but applying only for other Multifamily Programs such as HOME, Housing Trust Fund, etc., by 7 days prior to the submission of the Application), then the Applicant must certify to that fact in the "Application Notification Certification Form" provided in the Application.
(III) The Applicant must list all Neighborhood Organizations on record with the county or state whose boundaries include the proposed Development Site as outlined by the local elected officials, or that the Applicant has knowledge of as of the submission of the Application, in the "Application Notification Certification Form" provided in the Application.
(ii) Not later than the date the Application is submitted, notification must be sent to all of the following individuals and entities by e-mail, fax or mail with registered receipt return or similar tracking mechanism e-mail, fax or mail with registered receipt in the format required in the "Application Notification Template" provided in the Application. Developments located in an Extra Territorial Jurisdiction (ETJ) of a city are not required to notify city officials. Evidence of Notification is required in the form of a certification in the "Application Notification Certification Form" provided in the Application, although it is encouraged that Applicants retain proof of notifications in the event that the Department requires proof of Notification. Officials to be notified are those officials in office at the time the Application is submitted.
(I) Neighborhood Organizations on record with the state or county whose boundaries include the proposed Development Site as identified in clause (i)(III) of this subparagraph.
(II) Superintendent of the school district containing the Development;
(III) Presiding officer of the board of trustees of the school district containing the Development;
(IV) Mayor of the governing body of any municipality containing the Development;
(V) All elected members of the governing body of any municipality containing the Development;
(VI) Presiding officer of the governing body of the county containing the Development;
(VII) All elected members of the governing body of the county containing the Development;
(VIII) State senator of the district containing the Development; and
(IX) State representative of the district containing the Development.
(iii) Each such notice must include, at a minimum, all of the following:
(I) The Applicant's name, address, individual contact name and phone number;
(II) The Development name, address, city and county;
(III) A statement informing the entity or individual being notified that the Applicant is submitting a request for Housing Tax Credits with the Texas Department of Housing and Community Affairs;
(IV) Statement of whether the Development proposes New Construction, reconstruction, Adaptive Reuse or Rehabilitation;
(V) The type of Development being proposed (single family homes, duplex, apartments, townhomes, high-rise etc.) and population being served (family, Intergenerational Housing or elderly);
(VI) The approximate total number of Units and approximate total number of low-income Units;
(VII) The approximate percentage of Units serving each level of AMGI (e.g. 20% at 50% of AMGI, etc.) and the approximate percentage of Units that are market rate;
(VIII) The number of Units and proposed rents (less utility allowances) for the low-income Units and the number of Units and the proposed rents for any market rate Units. Rents to be provided are those that are effective at the time of the Application, which are subject to change as annual changes in the area median income occur; and
(IX) The expected completion date if credits are awarded.
(B) Signage on Property or Alternative. A Public Notification Sign shall be installed on the Development Site prior to the date the Application is submitted unless prohibited by local ordinance or code. Scattered site Developments must install a sign on each Development Site. For Competitive Housing Tax Credit Applications the date, time and location of the public hearing, as published by the Department and closest to the Development Site, must be included on the sign. For Tax-Exempt Bond Developments, regardless of the Priority of the Application or the Issuer, the sign must be installed within thirty (30) days of the Department's receipt of Volumes I and II. The date, time and location of the bond Tax Exempt Fiscal Responsibility Act (TEFRA) public hearing must be included on the sign no later than thirty (30) days prior to the scheduled public hearing. Evidence submitted with the Application must include photographs of the site with the installed sign. The sign must be at least 4 feet by 8 feet in size and located within twenty feet of, and facing, the main road adjacent to the site. The sign shall be continuously maintained on the site until the day that the Board takes final action on the Application for the Development. The information and lettering on the sign must meet the requirements identified in the Application. For Tax-Exempt Bond Developments, regardless of the issuer, the Applicant must certify to the fact that the sign was installed within 30 days of submission and the date, time and location of the bond hearing is indicated on the sign at least 30 days prior to the date of the scheduled hearing. In areas where the Public Notification Sign is prohibited by local ordinance or code, an alternative to installing a Public Notification Sign and at the same required time, the Applicant shall, mail written notification to those addresses described in either clause (i) or (ii) of this subparagraph. This written notification must include the information otherwise required for the sign as provided in the Application. The final Application must include a map of the proposed Development Site and mark the distance required by clause (i) or (ii) of this subparagraph, up to 1,000 feet, 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. If Public Notification Sign is prohibited by local ordinance or code, evidence of the applicable ordinance or code must be submitted in the Application.
(i) All addresses required for notification by local zoning notification requirements. For example, if the local zoning notification requirement is notification to all those addresses within 200 feet, then that would be the distance used for this purpose; or
(ii) For Developments located in communities that do not have zoning, communities that do not require a zoning notification or those located outside of a municipality, all addresses located within 1,000 feet of any part of the proposed Development Site.
(C) If any of the Units in the Development are occupied at the time of Application, then the Applicant must certify that it has notified each tenant at the Development of all the information otherwise required on the sign, including the Department's public hearing schedule for comment on submitted Applications.
(9) Evidence of the Development's proposed ownership structure and the Applicant's previous experience as described in subparagraphs (A) - (D) of this paragraph.
(A) Chart which clearly illustrates the complete organizational structure of the final proposed Development Owner and of any Developer or Guarantor, providing the names and ownership percentages of all Persons having an ownership interest in the Development Owner or the Developer or Guarantor, as applicable, whether directly or through one or more subsidiaries. Nonprofit entities, public housing authorities, publicly traded corporations, individual board members, and executive directors must be included in this exhibit.
(B) Each Applicant, Development Owner, Developer or Guarantor, or any entity shown on an organizational chart as described in subparagraph (A) of this paragraph that has ownership interest in the Development Owner, Developer or Guarantor, shall provide the following documentation, as applicable:
(i) For entities that are not yet formed but are to be formed either in or outside of the state of Texas, a certificate of reservation of the entity name from the Texas Secretary of State; or
(ii) For existing entities whether formed in or outside of the state of Texas, evidence that the entity has the authority to do business in Texas or has applied for such authority.
(C) Evidence that each entity shown on the organizational chart described in subparagraph (A) of this paragraph that has ownership interest in the Development Owner, Developer or Guarantor, has provided a copy of the completed and executed Previous Participation and Background Certification Form to the Department. Nonprofit entities, public housing authorities and publicly traded corporations are required to submit documentation for the entities involved; documentation for individual board members and executive directors is required for this exhibit. Any Person receiving more than 10% of the Developer fee will also be required to submit documents for this exhibit. The 2008 versions of these forms, as required in the Uniform Application, must be submitted. Units of local government are also required to submit this document. The form must include a list of all developments that are, or were, previously under ownership or Control of the Person. All participation in any TDHCA funded or monitored activity, including non-housing activities, must be disclosed.
(D) Evidence, in the form of a certification, that one of the Development Owner's General Partners, the Developer or their Principals have a record of successfully constructing or developing residential units in the capacity of owner, General Partner or Developer. Evidence must be a certification from the Department that the Person with the experience satisfies this exhibit, as further described under subsection (g)(1) of this section. Applicants must request this certification at least fourteen days prior to the close of the Application Acceptance Period. Applicants must ensure that the Person whose name is on the certification appears in the organizational chart provided in subparagraph (A) of this paragraph.
(10) Evidence of the Development's projected income and operating expenses as described in subparagraphs (A) - (D) of this paragraph:
(A) All Developments must provide a 30-year proforma estimate of operating expenses and supporting documentation used to generate projections (operating statements from comparable properties).
(B) If rental assistance, an operating subsidy, an annuity, or an interest rate reduction payment is proposed to exist or continue for the Development, any related contract or other agreement securing those funds or proof of application for such funds must be provided, which at a minimum identifies the source and annual amount of the funds, the number of Units receiving the funds, and the term and expiration date of the contract or other agreement. (§2306.6705(4))
(C) Applicant must provide documentation from the source of the "Utility Allowance" estimate used in completing the Rent Schedule provided in the Application. This exhibit must clearly indicate which utility costs are included in the estimate.
(D) Occupied Developments undergoing Rehabilitation must also submit the items described in clauses (i) - (iv) of this subparagraph.
(i) The items in subclauses (I) and (II) of this clause are required unless the current property owner is unwilling to provide the required documentation. In that case, submit a signed statement as to the Applicant's inability to provide all documentation as described.
(I) Submit at least one of the following:
(-a-) Historical monthly operating statements of the subject Development for 12 consecutive months ending not more than 3 months from the first day of the Application Acceptance Period;
(-b-) The two most recent consecutive annual operating statement summaries;
(-c-) The most recent consecutive six months of operating statements and the most recent available annual operating summary;
(-d-) All monthly or annual operating summaries available and a written statement from the seller refusing to supply any other summaries or expressing the inability to supply any other summaries, and any other supporting documentation used to generate projections may be provided; and
(II) A rent roll not more than 6 months old as of the first day the Application Acceptance Period, that discloses the terms and rate of the lease, rental rates offered at the date of the rent roll, Unit mix, tenant names or vacancy, and dates of first occupancy and expiration of lease.
(ii) A written explanation of the process used to notify and consult with the tenants in preparing the Application; (§2306.6705(6))
(iii) For Intergenerational Housing Applications or Qualified Elderly Developments, identification of the number of existing tenants qualified under the target population elected under this title;
(iv) A relocation plan outlining relocation requirements and a budget with an identified funding source; and (§2306.6705(6))
(v) If applicable, evidence that the relocation plan has been submitted to the appropriate legal or governmental agency. (§2306.6705(6))
(11) Applications involving Nonprofit General Partners and Qualified Nonprofit Developments.
(A) All Applications involving a nonprofit General Partner, regardless of the Set-Aside applied under, in which the Development will receive some financial or tax benefit for the involvement of the nonprofit General Partner, must submit all of the documents described in clauses (i) and (ii) of this subparagraph and indicate the nonprofit status on the carryover documentation and IRS Forms 8609: (§2306.6706)
(i) An IRS determination letter which states that the nonprofit organization is a §501(c)(3) or (4) entity or; and
(ii) The "Nonprofit Participation Exhibit."
(B) Additionally, all Applications applying under the Nonprofit Set-Aside, established under §50.7(b)(1) of this chapter, must also provide the following information with respect to the Qualified Nonprofit Organization as described in clauses (i) - (iii) of this subparagraph.
(i) A Third Party legal opinion stating:
(I) That the nonprofit organization is not affiliated with or Controlled by a forprofit organization and the basis for that opinion, and
(II) That the nonprofit organization is eligible, as further described, for a Housing Credit Allocation from the Nonprofit Set-Aside and the basis for that opinion. Eligibility is contingent upon the non-profit organization Controlling the Development, or if the organization's Application is filed on behalf of a limited partnership, or limited liability company, the Qualified Nonprofit Organization must be the controlling Managing Member; and otherwise meet the requirements of the Code, §42(h)(5),
(III) That one of the exempt purposes of the nonprofit organization is to provide low-income housing, and
(IV) That the nonprofit organization prohibits a member of its board of directors, other than a chief staff member serving concurrently as a member of the board, from receiving material compensation for service on the board, and
(V) That the Qualified Nonprofit Development will have the nonprofit entity or its nonprofit Affiliate or subsidiary be the Developer or co-Developer as evidenced in the development agreement; and
(ii) A copy of the nonprofit organization's most recent audited financial statement; and
(iii) Evidence in the form of a certification that a majority of the members of the nonprofit organization's board of directors principally reside:
(I) In this state, if the Development is located in a Rural Area; or
(II) Not more than 90 miles from the Development, if the Development is not located in a Rural Area.
(12) Applicants applying for acquisition credits must provide must provide
(A) An appraisal meeting the requirements of paragraph (14)(D) of this subsection, and
(B) An "Acquisition of Existing Buildings Form."
(13) Evidence of Financial Statement and Authorization to Release Credit Information. The financial statements and authorization to release credit information must be unbound and clearly labeled. A "Financial Statement and Authorization to Release Credit Information" must be completed and signed for any General Partner, Developer or Guarantor and any Person that has an ownership interest of 10% or more in the Development Owner, General Partner, Developer, or Guarantor. Nonprofit entities, public housing authorities and publicly traded corporations are only required to submit documentation for the entities involved; documentation for individual board members and executive directors is not required for this exhibit.
(A) Financial statements for an individual must not be older than 90 days from the first day of the Application Acceptance Period.
(B) Financial statements for partnerships or corporations should be for the most recent fiscal year ended 90 days from the first day of the Application Acceptance Period. An audited financial statement should be provided, if available, and all partnership or corporate financials must be certified. Financial statements are required for an entity even if the entity is wholly-owned by a Person who has submitted this document as an individual.
(C) Entities that have not yet been formed and entities that have been formed recently but have no assets, liabilities, or net worth are not required to submit this documentation, but must submit a statement with their Application that this is the case.
(14) Supplemental Threshold Reports. All Applications must include documents under subparagraphs (A) and (B) of this paragraph. If required under paragraph (6) of this subsection, a Property Condition Assessment as described in subparagraph (C) of this paragraph must be submitted. If required under paragraph (7) or (12) of this subsection, an appraisal as described in subparagraph (D) of this paragraph must be submitted. All submissions must meet the requirements stated in subparagraphs (E) - (G) of this paragraph.
(A) A Phase I Environmental Site Assessment (ESA) report:
(i) Prepared by a qualified Third Party;
(ii) Dated not more than 12 months prior to the first day of the Application Acceptance Period. In the event that a Phase I Environmental Site Assessment on the Development is more than 12 months old prior to the first day of the Application Acceptance Period, the Applicant must supply the Department with an updated letter or updated report dated not more than three months prior to the first day of the Application Acceptance Period from the Person or organization which prepared the initial assessment confirming that the site has been re-inspected and reaffirming the conclusions of the initial report or identifying the changes since the initial report; and
(iii) Prepared in accordance with the Department's Environmental Site Assessment Rules and Guidelines, §1.35 of this title.
(iv) Developments whose funds have been obligated by TRDO-USDA will not be required to supply this information; however, the Applicants of such Developments are hereby notified that it is their responsibility to ensure that the Development is maintained in compliance with all state and federal environmental hazard requirements.
(B) A comprehensive Market Analysis report:
(i) Prepared by a Third Party Qualified Market Analyst approved by the Department in accordance with the approval process outlined in the Market Analysis Rules and Guidelines, §1.33 of this title;
(ii) Dated not more than 6 months prior to the first day of the Application Acceptance Period. In the event that a Market Analysis is more than 6 months old prior to the first day of the Application Acceptance Period, the Applicant must supply the Department with an updated Market Analysis from the Person or organization which prepared the initial report; however the Department will not accept any Market Analysis which is more than 12 months old as of the first day of the Application Acceptance Period; and
(iii) Prepared in accordance with the methodology prescribed in the Department's Market Analysis Rules and Guidelines, §1.33 of this title.
(iv) For Applications in the TRDO-USDA Set-Aside proposing acquisition and Rehabilitation with residential structures at or above 80% occupancy at the time of Application Submission, the appraisal, required under paragraphs (7) or (12) of this subsection and prepared in accordance with the Uniform Standards of Professional Appraisal Practice and the Department's Appraisal Rules and Guidelines, §1.34 of this title, will satisfy the requirement for a Market Analysis; however the Department may request additional information as needed. (§2306.67055) (§42(m)(1)(A)(iii))
(C) A Property Condition Assessment (PCA) report:
(i) Prepared by a qualified Third Party;
(ii) Dated not more than 6 months prior to the first day of the Application Acceptance Period; and
(iii) Prepared in accordance with the Department's Property Condition and Assessment Rules and Guidelines, §1.36 of this title.
(iv) For Developments which require a capital needs assessment from TRDO-USDA, the capital needs assessment may be substituted and may be more than 6 months old, as long as TRDO-USDA has confirmed in writing that the existing capital needs assessment is still acceptable.
(D) An appraisal report:
(i) Prepared by a qualified Third Party;
(ii) Dated not more than 6 months prior to the first day of the Application Acceptance Period. In the event that an appraisal is more than 6 months old prior to the first day of the Application Acceptance Period, the Applicant must supply the Department with an updated appraisal from the Person or organization which prepared the initial report; however the Department will not accept any appraisal which is more than 12 months old as of the first day of the Application Acceptance Period; and
(iii) Prepared in accordance with the Uniform Standards of Professional Appraisal Practice and the Department's Appraisal Rules and Guidelines, §1.34 of this title.
(iv) For Developments that require an appraisal from TRDO-USDA, the appraisal may be more than 6 months old, as long as TRDO-USDA has confirmed in writing that the existing appraisal is still acceptable.
(E) Inserted at the front of each of these reports must be a transmittal letter from the individual preparing the report that states that the Department is granted full authority to rely on the findings and conclusions of the report. The transmittal letter must also state the report preparer has read and understood the Department rules specific to the report found at §§1.33 - 1.36 of this title.
(F) All Applicants acknowledge by virtue of filing an Application that the Department is not bound by any opinion expressed in the report. The Department may determine from time to time that information not required in the Department's Rules and Guidelines will be relevant to the Department's evaluation of the need for the Development and the allocation of the requested Housing Credit Allocation Amount. The Department may request additional information from the report provider or revisions to the report to meet this need. In instances of non-response by the report provider, the Department may substitute in-house analysis.
(G) The requirements for each of the reports identified in subparagraphs (A) - (C) of this paragraph can be satisfied in either of the methods identified in clause (i) or (ii) of this subparagraph and meet the requirements of clause (iii) of this subparagraph.
(i) Upon Application submission, the documentation for each of these exhibits may be submitted in its entirety; or
(ii) Upon Application submission, the Applicant may provide evidence in the form of an executed engagement letter with the party performing each of the individual reports that the required exhibit has been commissioned to be performed and that the delivery date will be no later than April 1, 2008. In addition to the submission of the engagement letter with the Application, a map must be provided that reflects the Qualified Market Analyst's intended market area. Subsequently, the entire exhibit must be submitted on or before 5:00 p.m. CST, April 1, 2008. If the entire exhibit is not received by that time, the Application will be terminated and will be removed from consideration.
(iii) A single hard copy of the report and a searchable soft copy in the format of a single file containing all information and exhibits in the hard copy report, presented in the order they appear in the hard copy report on a CD-R clearly labeled with the report type, Development name, and Development location are required.
(15) Self-Scoring. Applicant's self-score must be completed on the "Application Self-Scoring Form." An Applicant may not adjust the Application Self Scoring Form without a request from the Department as a result of an Administrative Deficiency.
(i) Selection Criteria. All Applications will be scored and ranked using the point system identified in this subsection. Unless otherwise stated, use normal rounding. Points other than paragraphs (2) and (6) of this subsection will not be awarded unless requested in the Self Scoring Form. All Applications, with the exception of TRDO-USDA Applications, must receive a final score totaling a minimum of 111, not including any points awarded or deducted pursuant to paragraphs (2) and (6) of this subsection to be eligible for an allocation of Housing Tax Credits. Maximum Total Points: 228.
(1) Financial Feasibility of the Development. Financial Feasibility of the Development based on the supporting financial data required in the Application that will include a Development underwriting pro forma from the permanent or construction lender. (§2306.6710(b)(1)(A)). Applications may qualify to receive 28 points for this item. No partial points will be awarded. Evidence will include the documentation required for this exhibit, as reflected in the Application submitted, in addition to the commitment letter required under subsection (h)(7)(C) of this section. The supporting financial data shall include:
(A) A fifteen year pro forma prepared by the permanent or construction lender:
(i) Specifically identifying each of the first five years and every fifth year thereafter;
(ii) Specifically identifying underlying assumptions including, but not limited to general growth factor applied to income and expense; and
(iii) Indicating that the Development maintains a minimum 1.15 debt coverage ratio throughout the initial fifteen years proposed for all third party lenders that require scheduled repayment; and
(B) A statement in the commitment letter, or other form deemed acceptable by the Department, indicating that the lender's assessment finds that the Development will be feasible for fifteen years.
(C) For Developments receiving financing from TRDO-USDA, the form entitled "Sources and Uses Comprehensive Evaluation for Multi-Family Housing Loans" or other form deemed acceptable by the Department shall meet the requirements of this section.
(2) Quantifiable Community Participation from Neighborhood Organizations on Record with the State or County and Whose Boundaries Contain the Proposed Development Site. Points will be awarded based on written statements of support or opposition from Neighborhood Organizations on record with the state or county in which the Development is to be located and whose boundaries contain the proposed Development site. (§2306.6710(b)(1)(B); §2306.6725(a)(2)). It is possible for points to be awarded or deducted based on written statements from organizations that were not identified by the process utilized for notification purposes under subsection (h)(8)(A)(ii) of this section if the organization provides the information and documentation required in subparagraphs (A) - (C) of this paragraph. It is also possible that neighborhood organizations that were initially identified as appropriate organizations for purposes of the notification requirements will subsequently be determined by the Department not to meet the requirements for scoring.
(A) Basic Submission Requirements for Scoring. Each Neighborhood Organization may submit one letter (and enclosures) that represents the organization's input. In order to receive a point score, the letter (and enclosures) must be received or postmarked (or similar tracking system) by the Department no later than February 29, 2008, for letters relating to Applications that submitted a Pre-Application, or April 1, 2008 if a Pre-Application was not submitted. Letters should be addressed to the Texas Department of Housing and Community Affairs, "Attention: Executive Director (Neighborhood Input)." Letters received after the applicable deadline will be summarized for the Board's information and consideration, but will not affect the score for the Application. The organization's letter (and enclosures) must:
(i) State the name and location of the proposed single Development;
(ii) Certify that the letter is signed by the person with the authority to sign on behalf of the neighborhood organization, and provide:
(I) the street and/or mailing addresses;
(II) day and evening phone numbers;
(III) and e-mail addresses and/or facsimile numbers for the signer of the letter; and
(IV) for one additional contact including their contact information for the organization;
(iii) Certify that the organization has boundaries, and that the boundaries in effect February 29, 2008 contain the proposed Development Site;
(iv) Certify that the organization meets the definition of "Neighborhood Organization as defined in §50.3(63) of this chapter." For the purposes of this section, a "Neighborhood Organization" is defined as an organization of persons living near one another within the organization's defined boundaries in effect February 29, 2008 that contain the proposed Development site and that has a primary purpose of working to maintain or improve the general welfare of the neighborhood. "Neighborhood Organizations" include homeowners associations, property owners associations, and resident councils in which the council is commenting on the Rehabilitation or reconstruction of the property occupied by the residents. "Neighborhood Organizations" do not include broader based "community" organizations.
(v) Include documentation showing that the organization is on record as of February 29, 2008 with the state or county in which the Development is proposed to be located. The receipt of a QCP letter, by the Department on or before February 29, 2008, that meets the requirements outlined in the QCP neighborhood information packet and the 2008 QAP, will constitute being on record with the State. The Neighborhood Organization must include in its letter, a contact name with a mailing address and phone number; and a written description and map of the organization's geographical boundaries, as well as proof that the boundaries described were in effect as of February 29, 2008. This request must be received no later than February 29, 2008. Acceptance of this documentation will be subject to Department approval. The Department is permitted to issue a deficiency notice for this registration process and if satisfied, the organization will still be deemed to be timely placed on record with the state.
