PART 1. TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS
CHAPTER 2. ENFORCEMENT
The Texas Department of Housing and Community Affairs (the Department) proposes amending 10 TAC Chapter 2, Enforcement, Subchapter A, General, §2.101, §2.102, §2.103, §2.104, Subchapter C Administrative Penalties, §2.301, §2.302 and Subchapter D, Debarment from Participation in Programs Administered by the Department, §2.401. The amendments will add reference to a new inspection protocol, NSPIRE, and brings this rule into consistency with changes recently made to Chapter 1, Subchapter C, relating to previous participation reviews and the removal of references to the now defunct Executive Award Review and Advisory Committee (EARAC).
FISCAL NOTE. Mr. Bobby Wilkinson, Executive Director, has determined that, for each year of the first five years the amendment to the rule 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.
a. GOVERNMENT GROWTH IMPACT STATEMENT REQUIRED BY TEX. GOV'T CODE §2001.0221.
1. Mr. Bobby Wilkinson, Executive Director, has determined that, for the first five years the proposed rule action would be in effect, the proposed actions do not create or eliminate a government program, but relate to changes to an existing activity, the enforcement of the Department's program rules.
2. The amendment to the rule will not require a change in the number of employees of the Department;
3. The amendment to the rule will not require additional future legislative appropriations;
4. The amendment to the rule will result in neither an increase nor a decrease in fees paid to the Department;
5. The amendment to the rule will not create a new regulation, but provides clarification to an existing regulation;
6. The amendment to the rule will not repeal an existing regulation;
7. The amendment to the rule will not increase or decrease the number of individuals subject to the rule's applicability; and
8. The amendment to the rule will neither positively nor negatively affect this state's economy.
PUBLIC BENEFIT/COST NOTE. Mr. Wilkinson also has determined that, for each year of the first five years the amendment to the rule is in effect, the public benefit anticipated as a result of the action will be the adding a new federally required inspection standard and bringing the rule into consistency with other Department rules. There will not be any economic cost to any individual required to comply with the amendment.
ADVERSE IMPACT ON SMALL OR MICRO-BUSINESSES OR RURAL COMMUNITIES. The Department has determined that there will be no economic effect on small or micro-businesses or rural communities.
REQUEST FOR PUBLIC COMMENT. All comments or questions in response to this action may be submitted in writing from December 22, 2023, through January 22, 2024. Written comments may be submitted to the Texas Department of Housing and Community Affairs, Attn: Brooke Boston, P.O. Box 13941, Austin, Texas 78711-3941, or by email to brooke.boston@tdhca.state.tx.us. ALL COMMENTS MUST BE RECEIVED BY 5:00 p.m. Austin local (Central) time, January 22, 2024.
SUBCHAPTER A. GENERAL
STATUTORY AUTHORITY. The proposed amendments are made pursuant to Tex. Gov't Code §2306.053, which authorizes the Department to adopt rules.
Except as described herein the proposed amendments affect no other code, article, or statute.
§2.101.Policy and Purpose.
This chapter sets forth the enforcement mechanisms that the
Department may use to bring about compliant administration of Department
funded state or federal programs[, state or federal,]
and exclude or remove from Department programs, Persons who have established,
through certain noncompliant behavior, that they are either
unwilling to act in a compliant manner, or are unable to do so. These
enforcement mechanisms are in addition to any available contractual
remedies under program agreements.
§2.102.Definitions.
The words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Capitalized words used herein have the meaning assigned in the specific chapters of this title that govern the program associated with the request, in Chapter 1 of this title (relating to Administration), or assigned by federal or state law.
(1) Actively Monitored Development--A Development that within the last three years has been monitored by the Department, either through a Uniform Physical Condition Standards (UPCS) inspection, a National Standards for the Physical Inspection of Real Estate (NSPIRE) inspection, an onsite or desk file monitoring review, an Affirmative Marketing Plan review, or a Written Policies and Procedures Review. UPCS and NSPIRE inspections include inspections completed by Department staff, Department contractors and inspectors from the Real Estate Assessment Center through federal alignment efforts.
(2) Consultant--A Person who provides services or advice for a fee in a capacity other than as an employee and does not have Control.
(3) Control (including the terms Controlled and Controlling)--"Control" is defined in §11.1 of this title (relating to General) or as identified in the specific Program rule.
