Amend CSHB 3449 as follows:
(1) On page 24, line 3, between "plan" and "to", insert "and
shall use other appropriate data".
(2) On page 24, line 16, between "practicable" and the
comma, insert "and when authorized under Section 42, Internal
Revenue Code of 1986 (26 U.S.C. Section 42)".
(3) On page 24, line 19, between "ability" and "to", insert
", when consistent with Section 42, Internal Revenue Code of 1986
(26 U.S.C. Section 42), practicable, and economically feasible,".
(4) On page 53, line 24, strike "prohibited by Section
2306.6724" and substitute "otherwise prohibited by this chapter".
(5) On page 54, line 18, strike "the" and substitute "a".
(6) On page 54, line 19, between "credit" and the period,
insert "from the nonprofit allocation pool".
(7) Strike Article 8, beginning on page 113, line 25 and
ending on page 148, line 12 and substitute the following:
ARTICLE 8
SECTION 8.01. Subchapter DD, Chapter 2306, Government Code,
is amended to read as follows:
SUBCHAPTER DD. LOW INCOME HOUSING TAX CREDIT PROGRAM
Sec. 2306.6701. PURPOSE. The department shall administer the
low income housing tax credit program to:
(1) encourage the development and preservation of
appropriate types of rental housing for households that have
difficulty finding suitable, affordable rental housing in the
private marketplace;
(2) maximize the number of suitable, affordable
residential rental units added to the state's housing supply;
(3) prevent losses for any reason to the state's
supply of suitable, affordable residential rental units by enabling
the rehabilitation of rental housing or by providing other
preventative financial support under this subchapter; and
(4) 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 affordable housing developments in urban and rural
communities.
Sec. 2306.6702. DEFINITIONS. (a) In this subchapter:
(1) "Applicant" means any person or affiliate of a
person who files an application with the department requesting a
housing tax credit allocation.
(2) "Application" means an application filed with the
department by an applicant and includes any exhibits or other
supporting materials.
(3) "Application log" means a form containing at least
the information required by Section 2306.6709.
(4) "Application round" means the period beginning on
the date the department begins accepting applications and
continuing until all available housing tax credits are allocated,
but not extending past the last day of the calendar year.
(5) "At-risk development" means a development that:
(A) receives 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, or rental assistance payment under the
following federal laws, as applicable:
(i) Sections 221(d)(3) and (5), National
Housing Act (12 U.S.C. Section 1715l);
(ii) Section 236, National Housing Act (12
U.S.C. Section 1715z-1);
(iii) Section 202, Housing Act of 1959 (12
U.S.C. Section 1701q);
(iv) Section 101, Housing and Urban
Development Act of 1965 (12 U.S.C. Section 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; or
(vii) Sections 514, 515, and 516, Housing
Act of 1949 (42 U.S.C. Sections 1484, 1485, and 1486); and
(B) is subject to the following conditions:
(i) the stipulation to maintain
affordability in the contract granting the subsidy is nearing
expiration; or
(ii) the federally insured mortgage on the
development is eligible for prepayment or is nearing the end of its
term.
(6) "Development" means a proposed qualified low
income housing project, as defined by Section 42(g), Internal
Revenue Code of 1986 (26 U.S.C. Section 42(g)), that consists of
one or more buildings containing multiple units, that is financed
under a common plan, and that is owned by the same person for
federal tax purposes, including a project consisting of multiple
buildings that:
(A) are located on scattered sites; and
(B) contain only rent-restricted units.
(7) "Development owner" means any person or affiliate
of a person who owns or proposes a development or expects to
acquire control of a development under a purchase contract approved
by the department.
(8) "Housing tax credit" means a tax credit allocated
under the low income housing tax credit program.
(9) "Land use restriction agreement" means an
agreement between the department, the development owner, and the
development owner's successors in interest that encumbers the
development with respect to the requirements of this subchapter and
the requirements of Section 42, Internal Revenue Code of 1986 (26
U.S.C. Section 42).
(10) "Qualified allocation plan" means a plan adopted
by the board under this subchapter that:
(A) provides the threshold, scoring, and
underwriting criteria based on housing priorities of the department
that are appropriate to local conditions;
(B) gives preference in housing tax credit
allocations to developments that, as compared to the other
developments:
(i) when practicable and feasible based on
available funding sources, serve the lowest income tenants; and
(ii) are affordable to qualified tenants
for the longest economically feasible period; and
(C) provides a procedure for the department, the
department's agent, or other private contractor of the department
to use in monitoring compliance with the qualified allocation plan
and this subchapter.
