By Ehrhardt H.B. No. 2441
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the administration of the low-income housing tax credit
1-3 program by the Texas Department of Housing and Community Affairs.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Modify Section 2306, Government Code by striking
1-6 the existing language in Subchapter DD and replacing it with the
1-7 following:
1-8 SUBCHAPTER DD. LOW INCOME HOUSING TAX CREDIT PROGRAM
1-9 Sec. 2306.671. DEFINITIONS. (a) APPLICANT. For purposes
1-10 of this subchapter the term "Applicant" shall mean any person and
1-11 any affiliate of such person, corporation, partnership, joint
1-12 venture, association, or other entity that submits an Application
1-13 to the Department requesting a Housing Tax Credit allocation.
1-14 (b) APPLICATION. For purposes of this subchapter the term
1-15 "Application" shall mean an application in the form prescribed by
1-16 the Department, including any required exhibits or other supporting
1-17 materials, filed with the Department by an Applicant requesting
1-18 Housing Tax Credits from the Department.
1-19 (c) APPLICATION LOG. For purposes of this subchapter the
1-20 term "Application Log" shall mean a form prescribed by the
1-21 Department that contains, at a minimum the following information:
1-22 (1) the names of the Applicant and Related Parties;
2-1 (2) the physical location of the proposed Development;
2-2 (3) the amount of Housing Tax Credits requested;
2-3 (4) the region of the state in which the proposed
2-4 development is located;
2-5 (5) the Set-Aside category the application is made
2-6 under, if any;
2-7 (6) the score of the Application under each scoring
2-8 category adopted by the Department under the Qualified Allocation
2-9 Plan;
2-10 (7) the identity of the Department staff who scored
2-11 the Application;
2-12 (8) the Department's determination whether the
2-13 Application met the Department's underwriting Threshold Criteria;
2-14 (9) the identity of the Department staff who
2-15 underwrote the Application;
2-16 (10) the Board decision on the Application; and
2-17 (11) the amount of Housing Tax Credits awarded by the
2-18 Department to the Application.
2-19 (d) APPLICATION ROUND. For purposes of this subchapter the
2-20 term "Application Round" shall mean the period beginning with the
2-21 date the Department begins accepting Applications for Housing Tax
2-22 Credits and lasting until such time as all available Housing Tax
2-23 Credits are allocated, provided that the Application Round not
2-24 extend beyond the last day of the calendar year.
2-25 (e) AT RISK DEVELOPMENT. For purposes of this subchapter
2-26 the term "At Risk Development" shall mean a housing development
3-1 that receives the benefit of a subsidy in the form of below-market
3-2 interest rates under Section 221(d)(3) and (5), interest reduction
3-3 payments under Section 236 of the National Housing Act, or below
3-4 market interest rate direct loans under Section 202 of the Housing
3-5 Act of 1959, including housing developments that receive the
3-6 benefit of a rental subsidy in the form of rent supplement payments
3-7 under Section 101 of the Housing and Urban Development Act of 1965
3-8 or housing assistance payments through Section 8 in connection with
3-9 Section 202 Loans for Housing for the Elderly or Handicapped, the
3-10 Section 8 Additional Assistance Program for housing developments
3-11 with HUD-Insured and HUD-Held Mortgages or the Section 8 Housing
3-12 Assistance Program for the Disposition of HUD-Owned Projects and
3-13 Sections 514, 515 and 516 Rural Rental Housing, including Rural
3-14 Rental Housing receiving rental assistance payments or Section 8
3-15 subsidies.
3-16 (f) DEVELOPMENT. For purposes of this subchapter the term
3-17 "Development" shall mean an activity defined by the United States
3-18 Internal Revenue Code Section 42(g)(1), one or more buildings that
3-19 contain rental Units, financed under a common plan, and owned by
3-20 the same person for federal tax purposes. Buildings that are part
3-21 of a scattered site Development may be treated as part of a single
3-22 Development if they meet these requirements, and if all of the
3-23 dwelling Units in the buildings are rent-restricted residential
3-24 rental Units.
3-25 (g) HOUSING DEVELOPMENT OWNER. For purposes of this
3-26 subchapter the term "Housing Development Owner" shall mean any
4-1 person or affiliate thereof that owns or proposes to develop the
4-2 housing Development or expects to acquire control of the housing
4-3 Development pursuant to a purchase contract satisfactory to the
4-4 Department.
4-5 (h) HOUSING TAX CREDITS. For purposes of this subchapter
4-6 the term "Housing Tax Credits" shall mean credits against federal
4-7 income taxes awarded to owners of qualified low-income rental
4-8 housing developments pursuant to the United States Internal Revenue
4-9 Code of 1986, Section 42, as amended.
4-10 (i) LAND USE RESTRICTION AGREEMENT. For purposes of this
4-11 subchapter the term "Land Use Restriction Agreement" shall mean an
4-12 agreement between the Department, the Housing Development Owner and
4-13 all successors in interest in the Housing Development Owner which
4-14 encumbers the housing Development with respect to provisions
4-15 stipulated in the United States Internal Revenue Code, Section 42,
4-16 and this subchapter, and the Texas Government Code, Chapter 2306 as
4-17 may be amended from time to time.