(4) Debarment--A prohibition from future participation in some or all Programs administered by the Department. Except as otherwise stated in the Order, Debarment does not impact existing or ongoing participation in Department Programs, prior to the date of the Debarment, nor does it affect any continuing responsibilities or duties thereunder.
(5) Enforcement Committee ( ["] Committee
["] )--A Committee of employees of the Department appointed
by the Executive Director. [The voting members of that Committee
shall be no fewer than five and no more than nine. Additionally, each
voting member shall have an alternate member, also appointed by the
Executive Director, in the event that the primary voting member is
unavailable]. The Committee may be composed of any member of
any Department division, but members from the referring division may
not be present during deliberations. [Alternate members may serve
on behalf of any voting member for purposes of assuring a quorum.]
The Legal Division will designate person(s) to attend meetings and
advise the Committee. A Legal Division designee will serve as Secretary
to the Committee.
(6) Event of Noncompliance (including the alternate
term ( ["] Finding of Noncompliance ["] ))--Any event for which a Person may be found to be in noncompliance
with Texas Government Code Chapters 2105 or 2306, any rule adopted
thereunder, any Program Agreement requirement, or federal program requirements.
(7) Legal Requirements--All requirements, as it relates to the particular Department Program, of state, federal, or local statutes, rules, regulations, ordinances, orders, court opinions, official interpretations, policy issuances, OMB Circulars, representations to secure awards, or any similar memorialization of requirement, including contract requirements.
(8) Monitoring Event--An onsite or desk monitoring
review, a [Uniform Physical Condition Standards] UPCS
inspection, a NSPIRE inspection, the submission of the Annual
Owner's Compliance Report, Final Construction Inspection, a Written
Policies and Procedures Review, or any other instance when the Department's
Compliance Division or other reviewing area provides written notice
to an Owner or Contact Person requesting a response by a certain date.
This would include, but not be limited to, responding to a tenant complaint.
(9) Person--A legal entity including, without limitation, any natural person, corporation, partnership, limited partnership, joint venture, limited liability corporation, trust, estate, association, cooperative, government, political subdivision, agency or instrumentality or other organization or entity of any nature whatsoever, and shall include any group of Persons acting in concert toward a common goal, including individual members of the group.
(10) Program--Includes any activity performed by a Subrecipient, Administrator, Contractor, Development Owner, or other Person under a Program Agreement or activities performed by a third party under a Program Agreement, including but not limited to a Subgrantee or Subcontractor.
(11) Program Agreements include:
(A) agreements between the Department and a Person setting forth Legal Requirements; and
(B) agreements between a Person subject to a Program Agreement and a third party to carry out one or more Legal Requirements.
(12) Responsible Party--Any Person subject to a Program Agreement.
(13) Vendor--A person who is procured by a subrecipient to provide goods or services in any way relating to a Department program or activity.
§2.103.General.
(a) A Responsible Party must comply with all applicable Legal Requirements.
(b) A failure by the Department to identify, address, or take action with respect to any one or more Events of Noncompliance does not constitute a waiver, ratification, or approval of, consent to, or agreement with such noncompliance. It is the responsibility of a Responsible Party to be familiar with the applicable Legal Requirements.
(c) Recordkeeping. Each referring division will keep records in accordance with the Department's record retention schedule and any other state or Federal requirements of all Events of Noncompliance.
(d) As provided for in Texas Government Code, §2306.6719, parties subject to certain compliance requirements must be afforded written notice and a reasonable period to correct identified Events of Noncompliance that are susceptible to being corrected. It is the responsibility of each division to provide any required cure, Corrective Action, or notice period(s) prior to referral of any matter to the Committee under this chapter. Matters should not be referred to the Committee until such cure, Corrective Action, or notice periods have been completed or expired.
(e) For each Event of Noncompliance, the Department will evaluate which Person or Persons had Control of the Development, Program, or activity at the time the Event of Noncompliance occurred. A Person will not be referred for Debarment or assessed a Administrative Penalty because they have newly acquired a Development that has existing Events of Noncompliance, provided that the findings are resolved by transferee within a reasonable timeframe after purchase, in accordance with a plan that is approved by the Department in an ownership transfer request under §10.406 of this title (relating to Ownership Transfers (§2306.6713)). Sale or foreclosure of a property does not preclude Debarment consideration against the Person or Persons who had Control of the Development, Program, or activity at the time an Event of Noncompliance occurred.
