TITLE 10. COMMUNITY DEVELOPMENT

PART 1. TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS

CHAPTER 1. ADMINISTRATION

SUBCHAPTER A. GENERAL POLICIES AND PROCEDURES

10 TAC §1.3

The Texas Department of Housing and Community Affairs (the "Department") adopts new 10 TAC §1.3, concerning Sick Leave Pool, without changes to the text as published in the June 9, 2017, issue of the Texas Register (42 TexReg 2988), and will not be republished. The purpose of this adopted section is to establish a sick leave pool for use by the employees of the Department, appoint a pool administrator and establish that the pool shall be operated consistent with Texas Gov't Code Chapter 661.

FISCAL NOTE. Timothy K. Irvine, Executive Director, has determined that, for each year of the first five years the adopted rule will be in effect, enforcing or administering the adopted rule will assure that any voluntary pooling and use of donated sick leave by Department employees will be administered in accordance with statutory requirements, and does not have any foreseeable additional costs or resources for the state or local governments.

PUBLIC BENEFIT/COST NOTE. Mr. Irvine also has determined that, for each year of the first five years the adopted section will be in effect, the public benefit anticipated as a result of the adopted section will be more efficient operation of the Department employees' sick leave pool.

ADVERSE IMPACT ON SMALL OR MICRO-BUSINESSES. The Department estimates that there will be no affect on small or micro-businesses, as defined in Texas Gov't Code §2006.001.

No public comment was received.

STATUTORY AUTHORITY. The new section is adopted pursuant to Texas Gov't Code §661.002 which requires the Department's governing body to establish a sick leave pool program. The new section affects no other code, article, or statute.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 31, 2017.

TRD-201702830

Timothy K. Irvine

Executive Director

Texas Department of Housing and Community Affairs

Effective date: August 20, 2017

Proposal publication date: June 9, 2017

For further information, please call: (512) 475-4752


CHAPTER 25. COLONIA SELF-HELP CENTER PROGRAM RULE

10 TAC §§25.1 - 25.9

The Texas Department of Housing and Community Affairs (the "Department") adopts the repeal of 10 TAC §§25.1 - 25.9, concerning the Colonia Self-Help Center Program Rule without changes to the text as published in the May 12, 2017, issue of the Texas Register (42 TexReg 2508). The rule is adopted for repeal in connection with the adoption of new 10 TAC Chapter 25, concerning the Colonia Self-Help Center Program Rule, which was published concurrently in the May 12, 2017, issue of the Texas Register (42 TexReg 2509).

REASONED JUSTIFICATION. The repeal of 10 TAC Chapter 25 concerning the Colonia Self-Help Center Program Rule will allow for the concurrent adoption of new 10 TAC Chapter 25 concerning the Colonia Self-Help Center Program Rule.

No public comment was received.

STATUTORY AUTHORITY. The repeal is adopted pursuant to Tex. Gov't Code §2306.053, which authorizes the Department to adopt rules; §2306.582, which requires the Department to establish, operate, monitor and fund Colonia SHCs in El Paso, Hidalgo, Staff and Webb counties, and in Cameron County to serve Cameron and Willacy counties; and §2306.582, which authorizes the Department to open two additional Colonia SHCs in Maverick and Val Verde counties.

The repeal affects no other code, article or statute.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 31, 2017.

TRD-201702825

Timothy K. Irvine

Executive Director

Texas Department of Housing and Community Affairs

Effective date: August 20, 2017

Proposal publication date: May 12, 2017

For further information, please call: (512) 936-7800


10 TAC §§25.1 - 25.9

The Texas Department of Housing and Community Affairs (the "Department") adopts new §§25.1 - 25.9, concerning the Colonia Self-Help Center Program Rule. Section 25.2 and §25.5 are adopted with changes to the proposed text as published in the May 12, 2017, issue of the Texas Register (42 TexReg 2508) and will be republished. Sections 25.1, 25.3, 25.4 and 25.6 - 25.8 are adopted without changes. This new rule is being adopted concurrently with the repeal of existing 10 TAC §§25.1 - 25.9, concerning the Colonia Self-Help Center Program Rule.