4-18 (j) QUALIFIED ALLOCATION PLAN. For purposes of this
4-19 subchapter the term "Qualified Allocation Plan" shall mean any
4-20 plan:
4-21 (1) that sets forth underwriting, selection and
4-22 scoring criteria to be used to determine housing priorities of the
4-23 Department which are appropriate to local conditions.
4-24 (2) that also gives preference in allocation of
4-25 housing credit dollar amounts among selected Developments to-
4-26 (i) Developments serving the lowest income
5-1 tenants; and
5-2 (ii) Developments obligated to serve
5-3 qualified tenants for the longest periods of time; and
5-4 (3) which provides a procedure for the Department, the
5-5 Department's agent or other private contractor of the Department to
5-6 follow for monitoring of compliance with the provisions of the
5-7 Qualified Allocation Plan and this subchapter.
5-8 (k) RELATED PARTY. For purposes of this subchapter the term
5-9 "Related Party" shall mean:
5-10 (1) within the third degree of consanguinity, as
5-11 determined by Chapter 573, Government Code, the brothers, sisters,
5-12 spouse, ancestors, and direct descendants of a person;
5-13 (2) a person and corporation where that person owns
5-14 more than 50% in value of the outstanding stock of that
5-15 corporation;
5-16 (3) two (2) or more corporations that are connected
5-17 through stock ownership with a common parent with stock possessing:
5-18 (i) at least fifty percent (50%) of the
5-19 total combined voting power of all classes that can vote, or
5-20 (ii) at least fifty percent (50%) of the
5-21 total value of shares of all classes of stock of each of the
5-22 corporations, or
5-23 (iii) at least fifty percent (50%) of the
5-24 total value of shares of all classes of stock of at least one of
5-25 the other corporations, excluding, in computing that voting power
5-26 or value, stock owned directly by that other corporation,
6-1 (4) a grantor and fiduciary of any trust;
6-2 (5) a fiduciary of one trust and a fiduciary of
6-3 another trust, if the same person is a grantor of both trusts;
6-4 (6) a fiduciary of a trust and a beneficiary of that
6-5 trust;
6-6 (7) a fiduciary of a trust and a corporation where
6-7 more than fifty percent (50%) in value of the outstanding stock is
6-8 owned by or for the trust or by or for a person who is a grantor of
6-9 the trust;
6-10 (8) a person or organization and an organization that
6-11 is tax-exempt under Subsection 501 (a) of the United States
6-12 Internal Revenue Code and that is controlled by that person or the
6-13 person's family members or by that organization;
6-14 (9) a corporation and a partnership or joint venture
6-15 if the same persons own more than:
6-16 (i) fifty percent (50%) in value of the
6-17 outstanding stock of the corporation; and
6-18 (ii) fifty percent (50%) of the capital
6-19 interest or the profits' interest, in the partnership or joint
6-20 venture;
6-21 (10) one S corporation and another S corporation if
6-22 the same persons own more than fifty percent (50%) in value of the
6-23 outstanding stock of each corporation;
6-24 (11) a S corporation and a C corporation, if the same
6-25 persons own more than fifty percent (50%) in value of the
6-26 outstanding stock of each corporation;
7-1 (12) a partnership and a person or organization owning
7-2 more than fifty percent (50%) of the capital interest, or the
7-3 profits' interest in that partnership; or
7-4 (13) two partnerships where the same person or
7-5 organization owns more than fifty percent (50%) of the capital
7-6 interests or profits' interests.
7-7 For purposes of the previous subsections, the constructive
7-8 ownership provisions of the United States Internal Revenue Code
7-9 Subsection 267 shall apply.
7-10 (l) RURAL AREA. For purposes of this subchapter the term
7-11 "Rural Area" shall mean an area that:
7-12 (1) is outside the boundaries of a Primary
7-13 Metropolitan Statistical Area (PMSA) or a Metropolitan Statistical
7-14 Area (MSA); or
7-15 (2) is within the boundaries of a PMSA or MSA, but has
7-16 a population of not more than twenty thousand (20,000) and does not
7-17 share boundaries with an urbanized area; or
7-18 (3) is located in an area that is eligible for funding
7-19 by Texas Rural Development Office of the United States Department
7-20 of Agriculture.
7-21 (n) RURAL DEVELOPMENT AGENCY. For purposes of this
7-22 subchapter the term "Rural Development Agency" shall mean the
7-23 agency or Department designated by the Legislature as principally
7-24 responsible for Rural Area development in the state.
7-25 (o) SET-ASIDE. For purposes of this subchapter the term
7-26 "Set-Aside" shall mean a reservation of a portion of the available
8-1 Housing Tax Credits for purposes of funding housing of a certain
8-2 type, geographic location or serving a specific housing consumer on
8-3 a priority basis as designed in the Qualified Allocation Plan.
