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Presentation, discussion, and possible action on an order proposing the repeal of 10 TAC Chapter 1, Subchapter D, Uniform Guidance for Recipients of Federal and State Funds, including §1.401 through §1.411; an order proposing new 10 TAC Chapter 1, Subchapter D, Uniform Guidance for Recipients of Federal and State Funds, including §1.401 through §1.411; and directing their publication for public comment in the Texas Register
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RECOMMENDED ACTION
recommendation
WHEREAS, the current rule relating to the guidance that must be followed uniformly by recipients of federal and state funds, at 10 TAC Chapter 1, Subchapter D, is in need of revisions, and such revision is being proposed through the repeal of the current rule and a simultaneous new rule to be proposed in its place;
WHEREAS, the needed revisions include changes to reflect changes to federal regulations, make minor procedural revisions, remove the prior process for the Executive Award Review and Advisory Committee (EARAC), add clarification that this rule does not apply to specific multifamily processes nor to vendors except as specifically outlined, and make other applicable changes as further described in this item; and
WHEREAS, such proposed rulemaking will be published in the Texas Register for public comment 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 hereby are authorized, empowered, and directed, for and on behalf of the Department, to cause the proposed actions herein 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 as they may deem necessary to effectuate the foregoing including any requested revisions to the preambles.
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BACKGROUND
10 TAC Chapter 1, Subchapter D, Uniform Guidance for Recipients of Federal and State Funds, including §1.401 through §1.411, has been identified by staff as needing revisions. Staff is recommending taking all sections out for public comment so that the public may give feedback even on sections with no proposed revisions. Most of the sections of this rule were last adopted or amended in 2021. Changes are summarized:
• §1.401. Effective Date and Definitions: Removes the definition for the Executive Award Review and Advisory Committee (EARAC); updates citations in the definition for Subrecipient; and revises the definition for Equipment to bring it into alignment with new federal changes to 2 CFR Part 200.
• §1.402. Cost Principles and Administrative Requirements: clarifies that the policies a Subrecipient puts in place to serve as controls on separation of duties must be not only adopted, but continued for the term of the contract. Clarified that certain CSBG subrecipients do not have to follow TXMGS.
• §1.403. Single Audit Requirements: Revises the amount of funds handled by the Subrecipient that would trigger the requirement for a Single Audit from $750,000 to $1 million to bring this policy into consistency with new federal changes to 2 CFR Part 200; and updates references to the previous EARAC process.
• §1.404. Purchase and Procurement Standards: Clarifies the request process for a Subrecipient to procure a vehicle.
• §1.405. Bonding Requirements: Adds the HOME-ARP program to the programs to which this section is applicable.
• §1.406. Fidelity Bond Requirements: Updates the amount of fidelity bond coverage from $10,000 to 5% of the contract amount.
• §1.407. Inventory Report: Adjusts the amount of supplies that must be reported in the inventory from $5,000 to $10,000 to comply with new federal changes to 2 CFR Part 200.
• §1.408. Travel: clarifies that the policies a Subrecipient puts in place for travel not only be adopted, but continued for the term of the contract.
• §1.409. Records Retention: Adds the HOME-ARP program to the programs to which this section is applicable.
• §1.410. Determination of Alien Status for Program Beneficiaries: Clarifies that this section does apply to vendors procured by the Department for services, if those services involve qualification of eligibility. Added LIHWAP to programs that must follow this subsection.
• §1.411. Administration of Block Grants under Chapter 2105 of the Tex. Gov’t Code: clarifies the process for denials, and specifies ‘calendar’ days.
This rule will be released for public comment and returned to the Board for final adoption.
Attachment 1: Preamble, including required analysis, for proposed repeal of 10 TAC Chapter 1, Subchapter D, Uniform Guidance for Recipients of Federal and State Funds, including §1.401 through §1.411
The Texas Department of Housing and Community Affairs (the Department) proposes the repeal of 10 TAC Chapter 1, Subchapter D, Uniform Guidance for Recipients of Federal and State Funds, including §1.401 through §1.411. The purpose of the proposed repeal is to eliminate the outdated rule and replace it simultaneously with a new more germane rule.
