| (a) Funding Availability. Direct Loan funds may be
made available through a NOFA or other similar governing document
that includes the method for applying for funds and funding requirements.
(b) Oversourced Developments. A Direct Loan request
may be reduced or not recommended if the Department's Underwriting
Report concludes the Development does not need all or part of the
MFDL funds requested in the Application because it is oversourced,
and for which a timely appeal has been completed, as provided in 10
TAC §1.7 of this title (relating to Appeals Process) or 10 TAC
§11.902 of this title (relating to Appeals Process for Competitive
HTC Applications), as applicable.
(c) Funding Sources. Direct Loan funds are composed
of annual HOME and National Housing Trust Fund (NHTF) allocations
from HUD and associated Program Income, repayment of TCAP or TCAP
RF loans, HOME Program Income, NSP Program Income (NSP PI or NSP),
and any other similarly encumbered funding that may become available,
except as otherwise noted in this chapter. Similar funds include any
funds that are identified by the Board to be loaned or granted for
the development of multifamily property and are not governed by another
chapter in this title, with the exception of State funds appropriated
for a specific purpose.
(d) Eligible and Ineligible Activities.
(1) Eligible Activities. Direct Loan funds may be used
for the predevelopment, acquisition, New Construction, reconstruction,
Adaptive Reuse, rehabilitation, or preservation of affordable housing
with suitable amenities, including real property acquisition, site
improvements, conversion, demolition, or operating cost reserves,
subject to applicable HUD guidance. Other expenses, such as financing
costs, relocation expenses of any displaced persons, families, businesses,
or organizations may be included. MFDL funds may be used to assist
Developments previously awarded by the Department when approved by
specific action of the Board. Eligible Activities may have fund source
restrictions or may be restricted by a NOFA.
(2) Ineligible Activities. Direct Loan funds may not
be awarded to a Development:
(A) Layered with Housing Tax Credits that have elected
the income averaging election under Section 42(g)(1)(C) of the Internal
Revenue Code that have more than 15% of the Units designated as Market
Rate Units;
(B) In which the Applicant will not be directly leasing
Units to residents, except as specifically described in the NOFA;
(C) Applicants applying for HOME or NSP funds may not
commit any choice limiting activities as defined by HUD in 24 CFR
Part 58 prior to obtaining environmental clearance, and will be subject
to termination of the Direct Loan award if such action is undertaken.
For an Applicant applying for NHTF funds, choice limiting activities
prior to full execution of a Contract with the Department are not
prohibited, unless the Development also has sources requiring environmental
review under 24 CFR Part 50 or Part 58, but the eligibility of costs
associated with these activities will be impacted in keeping with
24 CFR §93.201(h) and all applicable federal regulations. Furthermore,
certain activities which prohibit environmental mitigation may cause
the Development to be ineligible and will cause the termination of
the Direct Loan award.
(e) Ineligible Costs. All costs associated with the
Development and known by the Applicant must be disclosed as part of
the Application. Other federal funds will be included in the Final
Direct Loan Eligible Costs located in Table 1 of the Direct Loan Calculator
as part of the required per-unit subsidy limit calculation. Costs
ineligible for reimbursement with Direct Loan funds in accordance
with 24 CFR Parts 91, 92, 93, and 570, and 2 CFR Part 200, as federally
required or identified in the NOFA, include but are not limited to:
(1) Offsite costs;
(2) Stored Materials;
(3) Site Amenities, such as swimming pools and decking,
landscaping, playgrounds, and athletic courts;
(4) The purchase of equipment required for construction;
(5) Furnishings and Furniture, Fixtures and Equipment
(FF&E) required for the Development;
(6) Detached Community Buildings;
(7) Carports and/or parking garages, unless attached
as a feature of the Unit;
(8) Commercial Space costs;
(9) Personal Property Taxes;
(10) TDHCA fees;
(11) Syndication and organizational costs;
(12) Reserve Accounts, except Initial Operating Deficit
Reserve Accounts;
(13) Delinquent fees, taxes, or charges;
(14) Costs incurred more than 24 months prior to the
effective date of the Direct Loan Contract, unless the Application
is awarded TCAP RF, and if specifically allowed by the Board;
(15) Costs that have been allocated to or paid by another
fund source (except for soft costs that are attributable to the entire
project as specifically identified in the applicable federal rule,
or for TCAP RF if specifically allowed by the NOFA), including but
not limited to, contingency, including soft cost contingency, and
general partner loans and advances;
(16) Deferred Developer Fee;
(17) Texas Bond Review Board (BRB) fees;
(18) Community Facility spaces that are not for the
exclusive use of tenants and their guests;
(19) The portion of soft costs that are allocated to
support ineligible hard costs;
(20) Other costs limited by Award or NOFA, or as established
by the Board;
(21) Interest on Construction Loans; and
(22) Acquisition that occurred before the Application
Acceptance Date and environmental clearance for HOME and NSP projects.
For NHTF, acquisition that occurred prior to Contract signing.
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