TITLE 10. COMMUNITY DEVELOPMENT

PART 1. TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS

CHAPTER 7. HOMELESSNESS PROGRAMS

The Texas Department of Housing and Community Affairs (the "Department") adopts the repeal of 10 TAC Chapter 7, Subchapter A, §§7.1 - 7.14, General Provisions, and Subchapter B, Homeless Housing and Services Program, Subchapter B, §§7.1001 - 7.1005, without changes to the proposed text as published in the May 11, 2018, Texas Register (43 TexReg 2882) and will not be republished. The purpose of the repealed rule is to clarify general requirements and to align with new rules for the Homeless Housing and Services Program being adopted under a separate rulemaking action.

REASONED JUSTIFICATION: The Department finds that the adoption of the repeal is necessary to clarify general requirements for the Emergency Solutions Grants Program and Homeless Housing and Services Program, and to add the Ending Homelessness to the basic framework for administration, and to clarify specific requirements for the Homeless Housing and Services Program.

The TDHCA Governing Board approved the final order adopting the repealed rule on June 28, 2018.

SUMMARY OF PUBLIC COMMENTS. The public comment period for the repealed rule was held between May 11, 2018, and June 11, 2018. No public comment was received.

SUBCHAPTER A. GENERAL PROVISIONS

10 TAC §§7.1 - 7.14

STATUTORY AUTHORITY. The repealed sections are proposed pursuant to Texas Government Code, §2306.053, which authorizes the Department to adopt rules. Except as described herein the repealed sections affect no other code, article, or statute.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 2, 2018.

TRD-201802913

Timothy K. Irvine

Executive Director

Texas Department of Housing and Community Affairs

Effective date: July 22, 2018

Proposal publication date: May 11, 2018

For further information, please call: (512) 475-3975


SUBCHAPTER B. HOMELESS HOUSING AND SERVICES PROGRAM (HHSP)

10 TAC §§7.1001- 7.1005

STATUTORY AUTHORITY. The repealed sections are proposed pursuant to Texas Government Code, §2306.053, which authorizes the Department to adopt rules. Except as described herein the repealed sections affect no other code, article, or statute.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 2, 2018.

TRD-201802914

Timothy K. Irvine

Executive Director

Texas Department of Housing and Community Affairs

Effective date: July 22, 2018

Proposal publication date: May 11, 2018

For further information, please call: (512) 475-3975


SUBCHAPTER A. GENERAL POLICIES AND PROCEDURES

10 TAC §§7.1 - 7.11

The Texas Department of Housing and Community Affairs (the "Department') adopts the new 10 TAC, Chapter 7, Subchapter A, §§7.1 - 7.11, concerning General Provisions, with changes to the text in §7.4 and §7.11 as published in the May 11, 2018, issue of the Texas Register (43 TexReg 2883). Section 7.4 and §7.11 will be republished. No changes were made to §§7.1 - 7.3 and §§7.5 - 7.10, which will not be republished.

The purpose of the adopted new sections is to restructure the program rules to improve compliance with federal and state requirements, and to provide for consistency with other provisions of the Department's rules.

REASONED JUSTIFICATION. The Department finds that the adoption of new 10 TAC §§7.1 - 7.11 is necessary to clarify general requirements for the Emergency Solutions Grants Program and Homeless Housing and Services Program, and to add the Ending Homelessness to the basic framework for administration.

SUMMARY OF PUBLIC COMMENTS. The public comment period for the adopted rule was held between May 11, 2018, and June 11, 2018. No public comment was received.

The TDHCA Governing Board approved the final order adopting the new rule on June 28, 2018.

STATUTORY AUTHORITY. The new sections are adopted pursuant to Texas Government Code, §2306.053, which authorizes the Department to adopt rules. Except as described herein the adopted sections affect no other code, article, or statute.

§7.4.Subrecipient Contract.

(a) Subject to prior Board approval, the Department and a Subrecipient shall enter into and execute a Contract for the disbursement of program funds. The Department, acting by and through its Executive Director or his/her designee, may authorize, execute, and deliver authorized modifications and/or amendments to the Contract, as allowed by state and federal laws and rules.

(b) The Subrecipient may subcontract for the delivery of client assistance without obtaining Department's prior approval, but must obtain the Department's written permission before subgranting federal funds.

