TITLE 10. COMMUNITY DEVELOPMENT

PART 1. TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS

CHAPTER 24. TEXAS BOOTSTRAP LOAN PROGRAM RULE

10 TAC §§24.1 - 24.3, 24.5, 24.6, 24.8 - 24.13

The Texas Department of Housing and Community Affairs (the "Department") proposes amendments to 10 TAC Chapter 24 Texas Bootstrap Loan Program Rule: §24.1, concerning Purpose; §24.2, concerning Definitions; §24.3, concerning Allocation of Funds; §24.5, concerning Program Activities; §24.6, concerning Prohibited Activities; §24.8, concerning Criteria for Funding; §24.9, concerning Program Admininistration; §24.10, concerning Owner-Builder Qualifications; §24.11, concerning Types of Funding Transactions; §24.12, concerning Property Guidelines and Related Issues; and §24.13, concerning Nonprofit Owner-Builder Housing Program Certification.

The purpose of amending the Texas Bootstrap Loan Program Rule is to integrate changes made by the 85th Texas Legislature via House Bill 1512, add missing definitions, correct capitalization, simplify wording, and eliminate duplication of underwriting rules already stated in the Single Family Programs Umbrella Rule 10 TAC 20. The significant proposed changes to 10 TAC Chapter 24 are:

§24.1. Purpose. This section is amended to remove the limit on the amount of other funding that could be leveraged with Bootstrap loan funds per House Bill 1512, passed by the 85th Texas Legislature. Previously, Bootstrap borrowers could not exceed a total of $90,000 for all amortizing loan funds applied to their housing unit, including any leveraged funds from outside the Bootstrap Program.

§24.2. Definitions. This section is amended to include the term "Improvement Survey" because this term appears in §24.12, Property Guidelines and Related Issues, and was undefined.

§24.9. Program Administration. This section is amended to remove the limit on the amount of other funding that could be leveraged with Bootstrap loan funds per House Bill 1512, passed by the 85th Texas Legislature. This section is also amended to increase the Administrative Fee that can be earned by a Participant upon completing and funding a Bootstrap loan from 6% to 10% of the Bootstrap loan amount. This makes both the Bootstrap Loan Program and the Amy Young Barrier Removal Program--the two programs of the State Housing Trust Fund--consistent with one another with respect to the Administrative Fee provided to participating entities.

§24.10. Owner-Builder Qualifications. This section is amended to remove rules pertaining to underwriting (e.g., examples of outstanding items on a credit report that affect eligibility, limits on liquid assets, etc.) that are already stated in the Single Family Programs Umbrella Rule 10 TAC 20.

FISCAL NOTE. Timothy K. Irvine, Executive Director, has determined that for each year of the first five years the amendments are in effect, enforcing or administering the amendments does not have any foreseeable implications related to costs or revenues of the state or local governments.

PUBLIC BENEFIT/COST NOTE. Mr. Irvine also has determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of the amendments will be clarity of program requirements, adherence to state governing statute, and decreased potential foreclosures via modified underwriting criteria. There will be minimal economic cost to entities complying with the amendments.

ADVERSE IMPACT ON SMALL OR MICRO-BUSINESSES. The Department has determined that there will be no economic effect on small or micro-businesses.

REQUEST FOR PUBLIC COMMENT. The public comment period for the proposed amendments will be from August 11, 2017, to September 11, 2017. Written comments may be mailed to the Texas Department of Housing and Community Affairs, Attention: Homero Cabello, Director of Single Family Operations & Services, Bootstrap Rule Comments, P.O. Box 13941, Austin, Texas 78711-3941, or emailed to homero.cabello@tdhca.state.tx.us.

ALL COMMENTS MUST BE RECEIVED BY 5:00 P.M. AUSTIN LOCAL TIME SEPTEMBER 11, 2017.

STATUTORY AUTHORITY. The amendments are proposed pursuant to Texas Government Code §2306.053, which authorizes the Department to adopt rules; and §2306.752, which requires the Department to establish, operate, monitor and fund an Owner-Builder Loan Program to enable Owner-Builders to purchase or refinance real property on which to build new residential housing or improve existing residential housing.

The proposed amendments affect no other code, article, or statute.

§24.1.Purpose.

(a) This chapter clarifies the Texas Bootstrap Loan Program, administered by the Texas Department of Housing and Community Affairs (the "Department"), also known as the Owner-Builder Loan Program. The Texas Bootstrap Loan Program provides assistance to income-eligible individuals, families and households to purchase or refinance real property, on which to build new residential housing or improve existing residential housing. The Program is administered in accordance with Texas Government Code, Chapter 2306, Subchapter FF, 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), Chapter 21 of this title (relating to Minimum Energy Efficiency Requirements for Single Family Construction Activities), and Chapter 26 of this title (relating to Housing Trust Fund).

(b) The Texas Bootstrap Loan Program is a Self-Help construction Program that is designed to provide very low-income families an opportunity to help themselves attain homeownership or repair their existing homes through sweat equity. All Owner-Builder Applicants under this Program are required to provide through personal labor at least 65 percent of labor necessary to build or rehabilitate the home. All applicable building codes and housing standards are adhered to under this Program. [In addition, Nonprofit Organizations can combine these funds with other sources of funds. The total amount of amortized repayable loans made by the Department and other entities to an Owner-Builder may not exceed $90,000 per housing unit.]

§24.2.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Other definitions may be found in Texas Government Code, Chapter 2306, 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), Chapter 21 of this title (relating to Minimum Energy Efficiency Requirements for Single Family Construction Activities), and Chapter 26 of this title (relating to Housing Trust Fund).

(1) Capital Recovery Fee--Means a charge or assessment imposed by a political subdivision against new development in order to generate revenue for funding or recouping the costs of capital improvements or facility expansions necessitated by and attributable to the new development. The term includes amortized charges, lump-sum charges, contributions in aid of construction, and any other fee that functions as described by this definition.

(2) Improvement Survey--A survey locating the boundaries of the property and the location of all improvements.

(3) [(2)] Loan Origination Agreement--A written agreement, including all amendments thereto between the Department and the Participant that authorizes the Participant to originate certain loans under the Texas Bootstrap Loan Program.

(4) [(3)] NOHP--Nonprofit Owner-Builder Housing Provider.

(5) [(4)] Owner-Builder--A person, other than a person who owns or operates a construction business and who owns or purchases a piece of real property through a warranty deed and deed of trust; or is purchasing a piece of real property under a Contract for Deed entered into before January 1, 1999; and who undertakes to make improvements to that property.

(6) [(5)] Participant--An organization that [which] submits an application to the Department to be certified as an NOHP or a Colonia Self-Help Center.

(7) [(6)] Program--Texas Bootstrap Loan Program also known as the Owner-Builder Loan Program.

(8) [(7)] Self-Help Housing Construction--The Self-Help Housing process enables Owner-Builders to Rehabilitate, Reconstruct or construct their own homes, usually working together in groups on other eligible Owner-Builder's houses at the same time. Owner-Builders use their own "sweat equity" to reduce the cost of their homes.

§24.3.Allocation of Funds.

(a) The Department administers all Texas Bootstrap Loan Program funds provided to the Department in accordance with Texas Government Code, Chapter 2306, Subchapter FF. The Department shall solicit gifts and grants to make loans under this chapter.

(b) The Department may also make loans under this chapter from:

(1) available funds in the Housing Trust Fund [housing trust fund] established under Texas Government Code, §2306.201; or

(2) federal block grants that may be used for the purposes of this chapter.[; and]

[(3) the Owner-B uilder revolving loan fund established under Texas Government Code, §2306.7581.]