REASONED JUSTIFICATION. The new rule clarifies definitions; incorporates applicability of 10 TAC 21 regarding Minimum Energy Efficiency requirements; eliminates the "Small Repair" activity; simplifies and clarifies funding limits for all activities; adds funding for properties in need of on-site sewage facilities or connection to potable water and waste water disposal; incorporates the requirements for an Affirmative Fair Housing Marketing Plan; revises lien requirements for income eligible households; and updates Administrative Thresholds.

SUMMARY OF PUBLIC COMMENT AND STAFF RECOMMENDATIONS. The public comment period was from May 12, 2017, through June 12, 2017. Comments were accepted in writing and via email, with comments received from: (1) Robb Stevenson of Equity Community Development Corporation.

§25.2 DEFINITIONS

COMMENT SUMMARY: Commenter 1 suggested clarification of the use of "otherwise" at the end of the definition of "Reconstruction".

STAFF RESPONSE: Staff agrees and has replaced "otherwise" with further clarification. The new definition (revision in italics) of "Reconstruction" is "(14) Reconstruction--The demolition and rebuilding a Single Family Housing Unit on the same lot in substantially the same manner. The number of housing units may not be increased; however, the number of rooms may be increased or decreased dependent on the number of family members living in the housing unit at the time of Application. Reconstruction of residential structures also permits replacing an existing substandard Manufactured Housing Unit with a new, site-built housing unit or a new ENERGY STAR Certified Manufactured Housing Unit."

§25.3. Eligible and Ineligible Activities.

COMMENT SUMMARY: Commenter 1 praised the Department for including "title-related services" in the description of eligible activities that may be undertaken by a Colonia Self-Help Center, because they are more difficult to resolve in the colonias than in other residential areas.

STAFF RESPONSE: The Department thanks the commenter for his support. No changes to this section of the rule will be made in response to this comment.

§25.5. Allocation and the Colonia Self-Help Center Application Requirements

COMMENT SUMMARY: Commenter 1 suggested expanding the types of inspectors that could evaluate program participants' existing on-site sewage facilities beyond "TCEQ-licensed installers" to include licensed engineers, TCEQ-designated representatives and TCEQ-licensed site evaluators.

STAFF RESPONSE: Staff agrees and has revised and generalized this rule. The new rule (revision in italics) is "(f)(7)(A) Prior to Department approval of Colonia Self-Help Center construction activity, the Colonia Self-Help Center must document that existing on-site sewage facilities (septic systems) have been inspected by a Texas Commission on Environmental Quality-authorized agent to determine if the system is in substantial compliance with Health & Safety Code, Chapter 366 and the rules adopted under that chapter..."

§25.7. Colonia Self-Help Center Contract Operation and Implementation

COMMENT SUMMARY: Commenter 1 stated that some Colonia Self-Help Centers may be reluctant to undertake the administrative tasks needed to facilitate the placing of a Department lien on the properties of households earning 50% area median family incomes or higher. This rule might steer the Centers to serve households below the 50% income threshold in order to reduce administrative tasks, which could unintentionally exclude households who still need the program. Commenter 1 suggested increasing the income threshold for placing liens from 50% to 60% of area median income, or raising the income threshold to 80% while providing up to $20,000 in assistance with no lien.

STAFF RESPONSE: The liens to be placed on households above 50% of area median income and higher are for loans that are deferred and forgivable over time, as long as the household lives in the assisted property as their principal residence. This is in line with the Department's other programs. As Colonia Self-Help Centers learn the title clearing and disclosure requirements associated with placing liens on properties, this will ultimately build the capacity of the Centers to assist colonia residents with accessing forms of main stream assistance, such as third party financing. The lien requirement also ensures that every participating household above 50% of area median income will have the opportunity to clear any deficiencies on their titles. Staff recommends no changes to this rule and that it remains as follows: "(g) New Construction, Reconstruction, or Rehabilitation Activity that is provided by the Colonia Self-Help Center Program to Households with annual incomes that are equal or exceed 50% of the area median family income shall have a recorded and enforceable lien placed on the property secured by a deferred Forgivable Loan not shorter than five (5) years or a repayable mortgage loan not to exceed thirty (30) years. The Department will be a lien holder."