(vi) Accurately certify that the Neighborhood Organization was not formed by any Applicant, Developer, or any employee or agent of any Applicant (the seller of land is not considered, with the exception of an identity of interest, to be an agent of the Application) in the 2008 Competitive Housing Tax Credit Application Round, that the organization and any member did not accept money or a gift to cause the Neighborhood Organization to take its position of support or opposition, and has not provided any assistance other than education and information sharing to the Neighborhood Organization to meet the requirements of this subparagraph for any Application in the Application Round (i.e. hosting a public meeting, providing the "TDHCA Information Packet for Neighborhoods" to the Neighborhood Organization, or referring the Neighborhood Organization to TDHCA staff for guidance). Applicants may not provide any "production" assistance to meet these requirements for any Application in the Application Round (i.e. use of fax machines owned by the Applicant, use of legal counsel related to the Applicant, or assistance drafting a letter for the purposes of this subparagraph).
(vii) While not required, the organization is encouraged to hold a meeting to which all the members of the organization are invited to consider whether the organization should support, oppose, or be neutral on the proposed Development, and to have the membership vote on whether the organization should support, oppose, or be neutral on the proposed Development. The organization is also encouraged to invite the Developer or Applicant to this meeting.
(viii) Letters from Neighborhood Organizations, and subsequent correspondence from Neighborhood Organizations, may not be provided via the Applicant which includes facsimile and email communication.
(B) Scoring of Letters (and Enclosures). The input must clearly and concisely state each reason for the Neighborhood Organization's support for or opposition to the proposed Development.
(i) The score awarded for each letter for this exhibit will range from a maximum of +24 for the position support to +12 for the neutral position to 0 for a position of opposition. The number of points to be allocated to each organization's letter will be based on the organization's letter and evidence enclosed with the letter. The final score will be determined by the Executive Director. The Department may investigate a matter and contact the Applicant and Neighborhood Organizations for more information. The Department may consider any relevant information specified in letters from other Neighborhood Organizations regarding a Development in determining a score.
(ii) The Department highly values quality public input addressed to the merits of a Development. Input that points out matters that are specific to the neighborhood, the proposed site, the proposed Development, or Developer are valued. If a proposed Development is permitted by the existing or pending zoning or absence of zoning, concerns addressed by the allowable land use that are related to any multifamily development may generally be considered to have been addressed at the local level through the land use planning process. Input concerning positive efforts or the lack of efforts by the Applicant to inform and communicate with the neighborhood about the proposed Development is highly valued. If the Neighborhood Organization refuses to communicate with the Applicant the efforts of the Applicant will not be considered negative. Input that evidences unlawful discrimination against classes of persons protected by Fair Housing law or the scoring of which the Department determines to be contrary to the Department's efforts to affirmatively further fair housing will not be considered.
(iii) In general, letters that meet the requirements of this paragraph and:
(I) Establish at least one reason for support or opposition will be scored the maximum points for either support (+24 points) or opposition (zero);
(II) That do not establish a reason for support or opposition or that are unclear will be considered ineligible and scored as neutral (+12 points).
(iv) If an Application receives multiple eligible letters, the average score of all eligible letters will be applied to the Application.
(v) Applications for which no letters from Neighborhood Organizations are scored will receive a neutral score of +12 points.
(C) Basic Submission Deficiencies. The Department is authorized but not required to request that the Neighborhood Organization provide additional information or documentation the Department deems relevant to clarify information contained in the organization's letter (and enclosures). If the Department determines to request additional information from an organization, it will do so by e-mail or facsimile to the e-mail address or facsimile number provided with the organization's letter. If the deficiencies are not clarified or corrected in the Department's determination within seven business days from the date the e-mail or facsimile is sent to the organization, the organization's letter will not be considered further for scoring and the organization will be so advised. This potential deficiency process does not extend any deadline required above for the "Quantifiable Community Participation" process. An organization may not submit additional information or documentation after the applicable deadlines except in response to an e-mail or facsimile from the Department specifically requesting additional information.
(3) The Income Levels of Tenants of the Development. Applications may qualify to receive up to 22 points for qualifying under only one of subparagraphs (A) - (F) of this paragraph. To qualify for these points, the household incomes must not be higher than permitted by the AMGI level The Development Owner, upon making selections for this exhibit, will set aside Units at the levels of AMGI and will maintain the percentage of such Units continuously over the compliance and extended use period as specified in the LURA. These income levels require corresponding rent levels that do not exceed 30% of the income limitation in accordance with §42(g), Internal Revenue Code. (§2306.6710(b)(1)(C); §2306.111(g)(3)(B); §2306.6710(e); §42(m)(1)(B)(ii)(I); §2306.111(g)(3)(E))
(A) 22 points if at least 80% of the Total Units in the Development are set-aside with incomes at or below 50% of AMGI; or
(B) 22 points if at least 40% of the Total Units in the Development are set-aside with incomes at or below a combination of 50% and 30% of AMGI in which at least 5% of the Total Units are at or below 30% of AMGI; or
(C) 20 points if at least 60% of the Total Units in the Development are set-aside with incomes at or below 50% of AMGI; or
(D) 18 points if at least 10% of the Total Units in the Development are set-aside with incomes at or below 30% of AMGI; or
(E) 16 points if at least 40% of the Total Units in the Development are set-aside with incomes at or below 50% of AMGI; or
(F) 14 points if at least 35% of the Total Units in the Development are set-aside with incomes at or below 50% of AMGI.
(4) The Size and Quality of the Units (Development Characteristics). Applications may qualify to receive up to 20 points. Applications may qualify for points under both subparagraphs (A) and (B) of this paragraph. (§2306.6710(b)(1)(D); §42(m)(1)(C)(iii))
(A) Size of the Units. Applications may qualify to receive 6 points. The Development must meet the minimum requirements identified in this subparagraph to qualify for points. Six points for this item will be automatically granted for Applications involving Rehabilitation (excluding Reconstruction), Developments receiving funding from TRDO-USDA, or Developments proposing single room occupancy without meeting these square footage minimums if requested in the Self Scoring Form. The square feet of all of the Units in the Development, for each type of Unit, must be at least the minimum noted in clauses (i) - (v) of this subparagraph. Changes to an Application during any phase of the review process that decreases the square footage below the minimums noted in clause (i) - (v) of this subparagraph, will be re-evaluated and may result in a reduction of the Application score.
(i) 500 square feet for an efficiency Unit;
(ii) 650 square feet for a non-elderly one Bedroom Unit; 550 square feet for an elderly one Bedroom Unit;
(iii) 900 square feet for a non-elderly two Bedroom Unit; 750 square feet for an elderly two Bedroom Unit;
(iv) 1,000 square feet for a three Bedroom Unit; and
(v) 1,200 square feet for a four Bedroom Unit.
(B) Quality of the Units. Applications may qualify to receive up to 14 points. Applications in which Developments provide specific amenity and quality features in every Unit at no extra charge to the tenant will be awarded points based on the point structure provided in clauses (i) - (xix) of this subparagraph, not to exceed 14 points in total. Applications involving scattered site Developments must have all of the Units located with a specific amenity to count for points. Applications involving Rehabilitation (excluding reconstruction) or single room occupancy may receive 1.5 points for each point item, not to exceed 14 points in total.
(i) Covered entries (1 point);
(ii) Nine foot ceilings in living room and all bedrooms (at minimum) (1 point);
(iii) Microwave ovens (1 point);
(iv) Self-cleaning or continuous cleaning ovens (1 point);
(v) Ceiling fixtures in all rooms (light with ceiling fan in living area and all bedrooms) (1 point);
(vi) Refrigerator with icemaker (1 point);
(vii) Laundry connections (2 points);
(viii) Storage room or closet, of approximately 9 square feet or greater, which does not include bedroom, entryway or linen closets - does not need to be in the Unit but must be on the property site (1 point);
(ix) Laundry equipment (washers and dryers) for each individual unit including a front loading washer and dryer in required UFAS compliant Units (3 points);
(x) Thirty year architectural shingle roofing (1 point);
(xi) Covered patios or covered balconies (1 point);
(xii) Covered parking (including garages) of at least one covered space per Unit (2 points);
(xiii) 100% masonry on exterior, which can include stucco, cementitious board products, concrete brick and mortarless concrete masonry, but not EIFS synthetic stucco (3 points);
(xiv) Greater than 75% masonry on exterior, which can include stucco and cementitious board products, concrete brick and mortarless concrete masonry, but not EIFS synthetic stucco (1 point);
(xv) Use of energy efficient alternative construction materials (for example, Structural Insulated Panel construction) with wall insulation at a minimum of R-20 (3 points);
(xvi) R-15 Walls / R-30 Ceilings (rating of wall system) (3 points);
(xvii) 14 SEER HVAC or evaporative coolers in dry climates for New Construction, Adaptive Reuse, and reconstruction or radiant barrier in the attic for Rehabilitation (excluding reconstruction) (3 points);
(xviii) High Speed Internet service to all Units at no cost to residents (2 points); or
(xix) Fire sprinklers in all Units (2 points).
(5) The Commitment of Development Funding by Local Political Subdivisions. Applications may qualify to receive up to 18 points for qualifying under this paragraph provided for under Development Funding. (§2306.6710(b)(1)(E))
(A) Basic Submission Requirements for Scoring. Evidence of the following must be submitted in accordance with the Application Submission Procedures Manual (ASPM).
(i) The loans, grant(s) or in-kind contribution(s) must be attributed to the Total Housing Development Costs, as defined in this title, unless otherwise stipulated in this section.
(ii) An Applicant may only submit enough sources to substantiate the point request, and all sources must be included in the Sources and Uses form. For example, if an Applicant is requesting 18 points, five sources may be submitted if each is for an amount equal to 1% of the Total Housing Development Cost. However, five sources may not be submitted if each source is for an amount equal to 5% of the Total Housing Development Cost.
(iii) An Applicant may substitute any source in response to a Deficiency Notice or after the Application has been submitted to the Department.
(iv) A loan does not qualify as an eligible source unless it has a minimum term of the later of 1-year or the Placed in Service date, and the interest rate must be at the Applicable Federal Rate (AFR) or below (at the time of loan closing).
(v) In-kind contributions such as donation of land, tax exemptions, or waivers of fees such as building permits, water and sewer tap fees, or similar contributions are only eligible for points if the in-kind contribution provides a tangible economic benefit that results in a quantifiable Total Housing Development Cost reduction to benefit the Development will be acceptable to qualify for these points. The quantified value of the Total Housing Development Cost reduction may only include the value during the period the contribution or waiver is received and/or assessed. Donations of land must be under the control of the Applicant, pursuant to subsection (h)(7) of this section to qualify. The value of in-kind contributions may only include the time period between award, or August 1, 2008 and the Development's Placed in Service date, with the exception of contributions of land. The full value of land contributions, as established by the appraisal required pursuant to clause (viii) of this subparagraph. Contributions in the form of tax exemptions or abatements may only count for points if the contribution is in addition to any tax exemption or abatement required under statute.
(vi) To the extent that a Notice of Funding Availability (NOFA) is released and funds are available, funds from TDHCA's HOME Investment Partnerships (HOME) Program will qualify if a resolution, dated on or before the date the Application Acceptance Period ends, is submitted with the Application from the Local Political Subdivision authorizing the Applicant to act on behalf of the Local Political Subdivision in applying for HOME Funds from TDHCA for the particular Application. TDHCA's HOME funds may be substituted for a source originally submitted with the Application, provided the HOME funds substituted are from a NOFA released after the Application Acceptance Period ends and a resolution is submitted with the substitution documentation from the Local Political Subdivision authorizing the Applicant to act on behalf of the Local Political Subdivision in applying for HOME Funds from TDHCA for the particular Application.
(vii) Development based rental subsidies may qualify under this section if evidence of the remaining value of the contract is submitted from the Local Political Subdivision. The value of the contract does not include past subsidies.
(viii) Evidence to be submitted with the Application must include a copy of the commitment of funds; a copy of the application to the funding entity and a letter from the funding entity indicating that the application was received; or a certification of intent to apply for funding that indicates the funding entity and program to which the application will be submitted, the loan amount to be applied for and the specific proposed terms. For in-kind contributions, evidence must be submitted in the Application from Local Political Subdivision substantiating the value of the in-kind contributions. For in-kind contributions of land, evidence of the value of the contribution must be in the form of an appraisal.
(ix) If not already provided, at the time the executed Commitment Notice is required to be submitted, the Applicant or Development Owner must provide evidence of a commitment approved by the governing body of the Local Political Subdivision for the Development Funding to the Department. If the funding commitment from the Local Political Subdivision has not been received by the date the Department's Commitment Notice is to be submitted, the Application will be evaluated to determine if the loss of these points would have resulted in the Department's not committing the tax credits. If the loss of points would have made the Application noncompetitive, the Commitment Notice will be rescinded and the credits reallocated. If the Application would still be competitive even with the loss of points and the loss would not have impacted the recommendation for an award, the Application will be reevaluated for financial feasibility. If the Application is infeasible without the Local Political Subdivision's Development Funding, the Commitment Notice will be rescinded and the credits reallocated.
(x) Funding commitments from a Local Political Subdivision will not be considered final unless the Local Political Subdivision attests to the fact that any funds committed were not first provided to the Local Political Subdivision by the Applicant, the Developer, Consultant, Related Party or any individual or entity acting on behalf of the proposed Application, unless the Applicant itself is a Local Political Subdivision or subsidiary.
(B) Scoring. Points will be determined on a sliding scale based on the percentage of the Total Housing Development Costs of the Development, as reflected in the in the Development Cost Schedule. If a revised Development Cost Schedule is submitted to the Department in response to a deficiency notice at anytime during the review process, the Revised Development Cost Schedule will be utilized for this calculation, and Applicants will be notified of the revised score, consistent with subsection (e) of this section. Do not round for the following calculations. The "total contribution" is the total combined value of qualifying loan(s), grants or in-kind contributions from a Local Political Subdivision pursuant to subparagraph (A) of this paragraph.
(i) A total contribution equal to or greater than 1% of the Total Housing Development Cost of the Development receives 6 points; or
(ii) A total contribution equal to or greater than 2.5% of the Total Housing Development Cost of the Development receives 12 points; or
(iii) A total contribution equal to or greater than 5% of the Total Housing Development Cost of the Development receives 18 points.
(6) The Level of Community Support from State Representative or State Senator. The level of community support for the Application, evaluated on the basis of written statements received from the State Representative or State Senator that represents the district containing the proposed Development Site. (§2306.6710(b)(1)(F) and (f); §2306.6725(a)(2)). Applications may qualify to receive 14 points for this item. Letters of support must identify the specific Development and must clearly state support for or opposition to the specific Development. This documentation will be accepted with the Application or through delivery to the Department from the Applicant or the State Representative or Senator by April 1, 2008. State Representatives or Senators to be considered are those State Representatives or Senators in office at the time the Application is submitted. Letters of support from State Representatives or Senators that do not represent the district containing the proposed Development Site will not qualify for points under this Exhibit. Neutral letters, or letters that do not specifically refer to the Development, will receive neither positive nor negative points. Letters from State of Texas Representative or Senator: support letters are +14 points; opposition letters are -14 points for a maximum of either 14 or -14 points. If one letter is received in support and one letter is received in opposition the score would be 0 points.
(7) The Rent Levels of the Units. Applications may qualify to receive up to 12 points for qualifying under this exhibit. (§2306.6710(b)(1)(G)). If 80% or fewer of the Units in the Development (excluding any Units reserved for a manager) are restricted to having rents plus the allowance for utilities equal to or below the maximum tax credit rent, then the Development shall be awarded 7 points. If between 81% and 85% of the Units in the Development (excluding any Units reserved for a manager) are restricted to having rents plus the allowance for utilities equal to or below the maximum tax credit rent, then the Development shall be awarded 8 points. If between 86% and 90% of the Units in the Development (excluding any Units reserved for a manager) are restricted to having rents plus the allowance for utilities equal to or below the maximum tax credit rent, then the Development shall be awarded 9 points. If between 91% and 95% of the Units in the Development (excluding any Units reserved for a manager) are restricted to having rents plus the allowance for utilities equal to or below the maximum tax credit rent, then the Development shall be awarded 10 points. If greater than 95% of the Units in the Development (excluding any Units reserved for a manager) are restricted to having rents plus the allowance for utilities equal to or below the maximum tax credit rent, then the Development shall be awarded 12 points.
(8) The Cost of the Development by Square Foot (Development Characteristics). Applications may qualify to receive 10 points for this item. (§2306.6710(b)(1)(H); §42(m)(1)(C)(iii)). For this exhibit, costs shall be defined as construction costs, including site work, direct hard costs, contingency, contractor profit, overhead and general requirements, as represented in the Development Cost Schedule. This calculation does not include indirect construction costs. The calculation will be costs per square foot of net rentable area (NRA). For the purposes of this paragraph only, if the proposed Development is an elevator building serving elderly, a single room occupancy Development, or a high rise building serving any population, the NRA may include elevator served interior corridors. The calculations will be based on the cost listed in the Development Cost Schedule and NRA shown in the Rent Schedule of the Application. Developments qualify for 10 points if their costs do not exceed $85 per square foot for Qualified Elderly, single family design, transitional, and single room occupancy Developments (transitional housing for the homeless and single room occupancy units as provided in the Code, §42(i)(3)(B)(iii) and (iv)), unless located in a "First Tier County" in which case their costs do not exceed $87 per square foot; and $75 for all other Developments, unless designated as "First Tier" by the Texas Department of Insurance, in which case their costs do not exceed $77 per square foot. For 2007, the First Tier counties are Aransas, Brazoria, Calhoun, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, San Patricio, and Willacy. There are also specifically designated First Tier communities in Harris County that are east of State Highway 146, and evidence in the Application must include a map with the Development site designated clearly within the community. These communities are Pasadena, Morgan's Point, Shoreacres, Seabrook and La Porte. Intergenerational Developments will receive 10 points if costs described above do not exceed the square footage limit for elderly and non-elderly units as determined by using the NRA attributable to the respective elderly and non-elderly units. The Department will determine if points will be awarded by multiplying the NRA for elderly units by the applicable square footage limit for the elderly units and adding that total to the result of the multiplication of the NRA for family units by the applicable non-elderly square footage limit. If this maximum cost amount is equal to, or greater than the total of the costs identified above for the Application, points will be awarded (10 points).
(9) The Services to be Provided to Tenants of the Development. Applications may qualify to receive up to 8 points. (§2306.6710(b)(1)(I); §2306.6725(a)(1); General Appropriation Act, Article VII, Rider 7)
(A) The Applicant must certify that the Development will provide a combination of special supportive services appropriate for the proposed tenants. The provision of supportive services will be included in the LURA as selected from the list of services identified in this paragraph. No fees may be charged to the tenants for any of the services. Services must be provided on-site or transportation to off-site services must be provided (maximum of 7 points).
(i) Applications will be awarded points for selecting services listed in clause (ii) of this subparagraph based on the following scoring range:
(I) Two points will be awarded for providing two of the services; or
(II) Four points will be awarded for providing four of the services; or
(III) Seven points will be awarded for providing six of the services.
(ii) Service options include child care; transportation; basic adult education; legal assistance; counseling services; GED preparation; English as a second language classes; vocational training; home buyer education; credit counseling; financial planning assistance or courses; health screening services; health and nutritional courses; organized team sports programs or youth programs; scholastic tutoring; any other programs described under Title IV-A of the Social Security Act (42 U.S.C. §§601 et seq.) which enables children to be cared for in their homes or the homes of relatives; ends the dependence of needy families on government benefits by promoting job preparation, work and marriage; prevents and reduces the incidence of out-of wedlock pregnancies; and encourages the formation and maintenance of two-parent families; or any other services approved in writing by the Department.
(B) In addition, Applications will receive 1 point for providing Notary Public Services to tenants at no cost to the tenant. This will be included in the LURA.
(10) Declared Disaster Areas. Applications may receive 7 points, if at time the complete Application is submitted or at any time within the two-year period preceding the date of submission, the proposed Development site is located in a Disaster Area as defined in §50.3 of this chapter.
(11) Rehabilitation, (which includes reconstruction) or Adaptive Reuse. Applications may qualify to receive 6 points. Applications proposing to build solely Rehabilitation (excluding New Construction of non-residential buildings), solely reconstruction (excluding New Construction of non-residential buildings), or solely Adaptive Reuse qualify for points.
(12) Housing Needs Characteristics. (§42(m)(1)(C)(ii)). Applications may qualify to receive up to 6 points. Each Application may receive a score if correctly requested in the self score form based on objective measures of housing need in the Area where the Development is located. This Affordable Housing Need Score for each Area will be published in a Site Demographic Characteristics table in the Reference Manual.
(13) Development Includes the Use of Existing Housing as part of a Community Revitalization Plan (Development Characteristics). Applications may qualify to receive 6 points for this item. (§42(m)(1)(C)(iii)). The Development is an Existing Residential Development and proposed any Rehabilitation or any Reconstruction that is part of a Community Revitalization Plan. Evidence of the Community Revitalization Plan and a letter from the governing body stating that the Development Site is located within the targeted development areas outlined in the Community Revitalization Plan must be submitted.
(14) Pre-Application Participation Incentive Points. (§2306.6704) Applications that submitted a Pre-Application during the Pre-Application Acceptance Period and meet the requirements of this paragraph will qualify to receive 6 points for this item. To be eligible for these points, the Application must:
(A) Be for the identical Development Site, or reduced portion of the Development Site as the proposed Development Site under control in the Pre-Application;
(B) Have met the Pre-Application Threshold Criteria;
(C) Be serving the same target population (family, Intergenerational Housing, or elderly) as in the Pre-Application;
(D) Be serving the same target Set-Asides as indicated in the Pre-Application (Set-Asides can be dropped between Pre-Application and Application, but no Set-Asides can be added); and
(E) Be awarded by the Department an Application score that is not more than 5% greater or less than the number of points awarded by the Department at Pre-Application, with the exclusion of points for support and opposition under paragraphs (2), (6), and (18) of this of this subsection. The Application score used to determine whether the Application score is 5% greater or less than the number of points awarded at Pre-Application will also include all point losses under subsection (d)(4) of this section. An Applicant must choose, at the time of Application either clause (i) or (ii) of this subparagraph:
(i) To request the Pre-Application points and have the Department cap the Application score at no greater than the 5% increase regardless of the total points accumulated in the scoring evaluation. This allows an Applicant to avoid penalty for increasing the point structure outside the 5% range from Pre-Application to Application; or
(ii) To request that the Pre-Application points be forfeited and that the Department evaluate the Application as requested in the self-scoring sheet.
(15) Economic Development Initiatives. A Development that is located in one of the following two areas may qualify to receive 4 points. For the purpose of this paragraph, "area" shall mean the boundaries of any zone or community in subparagraph (A) or the area in which funds in subparagraph (B) of this paragraph must be used:
(A) a Designated State or Federal Empowerment/Enterprise Zone, Urban Enterprise Community, or Urban Enhanced Enterprise Community. To be eligible for these points, Applicants must submit a letter and a map from a city/county official stating that the proposed Development is located within such a designated zone or area; is eligible to receive the state or federal economic development grants or loans; and the city/county still has available funds. The letter should be no older than 6 months from the first day of the Application Acceptance Period. (VII, Rider 6; §2306.127); or
(B) an area that has received an award as of November 1, 2007, within the past three years from the Texas Capital Fund, Texas or Federal Enterprise Zone Fund, Texas Leverage Fund, Industrial Revenue Bond Program, Emerging Technologies, Skills Development, Rural Business Enterprise Grants, Certified Development Company Loans, or Micro Loan Program. Grants that qualify in these areas are included in the Application Reference Manual.