(11) "Related party" means the following individuals
or entities:
(A) the brothers, sisters, spouse, ancestors,
and descendants of a person within the third degree of
consanguinity, as determined by Chapter 573, Government Code;
(B) a person and a corporation, if the person
owns more than 50 percent of the outstanding stock of the
corporation;
(C) two or more corporations that are connected
through stock ownership with a common parent possessing more than
50 percent 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;
(D) a grantor and fiduciary of any trust;
(E) a fiduciary of one trust and a fiduciary of
another trust, if the same person is a grantor of both trusts;
(F) a fiduciary of a trust and a beneficiary of
the trust;
(G) a fiduciary of a trust and a corporation if
more than 50 percent 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;
(H) a person or organization and an organization
that is tax-exempt under Section 501(a), Internal Revenue Code of
1986 (26 U.S.C. Section 501), and that is controlled by that person
or the person's family members or by that organization;
(I) a corporation and a partnership or joint
venture if the same persons own more than:
(i) 50 percent of the outstanding stock of
the corporation; and
(ii) 50 percent of the capital interest or
the profits' interest in the partnership or joint venture;
(J) an S corporation and another S corporation
if the same persons own more than 50 percent of the outstanding
stock of each corporation;
(K) an S corporation and a C corporation if the
same persons own more than 50 percent of the outstanding stock of
each corporation;
(L) a partnership and a person or organization
owning more than 50 percent of the capital interest or the profits'
interest in that partnership; or
(M) two partnerships, if the same person or
organization owns more than 50 percent of the capital interests or
profits' interests.
(12) "Rural area" means 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 20,000 or less and does
not share a boundary with an urban area; or
(C) in an area that is eligible for funding by
the Texas Rural Development Office of the United States Department
of Agriculture.
(13) "Rural development agency" means the state agency
designated by the legislature as primarily responsible for rural
area development in the state.
(14) "Set-aside" means a reservation of a portion of
the available housing tax credits to provide financial support for
specific types of housing or geographic locations or serve specific
types of applicants as permitted by the qualified allocation plan
on a priority basis.
(15) "Threshold criteria" means the criteria used to
determine whether the development satisfies the minimum level of
acceptability for consideration established in the department's
qualified allocation plan.
(16) "Unit" means any residential rental unit in a
development consisting of an accommodation, including a single room
used as an accommodation on a non-transient basis, that contains
separate and complete physical facilities and fixtures for living,
sleeping, eating, cooking, and sanitation.
(b) For purposes of Subsection (a)(11), the constructive
ownership provisions of Section 267, Internal Revenue Code of 1986
(26 U.S.C. Section 267), apply. The board may lower in the
qualified allocation plan the percentages described by Subsection
(a)(11).
Sec. 2306.67021. APPLICABILITY OF SUBCHAPTER. Except as
provided by Section 2306.6703, this subchapter does not apply to
the allocation of housing tax credits to developments financed
through the private activity bond program.
Sec. 2306.67022. QUALIFIED ALLOCATION PLAN; MANUAL. The
board annually shall adopt a qualified allocation plan and a
corresponding manual to provide information regarding the
administration of and eligibility for the low income housing tax
credit program.
Sec. 2306.6703. INELIGIBILITY FOR CONSIDERATION. An
application is ineligible for consideration under the low income
housing tax credit program if:
(1) at the time of application or at any time during
the five-year period preceding the date the application round
begins, the applicant or a related party is or has been:
(A) a member of the board; or
(B) the director, a deputy director of housing
programs, or a tax credit manager employed by the department; or
(2) the applicant proposes to replace in less than 15
years any private activity bond financing of the development
described by the application.
Sec. 2306.6704. PRE-APPLICATION PROCESS. (a) To prevent
unnecessary filing costs, the department by rule shall establish a
voluntary pre-application process to enable a preliminary
assessment of an application proposed for filing under this
subchapter.
(b) The department shall award in the application evaluation
process described by Section 2306.6710 an appropriate number of
points as an incentive for participation in the pre-application
process established under this section.
(c) The department shall reject and return to the applicant
any application assessed by the department under this section that
fails to satisfy the threshold criteria required by the board in
the qualified allocation plan.
(d) If feasible under Section 2306.67041, an application
under this section must be submitted electronically.
Sec. 2306.67041. ON-LINE APPLICATION SYSTEM. (a) The
department and the Department of Information Resources shall
cooperate to evaluate the feasibility of an on-line application
system for the low income housing tax credit program to provide the
following functions:
(1) filing of pre-applications and applications
on-line;
(2) posting of on-line pre-application or application
status and the application log detailing the status of, and
department's evaluations and scores pertaining to, those
applications; and
(3) posting of comments from applicants and the public
regarding a pre-application or application.