STATUTORY AUTHORITY. The new rule is adopted pursuant to Tex. Gov't Code §2306.053, which authorizes the Department to adopt rules; §2306.582, which requires the Department to establish, operate, monitor and fund Colonia SHCs in El Paso, Hidalgo, Staff and Webb counties, and in Cameron County to serve Cameron and Willacy counties; and §2306.582, which authorizes the Department to open two additional Colonia SHCs in Maverick and Val Verde counties.

The new rule affects no other code, article or statute.

§25.2.Definitions.

The following words and terms, when used in this Chapter, shall have the following meanings unless the context or the Notice of Funding Availability (NOFA) indicates otherwise. Other definitions may be found in Chapter 2306 of the Tex. Gov't Code, Chapter 1 of this Title (relating to Administration), Chapter 2 of this Title (relating to Enforcement), Chapter 20 of this Title (relating to Single Family Programs Umbrella Rule), and Chapter 21 of this Title (relating to Minimum Energy Efficiency Requirements). Common definitions used under the CDBG Program are incorporated herein by reference.

(1) Beneficiary--A person or family benefiting from the Activities of a Colonia Self-Help Center Contract.

(2) Colonia Resident Advisory Committee ("C-RAC")--Advises the Department's Governing Board and evaluates the needs of Colonia residents, reviews programs and Activities that are proposed or operated through the Colonia Self-Help Centers to better serve the needs of Colonia residents.

(3) Colonia Self-Help Center Provider--An organization with which the Administrator has an executed Contract to administer Colonia Self-Help Center Activities.

(4) Community Action Agency--A political subdivision, combination of political subdivisions, or nonprofit organization that qualifies as an eligible entity under 42 U.S.C. §9902.

(5) Contract Budget--An exhibit in the Contract which specifies in detail the Contract funds by budget category, which is used in the Draw processes. The budget also includes all other funds involved that are necessary to complete the Performance Statement specifics of the Contract.

(6) Direct Delivery Costs--Soft costs related to and identified with a specific housing unit. Eligible Direct Delivery Costs include:

(A) Preparation of work write-ups, work specifications, and cost estimates;

(B) Legal fees, recording fees, architectural, engineering, or professional services required to prepare plans, drawings or specifications directly attributable to a particular housing unit;

(C) Home inspections, inspections for lead-based paint, asbestos, termites, and interim inspections; and

(D) Other costs as approved in writing by the Department.

(7) Housing Assistance Guidelines ("HAG")--The guidelines provided by the Unit of Local Government that outline the process and procedures used to administer the implementation of the Colonia Self-Help Center Program. These guidelines cannot conflict with state statute, program rules, regulations and/or contract requirements.

(8) Implementation Manual--A set of guidelines designed to be an implementation tool for the Administrator and Colonia Self-Help Center Providers that have been awarded Community Development Block Grant Funds and allows the Administrator to search for terms, regulations, procedures, forms and attachments.

(9) Income Eligible Families--

(A) Low-income families--families whose annual incomes do not exceed 80 percent of the median income of the area as determined by HUD Section 8 income limits adjusted for family size;

(B) Very low-income families--families whose annual incomes do not exceed 60 percent of the median family income for the area, as determined by HUD Section 8 income limits adjusted for family size; and

(C) Extremely low-income families--families whose annual incomes do not exceed 30 percent of the median family income for the area, as determined by HUD Section 8 income limits adjusted for family size.

(10) M Number--a several digit identification number, preceded by the letter "M" and assigned to colonias that have been identified by the Office of the Attorney General of Texas.