(C) Points under subparagraphs (A) and (B) of this paragraph will not be granted if more than 3 tax credit Developments have been awarded in that area in the last 7 years. The Applicant must provide evidence of the boundaries of the area, as required in the Application and Application Submission Procedures Manual.
(16) Development Location. (§2306.6725(a)(4)); §42(m)(1)(C)(i)). Applications may qualify to receive 4 points. Evidence, not more than 6 months old from the first day of the Application Acceptance Period, that the Development Site is located within one of the geographical areas described in subparagraphs (A) - (E) of this paragraph. Areas qualifying under any one of the subparagraphs (A) - (E) of this paragraph will receive 4 points. An Application may only receive points under one of the subparagraphs (A) - (E) of this paragraph.
(A) A geographical Area which is an Economically Distressed Area; a Colonia; or a Difficult Development Area (DDA) as specifically designated by the Secretary of HUD at the time of Application submission (§2306.127)
(B) The Development is located in a county that has received an award as of November 1, 2007, within the past three years, from the Texas Department of Agriculture's Rural Municipal Finance Program or Real Estate Development and Infrastructure Program. Cities which have received one of these awards are categorized as awards to the county as a whole so Developments located in a different city than the city awarded, but in the same county, will still be eligible for these points.
(C) The Development is located in a census tract which has a median family income (MFI), as published by the United States Bureau of the Census (U.S. Census), that is higher than the median family income for the county in which the census tract is located. This comparison shall be made using the most recent data available as of the date the Application Round opens the year preceding the applicable program year. Developments eligible for these points must submit evidence documenting the median income for both the census tract and the county. These Census Tracts are outlined in the 2007 Housing Tax Credit Site Demographic Characteristics Report.
(D) The proposed Development will serve families with children (at least 70% of the Units must have an eligible bedroom mix of two bedrooms or more) and is proposed to be located in an elementary school attendance zone of an elementary school that has an academic rating of "Exemplary" or "Recognized," or comparable rating if the rating system changes. The date for consideration of the attendance zone is that in existence as of the opening date of the Application Round and the academic rating is the most current rating determined by the Texas Education Agency as of that same date. (§42(m)(1)(C)(vii))
(E) The proposed Development will expand affordable housing opportunities for low-income families with children outside of poverty areas. This must be demonstrated by showing that the Development will serve families with children (at least 70% of the Units must have an eligible bedroom mix of two bedrooms or more) and that the census tract in which the Development is proposed to be located has no greater than 10% poverty population according to the most recent census data. Intergenerational Developments may qualify for points if 70% of the non-elderly Units in the Development have an eligible bedroom mix of two bedrooms or more. (§42(m)(1)(C)(vii)). These Census Tracts are outlined in the 2008 Housing Tax Credit Site Demographic Characteristics Report.
(17) Development Location in non-urban Areas. §42(m)(1)(C)(i)). Applications may qualify to receive 6 points if the Development is not located in a Rural Area and has a population less than 100,000 based on the most current Decennial Census.
(18) Demonstration of Community Support other than Quantifiable Community Participation: If an Applicant requests these points on the self scoring form and correctly certifies to the Department that there are no Neighborhood Organizations that meet the Department's definition of Neighborhood Organization pursuant to §50.3(63) of this chapter and 12 points were awarded under paragraph (2) of this subsection, then that Applicant may receive two points for each letter of support submitted from a community or civic organization that serves the community in which the site is located. Letters of support must identify the specific Development and must state support of the specific Development at the proposed location. The community or civic organization must provide some documentation of its existence in the community in which the Development is located to include, but not be limited to, listing of services and/or members, brochures, annual reports, etc. Letters of support from organizations that are not active in the area that includes the location of the Development will not be counted. For purposes of this item, community and civic organizations do not include neighborhood organizations, governmental entities, taxing entities or educational activities. Organizations that were created by a governmental entity or derive their source of creation from a governmental entity do not qualify under this item. For purposes of this item, educational activities include school districts, trade and vocational schools, charter schools and depending on how characterized could include day care centers; it would not include a PTA or PTO as that is a service organization even though it supports an educational activity. Letters of support received after February 29, 2008, will not be accepted for this item. Two points will be awarded for each letter of support submitted in the Application, not to exceed 6 points. Should an Applicant elect this option and the Application receives letters in opposition by February 29, 2008, then two points will be subtracted from the score for each letter in opposition, provided that the letter is from an organization serving the community. At no time will the Application, however, receive a score lower than zero for this item.
(19) Developments in Census Tracts with No Other Existing Same Type Developments Supported by Tax Credits: The Application may receive 6 points if the proposed Development is located in a census tract in which there are no other existing Developments supported by Housing Tax Credits that serve the same type of household, regardless of whether the development serves families, or elderly individuals (Intergenerational Housing is not a type of household as it relates to this paragraph). Applicant must provide evidence of the census tract in which the Development is located. (§2306.6725(b)(2)). These Census Tracts are outlined in the 2008 Housing Tax Credit Site Demographic Characteristics Report.
(20) Tenant Populations with Special Housing Needs. Applications may qualify to receive 4 points for this item. (§42(m)(1)(C)(v)). The Department will award these points to Applications in which at least 10% of the Units are set aside for Persons with Special Needs. Throughout the Compliance Period, unless otherwise permitted by the Department, the Development Owner agrees to affirmatively market Units to Persons with Special Needs. In addition, the Department will require a minimum 12 month period during which Units must either be occupied by Persons with Special Needs or held vacant. The 12 month period will begin on the date each building receives its certificate of occupancy. For buildings that do not receive a Certificate of Occupancy, the 12 month period will begin on the placed in service date as provided in the Cost Certification manual. After the 12 month period, the owner will no longer be required to hold Units vacant for households with special needs, but will be required to continue to affirmatively market Units to household with special needs.
(21) Length of Affordability Period. Applications may qualify to receive up to 4 points. (§2306.6725(a)(5); §2306.111(g)(3)(C); §2306.185(a)(1) and (c); §2306.6710(e)(2); §42(m)(1)(B)(ii)(II)). In accordance with the Code, each Development is required to maintain its affordability for a 15-year compliance period and, subject to certain exceptions, an additional 15-year extended use period. Development Owners that are willing to extend the affordability period for a Development beyond the 30 years required in the Code may receive points as follows:
(A) Add 5 years of affordability after the extended use period for a total affordability period of 35 years (2 points); or
(B) Add 10 years of affordability after the extended use period for a total affordability period of 40 years. (4 points)
(22) Site Characteristics. Development Sites, including scattered sites, will be evaluated based on proximity to amenities, the presence of positive site features and the absence of negative site features. Sites will be rated based on the criteria in subparagraphs (A) and (B) of this paragraph.
(A) Proximity of site to amenities. Developments Sites located within a one mile radius (two-mile radius for Developments competing for a Rural Regional Allocation) of at least three services appropriate to the target population will receive four points. A site located within one-quarter mile of public transportation that is accessible to all residents including Persons With Disabilities and/or located within a community that has "on demand" transportation, special transit service, or specialized elderly transportation for Qualified Elderly Developments, will receive full points regardless of the proximity to amenities, as long as the Applicant provides appropriate evidence of the transportation services used to satisfy this requirement. If a Development is providing its own specialized van or on demand service, then this will be a requirement of the LURA. Only one service of each type listed in clauses (i) - (xiv) of this subparagraph will count towards the points. A map must be included identifying the Development Site and the location of the services. The services must be identified by name on the map. If the services are not identified by name, points will not be awarded. All services must exist or, if under construction, must be at least 50% complete by the date the Application is submitted. (4 points)
(i) Full service grocery store or supermarket.
(ii) Pharmacy.
(iii) Convenience Store/Mini-market.
(iv) Department or Retail Merchandise Store.
(v) Bank/Credit Union.
(vi) Restaurant (including fast food).
(vii) Indoor public recreation facilities, such as civic centers, community centers, and libraries.
(viii) Outdoor public recreation facilities such as parks, golf courses, and swimming pools.
(ix) Hospital/medical clinic.
(x) Medical offices (physician, dentistry, optometry).
(xi) Public Schools (only eligible for Developments that are not Qualified Elderly Developments).
(xii) Senior Center.
(xiii) Dry cleaners.
(xiv) Family video rental (Blockbuster, Hollywood Video, Movie Gallery).
(B) Negative Site Features. Development Sites with the following negative characteristics will have points deducted from their score. For purpose of this exhibit, the term 'adjacent' is interpreted as sharing a boundary with the Development Site. The distances are to be measured from all boundaries of the Development Site to all boundaries of the property containing the negative site feature. If an Applicant negligently fails to note a negative feature, double points will be deducted from the score or the Application may be terminated. If none of these negative features exist, the Applicant must sign a certification to that effect. (-5 points)
(i) Developments located adjacent to or within 300 feet of junkyards will have 1 point deducted from their score.
(ii) Developments located adjacent to or within 300 feet of active railroad tracks will have 1 point deducted from their score, unless the Applicant provides evidence that the city/community has adopted a Railroad Quiet Zone or the railroad in question is commuter or light rail. Rural Developments funded through TRDO-USDA are exempt from this point deduction.
(iii) Developments located adjacent to or within 300 feet of heavy industrial uses such as manufacturing plants will have 1 point deducted from their score.
(iv) Developments located adjacent to or within 300 feet of a solid waste or sanitary landfills will have 1 point deducted from their score.
(v) Developments where the buildings are located within the "fall line" of high voltage transmission power lines will have 1 point deducted from their score.
(vi) Developments where the buildings are located adjacent to or within 300 feet of a sexually oriented business will have 1 point deducted from their score. For the purpose of this clause, sexually oriented business shall be defined as stated in §243.002 of the Texas Government Code.
(vii) Developments where the buildings are located within the accident zones or clear zones for commercial or military airports will have 1 point deducted from their score.
(23) Development Size. The Development consists of not more than 36 Units (3 points).
(24) Qualified Census Tracts with Revitalization. Applications may qualify to receive 1 point for this item. (§42(m)(1)(B)(ii)(III)). Applications will receive the points for this item if the Development is located within a Qualified Census Tract and contributes to a concerted Community Revitalization Plan. Evidence of the Community Revitalization Plan and a letter from the governing body stating that the Development Site is located within the targeted development areas outlined in the Community Revitalization Plan must be submitted.
(25) Sponsor Characteristics. Applications may qualify to receive a maximum of 2 points for this item for qualifying under either subparagraph (A) or (B) of this paragraph. (§42(m)(1)(C)(iv))
(A) An Application will receive these two points for submitting a plan to use Historically Underutilized Businesses in the development process consistent with the Historically Underutilized Business Guidelines for contracting with the State of Texas. The Applicant will be required to submit a report of the success of the plan as part of the cost certification documentation, in order to receive IRS Forms 8609.
(B) An Application will receive these points if there is evidence that a HUB that does not meet the experience requirements under subsection (g) of this section, as certified by the Texas Facilities Commission, has at least 51% ownership interest in the General Partner and materially participates in the Development and operation of the Development throughout the Compliance Period. To qualify for these points, the Applicant must submit a certification from the Texas Facilities Commission that the Person is a HUB at the close of the Application Acceptance Period. The HUB will be disqualified from receiving these points if any Principal of the HUB has developed, and received 8609's for, more than two Developments involving tax credits. Additionally, to qualify for these points, the HUB must partner with an experienced Developer (as defined by subsection (g) of this section); the experienced Developer, as an Affiliate, will not be subject to the credit limit described under §50.6(d) of this chapter for one Application per Application Round. For purposes of this section the experienced Developer may not be a Related Party to the HUB.
(26) Developments Intended for Eventual Tenant Ownership - Right of First Refusal. Applications may qualify to receive 1 point for this item. (§2306.6725(b)(1)); (§42(m)(1)(C)(viii)). Evidence that Development Owner agrees to provide a right of first refusal to purchase the Development upon or following the end of the Compliance Period for the minimum purchase price provided in, and in accordance with the requirements of, §42(i)(7) of the Code (the "Minimum Purchase Price"), to a Qualified Nonprofit Organization, the Department, or either an individual tenant with respect to a single family building, or a tenant cooperative, a resident management corporation in the Development or other association of tenants in the Development with respect to multifamily developments (together, in all such cases, including the tenants of a single family building, a "Tenant Organization"). Development Owner may qualify for these points by providing the right of first refusal in the following terms.
(A) Upon the earlier to occur of:
(i) The Development Owner's determination to sell the Development; or
(ii) The Development Owner's request to the Department, pursuant to §42(h)(6)(E)(II) of the Code, to find a buyer who will purchase the Development pursuant to a "qualified contract" within the meaning of §42(h)(6)(F) of the Code, the Development Owner shall provide a notice of intent to sell the Development ("Notice of Intent") to the Department and to such other parties as the Department may direct at that time. If the Development Owner determines that it will sell the Development at the end of the Compliance Period, the Notice of Intent shall be given no later than two years prior to expiration of the Compliance Period. If the Development Owner determines that it will sell the Development at some point later than the end of the Compliance Period, the Notice of Intent shall be given no later than two years prior to date upon which the Development Owner intends to sell the Development.
(B) During the two years following the giving of Notice of Intent, the Sponsor may enter into an agreement to sell the Development only in accordance with a right of first refusal for sale at the Minimum Purchase Price with parties in the following order of priority:
(i) During the first six-month period after the Notice of Intent, only with a Qualified Nonprofit Organization that is also a community housing development organization, as defined for purposes of the federal HOME Investment Partnerships Program at 24 C.F.R. §92.1 (a "CHDO") and is approved by the Department,
(ii) During the second six-month period after the Notice of Intent, only with a Qualified Nonprofit Organization or a Tenant Organization; and
(iii) During the second year after the Notice of Intent, only with the Department or with a Qualified Nonprofit Organization approved by the Department or a Tenant Organization approved by the Department.
(iv) If, during such two-year period, the Development Owner shall receive an offer to purchase the Development at the Minimum Purchase Price from one of the organizations designated in clauses (i) - (iii) of this subparagraph (within the period(s) appropriate to such organization), the Development Owner shall sell the Development at the Minimum Purchase Price to such organization. If, during such period, the Development Owner shall receive more than one offer to purchase the Development at the Minimum Purchase Price from one or more of the organizations designated in clauses (i) - (iii) of this subparagraph (within the period(s) appropriate to such organizations), the Development Owner shall sell the Development at the Minimum Purchase Price to whichever of such organizations it shall choose.
(C) After whichever occurs the later of:
(i) The end of the Compliance Period; or
(ii) Two years from delivery of a Notice of Intent, the Development Owner may sell the Development without regard to any right of first refusal established by the LURA if no offer to purchase the Development at or above the Minimum Purchase Price has been made by a Qualified Nonprofit Organization, a Tenant Organization or the Department, or a period of 120 days has expired from the date of acceptance of all such offers as shall have been received without the sale having occurred, provided that the failure(s) to close within any such 120-day period shall not have been caused by the Development Owner or matters related to the title for the Development.
(D) At any time prior to the giving of the Notice of Intent, the Development Owner may enter into an agreement with one or more specific Qualified Nonprofit Organizations and/or Tenant Organizations to provide a right of first refusal to purchase the Development for the Minimum Purchase Price, but any such agreement shall only permit purchase of the Development by such organization in accordance with and subject to the priorities set forth in subparagraph (B) of this paragraph.
(E) The Department shall, at the request of the Development Owner, identify in the LURA a Qualified Nonprofit Organization or Tenant Organization which shall hold a limited priority in exercising a right of first refusal to purchase the Development at the Minimum Purchase Price, in accordance with and subject to the priorities set forth in subparagraph (B) of this paragraph.
(F) The Department shall have the right to enforce the Development Owner's obligation to sell the Development as herein contemplated by obtaining a power-of-attorney from the Development Owner to execute such a sale or by obtaining an order for specific performance of such obligation or by such other means or remedy as shall be, in the Department's discretion, appropriate.
(27) Leveraging of Private, State, and Federal Resources. Applications may qualify to receive 1 point for this item. (§2306.6725(a)(3)). Funding sources used for points under paragraph (5) of this subsection, may not be used for this point item.
(A) Evidence must be submitted in the Application that the proposed Development has received or will receive loan(s), grant(s) or in-kind contributions from a private, state or federal resource, which include Capital Grant Funds and HOPE VI funds, that is equal to or greater than 2% (not using normal rounding) of the Total Housing Development Costs reflected in the Application.
(B) For in-kind contributions, evidence must be submitted in the Application from a private, state or federal resource which substantiates the value of the in-kind contributions. Development based rental subsidies from private, state or federal resource may qualify under this section if evidence of the remaining value of the contract is submitted from the source. The value of the contract does not include past subsidies.
(C) Qualifying funds awarded through local entities may qualify for points if the original source of the funds is from a private, state or federal source. If qualifying funds awarded through local entities are used for this item, a statement from the local entity must be provided that identifies the original source of funds.
(D) Applicants may only submit enough sources to substantiate the point request, and all sources must be included in the Sources and Uses form. For example, two sources may be submitted if each is for an amount equal to 1% of the Total Housing Development Cost. However, two sources may not be submitted if each source is for an amount equal to 2% of the Total Housing Development Cost.
(E) The funding must be in addition to the primary funding (construction and permanent loans) that is proposed to be utilized and cannot be issued from the same primary funding source or an affiliated source. The provider of the funds must attest to the fact that they are not the Applicant, the Developer, Consultant, Related Party or any individual or entity acting on behalf of the proposed Application and attest that none of the funds committed were first provided to the entity by the Applicant, the Developer, Consultant, Related Party or any individual or entity acting on behalf of the proposed Application, unless the Applicant itself is a Local Political Subdivision.
(F) The Development must have already applied for funding from the funding entity. Evidence to be submitted with the Application must include a copy of the commitment of funds or a copy of the application to the funding entity and a letter from the funding entity indicating that the application was received. At the time the executed Commitment Notice is required to be submitted, the Applicant or Development Owner must provide evidence of a commitment approved by the governing body of the entity for the sufficient financing to the Department. If the funding commitment from the private, state or federal source, or qualifying substitute source, has not been received by the date the Department's Commitment Notice is to be submitted, the Application will be evaluated to determine if the loss of these points would have resulted in the Department's not committing the tax credits. If the loss of points would have made the Application noncompetitive, the Commitment Notice will be rescinded and the credits reallocated. If the Application would still be competitive even with the loss of points and the loss would not have impacted the recommendation for an award, the Application will be reevaluated for financial feasibility. If the Application is infeasible without the commitment from the private, state or federal source, the Commitment Notice will be rescinded and the credits reallocated. Funds from the Department's HOME and Housing Trust Fund sources will only qualify under this category if there is a Notice of Funding Availability (NOFA) out for available funds and the Applicant is eligible under that NOFA.
(G) To qualify for this point, the Rent Schedule must show that at least 3% (not using normal rounding) of all low-income Units are designated to serve individuals or families with incomes at or below 30% of AMGI.
(28) Third-Party Funding Commitment Outside of Qualified Census Tracts. Applications may qualify to receive 1 point for this item. (§2306.6710(e)(1)). Evidence that the proposed Development has documented and committed Third-Party funding sources and the Development is located outside of a Qualified Census Tract. The provider of the funds must attest to the fact that they are not the Applicant, the Developer, Consultant, Related Party or any individual or entity acting on behalf of the proposed Application and attest that none of the funds committed were first provided to the entity by the Applicant, the Developer, Consultant, Related Party or any individual or entity acting on behalf of the proposed Application. The commitment of funds (an application alone will not suffice) must already have been received from the Third-Party funding source and must be equal to or greater than 2% (not using normal rounding) of the Total Development Costs reflected in the Application. Funds from the Department's HOME and Housing Trust Fund sources will not qualify under this category. The Third-Party funding source cannot be a loan from a commercial lender.
(29) Scoring Criteria Imposing Penalties. (§2306.6710(b)(2))
(A) Penalties will be imposed on an Application if the Applicant has requested an extension of the Carryover or 10% Test deadline, and did not meet the original submission deadline, relating to Developments receiving a Housing Tax Credit commitment made in the Application Round preceding the current round. For each extension request made, the Applicant will receive a 5 point deduction. No penalty points or fees will be deducted for extensions that were requested on Developments that involved Rehabilitation when the Department is the primary lender, or for Developments that involve TRDO-USDA as a lender if TRDO-USDA or the Department is the cause for the Applicant not meeting the deadline.
(B) Penalties will be imposed on an Application if the Developer or Principal of the Applicant has been removed by the lender, equity provider, or limited partners in the past five years for failure to perform its obligations under the loan documents or limited partnership agreement. An affidavit will be provided by the Applicant and the Developer certifying that they have not been removed as described, or requiring that they disclose each instance of removal with a detailed description of the situation. If an Applicant or Developer submits the affidavit, and the Department learns at a later date that a removal did take place as described, then the Application will be terminated and any Allocation made will be rescinded. The Applicant, Developers or Principals of the Applicant that are in court proceedings at the time of Application must disclose this information and the situation will be evaluated on a case-by-case basis. 3 points will be deducted for each instance of removal.
(C) Penalties will be imposed on an Application if Developer or Principal of the Applicant violates the Adherence to Obligations pursuant to subsection (c) of this section.
(j) Tie Breaker Factors.
(1) In the event that two or more Applications receive the same number of points in any given Set-Aside category, Rural Regional Allocation or Urban Regional Allocation, or Uniform State Service Region, and are both practicable and economically feasible, the Department will utilize the factors in this paragraph, in the order they are presented, to determine which Development will receive a preference in consideration for a tax credit commitment.
(A) Applications involving any Rehabilitation or Reconstruction of existing Units will win this first tier tie breaker over Applications involving solely New Construction or Adaptive Reuse.
(B) The Application located in the municipality or, if located outside a municipality, the county that has the lowest state average of units per capita supported by Housing Tax Credits or private activity bonds at the time the Application Round begins as reflected in the Reference Manual will win this second tier tie breaker.
(C) The amount of requested tax credits per net rentable square foot (the lower credits per square foot has preference).
(D) Projects that are intended for eventual tenant ownership. Such Developments must utilize a detached single family site plan and building design and have a business plan describing how the project will convert to tenant ownership at the end of the 15-year compliance period.
(2) This paragraph identifies how ties will be handled when dealing with the restrictions on location identified in §50.5(a)(8) of this chapter, and in dealing with any issues relating to capture rate calculation. When two Tax-Exempt Bond Developments would violate one of these restrictions, and only one Development can be selected, the Department will utilize the reservation docket number issued by the Texas Bond Review Board in making its determination. When two Competitive Housing Tax Credits Applications in the Application Round would violate one of these restrictions, and only one Development can be selected, the Department will utilize the tie breakers identified in paragraph (1) of this subsection. When a Tax-Exempt Bond Development and a Competitive Housing Tax Credit Application in the Application Round would both violate a restriction, the following determination will be used:
(A) Tax-Exempt Bond Developments that receive their reservation from the Bond Review Board on or before April 30, 2008 will take precedence over the Housing Tax Credit Applications in the 2008 Application Round;
(B) Housing Tax Credit Applications approved by the Board for tax credits in July 2008 will take precedence over the Tax-Exempt Bond Developments that received their reservation from the Bond Review Board on or between May 1, 2008 and July 31, 2008; and
(C) After July 31, 2008, a Tax-Exempt Bond Development with a reservation from the Bond Review Board will take precedence over any Housing Tax Credit Application from the 2008 Application Round on the Waiting List. However, if no reservation has been issued by the date the Board approves an allocation to a Development from the Waiting List of Applications in the 2008 Application Round or a forward commitment, then the Waiting List Application or forward commitment will be eligible for its allocation.
