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Presentation, discussion, and possible action on an order proposing amendments to 10 Texas Administrative Code Chapter 10, Uniform Multifamily Rules, Subchapter I, Public Facility Corporation Compliance Monitoring §1.1103 Reporting Requirements 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, the current rule relating to applicability of HB 2071 (88th Regular Legislature), and report requirements is in need of revisions to ensure that all Developments owned by a Public Facility Corporation (PFC) are required to submit an annual Audit Report to the Department in accordance with the provisions of HB 2071;
WHEREAS, staff proposes amending the current Public Facility Corporation rule to clarify and add requirements for PFC Developments for which the Department has compliance monitoring oversight; and
WHEREAS, such proposed rulemaking will be published in the Texas Register for public comment to be received and 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 amendments of 10 TAC §10.1103 Public Facility Corporation Compliance Monitoring 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 the preparation of the subchapter specific preambles.
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BACKGROUND
The Department was tasked with the compliance monitoring oversight of Public Facility Corporation (PFC) multifamily residential developments as a result of HB 2017 (the Act) being passed by the 88th Texas Legislature. The Department is seeking to amend the rule to codify in rule Section 10(d) of HB 2071, so that all PFC multifamily residential developments owned by a corporation created under Chapter 303 of the Texas Local Government Code, with the exception of those described in Tex. Local Gov’t Code §303.0421(a)(1)-(4), must annually submit an Audit Report to the Department. PFC Developments acquired, approved or occupied prior to the effective date of the Act, as described in Sections 10(b) and (c) of HB2071, are governed by the law in effect on the date the Development was approved by the corporation or sponsor. However, as Section 10(d) applies “notwithstanding any other provision of this section,” all PFC-owned multifamily residential developments with respect to which an exemption is sought or claimed under §303.042(c) - regardless of when the Development was acquired, approved, or occupied - must submit an Audit Report in accordance with Tex. Local Gov’t Code §303.0426(b). For those PFC-owned developments that pre-date the Act (as described in Sections 10(b) and (c) of the Act, the Audit Report requirements of Tex. Local Gov’t Code §303.0426(b)(1) will be satisfied by simply demonstrating its eligibility to continue under the former law, but the Audit Report must still fully address the requirements of §303.0426(b)(2) (identifying the difference in rent charged for income-restricted residential units and the estimated maximum market rents that could be charged for those units without the rent or income restrictions).
The first audit reports for PFC developments subject to the new law were required to be submitted to the Department by June 1, 2024. The Department is granting a one-time extension to allow all PFC-owned multifamily residential developments subject to this rule amendment to submit the required Audit Report no later than December 1, 2024. Subsequent reports are due to the Department no later than June 1 of each year.
Upon Board approval, the new rulemaking will be published in the Texas Register and released for public comment from August 9, 2024, through September 9, 2024. Staff will return to the Board for final adoption of the rules.