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Presentation, discussion, and possible action on the proposed amendments to 10 TAC Chapter 10 Subchapter E, Post Award and Asset Management Requirements, §10.400 Purpose, §10.401 Housing Tax Credit and Tax Exempt Bond Developments, §10.405 Amendments and Extensions, and §10.406 Ownership Transfers, §10.407 Right of First Refusal, §10.408 Qualified Contract Requirements, and directing their publication for public comment in the Texas Register
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RECOMMENDED ACTION
recommendation
WHEREAS, pursuant to Tex. Gov’t Code §2306.053, the Texas Department of Housing and Community Affairs (the Department) is authorized to adopt rules governing the administration of the Department and its programs;
WHEREAS, staff has identified changes to 10 TAC Chapter 10 Subchapter E, Post Award and Asset Management Requirements, that are needed to: clarify language or processes; add a requirement for construction inspection reports to be submitted directly to staff by the Development Owner’s Third Party inspector or by the third party lender or investor; remove the experience requirement to agree with a change to 10 TAC §11.204 of the Qualified Allocation Plan; add amendments to Contracts to the rules; identify when an expiration of the target populations for the elderly restrictions can be processed as a non-material LURA amendment; identify requests to opt into the 2025 HOME final rule as a non-material amendment to the Contract; add requirements for material LURA amendment requests that pertain to a right enforceable by a tenant or other third; add a requirement that for Developments subject to the 2025 update to 24 CFR 92 (HOME final rule), the Department and households must be notified at least 30 days prior to a foreclosure and that the notification must include information regarding the rent/income requirements post foreclosure for Developments; add a requirement for Community Housing Development Organization (CHDO) to renew their certification for ownership transfers that occur after April 30, 2026; identify that for ownership transfers, additional notification requirements may apply under 10 TAC §10.607 relating to Reporting Requirements; identify the Right of First Refusal requirements for a Multifamily Direct Loan LURA when the property is subject to the 2025 HOME final rule as identified in 10 TAC §10.601(g) relating to Compliance Monitoring Objectives and Applicability;
WHEREAS, staff has not identified substantive changes needed to §§10.400 and 10.408, but these sections are presented to comply with the four-year rule review requirement specified in Tex. Gov’t Code §2001.039; and
WHEREAS, such proposed rulemaking will be published in the Texas Register for public comment from January 30, 2026, through March 3, 2026, and subsequently returned to the Board for final adoption;
NOW, therefore, it is hereby
RESOLVED, that the Executive Director and his designees be and each of them are hereby authorized, empowered, and directed, for and on behalf of the Department, to cause the proposed amendments of §10.401 Housing Tax Credit and Tax Exempt Bond Developments, §10.405 Amendments and Extensions, §10.406 Ownership Transfers, and §10.407 Right of First Refusal, and to include §10.400 Purpose and §10.408 Qualified Contract Requirements, together with the preambles in the form presented to this meeting, to be published in the Texas Register for public comment and, in connection therewith, make such non-substantive technical corrections, or preamble-related corrections, as they may deem necessary to effectuate the foregoing, including the preparation and requested revisions to the subchapter specific preambles.
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BACKGROUND
Tex. Gov’t Code §2306.053 provides for the Department to administer federal housing, community affairs, or community development programs, including the low-income housing tax credit program. The Asset Management Division and its Rules, as a whole, are an integral part of administering the Department’s federal housing programs, assisting in reviewing and ensuring the long-term affordability and safety of multifamily rental housing Developments in the Department’s portfolio as required under Tex. Gov’t Code §§2306.185 and 2306.186, performing the functions of processing amendments and ownership transfers as required under Tex. Gov’t Code §§2306.6712 and 2306.6713, and performing essential functions required under various federal program (HOME, HOME-ARP, NSP, NHTF, Exchange, TCAP) rules and under Section 42 of the Internal Revenue Code.
Behind the proposed preamble for the proposed new action, a draft of the proposed amendments is shown in its blackline form reflecting changes to the rules that are proposed for amendment.
