SECTION 190.2. Allocation and Reservation System

(a) The state's ceiling shall be determined for each calendar year by the executive director based upon the most recent census estimate of the resident population of the state published by the Bureau of the Census prior to the beginning of such calendar year. The amount of the state ceiling shall be published on the board's website in January each year and shall be updated on the site at least weekly thereafter.

(b) On or after October 5 of the year preceding the applicable program year, the board will accept applications for reservation from issuers authorized to issue private activity bonds. The board shall not grant a reservation to any issuer prior to January 2 of the program year. If two or more issuers file an application for reservation of the state ceiling in any of the categories described in Government Code §1372.022, the board shall conduct a lottery establishing the priority order of each such application for reservation. Once the priority order for all applications for reservation filed on or before October 20 of the year preceding the applicable program year is established, except as provided by Government Code §1372.031(b) and subject to Government Code §1372.0321 and Government Code §1372.0231, reservations for each issuer within the categories described in Government Code §1372.022(a)(2), (3), (4), and (5) shall be granted in the order of priority established by such lottery. If determined by staff as necessary an additional lottery may be held immediately to stagger reservation dates for such issuers; otherwise, reservations shall be staggered by priority and then lot number. Each issuer of state voted issues granted a reservation initially may participate in the additional lottery or shall be granted a reservation date which is the first business day of the program year.

(c) The order of priority for reservations by housing finance corporations in the category described in Government Code §1372.022(a)(1), shall further be determined as provided in Government Code §1372.032.

(1) The first category of priority shall include those applications for a reservation filed by housing finance corporations which filed an application for a reservation on behalf of the same local population prior to September 1 of the previous calendar year, but which did not receive a reservation during such year. Any such priority of an issuer composed of more than one jurisdiction is not affected by the issuer's loss of a sponsoring government unit and that unit's population base if the dollar amount of the application has not increased.

(2) The second category of priority shall include those applications for a reservation not included in the first category of priority.

(3) Within each category of priority, reservations shall be granted in reverse calendar year order of the most recent closing of qualified mortgage bonds by each housing finance corporation, with the most recent closing being the last to receive a reservation and with those housing finance corporations that have never received a reservation for mortgage revenue bonds being the first to receive a reservation, and, in the case of closings occurring on the same date, reservations shall be granted in an order determined by the board by lot. The most recent closing applicable to:

(A) a newly created housing finance corporation that was created by a local government unit or local government units that had previously sponsored an existing housing finance corporation or a disbanded housing finance corporation, is the most recent closing of qualified mortgage bonds the proceeds of which were available to the population of the housing finance corporation;

(B) a housing finance corporation sponsored by a local government unit that has participated in the program of another housing finance corporation, is the most recent closing of qualified mortgage bonds the proceeds of which were available to the population of the housing finance corporation; and

(C) all other housing finance corporations, is the most recent closing of qualified mortgage bonds by the housing finance corporation. In no event will a housing finance corporation or its sponsoring local government unit be allowed to achieve an advantage in the determination of its last closing date by creating, dissolving, or withdrawing from a housing finance corporation.

(d) The order of priority for reservations in the category described in Government Code §1372.022(a)(4) shall further be determined as provided in Government Code §1372.0321 and Government Code §1372.0231.

(1) The first category of priority shall include those applications for a reservation for projects that:

(A) during the four-year period preceding the date of the application, have:

(i) filed an application for a low-income housing tax credit with the Texas Department of Housing and Community Affairs; and

(ii) closed on a previous reservation of bonds in accordance with Government Code §1372.042, as determined based on the date of allocation of those bonds; and

(B) require a subsequent issuance of bonds to maintain compliance with the percentage requirement described in Government Code §1372.0321(e); and

(C) have not previously applied for a subsequent issuance of bonds under Government Code §1372.0321(a).

(2) The second category of priority shall include those applications for a reservation for:

(A) projects:

(i) in which 50% of the units are reserved for families and individuals earning not more than 50% of the area median family income and in which the maximum allowable rents are restricted to 30% of 50% of area median family income, minus an allowance for utility costs authorized under the federal Low Income Housing Tax Credit Program; and

(ii) the remaining 50% of the residential units in the project are reserved for families and individuals earning not more than 60% of the area median family income and in which the maximum allowable rents are restricted to 30% of 60% of area median family income, minus an allowance for utility costs authorized under the federal Low Income Housing Tax Credit Program; or

(B) projects:

(i) in which 15% of the residential units in the project are reserved for families and individuals earning not more than 30% of the area median family income and in which the maximum allowable rents are restricted to 30% of 30% of area median family income, minus an allowance for utility costs authorized under the federal Low Income Housing Tax Credit Program; and

(ii) the remaining 85% of the residential units in the project are reserved for families and individuals earning not more than 60% of the area median family income and in which the maximum allowable rents are restricted to 30% of 60% of area median family income, minus an allowance for utility costs authorized under the federal Low Income Housing Tax Credit Program; or

(C) projects:

(i) in which 100% of the residential units in the project are reserved for families and individuals earning not more than 60% of the area median family income and in which the maximum allowable rents are restricted to 30% of 60% of area median family income, minus an allowance for utility costs authorized under the federal Low Income Housing Tax Credit Program; and

(ii) which are located in a census tract in which the median income, based on the most recent information published by the United States Bureau of the Census, is higher than the median income for the county, metropolitan statistical area, or primary metropolitan statistical area in which the census tract is located as established by the United States Department of Housing and Urban Development; or

(D) on June 1 and after, projects that were submitted for the lottery, and are located in counties, metropolitan statistical areas, or primary metropolitan statistical areas with area median family income levels below or at the median family income for the state according to the U.S. Department of Housing and Urban Development.