Tex. Gov’t Code §2001.0045(b) does not apply to the rule proposed for action because it was determined that no costs are associated with this action, and therefore no costs warrant being offset.
The Department has analyzed this proposed rulemaking and the analysis is described below for each category of analysis performed.
a. GOVERNMENT GROWTH IMPACT STATEMENT REQUIRED BY TEX. GOV’T CODE §2001.0221.
Mr. Bobby Wilkinson has determined that, for the first five years the repeal would be in effect:
1. The repeal does not create or eliminate a government program but relates to changes to an existing activity: how state and federal requirements are applied to recipients of Department funds.
2. The repeal does not require a change in work that would require the creation of new employee positions, nor are the rule changes significant enough to reduce work load to a degree that eliminates any existing employee positions.
3. The repeal does not require additional future legislative appropriations.
4. The repeal will not result in an increase in fees paid to the Department, nor in a decrease in fees paid to the Department.
5. The repeal is not creating a new regulation, except that it is being replaced by a new rule simultaneously to provide for revisions.
6. The repeal will not expand, limit, or repeal an existing regulation.
7. The repeal will not increase or decrease the number of individuals subject to the rule’s applicability.
8. The repeal will not negatively or positively affect the state’s economy.
b. ADVERSE ECONOMIC IMPACT ON SMALL OR MICRO-BUSINESSES OR RURAL COMMUNITIES AND REGULATORY FLEXIBILITY REQUIRED BY TEX. GOV’T CODE §2006.002.
The Department has evaluated the repeal and determined that the repeal will not create an economic effect on small or micro-businesses or rural communities.
c. TAKINGS IMPACT ASSESSMENT REQUIRED BY TEX. GOV’T CODE §2007.043. The repeal does not contemplate or authorize a taking by the Department; therefore, no Takings Impact Assessment is required.
d. LOCAL EMPLOYMENT IMPACT STATEMENTS REQUIRED BY TEX. GOV’T CODE §2001.024(a)(6).
The Department has evaluated the repeal as to its possible effects on local economies and has determined that for the first five years the repeal would be in effect there would be no economic effect on local employment; therefore, no local employment impact statement is required to be prepared for the rule.
e. PUBLIC BENEFIT/COST NOTE REQUIRED BY TEX. GOV’T CODE §2001.024(a)(5). Mr. Wilkinson has determined that, for each year of the first five years the repeal is in effect, the public benefit anticipated as a result of the changed sections would be an updated and more germane rule. There will not be economic costs to individuals required to comply with the repealed section.
f. FISCAL NOTE REQUIRED BY TEX. GOV’T CODE §2001.024(a)(4). Mr. Wilkinson also has determined that for each year of the first five years the repeal is in effect, enforcing or administering the repeal does not have any foreseeable implications related to costs or revenues of the state or local governments.
REQUEST FOR PUBLIC COMMENT. The public comment period will be held June 28, 2024 to July 29, 2024, to receive input on the proposed action. Comments may be submitted to the Texas Department of Housing and Community Affairs, Attn: Brooke Boston at brooke.boston@tdhca.state.tx.us. ALL COMMENTS MUST BE RECEIVED BY 5:00 p.m., Austin local (Central) time, July 29, 2024.
STATUTORY AUTHORITY. The repeal is made pursuant to Tex. Gov't Code §2306.053, which authorizes the Department to adopt rules. Except as described herein the repeal affects no other code, article, or statute.