[(c) The Department shall establish an Owner-Builder revolving loan fund for the sole purpose of funding loans pursuant to Texas Government Code, §2306.7581.]

[(d) The Department shall deposit money received in repayment of a loan to the Owner-Builder revolving loan fund pursuant to Texas Government Code, §2306.7581.]

(c) [(e)] Each state fiscal year the Department shall transfer at least $3 million to the Texas Bootstrap Loan Program [revolving fund] from money received under federal block grants or from available funds in the Housing Trust Fund [the federal HOME Investment Partnerships program established under Title II of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. §§12701, et seq.), from money in the housing trust fund; or from money appropriated by the legislature to the Department pursuant to Texas Government Code, §2306.7581].

(d) [(f)] In a state fiscal year the Department may use not more than 10 percent of the revenue available to enhance the ability of tax-exempt organizations described by Texas Government Code, §2306.755(a) to enhance the number of such organizations that are able to implement the Program. The Department shall use that available revenue to provide financial assistance, technical training and management support.

§24.5.Program Activities.

Texas Bootstrap Loan Program funds may be used to finance affordable housing and promote homeownership through acquisition, new construction, reconstruction [Reconstruction], or rehabilitation [Rehabilitation] of residential housing. All eligible organizations that satisfy the requirements of this chapter may reserve funds by submitting a loan application on behalf of an Owner-Builder Applicant for the Texas Bootstrap Loan Program.

§24.6.Prohibited Activities.

The fees described in paragraphs (1) - (8) of this section are prohibited and may not be charged directly to the Owner-Builder [in relation to the origination or servicing of a loan through the Texas Bootstrap Loan Program], but may be charged as an allowable cost by a third [(3rd)] party lender or servicer for a Texas Bootstrap loan [the origination of all other loans originated in connection with a loan through the Texas Bootstrap Loan Program]:

(1) payment of delinquent property taxes or related fees or charges on properties to be assisted with Texas Bootstrap Loan Program funds;

(2) Loan Origination Fees;

(3) Application fee;

(4) discount fees;

(5) underwriter fee;

(6) loan processing fees;

(7) loan servicing fees; and

(8) other fees not approved by the Department in writing prior to expenditure.

§24.8.Criteria for Funding.

(a) The Department will distribute the funds in accordance with the Texas Housing Trust Fund (HTF) Plan in effect at the time. The Department will publish an announcement for a Notice of Funding Availability ("NOFA") in the Texas Register and post the NOFA on the Department's website. The Program Rule and NOFA will establish and define the terms, conditions, and maximum Reservation amounts allowed per Participant. The Department may also set a deadline for receiving Reservations and/or Applications. The NOFA will indicate the approximate amount of available funds. The Department may increase funds in the NOFA from time to time without republishing the NOFA in the Texas Register and Department's website.

(b) A Nonprofit Organization must have been certified by the Department as an NOHP and must have executed a Loan Origination Agreement to be eligible to submit Reservations. Any Reservation containing false information will be disqualified. The Department will review and process all Reservations in the order received. The NOHP will be notified in writing of the Department's determination.

(c) Reservations received by the Department in response to a NOFA will be handled as described in paragraphs (1) - (5) of this subsection.

(1) The Department will accept Reservations until all funds under the NOFA have been committed. The Department may limit the eligibility of Reservations in the NOFA.

(2) Each Reservation will be assigned a "received date" based on the date and time the Reservation was entered into the Texas Bootstrap Loan Program Reservation system. Each Reservation will be reviewed in accordance with the Program rules.

(3) Reservations must comply with all applicable Texas Bootstrap Loan Program requirements or regulations established in this chapter. Reservations that do not comply with such requirements may be disqualified. The Participant will be notified in writing of any cancelled and/or disqualified Reservations.

(4) If a Reservation contains deficiencies which, in the determination of the Department, require clarification or correction of information submitted at the time of the Reservation, the Department may request clarification or correction in the form of an email or letter to the Participant.

(5) Prior to issuing an Applicant eligibility letter the Department may decline to fund any Reservation entered into the Reservation system if the proposed housing Activities do not, in the Department's sole determination, represent a prudent use of the Department's funds. The Department is not obligated to proceed with any action pertaining to any Reservation which are entered, and may decide it is in the Department's best interest to refrain from committing the funds. If the Department has issued an Applicant eligibility letter to the Owner-Builder Applicant, but the Participant and/or Owner-Builder Applicant has not complied with all the Program rules and guidelines, the Department may suspend funding until the Participant and/or Owner-Builder Applicant has satisfied all requirements of the Program. If the Participant is unable to cure any deficiencies within fifteen (15) calendar days, the Department may provide a one-time fifteen (15) calendar day extension or decline to fund the Reservation.

§24.9.Program Administration.

(a) Pursuant to §2306.754(b), the Department shall not exceed $45,000 in household assistance for any Texas Bootstrap Loan Program loan. If it is not possible for an Owner-Builder to purchase necessary real property and build or rehabilitate adequate housing for $45,000, the Owner-Builder must obtain the additional amounts necessary from other sources, which may include other types of Department funds with the exception of other State Housing Trust Funds. [Household assistance from the Department for any Texas Bootstrap Loan Program loans may not exceed $45,000 per household pursuant to Texas Government Code, §2306.754(b). The Owner-Builder must obtain the amount necessary that exceeds $45,000 from other sources of funds including other Department funds with the exception of funds being utilized to implement the Texas Bootstrap Loan Program. The total amount of amortized repayable loans made by the Department and other entities to an Owner-Builder under the Program may not exceed $90,000 pursuant to Texas Government Code, §2306.754(b).]

(b) The Department shall make loans for Owner-Builder applicants to enable them to:

(1) purchase or refinance real property on which to build new residential housing;

(2) build new residential housing; or

(3) improve existing residential housing.

(c) Upon approval by the Department, the Participant shall enter into, execute, and deliver to the Department the Loan Origination Agreement. The Department may terminate the Loan Origination Agreement in whole or in part if the Participant has not performed as outlined in the Program Rule, NOFA, Loan Origination Agreement, and/or Program Manual.

(d) In the event the Department has additional funds in the same funding cycle, the Department, with Board approval, will distribute funds in accordance with this chapter.

(e) If the Owner-Builder Applicant qualifies for the Program, the Department will issue an Applicant eligibility letter [(approval letter)] which reserves up to $45,000 in funds [the funds (up to $45,000 per Reservation)] for twelve (12) months from the date of the Applicant eligibility letter. Owner-Builder Applicant will not be required to re-qualify [for the Program] if the Owner-Builder Applicant closes by [on the loan on or before] the expiration date [stated ] on the Applicant eligibility. Otherwise [letter issued by the Department. If the Owner-Builder fails to close on the loan on or before the expiration date stated on the Applicant eligibility letter], the Owner-Builder Applicant must [will be required to] re-qualify for the Program and[. The Owner-Builder Applicant must be requalified by the Department. If the Owner-Builder Applicant is requalified] the Department may grant an extension of up to 90 days from the expiration date on the original Applicant eligibility letter. If the Owner-Builder Applicants fails to close on the loan after the extension is granted the Reservation and/or loan will be cancelled.

(f) Roles and responsibilities for administering the Program Contract. Participants are required to:

(1) qualify potential Owner-Builders for loans;

(2) provide Owner-Builder homeownership education classes;

(3) supervise and assist Owner-Builders to build and/or Rehabilitate housing;

(4) facilitate loans made or purchased by the Department under the Program; and

(5) implement and administer the Program on behalf of the Department.