(c) The Subrecipient is responsible for ensuring that the performance rendered under all subcontracts, subgrants and other agreements are rendered so as to comply with Homeless Program requirements, as if such performance rendered were rendered by the Subrecipient. Department maintains the right to monitor and require the Subrecipient's full compliance with the terms of the Subrecipient Contract.

(d) A performance statement and budget are attachments to the Contract between the Subrecipient and the Department. Execution of the Contract enables the Subrecipient to access funds through the Department's Contract System.

(e) Amendments and Extensions to Contracts.

(1) Except for amendments that only move funds within budget categories, the Department reserves the right to deny amendment requests if any of the following conditions exist:

(A) the request for an amendment was received in writing less than thirty (30) calendar days from the end of the Contract Term;

(B) if the award for the Contract was competitively awarded and the amendment would materially change the scope of the Contract performance or affected the score;

(C) if the funds associated with the Contract will reach their federal or state expiration date within forty-five (45) calendar days of the request;

(D) if the Subrecipient is delinquent in the submission of their Single Audit or their Single Audit Certification form required by §1.403 in Chapter 1 of this Title;

(E) if the Subrecipient owes the Department disallowed amounts in excess of $1,000 and a Department-approved repayment plan is not in place or has been violated;

(F) for amendments adding funds (not applicable to amendments for extending time), if the Department has cited the Subrecipient for violations within §7.11 of this Subchapter (related to Compliance Monitoring) and the corrective action period has expired without correction of the issue or a satisfactory plan for correction of the issue;

(G) the Contract has expired; or

(H) a member of the Subrecipient's board has been debarred and has not been removed.

(2) Denial of an amendment may be subject to §1.7 of this Title, regarding appeals.

(f) The Department reserves the right to use a Cost Reimbursement method of payment whereby reimbursement of costs incurred by a Subrecipient is made only after the Department has reviewed and approved backup documentation provided by the Subrecipient to support such costs for all funds if at any time the following apply:

(1) The Department determines that the Subrecipient has maintained cash balances in excess of need;

(2) The Department identifies significant deficiency in the cash controls or financial management system used by the Subrecipient; or

(3) The Subrecipient fails to comply with the reporting requirements in §7.5 and §7.6 of this Subchapter.

(g) Voluntary deobligation. The Subrecipient may fully relinquish funds in the form of a written request signed by the signatory, or successor thereto, of the Contract. The Subrecipient may partially relinquish funds under a Contract in the form of a written request from the signatory if the partial relinquishment in performance measures and budget would not have impacted the award of the Contract. Voluntary relinquishment of a Contract does not limit a Subrecipient's ability to participate in future funding.

(h) Funds provided under a Contract may not be used for sectarian or explicitly religious activities such as worship, religious instruction or proselytization, and must be for the benefit of persons regardless of religious affiliation.

§7.11.Compliance Monitoring.

(a) Purpose and Overview

(1) This section provides the procedures that will be followed for monitoring for compliance with the programs in 10 TAC Chapter 7.

(2) Any entity administering any or all of the programs detailed in 10 TAC Chapter 7 is a Subrecipient. A Subrecipient may also administer other programs, including programs administered by other state or federal agencies and privately funded programs. If the Subrecipient has Contracts for other programs through the Department, including but not limited to the HOME Partnerships Program, the Neighborhood Stabilization Program, or the Texas Housing Trust Fund, the Department may, but is not required to and does not commit to, coordinate monitoring of those programs with monitoring of the programs under this Chapter.

(3) Any entity administering any or all of the programs provided for in subsection (a)(2) of this section as part of a Memorandum of Understanding ("MOU"), contract, or other legal agreement with a Subrecipient is a Subgrantee.

(b) Frequency of Reviews, Notification and Information Collection.

(1) In general, the Subrecipient or Subgrantee will be scheduled for monitoring based on state or federal monitoring requirements and/or a risk assessment. Factors to be included in the risk assessment include but are not limited to: the number of Contracts administered by the Subrecipient or Subgrantee, the amount of funds awarded and expended, the length of time since the last monitoring, findings identified during previous monitoring, issues identified through the submission or lack of submission of a Single Audit, complaints received by the Department, and reports of fraud, waste and/or abuse. The risk assessment will also be used to determine which Subrecipients or Subgrantees will have an onsite review and which may have a desk review.