§2.104.Enforcement Mechanisms.
(a) The enforcement mechanisms referenced in this chapter are not the exclusive mechanisms whereby compliance may be obtained in any particular circumstance. Enforcement mechanisms related to Department programs may include, where applicable, those required or employed by other entities or agencies. With regard to the low-income housing tax credit program, if an identified Event of Noncompliance is required to be reported to the Internal Revenue Service, (IRS) it will be reported by the Compliance Division on form 8823. For federally funded Programs or activities, the Department may recommend that a federal funding agency initiate a debarment proceeding under 2 CFR Part 180 or 2 CFR 2424, as applicable. Program Agreements may also include additional enforcement mechanisms, federal reporting, or penalties.
(b) Enforcement mechanisms available to the Department include but are not limited to:
(1) Enforcement of contractual provisions in the Program Agreements including, but not limited to, options to place a Development into receivership, and rights of suspension or termination, and placement on a cost reimbursement status as described in Subchapter B of this chapter (relating to Enforcement for Noncompliance with Program Requirements of Chapters 6 and 7);
(2) Consideration of a reasonable plan for correction, warning letter, informal conference, and assessment of administrative penalties, as further described in Subchapter C of this chapter (relating to Administrative Penalties); or
(3) Debarment, as described in Subchapter D of this chapter (relating to Debarment from Participation in Programs Administered by the Department).
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on December 18, 2023.
TRD-202304848
Bobby Wilkinson
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: January 28, 2024
For further information, please call: (512) 475-3959
STATUTORY AUTHORITY. The proposed amendments are made pursuant to Tex. Gov't Code §2306.053, which authorizes the Department to adopt rules.
Except as described herein the proposed amendments affect no other code, article, or statute.
§2.301.General.
Department divisions will recommend to the Committee the initiation of proceedings to assess administrative penalties where the Responsible Party or Parties have violated Chapters 2105 or 2306 of the Texas Government Code or a rule or order adopted under Chapters 2105 or 2306 of the Texas Government Code and failed, despite written notice, to take appropriate and timely corrective action or seek and obtain for good cause an extension of the time to take corrective action. In addition, staff from any Department Divisions may recommend to the Committee the initiation of proceedings to assess administrative penalties where the Responsible Party or Parties has an established pattern of repeated substantive and material violations, even if corrected within the applicable corrective action periods. All correspondence shall be delivered electronically.
§2.302.Administrative Penalty Process.
(a) The Executive Director will appoint an Enforcement Committee, as defined in §2.102 of this chapter (relating to Definitions).
(b) [This] The referring division
will recommend the initiation of administrative penalty proceedings
to the Committee by referral to the secretary of the Committee ( ["]
Secretary ["] ). At the time of referral for a multifamily
rental Development, the referral letter from the referring Division
will require the Responsible Party who Controls the Development to
provide a listing of the Actively Monitored Developments in their
portfolio. The Secretary will use this information to help determine
whether mandatory Debarment should be simultaneously considered by
the Enforcement Committee in accordance with §2.401(e)(2) of
this section, related to repeated violations.
(c) The Secretary shall promptly contact the Responsible
Party. If fully acceptable corrective action documentation is submitted
to the referring division before the ( ["] Secretary ["]
) sends an informal conference notice, the referral shall be closed
with no further action provided that the Responsible Party is not
subject to consideration for Debarment and provided that the referring
division does not wish to move forward with the referral based upon
a pattern of repeated violations. If the Secretary is not able to
facilitate resolution, but receives a reasonable plan for correction,
such plan shall be reported to the Committee to determine whether
to schedule an informal conference, modify the plan, or accept the
plan. If accepted, plan progress shall be regularly reported to the
Committee, but an informal conference will not be held unless the
approved plan is substantively violated, or an informal conference
is later requested by the Committee or the Responsible Party. Plan
examples include but are not limited to: a rehabilitation plan with
a scope of work or contracts already in place, plans approved by [EARAC
as part of] the Department as part of the Previous Participation
Review process provided for in 10 TAC Subchapter C for an ownership
transfer or funding application, plans approved by the Executive Director,
plans approved by the Asset Management Division, and/or plans relating
to newly transferred Developments with unresolved Events of Noncompliance
originating under prior ownership. Should the Secretary and Responsible
Party fail to come to, an agreement or closer of the referral, or
if the Responsible Party or ownership group's prior history of administrative
penalty referrals does not support closure, or if consideration of
Debarment is appropriate, the Secretary will schedule an informal
conference with the Responsible Party to attempt to reach an agreed resolution.
