Texas Administrative Code › Title 10 - COMMUNITY DEVELOPMENT › Part 1 - TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS › Chapter 11 - QUALIFIED ALLOCATION PLAN (QAP) › Subchapter A - PRE-APPLICATION, DEFINITIONS, THRESHOLD REQUIREMENTS AND COMPETITIVE SCORING › Section 11.6 - Competitive HTC Allocation Process

Current through Reg. 49, No. 28; July 12, 2024
This section identifies the general allocation process and
					 the methodology by which awards during the Application Round are made.
(1) Regional Allocation Formula. The
				  Department shall initially make available in each Rural Area and Urban Area of
				  each Uniform State Service Region (subregion) Housing Tax Credits in an amount
				  not less than $600,000 in each Rural and Urban subregion, consistent with the
				  Regional Allocation Formula developed in compliance with Tex. Gov't Code §
										2306.1115. As
				  authorized by Tex. Gov't Code §
										2306.111(d-3),
				  the Department will reserve $600,000 in housing tax credits for Applications in
				  rural areas in each uniform state service region. The process of awarding the
				  funds made available within each subregion shall follow the process described
				  in this section. Where a particular situation that is not contemplated and
				  addressed explicitly by the process described herein, Department staff shall
				  formulate a recommendation for the Board's consideration based on the
				  objectives of the regional allocation formula together with other policies and
				  purposes set out in Tex. Gov't Code, Chapter 2306 and the Department shall
				  provide the public the opportunity to comment on and propose alternatives to
				  such a recommendation. In general, such a recommendation shall not involve
				  broad reductions in the funding request amounts solely to accommodate regional
				  allocation and shall not involve rearranging the competitive ranking of
				  Applications within a particular subregion or set-aside except as described
				  herein. If the Department determines that an allocation recommendation would
				  cause a violation of the $6 million credit limit per Applicant, the Department
				  will make its recommendation based on the criteria described in §
										11.4(a) of this
				  chapter (relating to Tax Credit Request, Award Limits and Increase in Eligible
				  Basis). The Department will publish on its website on or before December 1 of
				  each year, initial estimates of Regional Allocation Formula percentages and
				  limits of credits available, and the calculations periodically, if those
				  calculations change, until the credits are fully allocated.
(2) Credits Returned and National Pool
				  Allocated After January 1. For any credits returned after January 1 and
				  eligible for reallocation (not including credit returned and reallocated under
				  force majeure provisions), the Department shall first return the credits to the
				  subregion or set-aside from which the original allocation was made. The credits
				  will be treated in a manner consistent with the allocation process described in
				  this section and may ultimately flow from the subregion and be awarded in the
				  collapse process to an Application in another region, subregion or set-aside.
				  Consistent with the allocation process described in this section, credits that
				  are returned to the USDA or At-Risk Set-Asides are not eligible to flow to
				  another subregion or set-aside unless no eligible Applications remain in the
				  Set-Aside to which the credits were returned. For any credit received from the
				  "national pool" after the initial approval of awards in late July, the credits
				  will be added to any remaining credits and awarded to the next Application on
				  the waiting list for the state collapse, if sufficient credits are available to
				  meet the requirements of the Application as may be amended after underwriting
				  review.
(3) Award Recommendation
				  Methodology. (§2306.6710(a) - (f); §2306.111) The Department will
				  assign, as described herein, Developments for review by the program and
				  underwriting divisions. In general, Applications reviews will be conducted in
				  the order described in subparagraphs (A) - (F) of this paragraph based upon the
				  Applicant self-score and an initial program review. The procedure identified in
				  subparagraphs (A) - (F) of this paragraph will also be used in making
				  recommendations to the Board.
(A) USDA
				  Set-Aside Application Selection (Step 1). The first set of reviews will be
				  those Applications with the highest scores in the USDA Set-Aside until the
				  minimum requirements stated in §
											11.5(2) of this
				  chapter (relating to Competitive HTC Set-Asides. (§2306.111(d)) are
				  attained. The minimum requirement may be exceeded in order to award the full
				  credit request or underwritten amount of the last Application selected to meet
				  the USDA Set-Aside requirement.
(B)
				  At-Risk Set-Aside Application Selection (Step 2). The second set of reviews
				  will be those Applications with the highest scores in the At-Risk Set-Aside
				  statewide until the minimum requirements stated in §
											11.5(3) of this
				  chapter (relating to At-Risk Set-Aside) are attained. This may require the
				  minimum requirement to be exceeded to award the full credit request or
				  underwritten amount of the last Application selected to meet the At-Risk
				  Set-Aside requirement. This step may leave less than originally anticipated in
				  the 26 subregions to award under the remaining steps.
(C) Initial Application Selection in Each
				  Subregion (Step 3). The highest scoring Applications within each of the 26
				  subregions will then be selected provided there are sufficient funds within the
				  subregion to fully award the Application with the priorities in this
				  subparagraph first prioritized. Applications electing the At-Risk or USDA
				  Set-Asides will not be eligible to receive an award from funds made generally
				  available within each of the subregions. In Urban subregions in which credits
				  available do not allow for all of the priorities in clauses (iii) to (v) of
				  this subparagraph to be achieved, the priorities will be followed in the order
				  reflected in this subparagraph.
(i) In Uniform
				  State Service Regions containing a county with a population that exceeds one
				  million, the Board may not allocate more than the maximum percentage of credits
				  available for Elderly Developments, unless there are no other qualified
				  Applications in the subregion. The Department will, for each such Urban
				  subregion, calculate the maximum percentage in accordance with Tex. Gov't Code
				  §
												2306.6711(h),
				  and will publish such percentages on its website..