(k) Staff Recommendations. (§2306.1112 and §2306.6731) After eligible Applications have been evaluated, ranked and underwritten in accordance with the QAP and the Rules, the Department staff shall make its recommendations to the Executive Award and Review Advisory Committee. The Committee will develop funding priorities and shall make commitment recommendations to the Board. Such recommendations and supporting documentation shall be made in advance of the meeting at which the issuance of Commitment Notices or Determination Notices shall be discussed. The Committee will provide written, documented recommendations to the Board which will address at a minimum the financial or programmatic viability of each Application and a list of all submitted Applications which enumerates the reason(s) for the Development's proposed selection or denial, including all factors provided in §50.10(a) of this chapter that were used in making this determination.
§50.10.Board Decisions; Waiting List; Forward Commitments.
(a) Board Decisions. The Board's decisions shall be based upon the Department's and the Board's evaluation of the proposed Developments' consistency with the criteria and requirements set forth in this QAP and Rules.
(1) On awarding tax credits, the Board shall document the reasons for each Application's selection, including any discretionary factors used in making its determination, and the reasons for any decision that conflicts with the recommendations made by Department staff. The Board may not make, without good cause, a commitment decision that conflicts with the recommendations of Department staff. Good cause includes the Board's decision to apply discretionary factors. (§2306.6725(c); §42(m)(1)(A)(iv); §2306.6731)
(2) In making a determination to allocate tax credits, the Board shall be authorized to not rely solely on the number of points scored by an Application. It shall in addition, be entitled to take into account, as it deems appropriate, the discretionary factors listed in this paragraph. The Board may also apply these discretionary factors to its consideration of Tax-Exempt Bond Developments. If the Board disapproves or fails to act upon an Application, the Department shall issue to the Applicant a written notice stating the reason(s) for the Board's disapproval or failure to act. In making tax credit decisions (including those related to Tax-Exempt Bond Developments), the Board, in its discretion, may evaluate, consider and apply any one or more of the following discretionary factors: (§2306.111(g)(3))
(A) The Developer market study;
(B) The location;
(C) The compliance history of the Developer;
(D) The financial feasibility;
(E) The appropriateness of the Development's size and configuration in relation to the housing needs of the community in which the Development is located;
(F) The Development's proximity to other low-income housing Developments;
(G) The availability of adequate public facilities and services;
(H) The anticipated impact on local school districts;
(I) Zoning and other land use considerations;
(J) Any matter considered by the Board to be relevant to the approval decision and in furtherance of the Department's purposes; and
(K) Other good cause as determined by the Board.
(3) Before the Board approves any Application, the Department shall assess the compliance history of the Applicant with respect to all applicable requirements; and the compliance issues associated with the proposed Development, including compliance information provided by the Texas State Affordable Housing Corporation. The Committee shall provide to the Board a written report regarding the results of the assessments. The written report will be included in the appropriate Development file for Board and Department review. The Board shall fully document and disclose any instances in which the Board approves a Development Application despite any noncompliance associated with the Development or Applicant. (§2306.057)
(b) Waiting List. (§2306.6711(c) and (d)). If the entire State Housing Credit Ceiling for the applicable calendar year has been committed or allocated in accordance with this chapter, the Board shall generate, concurrently with the issuance of commitments, a waiting list of additional Applications ranked by score in descending order of priority based on Set-Aside categories and regional allocation goals. The Board may also apply discretionary factors in determining the Waiting List. If at any time prior to the end of the Application Round, one or more Commitment Notices expire and a sufficient amount of the State Housing Credit Ceiling becomes available, the Board shall issue a Commitment Notice to Applications on the waiting list subject to the amount of returned credits, the regional allocation goals and the Set-Aside categories, including the 10% Nonprofit Set-Aside allocation and 15% At-Risk Set-Aside allocation and 5% TRDO-USDA Set-Aside required under the Code, §42(h)(5). At the end of each calendar year, all Applications which have not received a Commitment Notice shall be deemed terminated. The Applicant may re-apply to the Department during the next Application Acceptance Period.
(c) Forward Commitments. The Board may determine to issue commitments of tax credit authority with respect to Applications from the State Housing Credit Ceiling for the calendar year following the year of issuance (each a "forward commitment") to Applications submitted in accordance with the rules and timelines required under this rule and the Application Submission Procedures Manual. The Board will utilize its discretion in determining the amount of credits to be allocated as forward commitments and the reasons for those commitments considering score and discretionary factors. The Board may utilize the forward commitment authority to allocate credits to TRDO-USDA Developments which are experiencing foreclosure or loan acceleration at any time during the 2008 calendar year, also referred to as Rural Rescue Developments. Applications that are submitted under the 2008 QAP and granted a Forward Commitment of 2009 Housing Tax Credits are considered by the Board to comply with the 2009 QAP by having satisfied the requirements of this 2008 QAP, except for statutorily required QAP changes.
(1) Unless otherwise provided in the Commitment Notice with respect to a Development selected to receive a forward commitment, actions which are required to be performed under this chapter by a particular date within a calendar year shall be performed by such date in the calendar year of the Credit Ceiling from which the credits are allocated.
(2) Any forward commitment made pursuant to this section shall be made subject to the availability of State Housing Credit Ceiling in the calendar year with respect to which the forward commitment is made. If a forward commitment shall be made with respect to a Development placed in service in the year of such commitment, the forward commitment shall be a "binding commitment" to allocate the applicable credit dollar amount within the meaning of the Code, §42(h)(1)(C).
(3) If tax credit authority shall become available to the Department in a calendar year in which forward commitments have been awarded, the Department may allocate such tax credit authority to any eligible Development which received a forward commitment, in which event the forward commitment shall be canceled with respect to such Development.
§50.11.Required Application Notifications, Receipt of Public Comment, and Meetings with Applicants; Viewing of Pre-Applications and Applications; Confidential Information.
(a) Required Application Notifications, Receipt of Public Comment, and Meetings with Applicants.
(1) Within approximately 14 days after the close of the Pre-Application Acceptance Period, the Department shall publish a Pre-Application Submission Log on its web site. Such log shall contain the Development name, address, Set-Aside, number of Units, requested credits, owner contact name and phone number. (§2306.6717(a)(1))
(2) Approximately 30 days before the close of the Application Acceptance Period, the Department will release the evaluation and assessment of the Pre-Applications on its web site.
(3) Not later than 14 days after the close of the Pre-Application Acceptance Period, or Application Acceptance Period for Applications for which no Pre-Application was submitted, the Department shall: (§2306.1114)
(A) Publish an Application submission log on its web site.
(B) Give notice of a proposed Development in writing that provides the information required under clause (i) of this subparagraph to all of the individuals and entities described in clauses (ii) - (x) of this subparagraph. (§2306.6718(a)-(c))
(i) The following information will be provided in these notifications:
(I) The relevant dates affecting the Application including the date on which the Application was filed, the date or dates on which any hearings on the Application will be held and the date by which a decision on the Application will be made;
(II) A summary of relevant facts associated with the Development;
(III) A summary of any public benefits provided as a result of the Development, including rent subsidies and tenant services; and
(IV) The name and contact information of the employee of the Department designated by the director to act as the information officer and liaison with the public regarding the Application.
(ii) Presiding officer of the governing body of the political subdivision containing the Development (mayor or county judge) to advise such individual that the Development, or a part thereof, will be located in his/her jurisdiction and request any comments which such individual may have concerning such Development.
(iii) If the Department receives a letter from the mayor or county judge of an affected city or county that expresses opposition to the Development, the Department will give consideration to the objections raised and will offer to visit the proposed site or Development with the mayor or county judge or their designated representative within 30 days of notification. The site visit must occur before the Housing Tax Credit can be approved by the Board. The Department will obtain reimbursement from the Applicant for the necessary travel and expenses at rates consistent with the state authorized rate (General Appropriation Act, Article VII, Rider 5) (§42(m)(1));
(iv) Any member of the governing body of a political subdivision who represents the Area containing the Development. If the governing body has single-member districts, then only that member of the governing body for that district will be notified, however if the governing body has at-large districts, then all members of the governing body will be notified;
(v) State representative and state senator who represent the community where the Development is proposed to be located. If the state representative or senator host a community meeting, the Department, if timely notified, will ensure staff are in attendance to provide information regarding the Housing Tax Credit Program; (General Appropriation Act, Article VII, Rider 8(d))
(vi) United States representative who represents the community containing the Development;
(vii) Superintendent of the school district containing the Development;
(viii) Presiding officer of the board of trustees of the school district containing the Development;
(ix) Any Neighborhood Organizations on record with the city or county in which the Development is to be located and whose boundaries contain the proposed Development site or otherwise known to the Applicant or Department and on record with the state or county; and
(x) Advocacy organizations, social service agencies, civil rights organizations, tenant organizations, or others who may have an interest in securing the development of affordable housing that are registered on the Department's email list service.
(C) The Department shall maintain an electronic mail notification service that will notify a subscriber, by zip code, of: (§2306.67171)
(i) The receipt of a Pre-Application or Application within 14 days of receipt;
(ii) The publication of materials to be presented to the Board for the Pre-Application or Application referred to in clause (i) of this subparagraph; and
(iii) Any public hearing for the Pre-Application or Application referred to in clause (i) of this subparagraph.
(D) The elected officials identified in subparagraph (B) of this paragraph will be provided an opportunity to comment on the Application during the Application evaluation process. (§42(m)(1))
(4) The Department shall hold at least three public hearings in different Uniform State Service Regions of the state to receive comment on the submitted Applications and on other issues relating to the Housing Tax Credit Program for competitive Applications under the State Housing Credit Ceiling. (§2306.6717(c))
(5) The Department shall make available on the Department's website information regarding the Housing Tax Credit Program including notice of public hearings, meetings, Application Round opening and closing dates, submitted Applications, and Applications approved for underwriting and recommended to the Board, and shall provide that information to locally affected community groups, local and state elected officials, local housing departments, any appropriate newspapers of general or limited circulation that serve the community in which a proposed Development is to be located, nonprofit and for-profit organizations, on-site property managers of occupied Developments that are the subject of Applications for posting in prominent locations at those Developments, and any other interested persons including community groups, who request the information. (§2306.6717(b))
(6) Approximately forty days prior to the date of the July Board meeting at which the issuance of Commitment Notices shall be discussed, the Department will notify each Applicant of the receipt of any opposition received by the Department relating to his or her Development at that time.
(7) Not later than the third working day after the date of completion of each stage of the Application process, including the results of the Application scoring and underwriting phases and the commitment phase, the results will be posted to the Department's web site. (§2306.6717(a)(3))
(8) At least thirty days prior to the date of the July Board meeting at which the issuance of Commitment Notices shall be discussed, the Department will:
(A) Provide the Application scores to the Board; (§2306.6711(a))
(B) If feasible, post to the Department's web site the entire Application, including all supporting documents and exhibits, the Application Log as further described in §50.19(b) of this chapter, a scoring sheet providing details of the Application score, and any other documents relating to the processing of the Application. (§2306.6717(a)(1) and (2))
(9) A summary of comments received by the Department on specific Applications shall be part of the documents required to be reviewed by the Board under this subsection if it is received 30 business days prior to the date of the Board Meeting at which the issuance of Commitment Notices or Determination Notices shall be discussed. Comments received after this deadline will not be part of the documentation submitted to the Board. However, a public comment period will be available prior to the Board's decision, at the Board meeting where tax credit commitment decisions will be made.
(10) Not later than the 120th day after the date of the initial issuance of Commitment Notices for Housing Tax Credits, the Department shall provide an Applicant who did not receive a commitment for Housing Tax Credits with an opportunity to meet and discuss with the Department the Application's deficiencies, scoring and underwriting. (§2306.6711(e))
(b) Viewing of Pre-Applications and Applications. Pre-Applications and Applications for tax credits are public information and are available upon request after the Pre-Application and Application Acceptance Periods close, respectively. All Pre-Applications and Applications, including all exhibits and other supporting materials, except Personal Financial Statements and Social Security numbers, will be made available for public disclosure after the Pre-Application and Application periods close, respectively. The content of Personal Financial Statements may still be made available for public disclosure upon request if the Attorney General's office deems it is not protected from disclosure by the Texas Public Information Act.
(c) Confidential Information. The Department may treat the financial statements of any Applicant as confidential and may elect not to disclose those statements to the public. A request for such information shall be processed in accordance with §552.305 of the Government Code. (§2306.6717(d))
§50.12.Tax-Exempt Bond Developments: Filing of Applications; Applicability of Rules; Supportive Services; Financial Feasibility Evaluation; Satisfaction of Requirements.
(a) Filing of Applications for Tax-Exempt Bond Developments. Applications for a Tax-Exempt Bond Development may be submitted to the Department as described in paragraphs (1) and (2) of this subsection:
(1) Applicants which receive advance notice of a Program Year 2008 reservation as a result of the Texas Bond Review Board's (TBRB) lottery for the private activity volume cap must file a complete Application not later than 12:00 p.m. on December 28, 2007. Such filing must be accompanied by the Application fee described in §50.20 of this chapter.
(2) Applicants which receive advance notice of a Program Year 2008 reservation after being placed on the waiting list as a result of the TBRB lottery for private activity volume cap must submit Volume 1 and Volume 2 of the Application and the Application fee described in §50.20 of this chapter prior to the Applicant's bond reservation date as assigned by the TBRB. Those Applications designated as Priority 3 by the TBRB must submit Volumes I and II within 14 days of the bond reservation date if the Applicant intends to apply for tax credits regardless of the Issuer. Any outstanding documentation required under this section regardless of Priority must be submitted to the Department at least 60 days prior to the Board meeting at which the decision to issue a Determination Notice would be made unless a waiver is requested by the Applicant. The Department staff will have limited discretion to recommend an Application with appropriate justification of the late submission.
(3) Applications involving multiple sites must submit the required information as outlined in the Application Submission Procedures Manual. The Application will be considered to be one Application as identified in Chapter 1372, Texas Government Code.
(b) Applicability of Rules for Tax-Exempt Bond Developments. Tax-Exempt Bond Development Applications are subject to all rules in this title, with the only exceptions being the following sections: §50.4 of this chapter (regarding State Housing Credit Ceiling), §50.7 of this chapter (regarding Regional Allocation and Set-Asides), §50.8 of this chapter (regarding Pre-Application), §50.9(d) and (f) of this chapter (regarding Evaluation Processes for Competitive Applications and Rural Rescue Applications), §50.9(i) of this chapter (regarding Selection Criteria), §50.10(b) and (c) of this chapter (regarding Waiting List and Forward Commitments), and §50.14(a) and (b) of this chapter (regarding Carryover and 10% Test). Such Developments requesting a Determination Notice in the current calendar year must meet all Threshold Criteria requirements stipulated in §50.9(h) of this chapter. Such Developments which received a Determination Notice in a prior calendar year must meet all Threshold Criteria requirements stipulated in the QAP and Rules in effect for the calendar year in which the Determination Notice was issued; provided, however, that such Developments shall comply with all procedural requirements for obtaining Department action in the current QAP and Rules; and such other requirements of the QAP and Rules as the Department determines applicable. This documentation must be submitted no later than 14 days before the Board meeting where the credits will be considered. Applicants will be required to meet all conditions of the Determination Notice by the time the construction loan is closed unless otherwise specified in the Determination Notice. Applicants must meet the requirements identified in §50.15 of this chapter. No later than 60 days following closing of the bonds, the Development Owner must also submit a Management Plan and an Affirmative Marketing Plan ( as further described in the Carryover Allocation Procedures Manual), and evidence must be provided at this time of attendance of the Development Owner or management company at Department-approved Fair Housing training relating to leasing and management issues for at least five hours and the Development architect at Department-approved Fair Housing training relating to design issues for at least five hours. Certifications must not be older than two years. Applications that receive a reservation from the Bond Review Board on or before December 31, 2007 will be required to satisfy the requirements of the 2007 QAP; Applications that receive a reservation from the Bond Review Board on or after January 1, 2008 will be required to satisfy the requirements of the 2008 QAP.
(c) Supportive Services for Tax-Exempt Bond Developments. Tax-Exempt Bond Development Applications must provide an executed agreement with a qualified service provider for the provision of special supportive services that would otherwise not be available for the tenants. No fees may be charged to the tenants for any of the services. Services must be provided on-site or transportation to off-site services must be provided. The provision of these services will be included in the LURA. Acceptable services as described in paragraphs (1) - (3) of this subsection include:
(1) The services must be in at least one of the following categories: child care, transportation, notary public service, basic adult education, legal assistance, counseling services, GED preparation, English as a second language classes, vocational training, home buyer education, credit counseling, financial planning assistance or courses, health screening services, health and nutritional courses, organized team sports programs, youth programs, scholastic tutoring, social events and activities, community gardens or computer facilities;
(2) Any other program described under Title IV-A of the Social Security Act (42 U.S.C. §§601 et seq.) which enables children to be cared for in their homes or the homes of relatives; ends the dependence of needy families on government benefits by promoting job preparation, work and marriage; prevents and reduces the incidence of out-of wedlock pregnancies; and encourages the formation and maintenance of two-parent families, or
(3) Any other services approved in writing by the Issuer. The plan for tenant supportive services submitted for review and approval of the Issuer must contain a plan for coordination of services with state workforce development and welfare programs. The coordinated effort will vary depending upon the needs of the tenant profile at any given time as outlined in the plan.
(d) Financial Feasibility Evaluation for Tax-Exempt Bond Developments. Code §42(m)(2)(D) requires the bond issuer (if other than the Department) to ensure that a Tax-Exempt Bond Development does not receive more tax credits than the amount needed for the financial feasibility and viability of a Development throughout the Compliance Period. Treasury Regulations prescribe the occasions upon which this determination must be made. In light of the requirement, issuers may either elect to underwrite the Development for this purpose in accordance with the QAP and the Underwriting Rules and Guidelines, §1.32 of this title or request that the Department perform the function. If the issuer underwrites the Development, the Department will, nonetheless, review the underwriting report and may make such changes in the amount of credits which the Development may be allowed as are appropriate under the Department's guidelines. The Determination Notice issued by the Department and any subsequent IRS Form(s) 8609 will reflect the amount of tax credits for which the Development is determined to be eligible in accordance with this subsection, and the amount of tax credits reflected in the IRS Form 8609 may be greater or less than the amount set forth in the Determination Notice, based upon the Department's and the bond issuer's determination as of each building's placement in service. Any increase of tax credits, from the amount specified in the Determination Notice, at the time of each building's placement in service will only be permitted if it is determined by the Department, as required by Code §42(m)(2)(D), that the Tax-Exempt Bond Development does not receive more tax credits than the amount needed for the financial feasibility and viability of a Development throughout the Compliance Period. Increases to the amount of tax credits that exceed 110% of the amount of credits reflected in the Determination Notice are contingent upon approval by the Board. Increases to the amount of tax credits that do not exceed 110% of the amount of credits reflected in the Determination Notice may be approved administratively by the Executive Director.
(e) Satisfaction of Requirements for Tax-Exempt Bond Developments. If the Department staff determines that all requirements of this QAP and Rules have been met, the Department will recommend that the Board authorize the issuance of a Determination Notice. The Board, however, may utilize the discretionary factors identified in §50.10(a) of this chapter in determining if they will authorize the Department to issue a Determination Notice to the Development Owner. The Determination Notice, if authorized by the Board, will confirm that the Development satisfies the requirements of the QAP and Rules in accordance with the Code, §42(m)(1)(D).
(f) Certification of Tax Exempt Applications with New Docket Numbers. Applications that are processed through the Department review and evaluation process and receive an affirmative Board Determination, but do not close the bonds prior to the bond reservation expiration date, and subsequently have that docket number withdrawn from the Bond Review Board, may have their Determination Notice reinstated. The Applicant would need to receive a new docket number from the Texas Bond Review Board. One of the following must apply:
(1) The new docket number must be issued in the same program year as the original docket number and must not be more than four months from the date the original application was withdrawn from the BRB. The application must remain unchanged. This means that at a minimum, the following can not have changed: site control, total number of units, unit mix (bedroom sizes and income restrictions), design/site plan documents, financial structure including bond and Housing Tax Credit amounts, development costs, rent schedule, operating expenses, sources and uses, ad valorem tax exemption status, target population, scoring criteria (TDHCA issues) or BRB priority status including the effect on the inclusive capture rate. Note that the entities involved in the Applicant entity and Developer can not change; however, the certification can be submitted even if the lender, syndicator or issuer changes, as long as the financing structure and terms remain unchanged. Notifications under §50.9(h)(8) of this chapter are not required to be reissued. In the event that the Department's Board has already approved the Application for tax credits, the Application is not required to be presented to the Board again (unless there is public opposition) and a revised Determination Notice will be issued once notice of the assignment of a new docket number has been provided to the Department and the Department has confirmed that the capture rate and market demand remain acceptable. This certification must be submitted no later than thirty days after the date the Bond Review Board issues the new docket number and no later than thirty days before the anticipated closing. In the event that the Department's Board has not yet approved the Application, the Application will continue to be processed and ultimately provided to the Board for consideration. This certification must be submitted no later than thirty days after the date the Bond Review Board issues the new docket number and no later than forty-five days before the anticipated Department's Board meeting date.
(2) If there are changing to the Application as referenced in paragraph (1) of this subsection, the Application will be required to submit a new Application in full, along with the applicable fees, to be reviewed and evaluated in its entirety for a new determination notice to be issued.
§50.13.Commitment and Determination Notices; Agreement and Election Statement; Documentation Submission Requirements.
(a) Commitment and Determination Notices. If the Board approves an Application the Department will:
(1) If the Application is for a commitment from the State Housing Credit Ceiling, issue a Commitment Notice to the Development Owner which shall:
(A) Confirm that the Board has approved the Application; and
(B) State the Department's commitment to make a Housing Credit Allocation to the Development Owner in a specified amount, subject to the feasibility determination described in §50.16 of this chapter, and compliance by the Development Owner with the remaining requirements of this chapter and any other terms and conditions set forth therein by the Department. This commitment shall expire on the date specified therein unless the Development Owner indicates acceptance of the commitment by executing the Commitment Notice or Determination Notice, pays the required fee specified in §50.20 of this chapter, and satisfies any other conditions set forth therein by the Department. The Commitment Notice expiration date may not be extended.
(2) If the Application regards a Tax-Exempt Bond Development, issue a Determination Notice to the Development Owner which shall:
(A) Confirm the Board's determination that the Development satisfies the requirements of this QAP; and
(B) State the Department's commitment to issue IRS Form(s) 8609 to the Development Owner in a specified amount, subject to the requirements set forth in §50.12 of this chapter and compliance by the Development Owner with all applicable requirements of this chapter and any other terms and conditions set forth therein by the Department. The Determination Notice shall expire on the date specified therein unless the Development Owner indicates acceptance by executing the Determination Notice and paying the required fee specified in §50.20 of this chapter. The Determination Notice shall also expire unless the Development Owner satisfies any conditions set forth therein by the Department within the applicable time period.
