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Presentation, discussion, and possible action on the proposed amendment to 10 TAC Chapter 13, Multifamily Direct Loan Rule, §13.1 Purpose and directing its publication for public comment in the Texas Register
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RECOMMENDED ACTION
recommendation
WHEREAS, the Texas Department of Housing and Community Affairs (the Department) is authorized to administer Direct Loan Program Funds pursuant to Tex. Gov’t Code Ch. 2306, Subchapter I, Housing Finance Division: General Provisions;
WHEREAS, the Department administers the fund sources used in making these awards of loans and grants in a specific manner that necessitates Chapter 13, the Multifamily Direct Loan Rule;
WHEREAS, pursuant to Tex. Gov’t Code §2306.053 the Department is authorized to adopt rules governing the administration of the Department and its programs;
WHEREAS, the Texas Regulatory Efficiency Office (TREO) coordinates with state agencies to review agency rules and recommends potential rule actions to improve efficiency, and TREO provided TDHCA with a Regulatory Efficiency Review Report that made suggestions on opportunities for improvement, and as requested by TREO such report was made available for stakeholder feedback in May 2026;
WHEREAS, it was suggested in the Report that the MFDL rule be revised to provide flexibility in the type of forms that may be accepted;
WHEREAS, such proposed rulemaking will be published for public comment in compliance with the State Administrative Procedures Act in the Texas Register from September 18, 2026, through October 19, 2026, and subsequently returned to the Board for final adoption; and
WHEREAS, public comment, for purposes of the Citizen Participation Plan requirements in 24 CFR §91.105, will be accepted between September 18, 2026, through October 19, 2026;
NOW, therefore, it is hereby
RESOLVED, that the proposed amendment of 10 TAC Chapter 13, §13.1 Purpose, together with the preamble presented to this meeting, are hereby approved for publication in the Texas Register for public comment; and
FURTHER 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 amendment, together with the changes, if any, made at this meeting and the preamble, 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, including any required revisions to the preambles, as they may deem necessary to effectuate the foregoing.
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BACKGROUND
The Texas Regulatory Efficiency Office (TREO) coordinates with state agencies to review agency rules and recommends potential amendments to, or repeals of, those rules. In April 2026, TREO released a draft Regulatory Efficiency Review (RER) report of possible regulatory changes that the Texas Department of Housing and Community Affairs (the Department) could make to improve efficiency in some of its rules. The recommendations in the report were not mandates or directives, but rather ideas and opportunities for improvement. TREO requested that the Department share these ideas with stakeholders for a 14-day period to garner feedback, which occurred from April 30, 2026 to May 14, 2026.
The report included a recommendation that Chapter 13, the MFDL Rule, be revised to allow greater flexibility on certain specific forms that are required, allowing for other acceptable versions if they meet the approval of the Department. While the report repeated this recommendation multiple times in relation to different forms, staff alternatively is adding this flexibility in one place in §13.1. Specifically, the rule update allows for equivalent documentation to be substituted for AIA Form G702, AIA Form G703, AIA Form G704, or Form HUD-92485 when those forms are required. In addition, the rule has been updated to provide Applicants with additional guidance related to the Build America, Buy America (BABA) Act.
Attached to this Board Action Request is §13.1, Purpose, which reflects staff’s recommendations for the Board’s consideration. The attached identifies the differences between the existing §13.1 in Texas Administrative Code and the proposed amendment in blackline format. The Department’s Public Comment page will also include a blackline version of the proposed rule as approved by the Board to facilitate stakeholders’ engagement with the changes.
Upon Board approval, the proposed amendment will be posted to the Department’s website and published in the Texas Register. Public comment, in accordance with the Citizen Participation Plan requirements in 24 CFR §91.105, will be accepted between September 18, 2026, through October 19, 2026. In compliance with the State Administrative Procedures Act, public comment will be accepted upon the rule’s publication in the Texas Register from September 18, 2026, through October 19, 2026.