8-4 (p) THRESHOLD CRITERIA. For purposes of this subchapter the
8-5 term "Threshold Criteria" shall mean criteria used to determine
8-6 that the Development's score and financial feasibility (as
8-7 determined by development underwriting) meet the minimum level of
8-8 acceptability for consideration established in the Department's
8-9 Qualified Allocation Plan.
8-10 (q) UNIT. For purposes of this subchapter the term "Unit"
8-11 shall mean any residential rental unit in a housing development
8-12 consisting of an accommodation containing separate and complete
8-13 physical facilities and fixtures for living, sleeping, eating,
8-14 cooking and sanitation. The term "Unit" may also include a single
8-15 room occupancy housing unit used on a non-transient basis so long
8-16 as separate facilities exist as above described.
8-17 Sec. 2306.672. PURPOSE. The Department shall administer the
8-18 Housing Tax Credit program for the following purposes:
8-19 (a) to produce the highest quality housing that serves the
8-20 lowest income tenants for the longest period of time;
8-21 (b) to maximize the number of affordable rental housing
8-22 Units added to the state's existing housing stock;
8-23 (c) to encourage development and preservation of appropriate
8-24 rental housing types for households which have difficulty finding
8-25 suitable and affordable rental housing in the private marketplace;
8-26 (d) to enable substantial rehabilitation of existing rental
9-1 housing in order to prevent losses to the existing supply of
9-2 affordable apartments;
9-3 (e) to prevent losses from the existing stock of low-income
9-4 rental housing of those At-Risk apartments under expiring contracts
9-5 with federal agencies or subject to prepayment which, without the
9-6 allocation of tax credits, would be converted to market rate
9-7 apartments;
9-8 (f) to maximize the term of affordability of the housing
9-9 created;
9-10 (g) to provide an equitable distribution of tax credits
9-11 across the state including small cities and Rural Areas.
9-12 Sec. 2306.673. ELIGIBILITY. (a) An Application will be
9-13 ineligible if the Applicant or a Related Party has been or is a
9-14 member of the Board, executive director, deputy director of housing
9-15 programs or tax credit manager that was employed by the Department
9-16 during any part of the five (5) years prior to the allocation
9-17 round.
9-18 (b) An Application will be ineligible if it requests an
9-19 annual allocation of Housing Tax Credits greater than $5,500 per
9-20 Housing Tax Credit restricted Unit. Developments in Rural Areas or
9-21 Developments located in counties designated as Economically
9-22 Distressed Areas as defined in Subchapter J, Chapter 16, Water Code
9-23 and Subchapter K, Chapter 17, Water Code may receive up to $6,500
9-24 per Housing Tax Credit restricted Unit in annual Housing Tax
9-25 Credits.
9-26 (c) Applications will be ineligible if submitted by an
10-1 Applicant requesting more than $1.6 million per Housing Tax Credit
10-2 Application Round. This limitation will apply to all Related
10-3 Parties.
10-4 (d) An Application for a Development comprising more than
10-5 100 residential dwelling Units will be ineligible.
10-6 Sec. 2306.674. APPLICATION. (a) Pre-application process.
10-7 The Department shall establish, by rule, a pre-application process
10-8 and shall provide an incentive through the award of points in the
10-9 scoring process as an incentive for Applicants to participate in
10-10 this process. The purpose of the pre-application process shall be
10-11 to allow the Department and Applicants to assess the viability and
10-12 eligibility of proposed Applications prior to the Applicant
10-13 incurring the costs of submission of a full Application.
10-14 Pre-applications that fail to score above a minimum Threshold
10-15 Criteria set by the Board in the Qualified Allocation Plan shall be
10-16 rejected by the Department and returned to the Applicant.
10-17 (b) Required elements of the Application.
10-18 (1) An Application for Housing Tax Credits shall
10-19 contain such elements as the board shall designate through the
10-20 Qualified Allocation Plan. The Application shall also contain the
10-21 following:
10-22 (i) Financing plan. A detailed
10-23 description of the financing plan, and proposed sources and uses of
10-24 funds, to include construction, permanent and bridge loan sources,
10-25 and other funding sources including rent or operating subsidies and
10-26 reserves. The commitment status of all fund sources shall be
11-1 described and non-traditional financing arrangements shall be
11-2 explained.
11-3 (ii) Justification of syndication costs in
11-4 basis. If syndication costs are included in eligible basis, a
11-5 justification from a tax attorney or tax accountant shall be
11-6 provided for each cost category.
11-7 (iii) Terms of syndication agreement.
11-8 Written estimate from syndicators or the financial consultant of
11-9 equity dollars expected to be raised for the proposed Development
11-10 from the amount of Housing Tax Credits requested, including pay-in
11-11 schedules, syndication costs, including syndicator consulting fees,
11-12 and an estimated tax credit factor.
