Texas Register, Volume 42, Number 43, Pages 5913-6056, October 27, 2017 Page: 5,958
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12.1. General.
(a) Authority. The rules in this chapter apply to the issuance
of multifamily housing revenue bonds ("Bonds") by the Texas Depart-
ment of Housing and Community Affairs ("Department"). The De-
partment is authorized to issue Bonds pursuant to Tex. Gov't Code,
Chapter 2306. Notwithstanding anything in this Chapter to the con-
trary, Bonds which are issued to finance the Development of multifam-
ily rental housing are subject to the requirements of the laws of the
State of Texas, including but not limited to Tex. Gov't Code, Chapters
1372 and 2306, and federal law pursuant to the requirements of Inter-
nal Revenue Code ("Code"), 142.
(b) General. The purpose of this chapter is to state the Depart-
ment's requirements for issuing Bonds, the procedures for applying for
Bonds and the regulatory and land use restrictions imposed upon Bond
financed Developments. The provisions contained in this chapter are
separate from the rules relating to the Department's administration of
the Housing Tax Credit program. Applicants seeking a Housing Tax
Credit Allocation should consult Chapter 11 of this title (relating to the
Housing Tax Credit Program Qualified Allocation Plan) and Chapter
10 of this title (relating to Uniform Multifamily Rules) for the current
program year. In general, the Applicant will be required to satisfy the
requirements of the Qualified Allocation Plan ("QAP") and Uniform
Multifamily Rules in effect at the time the Certificate of Reservation is
issued by the Texas Bond Review Board ("TBRB"). If the applicable
QAP or Uniform Multifamily Rules contradict rules set forth in this
Chapter, the applicable QAP or Uniform Multifamily Rules will take
precedence over the rules in this Chapter. The Department encourages
participation in the Bond program by working directly with Applicants,
lenders, Bond Trustees, legal counsels, local and state officials and the
general public to conduct business in an open, transparent and straight-
forward manner.
(c) Costs of Issuance. The Applicant shall be responsible for
payment of all costs related to the preparation and submission of the
pre-application and Application, including but not limited to, costs as-
sociated with the publication and posting of required public notices and
all costs and expenses associated with the issuance of the Bonds, re-
gardless of whether the Application is ultimately approved or whether
Bonds are ultimately issued. At any point [stage] during the process,
the Applicant is solely responsible for determining whether to proceed
with the Application and the Department disclaims any and all respon-
sibility and liability in this regard.
(d) Taxable Bonds. The Department may issue taxable Bonds
and the requirements associated with such Bonds, including occupancy
requirements, shall be determined by the Department on a case by case
basis.
(e) Waivers. Requests for waivers of program rules must be
made in accordance with 10.207 of this title (relating to Waiver of
Rules [for Applications]).
12.3. Bond Rating and Investment Letter
(a) Bond Ratings. All publicly offered Bonds issued by the
Department to finance Developments shall have a debt rating the equiv-
alent of at least an "A" rating assigned to long-term obligations by Stan-
dard & Poor's Ratings Services, [a division of The MeGrawHi4 Cem-
pan Inc- ] or Moody's Investors Service, Inc. If such rating is based
upon credit enhancement provided by an institution other than the Ap-
plicant or Development Owner, the form and substance of such credit
enhancement shall be subject to approval by the Board, evidenced by
a resolution authorizing the issuance of the credit enhanced Bonds.
(b) Investment Letters. Bonds rated less than "A," or Bonds
which are unrated must be placed with one or more Institutional Buy-
ers and must be accompanied by an investor letter acceptable to theDepartment. Subsequent purchasers of such Bonds shall also be qual-
ified as Institutional Buyers and shall execute and deliver to the De-
partment an investor letter in a form satisfactory to the Department.
Bonds rated less than "A" and Bonds which are unrated shall be issued
in physical form, in minimum denominations of one hundred thousand
dollars ($100,000), and shall carry a legend requiring any purchasers
of the Bonds to sign and deliver to the Department an investor letter in
a form acceptable to the Department.
12.4. Pre-Application Process and Evaluation.
(a) Pre-Inducement Questionnaire. Prior to the filing of a pre-
application, the Applicant shall submit the Pre-Inducement Question-
naire, in the form prescribed by the Department, so the Department
can get a preliminary understanding of the proposed Development plan
before a pre-application and corresponding fees are submitted. Infor-
mation requested by the Department in the questionnaire includes, but
is not limited to, the financing structure, borrower and key principals,
previous housing tax credit or private activity bond experience, related
party or identity of interest relationships and contemplated scope of
work (if proposing Rehabilitation). After reviewing the pre-induce-
ment questionnaire, Department staff will follow-up with the Applicant
to discuss the next steps in the process and may schedule a pre-induce-
ment conference call or meeting. Prior to the submission of a pre-appli-
cation, it is essential that the Department and Applicant communicate
regarding the Department's objectives and policies in the development
of affordable housing throughout the State using Bond financing. The
acceptance of the questionnaire by the Department does not constitute
a pre-application or Application and does not bind the Department to
any formal action regarding an inducement resolution.
(b) Undesirable Neighborhood Characteristics. If the
Development Site has any of the characteristics described in
10.101(a)(3)(B) of this title (relating to Site and Development Re-
quirements and Restrictions), the Applicant must disclose the presence
of such characteristics to the Department. Disclosure may be done at
time of pre-application and handled in connection with the inducement
or it can be addressed at the time of Application submission. The
Applicant understands that any determination made by staff or the
Board at the time of bond inducement regarding Site eligibility based
on the documentation presented, is preliminary in nature. Should
additional information related to any of the undesirable neighborhood
characteristics become available while the full Application is under re-
view, or the information by which the original determination was made
changes in a way that could affect eligibility, then such information
will be re-evaluated and presented to the Board. The Application may
be subject to termination should staff conclude that the Development
Site has any characteristics found in 10.101(a)(3)(B) of this title
(relating to Site and Development Requirements and Restrictions) and
the Applicant failed to disclose.
(c) Pre-Application Process. An Applicant who intends to pur-
sue Bond financing from the Department shall submit a pre-application
by the corresponding pre-application submission deadline, as set forth
by the Department. The required pre-application fee as described in
12.10 of this chapter (relating to Fees) must be submitted with the
pre-application in order for the pre-application to be accepted by the
Department. Department review at the time of the pre-application is
limited and not all issues of eligibility and documentation submission
requirements pursuant to Chapter 10 of this title (relating to Uniform
Multifamily Rules) are reviewed. The Department is not responsible
for notifying an Applicant of potential areas of ineligibility or other de-
ficiencies at the time of pre-application. If the Development meets the
criteria as described in 12.5 of this chapter (relating to Pre-Applica-
tion Threshold Requirements), the pre-application will be scored and
ranked according to the selection criteria as described in @12.6 of this
chapter (relating to Pre-Application Scoring Criteria).42 TexReg 5958 October 27, 2017 Texas Register
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Texas. Secretary of State. Texas Register, Volume 42, Number 43, Pages 5913-6056, October 27, 2017, periodical, October 27, 2017; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth897027/m1/46/?q=%22%22~1&rotate=270: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.