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Presentation, discussion, and possible action on an order adopting the repeal of 10 TAC Chapter 2, Debarment from Participation in Programs Administered by the Department, §2.401 General; an order adopting the replacement version of the rule; and directing publication 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, pursuant to Tex. Gov’t Code §2306.0504, the Department is authorized to debar a person from participation in Department programs, and is required to develop a rule governing debarments;
WHEREAS, the debarment rule at 10 TAC §2.401 outlines the criteria and administrative procedures for debarments;
WHEREAS, the Department proposed replacing the rule to incorporate voluntary nonparticipation agreements, incorporate elevator noncompliance, clarify areas of confusion, and streamline 10 TAC §2.401;
WHEREAS, staff has therefore drafted a revision of the current rule on this subject, which upon Board approval will be released for public comment and returned to the Board for adoption at a subsequent Board meeting.
WHEREAS, the proposed repeal and replacement of 10 TAC §2.401 was published in the Texas Register for public comment from October 24, 2025, through November 24, 2025, two comments were received, and responses to those comments are addressed in the attached preamble; and
WHEREAS, staff recommends adoption of the rule with no changes from the draft approved by the Board.
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 actions to publish the adopted rules in the Texas Register, and in connection therewith, make such non-substantive technical corrections as they may deem necessary to effectuate the foregoing, including the preparation of 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, and it authorizes the development of rules governing the administration of those programs. Tex. Gov’t Code §2306.0504 provides authority for the Department to debar a person from participation in Department programs, and requires the Department to develop a rule governing debarments. 10 TAC Chapter 2 governs how enforcement of programmatic requirements are handled. Debarment criteria and administrative procedures are described at 10 TAC §2.401.
Procedural changes were requested by the Board for an alternative option to debarment for circumstances in which a Responsible Party, Consultant or Vendor is referred to the Enforcement Committee for discretionary debarment violations under 10 TAC §2.401(a), but where the Enforcement Committee determines that debarment may not be warranted if the Responsible Party, Consultant, or Vendor voluntarily agrees to not participate in new funding or programs with the Department for a set period of time, as an alternative. Edits to the rule describe this new Voluntary Non-participation Agreement (VNA) option that may be offered at the Department’s discretion for violations of 10 TAC §2.401 that do not require mandatory debarment.
Additionally, during 2025, the Department received multiple complaints relating to broken elevators, with extended outage periods during which the affected buildings do not have an accessible route. Two notable examples that were referred for enforcement are The Life at Sterling Woods (HTC 04478 / CMTS 4176) and Jubilee at Texas Parkway (HTC 17317 / CMTS 5333), both of which are elderly developments that had extended elevator outages. The Board approved Agreed Final Orders assessing administrative penalties for the properties on March 6, 2025, and October 9, 2025, respectively. The Department recommends adopting changes to the debarment rule at 10 TAC §2.401 to reflect the seriousness of this elevator violation, incentivize timely correction, and to deter future violations at both the affected property and others in the ownership portfolio. Debarment would not be considered in the event that the owner can provide evidence that necessary repairs were under contract with a licensed repair company within the corrective action period.
Further rule changes were recommended to clarify areas of confusion, and streamline procedures.
Behind the preamble, the rule is provided in blackline form reflecting the changes adopted.
At the Board meeting on October 9, 2025, the Board approved the proposed repeal and replacement of the rule for publication for public comment. Public comment was accepted October 24, 2025, through November 24, 2025. Two comments were received, and responses to those comments are addressed in the attached preamble. Staff recommends adoption of the rules with no changes from the draft approved by the Board.
Attachment 1: Preamble, including required analysis, for adoption of the repeal of 10 TAC Chapter 2, Subchapter D, Debarment from Participation in Programs Administered by the Department, §2.401 General
The Texas Department of Housing and Community Affairs (the Department) adopts, without changes, the repeal of 10 TAC Chapter 2, Subchapter D, Debarment from Participation in Programs Administered by the Department, §2.401 General. The purpose of the repeal is to eliminate the outdated rule and replace it simultaneously with a new rule that incorporates voluntary nonparticipation agreements, incorporates elevator noncompliance, and clarifies areas of confusion.
Tex. Gov’t Code §2001.0045(b) does not apply because there are no costs associated with the repeal.
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: the enforcement of the Department’s program rules.
2. The repeal does not require a change in work that creates new 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 is not considered to expand an existing regulation.
7. The repeal does not increase 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.
SUMMARY OF PUBLIC COMMENT. The public comment period was held October 24, 2025 to November 24, 2025, to receive input on the proposed repealed section. No comments were received relating to the repeal.
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.
Attachment 2: Preamble, including required analysis, for adopting new 10 TAC Chapter 2, Subchapter D, Debarment from Participation in Programs Administered by the Department, §2.401 General
The Texas Department of Housing and Community Affairs (the Department) adopts, with no changes, new 10 TAC Chapter 2, Subchapter D, Debarment from Participation in Programs Administered by the Department, §2.401 General. The purpose is to eliminate the outdated rule and replace it simultaneously with a new rule that incorporates voluntary nonparticipation agreements, incorporates elevator noncompliance, and clarifies areas of confusion.
