| (E) Statewide Collapse (Step 5). Any credits remaining
after the Rural Collapse, including those in any subregion in the
State, will be combined into one "pool." The funds will be used to
award the highest scoring Application (not selected or eliminated
in a prior step) in the most underserved subregion in the State compared
to the amount originally made available in each subregion. In Uniform
State Service Regions containing a county with a population that exceeds
one million, the Board may not allocate more than the maximum percentage
of credits available as calculated through the Regional Allocation
Formula (RAF) for Elderly Developments, within an Urban subregion
of that service region. Therefore, certain Applications for Elderly
Developments may be excluded from receiving an award from the collapse.
The Department will, for each such Urban subregion, calculate the
maximum percentage in accordance with Tex. Gov't Code §2306.6711(h)
and will publish such percentages on its website. This process will
continue until the funds remaining are insufficient to award the next
highest scoring Application that is not rendered ineligible through
application of the elderly cap in the next most underserved subregion.
At least seven calendar days prior to the July Board meeting of the
Department at which final awards of credits are authorized, the Department
will post on its website the most current 2023 State of Texas Competitive
Housing Tax Credit Ceiling Accounting Summary which includes the Regional
Allocation Formula percentages including the maximum funding request/award
limits, the Elderly Development maximum percentages and limits of
credits available, and the methodology used for the determination
of the award determinations within the State Collapse. In the event
that more than one subregion is underserved by the same degree, the
priorities described in clauses (i) and (ii) of this subparagraph
will be used to select the next most underserved subregion:
(i) the subregion with no recommended At-Risk Applications
from the same Application Round; and
(ii) the subregion that was the most underserved during
the Application Round during the year immediately preceding the current
Application Round.
(F) Contingent Qualified Nonprofit Set-aside Step (Step
6). If an insufficient number of Applications participating in the
Nonprofit Set-Aside are selected after implementing the criteria described
in subparagraphs (A) - (E) of this paragraph to meet the requirements
of the 10% Nonprofit Set-Aside, action must be taken to modify the
criteria described in subparagraphs (A) - (E) of this paragraph to
ensure the Set-aside requirements are met. Therefore, the criteria
described in subparagraphs (C) - (E) of this paragraph will be repeated
after selection of the highest scoring Application(s) under the Nonprofit
Set-aside statewide are selected to meet the minimum requirements
of the Nonprofit Set- Aside. This step may cause some lower scoring
Applications in a subregion to be selected instead of a higher scoring
Application not participating in the Nonprofit Set-aside.
(4) Waiting List. The Applications that do not receive
an award by July 31 and remain active and eligible will be recommended
for placement on the waiting list. The waiting list is not static.
The allocation process will be used in determining the next Application
to award. If credits are returned through any process, those credits
will first be made available in the set-aside or subregion from which
they were originally awarded. The first Application on the waiting
list is in part contingent on the nature of the credits that became
available for award. The Department shall hold all credit available
after the late-July awards until September 30 in order to collect
credit that may become available when tax credit Commitments are submitted.
Credit confirmed to be available, as of September 30, may be awarded
to Applications on the waiting list unless insufficient credits are
available to fund the next Application on the waiting list. For credit
returned after September 30, awards from the waiting list will be
made when the remaining balance is sufficient to award the next Application
as may be amended on the waiting list based on the date(s) of returned
credit. Notwithstanding the foregoing, if decisions related to any
returns or rescissions of tax credits are under appeal or are otherwise
contested, the Department may delay awards until resolution of such
issues. The Department will evaluate all waiting list awards for compliance
with requested Set-asides. This may cause some lower scoring Applications
to be selected instead of a higher scoring Application. Where sufficient
credit becomes available to award an Application on the waiting list
later in the calendar year, staff may allow flexibility in meeting
the Carryover Allocation submission deadline and changes to the Application
as necessary to ensure to the extent possible that available resources
are allocated by December 31. (§2306.6710(a) - (f); §2306.111).
(5) Credit Returns Resulting from Force Majeure Events.
In the event that the Department receives a return of Competitive
HTCs during the current program year from an Application that received
a Competitive Housing Tax Credit award during any of the preceding
three years, such returned credit will, if the Board determines that
all of the requirements of this paragraph are met to its satisfaction,
be allocated separately from the current year's tax credit allocation,
and not be subject to the requirements of paragraph (2) of this section.
The Board determination must indicate the year of the Multifamily
Rules to be applied to the Development. The Department's Governing
Board may impose a deadline that is earlier than the Placed in Service
Deadline and may impose conditions that were not placed on the original
allocation. Requests to allocate returned credit separately where
all of the requirements of this paragraph have not been met or requests
for waivers of any part of this paragraph will not be considered.
For purposes of this paragraph, credits returned after September 30
of the preceding program year may be considered to have been returned
on January 1 of the current year in accordance with the treatment
described in §(b)(2)(C)(iii) of Treasury Regulation 1.42-14.
The Board may approve the execution of a current program year Carryover
Agreement regarding the returned credits with the Development Owner
that returned such credits only if:
(A) The credits were returned as a result of "Force
Majeure" events that occurred before issuance of Forms 8609. Force
Majeure events are the following sudden and unforeseen circumstances
outside the control of the Development Owner: acts of God such as
fire, tornado, flooding, significant and unusual rainfall or subfreezing
temperatures, or loss of access to necessary water or utilities as
a direct result of significant weather events; explosion; vandalism;
orders or acts of military authority; unrelated party litigation;
changes in law, rules, or regulations; national emergency or insurrection;
riot; acts of terrorism; supplier failures; or materials or labor
shortages. If a Force Majeure event is also a presidentially declared
disaster, the Department may treat the matter under the applicable
federal provisions. Force Majeure events must make construction activity
impossible or materially impede its progress;
(B) Acts or events caused by the negligent or willful
act or omission of the Development Owner, Affiliate or a Related Party
shall under no circumstance be considered to be caused by Force Majeure.
In order for rainfall, material shortages, or labor shortages to constitute
Force Majeure, the Development Owner must clearly explain and document
how such events could not have been reasonably foreseen and mitigated
through appropriate planning and risk management. Staff may use Construction
Status reports for the subject or other Developments in conducting
their review and forming a recommendation to the Board;
(C) A Development Owner claiming Force Majeure must
provide evidence of the type of event, as described in subparagraph
(A) of this paragraph, when the event occurred, and that the loss
was a direct result of the event;
(D) The Development Owner must prove that reasonable
steps were taken to minimize or mitigate any delay or damages, that
the Development Owner substantially fulfilled all obligations not
impeded by the event, including timely closing of all financing and
start of construction, that the Development and Development Owner
was properly insured and that the Department was timely notified of
the likelihood or actual occurrence of an event described in subparagraph
(A) of this paragraph;
(E) The event prevents the Development Owner from meeting
the placement in service requirements of the original allocation;
(F) The requested current year Carryover Agreement
allocates the same amount of credit as that which was returned; and
(G) The Department's Real Estate Analysis Division
determines that the Development continues to be financially feasible
in accordance with the Department's underwriting rules after taking
into account any insurance proceeds related to the event.
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