11-13 (iv) Description of subsidies. If rental
11-14 assistance, operating subsidies or annuities are proposed, the
11-15 Applicant shall furnish in the Application all related contracts
11-16 and agreements that secure said funds and identify the source,
11-17 annual amount, term, number of Units receiving assistance, and
11-18 expiration date of contracts and agreements.
11-19 (v) Evidence of zoning. If the
11-20 Development is located within a political subdivision with a zoning
11-21 ordinance, the Applicant shall provide written evidence in the form
11-22 of a letter from the chief executive officer of the appropriate
11-23 political jurisdiction or the Department director with jurisdiction
11-24 over zoning matters stating that the proposed Development is
11-25 permitted under current zoning ordinances applicable to the
11-26 property where the Development is to be located.
12-1 (vi) Tenant relocation plan. Applicants
12-2 proposing rehabilitation of an existing occupied rental housing
12-3 Development shall provide an explanation of the process used to
12-4 notify and consult with tenants in the preparation of the
12-5 Application, relocation requirements, a detailed relocation plan
12-6 including a budget with an identified funding source, and, where
12-7 applicable, evidence that the relocation plan has been submitted to
12-8 the appropriate local agency.
12-9 (vii) Nonprofit Set-Aside Application.
12-10 Applicants requesting Housing Tax Credits from the nonprofit
12-11 Set-Aside, as defined by the United States Internal Revenue Code
12-12 Section 42(h)(5), shall provide the following documentation with
12-13 respect to each developer and general partner of the proposed
12-14 Development Owner:
12-15 (A) IRS documentation of designation as a
12-16 501(c)(3) or 501(c)(4) corporation;
12-17 (B) proof that one of the exempt purposes of the
12-18 corporation is to provide low-income housing;
12-19 (C) a detailed description of the nonprofit
12-20 participation in the Development and ongoing operations of the
12-21 proposed Development;
12-22 (D) proof that the corporation prohibits members
12-23 of its board of directors, other than the chief staff member, if a
12-24 board member, from receiving material compensation for their
12-25 services as board members,
12-26 (E) a third party legal opinion that the
13-1 nonprofit organization is not affiliated with or controlled by a
13-2 for-profit organization, and the basis for said determination;
13-3 (F) a copy of the nonprofit corporation's last
13-4 audited financial statement;
13-5 (G) a list with home addresses of members of the
13-6 board of directors of the nonprofit corporation;
13-7 (H) a third party legal opinion stating that the
13-8 Applicant is eligible for the nonprofit Set-Aside pursuant to the
13-9 United States Internal Revenue Code Section 42(h)(5);
13-10 (I) evidence that fifty-one percent (51%) of the
13-11 board of directors of the nonprofit corporation principally reside
13-12 in the community in which the Development is to be constructed.
13-13 For purposes of this section "community" shall be defined as in an
13-14 area not more than ninety (90) miles from the site of the proposed
13-15 Development except in cases where the proposed Development is to be
13-16 located in a Rural Area as defined in this subchapter. A nonprofit
13-17 corporation proposing a Development in a Rural Area shall provide
13-18 evidence that fifty-one percent (51%) of the board of directors of
13-19 the nonprofit corporation principally reside in the state of Texas.
13-20 (viii) To be eligible for the nonprofit
13-21 Set-Aside, a nonprofit corporation must control no less than
13-22 fifty-one percent (51%) of the Development and must be the managing
13-23 general partner if the Application is submitted on behalf of a
13-24 limited partnership.
13-25 (c) Application changes. An Application may not be changed
13-26 subsequent to the Application filing deadline nor may any
14-1 supplemental information considered in the awarding of points or
14-2 meeting of Threshold Criteria be submitted.
14-3 (d) Identities of interest disclosed. The Applicant shall
14-4 disclose the identity of any persons or entities (including
14-5 affiliated entities and Related Parties) that will provide
14-6 development or operational services to the proposed Development.
14-7 These persons or entities shall include but are not limited to:
14-8 (1) developer;
14-9 (2) architect;
14-10 (3) attorney;
14-11 (4) tax professional;
14-12 (5) property management company;
14-13 (6) consultant;
14-14 (7) market analyst;
14-15 (8) tenant services provider;
14-16 (9) syndicator;
14-17 (10) real estate broker and agent or a person or
14-18 corporation receiving a fee in connection with any services usually
14-19 provided by a real estate broker or agent; and
14-20 (11) owners of the property on which the Development
14-21 is to be located.
14-22 For all of these parties the Application shall disclose, if
14-23 applicable, the company name and contact person, address and
14-24 telephone number.
14-25 (e) Processing Applications.
14-26 (1) The Department shall process Applications in a
15-1 manner that maintains the integrity of the Application, fully
15-2 documents Department decisions relative to the Application, and
15-3 makes available to the public accurate and timely information
15-4 concerning all Applications and Department decisions.