Tex. Gov’t Code §2001.0045(b) does not apply because there are no additional costs associated with this action. Sufficient existing state and/or federal administrative funds associated with the applicable programs are available to offset costs. No additional funds will be needed to implement this rule.
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 rule does not create or eliminate a government program but relates to changes to an existing activity: the enforcement of the Department’s program rules.
2. The rule does not require a change in work that creates new employee positions.
3. The new section will not require additional future legislative appropriations.
4. The new section 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 section is not creating a new regulation.
6. The new section does expand on an existing regulation.
7. The new section does not increase the number of individuals subject to the rule’s applicability.
8. The new section 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 section and determined that it 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 section 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 new section as to its possible effects on local economies and has determined that for the first five years the new section 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 section is in effect, the public benefit anticipated as a result of the new section would be improvement in the Department’s enforcement abilities. There will not be economic costs to individuals required to comply with the new 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 new section is in effect, enforcing or administering the sections may have some costs to the state to implement the verification process and to the Department’s subrecipients in administering the rule changes. However, sufficient state or federal administrative funds associated with the applicable programs are already available to offset costs. No additional funds will be required.
SUMMARY OF PUBLIC COMMENT. The public comment period was held October 24, 2025 to November 24, 2025, to receive input on the proposed new section. Two comments were received from Texas Housers and Disability Rights Texas, and are summarized below.
10 TAC §2.401(a) and (c). Pertaining to corrective action deadlines.
Comment Summary: Commenters 1 and 2 oppose parties in violation receiving time to correct noncompliance before administrative penalties or debarment are considered. Commenter 1 referred to a specific case presented to the Department’s Board in September 2023, in which a property took more than two years to install a ramp on an accessible route. Commenter 1 stated their opinion that the administrative penalty assessed in that case was too low ($10,000.00, of which $7,500.00 was forgivable with full corrections), and that the Department should consider debarment before a corrective action period is complete. Commenter 2 stated an opinion that parties already have ample opportunities to correct before penalties or debarment are considered.
Staff Response: Staff addressed the administrative penalty concern under Department response to a separate rule, 10 §TAC 2.302. Staff understands the concerns regarding corrective action periods, however, the Department’s goal is to achieve compliance, and the party’s action or inaction during the corrective action period is a relevant factor that must be considered in the potential debarment term. Furthermore, this change to the rule was merely clarification; 10 TAC §2.103(c) already states that parties must receive written notice and a corrective action period prior to referral to the Enforcement Committee. No revisions are recommended.
10 TAC §2.401(a)(7). Debarment due to Bankruptcy.
Comment Summary: Commenters 1 and 2 support seeking debarment if bankruptcy results in loss of affordable units.
Staff Response: Staff appreciates the support. No revisions are recommended.
10 TAC §2.401(a)(8). Debarment for Inoperable Elevators.
Comment Summary: Commenter 1 applauds seeking debarment for developments with inoperable elevators, stating that elevators are a critical component of safe, accessible housing, and providing examples of cases where inoperable elevators were dangerous for tenants. Commenter 2 also strongly supports the addition.
Staff Response: Staff appreciates the support. No revisions are recommended.
10 TAC §2.401(a). Recommendation for Discretionary Debarment for Parties with Current Properties that are out of Compliance with Accessibility Requirements.
Commenters 1 and 2 both propose adding a new item eligible for discretionary debarment in cases where current properties do not comply with accessibility requirements. Commenter 1 alleges that multiple tax credit properties listed for sale in 2024 and 2025 had potential accessibility noncompliance, the majority of which are properties built before 2008, when TDHCA began to be involved in final construction inspections. It provided examples of potential risks associated with possible accessibility noncompliance, such as environmental controls that might be installed out of reach, or water pipes that could cause burns if they are not insulated. Commenters 1 and 2 provide a specific example of a property that is currently for sale through a ROFR, which they allege does not have any accessible units. Commenter 1 also states that two properties without any accessible units received tax credits in 2024 and 2025.
Staff Response: Staff has referred Commenter’s concerns regarding older developments, including the property currently listed for sale, to the Asset Management and Compliance Divisions. The Department also responds to accessibility complaints for existing Developments in its portfolio through its complaint process in 10 TAC §1.2. The referenced 2024 and 2025 HTC awards will have standard accessibility requirements that are verified via a final construction inspection. No revisions are recommended because these concerns are outside of the scope of this rule amendment.
STATUTORY AUTHORITY. The new section is made pursuant to Tex. Gov't Code §2306.053, which authorizes the Department to adopt rules. Except as described herein, the new section affects no other code, article, or statute. The rule, as adopted, has been reviewed by legal counsel and found to be a valid exercise of the Department’s legal authority.