| (a) 10% Test (Competitive HTC Only). No later than
July 1 of the year following the submission of the Carryover Allocation
Agreement or as otherwise specified in the applicable year's Qualified
Allocation Plan, documentation must be submitted to the Department
verifying that the Development Owner has expended more than 10% of
the Development Owner's reasonably expected basis, pursuant to §42(h)(1)(E)(i)
and (ii) of the Code and Treasury Regulations, 26 CFR §1.42-6.
The Development Owner must submit, in the form prescribed by the Department,
documentation evidencing paragraphs (1) - (7) of this subsection,
along with all information outlined in the Post Award Activities Manual.
Satisfaction of the 10% Test will be contingent upon the submission
of the items described in paragraphs (1) - (7) of this subsection
as well as all other conditions placed upon the Application in the
Commitment. Requests for an extension will be reviewed on a case by
case basis as addressed in §10.405(c) of this subchapter and §11.2
of this title, as applicable, and a point deduction evaluation will
be completed in accordance with Tex. Gov't Code §2306.6710(b)(2)
and §11.9(g) of this title. Documentation to be submitted for
the 10% Test includes:
(1) An Independent Accountant's Report and Taxpayer's
Basis Schedule form. The report must be prepared on the accounting
firm's letterhead and addressed to the Development Owner or an Affiliate
of the Development Owner. The Independent Accountant's Report and
Taxpayers Basis Schedule form must be signed by the Development Owner.
If, at the time the accountant is reviewing and preparing their report,
the accountant has concluded that the taxpayer's reasonably expected
basis is different from the amount reflected in the Carryover Allocation
agreement, then the accountant's report should reflect the taxpayer's
reasonably expected basis as of the time the report is being prepared;
(2) Any conditions of the Commitment or Real Estate
Analysis underwriting report due at the time of 10% Test submission;
(3) Evidence that the Development Owner has purchased,
transferred, leased, or otherwise has ownership of the Development
Site and a current title policy. The Development Site must be identical
to the Development Site that was submitted at the time of Application
submission. For purposes of this paragraph, any changes to the Development
Site acreage between Application and 10% Test must be addressed by
written explanation or, as appropriate, in accordance with §10.405
of this subchapter (relating to Amendments and Extensions);
(4) A current survey or plat of the Development Site,
prepared and certified by a duly licensed Texas Registered Professional
Land Surveyor. The survey or plat must clearly delineate the flood
plain boundary lines and show all easements and encroachments;
(5) For New Construction, Reconstruction, and Adaptive
Reuse Developments, a certification from a Third Party civil engineer
or architect stating that all necessary utilities will be available
at the Development Site and that there are no easements, licenses,
royalties, or other conditions on or affecting the Development that
would materially or adversely impact the ability to acquire, develop,
and operate as set forth in the Application. Copies of supporting
documents may be required by the Department;
(6) For the Development Owner and on-site or regional
property manager, training certificate(s) from a Department approved
"property owner and manager Fair Housing trainer" showing that the
Development Owner and on-site or regional property manager attended
and passed at least five hours of Fair Housing training. For architects
and engineers, training certificate(s) from a Department approved
"architect and engineer Fair Housing trainer" showing that the lead
architect or engineer responsible for certifying compliance with the
Department's accessibility and construction standards has attended
and passed at least five hours of Fair Housing training. Certifications
required under this paragraph must not be older than two years from
the date of submission of the 10% Test Documentation, and must verify
that all parts or phases of the offered training have been completed;
two certificates supplied for the same part or phase of an offered
training will not be counted towards the five hour required minimum,
even if they were attended on different dates; and
(7) A Certification from the lender and syndicator
identifying all known Guarantors. If identified Guarantors have changed
from the Guarantors or Principals identified at the time of Application,
a non-material amendment may be required in accordance with §10.405
of this subchapter (relating to Amendments and Extensions), and the
new Guarantors or Principals must be reviewed in accordance with Chapter
1, Subchapter C of this title (relating to Previous Participation
and Executive Award Review and Advisory Committee).
(8) Evidence of submission of the CMTS Filing Agreement
pursuant to §10.607(a) of this title (relating to Reporting Requirements).
(b) Construction Status Report (All Multifamily Developments).
All multifamily Developments must submit a construction status report.