Staff will consider and prepare reasoned responses to public comment as part of the final action on amendment that is expected to be brought before the Board on November 5, 2026, for approval, adoption, and subsequent publication in the Texas Register.
Attachment A: Preamble, including required analysis, for proposed amendment of 10 TAC Chapter 13, Multifamily Direct Loan Rule, §13.1, Purpose.
The Texas Department of Housing and Community Affairs (the Department) proposes the amendment of 10 TAC Chapter 13, Multifamily Direct Loan Rule, § 13.1 Purpose. The purpose of the proposed amendment is to address changes proposed by the Texas Regulatory Efficiency Office (TREO) and to provide Applicants with additional guidance related to the Build America, Buy America (BABA) Act.
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, Executive Director, has determined that, for the first five years the amendment would be in effect:
1. The amendment does not create or eliminate a government program, but relates to a minor change for an existing activity: administration of the Multifamily Direct Loan Program.
2. The amendment does not require a change in work that would require the creation of new employee positions, nor is the amendment significant enough to reduce work load to a degree that any existing employee positions are eliminated.
3. The amendment does not require additional future legislative appropriations.
4. The amendment does not result in an increase in fees paid to the Department nor in a decrease in fees paid to the Department.
5. The amendment is not creating a new regulation.
6. The amendment will not repeal an existing regulation.
7. The amendment will not increase or decrease the number of individuals subject to the rule’s applicability
8. The amendment will not negatively or positively affect this 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 amendment and determined that the amendment 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 amendment 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 amendment as to its possible effects on local economies and has determined that for the first five years the amendment would be in effect there would be no economic effect on local employment; therefore no local employment impact statement is required to be prepared.
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 amendment is in effect, the public benefit anticipated as a result of the amendment would be increased flexibility for program participants. There will not be economic costs to individuals required to comply with the amended 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 amendment is in effect, enforcing or administering the amendment does not have any foreseeable implications related to costs or revenues of the state or local governments.
REQUEST FOR PUBLIC COMMENT. The Department requests comments on the amendment. The public comment period will be held September 18, 2026, through October 19, 2026, to receive input on the amendment. Written comments may be submitted to the Texas Department of Housing and Community Affairs, Attn: Priscilla Stevenson, Multifamily Direct Loan Program Specialist, Rule Comments, P.O. Box 13941, Austin, Texas 78711-3941 or email priscilla.stevenson@tdhca.state.tx.us ALL COMMENTS MUST BE RECEIVED BY 5:00 P.M. Austin local (Central) time October 19, 2026.
STATUTORY AUTHORITY. The proposed amendment is made pursuant to Tex. Gov’t Code §2306.053, which authorizes the Department to adopt rules. Except as described herein the amendment affects no other code, article, or statute.
(a) Authority. The rules in this chapter apply to the funds provided to Multifamily Developments through the Multifamily Direct Loan Program (MFDL or Direct Loan Program) by the Texas Department of Housing and Community Affairs (the Department). Notwithstanding anything in this chapter to the contrary, loans and grants issued to finance the development of multifamily rental housing are subject to the requirements of the laws of the State of Texas, including but not limited to Tex. Gov't Code, Chapter 2306, and federal law pursuant to the requirements of Title II of the Cranston-Gonzalez National Affordable Housing Act, Division B, Title III of the Housing and Economic Recovery Act (HERA) of 2008 - Emergency Assistance for the Redevelopment of Abandoned and Foreclosed Homes, Section 1497 of the Dodd-Frank Wall Street Reform and Consumer Protection Act: Additional Assistance for Neighborhood Stabilization Programs, Title I of the Housing and Economic Recovery Act of 2008, Section 1131 (Public Law 110-289), and the implementing regulations 24 CFR Parts 91, 92, 93, and 570 as they may be applicable to a specific fund source. The Department is authorized to administer Direct Loan Program funds pursuant to Tex. Gov't Code, Chapter 2306.