(2) The Department will provide the Subrecipient or Subgrantee with written notice of any upcoming onsite or desk monitoring review, and such notice will be given to the Subrecipient and Subgrantee by email to the Subrecipient's and Subgrantee's Contract contact at the email address most recently provided to the Department by the Subrecipient or Subgrantee. In general, a thirty (30) day notice will be provided. However, if a credible complaint of fraud or other egregious noncompliance is received the Department reserves the right to conduct unannounced monitoring visits. It is the responsibility of the Subrecipients to provide to the Department the current contact information for the organization and the Board in accordance with §7.7 of this Subchapter (relating to Subrecipient Contact Information) and §1.22 of this Title (relating to Providing Contact Information to the Department).

(3) Upon request, Subrecipients or Subgrantees must make available to the Department all books and records that the Department determines are reasonably relevant to the scope of the Department's review. Typically, these records may include (but are not limited to):

(A) Minutes of the governing board and any committees thereof, together with all supporting materials;

(B) Copies of all internal operating procedures or other documents governing the Subrecipient's operations;

(C) The Subrecipient's Board approved operating budget and reports on execution of that budget;

(D) The Subrecipient's strategic plan or comparable document if applicable and any reports on the achievement of that plan;

(E) Correspondence to or from any independent auditor;

(F) Contracts with any third parties for goods or services and files documenting compliance with any applicable procurement and property disposition requirements;

(G) All general ledgers and other records of financial operations (including copies of checks and other supporting documents);

(H) Applicable client files with all required documentation;

(I) Applicable human resources records;

(J) Monitoring reports from other funding entities;

(K) Client files regarding complaints, appeals and termination of services; and

(L) Documentation to substantiate compliance with any other applicable state or federal requirements including, but not limited to, the Davis-Bacon Act, HUD requirements for environmental clearance, Lead Based Paint, the Personal Responsibility and Work Opportunity Act, HUD LEP requirements, and requirements imposed by Section 3 of the Housing and Urban Development Act of 1968.

(c) Post Monitoring Procedures.

(1) In general, within thirty (30) calendar days of the last day of the monitoring visit, a written monitoring report will be prepared for the Subrecipient describing the monitoring assessment and any corrective actions, if applicable. The monitoring report will be emailed to the Subrecipient's designated Contract contact, as applicable. Issues of concern over which there is uncertainty or ambiguity may be discussed by the Department with the staff of cognizant agencies overseeing federal funding. Certain types of suspected or observed improper conduct may trigger requirements to make reports to other oversight authorities, state and federal, including but not limited to the State Auditor's Office and applicable Inspectors General.

(2) Subrecipient Response. If there are any findings of noncompliance requiring corrective action, the Subrecipient will be provided thirty (30) calendar days, from the date of the email, to respond, which may be extended for good cause. In order to receive an extension, the Subrecipient must submit a written request to the Chief of Compliance within the corrective action period, stating the basis for good cause that justifies the extension.

(3) Monitoring Close Out. Within forty-five (45) calendar days after the end of the corrective action period, a close out letter will be issued to the Subrecipient. If the Subrecipient's response satisfies all Findings and Concerns noted in the monitoring letter, the issue of noncompliance will be noted as resolved. If the Subrecipient's response does not correct all findings noted, the follow-up letter will identify the documentation that must be submitted to correct the issue.

(4) Options for Review. If, following the submission of corrective action documentation, Compliance staff continues to find the Subrecipient or Subgrantee in noncompliance, and the Subrecipient disagrees, the Subrecipient may request or initiate review of the matter using the following options, where applicable:

(A) If the issue is related to a program requirement or prohibition of a federal program, the Subrecipient may contact the applicable federal program officer for guidance or request that the Department contact applicable federal program officer for guidance without identifying the Subrecipient.

(B) If the issue is related to application of a provision of the Contract or a requirement of the Texas Administrative Code, the Subrecipient may request to submit an appeal to the Executive Director consistent with §1.7, regarding appeals in Chapter 1 of this Title.

