| (a) Purpose and Applicability. The purpose of this
rule is to provide the procedures used by the Department to comply
with Tex. Gov't Code §§2306.057, and 2306.6713 which require
the Compliance Division to assess the compliance history of the Applicant
and any Affiliate, the compliance issues associated with the proposed
or existing Development, and provide such assessment to the Board.
This rule also ensures Department compliance with 2 CFR §200.331(b)
and (c) and Texas Grant Management Standards (TxGMS), where applicable.
(b) Definitions. The following definitions apply only
as used in this subchapter. Other capitalized terms used in this section
have the meaning assigned in the specific chapters and rules of this
title that govern the program associated with the request, or assigned
by federal or state laws.
(1) Actively Monitored Development--A Development that
within the last three years has been monitored by the Department,
either through a NSPIRE inspection or prior onsite monitoring inspection
other than NSPIRE, an onsite or desk file monitoring review, an Affirmative
Marketing Plan review, or a Written Policies and Procedures Review.
NSPIRE inspections include inspections completed by Department staff,
Department contractors and inspectors from the Real Estate Assessment
Center through federal alignment efforts.
(2) Affiliate--Persons are Affiliates of each other
or are "affiliated" if they are under common Control by each other
or by one or more third parties. "Control" is as defined in §11.1
of this title (relating to General items relating to Pre-Application,
Definitions, Threshold Requirements and Competitive Scoring). For
Applications for Multifamily Direct Grants/Loans and 811 PRA, or for
Ownership Transfers of Multifamily Properties containing Multifamily
Direct Grants/Loans or 811 PRA, for purposes of assurance that the
Affiliate is not on the Federal Suspended or Debarred Listing, Affiliate
is also defined as required by 2 CFR Part 180 and 2 CFR Part 2424.
(3) Applicant--In addition to the definition of applicant
in §11.1 of this title, in this subchapter, the term applicant
includes Persons requesting approval to acquire a Department monitored
Development.
(4) Combined Portfolio--Actively Monitored Developments
within the Control of Persons affiliated with the Application as identified
by the Previous Participation Review and as limited by subsection
(c) of this section.
(5) Corrective Action Period--The timeframe during
which an Owner may correct an Event of Noncompliance, as permitted
in §10.602 or §10.803 of this title (relating to Notice
to Owners and Corrective Action Periods and Compliance and Events
of Noncompliance, respectively), including any permitted extension
or deficiency period.
(6) Events of Noncompliance--Any event for which an
Actively Monitored Development may be found to be in noncompliance
for monitoring purposes as further provided for in §10.803 of
this title or in the table provided at §10.625 of this title
(relating to Events of Noncompliance).
(7) Monitoring Event--An onsite or desk monitoring
review, an NSPIRE inspection, prior onsite monitoring inspection other
than NSPIRE, the submission of the Annual Owner's Compliance Report,
Final Construction Inspection, a Written Policies and Procedures Review,
or any other instance when the Department's Compliance Division or
other reviewing area provides written notice to an Owner or Contact
Person requesting a response by a certain date. This would include,
but not be limited to, responding to a tenant complaint.
(8) National Standards for the Physical Inspection
of Real Estate (NSPIRE)--As developed by the Real Estate Assessment
Center of HUD.
(9) Person--"Person" is as defined in 10 TAC Chapter
11 (relating Qualified Allocation Plan (QAP)). For Applications for
Multifamily Direct Grants/Loans and 811 PRA, or for Ownership Transfers
of Multifamily Properties containing Multifamily Direct Grants/Loans
or 811 PRA, for purposes of assurance that the Applicant or Affiliate
is not on the Federal Suspended or Debarred Listing, Person is also
defined and includes Principal as required by 2 CFR Part 180 and 2
CFR Part 2424.
(10) Single Audit--As used in this rule, the term relates
specifically to an audit required by 2 CFR §200.501 or the Texas
Single Audit Circular.