(g) Loan Servicing Agreement. If the Participant wishes to service the loans originated on behalf of the Department it must obtain prior approval and enter into a Loan Servicing Agreement with the Department. [The Department may grant the request upon reviewing the Participant capacity to implement those specific functions.]

(h) First Year Consultation Agreement. The Participant agrees that if notified by the Department that Owner-Builder has failed to make a scheduled payment due under the Program loan, or other payments due under the Program loan documents [issued under the Program], within the first twelve (12) months of funding, the Participant will be required to meet with the Owner-Builder and provide counseling and assistance until the payments are made current. After consultation and in the event that the Department and Participant are not able to [reach a consensus about Participant's effort to] bring the Program loan current as required under this chapter, the Department in accordance with its administrative rules may apply appropriate graduated sanctions leading up to, but not limited to, deobligation of funds and future debarment from participation in the Program.

(i) Administrative Fee. The Participant will be granted a 10 [6] percent administration fee upon completion of the house and funding of each Mortgage loan.

(j) Blueprints. If Participant's activity is interim or residential construction, Participant must provide an original copy of the proposed blueprints to be approved by the Department prior to accepting applications. Blueprints must include the required construction requirements pursuant to Texas Government Code, §2306.514, and [. All blueprints submitted for approval must] be prepared and executed by an architect or engineer licensed by the state of Texas.

(k) Work Write-up. If Participant's activity is rehabilitation, Participant must submit work write-ups and cost estimations for Department approval prior to construction [The Participant must submit a work write-up for all rehabilitation projects. Work write-ups must be reviewed and approved by the Department, before rehabilitation is started].

(l) Loan Program requirements. The Department may purchase or originate loans that conform to the lending parameters and the specific loan Program requirements as described in paragraphs (1) - (8) of this subsection:

(1) maximum Texas Bootstrap Loan Program loan [Loan] amount shall not [to] exceed $45,000. If it is not possible for an Owner-Builder to purchase necessary real property and build or rehabilitate adequate housing for $45,000, the Owner-Builder must obtain the additional amounts necessary from other sources, which may include other types of Department funds with the exception of other State Housing Trust Funds. [If it is not possible for the Owner-Builder to purchase necessary real property and build adequate housing for $45,000, the Participant must obtain additional funding from other sources of funds.]

(2) minimum Loan amount is $1,000;

[(3) the total amount of all amortized repayable loans under the Program may not exceed $90,000. Deferred Forgivable Loans are not included in these total loan calculations;]

(3) [(4)] may not exceed a term of thirty (30) years;

(4) [(5)] minimum loan term of five (5) years;

(5) [(6)] zero (0) percent [(0 percent)] non-interest loans;

(6) [(7)] when refinancing a Contract for Deed, the Department will not disburse any portion of the Department's loan until the Owner-Builder receives a deed to the property;

(7) [(8)] Owner-Builder [Owner-Builder(s)] must have resided in Texas [this state] for the preceding six (6) months prior to the date of loan application.

(m) Loan Assumption. A Program loan is assumable if the Department determines that the Owner-Builder Applicant complies with all Program requirements in effect at the time of the assumption.

(n) Forgivable Loan. The term for a Forgivable Loan may not exceed 15 years from the date of closing.

§24.10.Owner-Builder Qualifications.

The Owner-Builder must:

(1) own or be purchasing a piece of real property through a warranty deed or Contract for Deed;

(2) not have an annual household income that exceeds 60 percent of the greater of the state or local area median family income as determined by HUD's current income table[;]

[(A)] Eligibility Income is the total Household income including all income (salary, tips, bonus, overtime, alimony, child support, benefits, etc.) received by the Owner-Builder Applicant, co-Applicant and/or any other persons living in the home. This income is used to determine whether the household income exceeds 60% of the Area Median Family Income or 60% of the State Median Family Income, adjusted for Household size, whichever is greater. No income is excluded in this calculation.

[(B) Qualifying Income is the income used to calculate the Owner-Builder Applicant's debt to income ratio. It is the income of the Owner-Builder Applicant and co-Applicant excluding the total of any income not received consistently for the past 12 months from the date of application. Examples of excluded income includes, but is not limited to, income from a full or part time job that lacks a stable job history, potential bonuses, commissions, and child support.]

[(3) demonstrate the willingness and ability to repay the loan; Owner-Builder Applicants must have a credit history that indicates reasonable ability and willingness to meet debt obligations. In order for the Department to make a reasonable determination, the Department will obtain a tri-merge credit report on all Owner-Builder Applicants submitted to the Department for approval. Unacceptable credit includes, but is not limited to:]

[(A) payments on any open consumer, retail and/or installment account (i.e. auto loans, signature loans, payday loans, credit cards or any other type of retail and/or installment loan) which has been delinquent for more than thirty (30) days on three (3) or more occasions within the last twelve (12) months. For purposes of this subparagraph, the credit history of an Owner-Builder who is a Domestic Farm Laborer and receives a substantial portion of his/her income from the production or handling of agriculture or aquacultural products will not apply. However, Owner-Builder must still demonstrate the ability and willingness to meet debt obligations;]

[(B) a foreclosure which has been completed within the last twelve (12) months prior to the date of loan application;]

[(C) an outstanding Internal Revenue Service tax lien or any other outstanding tax liens unless the Owner-Builder Applicant has made formal and satisfactory payment arrangements for at least six (6) months prior to the date of loan application;]

[(D) a court-created or court-affirmed obligation or judgment caused by nonpayment that is currently outstanding must be paid off. The Department may consider this account in good standing if the Owner-Builder Applicant has made formal and satisfactory payment arrangements for at least six (6) months prior to the date of loan application;]

[(E) any account (with the exception of a medical account) that has been placed for "collection," "profit and loss" or "charged off" within the last twenty-four (24) months prior to the date of loan application, unless the account has been or will be paid in full after receiving notice from the Department. If there are other, unpaid or unresolved accounts that were placed for "collection," "profit and loss," or "charged off" prior to the last twenty-four (24) months prior to the date of loan application then. Owner-Builder Applicant must also have re-established at least one line of credit that must be in good standing with no delinquencies for at least six (6) months prior to the date of loan application. Type of debts that will be taken into consideration may include, but are not limited to the following: rental history, cell phone, utility, child care, auto insurance, etc.;]

[(F) any delinquency on any government debt unless the Owner-Builder Applicant has made formal and satisfactory payment arrangements for at least six (6) months prior to the date of loan application;]

[(G) a bankruptcy that has been filed within the past twelve (12) months prior to the date of loan application;]

[(H) any delinquency on child support unless the Owner-Builder Applicant has made formal and satisfactory payment arrangements for at least six (6) months prior to the date of loan application. The following will not be considered indicators of unacceptable credit:]

[(i) a bankruptcy in which debts were discharged more than twelve (12) months prior to the date of loan application. Owner-Builder Applicant must also have re-established at least one line of credit that must be in good standing with no delinquencies for at least six (6) months prior to the date of loan application. In addition the Owner-Builder Applicant must submit to the Department a letter of explanation regarding the circumstances that led to the bankruptcy which is acceptable to the Department;]

[(ii) where an Owner-Builder Applicant has successfully completed a debt restructuring plan and has demonstrated a willingness to meet obligations when due for the six (6) months prior to the date of loan application. If an Owner-Builder Applicant is currently participating in a debt management plan, the trustee or assignee must provide a letter to the Department stating that they are aware and agree with the Owner-Builder Applicant applying for a mortgage loan. In addition Owner-Builder Applicant must have successfully completed at least six (6) months of the debt management plan with no delinquent payments;]

