| (a) Rent or Utility Allowance Violations of the maximum
allowable limit for the HTC program. Under the HTC program, the amount
of rent paid by the household plus an allowance for utilities, plus
any mandatory fees, cannot exceed the maximum applicable limit (as
determined by the minimum set-aside elected by the Owner) published
by the Department. If it is determined that an HTC Development, during
the Compliance Period, collected rent in excess of the rent limit
established by the minimum set-aside, the Owner must correct the violation
by reducing the rent charged. The Department will report the violation
as corrected on January 1st of the year following the violation. The
refunding of overcharged rent does not avoid the disallowance of the
credit by the IRS.
(b) Rent or Utility Allowance Violations of additional
rent restrictions under the HTC program. If Owners agreed to additional
rent and occupancy restrictions, the Department will monitor to confirm
compliance. If noncompliance is discovered, the Department will require
the Owner to restore compliance by refunding (not a credit to amounts
owed the Development) any excess rents to a sufficient number of households
to meet the set aside.
(c) Rent Violations of the maximum allowable limit
due to application fees or application deposits not promptly converted
into a security deposit under the HTC program. Under the HTC program,
Owners may not charge tenants any overhead costs as part of the application
fee. Owners must only charge the actual cost for application fees
as supported by invoices from the screening company the Owner uses.
(1) The amount of time Development staff spends checking
an applicant's income, credit history, and landlord references may
be included in the Development's application fee. Development Owners
may add up to $5.50 per Unit for their other out of pocket costs for
processing an application without providing documentation. Example
622(2): A Development's out of pocket cost for processing an application
is $17.00 per adult. The property may charge $22.50 for the first
adult and $17.00 for each additional adult.
(2) Documentation of Development costs for application
processing or screening fees must be made available during onsite
visits or upon request. The Department will review application fee
documentation during onsite monitoring visits. If the Development
pays a flat monthly fee to a third party for credit or criminal background
checks, Owners must calculate the appropriate fee to be charged applicants
by using the total number of applications processed, not just approved
applications. Developments that pay a flat monthly fee must determine
the appropriate application fee at least annually based on the prior
year's activity. If the Department determines from a review of the
documentation that the Owner has overcharged residents an application
fee or collected impermissible deposits, the noncompliance will be
reported to the IRS on Form 8823 under the category "gross rent(s)
exceeds tax credit limits." The noncompliance will be corrected on
January 1st of the next year.
(3) Owners are not required to refund the overcharged
fee amount. To correct the issue, Owners must reduce the application
fee for prospective applicants. Once the fee is reduced for prospective
applicants, the Department will report the affected back in compliance
on January 1st of the year after they were overcharged the application
fee or an impermissible deposit.
(4) Throughout the Affordability Period, Owners may
not charge a deposit or any type of fee (other than an application
fee) for a household to be placed on a waiting list.
(d) Rent or Utility Allowance Violations on Non-HTC
Developments, HTC Developments after the Compliance Period, and foreclosed
HTC properties for three years after foreclosure. If it is determined
that the Development collected rent in excess of the allowable limit,
the Department will require the Owner to refund (not a credit to amounts
owed the Development) to the affected residents the amount of rent
that was overcharged.
(e) Trust Account to be established. If the Owner is
required to refund rent under subsection (b) or (d) of this section
and cannot locate the resident, the excess monies must be deposited
into a trust account for the tenant. The account must remain open
for the shorter of a four year period, or until all funds are claimed.
If funds are not claimed after the four year period, the unclaimed
funds must be remitted to the Texas Comptroller of Public Accounts
Unclaimed Property Holder Reporting Section to be disbursed as required
by Texas unclaimed property statutes.
(f) Rent Adjustments for HOME and TCAP RF Developments:
(1) 100% HOME/TCAP-RF assisted Developments. If a household's
income exceeds 80% at recertification, the Owner must charge rent
equal to 30% of the household's adjusted income;
(2) HOME/TCAP-RF Developments with any Market Rate
units. If a household's income exceeds 80% at recertification, the
Owner must charge rent equal to the lesser of 30% of the household's
adjusted income or the comparable Market rent; and
(3) HOME/TCAP-RF Developments layered with other Department
affordable housing programs. If a household's income exceeds 80% at
recertification, the owner must charge rent equal to the lesser of
30% of the household's adjusted income or the rent allowable under
the other Program.
(g) Special conditions for NSP Developments. To determine
if a Unit is rent restricted, the amount of rent paid by the household,
plus an allowance for utilities, plus any rental assistance payment
must be less than the applicable limit.
(h) Employee Occupied Units (HTC and THTF Developments).
IRS Revenue Rulings 92-61, 2004-82 and Chief Counsel Advice Memorandum
POSTN-111812-14 provide guidance on employee occupied units. In general,
employee occupied units are considered facilities reasonably required
for the project(s) and not residential rental units. Since the building's
applicable fraction is calculated using the residential rental units/space
in a building, employee occupied units are taken out of both the numerator
and the denominator.
(i) Owners of HOME, NSP, TCAP-RF, and NHTF must comply
with §10.403 of this chapter which requires annual rent review
and approval by the Department's Asset Management Division. Failure
to do so will result in an Event of Noncompliance.
(j) Owners are not permitted to increase the tenant
portion of rent more than once during a 12 month period, even if there
are increases in rent limits or decreases in utility allowances, unless
the Unit or household is governed by a federal housing program that
requires such changes.
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