(d) When an informal conference is scheduled, a deadline for submitting Corrective Action documentation will be included, providing a final opportunity for resolution. If compliance is achieved at this stage, the referral will be closed with a warning letter provided that factors, as discussed below, do not preclude such closure. Closure with a warning letter shall be reported to the Committee. Factors that will determine whether it is appropriate to close with a warning letter include, but are not limited to:
(1) Prior Enforcement Committee history relating to the Development or other properties in the ownership group;
(2) Prior Enforcement Committee history regarding similar federal or state Programs;
(3) Whether the deadline set by the Secretary in the informal conference notice has been met;
(4) Whether the Committee has set any exceptions for certain finding types; and
(5) Any other factor that may be relevant to the situation.
(e) If an informal conference is held:
(1) Notwithstanding the Responsible Party's attendance or presence of an authorized representative, the Enforcement Committee may proceed with the informal conference;
(2) The Responsible Party may, but is not required to be, represented by legal counsel of their choosing at their own cost and expense;
(3) The Responsible Party may bring to the meeting third parties, employees, and agents with knowledge of the issues;
(4) Assessment of an administrative penalty and Debarment may be considered at the same informal conference; and
(5) In order to facilitate candid dialogue, an informal conference will not be open to the public; however, the Committee may include such other persons or witnesses as the Committee deems necessary for a complete and full development of relevant information and evidence.
(f) An informal conference may result in the following, which shall be reported to the Executive Director:
(1) An agreement to dismiss the matter with no further action;
(2) A compliance assistance notice issued by the Committee, available for Responsible Parties appearing for the first time before the Committee for matters which the Committee determines do not necessitate the assessment of an administrative penalty, but for which the Committee wishes to place the Responsible Party on notice with regard to possible future penalty assessment;
(3) An agreement to resolve the matter through corrective action without penalty. If the agreement is to be included in an order, a proposed agreed order will be prepared and presented to the Board for approval;
(4) An agreement to resolve the matter through corrective action with the assessment of an administrative penalty which may be probated in whole or in part, and may, where appropriate, include additional action to promote compliance such as requirements to obtain training. In this circumstance, a proposed agreed order will be prepared and presented to Department's Governing Board for approval;
(5) A recommendation by the Committee to the Executive
Director to determine that a violation occurred, and to issue a report
to the Board and a Notice of Violation to the Responsible Party, seeking
the assessment of administrative penalties through a contested case
hearing with the State Office of Administrative Hearings (["]SOAH["]); or
(6) Other action as the Committee deems appropriate.
(g) Upon receipt of a recommendation from the Committee regarding the issuance of a report and assessment of an administrative penalty under subsection (f)(5), the Executive Director shall determine whether a violation has occurred. If needed, the Executive Director may request additional information and/or return the recommendation to the Committee for further development. If the Executive Director determines that a violation has occurred, the Executive Director will issue a report to the Board in accordance with §2306.043 of the Texas Government Code.
(h) Not later than [fourteen (] 14 [)]
days after issuance of the report to the Board, the Executive Director
will issue a Notice of Violation to the Responsible Party. The Notice
of Violation issued by the Executive Director will include:
(1) A summary of the alleged violation(s) together with reference to the particular sections of the statutes and rules alleged to have been violated;
(2) A statement informing the Responsible Party of the right to a hearing before the SOAH, if applicable, on the occurrence of the violation(s), the amount of penalty, or both;
(3) Any other matters deemed relevant; and
(4) The amount of the recommended penalty. In determining the amount of a recommended administrative penalty, the Executive Director shall take into consideration the statutory factors at Tex. Gov't Code §2306.042 the penalty schedule shown in the tables in subsection (k) of this section and in the instance of a proceeding to assess administrative penalties against a Responsible Party administering the annual block grant portion of CDBG, CSBG, or LIHEAP, whether the assessment of such penalty will interfere with the uninterrupted delivery of services under such program(s). The Executive Director shall further take into account whether the Department's purposes may be achieved or enhanced by the use of full or partial probation of penalties subject to adherence to specific requirements and whether the violation(s) in question involve disallowed costs.