[(iii) medical accounts that are delinquent or that have been placed for collection; The Owner-Builder Applicant's liabilities include all revolving charge accounts, real estate loans, alimony, child support, installment loans, and all other debts of a continuing nature with more than ten (10) monthly payments remaining. Debts for which the Owner-Builder Applicant is a co-signer will be included in the total monthly obligations. Payments on installment debts which are paid off prior to funding are not included for qualification purposes. Payments on all revolving debts (e.g. credit cards, payday loans, lines of credit, unsecured loans) and certain types of installment loans that appear to be recurring in nature will be included in debt ratio calculation, even if the Owner-Builder Applicant intends to pay off the accounts, since the Owner-Builder Applicant can reuse those credit sources, unless the account is paid off and closed. Payments on any type of loan that have been deferred must be deferred for at least eighteen (18) months from the date of loan application in order for the debt not to be included in the debt ratio calculation;]

(3) [(4)] execute a Self-Help Agreement committing to provide [through personal labor] at least 65 percent of the labor necessary to build or rehabilitate [Rehabilitate] the proposed housing [working] through a state-certified Participant; or provide an amount of labor equivalent to 65 percent in connection with building or rehabilitating [Rehabilitating] housing for others through a state-certified [state certified] Participant; provide through the noncontract labor of friends, family, or volunteers and through personal labor at least 65 percent of the labor necessary to build or rehabilitate [Rehabilitate] the proposed housing [by working] through a state-certified [state certified] Participant or if due to a documented disability or other limiting circumstances the Owner-Builder cannot provide the amount of personal labor otherwise required, provide through the noncontract labor of friends, family or volunteers at least 65 percent of the labor necessary to build or rehabilitate [Rehabilitate] the proposed housing [by working] through a state-certified [state certified] Participant;

[(5) not have cash assets in excess of $25,000 (excluding retirement and/or 401K accounts);]

(4) [(6)] successfully complete an Owner-Builder homeownership education class prior to loan funding;

(5) [(7)] be given priority for loans if the Owner-Builder has an income of less than $17,500 annually; and

(6) [(8)] not have any outstanding judgments and/or liens on the property.

(7) [(9)] the Owner-Builder must occupy the residence as a Principal Residence [residence must be occupied as the Principal Residence of the Owner-Builder] within thirty (30) days of [the later of] the end of the construction period or the closing of the loan, whichever is later. Any additional habitable structures must be removed from the property prior to closing but a portion of the structure[. Portion of the former structure] may be utilized as storage upon the Department's written approval prior to closing.

§24.11.Types of Funding Transactions.

All Mortgage Loans will be evidenced by a promissory note and will be secured by a lien on the subject property. The following transaction types are permitted by the Department under the Program.

(1) Purchase Money. All [In a purchase money transaction, all] proceeds are used to finance the purchase of a single-family dwelling unit and/or a piece of real property which must become [will be] the Owner-Builder's primary residence within thirty (30) days of closing the loan. The Department makes a [In this instance, a] permanent loan [is made] and the Owner-Builder's repayment obligation begins immediately. In certain situations, eligible closing costs may be financed by the loan proceeds.

(2) Residential Construction. This [(One Time Closing with Owner-Builder). An interim construction loan, also known as a residential construction loan, this] transaction is treated as a purchase and [, because it] is a one-time closing with the Owner-Builder. Construction period may be up to twelve (12) months.

(3) Interim Construction (Closing with Participant). Interim construction is a commercial transaction between the Participant and the Department. The construction period may be up to twelve (12) months. Once[; once] the construction of the home is completed, the closing with the Owner-Builder will take place as a purchase money transaction.

(4) Purchase of Mortgage loans. The Department may purchase and take assignments from Mortgage lenders of notes and other obligations evidencing loans or interest in loans for purchase money transactions as described in paragraph (1) of this section or for residential construction transactions as described in paragraph (2) of this section.

§24.12.Property Guidelines and Related Issues.

(a) Appraisals are required by the Department on each property prior to closing.

(b) Loan-to-value [Loan to value] ratio may not exceed 95 percent of the appraised value. The lien amounts of forgivable loans and/or Grants will not be included in the loan-to-value calculation.

(c) Combined loan-to-value ratio may not exceed 100 percent of the appraised value. The lien amounts of Forgivable Loans will also be included in the combined loan to value ratio.

(d) Improvement Surveys are required on each property.

(e) Category 1A (Texas Society of Professional Surveyors) lot surveys [("lot survey")] are required for all interim and residential construction loans. Upon Department approval a recorded subdivision plat may be used in lieu of lot surveys for interim construction loans only. Upon completion of construction an improvement survey must also be provided.

(f) Title Commitment. A copy of the preliminary title report including complete legal description[,] and copies of covenants, conditions and restrictions, easements, and any supplements thereto is required. The preliminary title report should not be more than thirty (30) days old at the time the submission or funding package [(Submission or Funding Package)] is sent to the Department and must list the Department's Loan.

(g) Existing Property. A property inspection will be required to be completed by a professional inspector licensed by the Texas Real Estate Commission for all existing properties. A copy of the inspection report must be submitted and any [prior to closing. Any] deficiencies listed on the report must be corrected prior to closing. Cosmetic issues such as paint, wall texture, etc. may not be required to be corrected if utilizing a Self-Help construction Program. A copy of the reports must be provided to the Owner-Builder Applicant and the Department. The Participant and/or the Owner-Builder Applicant will be responsible for the selection and/or the fee of a licensed inspector.

§24.13.Nonprofit Owner-Builder Housing Program Certification.

(a) [Definitions and Terms. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.]

[(1)] The term, Applicant, when used in this section, shall mean a[--A] Nonprofit Organization that is an NOHP or has submitted a request to the Department for certification as an NOHP in order to participate in [to the Department. An Applicant for] the Texas Bootstrap Loan Program [must be an NOHP certified by the Department].

[(2) Bylaws--A rule or administrative provision adopted by a corporation for its internal governance. Bylaws are enacted apart from the Certificate of Formation. Bylaws and amendments to bylaws must be formally adopted in the manner prescribed by the organization's certificate of formation or current bylaws by either the organization's board of directors or the organization's members, whoever has the authority to adopt and amend bylaws.]

[(3) Certificate of Formation--A document that sets forth the basic terms of a corporation's existence and is the official recognition of the corporation's existence. The documents must evidence that they have been filed with the Office of the Secretary of State.]

[(4) Resolutions--Formal action by a corporate board of directors or other corporate body authorizing a particular act, transaction, or appointment. Resolutions must be in writing and state the specific action that was approved and adopted, the date the action was approved and adopted, and the signature of person or persons authorized to sign resolutions. Resolutions must be approved and adopted in accordance with the corporate bylaws.]

(b) Application Procedures for NOHP Certification or NOHP Recertification [Re-Certification of NOHP]. An Applicant requesting NOHP certification or recertification [re-certification as an NOHP] must submit an Application [for NOHP certification in a form prescribed by the Department. The NOHP Application must be submitted] prior to submitting an Application for Texas Bootstrap Loan Program Reservation system, and must be recertified every three (3) years. NOHP recertification requires submission of the following only [An NOHP applying for recertification will only be required to submit the following] if any changes have occurred. [An organization applying for certification must include documentation pertaining to the requirements of this subsection.]