Construction status reports shall be due by the tenth day of the month
following each reporting quarter's end (January, April, July, and
October) and continue on a quarterly basis until the entire Development
is complete as evidenced by one of the following: Certificates of
occupancy for each building, the Architect's Certificate(s) of Substantial
Completion (AIA Document G704 or equivalent form) for the entire Development,
the final Application and Certificate for Payment (AIA Document G702
and G703), or an equivalent form approved for submission by the construction
lender and/or investor. For Competitive Housing Tax Credit Developments,
the initial report must be submitted no later than October 10th following
the year of award (this includes Developments funded with HTC and
TDHCA Multifamily Direct Loans), and for Developments awarded under
the Department's Multifamily Direct Loan programs only, the initial
report must be submitted 90 calendar days after loan closing. For
Tax Exempt Bond Developments, the initial construction status report
must be submitted as part of the Post Bond Closing Documentation due
no later than 60 calendar days following closing on the bonds. The
initial report for all multifamily Developments shall consist of the
items identified in paragraphs (1) - (6) of this subsection, unless
stated otherwise. All subsequent reports shall contain items identified
in paragraphs (4) - (6) of this paragraph and must include any changes
or amendments to items in paragraphs (1) - (3) if applicable:
(1) The executed partnership agreement with the investor
or, for Developments receiving an award only from the Department's
Direct Loan Program, other documents setting forth the legal structure
and ownership. If identified Guarantors or Principals of a Guarantor
entity were not already identified as a Principal of the Owner, Developer,
or Guarantor at the time of Application, a non-material amendment
must be requested in accordance with §10.405 of this subchapter,
and the new Guarantors and all of its Principals, as applicable, must
be reviewed in accordance with Chapter 1, Subchapter C of this title
(relating to Previous Participation and Executive Award Review and
Advisory Committee);
(2) The executed construction contract for the General
Contractor, prime subcontractor(s) and Affiliates or Related Party
subcontractor(s);
(3) The construction loan agreement. If the loan has
not closed, the anticipated closing date must be provided and, upon
closing, the agreement must be provided to the Department;
(4) The most recent Application and Certificate for
Payment (AIA Document G702 and G703) certified by the Architect of
Record (or equivalent form approved for submission by the construction
lender and/or investor) for the General Contractor, prime subcontractor(s)
and Affiliates or Related Party subcontractor(s);
(5) All Third Party construction inspection reports
not previously submitted. If the lender and/or investor does not require
third party construction inspection reports, the Development Owner
must hire a third party inspector to perform these inspections on
a quarterly basis and submit the reports to the Department. Third
Party construction inspection reports must include, at a minimum,
the date construction started (initial submission only), a discussion
of site conditions as of the date of the site visit, current photographs
of the construction site and exterior and interior of buildings, an
estimated percentage of construction completion as of the date of
the site visit, identification of construction delays and other relevant
progress issues, if any, and the anticipated construction completion
date; and
(6) Minority Owned Business Report (HTC only) showing
the attempt to ensure that at least 30% of the construction and management
businesses with which the Applicant contracts in connection with the
Development are Minority Owned Businesses as required and further
described in Tex. Gov't Code §2306.6734.
(c) LURA Origination.
(1) The Development Owner must request origination
of the HTC LURA as directed in the Post Award Activities Manual. The
Department will draft a LURA for the Development Owner that will impose
the income and rent restrictions identified in the Development's final
underwriting report and other representations made in the Application,
including but not limited to specific commitments to provide tenant
services, to lease to Persons with Disabilities, and/or to provide
specific amenities. After origination, the Department executed LURA
and all exhibits and addendums will be sent to the Development Owner
to execute and record in the real property records for the county
in which the Development is located. A copy of the fully executed,
recorded LURA must be returned to the Department no later than the
end of the first year of the Credit Period. In general, no Housing
Tax Credits are allowed to be issued for a building unless there is
a properly executed and recorded LURA in effect at the end of the
first year of the Credit Period. Nothing in this section negates a
Development Owner's responsibility for full compliance with §42(h)(6)
of the Code. The Department will not issue IRS Form(s) 8609 until
it receives a copy of the fully executed, recorded LURA.
(2) LURAs for Direct Loan awardees will be prepared
by the Department's Legal Division and executed at loan closing.
(d) Cost Certification (Competitive and Non-Competitive
HTC, and related activities only). The Department conducts a feasibility
analysis in accordance with §42(m)(2)(C)(i)(III) of the Code
and Chapter 11, Subchapter D of this title (relating to Underwriting
and Loan Policy) to make a final determination on the allocation of
Housing Tax Credits. For Non-Competitive HTC Developments, the amount
of tax credits reflected in the IRS Form(s) 8609 may be greater or
less than the amount set forth in the Determination Notice based upon
the Department's determination as of each building's placement in
service. Any increase of tax credits will only be permitted if it
is determined necessary by the Department, as required by §42(m)(2)(D)
of the Code through the submission of the Cost Certification package.
Increases to the amount of tax credits that exceed 120% of the amount
of credits reflected in the Determination Notice must be approved
by the Board. Increases to the amount of tax credits that do not exceed
120% of the amount of credits reflected in the Determination Notice
may be approved administratively by the Executive Director or designee.
All credit increases are subject to the Tax-Exempt Bond Credit Increase
Request Fee as described in Chapter 11, Subchapter E of this Part
(relating to Fee Schedule, Appeals, and other Provisions). The requirements
for cost certification include those identified in paragraphs (1)
- (3) of this subsection.
(1) Development Owners must file cost certification
documentation no later than January 15 following the first year of
the Credit Period, as defined in §42(f)(1) of the Code.
(2) The Department will evaluate the cost certification
documentation and notify the Development Owner of any additional required
documentation needed to complete the review. The Department reserves
the right to request additional documents or certifications as it
deems necessary or useful in the determination of the Development's
eligibility for a final Housing Tax Credit allocation amount. Any
communication issued to the Development Owner pertaining to the cost
certification documentation may also be sent to the syndicator.
(3) IRS Form(s) 8609 will not be issued until the conditions
as stated in subparagraphs (A) - (G) of this paragraph have been met.
The Development Owner has:
(A) Provided evidence that all buildings in the Development
have been placed in service by:
(i) December 31 of the year the Commitment was issued;
(ii) December 31 of the second year following the year
the Carryover Allocation Agreement was executed; or
(iii) the approved Placed in Service deadline;
(B) Provided a complete final cost certification package
in the format prescribed by the Department. As used herein, a complete
final cost certification package means a package that meets all of
the Department's criteria with all required information and exhibits
listed in clauses (i) - (xxxiv) of this subparagraph, and pursuant
to the Post Award Activities Manual. If any item on this list is determined
to be unclear, deficient, or inconsistent with the cost certification
review completed by the Department, a Request for Information (RFI)
will be sent to the Development Owner. Requirements include:
Cont'd... |