(3) Notify, in writing, the mayor or other equivalent chief executive officer of the municipality in which the Property is located informing him/her of the Board's issuance of a Commitment Notice or Determination Notice, as applicable.
(4) A Commitment or Determination Notice shall not be issued with respect to any Development for an unnecessary amount or where the cost for the total development, acquisition, construction or Rehabilitation exceeds the limitations established from time to time by the Department and the Board, unless the Department staff make a recommendation to the Board based on the need to fulfill the goals of the Housing Tax Credit Program as expressed in this QAP and Rules, and the Board accepts the recommendation. The Department's recommendation to the Board shall be clearly documented.
(5) A Commitment or Determination Notice shall not be issued with respect to the Applicant, the Development Owner, the General Contractor, or any Affiliate of the General Contractor that is active in the ownership or Control of one or more other low-income rental housing properties in the state of Texas administered by the Department that is in Material Noncompliance with the LURA (or any other document containing an Extended Low-income Housing Commitment) or the program rules in effect for such property, as described in Chapter 60 of this title.
(6) The executed Commitment or Determination Notice must be returned to the Department on the date specified with the Commitment Notice or Determination Notice, which shall be no earlier than ten days of the effective date of the Notice.
(b) Agreement and Election Statement. Together with the Development Owner's acceptance of the Carryover Allocation, the Development Owner may execute an Agreement and Election Statement, in the form prescribed by the Department, for the purpose of fixing the Applicable Percentage for the Development as that for the month in which the Carryover Allocation was accepted (or the month the bonds were issued for Tax-Exempt Bond Developments), as provided in the Code, §42(b)(2). Current Treasury Regulations, §1.42-8(a)(1)(v), suggest that in order to permit a Development Owner to make an effective election to fix the Applicable Percentage for a Development, the Carryover Allocation Document must be executed by the Department and the Development Owner within the same month. The Department staff will cooperate with a Development Owner, as possible or reasonable; to assure that the Carryover Allocation Document can be so executed.
(c) Documentation Submission Requirements at Commitment of Funds. No later than the date the Commitment Notice or Determination Notice is executed by the Applicant and returned to the Department with the appropriate Commitment Fee as further described in §50.20(f) of this chapter, the following documents must also be provided to the Department. Failure to provide these documents may cause the Commitment to be rescinded. For each Applicant all of the following must be provided:
(1) Evidence that the entity has the authority to do business in Texas;
(2) A Certificate of Account Status from the Texas Comptroller of Public Accounts or, if such a Certificate is not available because the entity is newly formed, a statement to such effect; and a Certificate of Organization from the Secretary of State;
(3) Copies of the entity's governing documents, including, but not limited to, its Articles of Incorporation, Articles of Organization, Certificate of Limited Partnership, Bylaws, Regulations and/or Partnership Agreement; and
(4) Evidence that the signer(s) of the Application have the authority to sign on behalf of the Applicant in the form of a corporate resolution or by-laws which indicate same from the sub-entity in Control and that those Persons signing the Application constitute all Persons required to sign or submit such documents.
§50.14.Carryover; 10% Test; Commencement of Substantial Construction.
(a) Carryover. All Developments which received a Commitment Notice, and will not be placed in service and receive IRS Form 8609 in the year the Commitment Notice was issued, must submit the Carryover documentation to the Department no later than November 1 of the year in which the Commitment Notice is issued pursuant to §42(h)(I)(c) IRC. Commitments for credits will be terminated if the Carryover documentation, or an approved extension, has not been received by this deadline. In the event that a Development Owner intends to submit the Carryover documentation in any month preceding November of the year in which the Commitment Notice is issued, in order to fix the Applicable Percentage for the Development in that month, it must be submitted no later than the first Friday in the preceding month. If the financing structure, syndication rate, amount of debt or syndication proceeds are revised at the time of Carryover from what was proposed in the original Application, applicable documentation of such changes must be provided and the Development may be reevaluated by the Department. The Carryover Allocation format must be properly completed and delivered to the Department as prescribed by the Carryover Allocation Procedures Manual. All Carryover Allocations will be contingent upon the following, in addition to all other conditions placed upon the Application in the Commitment Notice:
(1) The Development Owner for all New Construction and Adaptive Reuse Developments must have purchased the Development Site.
(2) A current original plat or survey of the land, prepared by a duly licensed Texas Registered Professional Land Surveyor. Such survey shall conform to standards prescribed in the Manual of Practice for Land Surveying in Texas as promulgated and amended from time to time by the Texas Surveyors Association as more fully described in the Carryover Procedures Manual.
(3) For all Developments involving New Construction or Adaptive Reuse, evidence of the availability of all necessary utilities/services to the Development site must be provided. Necessary utilities include natural gas (if applicable), electric, trash, water, and sewer. Such evidence must be a letter or a monthly utility bill from the appropriate municipal/local service provider. If utilities are not already accessible, then the letter must clearly state: an estimated time frame for provision of the utilities, an estimate of the infrastructure cost, and an estimate of any portion of that cost that will be borne by the Development Owner. Letters must be from an authorized individual representing the organization which actually provides the services. Such documentation should clearly indicate the Development property. If utilities are not already accessible (undeveloped areas), then the letter should not be older than three months from the first day of the Application Acceptance Period.
(4) The Department will not execute a Carryover Allocation Agreement with any Owner in Material Noncompliance on October 1, 2008.
(b) 10% Test. No later than six months from the date the Carryover Allocation Document is executed by the Department and the Development Owner, more than 10% of the Development Owner's reasonably expected basis must have been incurred pursuant to §42(h)(1)(E)(i) and (ii) of the Internal Revenue Code and Treasury Regulations, §1.42-6. The evidence to support the satisfaction of this requirement must be submitted to the Department no later than June 30 of the year following the execution of the Carryover Allocation Document in a format prescribed by the Department. At the time of submission of the documentation, the Development Owner must also submit a Management Plan and an Affirmative Marketing Plan as further described in the Carryover Allocation Procedures Manual. Evidence must be provided at this time of attendance of the Development Owner or management company at Department-approved Fair Housing training relating to leasing and management issues for at least five hours and the Development architect and engineer at Department-approved Fair Housing training relating to design issues for at least five hours on or before the time the 10% Test Documentation is submitted. Certifications must not be older than two years.
(c) Commencement of Substantial Construction. The Development Owner must submit evidence of having commenced and continued substantial construction activities as defined in Chapter 60 of this title. The evidence must be submitted not later than December 1 of the year after the execution of the Carryover Allocation Document with the possibility of an extension as described in §50.20 of this chapter.
§50.15.LURA, Cost Certification.
(a) Land Use Restriction Agreement (LURA). The Development Owner must request a LURA from the Department no later than the date specified in Chapter 60 of this title, the Department's Compliance Rules. The Development Owner must date, sign and acknowledge before a notary public the LURA and send the original to the Department for execution. The initial compliance and monitoring fee must be accompanied by a statement, signed by the Owner, indicating the start of the Development's Credit Period and the earliest placed in service date for the Development buildings. After receipt of the signed LURA from the Department, the Development Owner shall then record the LURA, along with any and all exhibits attached thereto, in the real property records of the county where the Development is located and return the original document, duly certified as to recordation by the appropriate county official, to the Department no later than the date that the Cost Certification Documentation is submitted to the Department. If any liens (other than mechanics' or materialmen's liens) shall have been recorded against the Development and/or the Property prior to the recording of the LURA, the Development Owner shall obtain the subordination of the rights of any such lienholder, or other effective consent, to the survival of certain obligations contained in the LURA, which are required by §42(h)(6)(E)(ii) of the Code to remain in effect following the foreclosure of any such lien. Receipt of such certified recorded original LURA by the Department is required prior to issuance of IRS Form 8609. A representative of the Department, or assigns, shall physically inspect the Development for compliance with the Application and the representations, warranties, covenants, agreements and undertakings contained therein. Such inspection will be conducted before the IRS Form 8609 is issued for a building, but it shall be conducted in no event later than the end of the second calendar year following the year the last building in the Development is placed in service. The Development Owner for Tax-Exempt Bond Developments shall obtain a subordination agreement wherein the lien of the mortgage is subordinated to the LURA. The LURA shall contain any provision which requires the Development Owner to restrict rents and incomes at any AMGI level, as approved by the Board. The restricted gross rents for any AMGI level outlined in the LURA will be calculated in accordance with §42(g)(2)(A), Internal Revenue Code.
(b) Cost Certification. The Cost Certification Procedures Manual sets forth the documentation required for the Department to perform a feasibility analysis in accordance with §42(m)(2)(C)(i)(II), Internal Revenue Code, and determine the final Credit to be allocated to the Development.
(1) To request IRS Forms 8609, Developments must have:
(A) Placed in Service by December 31 of the year the Commitment Notice was issued if a Carryover Allocation was not requested and received; or December 31 of the second year following the year the Carryover Allocation Agreement was executed;
(B) Scheduled a final construction inspection in accordance with Chapter 60 of this title, the Department's Compliance Monitoring Policies and Procedures;
(C) Informed the Department of and received written approval for all Development amendments in accordance with §50.17(c) of this chapter;
(D) Submitted to the Department the LURA in accordance with subsection (a) of this section;
(E) Paid all applicable Department fees; and
(F) Prepared all Cost Certification documentation as more fully described in the Cost Certification Procedures Manual including:
(i) Carryover Allocation Agreement/Determination Notice and Election Statement;
(ii) Owner's Statement of Certification;
(iii) Owner Summary;
(iv) Evidence of Nonprofit and CHDO Participation;
(v) Evidence of Historically Underutilized Business (HUB) Participation;
(vi) Development Summary;
(vii) As-Built Survey;
(viii) Closing Statement;
(ix) Title Policy;
(x) Evidence of Placement in Service;
(xi) Independent Auditor's Reports;
(xii) Total Development Cost Schedule;
(xiii) AIA Form G702 and G703, Application and Certificate for Payment;
(xiv) Rent Schedule;
(xv) Utility Allowance;
(xvi) Annual Estimated Operating Expenses and 15-Year Proforma;
(xvii) Current Annual Operating Statement and Rent Roll;
(xviii) Final Sources of Funds;
(xix) Executed Limited Partnership Agreement;
(xx) Loan Agreement or Firm Commitment;
(xxi) Architect's Certification of Fair Housing Requirements; and
(xxii) TDHCA Compliance Workshop Certificate.
(2) Required Cost Certification documentation must be received by the Department no later than January 15 following the year the Credit Period begins. Any Developments issued a Commitment Notice or Determination Notice that fails to submit its Cost Certification documentation by this deadline will be reported to the IRS and the Owner will be required to submit a request for extension consistent with §50.20(l) of this chapter.
(3) The Department will perform an initial evaluation of the Cost Certification documentation within 45 days from the date of receipt and notify the Owner in a deficiency letter of all additional required documentation. Any deficiency letters issued to the Owner pertaining to the Cost Certification documentation will also be copied to the syndicator. The Department will issue IRS Forms 8609 no later than 90 days from the date that all required documents have been received.
(4) The Department will perform an evaluation to determine if the Applicant is in Material Noncompliance with the LURA (or any other document containing an Extended Low-income Housing Commitment) or the program rules in effect for the subject property, as described in Chapter 60 of this title, prior to issuance of IRS Forms 8609.
§50.16.Housing Credit Allocations.
(a) In making a commitment of a Housing Credit Allocation under this chapter, the Department shall rely upon information contained in the Application to determine whether a building is eligible for the credit under the Code, §42. The Development Owner shall bear full responsibility for claiming the credit and assuring that the Development complies with the requirements of the Code, §42. The Department shall have no responsibility for ensuring that a Development Owner who receives a Housing Credit Allocation from the Department will qualify for the tax credit.
(b) The Housing Credit Allocation Amount shall not exceed the dollar amount the Department determines is necessary for the financial feasibility and the long term viability of the Development throughout the affordability period. (§2306.6711(b)). Such determination shall be made by the Department at the time of issuance of the Commitment Notice or Determination Notice; at the time the Department makes a Housing Credit Allocation; and as of the date each building in a Development is placed in service. Any Housing Credit Allocation Amount specified in a Commitment Notice, Determination Notice or Carryover Allocation Document is subject to change by the Department based upon such determination. Such a determination shall be made by the Department based on its evaluation and procedures, considering the items specified in the Code, §42(m)(2)(B), and the department in no way or manner represents or warrants to any Applicant, sponsor, investor, lender or other entity that the Development is, in fact, feasible or viable.
(c) The General Contractor hired by the Development Owner must meet specific criteria as defined by the General Appropriation Act, Article VII, Rider 8(c). A General Contractor hired by a Development Owner or a Development Owner, if the Development Owner serves as General Contractor must demonstrate a history of constructing similar types of housing without the use of federal tax credits. Evidence must be submitted to the Department, in accordance with §50.9(h)(4)(I) of this chapter, which sufficiently documents that the General Contractor has constructed some housing without the use of Housing Tax Credits. This documentation will be required as a condition of the Commitment Notice or Carryover Allocation Agreement, and must be complied with prior to commencement of construction and at cost certification and final allocation of credits.
(d) An allocation will be made in the name of the Development Owner identified in the related Commitment Notice or Determination Notice. If an allocation is made to a member or Affiliate of the ownership entity proposed at the time of Application, the Department will transfer the allocation to the ownership entity as consistent with the intention of the Board when the Development was selected for an award of tax credits. Any other transfer of an allocation will be subject to review and approval by the Department consistent with §50.17(c) of this chapter. The approval of any such transfer does not constitute a representation to the effect that such transfer is permissible under §42 of the Code or without adverse consequences thereunder, and the Department may condition its approval upon receipt and approval of complete current documentation regarding the owner including documentation to show consistency with all the criteria for scoring, evaluation and underwriting, among others, which were applicable to the original Applicant.
(e) The Department shall make a Housing Credit Allocation, either in the form of IRS Form 8609, with respect to current year allocations for buildings placed in service, or in the Carryover Allocation Document, for buildings not yet placed in service, to any Development Owner who holds a Commitment Notice which has not expired, and for which all fees as specified in §50.20 of this chapter have been received by the Department and with respect to which all applicable requirements, terms and conditions have been met. For Tax-Exempt Bond Developments, the Housing Credit Allocation shall be made in the form of a Determination Notice. For an IRS Form 8609 to be issued with respect to a building in a Development with a Housing Credit Allocation, satisfactory evidence must be received by the Department that such building is completed and has been placed in service in accordance with the provisions of the Department's Cost Certification Procedures Manual. The Cost Certification documentation requirements will include a certification and inspection report prepared by a Third-Party accessibility specialist to certify that the Development meets all required accessibility standards. IRS Form 8609 will not be issued until the certifications are received by the Department. The Department shall mail or deliver IRS Form 8609 (or any successor form adopted by the Internal Revenue Service) to the Development Owner, with Part I thereof completed in all respects and signed by an authorized official of the Department. The delivery of the IRS Form 8609 will occur only after the Development Owner has complied with all procedures and requirements listed within the Cost Certification Procedures Manual. Regardless of the year of Application to the Department for Housing Tax Credits, the current year's Cost Certification Procedures Manual must be utilized when filing all cost certification materials. A separate Housing Credit Allocation shall be made with respect to each building within a Development which is eligible for a tax credit; provided, however, that where an allocation is made pursuant to a Carryover Allocation Document on a Development basis in accordance with the Code, §42(h)(1)(F), a housing credit dollar amount shall not be assigned to particular buildings in the Development until the issuance of IRS Form 8609s with respect to such buildings. The Department may delay the issuance of IRS Form 8609 if any Development violates the representations of the Application.
(f) In making a Housing Credit Allocation, the Department shall specify a maximum Applicable Percentage, not to exceed the Applicable Percentage for the building permitted by the Code, §42(b), and a maximum Qualified Basis amount. In specifying the maximum Applicable Percentage and the maximum Qualified Basis amount, the Department shall disregard the first-year conventions described in the Code, §42(f)(2)(A) and §42(f)(3)(B). The Housing Credit Allocation made by the Department shall not exceed the amount necessary to support the extended low-income housing commitment as required by the Code, §42(h)(6)(C)(i).
(g) Development inspections shall be required to show that the Development is built or rehabilitated according to construction threshold criteria and Development characteristics identified at application. At a minimum, all Development inspections must meet Uniform Physical Condition Standards (UPCS) as referenced in Treasury Regulation §1.42-5 (d)(2)(ii) and include an inspection for quality during the construction process while defects can reasonably be corrected and a final inspection at the time the Development is placed in service. All such Development inspections shall be performed by the Department or by an independent Third Party inspector acceptable to the Department. The Development Owner shall pay all fees and costs of said inspections as described in §50.20 of this chapter. Details regarding the construction inspection process are set forth in the Department Rule Chapter 60 of this title, the Department's Compliance Monitoring Policies and Procedures (§2306.081; General Appropriation Act, Article VII, Rider 8(b)).
(h) After the entire Development is placed in service, which must occur prior to the deadline specified in the Carryover Allocation Document and as further outlined in §50.15 of this chapter, the Development Owner shall be responsible for furnishing the Department with documentation which satisfies the requirements set forth in the Cost Certification Procedures Manual. For purposes of this title, and consistent with IRS Notice 88-116, the placed in service date for a new or existing building used as residential rental property is the date on which the building is ready and available for its specifically assigned function and more specifically when the first Unit in the building is certified as being suitable for occupancy in accordance with state and local law and as certified by the appropriate local authority or registered architect as ready for occupancy. The Cost Certification must be submitted for the entire Development; therefore partial Cost Certifications are not allowed. The Department may require copies of invoices and receipts and statements for materials and labor utilized for the New Construction or Rehabilitation and, if applicable, a closing statement for the acquisition of the Development as well as for the closing of all interim and permanent financing for the Development. If the Development Owner does not fulfill all representations and commitments made in the Application, the Department may make reasonable reductions to the tax credit amount allocated via the IRS Form 8609, may withhold issuance of the IRS Form 8609s until these representations and commitments are met, and/or may terminate the allocation, if appropriate corrective action is not taken by the Development Owner.
(i) The Board at its sole discretion may allocate credits to a Development Owner in addition to those awarded at the time of the initial Carryover Allocation in instances where there is bona fide substantiation of cost overruns and the Department has made a determination that the allocation is needed to maintain the Development's financial viability.
(j) The Department may, at any time and without additional administrative process, determine to award credits to Developments previously evaluated and awarded credits if it determines that such previously awarded credits are or may be invalid and the owner was not responsible for such invalidity.
(k) If an Applicant returns a full credit allocation after the Carryover Allocation deadline required for that allocation, the Department will impose a penalty on the score for any Competitive Housing Tax Credit Applications submitted by that Applicant or any Affiliate of that Applicant for any Application in an Application Round occurring concurrent to the return of credits or if no Application Round is pending the Round immediately following the return of credits. The penalty will be assessed in an amount that reduces the Applicant's final awarded score by an additional 20%.
§50.17.Board Reevaluation, Appeals Process; Provision of Information or Challenges Regarding Applications; Amendments; Housing Tax Credit and Ownership Transfers; Sale of Tax Credit Properties; Withdrawals; Cancellations; Alternative Dispute Resolution.
(a) Board Reevaluation. (§2306.6731(b)). Regardless of development stage, the Board shall reevaluate a Development that undergoes a substantial change between the time of initial Board approval of the Development and the time of issuance of a Commitment Notice or Determination Notice for the Development. For the purposes of this subsection, substantial change shall be those items identified in subsection (d)(4) of this section. The Board may revoke any Commitment Notice or Determination Notice issued for a Development that has been unfavorably reevaluated by the Board.
(b) Appeals Process. (§2306.6715) An Applicant may appeal decisions made by the Department as follows.
(1) The decisions that may be appealed are identified in subparagraphs (A) - (D) of this paragraph.
(A) A determination regarding the Application's satisfaction of:
(i) Eligibility Requirements;
(ii) Disqualification or debarment criteria;
(iii) Pre-Application or Application Threshold Criteria;
(iv) Underwriting Criteria;
(B) The scoring of the Application under the Application Selection Criteria; and
(C) A recommendation as to the amount of Housing Tax Credits to be allocated to the Application.
(D) Any Department decision that results in termination of an Application.
(2) An Applicant may not appeal a decision made regarding an Application filed by another Applicant.
(3) An Applicant must file its appeal in writing with the Department not later than the seventh day after the date the Department publishes the results of any stage of the Application evaluation process identified in §50.9 of this chapter. In the appeal, the Applicant must specifically identify the Applicant's grounds for appeal, based on the original Application and additional documentation filed with the original Application. If the appeal relates to the amount of Housing Tax Credits recommended to be allocated, the Department will provide the Applicant with the underwriting report upon request.
(4) The Executive Director of the Department shall respond in writing to the appeal not later than the 14th day after the date of receipt of the appeal. If the Applicant is not satisfied with the Executive Director's response to the appeal, the Applicant may appeal directly in writing to the Board, provided that an appeal filed with the Board under this subsection must be received by the Board before:
(A) The seventh day preceding the date of the Board meeting at which the relevant commitment decision is expected to be made; or
(B) The third day preceding the date of the Board meeting described by subparagraph (A) of this paragraph, if the Executive Director does not respond to the appeal before the date described by subparagraph (A) of this paragraph.
(5) Board review of an appeal under paragraph (4) of this subsection is based on the original Application and additional documentation filed with the original Application. The Board may not review any information not contained in or filed with the original Application. The decision of the Board regarding the appeal is final.
(6) The Department will post to its web site an appeal filed with the Department or Board and any other document relating to the processing of the appeal. (§2306.6717(a)(5))
(c) Provision of Information or Challenges Regarding Applications from Unrelated Entities to the Application. The Department will address information or challenges received from unrelated entities to a specific 2008 active Application, utilizing a preponderance of the evidence standard, as stated in paragraphs (1) - (3) of this subsection, provided the information or challenge includes a contact name, telephone number, fax number and e-mail address of the person providing the information or challenge and must be received by the Department no later than June 15, 2008:
(1) Within 14 business days of the receipt of the information or challenge, the Department will post all information and challenges received (including any identifying information) to the Department's website.
(2) Within seven business days of the receipt of the information or challenge, the Department will notify the Applicant related to the information or challenge. The Applicant will then have seven business days to respond to all information and challenges provided to the Department.
(3) Within 14 business days of the receipt of the response from the Applicant, the Department will evaluate all information submitted and other relevant documentation related to the investigation. This information may include information requested by the Department relating to this evaluation. The Department will post its determination summary to its website. Any determinations made by the Department cannot be appealed by any party unrelated to the Applicant.
(d) Amendment of Application Subsequent to Allocation by Board. (§2306.6712 and §2306.6717(a)(4))
(1) If a proposed modification would materially alter a Development approved for an allocation of a Housing Tax Credit, or if the Applicant has altered any selection criteria item for which it received points, the Department shall require the Applicant to file a formal, written request for an amendment to the Application.
(2) The Executive Director of the Department shall require the Department staff assigned to underwrite Applications to evaluate the amendment and provide an analysis and written recommendation to the Board. The appropriate party monitoring compliance during construction in accordance with §50.18 of this chapter shall also provide to the Board an analysis and written recommendation regarding the amendment. For amendments which require Board approval, the amendment request must be received by the Department at least 30 days prior to the Board meeting where the amendment will be considered.