(1) Applicant must have the following legal status at the time of Application [to apply] for NOHP certification [as an NOHP]:

(A) The Applicant must be organized as a nonprofit organization under the Texas Business Code or other state not-for-profit/nonprofit statute as evidenced by charter or Certificate of Formation.

(B) The Applicant must be registered and in good standing with the Office of the Secretary of State and the State Comptroller's Office to do business in the state of Texas.

(C) No part of the Nonprofit Organization's net earnings may inure to the benefit of any member, founder, contributor, or individual, as evidenced by charter or Certificate of Formation.

(D) The Applicant must have the following tax status:

(i) A current letter of determination from the Internal Revenue Service (IRS) under §501(c)(3), a charitable, nonprofit corporation, of the Internal Revenue Code of 1986, as evidenced by a certificate from the IRS [that is] dated 1986 or later. The exemption ruling must be effective on the date of the Application and must continue to be effective while certified as an NOHP; or

(ii) Classification as a subordinate of a central Nonprofit Organization under the Internal Revenue Code §501(c)(3), as evidenced by a current group exemption letter[, that is] dated 1986 or later. [The group exemption letter must specifically list the Applicant.]

(iii) A Nonprofit Organization's pending application for §501(c)(3) status cannot be used to comply with the tax status requirement under this subparagraph.

(E) The Applicant must have among its purposes the provision of decent housing that is affordable to low and moderate income people as evidenced by a statement in the organization's charter, Certificate of Formation, Resolutions, or Bylaws.

(2) An Applicant must have the capacity and experience listed in subparagraphs (A) and (B) of this paragraph.

(A) Conforms to the United States Generally Accepted Accounting Principles ("GAAP") as evidenced by a:

(i) notarized statement by the Executive Director or chief financial officer of the organization in a form prescribed by the Department; or

(ii) certification from a Certified Public Accountant.

(B) If the Applicant will be utilizing interim or residential construction funds it must provide an audited financial statement for the most recent fiscal year or a signed and dated financial statement for the period since last published audit. Applicants that do not have audited financial statements or a signed and dated financial statement for the period since last published audit must provide a resolution from the Board of Directors that is signed and dated within 6 months from the date of application and certifies that the accounting procedures used by the organization conform to the GAAP. Applicants that do not have audited financial statements or a signed and dated financial statement for the period since last published audit and are certified [as ] NOHPs are restricted to only originating permanent loans and will be ineligible for any interim or residential construction loans until the Department has reviewed the most current audited financial statements.

(C) Has a demonstrated capacity of at least one (1) year for carrying out Mortgage loan origination and Self-Help housing construction Activities, as evidenced by resumes and/or statements that describe the experience of key staff members who have successfully completed projects similar to those to be assisted with Texas Bootstrap Loan Program funds; or contract(s) with consultant firms or individuals who have housing experience similar to projects to be assisted with Texas Bootstrap Loan Program funds, to train appropriate key staff of the organization. If applying for NOHP recertification [re-certification to participate in the Texas Bootstrap Loan Program] and the organization is in good standing as determined by the Department, the organization will not be required to submit any additional information regarding experience.

(3) An Applicant must submit a current roster of all Board of Directors, including names and mailing addresses.

(4) A local or state government and/or public agency cannot qualify as an NOHP, but may sponsor the creation of an NOHP.

(5) Religious or Faith-based Organizations may sponsor an NOHP if the NOHP meets all the requirements of this section. While the governing board of an NOHP sponsored by a religious or a faith-based organization remains subject to all other requirements in this section, the religious or faith-based organization may retain control over appointments to the board. [Subparagraphs If an NOHP is sponsored by a religious organization, the restrictions described in subparagraphs] (A) - (C) of this paragraph also apply:

(A) Housing developed must be made available exclusively for the residential use of Program beneficiaries, and must be made available to all persons regardless of religious affiliations or beliefs;

(B) [A religious organization that participates in the Texas Bootstrap Loan Program may not use] Texas Bootstrap Loan Program funds may never be used to support any explicitly [inherently] religious activities such as worship, religious instruction, or proselytizing; and

(C) Compliance with subparagraphs (A) and (B) of this paragraph must [may] be evidenced by the Bylaws, charter or Certificate of Formation. [If an organization is applying for re-certification and no updates have been made to its Bylaws and/or Certificate of Formation, the organization will not be required to submit any additional information regarding its Bylaws and/or Certificate of Formation, but must submit a sworn statement attesting to the fact that no changes have been made to either the Bylaws and/or Certificate of Formation.]

(6) A Colonia Self-Help Center as defined under Texas Government Code, Chapter 2306, Subchapter Z is not required to complete the NOHP Certification process as long as it provides a letter from the unit of local government demonstrating performance is in [a] good standing [performance].

(c) Program Design. Organizations must provide policies for [written evidence on] how the Owner-Builder will meet the 65 percent sweat equity requirement. If applying for NOHP recertification [re-certification to participate in the Texas Bootstrap Loan Program] and the organization is in good standing and [certifies that] no changes have been made to the Program design, the organization will not be required to submit any additional information [regarding the Program design].

(d) Applicant must provide details, such as number of houses they are proposing to build, type of proposed financing structure and construction timelines, [in order] to [show] evidence [of] its ability to carry out the [Texas Bootstrap Loan] Program. If applying for NOHP recertification [re-certification to participate in the Texas Bootstrap Loan Program] and the organization is in good standing and [certifies that] no changes have been made that impact the proposed financing structure or construction timelines, the organization will not be required to submit any additional information.

(e) Applicant must provide copies of Program guidelines [used to qualify Owner-Builders] and homebuyer course curriculum [in order] to [show] evidence [of] its experience in qualifying potential Owner-Builders and in providing education classes, counseling and training. If applying for NOHP recertification [re-certification to participate in the Texas Bootstrap Loan Program] and the organization is in good standing, the organization will not be required to submit any additional information.

(f) Applicant must be in compliance with 10 TAC §1.403 [submit any past due Single Audit to the Department in a satisfactory format] on or before the Application deadline.

(g) Applicants must be in compliance in any existing or prior Contracts awarded by the Department.

[(h) The Department may certify NOHPs meeting all of the criteria in subsection (b) of this section operated by a tax-exempt organization listed under §501(c)(3), Internal Revenue Code of 1986 to:]

[(1) qualify potential Owner-Builders for loans under this chapter;]

[(2) provide Owner-Builder education classes;]

[(3) assist Owner-Builders in building or Rehabilitating housing; and]

[(4) originate and/or service loans.]

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

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

TRD-201702845

Timothy K. Irvine

Executive Director

Texas Department of Housing and Community Affairs

Earliest possible date of adoption: September 10, 2017

For further information, please call: (512) 475-4828


CHAPTER 26. TEXAS HOUSING TRUST FUND RULE

10 TAC §§26.1 - 26.7

The Texas Department of Housing and Community Affairs (the "Department") proposes the repeal of 10 TAC Chapter 26, §§26.1 - 26.7, concerning the Texas Housing Trust Fund Rule. The purpose of the repealed rules is to clarify applicability of the Rule to the Texas Bootstrap Loan Program and the Amy Young Barrier Removal Program; improve readability through the re-ordering of phrases and sections; remove frequent references to Notices of Funding Availability and Program Manuals; and further delineate program guidelines for the Amy Young Barrier Removal Program with regards to purpose, definitions, geographic dispersion of funds, administrative requirements, reservation system requirements, household eligibility, property eligibility, construction requirements and project completion requirements. The proposed new rules for Chapter 26 are published concurrently with this rulemaking.