(C) The Subrecipient may request Alternative Dispute Resolution ("ADR"). The Subrecipient may send a proposal to the Department's Dispute Resolution Coordinator to initiate ADR pursuant to Chapter 1, Subchapter A of this title.

(5) If the Subrecipient does not respond to a monitoring letter or fail to provide acceptable evidence of compliance, the matter will be handled through the procedures described in Chapter 2 of this Title, relating to Enforcement.

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 2, 2018.

TRD-201802911

Timothy K. Irvine

Executive Director

Texas Department of Housing and Community Affairs

Effective date: July 22, 2018

Proposal publication date: May 11, 2018

For further information, please call: (512) 475-3975


SUBCHAPTER B. HOMELESS HOUSING AND SERVICES PROGRAM (HHSP)

10 TAC §§7.21 - 7.29

The Texas Department of Housing and Community Affairs (the "Department") adopts the new 10 TAC Chapter 7, Subchapter B, §§7.21 - 7.29, concerning Homeless Housing and Services Program, with no changes to text as published in the May 11, 2018, issue of the Texas Register (42 TexReg 2891). The purpose of the adopted new sections is to restructure the program rules to improve compliance with federal and state requirements, and to provide for consistency with other provisions of the Department's rules.

REASONED JUSTIFICATION: The Department finds that the adopted new rule is necessary to clarify specific requirements for the Homeless Housing and Services Program.

SUMMARY OF PUBLIC COMMENTS. The public comment period for the adopted new rule was held between May 11, 2018, and June 11, 2018. Written comments were accepted by mail, email, and facsimile. The Department received one comment from one source: Natalie Evans.

§7.23. Allocation of Funds and Formula.

COMMENT SUMMARY: Commenter supports the provision utilizing the American Community Survey 1 Year Estimates to determine population for the purposes of municipal eligibility.

STAFF RESPONSE: Staff agrees with the comment. No changes have been made to the rule in response to this comment.

The TDHCA Governing Board approved the final order adopting the new rule on June 28, 2018.

STATUTORY AUTHORITY. The new sections are adopted pursuant to Tex. Gov't Code, §2306.053, which authorizes the Department to adopt rules. Except as described herein the adopted new sections affect 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 2, 2018.

TRD-201802912

Timothy K. Irvine

Executive Director

Texas Department of Housing and Community Affairs

Effective date: July 22, 2018

Proposal publication date: May 11, 2018

For further information, please call: (512) 475-3975


CHAPTER 23. SINGLE FAMILY HOME PROGRAM

SUBCHAPTER F. TENANT-BASED RENTAL ASSISTANCE PROGRAM

10 TAC §23.61

The Texas Department of Housing and Community Affairs (the "Department") adopts the amendments to 10 TAC Chapter 23, Subchapter F, §23.61, concerning Tenant-Based Rental Assistance (TBRA) General Requirements, without changes, as published in the May 11, 2018, Texas Register (43 TexReg 2896) and will not be republished.

REASONED JUSTIFICATION: The purpose of amending the State HOME Investment Partnerships Program ("HOME") Rule under Subchapter F is two-fold. First is to remove requirements that are duplicative of requirements stated in the federal regulations governing the HOME Program, and second is to provide flexibility to Administrators of HOME TBRA funds as they relate to Administrative costs. Secondly, the amended section related to administrative costs will allow Administrators of HOME Program funds to have the option of selecting one of two methods of receiving administrative costs and soft costs for expenses related to provision of TBRA activities. Administrators will have the option to request reimbursement for Administrative costs equal to 4 percent of Direct Activity costs, excluding Match funds, and up to $1,200 per activity in project soft costs; or reimbursement of Administrative costs equal to 8 percent of Direct Activity costs, excluding Match funds. In either case, Administrators may request reimbursement for Administrative funds up to an additional 1 percent of Direct Activity Costs if Match is provided in an amount equal to 5 percent or more of Direct Activity Costs.

The Department accepted public comment between May 11, 2018, and June 11, 2018. No comments were received concerning the amendment.

The Board approved the final order adopting the amendments on June 28, 2018.

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

The adopted amendments affect 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 2, 2018.

TRD-201802917

Timothy K. Irvine

Executive Director

Texas Department of Housing and Community Affairs

Effective date: July 22, 2018

Proposal publication date: May 11, 2018

For further information, please call: (512) 475-0908