(b) The department shall determine the process for allowing
access to on-line pre-applications and applications, information
related to those applications, and department decisions relating to
those applications.
(c) In the application cycle following the date any on-line
application system becomes operational, the department shall
require use of the system for submission of pre-applications and
applications under this subchapter.
(d) The department shall publish a status report on the
implementation of the on-line application on the department's
website not later than January 1, 2002.
(e) Before the implementation of the on-line application
system, the department may implement the requirements of Section
2306.6717 in any manner the department considers appropriate.
Sec. 2306.6705. GENERAL APPLICATION REQUIREMENTS. An
application must contain at a minimum the following written,
detailed information in a form prescribed by the board:
(1) a description of:
(A) the financing plan for the development,
including any non-traditional financing arrangements;
(B) the use of funds with respect to the
development;
(C) the funding sources for the development,
including:
(i) construction, permanent, and bridge
loans; and
(ii) rents, operating subsidies, and
replacement reserves; and
(D) the commitment status of the funding sources
for the development;
(2) if syndication costs are included in the eligible
basis, a justification of the syndication costs for each cost
category by an attorney or accountant specializing in tax matters;
(3) from a syndicator or a financial consultant of the
applicant, 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 applicant,
including:
(A) pay-in schedules; and
(B) syndicator consulting fees and other
syndication costs;
(4) if rental assistance, an operating subsidy, or an
annuity is proposed for the development, any related contract or
other agreement securing those funds and an identification of:
(A) the source and annual amount of the funds;
(B) the number of units receiving the funds; and
(C) the term and expiration date of the contract
or other agreement;
(5) if the development is located within the
boundaries of a political subdivision with a zoning ordinance,
evidence in the form of a letter from the chief executive officer
of the political subdivision or from another local official with
jurisdiction over zoning matters that states that:
(A) the development is permitted under the
provisions of the ordinance that apply to the location of the
development; or
(B) 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;
(6) if an occupied development is proposed for
rehabilitation:
(A) an explanation of the process used to notify
and consult with the tenants in preparing the application;
(B) a relocation plan outlining:
(i) relocation requirements; and
(ii) a budget with an identified funding
source; and
(C) if applicable, evidence that the relocation
plan has been submitted to the appropriate local agency;
(7) a certification of the applicant's compliance with
appropriate state and federal laws, as required by other state law
or by the board; and
(8) any other information required by the board in the
qualified allocation plan.
Sec. 2306.6706. ADDITIONAL APPLICATION REQUIREMENT:
NONPROFIT SET-ASIDE ALLOCATION. (a) In addition to the information
required by Section 2306.6705, an application for a housing tax
credit allocation from the nonprofit set-aside, as defined by
Section 42(h)(5), Internal Revenue Code of 1986 (26 U.S.C. Section
42(h)(5)), must contain the following written, detailed information
with respect to each development owner and each general partner of
a development owner:
(1) Internal Revenue Service documentation of
designation as a Section 501(c)(3) or 501(c)(4) organization;
(2) evidence that one of the exempt purposes of the
nonprofit organization is to provide low income housing;
(3) a description of the nonprofit organization's
participation in the construction or rehabilitation of the
development and in the ongoing operations of the development;
(4) evidence 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;
(5) a third-party legal opinion stating that the
nonprofit organization is not affiliated with or controlled by a
for-profit organization and the basis for that opinion;
(6) a copy of the nonprofit organization's most recent
audited financial statement;
(7) a list of the names and home addresses of members
of the board of directors of the nonprofit organization;
(8) a third-party legal opinion stating that the
nonprofit organization is eligible under Subsection (b) for a
housing tax credit allocation from the nonprofit set-aside and the
basis for that opinion; and
(9) evidence that a majority of the members of the
nonprofit organization's board of directors principally reside:
(A) in this state, if the development is located
in a rural area; or
(B) not more than 90 miles from the development
in the community in which the development is located, if the
development is not located in a rural area.
(b) To be eligible for a housing tax credit allocation from
the nonprofit set-aside, a nonprofit organization must:
(1) control a majority of the development;
(2) if the organization's application is filed on
behalf of a limited partnership, be the managing general partner;
and
(3) otherwise meet the requirements of Section
42(h)(5), Internal Revenue Code of 1986 (26 U.S.C. Section
42(h)(5)).