FISCAL NOTE. Timothy K. Irvine, Executive Director, has determined that for each year of the first five years the repeal will be in effect, enforcing or administering new sections do not have any foreseeable implications related to costs or revenues of the state or local governments.

PUBLIC BENEFIT/COST NOTE. Mr. Irvine also has determined that for each year of the first five years the repeal is in effect, the public benefit anticipated as a result of the new sections will be clarity of applicability of the rule to HTF Programs, and further delineation of the program guidelines for the Amy Young Barrier Removal Program, especially with respect to Administrator expectations for construction performance. There will be minimal economic cost to entities complying with the amendments.

ADVERSE IMPACT ON SMALL OR MICRO-BUSINESSES. The Department has determined that there will be no economic effect on small or micro-businesses.

REQUEST FOR PUBLIC COMMENT. The public comment period for the proposed repeal will be from August 11, 2017, to September 11, 2017. Written comments may be mailed to the Texas Department of Housing and Community Affairs, Attention: Homero Cabello, Director of Single Family Operations & Services, Texas Housing Trust Fund Rule Comments, P.O. Box 13941, Austin, Texas 78711-3941; or emailed to htf@tdhca.state.tx.us.

ALL COMMENTS MUST BE RECEIVED BY 5:00 p.m. Austin local time, September 11, 2017.

STATUTORY AUTHORITY. The repeal is proposed pursuant to Texas Government Code §2306.053, which authorizes the Department to adopt rules.

The proposed repeal affects no other code, article, or statute.

§26.1.Purpose.

§26.2.Definitions.

§26.3.Allocation of Funds.

§26.4.Use of Funds.

§26.5.Prohibited Activities.

§26.6.Administrator Eligibility and Requirements.

§26.7.Waiver.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

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

TRD-201702827

Timothy K. Irvine

Executive Director

Texas Department of Housing and Community Affairs

Earliest possible date of adoption: September 10, 2017

For further information, please call: (512) 475-4828


CHAPTER 26. TEXAS HOUSING TRUST FUND RULE

The Texas Department of Housing and Community Affairs (the "Department") proposes new 10 TAC Chapter 26, Subchapter A, §§26.1 - 26.6, concerning General Guidance, and new Subchapter B, §§26.20 - 26.28, concerning the Amy Young Barrier Removal Program.

The purpose of the proposed new subchapters is to clarify applicability of the Single Family Programs Umbrella Rule and the Texas Housing Trust Fund Rule to the Texas Bootstrap Loan Program and the Amy Young Barrier Removal Program; improve readability through the re-ordering of phrases and sections; remove frequent references to Notices of Funding Availability and Program Manuals; and further delineate program guidelines for the Amy Young Barrier Removal Program with regards to purpose, definitions, geographic dispersion of funds, administrative requirements, reservation system requirements, household eligibility, property eligibility, construction requirements and project completion requirements. The proposed repeal of existing Chapter 26 is published concurrently with this rulemaking.

FISCAL NOTE. Timothy K. Irvine, Executive Director, has determined that for each year of the first five years the new rules are in effect, enforcing or administering new sections do not have any foreseeable implications related to costs or revenues of the state or local governments.

PUBLIC BENEFIT/COST NOTE. Mr. Irvine also has determined that for each year of the first five years the new rules are in effect, the public benefit anticipated as a result of the new sections will be clarity of applicability of the rule to HTF Programs, and further delineation of the program guidelines for the Amy Young Barrier Removal Program, especially with respect to Administrator expectations for construction performance. There will be minimal economic cost to entities complying with the new rules.

ADVERSE IMPACT ON SMALL OR MICRO-BUSINESSES. The Department has determined that there will be no economic effect on small or micro-businesses.

REQUEST FOR PUBLIC COMMENT. The public comment period for the proposal will be from August 11, 2017, to September 11, 2017. Written comments may be mailed to the Texas Department of Housing and Community Affairs, Attention: Homero Cabello, Director of Single Family Operations & Services, Texas Housing Trust Fund Rule Comments, P.O. Box 13941, Austin, Texas 78711-3941; or emailed to htf@tdhca.state.tx.us.

ALL COMMENTS MUST BE RECEIVED BY 5:00 P.M. Austin local time, September 11, 2017.

SUBCHAPTER A. GENERAL GUIDANCE

10 TAC §§26.1 - 26.6

STATUTORY AUTHORITY. The new rules are proposed pursuant to Texas Government Code §2306.053, which authorizes the Department to adopt rules.

The proposal affects no other code, article, or statute.

§26.1.Purpose.

This chapter clarifies the administration of the Texas Housing Trust Fund Program (HTF). The HTF provides loans, grants or other comparable forms of assistance to income-eligible individuals, families and households. The HTF is administered in accordance with Texas Government Code, Chapter 2306, Chapter 20 of this Title (relating to Single Family Programs Umbrella Rule), and Chapter 24 of this Title (relating to Texas Bootstrap Loan Program Rule).

§26.2.Definitions.

Definitions may be found in Texas Government Code, Chapter 2306; 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); Chapter 21 of this Title (relating to Minimum Energy Efficiency Requirements for Single Family Construction Activities), and Chapter 24 of this Title (relating to Texas Bootstrap Loan Program Rule), unless the context or the Notice of Funding Availability (NOFA) indicates otherwise.

§26.3.Allocation of Funds.

(a) The Department administers all HTF funds provided to the Department in accordance with Texas Government Code, Chapter 2306. The Department may solicit gifts and grants to endow the fund.

(b) Pursuant to Texas Government Code, §2306.202(b), use of the HTF is limited to providing:

(1) assistance for individuals and families of low and very low income;

(2) technical assistance and capacity building to nonprofit organizations engaged in developing housing for individuals and families of low and very low income;

(3) security for repayment of revenue bonds issued to finance housing for individuals and families of low and very low income; and

(4) subject to the limitations in Texas Government Code, §2306.251, the Department may also use the fund to acquire property to endow the fund.

(c) Set-Asides. In accordance with Texas Government Code, §2306.202(a) and program guidelines:

(1) in each biennium, the first $2.6 million available through the HTF for loans, grants, or other comparable forms of assistance shall be set aside and made available exclusively for Local Units of Government, Public Housing Authorities, and Nonprofit Organizations;

(2) any additional funds may also be made available to for-profit organizations provided that at least 45 percent of available funds, as determined on September 1 of each state fiscal year, in excess of the first $2.6 million shall be made available to Nonprofit Organizations; and

(3) the remaining portion shall be distributed to Nonprofit Organizations, for-profit organizations, and other eligible entities, pursuant to Texas Government Code, §2306.202.

§26.4.Use of Funds.

(a) Use of additional or Deobligated Funds. In the event the Department receives additional funds, such as loan repayments, donations and interest earnings, the Department will redistribute the funds in accordance with the HTF plan in effect at the time the additional funds become available.

(b) Reprogramming of Funds. If funding for a program is undersubscribed or funds not utilized, within a timeframe as determined by the Department, remaining funds may be reprogrammed at the discretion of the Department consistent with the HTF plan in effect at the time.

§26.5.Prohibited Activities.

(a) Persons receiving or benefiting from HTF funds, as determined by the Department, may not be currently in delinquency or in default with child support and/or government loans.

(b) The activities described in paragraphs (1) - (7) of this subsection are prohibited in relation to the origination of a HTF loan, but may be charged as an allowable cost by a third (3rd) party lender for the origination of all other loans originated in connection with an HTF loan:

(1) payment of delinquent property taxes or related fees or charges on properties to be assisted with HTF funds;

(2) loan origination fees;

(3) application fees;

(4) discount fees;

(5) underwriter fees;

(6) loan processing fees; and

(7) other fees not approved by the Department in writing prior to expenditure.

