Texas Register, Volume 38, Number 39, Pages 6341-6746, September 27, 2013 Page: 6,412
6341-6746 p. ; 28 cm.View a full description of this periodical.
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(b) Requirement. Department approval must be requested for
any new member to join in the ownership of a Development, except
for changes to the investment limited partner, non-controlling limited
partner, or other partners affiliated with the investment limited partner
or changes resulting from foreclosure wherein the lender or financial
institution involved in the transaction is the resulting owner. Any sub-
sequent transfer of the Development will be required to adhere to the
process in this section. Furthermore, a Development Owner may not
transfer an allocation of tax credits or ownership of a Development sup-
ported with an allocation of tax credits to any Person or entity unless
the Development Owner obtains the Executive Director's prior, writ-
ten approval of the transfer, except where the transfer is an Affiliate of
the Development Owner, if such entity contains no new members, or a
non-Controlling Related Party for estate planning purposes. The Exec-
utive Director may not unreasonably withhold approval of the transfer
requested in compliance with this section.
(c) Transfers Prior to 8609 Issuance or Construction Comple-
tion. Transfers (other than to an Affiliate or non-Controlling Related
Party for estate planning purposes included in the ownership structure)
will not be approved prior to the issuance of IRS Form(s) 8609 (for
Housing Tax Credits) or the completion of construction (for all Devel-
opments funded through other Department programs) unless the De-
velopment Owner can provide evidence that the need for the transfer
is due to a hardship (ex. potential bankruptcy, removal by a partner,
etc.). The Development Owner must provide the Department with
a written explanation describing the hardship and a copy of any ap-
plicable agreement between the parties to the transfer, including any
Third-Party agreement.
(d) Non-Profit Organizations. If the ownership transfer re-
quest is to replace a qualified non-profit organization within the own-
ership entity, the replacement non-profit entity must adhere to the re-
quirements in paragraph (1) or (2) of this subsection.
(1) If the LURA requires ownership or material participa-
tion in ownership by a qualified non-profit organization, pursuant to
42(h)(5) of the Code, the Owner must comply with Code requirements
and affirmatively document that the allocation would have been made
to the Development Owner regardless of the set-aside election or, the
Owner will be required to meet the additional requirements for appli-
cation in the non-profit set-aside outlined in Texas Government Code,
2306.6706.
(2) If the LURA requires ownership or material participa-
tion in ownership by a qualified non-profit organization, pursuant to
42(h)(5) of the Code and Texas Government Code, 2306.6706, the
Owner must comply with both regulatory requirements.
(e) Documentation Required. A Development Owner must
submit documentation requested by the Department to enable the De-
partment to understand fully the facts and circumstances that gave rise
to the need for the transfer and the effects of approval or denial. Doc-
umentation includes but is not limited to:
(1) a written explanation outlining the reason for the re-
quest;
(2) a list of the names of transferees and Related Parties;
(3) detailed information describing the experience and fi-
nancial capacity of transferees and related parties holding an owner-
ship interest of 10 percent or greater;
(4) evidence and certification that the tenants in the Devel-
opment have been notified in writing of the transfer at least thirty (30)
calendar days prior to the date the transfer is approved by the Depart-
ment.(f) Within five (5) business days after the date the Department
receives all necessary information under this section, staff shall conduct
a qualifications review of a transferee to determine the transferee's past
compliance with all aspects of the Department's programs, LURAs and
eligibility under this chapter.
(g) Credit Limitation. As it relates to the Housing Tax Credit
amount further described in 11.4(a) of this title (relating to Tax Credit
Request and Award Limits), the credit amount will not be applied in
circumstances described in paragraphs (1) and (2) of this subsection:
(1) in cases of transfers in which the syndicator, investor or
limited partner is taking over ownership of the Development and not
merely replacing the general partner; or
(2) in cases where the general partner is being replaced if
the award of credits was made at least five (5) years prior to the transfer
request date.
(h) Penalties. The Development Owner must comply with any
additional documentation requirements as stated in Subchapter F of
this chapter (relating to Compliance Monitoring). The Development
Owner, as on record with the Department, will be liable for any penal-
ties imposed by the Department even if such penalty can be attributable
to the new Development Owner unless such ownership transfer is ap-
proved by the Department.
(i) Ownership Transfer Processing Fee. The ownership trans-
fer request must be accompanied by corresponding ownership transfer
fee as outlined in 10.901 of this chapter (relating to Fee Schedule).
10.407. Right ofFirst Refusal.
(a) General. This section applies to LURAs that provided an
incentive for Development Owners to offer a Right of First Refusal
(ROFR) to a Qualified ROFR Organization which is defined as a quali-
fied nonprofit organization under 42(h)(5)(c) or tenant organizations.
The Development Owner may market the Property for sale and sell
the Property to a Qualified ROFR Organization without going through
the ROFR process outlined in this section. The purpose of this section
is to provide administrative procedures and guidance on the process
and valuation of properties under the LURA. All requests for ROFR
submitted to the Department, regardless of existing regulations, must
adhere to this process. A ROFR request must be made in accordance
with the LURA for the Development. If there is a conflict between the
Development's LURA and this subchapter, requirements in the LURA
supersede the subchapter. If a LURA includes the ROFR provision, the
Development Owner may not request a Preliminary Qualified Contract
until the requirements outlined in this section have been satisfied. The
Department reviews and approves all ownership transfers, including
transfers to a nonprofit or tenant organization through a ROFR. Prop-
erties subject to a LURA may not be transferred to an entity that is con-
sidered an ineligible entity under the Department's most recent Qual-
ified Allocation Plan. In addition, ownership transfers to a non-profit
organization during the ROFR period are subject to 1.5 of this title
(relating to Previous Participation Reviews). Properties that have been
determined by staff to have a pattern of non-compliance that wish to
pursue the acquisition of a Department-administered Property may ap-
peal to the Board regarding the denial of such transfer by the Execu-
tive Director. Satisfying the ROFR requirement does not terminate the
LURA.
(b) Right of First Refusal Offer Price. There are two general
expectations of the ROFR offer or sale price identified in the outstand-
ing LURAs. The descriptions in paragraphs (1) and (2) of this subsec-
tion do not alter the requirements or definitions included in the LURA
but provide further clarification as applicable:38 TexReg 6412 September 27, 2013 Texas Register
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Texas. Secretary of State. Texas Register, Volume 38, Number 39, Pages 6341-6746, September 27, 2013, periodical, September 27, 2013; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth342084/m1/72/: accessed May 2, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.