(3) The Board must vote on whether to approve an amendment. The Board by vote may reject an amendment and, if appropriate, rescind a Commitment Notice or terminate the allocation of Housing Tax Credits and reallocate the credits to other Applicants on the Waiting List if the Board determines that the modification proposed in the amendment:
(A) would materially alter the Development in a negative manner; or
(B) would have adversely affected the selection of the Application in the Application Round.
(4) Material alteration of a Development includes, but is not limited to:
(A) a significant modification of the site plan;
(B) a modification of the number of units or bedroom mix of units;
(C) a substantive modification of the scope of tenant services;
(D) a reduction of 3% or more in the square footage of the units or common areas;
(E) a significant modification of the architectural design of the Development;
(F) a modification of the residential density of the Development of at least 5%;
(G) an increase or decrease in the site acreage of greater than 10% from the original site under control and proposed in the Application; and
(H) any other modification considered significant by the Board.
(5) In evaluating the amendment under this subsection, the Department staff shall consider whether the need for the modification proposed in the amendment was:
(A) Reasonably foreseeable by the Applicant at the time the Application was submitted; or
(B) Preventable by the Applicant.
(6) This section shall be administered in a manner that is consistent with the Code, §42.
(7) Before the 15th day preceding the date of Board action on the amendment, notice of an amendment and the recommendation of the Executive Director and monitor regarding the amendment will be posted to the Department's web site.
(8) In the event that an Applicant or Developer seeks to be released from the commitment to serve the income level of tenants targeted in the Real Estate Analysis Report at the time of the Commitment Notice issuance, as approved by the Board, the following procedure will apply. For amendments that involve a reduction in the total number of low-income Units being served, or a reduction in the number of low-income Units at any level of AMGI, as approved by the Board, evidence must be presented to the Department that includes written confirmation from the lender and syndicator that the Development is infeasible without the adjustment in Units. The Board may or may not approve the amendment request, however, any affirmative recommendation to the Board is contingent upon concurrence from the Real Estate Analysis Division that the Unit adjustment (or an alternative Unit adjustment) is necessary for the continued feasibility of the Development. Additionally, if it is determined by the Department that the allocation of credits would not have been made in the year of allocation because the loss of low-income targeting points would have resulted in the Application not receiving an allocation, and the amendment is approved by the Board, the approved amendment will carry a penalty that prohibits the Applicant and all persons or entities with any ownership interest in the Application (excluding any tax credit purchaser/syndicator), from participation in the Housing Tax Credit Program (for both the Competitive Housing Tax Credit Developments and Tax-Exempt Bond Developments) for 24 months from the time that the amendment is approved.
(e) Housing Tax Credit and Ownership Transfers. (§2306.6713) A Development Owner may not transfer an allocation of Housing Tax Credits or ownership of a Development supported with an allocation of Housing Tax Credits to any Person other than an Affiliate of the Development Owner unless the Development Owner obtains the Executive Director's prior, written approval of the transfer. The Executive Director may not unreasonably withhold approval of the transfer.
(1) Transfers will not be approved prior to the issuance of IRS Forms 8609 unless the Development Owner can provide evidence that a hardship is creating the need for the transfer (potential bankruptcy, removal by a partner, etc.). A Development Owner seeking Executive Director approval of a transfer and the proposed transferee must provide to the Department a copy of any applicable agreement between the parties to the transfer, including any third-party agreement with the Department.
(2) A Development Owner seeking Executive Director approval of a transfer must provide the Department with documentation requested by the Department, including but not limited to, a list of the names of transferees and Related Parties; and detailed information describing the experience and financial capacity of transferees and related parties. All transfer requests must disclose the reason for the request. The Development Owner shall certify to the Executive Director that the tenants in the Development have been notified in writing of the transfer before the 30th day preceding the date of submission of the transfer request to the Department. Not later than the fifth working day after the date the Department receives all necessary information under this section, the Department shall conduct a qualifications review of a transferee to determine the transferee's past compliance with all aspects of the Housing Tax Credit Program, LURAs; and the sufficiency of the transferee's experience with Developments supported with Housing Credit Allocations. If the viable operation of the Development is deemed to be in jeopardy by the Department, the Department may authorize changes that were not contemplated in the Application.
(3) As it relates to the Credit Cap further described in §50.6(d) of this chapter, the credit cap will not be applied in the following circumstances:
(A) In cases of transfers in which the syndicator, investor or limited partner is taking over ownership of the Development and not merely replacing the general partner; or
(B) In cases where the General Partner is being replaced if the award of credits was made at least five years prior to the transfer request date.
(f) Sale of Certain Tax Credit Properties. Consistent with §2306.6726, Texas Government Code, not later than two years before the expiration of the Compliance Period, a Development Owner who agreed to provide a right of first refusal under §2306.6725(b)(1), Texas Government Code and who intends to sell the property shall notify the Department of its intent to sell.
(1) The Development Owner shall notify Qualified Nonprofit Organizations and tenant organizations of the opportunity to purchase the Development. The Development Owner may:
(A) During the first six-month period after notifying the Department, negotiate or enter into a purchase agreement only with a Qualified Nonprofit Organization that is also a community housing development organization as defined by the Federal Home Investment Partnership Program (HOME);
(B) During the second six-month period after notifying the Department, negotiate or enter into a purchase agreement with any Qualified Nonprofit Organization or tenant organization; and
(C) During the year before the expiration of the compliance period, negotiate or enter into a purchase agreement with the Department or any Qualified Nonprofit Organization or tenant organization approved by the Department.
(2) Notwithstanding items for which points were received consistent with §50.9(i) of this chapter, a Development Owner may sell the Development to any purchaser after the expiration of the compliance period if a Qualified Nonprofit Organization or tenant organization does not offer to purchase the Development at the minimum price provided by §42(i)(7), Internal Revenue Code of 1986 (26 U.S.C. §42(i)(7)), and the Department declines to purchase the Development.
(g) Withdrawals. An Applicant may withdraw an Application prior to receiving a Commitment Notice, Determination Notice, Carryover Allocation Document or Housing Credit Allocation, or may cancel a Commitment Notice or Determination Notice by submitting to the Department a notice, as applicable, of withdrawal or cancellation, and making any required statements as to the return of any tax credits allocated to the Development at issue.
(h) Cancellations. The Department may cancel a Commitment Notice, Determination Notice or Carryover Allocation prior to the issuance of IRS Form 8609 with respect to a Development if:
(1) The Applicant or the Development Owner, or the Development, as applicable, fails to meet any of the conditions of such Commitment Notice or Carryover Allocation or any of the undertakings and commitments made by the Development Owner in the Applications process for the Development;
(2) Any statement or representation made by the Development Owner or made with respect to the Development Owner or the Development is untrue or misleading;
(3) An event occurs with respect to the Applicant or the Development Owner which would have made the Development's Application ineligible for funding pursuant to §50.5 of this chapter if such event had occurred prior to issuance of the Commitment Notice or Carryover Allocation; or
(4) The Applicant or the Development Owner or the Development, as applicable, fails to comply with these Rules or the procedures or requirements of the Department.
(i) Alternative Dispute Resolution Policy. In accordance with §2306.082, Texas Government Code, it is the Department's policy to encourage the use of appropriate alternative dispute resolution procedures ("ADR") under the Governmental Dispute Resolution Act, Chapter 2009, Texas Government Code, to assist in resolving disputes under the Department's jurisdiction. As described in Chapter 154, Civil Practices and Remedies Code, ADR procedures include mediation. Except as prohibited by the Department's ex parte communications policy, the Department encourages informal communications between Department staff and Applicants, and other interested persons, to exchange information and informally resolve disputes. The Department also has administrative appeals processes to fairly and expeditiously resolve disputes. If at anytime an Applicant or other person would like to engage the Department in an ADR procedure, the person may send a proposal to the Department's Dispute Resolution Coordinator. For additional information on the Department's ADR Policy, see the Department's General Administrative Rule on ADR at §1.17 of this title.
§50.18.Compliance Monitoring and Material Noncompliance.
The Code, §42(m)(1)(B)(iii), requires the Department as the housing credit agency to include in its QAP a procedure that the Department will follow in monitoring Developments for compliance with the provisions of the Code, §42 and in notifying the IRS of any noncompliance of which the Department becomes aware. Detailed compliance rules and procedures for monitoring are set forth in Chapter 60 of this title.
§50.19.Department Records; Application Log; IRS Filings.
(a) Department Records. At all times during each calendar year the Department shall maintain a record of the following:
(1) The cumulative amount of the State Housing Credit Ceiling that has been committed pursuant to Commitment Notices during such calendar year;
(2) The cumulative amount of the State Housing Credit Ceiling that has been committed pursuant to Carryover Allocation Documents during such calendar year;
(3) The cumulative amount of Housing Credit Allocations made during such calendar year; and
(4) The remaining unused portion of the State Housing Credit Ceiling for such calendar year.
(b) Application Log. (§2306.6702(a)(3) and §2306.6709) The Department shall maintain for each Application an Application Log that tracks the Application from the date of its submission. The Application Log will contain, at a minimum, the information identified in paragraphs (1) - (9) of this subsection.
(1) The names of the Applicant and all General Partners of the Development Owner, the owner contact name and phone number, and full contact information for all members of the Development Team;
(2) The name, physical location, and address of the Development, including the relevant Uniform State Service Region of the state;
(3) The number of Units and the amount of Housing Tax Credits requested for allocation by the Department to the Applicant;
(4) Any Set-Aside category under which the Application is filed;
(5) The requested and awarded score of the Application in each scoring category adopted by the Department under the Qualified Allocation Plan;
(6) Any decision made by the Department or Board regarding the Application, including the Department's decision regarding whether to underwrite the Application and the Board's decision regarding whether to allocate Housing Tax Credits to the Development;
(7) The names of individuals making the decisions described by paragraph (6) of this subsection, including the names of Department staff scoring and underwriting the Application, to be recorded next to the description of the applicable decision;
(8) The amount of Housing Tax Credits allocated to the Development; and
(9) A dated record and summary of any contact between the Department staff, the Board, and the Applicant or any Related Parties.
(c) IRS Filings. The Department shall mail to the Internal Revenue Service, not later than the 28th day of the second calendar month after the close of each calendar year during which the Department makes Housing Credit Allocations, a copy of each completed (as to Part I) IRS Form 8609, the original of which was mailed or delivered by the Department to a Development Owner during such calendar year, along with a single completed IRS Form 8610, Annual Low-income Housing Credit Agencies Report. When a Carryover Allocation is made by the Department, a copy of the Carryover Allocation Agreement will be mailed or faxed to the Development Owner by the Department. The original of the Carryover Allocation Document will be retained by the Department and IRS Form 8610 Schedule A will be filed by the Department with IRS Form 8610 for the year in which the allocation is made. The Department shall be authorized to vary from the requirements of this section to the extent required to adapt to changes in IRS requirements.
§50.20.Program Fees; Refunds; Public Information Requests; Adjustments of Fees and Notification of Fees; Extensions; Penalties.
(a) Timely Payment of Fees. All fees must be paid as stated in this section, unless the Executive Director has granted a waiver for specific extenuating and extraordinary circumstances. To be eligible for a waiver, the Applicant must submit a request for a waiver no later than 10 business days prior to the deadlines as stated in this section. Any fees, as further described in this section, that are not timely paid will cause an Applicant to be ineligible to apply for tax credits and additional tax credits and ineligible to submit extension requests, ownership changes and Application amendments. Payments made by check, for which insufficient funds are available, may cause the Application, commitment or allocation to be terminated.
(b) Pre-Application Fee. Each Applicant that submits a Pre-Application shall submit to the Department, along with such Pre-Application, a non refundable Pre-Application fee, in the amount of $10 per Unit. Units for the calculation of the Pre-Application Fee include all Units within the Development, including tax credit, market rate and owner-occupied Units. Pre-Applications without the specified Pre-Application Fee in the form of a check will not be accepted. Pre-Applications in which a CHDO or Qualified Nonprofit Organization intends to serve as the managing General Partner of the Development Owner, or Control the managing General Partner of the Development Owner, will receive a discount of 10% off the calculated Pre-Application fee. (General Appropriation Act, Article VII, Rider 7; §2306.6716(d)). For Tax Exempt Bond Developments with the Department as the issuer, the Applicant shall submit the following fees: $1,000 (payable to TDHCA), $1,500 (payable to Vinson & Elkins, Bond Counsel), and $5,000 (payable to the Texas Bond Review Board).
(c) Application Fee. Each Applicant that submits an Application shall submit to the Department, along with such Application, an Application fee. For Applicants having submitted a Pre-Application which met Pre-Application Threshold and for which a Pre-Application fee was paid, the Application fee will be $20 per Unit. For Applicants not having submitted a Pre-Application, the Application fee will be $30 per Unit. Units for the calculation of the Application Fee include all Units within the Development, including tax credit, market rate and owner-occupied Units. Applications without the specified Application Fee in the form of a check will not be accepted. Applications in which a CHDO or Qualified Nonprofit Organization intends to serve as he managing General Partner of the Development Owner, or Control the managing General Partner of the Development Owner, will receive a discount of 10% off the calculated Application fee. (General Appropriation Act, Article VII, Rider 7; §2306.6716(d)). For Tax Exempt Bond Developments with the Department as the Issuer the Applicant shall submit a tax credit application fee of $30 per unit and bond application fee of $10,000. Those Applications utilizing a local issuer only need to submit the tax credit application fee.
(d) Refunds of Pre-Application or Application Fees. (§2306.6716(c)). Upon written request from the Applicant, the Department shall refund the balance of any fees collected for a Pre-Application or Application that is withdrawn by the Applicant or that is not fully processed by the Department. The amount of refund on Pre-Applications not fully processed by the Department will be commensurate with the level of review completed. Intake and data entry will constitute 50% of the review, and Threshold review prior to a deficiency issued will constitute 30% of the review. Deficiencies submitted and reviewed constitute 20% of the review. The amount of refund on Applications not fully processed by the Department will be commensurate with the level of review completed. Intake and data entry will constitute 20% of the review, the site visit will constitute 20% of the review, Eligibility and Selection review will constitute 20%, and Threshold review will constitute 20% of the review, and underwriting review will constitute 20%. The Department must provide the refund to the Applicant not later than the 30th day after the date of request.
(e) Third Party Underwriting Fee. Applicants will be notified in writing prior to the evaluation of a Development by an independent external underwriter in accordance with §50.9(d)(6), (e)(3), and (f)(6) of this chapter if such a review is required. The fee must be received by the Department prior to the engagement of the underwriter. The fees paid by the Development Owner to the Department for the external underwriting will be credited against the commitment fee established in subsection (f) of this section, in the event that a Commitment Notice or Determination Notice is issued by the Department to the Development Owner.
(f) Commitment or Determination Notice Fee. Each Development Owner that receives a Commitment Notice or Determination Notice shall submit to the Department, not later than the expiration date on the Commitment or Determination notice, a non-refundable commitment fee equal to 5% of the annual Housing Credit Allocation amount. The commitment fee shall be paid by check. If a Development Owner of an Application awarded Competitive Housing Tax Credits has paid a Commitment Fee and returns the credits by November 1, 2008, the Development Owner will receive a refund of 50% of the Commitment Fee.
(g) Compliance Monitoring Fee. Upon receipt of the cost certification, the Department will invoice the Development Owner for compliance monitoring fees. The amount due will equal $40 per tax credit unit. The fee will be collected, retroactively if applicable, beginning with the first year of the credit period. The invoice must be paid prior to the issuance of form 8609. Subsequent anniversary dates on which the compliance monitoring fee payments are due shall be determined by the month the first building is placed in service.
(h) Building Inspection Fee. The Building Inspection Fee must be paid at the time the Commitment Fee is paid. The Building Inspection Fee for all Developments is $750. Inspection fees in excess of $750 may be charged to the Development Owner not to exceed an additional $250 per Development.
(i) Tax-Exempt Bond Credit Increase Request Fee. As further described in §50.12 of this chapter, requests for increases to the credit amounts to be issued on IRS Forms 8609 for Tax-Exempt Bond Developments must be submitted with a request fee equal to 5% of the amount of the credit increase for one year.
(j) Public Information Requests. Public information requests are processed by the Department in accordance with the provisions of the Government Code, Chapter 552. The Department uses the guidelines promulgated by The Texas Facilities Commission to determine the cost of copying, and other costs of production.
(k) Periodic Adjustment of Fees by the Department and Notification of Fees. (§2306.6716(b)). All fees charged by the Department in the administration of the tax credit program will be revised by the Department from time to time as necessary to ensure that such fees compensate the Department for its administrative costs and expenses. The Department shall publish each year an updated schedule of Application fees that specifies the amount to be charged at each stage of the Application process. Unless otherwise determined by the Department, all revised fees shall apply to all Applications in process and all Developments in operation at the time of such revisions.
(l) Extension and Amendment Requests. All extension requests relating to the Commitment Notice, Carryover, Documentation for 10% Test, Substantial Construction Commencement, Placed in Service or Cost Certification requirements and amendment requests shall be submitted to the Department in writing and be accompanied by a mandatory non-refundable extension fee in the form of a check in the amount of $2,500. Such requests must be submitted to the Department no later than the date for which an extension is being requested. All requests for extensions totaling less than 6 months may be approved by the Executive Director and are not required to have Board approval. For extensions that require Board approval, the extension request must be received by the Department at least 15 business days prior to the Board meeting where the extension will be considered. The extension request shall specify a requested extension date and the reason why such an extension is required. Carryover extension requests shall not request an extended deadline later than December 1st of the year the Commitment Notice was issued. The Department, in its sole discretion, may consider and grant such extension requests for all items. If an extension is required at Cost Certification, the fee of $2,500 must be received by the Department to qualify for issuance of Forms 8609. Amendment requests must be submitted consistent with §50.17(d) of this chapter. The Board may waive related fees for good cause.
(m) Penalties. Development Owners who have more tax credits allocated to them than they can substantiate through Cost Certification will return those excess tax credits prior to issuance of 8609's. For Competitive Housing Tax Credit Developments, a penalty fee equal to the one year credit amount of the lost credits (10% of the total unused tax credit amount) will be required to be paid by the Owner prior to the issuance of form 8609's if the tax credits are not returned, and 8609's issued, within 180 days of the end of the first year of the credit period. This penalty fee may be waived without further Board action if the Department recaptures and re-issues the returned tax credits in accordance with §42, Internal Revenue Code.
§50.21.Manner and Place of Filing All Required Documentation.
(a) All Applications, letters, documents, or other papers filed with the Department must be received only between the hours of 8:00 a.m. and 5:00 p.m. on any day which is not a Saturday, Sunday or a holiday established by law for state employees.
(b) All notices, information, correspondence and other communications under this title shall be deemed to be duly given if delivered or sent and effective in accordance with this subsection. Such correspondence must reference that the subject matter is pursuant to the Tax Credit Program and must be addressed to the Housing Tax Credit Program, Texas Department of Housing and Community Affairs, P.O. Box 13941, Austin, TX 78711-3941 or for hand delivery or courier to 221 East 11th Street, Austin, Texas 78701 or more current address of the Department as released on the Department's website. Every such correspondence required or contemplated by this title to be given, delivered or sent by any party may be delivered in person or may be sent by courier, telecopy, express mail, telex, telegraph or postage prepaid certified or registered air mail (or its equivalent under the laws of the country where mailed), addressed to the party for whom it is intended, at the address specified in this subsection. Regardless of method of delivery, documents must be received by the Department no later than 5:00 p.m. for the given deadline date. Notice by courier, express mail, certified mail, or registered mail will be considered received on the date it is officially recorded as delivered by return receipt or equivalent. Notice by telex or telegraph will be deemed given at the time it is recorded by the carrier in the ordinary course of business as having been delivered, but in any event not later than one business day after dispatch. Notice not given in writing will be effective only if acknowledged in writing by a duly authorized officer of the Department.
(c) If required by the Department, Development Owners must comply with all requirements to use the Department's web site to provide necessary data to the Department.
§50.22.Waiver and Amendment of Rules.
(a) The Board, in its discretion, may waive any one or more of these Rules if the Board finds that waiver is appropriate to fulfill the purposes or policies of Chapter 2306, Texas Government Code, or for other good cause, as determined by the Board.
(b) Section 1.13 of this title may be waived for any person seeking any action by filing a request with the Board.
(c) The Department may amend this chapter and the Rules contained herein at any time in accordance with the Government Code, Chapter 2001.
§50.23.Deadlines for Allocation of Housing Tax Credits. (§2306.6724)
(a) Not later than September 30 of each year, the Department shall prepare and submit to the Board for adoption the draft QAP required by federal law for use by the Department in setting criteria and priorities for the allocation of tax credits under the Housing Tax Credit program.
(b) The Board shall adopt and submit to the Governor the QAP not later than November 15 of each year.
(c) The Governor shall approve, reject, or modify and approve the QAP not later than December 1 of each year. (§2306.67022) (§42(m)(1))
(d) The Board shall annually adopt a manual, corresponding to the QAP, to provide information on how to apply for Housing Tax Credits.
(e) Applications for Housing Tax Credits to be issued a Commitment Notice during the Application Round in a calendar year must be submitted to the Department not later than March 1.
(f) The Board shall review the recommendations of Department staff regarding Applications and shall issue a list of approved Applications each year in accordance with the Qualified Allocation Plan not later than June 30.
(g) The Board shall approve final commitments for allocations of Housing Tax Credits each year in accordance with the Qualified Allocation Plan not later than July 31, unless unforeseen circumstances prohibit action by that date. In any event, the Board shall approve final commitments for allocations of Housing Tax Credits each year in accordance with the Qualified Allocation Plan not later than September 30. Department staff will subsequently issue Commitment Notices based on the Board's approval. Final commitments may be conditioned on various factors approved by the Board, including resolution of contested matters in litigation.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on January 14, 2008.
TRD-200800147
Michael Gerber
Executive Director
Texas Department of Housing and Community Affairs
Effective date: February 3, 2008
Proposal publication date: September 7, 2007
For further information, please call: (512) 475-3916
Subchapter B. ACCESSIBILITY REQUIREMENTS
The Texas Department of Housing and Community Affairs (the Department) adopts new Chapter 60, Subchapter B, §§60.201 - 60.211, concerning Accessibility Requirements. Sections 60.201 - 60.207, 60.209 and 60.210 are adopted with changes to the proposed text as published in the October 5, 2007, issue of the Texas Register (32 TexReg 6954). Section 60.208 and §60.211 are adopted without changes and will not be republished.
The new subchapter is adopted to ensure that the accessibility policy conforms to other Department rules that are being revised in the 2008 rule cycle and to implement changes enacted during the Regular Session of the 80th Texas Legislature.
Public hearings on the new chapter were held in El Paso (September 24, 2007), Lubbock (September 28, 2007), Brownsville (October 3, 2007), Houston (September 26, 2007), Dallas (October 1, 2007), and Austin (October 4, 2007). Additionally, written comments on the new chapter were accepted by mail, e-mail, and facsimile through October 29, 2007.