§26.6.Administrator Eligibility and Requirements.

Administrator must enter into an agreement with the Department in order to be eligible to access the Housing Trust Fund.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

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

TRD-201702828

Timothy K. Irvine

Executive Director

Texas Department of Housing and Community Affairs

Earliest possible date of adoption: September 10, 2017

For further information, please call: (512) 475-4828


SUBCHAPTER B. AMY YOUNG BARRIER REMOVAL PROGRAM

10 TAC §§26.20 - 26.28

STATUTORY AUTHORITY. The new rules are proposed pursuant to Texas Government Code §2306.053, which authorizes the Department to adopt rules.

The proposal affects no other code, article, or statute.

§26.20.Amy Young Barrier Removal Program Purpose.

The Amy Young Barrier Removal Program (the "Program" or "AYBRP") provides one-time grants of up to $20,000 in combined Hard and Soft Costs to Persons with Disabilities in a Household qualified as Low-Income. Grants are for home modifications that increase accessibility, eliminate life-threatening hazards and correct unsafe conditions.

§26.21.Amy Young Barrier Removal Program Definitions.

The following words and terms used in this Subchapter shall have the following meanings, unless the context clearly indicates otherwise. Other definitions are found in Texas Government Code, Chapter 2306, 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), Chapter 21 of this Title (relating to Minimum Energy Efficiency Requirements for Single Family Construction Activities), and Chapter 26, Subchapter A of this Title (relating to Housing Trust Fund).

(1) Administration Fee--Funds equal to 10% of the Project Costs (combined Hard and Soft Costs) paid to an Administrator upon completion of a project.

(2) Hard Costs--Site-specific costs incurred during construction, including but not limited to: general requirements, building permits, jobsite toilet rental, dumpster fees, site preparation, demolition, construction materials, labor, installation equipment expenses, etc.

(3) Low-Income--Household income does not exceed the greater of 80% of the Area Median Family Income or 80% of the Statewide Income Limits, adjusted for Household size, in accordance with the current HOME Investment Partnerships Program income limits as defined by HUD.

(4) Project Costs--Program funds (combined Hard and Soft Costs) that directly assist a Household.

(5) Qualified Inspector--Certified by the Administrator that the individual has professional certifications, relevant education or a minimum of five (5) years experience in a field directly related to home inspection, including but not limited to installing, servicing, repairing or maintaining the structural, mechanical, plumbing and electrical systems found in Single Family Housing Units, as evidenced by inspection logs, certifications, training courses or other documentation.

(6) Reservation Agreement--A written Agreement including all amendments thereto between the Department and Administrator that authorizes the Administrator to reserve funds under the AYBRP.

(7) Soft Costs--Costs related to and identified with a specific Single Family Housing Unit other than construction costs, per Texas Administrative Code, Title 10, Part 1, Single Family Umbrella Rule §20.3.

§26.22.Amy Young Barrier Removal Program Geographic Dispersion.

(a) The process to promote geographic dispersion of program funds is as follows:

(1) For the first 90 days of the initial release of funds, each state region will receive funding amounts for their rural and urban subregions. For 90 days, these funds may be reserved only for Households located in these rural and urban subregions.

(2) For the next 90 days following the initial 90 days after the release date, any funds remaining in the rural and urban subregions will be combined into one balance for that state region. For 90 days, these funds may be reserved only for Households located in that state region.

(3) After the initial 180 days following the release date, any funds remaining across all state regions will collapse into one state-wide pool. For as long as funds are available, these funds may be reserved for any Households anywhere in the state on a first-come, first-served basis.

(b) If any additional funds beyond the original program allocations that derive from HTF loan repayments, interest earnings, deobligations, and other HTF funds in excess of those funds required under Rider 8 may be placed directly into the state-wide pool for reservation.

§26.23.Amy Young Barrier Removal Program Administrative Requirements.

(a) To participate in the Program, an eligible participant must first be approved as an Administrator by the Department by the submission of a Reservation System Access Application. Eligible participants include Colonia Self-Help Centers established under Texas Government Code, Chapter 2306, Subchapter Z; Councils of Government; Units of Local Government; Nonprofit Organizations; Local Mental Health Authorities and Public Housing Authorities.

(b) The Administrator must enter into a Reservation Agreement ("Agreement") with the Department in order to be eligible to reserve funds for the Amy Young Barrier Removal Program.

(1) The Applicant submit a current letter of determination from the Internal Revenue Service (IRS) under §501(c)(3), a charitable, nonprofit corporation, of the Internal Revenue Code of 1986, as evidenced by a certificate from the IRS that is dated 1986 or later. The exemption ruling must be effective on throughout the agreement period to access the Reservation System.

(2) The Applicant must be registered and in good standing with the Office of the Secretary of State and the State Comptroller's Office to do business in the state of Texas.

(3) The Applicant must have the capacity and experience demonstrating at least two years experience in housing rehabilitation in Texas. Summary of experience will describe the capacity of key staff members and their skills and experience in client intake, records management, and managing housing rehabilitation. It will also describe organizational knowledge and experience in serving Persons with Disabilities.

(4) The Applicant must evidence of financial accountability standards, demonstrated by certification from a Certified Public Accountant and an audited financial statement from the most recent fiscal year, or a current dated and signed financial statement for the period since last audit produced. For Nonprofit Organizations that do not yet have audited financial statements, the Department may accept a resolution from the Board of Directors that is signed and dated within the six months preceding the application and that certifies that the accounting procedures used by the organization conform to Generally Accepted Accounting Principles (GAAP) and the Financial Accounting Standards Board (FASB) No. 117, "Financial Statements of Not-For-Profit Organizations".

(5) Applicants who have previously received any TDHCA funding must be in compliance with all active Contracts and Agreements.

(6) An Applicant must submit a current roster of all Board of Directors, including names and mailing addresses.

(7) The Applicant must submit a resolution from the Board of Directors, Council, or Commissioners that is signed and dated within the six months preceding the application. The resolution must state that the board, council or commissioners have approved the Applicant to access the Reservation System for TDHCA's Amy Young Barrier Removal Program; and the name and title of the individual authorized to execute a written Reservation System Access Agreement.

(8) The Applicant must submit any past due Single Audit to the Department in a satisfactory format on or before the Application deadline.

(9) The Applicant's compliance history will be evaluated in accordance with 10 TAC Chapter 1, Subchapter 1, §1.302, relating to Previous Participation Reviews for Department Program Awards. Access to funds may be subject to terms and conditions.

(10) If applicable, the Applicant must submit copies of executed contracts with consultants or other organizations that are assisting in the implementation of the applicant's AYBRP activities. They must include a summary of the consultant or other organization's experience in housing rehabilitation and/or serving Persons with Disabilities.

(c) Administrators must follow the processes and procedures as required by the Department through its governing statute (Chapter 2306 of the Government Code), Administrative Rules (Texas Administrative Code, Title 10, Part 1), Reservation Agreement, Program Manual, forms, and NOFA.

§26.24.Amy Young Barrier Removal Program Reservation System Requirements.

(a) An Administrator is ineligible to access the online Reservation System until any past due audits or Department audit certification forms have been submitted to the Department in a satisfactory format.

(b) Reservation Setups will be processed in the order submitted on the Reservation System. Submission of a Reservation Setup consisting of support documentation on behalf of a Household does not guarantee funding.