(c) Items Not Considered. When conducting a previous
participation review the items in paragraphs (1) - (10) of this subsection
will not be taken into consideration:
(1) Events of Noncompliance, Findings, Concerns, and
Deficiencies (as described in 10 TAC §6.2, 10 TAC §7.2,
10 TAC §10.625, 10 TAC §10.803 and 10 TAC §20.3 or
by Contract) that were corrected over three years from the date the
Event is closed;
(2) Events of Noncompliance with an "out of compliance
date" prior to the Applicant's period of Control if the event(s) is
currently corrected;
(3) Events of Noncompliance with an "out of compliance
date" prior to the Applicant's period of Control if the event(s) is
currently uncorrected and the Applicant has had Control for less than
one year, or if the Owner is still within the timeframe of a Department-approved
corrective action from the Department's Enforcement Committee;
(4) The Event of Noncompliance "Failure to provide
Fair Housing Disclosure notice";
(5) The Event of Noncompliance "Program Unit not leased
to Low income Household" sometimes referred to as "Household Income
above income limit upon initial Occupancy" for units at Developments
participating in U.S. Department of Housing and Urban Development
programs (or used as HOME Match) or U.S. Department of Agriculture,
if the household resided in the unit prior to an allocation of Department
resources and Federal Regulations prevent the Owner from correcting
the issue, provided that the household is below the program's upper
income limit and otherwise qualifies for the Unit;
(6) The Event of Noncompliance "Casualty loss" if the
restoration period has not expired;
(7) Events of Noncompliance that the Applicant believes
can never be corrected and the Department agrees in writing that such
item should not be considered;
(8) Events of Noncompliance corrected within their
Corrective Action Period;
(9) Events of failure to respond within the Corrective
Action Period which have been fully corrected prior to January 1,
2019, will not be taken into consideration under subsection (e)(2)(C)
and (3)(C) of this section;
(10) Events of Noncompliance precluded from consideration
by Tex. Gov't Code §2306.6719(e); and
(11) Except for Applications for Multifamily Direct
Grants/Loans and 811 PRA, or for Ownership Transfers of Multifamily
Properties containing Multifamily Direct Grants/Loans or 811 PRA,
Events of Noncompliance associated with a Development that has submitted
documentation, using the appropriate Department form, that the responsibility
for the Development's compliance has been delegated to another participant
in the project (defined as a member of the Development Team), and
the Applicant is not in Control of the Development with Events of
Noncompliance for purposes of management and compliance. The term
"Combined Portfolio" used in this section does not include those properties
with such documentation. The Department may require additional information
to support the Control Form including but not limited to partnership
agreements or other legal documents.
(d) Applicant Process. Persons affiliated with an Application
or an Ownership Transfer request must complete the Department's Uniform
Previous Participation Review Form and respond timely to staff inquiries
regarding apparent errors or omissions, but for Applications no later
than the Administrative Deficiency deadline. For an Ownership Transfer
request, a recommendation will be delayed until the required forms
or responsive information is provided.
(e) Determination of Compliance Status. Through a review
of the form, Department records, and the compliance history of the
Affiliated multifamily Developments, staff will determine the applicable
category for the Application or Ownership Transfer request using the
criteria in paragraphs (1) - (3) of this subsection. Combined Portfolios
will not be designated as a Category 3 if both Applicants are considered
a Category 2 when evaluated separately. For example, if each Applicant
is a Category 2 and their Combined Portfolio is a Category 3, the
Application will be considered a Category 2.
(1) Category 1. An Application will be considered a
Category 1 if the Actively Monitored Developments in the Combined
Portfolio have no issues that are currently uncorrected, all Monitoring
Events were responded to during the Corrective Action Period, and
the Application does not meet any of the criteria of Category 2 or
3.
(2) Category 2. An Application will be considered a
Category 2 if any one or more of the following criteria are met:
Cont'd... |