15-5 (2) The complete Application, all supporting documents
15-6 and exhibits, Application Logs, scoring sheets and all other
15-7 documents related to the processing of the Application shall be
15-8 available to the public through the Department's Website at least
15-9 thirty (30) days prior to any Board decision to award tax credits.
15-10 (3) The Department's certification, scoring, and
15-11 underwriting decisions regarding an Application shall be documented
15-12 on the Application Log.
15-13 (4) The Application Log shall document all contacts
15-14 between the Department staff, the Board and the Applicant and any
15-15 Related Parties and contain a summary of the nature of these
15-16 contacts.
15-17 (5) The Application Log sheet shall contain a list of
15-18 staff and Board decisions relative to the Application. The
15-19 identity of the staff member making the relevant decision
15-20 concerning the Application shall appear on an Application Log next
15-21 to the decision.
15-22 (6) Notwithstanding any other provision herein, the
15-23 financial statements of any individual making Application for tax
15-24 credits may be regarded by the Department as confidential and not
15-25 disclosed to the public.
15-26 (f) Application scoring.
16-1 (1) In awarding Applications for tax credits the
16-2 Department shall follow the following process:
16-3 (i) The Department shall first score each
16-4 Application received. Any Application not meeting Threshold
16-5 Criteria set out in the Qualified Allocation Plan shall be rejected
16-6 and returned to the Applicant.
16-7 (ii) The Department will then underwrite
16-8 Applications, beginning with the Application with the highest score
16-9 within each region established in Section 2306.111(d) and within
16-10 each Set-Aside category established in the Qualified Allocation
16-11 Plan. The Department will underwrite Applications until a
16-12 sufficient number of Applications that meet the Department's
16-13 underwriting standards have been processed to award all available
16-14 tax credits consistent with the regional allocation goals and the
16-15 Set-Aside categories. The Department shall underwrite additional
16-16 Applications in order to establish a waiting list of Applications
16-17 of a number determined by the Board to be adequate to ensure that
16-18 all of the available Housing Tax Credits can be awarded within the
16-19 time period provided by state and federal law.
16-20 (2) In allocating Housing Tax Credits, the Department
16-21 shall score each Application using a point system based on criteria
16-22 adopted by the Department. The Department shall publish in the
16-23 Qualified Allocation Plan details of the scoring system that the
16-24 Department will use in scoring an Application.
16-25 (3) The Department shall adopt a scoring system that
16-26 considers:
17-1 (i) the income levels of tenants that will
17-2 be housed;
17-3 (ii) the rent levels of the Units;
17-4 (iii) the period of guaranteed
17-5 affordability for low income tenants;
17-6 (iv) the cost per square foot of the
17-7 Development;
17-8 (v) the size, quality and amenities of the
17-9 Units;
17-10 (vi) the services to be provided at the
17-11 Development to tenants;
17-12 (vii) local market conditions;
17-13 (viii) the commitment of funding to the
17-14 Development from local units of government;
17-15 (ix) the level of community support for
17-16 the Application;
17-17 (4) In developing scoring factors to rank Housing Tax
17-18 Credit Applications the Department shall adopt as the most
17-19 important scoring criteria such factors and scoring weights as will
17-20 result in the award of tax credits to Developments serving the
17-21 lowest income tenants and produce the highest quality Units that
17-22 commit to remain affordable to qualified tenants for the longest
17-23 periods of time.
17-24 (5) The Department will adopt underwriting standards
17-25 that are consistent with the selection criteria in section (4).
17-26 (6) The Department shall measure community support for
18-1 a Development through the written statements of support from local
18-2 and state elected officials.
18-3 (7) The Department shall publish on the Department's
18-4 Website the details of the score for each Application at least
18-5 thirty (30) days before awards are made.
18-6 (g) Modification of Application by Applicant subsequent to
18-7 award by the Board
18-8 (1) Any Application for which Development
18-9 modifications are proposed that would materially alter the original
18-10 approved Development shall be subject to following procedure:
18-11 (2) The Department shall require the Applicant to file
18-12 a formal written amendment to the Housing Tax Credit Application on
18-13 forms designed by the Department;
18-14 (3) The executive director will provide an evaluation
18-15 and recommendation in writing to the Board;
18-16 (4) Notice of the amendment and the staff
18-17 recommendation on the amendment will be posted on the Department's
18-18 Website at least fifteen (15) days prior to Board action on the
18-19 amendment;
18-20 (5) The amendment must be approved by vote of the
18-21 Board. The Board may reject any proposed amendment and may rescind
18-22 an award and reallocate credits to other Applicants on the waiting
18-23 list set out in 2306.674(j) if, in the judgment of the Board, the
18-24 amendment materially negatively affects the proposed Development or
18-25 would have affected the selection of the Application in the
18-26 Application Round;
19-1 (6) A material alteration of an Application shall
19-2 include such modifications as the Board may determine are of
19-3 significance, including, but not limited to the following:
19-4 (i) a significant change in the site plan;
19-5 (ii) an alteration of the number of Units
19-6 or bedroom mix of Units;
19-7 (iii) a substantive modification of the
19-8 scope of tenant services;
19-9 (iv) a reduction in the square footage of
19-10 the Units or common areas of three percent (3%) or more;
19-11 (v) a significant modification of the
19-12 architectural design of the Development;
19-13 (vi) a change in the residential density
19-14 of the Development of plus or minus five percent (5%).