Sec. 2306.6707. ADDITIONAL APPLICATION REQUIREMENT:
DISCLOSURE OF INTERESTED PERSONS. (a) The applicant must disclose
in the application the names of any persons, including affiliates
of those persons and related parties, providing developmental or
operational services to the development, including:
(1) a development owner;
(2) an architect;
(3) an attorney;
(4) a tax professional;
(5) a property management company;
(6) a consultant;
(7) a market analyst;
(8) a tenant services provider;
(9) a syndicator;
(10) a real estate broker or agent or a person
receiving a fee in connection with services usually provided by a
real estate broker or agent;
(11) at the time the application is submitted, the
owners of the property on which the development is located;
(12) a developer; and
(13) a builder or general contractor.
(b) For each person described by Subsection (a), the
application must disclose any company name, company contact person,
address, and telephone number.
Sec. 2306.6708. APPLICATION CHANGES OR SUPPLEMENTS. (a)
Except as provided by Subsection (b), an applicant may not change
or supplement an application in any manner after the filing
deadline.
(b) This section does not prohibit an applicant from:
(1) at the request of the department, clarifying
information in the application or correcting administrative
deficiencies in the application; or
(2) amending an application after allocation of
housing tax credits in the manner provided by Section 2306.6712.
Sec. 2306.6709. APPLICATION LOG. (a) In a form prescribed
by the department, the department shall maintain for each
application an application log that tracks the application from the
date of its submission.
(b) The application log must contain at least the following
information:
(1) the names of the applicant and related parties;
(2) the physical location of the development,
including the relevant region of the state;
(3) 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 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 persons making the decisions
described by Subdivision (6), 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.
Sec. 2306.6710. EVALUATION AND UNDERWRITING OF APPLICATIONS.
(a) In evaluating an application, the department shall determine
whether the application satisfies the threshold criteria required
by the board in the qualified allocation plan. The department
shall reject and return to the applicant any application that fails
to satisfy the threshold criteria.
(b) If an application satisfies the threshold criteria, the
department shall score and rank the application using a point
system based on criteria that are adapted to regional market
conditions and adopted by the department, including criteria:
(1) regarding:
(A) the income levels of tenants of the
development;
(B) the rent levels of the units;
(C) the period of guaranteed affordability for
low income tenants;
(D) the cost by square foot of the development;
(E) the size, quality, and amenities of the
units;
(F) the services to be provided to tenants of
the development;
(G) the commitment of development funding by
local political subdivisions that enables additional units for
individuals and families of very low income; and
(H) the level of community support for the
application, evaluated on the basis of written statements of
support from local and state elected officials representing
constituents in areas that include the location of the development;
and
(2) imposing penalties on applicants or affiliates who
have requested extensions of department deadlines relating to
developments supported by housing tax credit allocations made in
the application round preceding the current round.
(c) The department shall publish in the qualified allocation
plan details of the scoring system used by the department to score
applications.
(d) The department shall underwrite the applications ranked
under Subsection (b) beginning with the applications with the
highest scores in each region described by Section 2306.111(d) and
in each set-aside category described in the qualified allocation
plan. 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 an applications
waiting list under Section 2306.6711, the department shall
underwrite as many additional applications as the board considers
necessary to ensure that all available housing tax credits are
allocated within the period required by law.
(e) In adopting criteria for scoring and underwriting
applications for purposes of housing tax credit allocations, the
department shall attach, consistent with Section 42, Internal
Revenue Code of 1986 (26 U.S.C. Section 42), the most weight to
criteria that will:
(1) result in an allocation of housing tax credits for
developments serving the lowest income tenants; and
(2) produce the greatest number of high quality units
committed to remaining affordable to qualified tenants for extended
periods.
Sec. 2306.6711. ALLOCATION OF HOUSING TAX CREDITS. (a) The
director shall provide the application scores to the board before
the 30th day preceding the date the board begins to issue
commitments for housing tax credits in the allocation round.
(b) Not later than the deadline specified in the qualified
allocation plan, the board shall issue commitments for available
housing tax credits based on the application evaluation process
provided by Section 2306.6710. The board may not allocate to an
applicant housing tax credits in any unnecessary amount, as
determined by the department's underwriting policy and by federal
law, and in any event may not allocate to the applicant housing tax
credits in an amount greater than $1.6 million in a single
application round.
(c) Concurrently with the initial issuance of commitments
for housing tax credits under Subsection (b), the board shall
establish a waiting list of additional applications ranked by score
in descending order of priority based on set-aside categories and
regional allocation goals.
(d) The board shall issue commitments for housing tax
credits with respect to applications on the waiting list as
additional credits become available.