(11) New Construction--A housing unit that is built only by certified Community Housing Development Organizations ("CHDOs") or Community Based Development Organizations ("CBDOs") on a previously vacant lot that will be occupied by Income Eligible Families.

(12) Performance Statement--An exhibit in the Contract which specifies in detail the scope of work to be performed.

(13) Public Service Activities--Activities other than New Construction, Reconstruction, and Rehabilitation activities that are provided by a Colonia Self-Help Center to benefit Colonia residents. These include, but are not limited to, construction skills classes, solid waste removal, tool lending library, technology classes, home ownership classes and technology access.

(14) Reconstruction--The demolition and rebuilding a Single Family Housing Unit on the same lot in substantially the same manner. The number of housing units may not be increased; however, the number of rooms may be increased or decreased dependent on the number of family members living in the housing unit at the time of Application. Reconstruction of residential structures also permits replacing an existing substandard Manufactured Housing Unit with a new, site-built housing unit or a new ENERGY STAR Certified Manufactured Housing Unit."

(15) Rehabilitation--The improvement or modification of an existing single family housing residential unit through an alteration, addition, or enhancement on the same lot.

(16) Unit of General Local Government (UGLG)--A city, town, county, or other general purpose political subdivision of the state.

§25.5.Allocation and the Colonia Self-Help Center Application Requirements.

(a) The Department distributes Colonia Self-Help Center funds to UGLGs from the 2.5 percent set-aside of the annual CDBG allocation to the state of Texas.

(b) The Department shall allocate no more than $1 million per Colonia Self-Help Center award except as provided by this Chapter. If there are insufficient funds available from any specific program year to fully fund an Application, the awarded Administrator may accept the amount available at that time and wait for the remaining funds to be committed upon the Department's receipt of the CDBG set-aside allocation from the next program year.

(c) With a baseline award beginning at $500,000 (or a lesser amount as provided for in (b) of this Section), the Department will add an additional $100,000 for each expenditure threshold, as defined in §25.9 of this Chapter (relating to Expenditure Thresholds and Closeout Requirements), met on the current Colonia Self-Help Center Contract, and an additional $100,000 for an accepted Application submitted by the deadline. If an Administrator can demonstrate that any violation of an Expenditure Threshold was beyond the control of the Administrator, it may request of the Board that an individual violation be waived for the purpose of future funding. The Governing Board, in its discretion and within the limits of federal and state law, may waive any one or more of the expenditure threshold requirements if it finds the waiver is appropriate to fulfill the purposes or policies of the Tex. Gov't Code, or for other good cause as determined by the Board.

(d) The Administrator shall submit its Application no later than three (3) months before the expiration of its current Contract, or when ninety (90) percent of the funds under the current Contract have been expended, whichever comes first.

(e) Application reviews are conducted on a first-come, first-served basis until all Colonia Self-Help Center funds for the current program year and deobligated Colonia Self-Help Center funds are committed.

(f) In order to be accepted, each Application must include:

(1) Evidence of the submission of the Contract Administrator's current annual single audit;

(2) A Colonia identification form and the M number, as assigned by the Office of the Attorney General of Texas, for each Colonia to be served, including all required back-up documentation as identified on the form;

(3) A boundary map for each of the five Colonias;

(4) A description of the method of implementation. For each Colonia to be served by the Colonia Self-Help Center, the Administrator shall describe the services and Activities to be delivered. Participating households must provide at least 15% of the labor necessary to build or rehabilitate the proposed housing by contributing the labor personally and/or through non-contract labor assistance from family, friends, or volunteers. Volunteer hours at the Colonia Self-Help Center may also fulfill the 15% labor requirement.