19-15 (7) Credit and ownership transfers. No allocation of
19-16 Housing Tax Credits, or ownership of a Development funded with
19-17 Housing Tax Credits, may be transferred by an Applicant unless
19-18 written approval of the executive director is obtained prior to the
19-19 proposed transfer. Approvals shall not be unreasonably withheld.
19-20 (8) Any transfer of Development ownership or
19-21 allocation of Housing Tax Credits shall be evidenced by written
19-22 agreement between the parties to the transfer, including agreements
19-23 entered into by the transferee and the Department.
19-24 (9) The owner of the property shall furnish the
19-25 executive director certification that the tenants in the
19-26 Development have been notified in writing of the proposed sale or
20-1 transfer at least thirty (30) days prior to the submission of the
20-2 request to the Department for approval of the transfer.
20-3 (10) The entity acquiring ownership or Housing Tax
20-4 Credits shall be subject to a "qualifications review" by the
20-5 Department to determine past compliance with Housing Tax Credits
20-6 Land Use Restriction Agreements and if sufficient housing
20-7 development and management experience is present for owning and
20-8 operating a Housing Tax Credit Development. Information regarding
20-9 the names of the purchasers or transferees and Related Parties, and
20-10 detailed information describing the experience and financial
20-11 capacity of said persons, shall be provided to the Department upon
20-12 request.
20-13 (h) Deadlines for allocation of Housing Tax Credits.
20-14 (1) Not later than November 15 of each year, the
20-15 Department shall prepare and submit to the Board for adoption the
20-16 Qualified Allocation Plan required by federal law for use by the
20-17 Department in setting criteria and priorities for the allocation of
20-18 Housing Tax Credits and Set-Asides under the Housing Tax Credit
20-19 program.
20-20 (2) The Board shall adopt and submit to the Governor
20-21 the Qualified Allocation Plan not later than January 31.
20-22 (3) The Governor shall approve, reject, or modify and
20-23 approve the Qualified Allocation Plan not later than February 28.
20-24 (4) An Applicant for Housing Tax Credits to be issued
20-25 a commitment during the initial allocation cycle in a calendar year
20-26 must submit an Application to the Department not later than May 15.
21-1 (5) The Board shall issue a commitment for allocation
21-2 for the initial cycle of Housing Tax Credits each year in
21-3 accordance with the Qualified Allocation Plan not later than July
21-4 31.
21-5 (i) The executive director shall provide the Application
21-6 scores to the Board no less than thirty (30) days before the Board
21-7 makes a decision relating to the allocation of Housing Tax Credits.
21-8 (j) Not later than the deadline specified in Section
21-9 2306.674(h)(5), the Board shall issue a commitment for Housing Tax
21-10 Credits available to the Department based on the awards process set
21-11 out in Section 2306.674(f)(1). Concurrently with the issuance of a
21-12 commitment for the initial Housing Tax Credits, the Board shall
21-13 establish a waiting list of additional Applications, ranked in
21-14 descending order of priority based on the Set-Aside category,
21-15 Application score and regional allocation requirements of Section
21-16 2306.111, to be issued a commitment for Housing Tax Credits if
21-17 additional Housing Tax Credits become available.
21-18 (k) At-Risk Development Set-Aside. Twenty percent (20%) of
21-19 the Housing Tax Credits for any calendar year shall be Set-Aside
21-20 for Developments that qualify as At-Risk pursuant to this
21-21 subchapter. Any amount of Housing Tax Credits Set-Aside under this
21-22 section remaining after the reservation of Housing Tax Credits
21-23 shall be available for allocation to any eligible Development.
21-24 (l) Ex parte communication prohibited. Neither the Applicant
21-25 nor any person, general partner, contractor or their respective
21-26 principals or affiliates active in the ownership or control of the
22-1 proposed Development or any person employed as a lobbyist by the
22-2 Applicant or Related Party shall communicate with any Board member
22-3 expect at a Board meeting or a public hearing with respect to the
22-4 Application during the period of time an Application is submitted
22-5 until that time Housing Tax Credits are approved by the Board.
22-6 Sec. 2306.675. APPEALS. (a) AVAILABILITY. An Applicant may
22-7 file an appeal of a Department evaluation and scoring, limited to:
22-8 (1) determination of the Application score;
22-9 (2) qualification in meeting Threshold Criteria;
22-10 (3) determination that the Development meets the
22-11 Department's Threshold Criteria for underwriting standards and,
22-12 (4) determination of the credit amount.
22-13 No applicant may appeal the Department's evaluation of another
22-14 Applicant's Application.