(e) Not later than the 120th day after the date of the
initial issuance of commitments for housing tax credits under
Subsection (b), the department shall provide to an applicant who
did not receive a commitment under that subsection an opportunity
to meet and discuss with the department the application's
deficiencies and scoring.
Sec. 2306.6712. AMENDMENT OF APPLICATION SUBSEQUENT TO
ALLOCATION BY BOARD. (a) If a proposed modification would
materially alter a development approved for an allocation of a
housing tax credit, the department shall require the applicant to
file a formal, written amendment to the application on a form
prescribed by the department.
(b) The director 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
monitor under Section 2306.6719 shall also provide to the board an
analysis and written recommendation regarding the amendment.
(c) The board must vote on whether to approve the amendment.
The board by vote may reject an amendment and, if appropriate,
rescind the allocation of housing tax credits and reallocate the
credits to other applicants on the waiting list required by Section
2306.6711 if the board determines that the modification proposed in
the amendment:
(1) would materially alter the development in a
negative manner; or
(2) would have adversely affected the selection of the
application in the application round.
(d) Material alteration of a development includes:
(1) a significant modification of the site plan;
(2) a modification of the number of units or bedroom
mix of units;
(3) a substantive modification of the scope of tenant
services;
(4) a reduction of three percent or more in the square
footage of the units or common areas;
(5) a significant modification of the architectural
design of the development;
(6) a modification of the residential density of the
development of at least five percent; and
(7) any other modification considered significant by
the board.
(e) In evaluating the amendment under this subsection, the
department staff shall consider whether the need for the
modification proposed in the amendment was:
(1) reasonably foreseeable by the applicant at the
time the application was submitted; or
(2) preventable by the applicant.
(f) This section shall be administered in a manner that is
consistent with Section 42, Internal Revenue Code of 1986 (26
U.S.C. Section 42).
Sec. 2306.6713. HOUSING TAX CREDIT AND OWNERSHIP TRANSFERS.
(a) An applicant 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 unless
the applicant obtains the director's prior, written approval of the
transfer.
(b) The director may not unreasonably withhold approval of
the transfer.
(c) An applicant seeking 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.
(d) On request, an applicant seeking director approval of a
transfer must provide to the department:
(1) a list of the names of transferees and related
parties; and
(2) detailed information describing the experience and
financial capacity of transferees and related parties.
(e) The development owner shall certify to the 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.
(f) 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:
(1) the transferee's past compliance with all aspects
of the low income housing tax credit program, including land use
restriction agreements; and
(2) the sufficiency of the transferee's experience
with developments supported with housing tax credit allocations.
Sec. 2306.6714. AT-RISK DEVELOPMENT SET-ASIDE. (a) The
department shall set aside for at-risk developments not less than
15 percent of the housing tax credits available for allocation in
the calendar year.
(b) Any amount of housing tax credits set aside under this
section that remains after the initial allocation of housing tax
credits is available for allocation to any eligible applicant as
provided by the qualified allocation plan.
Sec. 2306.6715. APPEAL. (a) In a form prescribed by the
department in the qualified allocation plan, an applicant may
appeal the following decisions made by the department in the
application evaluation process provided by Section 2306.6710:
(1) a determination regarding the application's
satisfaction of threshold and underwriting criteria;
(2) the scoring of the application; and
(3) a recommendation as to the amount of housing tax
credits to be allocated to the application.
(b) An applicant may not appeal a decision made under
Section 2306.6710 regarding an application filed by another
applicant.
(c) An applicant must file a written appeal authorized by
this section with the department not later than the seventh day
after the date the department publishes the results of the
application evaluation process provided by Section 2306.6710. 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.
(d) The director 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 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:
(1) the seventh day preceding the date of the board
meeting at which the relevant allocation decision is expected to be
made; or
(2) the third day preceding the date of the board
meeting described by Subdivision (1), if the director does not
respond to the appeal before the date described by Subdivision (1).
(e) Board review of an appeal under Subsection (d) 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.
Sec. 2306.6716. FEES. (a) A fee charged by the department
for filing an application may not be excessive and must reflect the
department's actual costs in processing the application, providing
copies of documents to persons connected with the application
process, and making appropriate information available to the public
through the department's website.
(b) The department shall publish not later than July 1 of
each year a schedule of application fees that specifies the amount
to be charged at each stage of the application process.
(c) In accordance with the fee schedule, the department
shall refund the balance of any fees collected for an application
that is withdrawn by the applicant or that is not fully processed
by the department. The department must provide the refund to the
applicant not later than the 30th day after the date the last
official action is taken with respect to the application.