(3) The third category of priority shall include those applications for a reservation for a project in which at least 80% of the units are reserved for families and individuals earning not more than 60% of the area median family income and in which the maximum allowable rents are restricted to 30% of 60% of area median family income, minus an allowance for utility costs authorized under the federal Low Income Housing Tax Credit Program.

(4) The fourth category of priority shall include those applications for any other qualified residential rental project.

(5) Within each category of priority, reservations shall be granted in the order established by the lottery subject to Government Code §1372.0231.

(6) Owners of Low Income Housing Tax Credits (LIHTC) and 501(c)(3) properties that issue through State agencies are prohibited from having policies, procedures and/or screening practices which have the effect of excluding applicants because they have Section 8 voucher or certificate. The verification of such an exclusionary practice on the part of the owner or manager by a state agency will be considered a violation and may result in the owner's inability to participate in future housing programs of the state.

(7) When determining the priority level of an application established under Government Code §1372.0321, the applicant shall use the most current data available on October 1 of the year preceding the program year in which allocation is being sought, unless specifically otherwise provided in federal or state law or in this title. All American Community Survey (ACS) data must be five year estimates, and any reference to median income in this title shall be synonymous with median family income unless otherwise specified.

(e) The order of priority for reservations in the category described in Government Code §1372.022(a)(5), shall further be determined as provided in Government Code §1372.033.

(f) If state ceiling becomes available on August 15, it shall be available for all applications for reservations in the order determined by the board by lot. If all applications have been offered a portion of the available state ceiling then the board shall grant reservations in the order in which the applications are received.

(g) All applications for a reservation filed after October 20 of the preceding year by any issuer for the issuance of bonds shall be accepted by the board in their order of receipt.

(h) An application for a reservation for the current program year may not be submitted and a reservation may not be granted after November 15 of the program year.

(i) An issuer may refuse to accept a reservation if the amount of state ceiling available is less than the amount for which the issuer applied or for any amount if the reservation is granted after September 23 of the program year.

(j) The amount of the state's ceiling that has not been reserved prior to November 16 of the program year and any amount previously reserved that becomes available on or after that date because of the cancellation of a reservation or any other reason, may be designated, by the board, as traditional carryforward for the carryforward purposes outlined in the Code through submission of the application for carryforward and any other required documentation. If the 150-day, 180-day, or 210-day period, as applicable, expires on or after December 24th of a program year in which a reservation was issued, an issuer is required to close on its bonds before December 24th. However, if an issuer's applicable period expires after December 31st, the issuer must notify the board in writing before December 24th of their intent to request non-traditional carryforward designation of the reservation and with their expected bond closing date. The granting by the board of a non-traditional carryforward designation through this described process, will allow an issuer the remaining balance of their 150-day, 180-day, or 210-day period, as applicable, to close on their bond by the expected closing date. If any issuer makes this election and does not close the bonds on or before the expected closing date, the amount of non-traditional carryforward designation will be administered by the board in compliance with the requirements of the Code.

(k) An issuer may submit an application for carryforward to the board at any time during the year before December 24th.

(l) Issuers will be eligible for carryforward according to the priority classifications listed in the Act, specifically Government Code §1372.062.

(m) With respect to the amount of the state ceiling set aside under Government Code §1372.0231(a)(1) and (3), applications are subject to review and approval by board staff prior to receiving a certificate of allocation.

(n) With respect to the time period and amount of the state ceiling set aside under Government Code §1372.0231(a)(1), should the Texas Department of Housing and Community Affairs (TDHCA) opt to participate in the lottery, TDHCA shall submit residential rental project applications to the board during the application period outlined in Government Code §1372.028. The board shall include a number of lottery balls in the lottery on behalf of TDHCA equal to the number of applications TDHCA submits that are eligible for participation in the lottery. Prior to the date of the lottery, TDHCA will rank its eligible applications according to the provisions established by TDHCA and shall provide this ranking to the board. After the lottery, the board will assign the lottery numbers drawn on behalf of TDHCA to TDHCA's eligible applications based upon the rank provided by TDHCA, with the lowest lottery number being assigned to the highest-ranking application. TDHCA applications submitted post-lottery are ineligible for lottery numbers and may not receive a reservation ahead of any other TDHCA eligible application with a lottery number.

(o) Until August 1 of the program year, within the category described by Government Code §1372.022(a)(5), priority shall be granted to the Texas Economic Development Bank for projects that the Texas Economic Development and Tourism Office determines meet the governor's criteria for funding from the Texas Enterprise Fund, pursuant to the requirements of Government Code §1372.031(b).

(p) On the last business day of a program year the Board may assign as carryforward unencumbered state ceiling to a state agency or to an issuer that was created to act on behalf of the state at their request and in the order received without a formal application process. Unencumbered means any state ceiling that is not reserved or designated as carryforward and for which no application for carryforward is pending.

Source Note: The provisions of this §190.2 adopted to be effective January 3, 1992, 16 TexReg 7646; amended to be effective January 11, 1993, 18 TexReg 65; amended to be effective December 21, 1995, 20 TexReg 10389; amended to be effective October 8, 1997, 22 TexReg 9895; amended to be effective October 6, 1999, 24 TexReg 8566; amended to be effective February 27, 2002, 27 TexReg 1338; amended to be effective September 26, 2002, 27 TexReg 8957; amended to be effective September 18, 2003, 28 TexReg 8136; amended to be effective April 10, 2008, 33 TexReg 2831; amended to be effective October 8, 2009, 34 TexReg 6860; amended to be effectiveDecember 2, 2019, 44 TexReg 7403; amended to be effective October 13, 2021, 46 TexReg 6948; amended to be effective August 22, 2022, 47 TexReg 5000; amended to be effective October 11, 2023, 48 TexReg 5825