22-15 (b) TIMING. The appeal shall be submitted in writing in a
22-16 format prescribed by the Department in the Qualified Allocation
22-17 Plan and be received by the Department not later than seven (7)
22-18 calendar days following the publication of the Department's scoring
22-19 of Applications and underwriting. The appeal shall identify
22-20 specifically, based upon documentation furnished with the original
22-21 Application, the Applicant's grounds for the appeal.
22-22 (c) REVIEW. The executive director shall respond in writing
22-23 to the appeal within fourteen (14) days, and if the Applicant is
22-24 not satisfied with that response, the Applicant shall be permitted
22-25 to appeal in writing to the Board, provided that the appeal is
22-26 received at least seven (7) days before the Board meeting at which
23-1 decisions are expected to be made, or, if the determination of the
23-2 appeal to the executive director is made less than seven (7) days
23-3 prior to the Board meeting, at least three days before the Board
23-4 meeting. The appeal review shall be based upon the existing
23-5 documentation submitted by the Applicant when the Application was
23-6 filed. No information not submitted with the original application
23-7 shall be submitted. The decision of the Board is final.
23-8 (d) The appeal and all documents in the appeals process are
23-9 public records and shall be made available through the Department's
23-10 Website.
23-11 Sec. 2306.676. FEES. (a) A fee charged by the Department
23-12 to an Applicant for filing a Housing Tax Credit Application may not
23-13 be excessive and must reflect the Department's actual costs in
23-14 processing Applications, providing copies of documents in
23-15 connection with the allocation process and making the information
23-16 about the Application and scoring available to the public through
23-17 the Department's Website.
23-18 (b) The Department shall publish not later that July 1 a
23-19 schedule of Application fees, detailing the amount of fees to be
23-20 charged Applicants at each stage of the Application process. These
23-21 fees shall be based on the Department's actual costs of processing
23-22 the Applications. The Department shall refund within thirty (30)
23-23 days the balance of any fees collected from an Applicant for an
23-24 application that was withdrawn or not fully processed by the
23-25 Department in accordance with the Department's published schedule
23-26 of Application fees.
24-1 (c) The Department shall develop a sliding scale fee
24-2 schedule for the Housing Tax Credit Applications that encourages
24-3 increased participation by nonprofit community housing development
24-4 organizations (CHDOs).
24-5 Sec. 2306.677. PUBLIC INFORMATION AND HEARINGS. (a) The
24-6 Department shall provide information regarding the Housing Tax
24-7 Credit program, including notices of public hearings, meetings, and
24-8 opening and closing dates for Applications for Housing Tax Credits,
24-9 to local housing departments, newspapers, nonprofit organizations,
24-10 on-site property managers of occupied developments that are the
24-11 subject of Housing Tax Credit Applications for posting in prominent
24-12 locations at those developments, and other interested persons and
24-13 community groups who request the information.
24-14 (b) The Department shall hold at least three (3) public
24-15 hearings in different regions of the state to receive public
24-16 comments on Housing Tax Credit Applications.
24-17 (c) Within five (5) working days following submission of a
24-18 Housing Tax Credit Application, the Department shall make available
24-19 to the public a full and complete copy of the Application and all
24-20 attachments and exhibits through the Department's Website.
24-21 (d) The Department will provide to the public through the
24-22 Department's Website within three (3) working days the results of
24-23 each phase of the Application scoring, underwriting and awards
24-24 process.
24-25 (e) The Department shall provide written notification that
24-26 an Application has been filed to the following elected
25-1 representatives of the government jurisdictions where the proposed
25-2 Development is to be located: member of the Texas Senate; member
25-3 of the Texas House of Representatives; and the chief executive
25-4 officer (e.g., city manager, county judge) of the local
25-5 jurisdiction within which the proposed Development is located. The
25-6 Department shall provide elected officials an opportunity to
25-7 comment on the proposed Development prior to any award of Housing
25-8 Tax Credits and shall consider these comments as provided in
25-9 Section 2306.674(f)(4).
25-10 (f) A state senator or a state representative representing
25-11 the area where a housing Development would be located may hold a
25-12 community meeting at which the Department shall provide appropriate
25-13 representation.
25-14 (g) When the Department receives written notification from
25-15 the mayor or county judge of an affected city or county opposing an
25-16 Application, the Department must contact the mayor or county judge
25-17 and offer to conduct a physical inspection of the site and
25-18 consultation with the mayor or county judge before the Application
25-19 is scored.
25-20 Sec. 2306.678. MONITORING AND COMPLIANCE. (a) The
25-21 Department shall assign staff, independent of Housing Tax Credit
25-22 division staff, or shall contract with an outside independent third
25-23 party to oversee and monitor Housing Tax Credit Developments during
25-24 construction for compliance with all Application commitments.
25-25 These monitors shall supply the Board with an analysis and
25-26 recommendation concerning any proposed substantive modification to
26-1 a funded Housing Tax Credit Application prior to Board
26-2 consideration of a request for approval of such a modification.