(d) The department shall develop a sliding scale fee
schedule for applications that encourages increased participation
by community housing development organizations in the low income
housing tax credit program.
Sec. 2306.6717. PUBLIC INFORMATION AND HEARINGS. (a)
Subject to Section 2306.67041, the department shall make the
following items available on the department's website:
(1) as soon as practicable, any proposed application
submitted through the pre-application process established by this
subchapter;
(2) before the 30th day preceding the date of the
relevant board allocation decision, except as provided by
Subdivision (3), the entire application, including all supporting
documents and exhibits, the application log, a scoring sheet
providing details of the application score, and any other document
relating to the processing of the application;
(3) not later than the third working day after the
date of the relevant determination, the results of each stage of
the application process, including the results of the application
scoring and underwriting phases and the allocation phase;
(4) before the 15th day preceding the date of board
action on the amendment, notice of an amendment under Section
2306.6712 and the recommendation of the director and monitor
regarding the amendment; and
(5) an appeal filed with the department or board under
Section 2306.6715 or 2306.6721 and any other document relating to
the processing of the appeal.
(b) The department shall provide information regarding the
low income housing tax credit program, including notice regarding
public hearings, board meetings, and the opening and closing dates
for applications, to:
(1) local housing departments;
(2) newspapers;
(3) nonprofit organizations;
(4) on-site property managers of occupied developments
that are the subject of applications; and
(5) any other interested persons, including community
groups, who request the information.
(c) The department shall hold at least three public hearings
in different regions of the state to receive public comments on
applications and on other issues relating to the low income housing
tax credit program.
(d) Notwithstanding any other provision of this section, the
department may treat the financial statements of any applicant as
confidential and may elect not to disclose those statements to the
public.
Sec. 2306.6718. ELECTED OFFICIALS. (a) The department shall
provide written notice of the filing of an application to the
following elected officials:
(1) members of the legislature who represent the
community containing the development described in the application;
and
(2) the chief executive officer of the political
subdivision containing the development described in the
application.
(b) The department shall provide the elected officials with
an opportunity to comment on the application during the application
evaluation process provided by Section 2306.6710 and shall consider
those comments in evaluating applications under that section.
(c) A member of the legislature who represents the community
containing the development may hold a community meeting at which
the department shall provide appropriate representation.
(d) If the department receives written notice from the mayor
or county judge of an affected municipality or county opposing an
application, the department must contact the mayor or county judge
and offer to conduct a physical inspection of the development site
and consult with the mayor or county judge before the application
is scored.
Sec. 2306.6719. MONITORING OF COMPLIANCE. (a) The
department may contract with an independent third party to monitor
a development during its construction or rehabilitation and during
its operation for compliance with:
(1) any conditions imposed by the department in
connection with the allocation of housing tax credits to the
development; and
(2) appropriate state and federal laws, as required by
other state law or by the board.
(b) The department may assign department staff other than
housing tax credit division staff to perform the relevant
monitoring functions required by this section in the construction
or rehabilitation phase of a development.
Sec. 2306.6720. ENFORCEABILITY OF APPLICANT REPRESENTATIONS.
Each representation made by an applicant to secure a housing tax
credit allocation is enforceable by the department and the tenants
of the development supported with the allocation.
Sec. 2306.6721. DEBARMENT FROM PROGRAM PARTICIPATION. (a)
The board by rule shall adopt a policy providing for the debarment
of a person from participation in the low income housing tax credit
program as described by this section.
(b) The department may debar a person from participation in
the program on the basis of the person's past failure to comply
with any condition imposed by the department in connection with the
allocation of housing tax credits.
(c) The department shall debar a person from participation
in the program if the person:
(1) materially violates any condition imposed by the
department in connection with the allocation of housing tax
credits;
(2) is debarred from participation in federal housing
programs by the United States Department of Housing and Urban
Development; or
(3) is in material noncompliance with or has
repeatedly violated a land use restriction agreement regarding a
development supported with a housing tax credit allocation.
(d) A person debarred by the department from participation
in the program may appeal the person's debarment to the board.
Sec. 2306.6722. DEVELOPMENT ACCESSIBILITY. Any development
supported with a housing tax credit allocation shall comply with
the accessibility standards that are required under Section 504,
Rehabilitation Act of 1973 (29 U.S.C. Section 794), and specified
under 24 C.F.R. Part 8, Subpart C.