(i) Not later than 20 days after the Responsible Party receives the Notice of Violation, the Responsible Party may accept the requirements of the Notice of Violation or request a SOAH hearing.
(j) If the Responsible Party requests a hearing or does not respond to the Notice of Violation, the Executive Director, with the approval of the Board, shall cause the hearing to be docketed before a SOAH administrative law judge in accordance with §1.13 of this title (relating to Contested Case Hearing Procedures), which outlines the remainder of the process.
(k) Penalty schedules.
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The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on December 18, 2023.
TRD-202304849
Bobby Wilkinson
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: January 28, 2024
For further information, please call: (512) 475-3959
STATUTORY AUTHORITY. The proposed amendments are made pursuant to Tex. Gov't Code §2306.053, which authorizes the Department to adopt rules.
Except as described herein the proposed amendments affect no other code, article, or statute.
§2.401.General.
(a) The Department may debar a Responsible Party, a Consultant and/or a Vendor who has exhibited past failure to comply with any condition imposed by the Department in the administration of its programs. A Responsible Party, Consultant or Vendor may be referred to the Committee for Debarment for any of the following:
(1) Refusing to provide an acceptable plan to implement and adhere to procedures to ensure compliant operation of the program after being placed on Modified Cost Reimbursement;
(2) Refusing to repay disallowed costs;
(3) Refusing to enter into a plan to repay disallowed costs or egregious violations of an agreed repayment plan;
(4) Meeting any of the ineligibility criteria referenced in §11.202 of this title (relating to Ineligible Applicants and Applications) or other ineligibility criteria outlined in a Program Rule, with the exception of: ineligibility related to conflicts of interest disclosed to the Department for review, and ineligibility identified in a previous participation review in conjunction with an application for funds or resources (unless otherwise eligible for Debarment under this Subchapter D);
(5) Providing fraudulent information, knowingly falsified documentation, or other intentional or negligent material misrepresentation or omission with regard to any documentation, certification or other representation made to the Department;
(6) Failing to correct Events of Noncompliance as required
by an order that became effective after April 1, 2021 [the
effective date of this rule], and/or failing to pay an administrative
penalty as required by such order, within six months of a demand being
issued by the Department. In this circumstance, if the Debarment process
is initiated but the Responsible Party fully corrects the findings
of noncompliance to the satisfaction of the referring division and
pays the administrative penalty as required by the order before the
Debarment is finalized by the Board, the Debarment recommendation
may be cancelled or withdrawn by Committee recommendation and Executive
Director concurrence. This type of referral would be initiated by
the Secretary;
(7) Controlling a multifamily Development that was
foreclosed after the April 1, 2021 [effective date
of this rule], where the foreclosure or deed in lieu of foreclosure
terminates a subordinate TDHCA LURA;
(8) Controlling a multifamily Development and allowing
a change in ownership after April 1, 2021 [the effective
date of this rule], without Department approval;
(9) Transferring a Development, after April 1,
2021 [the effective date of this rule], without regard
for a Right of First Refusal requirement;
(10) Being involuntary removed, or replaced due to a default by the General Partner under the Limited Partnership Agreement, after April 1, 2021;
(11) Controlling a multifamily Development and failing to correct Events of Noncompliance before the expiration of a Land Use Restriction Agreement, after April 1, 2021;
(12) [(11)] Refusing to comply
with conditions approved by the Board that were recommended by the
Executive Award Review Advisory Committee after April 1, 2021 [the effective date of this rule];
(13) [(12)] Having any Event
of Noncompliance that occurs [occur] after April
1, 2021 [the effective date of this rule], that causes
the Department to be required to repay federal funds to any federal
agency including, but not limited to the U.S. Department of Housing
and Urban Development; and/or
(14) [(13)] Submitting a written
certification that non-compliance has been corrected when it is determined
that the Event of Noncompliance was not corrected. For certain Events
of Noncompliance, in lieu of documentation, the Compliance Division
accepts a written certification that noncompliance has been corrected.