Subchapter D, Uniform Guidance for Recipients of Federal and State Funds
§1.401. Effective Date and Definitions
§1.402. Cost Principles and Administrative Requirements
§1.403. Single Audit Requirements
§1.404. Purchase and Procurement Standards
§1.405. Bonding Requirements
§1.406. Fidelity Bond Requirements
§1.407. Inventory Report
§1.408. Travel
§1.409. Records Retention
§1.410. Determination of Alien Status for Program Beneficiaries
§1.411. Administration of Block Grants under Chapter 2105 of the Tex. Gov’t Code
Attachment 2: Preamble, including required analysis, for proposed new §1.21, Action by Department if Outstanding Balances Exist
The Texas Department of Housing and Community Affairs (the Department) proposes new 10 TAC Chapter 1, Subchapter D, Uniform Guidance for Recipients of Federal and State Funds, including §1.401 through §1.411. The purpose of the new section is to reflect changes to federal regulations, make minor procedural revisions, remove the prior process for the Executive Award Review and Advisory Committee (EARAC), add clarification of when this rule is applicable to vendors, and make other applicable changes.
Tex. Gov’t Code §2001.0045(b) does not apply to the rule because it was determined that no costs are associated with this action, and therefore no costs warrant being offset.
The Department has analyzed this rulemaking and the analysis is described below for each category of analysis performed.
a. GOVERNMENT GROWTH IMPACT STATEMENT REQUIRED BY TEX. GOV’T CODE §2001.0221.
Mr. Bobby Wilkinson has determined that, for the first five years the new sections would be in effect:
1. The new sections do not create or eliminate a government program but relates to updates to existing requirements for recipients of Department funds.
2. The new sections do not require a change in work that would require the creation of new employee positions, nor are the rule changes significant enough to reduce work load to a degree that eliminates any existing employee positions.
3. The new sections do not require additional future legislative appropriations.
4. The new sections will not result in an increase in fees paid to the Department, nor in a decrease in fees paid to the Department.
5. The new sections are not creating a new regulation, except that they are replacing sections being repealed simultaneously to provide for revisions.
6. The new sections will not expand, limit, or repeal an existing regulation.
7. The new sections will not increase or decrease the number of individuals subject to the rule’s applicability.
8. The new sections will not negatively or positively affect the state’s economy.
b. ADVERSE ECONOMIC IMPACT ON SMALL OR MICRO-BUSINESSES OR RURAL COMMUNITIES AND REGULATORY FLEXIBILITY REQUIRED BY TEX. GOV’T CODE §2006.002.
The Department has evaluated the new sections and determined that they will not create an economic effect on small or micro-businesses or rural communities.
c. TAKINGS IMPACT ASSESSMENT REQUIRED BY TEX. GOV’T CODE §2007.043. The new sections do not contemplate or authorize a taking by the Department; therefore, no Takings Impact Assessment is required.
d. LOCAL EMPLOYMENT IMPACT STATEMENTS REQUIRED BY TEX. GOV’T CODE §2001.024(a)(6).
The Department has evaluated the new sections as to their possible effects on local economies and has determined that for the first five years the new sections would be in effect there would be no economic effect on local employment; therefore, no local employment impact statement is required to be prepared for the rule.
e. PUBLIC BENEFIT/COST NOTE REQUIRED BY TEX. GOV’T CODE §2001.024(a)(5). Mr. Wilkinson has determined that, for each year of the first five years the new sections are in effect, the public benefit anticipated as a result of the new sections would be a more current and germane rule. There will not be economic costs to individuals required to comply with the new sections.
f. FISCAL NOTE REQUIRED BY TEX. GOV’T CODE §2001.024(a)(4). Mr. Wilkinson also has determined that for each year of the first five years the new sections are in effect, enforcing or administering the sections does not have any foreseeable implications related to costs or revenues of the state or local governments.
REQUEST FOR PUBLIC COMMENT. The public comment period will be held June 28, 2024 to July 29, 2024, to receive input on the proposed action. Comments may be submitted to the Texas Department of Housing and Community Affairs, Attn: Brooke Boston at brooke.boston@tdhca.state.tx.us. ALL COMMENTS MUST BE RECEIVED BY 5:00 p.m., Austin local (Central) time, July 29, 2024.
STATUTORY AUTHORITY. The new sections are made pursuant to Tex. Gov't Code §2306.053, which authorizes the Department to adopt rules. Except as described herein the new sections affect no other code, article, or statute.