Sec. 2306.6723. DISCRIMINATION AGAINST PERSONS RECEIVING
FEDERAL HOUSING ASSISTANCE PROHIBITED. The department shall
prohibit a development supported with a housing tax credit
allocation from:
(1) excluding an individual or family from admission
to the development because the individual or family participates in
the housing choice voucher program under Section 8, United States
Housing Act of 1937 (42 U.S.C. Section 1437f); and
(2) using a financial or minimum income standard for
an individual or family participating in the voucher program
described by Subdivision (1) that requires the individual or family
to have a monthly income of more than 2-1/2 times the individual's
or family's share of the total monthly rent payable to the
development owner.
Sec. 2306.6724. COORDINATION WITH RURAL DEVELOPMENT AGENCY.
(a) The department shall jointly administer with the rural
development agency any set-aside for rural areas to:
(1) ensure the maximum use and optimum geographic
distribution of housing tax credits in rural areas; and
(2) provide for information sharing, efficient
procedures, and fulfillment of development compliance requirements
in rural areas.
(b) The rural development agency shall assist in developing
all threshold, scoring, and underwriting criteria applied to
applications eligible for the rural area set-aside. The criteria
must be approved by that agency.
(c) To ensure that the rural area set-aside receives a
sufficient volume of eligible applications, the department shall
fund and, with the rural development agency, shall jointly
implement outreach, training, and rural area capacity building
efforts as directed by the rural development agency.
(d) The department and the rural development agency shall
jointly adjust the regional allocation of housing tax credits
described by Section 2306.111 to offset the under-utilization and
over-utilization of multifamily private activity bonds and other
housing resources in the different regions of the state.
(e) From application fees collected under this subchapter,
the department shall reimburse the rural development agency for any
costs incurred by the agency in carrying out the functions required
by this section.
Sec. 2306.6725 <2306.671>. DEADLINES FOR ALLOCATION OF LOW
INCOME HOUSING TAX CREDITS. (a) Not later than September 30
<November 15> of each year, the department shall prepare and submit
to the board for adoption the qualified allocation plan required by
federal law for use by the department in setting criteria and
priorities for the allocation of tax credits under the low income
housing tax credit program.
(b) The board shall adopt and submit to the governor the
qualified allocation plan not later than November 15 <January 31>.
(c) The governor shall approve, reject, or modify and
approve the qualified allocation plan not later than December 1
<February 28>.
(d) An applicant for a low income housing tax credit to be
issued a commitment during the initial allocation cycle in a
calendar year must submit an application to the department not
later than March 1 <May 15>.
(e) The board shall review the recommendations of department
staff regarding applications and shall issue a list of approved
applications <issue a commitment for allocation for the initial
cycle of low income housing tax credits> each year in accordance
with the qualified allocation plan not later than June 30 <July
31>.
(f) The board shall issue final commitments for allocations
of housing tax credits each year in accordance with the qualified
allocation plan not later than July 31.
Sec. 2306.6726 <2306.672>. SCORING OF APPLICATIONS. (a)
<The goal of the low income housing tax credit program is to
provide permanent affordable housing.> In allocating low income
housing tax credits, the department shall score each application
using a point system based on criteria adopted by the department
that are consistent with the department's housing goals, including
criteria addressing the ability of the proposed project to:
(1) provide quality social support services to
residents;
(2) demonstrate community and neighborhood support as
defined by the qualified allocation plan;
(3) consistent with sound underwriting practices and
when economically feasible, serve individuals and families of
extremely low income by leveraging private and state and federal
resources, including federal HOPE VI grants received through the
United States Department of Housing and Urban Development;
(4) serve traditionally underserved areas;
(5) remain affordable to qualified tenants for an
extended, economically feasible period; and
(6) comply with the accessibility standards that are
required under Section 504 of the Rehabilitation Act of 1973 (29
U.S.C. Section 794), and specified under 24 C.F.R. Part 8, Subpart
C. <The department shall publish in the qualified allocation plan
any discretionary factor that the department will consider in
scoring an application.>
(b) The department shall provide appropriate incentives as
determined through the qualified allocation plan to reward
applicants who agree <If an applicant meets the department's
scoring and underwriting criteria, the department shall add:>
<(1) five bonus points to the applicant's score if the
applicant agrees> to provide to a qualified nonprofit organization
or tenant organization a right of first refusal to purchase the
property to which the tax credit applies at the minimum price
provided in, and in accordance with the requirements of, Section
42(i)(7), Internal Revenue Code of 1986 (26 U.S.C. Section
42(i)(7))<; and>
<(2) two bonus points to the applicant's score if the
application is received within the first 10 days of the application
acceptance period>.