If it is determined that the Event of Noncompliance was not corrected,
a Person who signed the certification may be recommended for debarment;
(15) ([(14)]) Refusing to provide
an amenity required by the LURA after April 1, 2021; [the
effective date of this rule]
(16) [(15)] Failing to reserve
units for Section 811 PRA participants after April 1, 2021; [the effective date of this rule;]
(17) [(16)] Failing to notify
the Department of the availability of 811 PRA units after April
1, 2021; [the effective date of this rule;]
(18) [(17)] Taking "choice limiting"
actions prior to receiving HUD environmental clearance (24 CFR §58.22);
(19) [(18)] Substandard construction,
as defined by the Program, and repeated failure to conduct required inspections;
(20) [(19)] Repeated failure
to provide eligible match. 24 CFR §92.220, 24 CFR §576.201,
and as required by NOFA;
(21) [(20)] Repeated failure
to report program income. 24 CFR §200.80, 24 CFR §570.500,
24 CFR §576.407(c), 24 [2] CFR §92.
503, (as [Part 215 (if] applicable), and 10 TAC §20.9,
or as defined by Program Rule;
(22) [(21)] Participating in
activities leading to or giving the appearance of "Conflict of Interest". As applicable, in 2 CFR Part 215 2 CFR Part 200, [(if
applicable)], 24 CFR §93.353 [84.42], §92.356 24 CFR [(if applicable)], §570.489, 24
CFR §576.404, 10 TAC §20.9, or as defined by Program Rule;
(23) [(22)] Repeated material
financial system deficiencies. As applicable, 2 CFR Part 200, 24
CFR §§ [84.21, 84.43, 85.20, 85.22, 85.36,] 92.205,
92.206, 92.350, 92.505, and 92.508, [(if applicable),
OMB A-110 Relocated to] 2 CFR Part 215, [(if
applicable), OMB A-87 Relocated to] 2 CFR Part 225 (if applicable),
[OMB A-122 Relocated to] 2 CFR Part 230 [(if applicable)](, 10 TAC §20.9[and], Uniform Grant
Management Standards [(if], and Texas Grant Management
Standards (as applicable), [)] and as
defined by Program Rule.
(24) [(23)] Repeated violations
of Single Audit or other programmatic audit requirements;
(25) [(24)] Failure to remain
a CHDO for Department committed HOME funds;
(26) [(25)] Commingling of funds,
Misapplication of funds;
(27) [(26)] Refusing to submit
a required Audit Certification Form, Single Audit, or other programmatic audit;
(28) [(27)] Refusing to timely
respond to reports/provide required correspondence;
(29) [(28)] Failure to timely
expend funds; and
(30) [(29)] A Monitoring Event
determines that 50% or more of the client or household files reviewed
do not contain required documentation to support income eligibility
or indicate that the client or household is not income eligible.
(b) The Department shall debar any Responsible Party, Consultant, or Vendor who is debarred from participation in any program administered by the United States Government.
(c) Debarment for violations of the Department's Multifamily
Programs. The Department shall debar any Responsible Party who has
materially or repeatedly violated any condition imposed by the Department
in connection with the administration of a Department program, including
but not limited to a material or repeated violation of a land use
restriction agreement (LURA[).]) or Contract.
Subsection (d) of this section provides the criteria the Department
will use to determine if there has been a material violation of a
LURA. Subsections (e)(1) and (e)(2) of this section provide the criteria
the Department shall use to determine if there have been repeated
violations of a LURA.
(d) Material violations of a LURA. A Responsible Party
will be considered to have materially violated a LURA, Program Agreement,
or condition imposed by the Department and shall be referred to the
committee for mandatory Debarment if they: [;]
(1) Control a Development that has, on more than one
occasion scored 50 or less on a UPCS inspection [;] or
has, on more than one occasion scored 50 or less on a NSPIRE inspection,
or any combination thereof. The Compliance Division may temporarily
decrease this NSPIRE score threshold with approval by the Executive
Director, for a period of time not longer than one year, so long as
the score threshold is applied evenly to all properties;
(2) Refuse to allow a monitoring visit when proper notice was provided or failed to notify residents, resulting in inspection cancellation, or otherwise fails to make units and records available;
(3) Refuse to reduce rents to less than the highest allowed under the LURA;
(4) Refuse to correct a UPCS, NSPIRE, or final construction inspection deficiency after the effective date of this rule;
(5) [(4)] Fail to meet minimum
set aside by the end of the first year of the credit period (HTC Developments
only) after April1, 2021; or
(6) [(5)] Excluding an individual
or family from admission to the Development solely because the household
participates in the HOME Tenant Based Rental Assistance Program, the
housing choice voucher program under Section 8, United States Housing
Act of 1937 (42 U.S.C. §1-437), or other federal, state, or local
government rental assistance program after April 1, 2021 [ the effective date of this
rule.].