(ii) In accordance with Tex. Gov't Code,
				  §
												2306.6711(g),
				  in Uniform State Service Regions containing a county with a population that
				  exceeds 1.7 million, the Board shall allocate competitive tax credits to the
				  highest scoring Development, if any, that is part of a concerted revitalization
				  plan that meets the requirements of §11.9(d)(7) (except for
				  §11.9(d)(7)(A)(ii)(III) and §11.9(d)(7)(B)(iii)), is located in an
				  Urban subregion, and is within the boundaries of a municipality with a
				  population that exceeds 500,000.
(iii) In Urban subregions, not including the
				  calculation of At-Risk Applications awarded, no more than 50% of all credits in
				  a subregion will be awarded to Applications proposing Rehabilitation or
				  Reconstruction, unless only Rehabilitation or Reconstruction Applicants are
				  eligible in the subregion.
(iv) In
				  Urban subregions containing a county with a population that exceeds 950,000,
				  the Board shall allocate competitive tax credits to the highest scoring
				  Development, if any, that is located in a neighborhood which is a recipient of
				  a HUD Choice Neighborhood Planning or Implementation grant in the preceding
				  five years from the date of Application submission and funds from the HUD
				  Choice Neighborhood awardee are reflected in the Application's Sources and
				  Uses.
(v) In Urban subregions
				  containing a county with a population that exceeds 1,000,000, the Board shall
				  allocate competitive tax credits to the highest scoring Development, if any,
				  that elects to provide a High-Quality Pre-Kindergarten (HQ Pre-K) program and
				  associated educational space at the Development Site that meets the
				  requirements of items (a)-(c) of subparagraph (C)(i)(I) of §11.101(b)(5)-
				  (related to Common Amenities). Developments serving a Target Population that is
				  Elderly or Supportive Housing are not eligible for this item.
(D) Rural Collapse (Step 4). If
				  there are any tax credits set-aside for Developments in a Rural Area in a
				  specific Uniform State Service Region (Rural subregion) that remain after award
				  under subparagraph (C) of this paragraph, those tax credits shall be combined
				  into one "pool" and then be made available in any other Rural Area in the state
				  to the Application in the most underserved Rural subregion as compared to the
				  subregion's allocation. This rural redistribution will continue until all of
				  the tax credits in the "pool" are allocated to Rural Applications and at least
				  20% of the funds available to the State are allocated to Applications in Rural
				  Areas. (§2306.111(d)(3)) In the event that more than one subregion is
				  underserved by the same percentage, the priorities described in clauses (i) -
				  (ii) of this subparagraph will be used to select the next most underserved
				  subregion:
(i) the subregion with no
				  recommended At-Risk Applications from the same Application Round; and
(ii) the subregion that was the most
				  underserved during the Application Round during the year immediately preceding
				  the current Application Round.
(E) Statewide Collapse (Step 5). Any credits
				  remaining after the Rural Collapse, including those in any subregion in the
				  State, will be combined into one "pool." The funds will be used to award the
				  highest scoring Application (not selected or eliminated in a prior step) in the
				  most underserved subregion in the State compared to the amount originally made
				  available in each subregion. In Uniform State Service Regions containing a
				  county with a population that exceeds one million, the Board may not allocate
				  more than the maximum percentage of credits available as calculated through the
				  Regional Allocation Formula (RAF) for Elderly Developments, within an Urban
				  subregion of that service region. Therefore, certain Applications for Elderly
				  Developments may be excluded from receiving an award from the collapse. The
				  Department will, for each such Urban subregion, calculate the maximum
				  percentage in accordance with Tex. Gov't Code §
											2306.6711(h)
				  and will publish such percentages on its website. This process will continue
				  until the funds remaining are insufficient to award the next highest scoring
				  Application that is not rendered ineligible through application of the elderly
				  cap in the next most underserved subregion. At least seven calendar days prior
				  to the July Board meeting of the Department at which final awards of credits
				  are authorized, the Department will post on its website the most current 2023
				  State of Texas Competitive Housing Tax Credit Ceiling Accounting Summary which
				  includes the Regional Allocation Formula percentages including the maximum
				  funding request/award limits, the Elderly Development maximum percentages and
				  limits of credits available, and the methodology used for the determination of
				  the award determinations within the State Collapse. In the event that more than
				  one subregion is underserved by the same degree, the priorities described in
				  clauses (i) and (ii) of this subparagraph will be used to select the next most
				  underserved subregion:
(i) the subregion with
				  no recommended At-Risk Applications from the same Application Round;
				  and
(ii) the subregion that was the
				  most underserved during the Application Round during the year immediately
				  preceding the current Application Round.
(F) Contingent Qualified Nonprofit Set-aside
				  Step (Step 6). If an insufficient number of Applications participating in the
				  Nonprofit Set-Aside are selected after implementing the criteria described in
				  subparagraphs (A) - (E) of this paragraph to meet the requirements of the 10%
				  Nonprofit Set-Aside, action must be taken to modify the criteria described in
				  subparagraphs (A) - (E) of this paragraph to ensure the Set-aside requirements
				  are met. Therefore, the criteria described in subparagraphs (C) - (E) of this
				  paragraph will be repeated after selection of the highest scoring
				  Application(s) under the Nonprofit Set-aside statewide are selected to meet the
				  minimum requirements of the Nonprofit Set- Aside. This step may cause some
				  lower scoring Applications in a subregion to be selected instead of a higher
				  scoring Application not participating in the Nonprofit Set-aside.