(5) The proposed Performance Statement must include the number of Colonia residents to be assisted from each Activity, the Activities to be performed (including all Sub-Activities under each budget line item), and the corresponding budget;

(6) The proposed Contract Budget must adhere to the following limitations:

(A) The Administration line item may not exceed fifteen (15) percent;

(B) At least eight (8) percent, but no more than ten (10) percent, must be used for the Public Service Activities;

(C) Colonia Self-Help Center Program funds cannot exceed $45,000 in Program funds per unit per Income Eligible Household. Program funds can be used for Rehabilitation, Reconstruction or New Construction. An additional $5,000 in Program funds are available for properties with non-functioning and/or unpermitted cesspools or septic tanks that need replacement with an appropriately sized on-site sewage facility or connection to a Department-approved source of potable water and wastewater disposal. Additional funds from other sources may be leveraged with Program funds.

(D) Direct Delivery Costs for all New Construction and Reconstruction Activities cannot exceed ten (10) percent per unit provided by the Colonia Self-Help Center Program. Direct Delivery Costs for Rehabilitation are limited to fifteen (15) percent per unit provided by the Colonia Self-Help Center Program. All Direct Delivery Costs must be eligible and based on actual expenses for the specific housing unit;

(7) Proposed HAG must include an Affirmative Fair Housing Marketing Plan as described under Chapter 20 of this Title and program parameters for Rehabilitation, Reconstruction, or New Construction;

(A) Prior to Department approval of Colonia Self-Help Center construction activity, the Colonia Self-Help Center must document that existing on-site sewage facilities (septic systems) have been inspected by a Texas Commission on Environmental Quality-authorized agent to determine if the system is in substantial compliance with Health & Safety Code, Chapter 366 and the rules adopted under that chapter. Cesspools that have not been previously permitted are unacceptable and must be replaced by an appropriately sized on-site sewage facility or the home must be connected to a Department-approved source of potable water and wastewater disposal.

(B) New Construction, Reconstruction, and Rehabilitation activities under the Colonia Self-Help Center Program must adhere to TDHCA's Minimum Energy Efficiency Requirements for Single Family Construction Activities under Chapter 21 of this Title.

(8) Evidence of model subdivision rules adopted by the County;

(9) Written policies and procedures, as applicable, for:

(A) Solid waste removal;

(B) Construction skill classes;

(C) Homeownership classes;

(D) Technology access, including any technology hardware inventory purchased with Colonia Self-Help Center funds;

(E) Homeownership assistance; and/or

(F) Tool lending library, including any library inventory purchased with Colonia Self-Help Center funds. All Colonia Self-Help Centers are required to operate a tool lending library;

(10) Authorized signatory form and direct deposit authorization;

(11) UGLG resolution authorizing the submission of the Application and appointing the primary signatory for all Contract documents;

(12) Acquisition report (even if there is no acquisition activity);

(13) Certification of exemption for HUD funded projects; and

(14) Initial disclosure report for the Texas Department of Agriculture.

(g) Upon receipt of the Application, the Department will perform an initial review to determine whether the Application is complete and that each Activity meets a national objective as required by §104(b)(3) of the Housing and Community Development Act of 1974 (42 U.S.C. 5304(b)(3)).

(h) The Department may reduce the funding amount requested in the Application in accordance to subsection (c) of this Section. Should this occur, the Department shall notify the appropriate Administrator before the Application is submitted to C-RAC for review, comments and approval. The Department and the Administrator will work together to jointly agree on the performance measures and proposed funding amounts for each Activity.

(i) The Department shall execute a four (4) year Contract with the Administrator. No Contract extensions will be allowed. If the Administrator requirements are completed prior to the end of the four (4) year Contract period, the Administrator may submit a new Application.

(j) The Department may decline to fund any Application if the Activities do not, in the Department's sole determination, represent a prudent use of Colonia Self-Help Center funds. The Department is not obligated to proceed with any action pertaining to any Application which is received, and may decide it is in the Department's best interest to refrain from pursuing any selection process.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 31, 2017.

TRD-201702826

Timothy K. Irvine

Executive Director

Texas Department of Housing and Community Affairs

Effective date: August 20, 2017

Proposal publication date: May 12, 2017

For further information, please call: (512) 936-7800