(e) Repeated Violations of a LURA that shall be referred to the Committee for Debarment.
(1) A Responsible Party shall be referred to the Committee for mandatory Debarment if they Control a Development that, during two Monitoring Events in a row is found to be out of compliance with the following Events of Noncompliance:
(A) No evidence of, or failure to certify to, material participation of a non-profit or HUB, if required by the Land Use Restriction Agreement;
(B) Any Uniform Physical Condition Standards Violations
that result in a score of 70 or below in sequential UPCS inspections
after April 1, 2021 or NSPIRE violations that result in a score
of 50 or below in sequential inspections after the effective date
of this rule, or any combination thereof. The Compliance Division
may temporally decrease this NSPIRE score threshold with approval
by the Executive Director, for a period not to exceed one year, so
long as the score threshold is applied evenly to all properties; [the effective date of this
rule;]
(C) Refuse to submit all or parts of the Annual Owner's
Compliance Report for two consecutive years after April 1, 2021;
or [the effective date of this rule; or]
(D) Gross rents exceed the highest rent allowed under the LURA or other deed restriction.
(2) Repeated violations in a portfolio. Persons who
control five or more Actively Monitored Developments will be considered
for Debarment based on repeated violations in a portfolio. A Person
shall be referred to be committee [for mandatory will be referred
for Debarment] if an inspection or referral, after April
1, 2021 [the effective date of this rule], indicates
the following:
(A) 50% or more of the Actively Monitored Developments
in the portfolio have been referred to the Enforcement Committee within
the last three years. The Enforcement Committee may increase this
threshold at its discretion. For example, if three properties in a
five-property portfolio are monitored in the same month, and then
referred to the Enforcement Committee at the same time, it may be
appropriate to increase the 50% threshold; or, [; or,]
(B) 50% or more of the Actively Monitored Developments in the portfolio score a 70 or less during a Uniform Physical Conditions Standards inspection or score 50 or less during a NSPIRE inspection, or any combination thereof. The Compliance Division may decrease this NSPIRE score threshold with approval by the Executive Director, so long as the score threshold is applied evenly to all properties.
(f) Debarment for violations of [all other]
Department Programs, with the exception of the Non-Discretionary funds
in the Community Services Block Grant program. Material or repeated
violations of conditions imposed in connection with the administration
of Programs administered by the Department. Administrators, Subrecipients,
Responsible Parties, contractors, multifamily owners, and related
parties shall be referred to the Committee for consideration for Debarment
for violations including but not limited to:
(1) 50% or more loan defaults in the first 12 months
of the loan agreement after April 1, 2021 [the effective
date of this rule];
(2) The following Davis Bacon Act Violations:
(A) Refusing to pay restitution (underpayment of wages). 29 CFR §5.31.
(B) Refusing to pay liquidated damages (overtime violations). 29 CFR §5.8.
(C) Repeated failure to pay full prevailing wage, including fringe benefits, for all hours worked. 29 CFR §5.31.
(3) The following violations of the Uniform Relocation Act and requirements of §104(d):
(A) Repeated failure to provide the General Information Notice to tenants prior to application. 49 CFR §24.203, 24 CFR §92.353, 24 CFR §93.352 and HUD Handbook 1378.
(B) Repeated failure to provide all required information
in the General Information Notice. 49 CFR §24.203, 24 CFR §570.606, 24 CFR §92.353, 24 CFR §93.352 or [and], HUD Handbook 1378.
(C) Repeated failure to provide the Notice of Eligibility
and/or Notice of Non-displacement on or before the Initiation of Negotiations
date. 49 CFR §24.203, 24 CFR §92.353, 24 CFR §93.352, or [and] 24 CFR §570.606.
(D) Repeated failure to provide all required information
in the Notice of Eligibility and/or Notice of Non-displacement. 49
CFR §24.203, 24 CFR §92.353, 24 CFR §93.352, or [and] 24 CFR §570.606.