The proposed amendments to six sections of the 2026 Post Award and Asset Management Requirements reflects staff’s recommendations for the Board’s consideration. The more significant changes to specific sections are summarized below. Changes made only for purposes of correcting previous grammatical errors or spacing, re-numbering, re-aligning requirements with updated references to sections elsewhere in rule, removing redundancies, or updating rules to reflect current Department processes that do not signal a change in policy or practice are not specifically discussed.
Upon Board approval, the proposed amendments to the Asset Management Rules will be posted to the Department’s website and published in the Texas Register. Public comment will be accepted from January 30, 2026, through March 3, 2026. The proposed amendments to the Asset Management Rules, after consideration of public comment, are anticipated to be brought before the Board in April 2026 for final approval and subsequently published in the Texas Register for adoption.
Summary of Proposed Changes: Most of the changes proposed by staff are clarifying in nature; however, this section outlines the more significant recommendations made by staff.
1. §10.400 Purpose. No substantive amendments are proposed to this section, but the section is added for public comment to meet the four-year rule review requirement specified in Tex. Gov’t Code §2001.039.
2. §10.401 Housing Tax Credit and Tax Exempt Bond Developments. In §10.401(b) Construction Status Report, a requirement was added to have construction inspections submitted directly to the Department by the Development Owner’s Third Party inspector or by the Third Party lender or investor.
3. §10.405 Amendments and Extensions. A revision was made to §10.405(a)(2)(E) to be consistent with the removal of the experience requirement from §11.204. Contracts amendments were added to the LURA amendment section. 10.405(b(1)(F) was added to specify that a request submitted within one year of the expiration of the Elderly restrictions would be a non-material amendment to the LURA if the Development Owner certifies that the Development still qualifies as Elderly. 10.405(b(1)(G) was added to identify that a request to opt into the updated 24 CFR Part 92 (2025 HOME final rule) in accordance with §10.601(g) of this chapter pertaining to Compliance Monitoring Objectives and Applicability. 10.405(b(3) was amended to specify that if the amendment pertains to a right enforceable by a tenant or other third party, then the Development Owner must explain why performance of the original condition is impossible or demonstrate that Development would no longer be financially feasible, in accordance with the rules adopted in Chapter 11 Subchapter D of this part relating to Underwriting and Loan Policy. 10.405(b)(6) added clarification that a Contract Amendment or an amendment to the Loan Documents may be needed for some Programs as for some Programs if determined by the Department’s Legal Division.
4. §10.406 Ownership Transfers. In §10.406(b), a change was added that requires Developments that are subject to the 2025 HOME final rule to notify both the Department and households at least 30 days prior to a foreclosure and to specify that the notification must include information regarding the applicable rent/income requirements post foreclosure. A change was added to §10.406(f)(2) that requires a Community Housing Development Organization (CHDO) to renew their certification using the new certification package that includes the 2025 HOME final rule requirements. §10.406(h)(9) added clarification that additional notification requirements may apply under §10.607 of this chapter pertaining to Reporting Requirements.
5. §10.407 Right of First Refusal. §10.407(a)(1)(D) was added to state that the Right of First Refusal process will not be required when the Multifamily Direct Loan LURA requires a new Owner to be a CHDO, but the Development subject to the 2025 HOME final rule as identified in §10.601(g) of this chapter pertaining to Compliance Monitoring Objectives and Applicability, and the Development Owner is selling or conveying the Development to another CHDO approved by the Department. §10.407(d)(4) was added to state that if a Multifamily Direct Loan LURA for a property is subject to the 2025 HOME final rule as identified in §10.601(g) of this chapter pertaining to Compliance Monitoring Objectives and Applicability, then a CHDO approved by the Department may submit an offer to purchase the property.
6. §10.408 Qualified Contract Requirements. No substantial amendments are proposed to this section, but the section is added for public comment to meet the four-year rule review requirement specified in Tex. Gov’t Code §2001.039.