(c) On <The department shall provide the score of each
application on each criterion to the board and the governor. The
results of the scoring shall be available to the public.>
<(d) Upon> awarding tax credit allocations, the board shall
document the reasons for each project's selection, including an
explanation of:
(1) all discretionary factors used in making its
determination; and
(2) the reasons for any decision that conflicts with
the recommendations of department staff under Section 2306.6751.
(d) For each scoring criterion, the department shall use a
range of points to evaluate the degree to which a proposed project
satisfies the criterion. The department may not award a number of
points for a scoring criterion that is disproportionate to the
degree to which a proposed project complies with that criterion.
Sec. 2306.6727 <2306.673>. SALE OF CERTAIN LOW INCOME
HOUSING TAX CREDIT PROPERTY. (a) Not later than two years before
the expiration of the compliance period, a recipient of a low
income housing tax credit who agreed to provide a right of first
refusal under Section 2306.6726 <2306.672(b)(1)> and who intends to
sell the property shall notify the department of the recipient's
intent to sell. The recipient shall notify qualified nonprofit
organizations and tenant organizations of the opportunity to
purchase the property.
(b) The recipient may:
(1) 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;
(2) 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
(3) 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.
(c) Notwithstanding an agreement under Section 2306.6726
<2306.672(b)(1)>, a recipient of a low income housing tax credit
may sell property to which the tax credit applies to any purchaser
after the expiration of the compliance period if a qualified
nonprofit organization or tenant organization does not offer to
purchase the property at the minimum price provided by Section
42(i)(7), Internal Revenue Code of 1986 (26 U.S.C. Section
42(i)(7)), and the department declines to purchase the property.
(d) In this section, "compliance period" has the meaning
assigned by Section 42(i)(1), Internal Revenue Code of 1986 (26
U.S.C. Section 42(i)(1)).
Sec. 2306.6728 <2306.674>. DEPARTMENT PURCHASE OF LOW INCOME
HOUSING TAX CREDIT PROPERTY. The board by rule may develop and
implement a program to purchase low income housing tax credit
property that is not purchased by a qualified nonprofit
organization or tenant organization. The department may not
purchase low income housing tax credit property if the board finds
that the purchase is not in the best interest of the state.
Sec. 2306.6751 <2306.675>. ALLOCATION DECISION; REEVALUATION
<OF LOW INCOME HOUSING TAX CREDIT>. (a) Department staff shall
provide written, documented recommendations to the board concerning
the financial or programmatic viability of each application for a
low income housing tax credit before the board makes a decision
relating to the allocation of tax credits. The board may not make
without good cause an allocation decision that conflicts with the
recommendations of department staff.
(b) Regardless of project stage, the board must reevaluate a
project that undergoes a substantial change between the time of
initial board approval of the project and the time of issuance of a
tax credit commitment for the project. The board may revoke any
tax credit commitment issued for a project that has been
unfavorably reevaluated by the board under this subsection <Not
later than the deadline specified in Section 2306.671(e), the board
shall issue a commitment for tax credits available to the
department. Concurrently with the issuance of a commitment for
initial tax credits, the board shall establish a waiting list of
additional applications, ranked in descending order of priority, to
be issued a commitment for tax credits if additional credits become
available>.
<Sec. 2306.676. EQUAL ACCESS TO PROGRAM. The department
shall establish procedures through the qualified allocation plan to
ensure that each applicant for a low income housing tax credit has
a fair and equal opportunity to submit or resubmit an application
and submit for consideration any authorized supplementary materials
and information.>
<Sec. 2306.677. FEES. (a) A fee charged by the department
to an applicant for a low income housing tax credit may not be
excessive and must reflect the department's actual costs in
processing applications and providing copies of documents in
connection with the allocation process.>
<(b) The department shall refund a fee charged to an
applicant if the department does not score the applicant's
application, except the department may retain a reasonable portion
of the fee to compensate the department for costs associated with
the application.>
Sec. 2306.6781 <2306.678>. PUBLIC INFORMATION <AND HEARINGS
ON PROGRAM>. <(a)> The department shall provide information
regarding the low income housing tax credit program, including
notices of public hearings, meetings, and opening and closing dates
for applications for a low income housing tax credit, to local
housing departments, any appropriate newspapers of general or
limited circulation that serve the community in which the proposed
project is to be located, nonprofit organizations, on-site property
managers of occupied projects that are the subject of tax credit
applications for posting in prominent locations at those projects,
and any other interested persons and community groups<,> who
request the information. The department shall also publish the
information on the department's website.
<(b) The department shall hold at least three public
hearings in different regions of the state to receive public
comments on low income housing tax credit applications.>