(E) Repeated failure to provide 90 Day Notices to all
"displaced" tenants and/or repeated failure to provide 30 Day Notices
to all "non-displaced" tenants. 49 CFR §24.203, 24 CFR §92.353,
24 CFR §93.352, or [and] 24 CFR §570.606.
(F) Repeated failure to perform and document "decent,
safe and sanitary" inspections of replacement housing. 49 CFR §24.203,
24 CFR §92.353, 24 CFR §93.352, or [and]
24 CFR §570.606.
(G) Refusing to properly provide Uniform Relocation Act or §104(d) assistance. 49 CFR §24.203, 24 CFR §92.353, 24 CFR §570.606 and §104(d) of the Housing & Community Development Act of 1974 - 24 CFR Part 42.
(4) Refusing to reimburse excess cash on hand;
(5) Using Department funds to demolish a homeowner's dwelling and then refusing to rebuild;
(6) Drawing down Department funds for an eligible use and then refusing to pay a properly submitted request for payment to a subgrantee or vendor with the drawn down funds.
(g) The referring division shall provide the Responsible Party with written notice of the referral to the Committee, setting forth the facts and circumstances that justify the referral for Debarment consideration.
(h) The Secretary shall then offer the Responsible Party the opportunity to attend an Informal Conference with the Committee to discuss resolution of the. In the event that the Debarment referral was the result of a violated agreed order or a determination that 50% or more of the Actively Monitored Developments in their portfolio have been referred to the Enforcement Committee, the above written notice of the referral to the Committee and the informal conference notice shall be combined into a single notice issued by the Secretary.
(i) A Debarment Informal Conference may result in the following, which shall be reported to the Executive Director:
(1) A determination that the Department did not have sufficient information and/or that the Responsible Party does not meet any of the criteria for Debarment;
(2) An agreed Debarment, with a proposed agreed order to be prepared and presented to the Board for approval;
(3) A recommendation by the Committee to the Executive Director for Debarment;
(4) A request for further information, to be considered during a future meeting; or,
(5) If Debarment is not mandatory, an agreement to dismiss the matter with no further action, an agreement to dismiss the matter with corrective action being taken, or any other action as the Committee deems appropriate, which will then be reported to the Executive Director.
(j) The Committee's recommendation to the Executive Director regarding Debarment shall include a recommended period of Debarment. Recommended periods of Debarment will be based on material factors such as repeated occurrences, seriousness of underlying issues, presence or absence of corrective action taken or planned, including corrective action to install new responsible persons and ensure they are qualified and properly trained. Recommended periods of Debarment if based upon HUD Debarment, shall be for the period of the remaining HUD Debarment; or, if based upon criminal conviction, shall be up to ten (10) years or until fulfillment of all conditions of incarceration and/or probation, whichever is greater.
(k) The Executive Director shall accept, reject, or modify the Debarment recommendation by the Committee and shall provide written notice to the Responsible Party of the determination, and an explanation of the determination if different than the Committee's recommendation, including the period of Debarment, if any. The Responsible Party may appeal the Debarment determination in writing to the Board as described in §1.7 of this title (relating to Appeals Process).
(l) The Debarment recommendation will be brought to the next Board meeting for which the matter can be properly posted. The Board reserves discretion to impose longer or shorter Debarment periods than those recommended by staff based on its finding that such longer or shorter periods are appropriate when considering all factors and/or for the purposes of equity or other good cause. An action on a proposed Debarment of an Eligible Entity under the CSBG Act will not become final until and unless proceedings to terminate Eligible Entity status have occurred, resulting in such termination and all rights of appeal or review have run or Eligible Entity status has been voluntarily relinquished.
(m) Until the Responsible Party's Debarment referral is fully resolved, the Responsible Party may not participate in new Department financing and assistance opportunities.
(n) Any person who has been debarred is prohibited from participation as set forth in the final order of Debarment for the term of their Debarment. Unless specifically stated in the order of Debarment, Debarment does not relieve a Responsible Party from its current obligations, or prohibit it from continuing its participation in any existing engagements funded through the Department, nor limit its responsibilities and duties thereunder. The Board will not consider modifying the terms of the Debarment after the issuance of a final order of Debarment.
(o) If an Eligible Entity under the CSBG Act meets any of the criteria for Debarment in this rule, the Department may recommend the Eligible Entity for Debarment. However, that referral or recommendation shall not proceed until the termination of the Eligible Entity's status under the CSBG Act has concluded, and no right of appeal or review remains.
(p) All correspondence under this rule shall be delivered electronically.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on December 18, 2023.
TRD-202304850
Bobby Wilkinson
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: January 28, 2024
For further information, please call: (512) 475-3959