SUMMARY OF COMMENTS, STAFF RESPONSE AND BOARD ACTION
The Department received one comment from Advocacy, Inc., and a letter agreeing with Advocacy, Inc. from United Cerebral Palsy (UCP). Advocacy, Inc. comments were based on an earlier version of the rule rather than the published version. The Department conformed these comments and requested that Advocacy, Inc. review our alterations to ensure that they matched the published rule and were accurate to their original comment. This was confirmed and the following comments reflect consistency with the published rule. Our outside legal counsel reviewed the comments and provided a reasoned response based on the comments presented. They are:
COMMENT: The language in §60.201(b) tracks the general anti-discrimination mandate in §504, but the TDHCA regulations do not include anything similar tracking the general FHA anti-discrimination requirements, or even anything tracking the specific FHA provisions regarding accessibility. The difference is important because, for example, the "solely by reason of" language in the TDHCA regulations accurately tracks the §504 language, but it is not the correct causation standard applicable to FHA claims, which is much less restrictive than sole cause. (footnotes deleted)
STAFF RESPONSE: Agreed. Change made in text where appropriate. This was a persistent problem with a regulation that was developed to focus on §504 but also had to be consistent with the Fair Housing Act.
COMMENT: It would seem to improve the clarity of §60.201(c) to add a comma before the word 'and/or', and to add the word 'to' after the word 'and/or'.
STAFF RESPONSE: Agreed. Change made in text where appropriate.
COMMENT: It would also seem to improve the clarity of §60.201(d) if the text were broken into subpoints, such as:
(a) Except as set forth in subpart (b) below, this subchapter does not apply to entities that only participate in the Housing Choice Voucher or the Enhanced Voucher programs and receive no other federal financial assistance.
(b) All entities that participate in the Housing Choice Voucher or the Enhanced Voucher programs are covered by the Fair Housing Act's prohibitions against discrimination, including the requirements that such entities:
(1) permit reasonable modifications to existing premises;
(2) make reasonable accommodations to rules, policies, practices, or services, when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling; and
(3) for those properties that were designed and constructed for first occupancy after March 13, 1991, comply with the Fair Housing Act's provisions for accessible design and construction of new multifamily housing.
STAFF RESPONSE: No substantive change recommended. Proposed changes incorporated in slightly different format.
COMMENT: Assuming that there may be entities that contract with the state for the purpose of providing housing services (or property management services and the like), in order to prevent them from arguing that they are exempted from these regulations, §60.201(e) should be edited to add the words 'non-housing' before the word 'services'.
STAFF RESPONSE: Staff recommends no change and believes the rule is clear.
COMMENT: There may need to be a definition of "entity" in §60.202 in order to prevent someone from thinking that §60.201(d) applies to tenants or ultimate purchasers.
STAFF RESPONSE: Staff believes the proposed change would create more problems than it would resolve. The current regulation is clear in that it applies to recipients and subrecipients.
COMMENT: Numbering (as subparts) those terms being defined in §60.202 would improve the usefulness of the regulation because the definitions could then be cited much more easily.
STAFF RESPONSE: Agreed. Change made in text where appropriate.
COMMENT: There is a problem with the second sentence of the definition of "Disability" in Proposed §60.202. That wording accurately describes the limitation of the definition of the term under the Fair Housing Act, but that language is not found in the definition set out in HUD's §504 regulations, and is in fact inconsistent with it. (footnote eliminated)
STAFF RESPONSE: Staff does not accept this comment as this provision is contained in the Fair Housing Act, and, as noted in the commenters footnote 6, it is broader than the language found in HUD's §504 regulations. However, this provision of the Fair Housing Act applies to the housing covered by this regulation. It provides broader protection for housing providers in dealing with applicants or residents whose tenancy presents a threat to the health or safety, or risk of damage to the property, of others.
"Nothing in this subsection requires that a dwelling be made available to an individual whose tenancy would constitute a direct threat to the health or safety of other individuals or whose tenancy would result in substantial physical damage to the property of others." 42 USC §3604(f)(9).
COMMENT: We are unaware of clear authority for the final sentence in the definition of "Federal financial assistance" in §60.202, that receipt of federal tax credits is not federal financial assistance. That language does not appear in the §504 regulation that is cited as the source of this definition; thus, leaving it out would conform the regulation more closely to federal law.
STAFF RESPONSE: This section is eliminated based on state law. Texas Government Code §2306.6730 specifically requires low income tax credit developments to meet §504 requirements.
COMMENT: With regard to the definition of 'Multifamily housing project' in §60.202 we are not aware of what contribution the cited case makes. The definition could also be improved by deleting in the first sentence the words 'under a single project number' (because that language is already in the second sentence), and by adding the words 'Federal financial' before the word 'assistance' in the second sentence (because that tracks the referenced federal regulation more closely, and because without these words the reference to 'assistance' could be confusing).
STAFF RESPONSE: The cited case provides the authority for the proposition that a "project" includes all units, wherever located, if they are covered by a single contract. This was not clear from HUD's regulations until the ruling in this case, which HUD has followed as a policy matter. As to the specific suggestions, they are accepted and the changes have been made in the text.
COMMENT: Section 60.203(c) is incomplete in that it does not point out that HUD may require a higher percentage of accessible units. We therefore recommend that the following be included after the first paragraph in this section:
If HUD prescribes a higher percentage or number of accessible units pursuant to its authority under 24 CFR §8.22(c) or §8.23(b)(2), the recipient must comply with such higher percentage or number.
STAFF RESPONSE: No change made. If federal rules change, the state rule will be changed to reflect that change if required.
COMMENT: Section 60.203(c) excludes home ownership programs from the 5% - 2% rule. Although that position is supported by the district court holding cited in the source, we see no support for that exclusion in either §504, its implementing regulations, or the HUD Handbook provision also cited there. We thus recommend that this exclusion be omitted until further guidance is received.
STAFF RESPONSE: HUD has not issued any clarifying interpretation on this issue and the draft rule was published with this language included. The change suggested by the commenter would be too significant a policy change to adopt in final rules. The suggestion could be considered in future rules or when guidance is provided by HUD.
COMMENT: In the Example 203(1) in §60.203, in order to use modern, "people first" language, we recommend deleting the words 'is disabled' and replacing them with the words 'has a disability.'
STAFF RESPONSE: Agreed. Change made in text where appropriate.
COMMENT: We suggest adding the following sentence to the end of the first paragraph under §60.204(a)(1): "In choosing among available methods for meeting the requirements of this section, the recipient shall give priority to those methods that offer programs and activities to qualified individuals with disabilities in the most integrated setting appropriate." This more closely track the relevant §504 regulation, and more clearly links the provision to the §504 integration mandate. (footnote eliminated)
STAFF RESPONSE: Agreed. The authority for this provision is 24 CFR §8.4(d), "Recipients shall administer programs and activities receiving Federal financial assistance in the most integrated setting appropriate to the needs of qualified individuals with handicaps." Appropriate changes have been made in the text.
COMMENT: We also suggest providing a separate source citation for this first paragraph under §60.204(a)(1), namely:
Source: 24 C.F.R. §8.21(c)(2)(I); HUD Handbook 4350.3, §2-35(E)(3).
STAFF RESPONSE: Staff does not recommend change. The appropriate authority is 24 CFR §8.4(d). The regulatory authority at 24 CFR §8.21 addresses non-housing programs. The citation to 24 CFR §8.4(d) is, however, incorporated in the text.
COMMENT: As written, Example 204(1) following §60.204(a)(1) is not really relevant to the paragraph above it. It better exemplifies the part of the fundamental alteration analysis that provides that if accessibility would result in an undue financial and administrative burden, the recipient must still take other reasonable steps to accessibility. We suggest that this provision be made express, and therefore also suggest that this Example be moved to that location. We also suggest that this Example be re-worded to more closely conform to its apparent source, namely the 2d Example in HUD Handbook 4350.3, §2-43(D). The reason is that as currently written in the Proposed Rule, this Example is confusing because it might incorrectly suggest that other functions that occur in the office (e.g., arranging to see available units, making complaints, attending tenant meetings, etc.) do not have to be made accessible.
STAFF RESPONSE: Although a rental office may also be covered by the Americans with Disabilities Act, Title III, see also Sapp v. MHI Partnership, Inc, 199 F. Supp. 2d 578 (S. D. TX 2002), the example that was selected does not invoke ADA title III coverage because it is an older building, where removal of barriers was not feasible, and where no renovations were involved. A new example has been provided which does not raise the undue financial and administrative hardship issue in the same way.
EXAMPLE: A resident who uses a wheelchair wishes to participate in the Family Self-Sufficiency program at the local housing authority. However, the sessions are held in an older building with three steps up to the front door, and inaccessible public restrooms. The resident requests that a ramp be constructed and that the public men's bathroom have an accessible stall added. Instead, the housing authority moves the site for the Family Self Sufficiency program to an accessible location.
COMMENT: Although the language in the first paragraph under §60.204(a)(2) is accurate, it is incomplete in describing the undue burden analysis, and we believe it is thus misleading. In addition, we believe the paragraph could be improved by adding a source citation to it. Also, we believe that the undue burden analysis warrants its own heading. Finally, we believe that the subparagraphs following the first paragraph need some context, are not completely accurate, and should have a citation to authority.
STAFF RESPONSE: The submission by the commenter includes the identical language contained in the proposed regulation, plus additional language. There is no objection to the inclusion of citations as suggested. There is also no objection to the inclusion of the more specific proposed language in the undue burden section or the provision regarding taking other steps to provide accessibility, which fairly state HUD's position on this issue. Changes made in the text where appropriate.
COMMENT: In Example 204(2) following §60.204(a)(2), we recommend that in the third line, the words 'the units' be replaced with the words 'any unit'. This will improve its accuracy and consistency. We also recommend that the last sentence reflect some outcome. This will make it more useful, and more consistent with its apparent source, HUD Handbook 4350.3, Exhibit 2-6, paragraph 3. STAFF RESPONSE: Agreed. Changes made in the text where appropriate.
COMMENT: In Example 204(3) following §60.204(a)(2), we recommend that in the fourth line, the word 'undue' be replaced before the word 'financial'. This will improve its accuracy and consistency. We also recommend that the example include the fact that funding was not otherwise available, and that it also point out that the tenant must be allowed to make accessibility modifications at his or her own expense. This will make the example more accurate and complete, and also more consistent with HUD Handbook 4350.3.
STAFF RESPONSE: Agreed to the first and third changes recommended. Changes made in the text where appropriate. As to the second change, this seems unnecessary, given the opening reference to the first example. In addition, the language in the second example has also been revised by changing the word "may" to "should" in the sixth line to clarify that an owner who identifies an undue burden as defined in the proposed regulation must still examine other alternative approaches to accessibility. This is consistent with judicial precedent interpreting §504 and the Fair Housing Act.
COMMENT: In Example 204(4) following §60.204(a)(2), we recommend that the fourth sentence (referencing the 5% requirement) be deleted and replaced with:
The property is not required to make a unit fully compliant with UFAS. But the property must still take all other steps necessary to comply with UFAS that will not result in an undue financial hardship.
This will make the example more accurate and complete, and also more consistent with HUD Handbook 4350.3.
STAFF RESPONSE: No changes recommended. The example as written is MORE explicit than the suggested language.
COMMENT: In Example 204(6) following §60.204(a)(2), to improve its accuracy, we recommend that the final sentence be changed to read:
No additional rehabilitation for accessibility need be conducted unless HUD requires a higher percentage of accessible units pursuant to its authority under 24 C.F.R. §8.22(c) or §8.23(b)(2).
STAFF RESPONSE: No change made. If federal rules change, the state rule will be changed to reflect that change if required.
COMMENT: The citation in §60.204(b) appears to be in error; it should read:
Source: HUD Handbook 4350.3, §2-37(E).
STAFF RESPONSE: The commenter is correct. Change made in the text.
COMMENT: The citation in §60.204(c) appears to be in error; it should read:
Source: HUD Handbook 4350.3, §2-37(D).
STAFF RESPONSE: The commenter is correct. Change made in the text.
COMMENT: The citation in §60.204(d) is correct, but it could also include a reference to HUD Handbook 4350.3, §2-37(B).
STAFF RESPONSE: Agreed. Change made in Text.
COMMENT: We disagree with the Example following §60.204(d), in that it would appear to suggest that no other elements need be made accessible if a certain element cannot be made to conform to UFAS, and it also contradicts HUD Handbook 4350.3, §2-37(c).
STAFF RESPONSE: A final sentence, consistent with HUD Handbook 4350.3, §2-37(C) has been added for more clarity to the example.
COMMENT: We believe that §60.205 can be simplified, and made to track federal law more closely, by editing it to read:
If alterations are undertaken to a project that has 15 or more units, and the cost of the alterations is 75 percent or more of the replacement cost of the completed facility, the recipient must make a minimum of 5% of the units in the property accessible for persons with mobility impairments by full compliance with UFAS, and must make a minimum of 2% of the units accessible for persons with visual and hearing impairments.
STAFF RESPONSE: No change recommended. The draft language paraphrases the language in the referenced Handbook section. The introductory language makes it clear that properties built before 1988 are subject to these provisions. Properties built after 1988 have an absolute requirement to meet the 5% and 2% minimums. See §60.203(3). The suggested language could be misread to suggest that only properties making alterations must comply, and that is not accurate for properties built after 1988, which are subject to an absolute requirement to comply.
COMMENT: With regard to the numbered paragraphs in §60.206, we believe that separate citations to source material after each might improve this section. Those source citations might include:
For paragraph 1, 24 C.F.R. §8.23(b)(1); HUD Handbook 4350.3, §2-35(E)(2)(a)
For paragraph 2, 24 C.F.R. §8.23(b)(1); HUD Handbook 4350.3, §2-35(E)(2)(b)
For paragraph 3, 24 C.F.R. §8.23(b)(1); HUD Handbook 4350.3, §2-35(E)(2)(c)
For paragraph 4, HUD Handbook 4350.3, §2-35(E)(2)(c)(1)
For paragraph 5, HUD Handbook 4350.3, §2-35(E)(2)(c)(2)
For paragraph 6, 24 C.F.R. §8.3
STAFF RESPONSE: The existing citation is retained for this section of the proposed rule; one citation to HUD Handbook 4350.3 §2-35(E) has been added.
COMMENT: With regard to subparagraph 5 in §60.206, omitting the words 'but not required' would more closely conform the wording to its source, HUD Handbook 4350.3, §2-35(E)(2)(c)(2).
STAFF RESPONSE: Staff believes the language as proposed is accurate.
COMMENT: In the fifth Example in §60.206, we believe the example might be improved by adding at the end: "Reroofing is generally not considered an alteration." This would make the example conform more closely to 24 C.F.R. §8.3.
STAFF RESPONSE: Agreed. Text has been changed to reflect this recommendation.
COMMENT: The sixth (and last) Example in §60.206 contains an error. The words 'replacing the units' should be deleted and replaced with 'replacing the completed property'.
See HUD Handbook 4350.3, §2-35(E)(1).
STAFF RESPONSE: Agreed. Text has been changed to reflect this recommendation.
COMMENT: Section 60.207, paragraph (a)(1) contains errors. It appears to allow the project to choose to make just one unit accessible, even if that is less than 5%. It also omits the 2% requirement. Finally, it applies the 5% rule only to the newly constructed units in a larger project, even if the rules regarding Alterations would require that 5% of the entire project be accessible. To address these issues, this entire Rule might be amended to read:
1) A project consisting of all newly constructed multifamily housing of five or more units shall comply with the accessibility requirements in §60.203(c) above.
2) A project consisting of some existing multifamily housing units, together with some newly constructed multifamily housing of five or more units (e.g., due to demolition, addition of units, or replacement of uninhabitable units) shall be designed and constructed to provide accessibility to persons with disabilities, as follows:
a) A minimum of 5% of the new units (but not less than one unit) shall be made accessible for persons with mobility impairments, and an additional two percent of the units (but not less than one unit) shall be made accessible for persons with hearing or vision impairments.
b) In addition to the above, because such construction is also governed by §60.205 and §206 above, more than 5% of the new units may need to be made accessible for persons with mobility impairments, and more than 2% of the units may need to be made accessible for persons with hearing or vision impairments, if necessary to insure that the property as a whole has 5% of its units that are accessible for persons with mobility impairments, and 2% of its units that are accessible for persons with hearing or vision impairments.
3) All accessible units must be on an accessible route, and must comply with the UFAS requirements.
STAFF RESPONSE: This comment required significant research and thought to reach an appropriate conclusion, including informal consultation with a Washington, D.C. HUD official. Neither the draft language nor the proposed language satisfactorily addresses this question. In response to the comments, proposed §60.207 has been divided into two parts, one part to address situations where as a result of demolition or replacement of uninhabitable units, new free-standing units are constructed. In that situation, new construction requirements will apply, assuming that the project has more than five units. Free standing new construction must have at least 5% of its units accessible to people with mobility impairments and an additional 2% of units accessible to people with sensory impairments. Proposed §60.203(c) has been changed to make it clear that new construction requirements apply when units are replaced because they have been demolished or are uninhabitable.
A different rule applies to newly constructed units that are additions to existing units and structurally attached to them. For units which are additions to an existing project, the 5% and the 2% requirements must be met for the entire project after the addition is completed. So if a property does not meet the 5%/2% requirements at the time units are added through an addition, the units in the addition must contain enough UFAS-compliant units to meet the 5% and 2% requirements considering all of the units that will be in the project when the addition is completed. At the same time, if the property already meets the 5% and the 2% requirements in existing units, in some circumstances no units in the addition will be required to be accessible. For example, to illustrate the first point, a property has 100 units and none comply with UFAS. Twenty units are being added as a new wing. In this case 6 of the 20 units in the addition must be accessible to people with mobility impairments through compliance with UFAS because there will 120 units in the project after the addition is completed and 5% of 120 is 6. For the same property, 2% of the 120 units, or 3, of the units must comply with UFAS requirements for people with sensory impairments.
Because units that are part of an addition that are structurally attached to existing housing are considered part of the original project, this requirement applies to additions of one or more units.
COMMENT: In §60.207, the organization of subpart (b) seems problematic, and may include language that is inappropriate for regulatory use. We suggest reorganizing and rewording this material as follows:
2) All covered multifamily housing that is newly constructed for first occupancy, including additions of four or more units, must be accessible as defined below, regardless of funding. Such covered units must also be on an accessible route.
(a) In a building with four or more units that has an elevator, all multifamily housing units are covered.
(b) In a building with four or more units without an elevator, all of the ground floor units are covered.
(c) As used in this Rule, "accessible" means designed and constructed to comply with 24 C.F.R. §100.205(c), and with an objective accessibility standard that provides at least as much accessibility as the Fair Housing Act Accessibility Guidelines.
(d) Compliance with a set of standards identified by the U.S. Department of Housing and Urban Development as meeting or exceeding the Fair Housing Act Accessibility Guidelines will provide compliance with this Rule's accessibility requirements. Compliance with local building code requirements does not assure compliance with this Rule, although compliance with the ANSI A117.1-1986 will satisfy the requirements of this Rule.
The Department may also wish to include 24 C.F.R. §100.201 in its source citation.
STAFF RESPONSE: Staff believes the suggested language is less clear than the language in the draft rule. Small language changes have been made consistent with the plain English explanation of these requirements found on the HUD-approved Fair Housing FIRST website.
COMMENT: To insure that the language in §60.209 is clear that using and enjoying a dwelling means something beyond merely living in the dwelling, and to more closely conform this Rule to the source material in HUD Handbook 4350.3, §2-39(A)(3) and (B), the subparagraphs under paragraph (a) should be edited to state:
a) Participate fully in a program;
b) Take advantage of a service;
c) Live in a dwelling; or
d) Use and enjoy a dwelling.
STAFF RESPONSE: There is no objection to this suggestion. Change made in the text.
COMMENT: We think that §60.209(d) could be clarified by replacing the words 'although not those requested' with the words 'even if not requested'.
STAFF RESPONSE: Text has been changed to read "although not requested."
COMMENT: We think that §60.209(e) could be clarified by adding ', increase rent,' before the words 'or place conditions'.
STAFF RESPONSE: Staff believes the change is not necessary. Charging a fee includes increasing rent.
COMMENT: In the second Example in §60.209, in order to use modern, "people first" language, we recommend deleting the words 'disabled residents' and replacing them with the words 'residents with disabilities'.
STAFF RESPONSE: Agreed. Change made in text.
COMMENT: In the final Example in §60.209, in order to use modern, "people first" language, we recommend deleting the words 'is a quadriplegic' and replacing them with the words 'has quadriplegia'.
STAFF RESPONSE: Change in text to "resident with quadriplegia."
The new chapter is adopted pursuant to authority granted in Chapter 2306, Texas Government Code; specifically §2306.053 which grants the Department general rulemaking authority to carry out the powers expressly granted or necessarily implied by Chapter 2306, and §2306.6722 which requires that any development supported with a housing tax credit allocation shall comply with the accessibility standards that are required under §504, Rehabilitation Act of 1973 (29 U.S.C. §794), and specified under 24 C.F.R Part 8, Subpart C.
§60.201.Scope.
(a) The purpose of this subchapter is to provide guidance about and to ensure compliance with the requirements of §504 of the 1973 Rehabilitation Act and the Fair Housing Act in the alteration or construction of multifamily housing projects by recipients of funding from the Texas Department of Housing and Community Affairs ("the Department").
(b) No individual with a disability shall, by reason of their disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance from the Department of Housing and Urban Development through the department. (Source: 24 CFR §8.1(a), 24 CFR §8.20)
(c) This subchapter applies to all of the programs and activities of recipients of federal financial assistance from the Department of Housing and Urban Development through the programs and activities of the department, and/or any other program required to comply with §504 of the 1973 Rehabilitation Act under state law. (Source: Texas Government Code §2306.6722 and §2306.6730, 24 CFR §8.2. See also the Civil Rights Restoration Act of 1987, 20 U.S.C. §794(b), March 22, 1988, (the amendments "make clear that discrimination is prohibited throughout entire agencies or institutions if any part receives Federal financial assistance). S. Rep. No. 64, 100th Cong., 2d Sess. 4 (1988) and Texas Government Code Chapter 2306)
(d) Except as set forth in subsection (b) of this section, this subchapter does not apply to entities that only participate in the Housing Choice Voucher or the Enhanced Voucher programs and receive no other federal financial assistance.
(e) All entities that participate in the Housing Choice Voucher or the Enhanced Voucher programs are covered by the Fair Housing Act's prohibitions against discrimination, including the requirements that such entities:
(1) permit reasonable modifications to existing premises;
(2) make reasonable accommodations to rules, policies, practices, or services, when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling; and
(3) for those properties that were designed and constructed for first occupancy after March 13, 1991, comply with the Fair Housing Act's provisions for accessible design and construction of new multifamily housing. (See §60.207(b), (c) and (d) of this subchapter)
(f) This subchapter does not apply to contracts for
the procurement of goods or services by the department.
(g) There are additional requirements for compliance
with §504 of the 1973 Rehabilitation Act; Title VI of the Civil
Rights Act of 1964; the Fair Housing Act; the Americans with Disabilities
Act; and other civil rights laws, regulations and Executive Orders
by recipients of federal financial assistance. This subchapter addresses
only the requirements relating to physical accessibility in new construction,
alterations, and reasonable accommodations under §504 and the
Fair Housing Act. Other disability-related requirements include:
(1) Operating housing that is not segregated based
upon disability or type of disability, unless authorized by federal
statute or executive order;
(2) Providing auxiliary aids and services necessary
for effective communication with persons with disabilities; and
(3) Operating programs in the most integrated setting
appropriate to the needs of qualified individuals with disabilities.
