Texas Register, Volume 46, Number 38, Pages 5983-6306, September 17, 2021 Page: 6,016
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(9) Single Audit--As used in this rule, the term relates
specifically to an audit required by 2 CFR 200.501 or the Texas
Single Audit Circular.
(c) Items Not Considered. When conducting a previous par-
ticipation review the items in paragraphs (1) through (10) of this sub-
section will not be taken into consideration:
(1) Events of Noncompliance, Findings, Concerns, and
Deficiencies (as described in 10 TAC 6.2, 10 TAC 7.2, 10 TAC
10.625, 10 TAC 10.803 and 10 TAC 20.3) that were corrected over
three years from the date the Event is closed;
(2) Events of Noncompliance with an "out of compliance
date" prior to the Applicant's period of Control if the event(s) is cur-
rently corrected;
(3) Events of Noncompliance with an "out of compliance
date" prior to the Applicant's period of Control if the event(s) is cur-
rently uncorrected and the Applicant has had Control for less than one
year, or if the Owner is still within the timeframe of a Department-ap-
proved corrective action from the Department's Enforcement Commit-
tee;
(4) The Event of Noncompliance "Failure to provide Fair
Housing Disclosure notice";
(5) The Event of Noncompliance "Program Unit not leased
to Low income Household" sometimes referred to as "Household In-
come above income limit upon initial Occupancy" for units at Devel-
opments participating in U.S. Department of Housing and Urban De-
velopment programs (or used as HOME Match) or U.S. Department of
Agriculture, if the household resided in the unit prior to an allocation
of Department resources and Federal Regulations prevent the Owner
from correcting the issue;
(6) The Event of Noncompliance "Casualty loss" if the
restoration period has not expired;
(7) Events of Noncompliance that the Applicant believes
can never be corrected and the Department agrees in writing that such
item should not be considered;
(8) Events of Noncompliance corrected within their Cor-
rective Action Period;
(9) Events of failure to respond within the Corrective Ac-
tion Period which have been fully corrected prior to January 1, 2019,
will not be taken into consideration under subsection (e)(2)(C) and
(e)(3)(C) of this section;
(10) Events of Noncompliance precluded from considera-
tion by Tex. Gov't Code 2306.6719(e); and
(11) Except for Applications for Multifamily Direct
Grants/Loans and 811 PRA, or for Ownership Transfers of Multi-
family Properties containing Multifamily Direct Grants/Loans or 811
PRA, Events of Noncompliance associated with a Development that
has submitted documentation, using the appropriate Department form,
that the responsibility for the Development's compliance has been
delegated to another participant in the project (defined as a member
of the Development Team), and the Applicant is not in Control of the
Development with Events of Noncompliance for purposes of manage-
ment and compliance. The term "Combined Portfolio" used in this
section does not include those properties with such documentation.
The Department may require additional information to support the
Control Form including but not limited to partnership agreements or
other legal documents.
(d) Applicant Process. Persons affiliated with an Application
or an Ownership Transfer request must complete the Department's Uni-form Previous Participation Review Form and respond timely to staff
inquiries regarding apparent errors or omissions, but for Applications
no later than the Administrative Deficiency deadline. For an Owner-
ship Transfer request, a recommendation will be delayed until the re-
quired forms or responsive information is provided.
(e) Determination of Compliance Status. Through a review of
the form, Department records, and the compliance history of the Af-
filiated multifamily Developments, staff will determine the applicable
category for the Application or Ownership Transfer request using the
criteria in paragraphs (1) through (3) of this subsection. Combined
Portfolios will not be designated as a Category 3 if both Applicants are
considered a Category 2 when evaluated separately. For example, if
each Applicant is a Category 2 and their Combined Portfolio is a Cat-
egory 3, the Application will be considered a Category 2.
(1) Category 1. An Application will be considered a
Category 1 if the Actively Monitored Developments in the Combined
Portfolio have no issues that are currently uncorrected, all Monitoring
Events were responded to during the Corrective Action Period, and
the Application does not meet any of the criteria of Category 2 or 3.
(2) Category 2. An Application will be considered a Cate-
gory 2 if any one or more of the following criteria are met:
(A) The number of uncorrected Events of Noncompli-
ance plus the number of corrected Events of Noncompliance that were
not corrected during the Corrective Action Period totals at least three
but is less than 50% of the number of Actively Monitored Develop-
ments in the Combined Portfolio; or
(B) There are uncorrected Events of Noncompliance
but the number of Events of Noncompliance is 10% or less than
the number of Actively Monitored Developments in the Combined
Portfolio. Corrective action uploaded to the Department's Compliance
Monitoring and Tracking System (CMTS) or submitted during the
seven day period referenced in subsection (f) of this section will be
reviewed and the Category determination may change as appropriate;
or
(C) Within the three years immediately preceding the
date of Application, any Person subject to previous participation review
failed to respond during the Corrective Action Period to a Monitoring
Event; however, the number of times is less than 25% of the number of
Actively Monitoring Developments in the Combined Portfolio; or
(D) The Applicant is required to have a Single Audit
and a relevant issue was identified in the Single Audit (e.g. Notes to
the Financial Statements), or the required Single Audit is past due.
(3) Category 3. An Application will be considered a Cate-
gory 3 if any one or more of the following criteria are met:
(A) The number of uncorrected Events of Noncompli-
ance plus the number of corrected Events of Noncompliance that were
not corrected during the Corrective Action Period total at least three
and equal or exceed 50% of the number of Actively Monitored Devel-
opments in the Combined Portfolio;
(B) The number of Events of Noncompliance that are
currently uncorrected total 10% or more than the number of Actively
Monitored Developments in the Combined Portfolio. Corrective action
uploaded to CMTS or submitted during the seven day period referenced
in subsection (f) of this section will be reviewed and the Category de-
termination may change as appropriate;
(C) Within the three years immediately preceding the
date of Application, any Person subject to previous participation re-
view failed to respond during the Corrective Action Period to a Mon-
itoring Event and the number of times is equal to or greater than 25%46 TexReg 6016 September 17, 2021 Texas Register
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Texas. Secretary of State. Texas Register, Volume 46, Number 38, Pages 5983-6306, September 17, 2021, periodical, September 17, 2021; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth1385246/m1/34/: accessed July 17, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.