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Presentation, discussion, and possible action on an order proposing amendments to 10 TAC Chapter 10, Subchapter F, §10.601 Compliance Monitoring Objectives and Applicability; §10.607 Reporting Requirements; §10.611 Determination, Documentation and Certification of Annual Income; §10.613 Lease Requirements; §10.614 Utility Allowances; §10.621 Property Condition Standards; §10.622 Special Rules Regarding Rents and Rent Limit Violations; and Figure §10.625 and directing its 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, Housing and Urban Development (HUD) published program updates to the HOME Investment Partnerships Program (HOME Final rule) on May 24, 2024, with an implementation date of April 30, 2026, and the current rule relating to applicability of compliance is in need of revisions to ensure federal guidance requirements related to the HOME, TCAP-RF and HOME Match developments are clearly described in the Department’s monitoring;
WHEREAS, staff proposes a new requirement for Owners to report within twenty-four hours any non-operational elevator to the Department to ensure an elevator repair is timely completed;
WHEREAS, staff proposes amending the current Compliance rule to add new requirements for Developments monitored and inspected by the Department; and
WHEREAS, such proposed amendments will be published in the Texas Register for public comment from January 30, 2026, to 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 action, together with the preambles in the form presented to this meeting, to be published in the Texas Register for public comment and, in connections, as they may deem necessary to effectuate the forgoing, 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, and community development programs, including the low-income housing tax credit program. The Compliance Division and its Rules, as a whole, are an integral part of monitoring the Department’s federal housing programs, assisting in: reviewing and ensuring long-term affordability, compliance 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 monitoring compliance as required under §§2306.6719; and performing essential functions required under various federal program (HOME, ERA, HOME-Match, HOME-ARP, NSP, NHTF, TCAP-RF, Exchange, TCAP, Bond, 811 PRA) rules and under Section 42 of the Internal Revenue Code.
Housing and Urban Development (HUD) published a new HOME Final rule that must be implemented no later than April 30, 2026. The changes include significant revisions to tenant protections, utility allowances, rent increases, reporting requirements for multifamily developments that have contracts executed on or after April 30, 2026. Owners of existing HOME, TCAP-RF and HOME-Match developments will have the opportunity to execute an amendment if they choose to opt-in to the entirety of the new rule (to the extent allowed under federal and state law).
The proposed draft of the Compliance Monitoring Rules reflects staff’s recommendations for the Board’s consideration. Behind the proposed preamble for the proposed rule action is the rule shown in its blackline form reflecting changes to the rule that is proposed for an amendment.
Only the sections noted in the recitals and proposed for action will be published in the Texas Register for public comment. Proposed substantive changes are explained below.
Upon Board approval, the proposed sections of the rule will be posted on the Department’s website and published in the Texas Register. Public comment will be accepted from January 30, 2026, through March 3, 2026. The Compliance Monitoring Rules, after consideration for public comment, will be brought before the Board at the May 2026, Board meeting, for final approval and subsequently published in the Texas Register for adoption.
Summary of Proposed Changes:
§10.601 Compliance Monitoring Objectives and Applicability. Adds that HOME, TCAP-RF and Developments with HOME Match Units are subject to the new HOME Final rule if they have a contract executed on or after April 30, 2026. Additionally, notifies Owners that they have the opportunity to opt-in to the entirety of the rule, to the extent allowed under federal and state law, through an approved executed amendment to the Contract, LURA, and Loan Documents, as applicable.
§10.607 Reporting Requirements. Clarifies that any ownership or management change to a Development subject to the new HOME Final rule must notify tenants in writing of such change within five (5) business days.
§10.611 Determination, Documentation and Certification of Annual Income. Codifies Bond low-income units may use the Asset Certification form to document household assets when family assets are at or below the threshold. Also, clarifies the circumstances in which the Department will accept the income certification done by a Housing Authority.
§10.613 Lease Requirements. Incorporates the requirement that developments subject to the 2025 HOME Final rule are prohibited from locking out or threatening to lock out any tenants including seizing property for non-payment of rent, etc. Also prohibits Owners from requiring surety bonds or, security deposit insurance be used in lieu of or in addition to security deposits. Security deposits must be refundable and may not exceed the cost of two months of rent. Lease template must be submitted and approved by the Department via email and must provide tenants more than one method to communicate with the Owner and management company. Additionally, any notice to vacate must be submitted to the Department either upon issuance or no later than 14 days after the notice is issued based on the circumstances.
§10.614 Utility Allowances. Allows Developments subject to the 2025 HOME Final rule to use the Public Housing Authority schedule to establish a utility allowance.
§10.621 Property Condition Standards. Adds the requirement that Developments with non-operable elevators must notify the Department within 24 hours.
§10.622 Special Rules Regarding Rents and Rent Limit Violations. Clarifies Developments subject to the, that a household’s income that exceeds the program 80% income limit at recertification is subject to the HTC rent limit Prohibits Owners from refusing to accept rent if payment is made on time and in full and to cut off utilities during the greater of the time period required by the applicable federal program or under state law. Also, clarifies the over-income rules when an MFDL Development, has LIHTC and Market Rate Units. Requires Developments subject to the 2025 Final Rule to provide tenants a 60-day written notice before implementing a rent increase.
Figure §10.625. Refines the language by removing the words quarterly reports. Added an Event of Noncompliance for Owners that refuse to accept rent if the payment is made on time and in full or that cut off utilities during the greater of the time period required by the applicable federal program or under state law.