26-3 (b) In monitoring compliance during the operation of Housing
26-4 Tax Credit Developments as residential rental property, the
26-5 Department may contract with an outside, independent third party to
26-6 conduct compliance monitoring.
26-7 (c) The Department shall utilize fair housing and housing
26-8 compliance testers to ensure that Housing Tax Credit Developments
26-9 are in compliance with all agreements and restrictions imposed by
26-10 the Department.
26-11 (d) All representations made by an Applicant for an
26-12 allocation are enforceable by the Department and the tenants of the
26-13 Development.
26-14 Sec. 2306.679. OTHER PROVISIONS. (a) Debarment from
26-15 participation.
26-16 (1) Individuals and corporations may be barred from
26-17 submission of Applications for Housing Tax Credits on the basis of
26-18 past failure to adhere to the terms and conditions imposed by the
26-19 Department in the award of Housing Tax Credits.
26-20 (2) The board shall adopt a debarment policy by rule.
26-21 Debarment from participation shall occur when a corporation or an
26-22 individual shall have materially violated the terms and conditions
26-23 set out by the Department for the award of Housing Tax Credits,
26-24 shall have been debarred from participation in federal housing
26-25 programs by the United States Department of Housing and Urban
26-26 Development, or shall have been found to have been in material
27-1 noncompliance with a Land Use Restriction Agreement on a
27-2 development funded by the Department. Evidence of repeated
27-3 violations of the Land Use Restriction Agreement shall constitute
27-4 sufficient basis for debarment from the Housing Tax Credit program.
27-5 (3) An individual or corporation debarred for
27-6 participation in the program may appeal their debarment to the
27-7 Board.
27-8 (b) Accessibility to people with disabilities.
27-9 (1) Any Development funded with Housing Tax Credits
27-10 shall comply with Section 504 of the Rehabilitation Act of 1973
27-11 design standards.
27-12 (c) Discrimination against persons receiving federal housing
27-13 assistance prohibited.
27-14 (1) The Department shall prohibit Housing Tax Credit
27-15 Developments from excluding an individual or family from:
27-16 (i) admission to any Development funded
27-17 under this program because the individual or family participates in
27-18 the housing choice voucher program under Section 8, United States
27-19 Housing Act of 1937 (42 U.S.C. Section 1437f), as amended; and
27-20 (ii) using a financial or minimum income
27-21 standard for an individual or family participating in the voucher
27-22 program described in Subdivision (i) that requires the individual
27-23 or family to have a monthly income of more than two and one-half
27-24 (2-1/2) times the individual's or family's share of the total
27-25 monthly rent payable to the owner of the Housing Tax Credit Unit.
27-26 (d) Coordination with state agency for Rural Area
28-1 development. The Department shall jointly administer with the
28-2 state Rural Development Agency that portion of the Housing Tax
28-3 Credit program Set-Aside for Rural Areas.
28-4 (1) The purpose of this joint administration shall be
28-5 to assure maximum utilization and optimum geographic distribution
28-6 of Housing Tax Credits in Rural Areas, provide for sharing of
28-7 information, efficient procedures, and fulfillment of Development
28-8 compliance requirements in Rural Areas of the state.
28-9 (2) The Rural Development Agency shall participate in
28-10 development of all scoring and underwriting criteria applied to
28-11 Applications within any Housing Tax Credit Set-Aside for Rural
28-12 Areas. The Rural Development Agency shall approve all scoring and
28-13 underwriting criteria developed by the Department for Housing Tax
28-14 Credit Applications within any Housing Tax Credit Set-Aside for
28-15 Rural Areas.
28-16 (3) The Rural Development Agency shall participate
28-17 jointly with the Department in the review and scoring of
28-18 Applications made under any Housing Tax Credit Set-Aside for Rural
28-19 Areas.
28-20 (4) The Department shall fund and jointly carry out
28-21 with the Rural Development Agency outreach, training and Rural Area
28-22 capacity building efforts as directed by the Rural Development
28-23 Agency to ensure that the Housing Tax Credit Set-Aside for Rural
28-24 Areas receives a sufficient volume of qualifying Applications.
28-25 (5) To maximize the utilization of appropriate housing
28-26 resources to meet the housing needs of different regions of the
29-1 state the Department and the Rural Development Agency shall jointly
29-2 adjust the regional allocation of tax credits provided under
29-3 Section 2306.111 in order to offset for the under and over
29-4 utilization of multifamily private activity bonds and other housing
29-5 resources between different regions of the state.
29-6 (6) The Department shall reimburse the Rural
29-7 Development Agency from Housing Tax Credit Application fees the
29-8 Department collects for costs that the Rural Development Agency
29-9 incurs in carrying out these functions.
29-10 SECTION 2. This Act takes effect immediately if it receives
29-11 a vote of two-thirds of all the members elected to each house, as
29-12 provided by Section 39, Article III, Texas Constitution. If this
29-13 Act does not receive the vote necessary for immediate effect, this
29-14 Act takes effect September 1, 2001.