(c) If the Reservation is incomplete and missing any of the required forms as prescribed by the current setup instructions, it will be set back to "pending" status and funds will be released and available for reservation.

(d) If support documentation needs correction or additional information, the Department will notify the Administrator of the deficiencies. If any deficiencies remain uncured within ten calendar days after notification, the Department may cancel the reservation.

(e) If a Household is eligible for assistance, the Department will reserve up to the maximum of $20,000 in Project Costs and an Administration Fee equal to 10% of the combined Hard and Soft costs in the Housing Contract System on behalf of the Household.

§26.25.Amy Young Barrier Removal Program Household Eligibility Requirements.

(a) At least one Household member shall meet the definition of Persons with Disabilities.

(b) The assisted Household shall not have Household income that exceeds 80% of Area Median Family Income.

(c) The assisted Household's liquid assets shall not exceed $20,000. Liquid assets are considered to be cash deposited in checking or savings accounts, money markets, certificates of deposit, mutual funds or brokerage accounts; the net value of stocks or bonds that may be easily converted to cash; and the appraisal district's market value for any real property that is not a principal residence. Funds in tax-deferred accounts for retirement or education savings (e.g., Individual Retirement Accounts, 401Ks, 529 plans) are excluded from the liquid assets calculation.

(d) The Household may be ineligible for the program if there is debt owed to the State of Texas, including a tax delinquency; a child support delinquency; a student loan default; or any other delinquent debt owed to the State of Texas.

§26.26.Amy Young Barrier Removal Program Property Eligibility Requirements.

(a) Owner-occupied homes are eligible for Program assistance.

(1) In owner-occupied homes, the owner of record must reside in the home as their permanent residence unless otherwise approved by the Department.

(2) Real property taxes assessed on an owner-occupied Single Family Housing Unit must be current (including prior years). Alternatively, the Household must be satisfactorily participating in an approved payment plan with the taxing authority and must be current for at least six consecutive months prior to the date of Application, or, must have qualified for an approved tax deferral plan, or has received a valid exemption from real property taxes.

(b) Certain rental units are eligible for Program assistance.

(1) In rental units, all Household occupants, including the Person with Disability, must be named on the lease.

(2) If the owner of record does not live in the subject property with the Person with Disability, the Department may consider it a renter-occupied unit.

(3) If the property is family-owned but the owner of record is not a Household member (or is deceased), the Department may consider it a renter-occupied unit.

(4) The following rental properties are ineligible for Program assistance:

(A) Property that is or has been developed, owned, or managed by that Administrator or an Affiliate;

(B) Rental units in properties that are financed with any federal funds or that are subject to 10 TAC Chapter 1, Subchapter B, §1.206 relating to Applicability of the Construction Standards for Compliance with §504 of the Rehabilitation Act of 1973.

(C) Rental units that have life-threatening hazards or unsafe conditions identified in the initial inspection. Program funds may not be used to correct hazardous or unsafe conditions in rental units, but may be used for accessibility modifications only after the life-threatening hazards and unsafe conditions have been corrected by the property owner at the property owner's expense.

(D) Rental units owned by a property owner who is delinquent on property taxes associated with the property occupied by the Household.

§26.27.Amy Young Barrier Removal Program Construction Requirements.

(a) Inspections.

(1) Initial inspection is required and must identify the accessibility modifications needed by the Person with Disability; assess and document the condition of the property; and identify all deficiencies that constitute life-threatening hazards and unsafe conditions.

(2) Final inspection is required and must verify, assess and document that all construction activities have been repaired, replaced and/or installed in a professional manner consistent with all applicable building codes and Program requirements.

(3) Initial and final inspections must be completed by a Qualified Inspector.

(4) All On-Site Sewage Facilities (OSSF or septic system) shall be 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, unless waived by the Department on a case-by-case basis.

(b) A Manufactured Housing Unit may be eligible for Program assistance if it was constructed on or after January 1, 1995.

(c) Construction standards.

(1) Administrators must follow all applicable sections of their local building codes and ordinances, pursuant to Section 214.212 of the Local Government Code. Where local codes do not exist, the 2015 International Residential Code (IRC), including Appendix J for Existing Buildings and Structures, is the applicable code for the Program.

(2) Accessibility modifications shall be made with consideration of the design standards established by the 2010 ADA Standards. Any variation from 2010 ADA Standards must be documented as necessary to meet the disability related needs of the Person with a Disability.

(3) Administrators must adhere to Chapter 21 of this Title, relating to "Minimum Energy Efficiency Requirements for Single Family Construction Activities".

(d) Life-threatening hazards and unsafe conditions.

(1) Administrators may make repairs to eliminate life-threatening hazards and correct unsafe conditions in the housing unit as long as no more than 25% of the Project Hard Costs budget is utilized for this purpose, unless otherwise approved by the Department.

(2) Life-threatening hazards and unsafe conditions include, but are not limited to: faulty or damaged electrical systems; faulty or damaged gas-fueled systems; faulty or damaged heating and cooling systems or the absence of adequate heating and cooling system; faulty or damaged plumbing systems, including sanitary sewer systems; faulty or damaged smoke, fire and carbon monoxide detection/alarm systems or the absence of these systems; structural systems on the verge of collapse or failure; environmental hazards such as mold, lead-based paint, asbestos or radon; serious pest infestation; absence of adequate emergency escape and rescue openings and fire egress; and the absence of ground fault circuit interrupters (GFCI) and arc fault circuit interrupters (AFCI) in applicable locations.

(3) Because of the essential nature of the elimination of certain life-threatening hazards, the percentage of Project Hard Costs budget devoted to eliminate life-threatening hazards and correct unsafe conditions in the housing unit may exceed 25% if the work write-up and cost estimation includes the correction of: inadequate, faulty, or damaged systems; the absence of emergency escape, rescue openings and fire egress, ground fault circuit interrupters (GFCI), arc fault circuit interrupters (AFCI); and the absence of smoke, fire and carbon monoxide detection/alarm systems. The combination of the correction of these certain life-threatening hazards with the correction of any other unsafe conditions cannot exceed 40% of Project Hard Costs budget.

(4) All areas and components of the housing must be free of life-threatening hazards and unsafe conditions at project completion.

(e) Work-Write Ups. The Department shall review work-write ups (also referred to as "scope of work") and cost estimates prior to the Administrator soliciting bids.

(f) Bids. The Department shall review all line item bids Administrators select for award prior to the commencement of construction. Lump sum bids will not be accepted.

(g) Change orders. Administrators seeking change orders must obtain written Department approval prior to the commencement of any work related to the proposed change. Failure to get prior Departmental approval may result in disallowed costs.

§26.28.Amy Young Barrier Removal Program Project Completion Requirements.

(a) The Administrator has ninety calendar days to complete all construction activities and submit the Project and Administrative draw request, with required supporting documentation, in the Housing Contract System for reimbursement by the Department. The Department may grant a one-time, 30-calendar day extension to the Project completion deadline due to extenuating circumstances that were beyond the Administrator's control.

(b) The Department will reimburse the Administrator in one, single payment after the Administrator's successful submission of the Project and Administrative draw request per Department instructions. Interim draws will not be permitted. The Department reserves the right to delay draw approval in the event that the Household expresses dissatisfaction with the work completed in order to resolve any outstanding conflicts between the Household and/or the Administrators and their subcontractors.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

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

TRD-201702829

Timothy K. Irvine

Executive Director

Texas Department of Housing and Community Affairs

Earliest possible date of adoption: September 10, 2017

For further information, please call: (512) 475-4828