See 24 CFR Part 8 for complete information.
(Source: 24 CFR §8.4)
(h) These rules are to be performed in conjunction
with the rules found in Chapter 60, Subchapter A, of this title.
§60.202.Definitions.
The following terms are used for purposes of this subchapter:
(1) Accessible route--A continuous unobstructed path
connecting accessible elements and spaces in a facility or building
that complies with the space and reach requirements of an applicable
accessibility standard. In cases of rehabilitation, an accessible
route is not required to serve units that are occupied by persons
with hearing or vision impairments.
(Source:
24 CFR §8.3 Definitions. Definition of Accessible Route)
(2) Alteration--Any physical change in a facility or
its permanent fixtures or equipment. It includes, but is not limited
to, remodeling, renovation, rehabilitation, reconstruction, changes
or rearrangements in structural parts and extraordinary repairs. It
does not include normal maintenance or repairs, reroofing, interior
decoration, or changes to mechanical systems.
(Source: 24 CFR §8.3 Definitions. Definition of Alteration)
(3) Disability--A physical or mental impairment that
substantially limits one or more major life activities; or having
a record of such an impairment; or being regarded as having such an
impairment. Nothing in this subpart requires that a dwelling be made
available to an individual whose tenancy would constitute a direct
threat to the health or safety of other individuals or whose tenancy
would result in substantial physical damage to the property of others. (Source: 24 CFR §8.3 Definitions. Definition
of Individual with Handicaps. 24 CFR §§100.201, 202(d))
(4) Federal financial assistance--Any assistance provided
or otherwise made available by the department through any grant, loan,
contract or any other arrangement, in the form of:
(A) Funds;
(B) Services of personnel; or
(C) Real or personal property or any interest in or
use of such property, including transfers or leases of the property
for less than fair market value or for reduced consideration. (Source: 24 CFR §8.3 Definitions. Definition of Federal Financial Assistance)
(5) Multifamily housing project--A project that includes
five or more dwelling units. It does not include a single family development.
A project includes the whole of one or more residential structures
and appurtenant structures, equipment, roads, walks, and parking lots
which are covered by a single contract or application for federal
financial assistance, or which are treated as a whole for processing
purposes, whether or not located on a common site. (Source: 24 CFR Definitions. Definition of multifamily
housing project and definition of project. ADAPT v. Philadelphia Housing
Authority, 2000 U.S. Dist. LEXIS 5380 (E.D. PA 2000))
(6) Recipient--Includes a subrecipient and means any
State or its political subdivision, any instrumentality of a State
or its political subdivision, any public or private agency, institution,
organization, or other entity, or any person to which Federal financial
assistance is extended for any program or activity directly or through
another recipient, including any successor, assignee, or transferee
of a recipient, but excluding the ultimate beneficiary of the assistance.
Recipients include private entities in partnership with recipients
to own or operate a program or service.
(Source: 24 CFR §8.4 Definitions. Definition of recipient)
(7)
Replacement cost--The total development cost for
construction and equipment for a newly constructed housing facility
of the size and type being altered. Construction and equipment costs
do not include the cost of land, demolition, site improvements, non-dwelling
facilities or administrative costs for project development activities. (Source: 24 CFR §8.4 Definitions. Definition of replacement cost)
§60.203.General Requirements.
(a)
A unit is not considered to be fully accessible
unless it meets the requirements of the Uniform Federal Accessibility
Standards (UFAS). All units that are accessible to persons with mobility
impairments must be on an accessible route.
(Source:
HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs, §2-22(C)(4))
(b) Recipients must give priority to methods that offer
housing in the most integrated setting possible (i.e., a setting that
enables qualified persons with disabilities and persons without disabilities
to interact to the fullest extent possible). To the maximum extent
feasible and subject to reasonable health and safety requirements,
accessible units must be:
(1)
Distributed throughout the project and site; and
(2)
Made available in a sufficient range of sizes and
amenities so that the choice of living arrangements of qualified persons
with disabilities is, as a whole, comparable to that of other persons
eligible for housing assistance under the same program. (Source: 24 CFR §8.26)
(c) Multifamily housing projects covered by this subchapter
and built after July 11, 1988 must have a minimum of 5% of the units
in multifamily housing that are fully accessible in accordance with
the Uniform Federal Accessibility Standards (UFAS) and an additional
2% that are accessible to persons with visual and hearing impairments.
This obligation is an absolute requirement. For buildings that fall
within this category, an owner may not justify a failure to have met
these requirements because of an undue financial and administrative
burden. This requirement also applies to units that are newly constructed
to replace demolished or uninhabitable units.
(d) Multifamily housing projects which are designed
and constructed only for homeownership are not subject to the 5%/2%
requirement. However, they are subject to the other requirements of
this subchapter, including, but not limited to, the requirements found
in §60.207(a)(2) and §60.209 of this subchapter.
(e) Multifamily housing designed and constructed for
first occupancy after March 13, 1991 containing covered dwelling units
must comply with the design and construction requirements of the Fair
Housing Act.
(f) Covered multifamily dwelling housing is buildings
consisting of four or more dwelling units if such buildings have one
or more elevators and ground floor dwelling units in other buildings
consisting of four or more dwelling units.
(Source:
24 CFR §8.22, HUD Handbook 4350.3, §2-35, Telesca v. Long
Island Housing Partnership, 443 F. Supp. 2nd 397 (E.D. N.Y. 2006),
42 USC §3604(f)(3)). EXAMPLE 203(1): A recipient receives funding
from the Department and will construct a 10 unit homeownership project.
The requirement that 5% of the units are accessible to persons with
mobility impairments and 2% of the units are accessible to persons
with sensory impairments does not apply. However, structural changes
that are needed by a purchaser with a family member who has a disability
are subject to the requirement that the recipient make reasonable
accommodations, including structural changes that may be necessary
to enable the family to live in the unit. So a request that a ramp
be constructed to access the front porch of a homeownership unit to
accommodate the disability of a 12 year old resident or prospective
resident must be provided as a reasonable accommodation, unless the
accommodation presents an undue financial and administrative hardship
or constitutes a fundamental alteration of the program. In addition,
if some or all of the units are covered by the design and construction
requirements of the Fair Housing Act, those units must comply with
the requirements.
§60.204.Other Limitations Relating to Alterations.
When alterations are considered for a project:
(1) Recipients are not required to make structural
changes where other methods, which may not cost as much, are effective
in making federally assisted housing programs or activities readily
accessible to and usable by persons with disabilities.
(2)
In choosing among available methods for meeting
the requirements of this section, the recipient shall give priority
to those methods that offer programs and activities to qualified individuals
with disabilities in the most integrated setting appropriate. (Source: 24 CFR §8.4(d)). EXAMPLE 204(1):
A resident who uses a wheelchair wishes to participate in the Family
Self-Sufficiency program at the local housing authority. However,
the sessions are held in an older building with three steps up to
the front door, and inaccessible public restrooms. The resident requests
that a ramp be constructed and that the public men's bathroom have
an accessible stall added. Instead, the housing authority moves the
site for the Family Self Sufficiency program to an accessible location.
(3) Undue burden.
(A) The determination of undue financial and administrative
burden must be made on a case-by-case basis, involving various factors,
such as the cost of the reasonable accommodation, the financial resources
of the provider, the benefits the accommodation would provide to the
requester, and the availability of alternative accommodations that
would adequately meet the requester's disability-related needs. (Source: HUD Handbook 4350.3, §2-43(B)). For
more examples of undue financial and administrative burden, see HUD
Handbook 4350.3, Exhibit 2-6.
(B) In considering whether an expense would constitute an undue burden:
(i) Payment for alterations from operating funds, residual
receipts accounts, or reserve replacement accounts must be sought
using appropriate approval procedures.
(ii) The approved amount must normally be able to be
replenished through property rental income within one year without
a corresponding raise in rental rates.
(iii)
A projected inability to replenish an operating
fund account or the reserve for replacement account within one year
for funds spent in providing alterations under this subchapter is
some evidence that the alteration would be an undue financial and
administrative burden.
(Source: HUD Handbook
4350.3, §2-43(C), and the first example following §2-43(D))
(C)
If providing accessibility would result in an undue
financial and administrative burden, the recipient must still take
other reasonable steps to achieve accessibility.
(D)
If a structural change would constitute an undue
financial and administrative burden, and the tenant still wants that
particular change to be made, the tenant must be allowed to make and
pay for the accommodation.
(Source: HUD Handbook
4350.3, §2-45(B))
(i)
EXAMPLE 204(2): Each entrance to existing pre-1988
units is reached by a number of steps. Estimates of the cost of making
any of the units accessible are high. The project rental income will
not cover the cost of making the units accessible without a rent increase
or a reduction in services or benefits to other tenants. However,
the project has a large residual receipts account. Therefore, the
operator of the housing could request approval to use money from this
account to remove the steps and replace them with a ramp or chairlift.
The owner receives HUD approval for this use and makes the alterations.
(ii)
EXAMPLE 204(3): In the same situation, the project
does not have funds in its residual receipts account, but it has a
large reserve for replacement account. However, the estimate is large
enough that a rent increase would be required in order to replenish
the account completely within one year. It would be an undue financial
and administrative burden for the project to make a unit accessible.
The owner must explore alternatives to making its program accessible
but is not required to make the structural changes. The tenant must
also be permitted to make the requested changes at the tenant's expense.
(iii)
EXAMPLE 204(4): A high rise project that was
built before 1988 has no units that comply with UFAS. In order to
make one of its units large enough to comply with UFAS, it would be
required to rehabilitate the property substantially and eliminate
at least one unit. The loss of income from the rental unit would present
a serious financial hardship to the property and there are inadequate
funds in the relevant accounts. The property is not required to meet
the 5% requirement. It must meet the requirement that 2% of its units
are accessible to persons with sensory impairments, and it must make
reasonable accommodations to meet the needs of individuals with disabilities.
(iv)
EXAMPLE 204(5): A project seeks funding for rehabilitation
of the property from the Department. The project includes in its request
all structural alterations that are necessary to ensure compliance
with this section. A property that receives funding for accessible
features from the Department may not assert that providing those features
is an undue financial and administrative burden if it receives funding
to undertake those alterations. The other provisions in this section
with respect to limitations on alterations apply.
(v)
EXAMPLE 204(6): A project receives funding for
rehabilitation of the property from the Department. The property already
has 5% of the units that are UFAS compliant. No additional rehabilitation
for accessibility need be conducted.
(vi)
EXAMPLE 204(7): A project receives funding for
repair of the waste disposal system at the property from the Department.
Because the funding does not cover alteration of structural elements
but only repair of an existing system, no accessible elements need
be provided.
(Source: HUD Handbook 4350.3, §2-43(C),
Exhibit 2-6)
(4) Recipients are not required to install an elevator
solely for the purpose of making units accessible. (Source: HUD Handbook 4350.3, §2-37(E))
(5) Recipients do not have to make mechanical rooms
and similar spaces accessible when, because of their intended use,
they do not require accessibility by the public, by tenants, or by
employees with physical disabilities.
(Source: HUD Handbook 4350.3, §2-37(D))
(6) Recipients are not required to make building alterations
that have little likelihood of being accomplished without removing
or altering a load-bearing structural member.
(Source:
24 CFR §8.32(c). HUD Handbook 4350.3, §2-37(B)). EXAMPLE
204(8): A property built before 1988 has no units that comply with
UFAS. An assessment of the property indicates that no units can be
made accessible to persons with mobility impairments because of the
existence of load bearing interior and exterior walls which prevent
construction of accessible exterior doorways. Therefore, no units
must be made accessible to persons with mobility impairments except
to the extent that they are made as a reasonable accommodation for
a person with a disability. An owner must, however, take other reasonable
steps to insure program accessibility, including in some cases, making
additional units accessible in other buildings operated by the owner.
§60.205.Substantial Alteration.
When a recipient undertakes alterations to one or more structural
elements in a project that contains fifteen or more units, which was
built before July 11, 1988 and which lacks the required minimum of
5% of units that are accessible to persons with mobility impairments,
it must meet accessibility requirements. If the total cost of the
alterations is 75% or more of the replacement cost of the completed
property, then the recipient must make a minimum of 5% of the units
in the property accessible for persons with mobility impairments,
and a minimum of 2% of the units accessible for persons with visual
and hearing impairments. These units must comply fully with UFAS. (Source: 24 CFR §8.23-(a), HUD Handbook §2-35(E)(1)).
EXAMPLE 205(1): The total development cost for a planned alteration
of a 40 unit apartment building with no accessible unit amounts to
$80,000 per unit and the replacement cost per unit is $100,000. Because
the cost of the alterations is more than 75% of the replacement cost
of the unit, the recipient must make a minimum of 5% of the 40 units,
or at least two, of the units accessible to persons with mobility
impairments by compliance with UFAS and at least 2%, or one unit,
accessible to people with visual and hearing impairments.
§60.206.Renovation of Elements.
When a recipient has a project which was built before July
11, 1988 and that contains five or more units but lacks the required
5% of units that are accessible to people with mobility impairments,
when the recipient undertakes alterations to a structural element
that are not substantial as defined in §60.205 of this subchapter:
(1) Those alterations must be accessible, to the maximum
extent feasible, until at least 5% of the units are fully accessible
for persons with mobility impairments. If the 5% requirement is met,
no other structural alterations are required to units except to provide
reasonable accommodations to individuals with disabilities.
(2) If alterations of single elements (such as replacement
of a bathtub or a door) or spaces (such as kitchens or bathrooms)
occur in a single unit and when the alterations are considered as
a group amount to an alteration of the entire unit, the recipient
must make the entire dwelling unit accessible until 5% of the units
are accessible to persons with mobility impairments.
(3) When the recipient is not altering the entire unit,
all of the single elements or spaces that are being altered must be
made accessible unless at least 5% of the units in the project already
comply fully with the UFAS, requirements for persons with mobility
impairments. If at least 5% of the units comply with UFAS, no additional
single elements need be made accessible except to provide reasonable
accommodation for an individual with a disability.
(4) Recipients are encouraged to examine existing units
for compliance with UFAS and ensure that at least 5% of the units
in a property are accessible. When at least 5% of the units comply
with UFAS requirements for accessibility, individual elements need
not comply with accessibility requirements when they are altered.
(5) Recipients are encouraged, but not required, to
make at least an additional 2% of the units being altered comply with
UFAS requirements for persons with hearing and vision impairments,
if such units do not already exist.
(6) Completion of minor maintenance required to maintain
a property in a decent, safe and sanitary condition is generally considered
to be normal repairs and not alteration.
(Source:
24 CFR §8.23, HUD Handbook 4350.3, Handbook 4350.3, §2-35(E)(2),
HUD Handbook 4315.1, Rev 1, Chg 2, page 10-14, 24 CFR §8.3, Definition
of Alteration)
(A) EXAMPLE 206(1): A property is remodeling all of
the bathrooms throughout the property by replacing plumbing, fixtures,
and cabinets. Remodeling the bathroom is an alteration to a space.
Unless the property already has a minimum of 5% of its units that
comply with UFAS to serve people with mobility impairments, 100% of
the bathrooms remodeled must be made accessible until the property
has a minimum of 5% of its units compliant with UFAS.
(B) EXAMPLE 206(2): A property is remodeling all of
the kitchens throughout a property by replacing stoves and refrigerators.
Because this is not an alteration to a structural element, no structural
elements must be made accessible.
(C) EXAMPLE 206(3): A property is renovating its heating
system by replacing furnaces, ductwork and vents. This is not an alteration
that triggers compliance with this section because it is the replacement
of a mechanical system.
(D) EXAMPLE 206(4): A property has 100 units and 6
of the units are for persons with mobility impairments. They comply
with UFAS and are on an accessible route. The property is remodeling
all of the bathrooms throughout the property by replacing plumbing,
fixtures, and cabinets. None of the remodeled bathrooms need be made
accessible because the property already has at least 5% of its units
that comply with UFAS.
(E) EXAMPLE 206(5): A property that was built before
1988 has 100 units and none of them comply with the UFAS requirements.
The property is replacing all of the roofs as part of regularly scheduled
maintenance and repair. No units are required to be made accessible
because the work being performed is regular maintenance and repair.
Reroofing is specifically not considered an alteration.
(F) EXAMPLE 206(6): A property has 100 units and only
three of those units (or 3%) comply with UFAS for persons with mobility
impairments. The property is renovating 10 units, but the cost of
renovation is only 50% of the cost of replacing the completed property,
so this is not a substantial alteration. Because the entire unit is
being renovated, two of the renovated units must comply with UFAS
in order to provide a minimum of 5% of the total number of units that
are accessible to people with mobility impairments.
§60.207.New Construction and Additions of Units.
(a) A project consisting of all newly constructed multifamily
housing of five or more units constructed after July 11, 1988 shall
comply with the accessibility requirements in §60.203(c) of this
subchapter. When a recipient adds one or more units to existing multifamily
housing, as an addition that is structurally connected to the existing
housing, the following requirements apply. A project consisting of
existing multifamily housing units, together with one or more newly
constructed multifamily housing units that are structurally attached
to the existing housing, shall be designed and constructed to provide
accessibility to persons with disabilities, as follows:
(1) The project including the existing units and the
newly constructed units in an addition must, when taken as a whole
after the construction of the additional units, have at least 5% of
units that are accessible for persons with mobility impairments and
at least 2% of its units that are accessible for persons with sensory
impairments.
(2) All accessible units must be on an accessible route,
and must comply with UFAS requirements.
(Source:
24 CFR §8.22)
(b) All covered multifamily dwelling units that are
newly constructed for first occupancy, after March 13, 1991 including
additions of four or more units, must be designed and constructed
to comply with the Fair Housing Act's design and construction requirements,
regardless of funding.
(c) Multifamily dwelling units are all dwelling units
in buildings containing four or more dwelling units if the buildings
have one or more elevators and all ground floor units in other buildings
containing four or more units, without an elevator. (Source: 24 CFR §100.205, www.fairhousing.org)
(d)
Compliance with a set of standards identified by
the U.S. Department of Housing and Urban Development as meeting or
exceeding the Fair Housing Act Accessibility Guidelines will provide
compliance with this subchapter's accessibility requirements. Compliance
with local building code requirements does not assure compliance with
this subchapter.
(Source: 24 CFR §100.201, §100.205,
www.fairhousingfirst.org)
§60.209.Reasonable Accommodations.
(a) A reasonable accommodation is an alteration, change,
exception, or adjustment to a program, service, building, dwelling
unit, or workplace that will allow a qualified person with a disability to:
(1) Participate fully in a program;
(2) Take advantage of a service;
(3) Live in a dwelling; or
(4) Use and enjoy a dwelling.
(b) To show that a requested accommodation may be necessary,
there must be an identifiable relationship between the requested accommodation
and the individual's disability.
(c) When a resident or applicant requires an accessible
unit, feature, space or element, or a policy modification, or other
reasonable accommodation to accommodate a disability, the recipient
must provide and pay for the requested accommodation, unless doing
so would result in a fundamental alteration in the nature of the program
or an undue financial and administrative burden. A fundamental alteration
is a modification that is so significant that it alters the essential
nature of the provider's operations.
(d) If a particular accommodation would result in an
undue financial and administrative burden or fundamentally alter the
program, the recipient must explore whether other accommodations,
although not requested, can meet the needs of the person with a disability.
(e) A recipient may not charge a fee or place conditions
on a resident or applicant in exchange for making the accommodation.
(f) A reasonable accommodation that amounts to an alteration
should be made to meet the needs of the individual with a disability,
rather than any particular minimum code specification.
(g) If a recipient refuses to provide a requested accommodation
because it is either an undue financial and administrative burden
or would result in a fundamental alteration to the nature of the program,
the recipient shall engage in an interactive dialogue with the requester
to determine if there is an alternative accommodation that would adequately
address the requester's disability-related needs. If an alternative
accommodation would meet the individual's needs and is reasonable,
the recipient must provide it.
(Source: HUD
Handbook 4350.3, §2-39, §2-40, 24 CFR §8.33, Secretary
v. Country Manor, HUDALJ 05-98-1469-8 (September 20, 2001))
(1) EXAMPLE 209(1): A resident requires an accessible
parking space that will accommodate her wheelchair-equipped van. A
reasonable accommodation includes relocating and enlarging an existing
parking space that will serve the van.
(2) EXAMPLE 209(2): A project has five parking spaces
located outside the main entrance to the building and another parking
lot with 20 spaces a half block away. All five of the parking spaces
near the entrance to the building have been assigned to residents
with disabilities who need a parking space near their door because
of their disabilities. A sixth tenant with difficulty in walking long
distances moves into the project and requests a parking space near
his door. The recipient has explored the options and concluded that
the only way to provide more parking spaces near the door would be
to widen the parking area by purchasing valuable real estate next
door. It would be an undue financial and administrative burden for
the recipient to provide the sixth tenant with a parking space near
the entrance. An alternative accommodation could be to provide the
sixth tenant with an assigned parking space in the lot half block
away until such time as one of the five spaces near the door becomes
available.
(3) EXAMPLE 209(3): A resident needs grab bars at the
toilet in her bathroom. She does not require other accessible features.
The recipient must install grab bars consistent with the resident's
needs in the bathroom.
(4) EXAMPLE 209(4): A resident needs a ramped entrance
to her ground floor unit to accommodate her wheelchair. She does not
wish to move to an accessible unit. The recipient must provide an
accessible entrance at the resident's current unit, unless it would
be an undue financial and administrative hardship or a fundamental
alteration of the program to do so.
(5) EXAMPLE 209(5): A resident uses a scooter type
wheelchair which is 38 inches in width. She requests a ramp to enter
her ground floor unit. The ramp which she requests must be at least
40 inches wide, it must have a slope of no more than 3%, and the landing
at the front door, which opens outward, must be enlarged to provide
adequate maneuvering space to enter the doorway. The changes must
be provided, even though they may exceed the usual specifications
for such alterations.
(6) EXAMPLE 209(6): A resident with quadriplegia requests
replacement of a bathtub in his unit with a roll-in shower. Due to
the location of existing plumbing in the building and the size of
the existing bathroom, a plumber confirms that installation of a roll-in
shower in that unit is impossible. The on-site manager meets with
the resident to explain why the roll-in shower cannot be installed
and to explore alternative accommodations with the resident.
(h) Housing Tax credit Properties that are not layered
with additional federal funds are not subject to any provision identified
in this section.
§60.210.Certifications and Effect of Non Compliance.
(a) Compliance with the provisions of this subchapter
is included in the certifications required in the Certification of
Program Compliance found in Chapter 60, Subchapter A, §60.103
of this title.
(b) Failure to comply with the provisions of this subchapter
shall be addressed by the rights and remedies found in Chapter 60,
Subchapter C of this title.
This agency hereby certifies that the adoption has
been reviewed by legal counsel and found to be a valid exercise of
the agency's legal authority.
Filed with the Office of the Secretary of State on January 14, 2008.
TRD-200800149
Michael Gerber
Executive Director
Texas Department of Housing and Community Affairs
Effective date: February 3, 2008
Proposal publication date: October 5, 2007
For further information, please call: (512) 475-3916