(b) General. This chapter applies to Applications submitted for, and award of, MFDL funds by the Department and establishes the general requirements associated with the application and award process for such funds. Applicants pursuing MFDL assistance from the Department are required to certify, among other things, that they have familiarized themselves with all applicable rules that govern that specific program including, but not limited to this chapter, Chapter 1 of this title (relating to Administration), Chapter 2 of this title (relating to Enforcement), Chapter 10 of this title (relating to Uniform Multifamily Rules), Chapter 11 of this title (relating to Qualified Allocation Plan (QAP)), and Chapter 12 of this title (relating to Multifamily Housing Revenue Bond Rules) as applicable. The Applicant is also required to certify that it is familiar with the requirements of any other federal, state, or local financing sources that it identifies in its Application. Any conflict with rules, regulations, or statutes will be resolved on a case-by-case basis that allows for compliance with all requirements. Conflicts that cannot be resolved may result in Application ineligibility, with the right to an Appeal as provided in 10 TAC §1.7 of this title (relating to Appeals Process) or 10 TAC §11.902 of this title (relating to Appeals Process for the Housing Tax Credit program), as applicable.
(c) Waivers. Requests for waivers of any program rules or requirements must be made in accordance with 10 TAC §11.207 of this title (relating to Waiver of Rules), as limited by the rules in this chapter. Waiver requirements are provided in paragraphs (1) through (3) of this subsection:
(1) Rule Waivers and NOFA Amendments prior to Construction Completion. For Direct Loan Developments, an Applicant may request, at the latest at Application submission, that the Department amend its NOFA, amend its Consolidated Plan or One Year Action Plan, or ask HUD to grant a waiver of its regulations, if such request will not impact the timing of the Application’s review, nor alter the scoring or satisfaction of threshold requirements for the Housing Tax Credits or other Department resources. Such requests will be presented to the Department’s Board. The Board may not waive rules that are federally required, or that have been incorporated as a required part of the Department's Consolidated Plan or One Year Action Plan (OYAP) to the U.S. Department of Housing and Urban Development (HUD), unless those Plans are so amended by the earlier of a date the NOFA is closed or by an earlier date that is identified by the Board. Such items include §13.8 of this chapter, relating to Loan Structure and Underwriting Requirements, the interest rate published in the NOFA, the maximum subsidy limits as published in the NOFA, the priorities listed in the NOFA, the eligibility requirements of applicants described in rule or the NOFA, scoring, and the tiebreaker procedure. Prior to Contract, except as otherwise described in rule, the Application Acceptance Date will then be the date the Department completes the amendment process or receives a waiver from HUD, if funds are still available in the NOFA. After Contract, but prior to Construction Completion staff will not recommend a waiver or NOFA Amendment;
(2) Build America, Buy America (BABA) Waiver. If the Applicant intends to request a waiver of BABA, such request must be submitted no later than the date on which the Application is submitted. The Department will submit this waiver request to HUD. This waiver, if granted by HUD the earlier of 90 days before the NHTF Commitment deadline or one year from Board Award, will not require the Development to receive a new Application Acceptance Date. The Department will generally not submit public interest waivers. If the Department submits an unreasonable cost waiver, then the execution of the contract for the funds will be delayed until HUD responds to the waiver. Loan closings may also be delayed due to pending waivers;
(3) Waivers under Closed NOFAs. The Board may not waive any portion of a closed NOFA prior to Construction Completion. Thereafter, the Board may only waive any portion of a closed NOFA as part of an approved Asset Management Division work out. Allowable Post-Closing Amendments are described in 10 TAC §13.13 of this chapter (relating to Post-Closing Amendments to Direct Loan Terms).
(d) Eligibility and Threshold Requirements. Applications for Multifamily Direct Loan funds must meet all applicable eligibility and threshold requirements of Chapter 11 of this title (relating to the Qualified Allocation Plan (QAP)), unless otherwise excepted in this rule or NOFA.
(e) Forms. Where references are made to AIA Form G702, AIA Form G703, AIA Form G704, or Form HUD-92485, these may be substituted for equivalent forms acceptable to the Department.