This document is a substantial amendment to the Action Plan for FFY 2010 submitted by the State of Texas. The Action Plan is the annual update to the Consolidated Plan for FFY 2010 through 20152014. This amendment outlines the expected distribution and use of $7,284,978.00 through the Neighborhood Stabilization Program (NSP), which the U.S. Department of Housing and Urban Development (HUD) is providing to the State of Texas. This allocation of funds is provided under Section 1497 of the Wall Street Reform and Consumer Protection Act of 2010 (Pub. L. 111-203, approved July 21, 2010) (Dodd-Frank Act).

The Texas Department of Housing and Community Affairs (TDHCA or Department) issued a competitive Notice of Funds Availability pursuant to which it has awarded funding to eligible subgrantees, Legacy Community Development Corporation in Port Arthur and Community Development Corporation of Brownsville in Brownsville.

The census tracts where awards will be used are 48245005500 in Jefferson County, Texas and 48061014100 in Cameron County, Texas.   The allocation of funds total $6,556,480.20 in project funds and $728,497.80 in administrative funds to assist approximately 54 households

AREAS OF GREATEST NEED
The Federal Register Notice (Docket No.FR-5321-N-03), specifies that funds be used in the areas of greatest need.  Need is determined by the HUD Foreclosure Need website located at https://www.huduser.org/nspgis/nsp.html

Texas has identified census tracts with a score of 16 or greater as being the census tracts with the HUD-estimated greatest need.  Eligible applicants within these census tracts will be able to apply for NSP3 funding. 

ELIGIBLE ENTITIES AND USES OF FUNDS
Eligible applicants for rental properties are nonprofit organizations as described in Section 501 (c)(3) or (c)(4) of the Internal Revenue Code who are required by federal rules to follow 24 CFR Part 84.  Eligible applicants for homebuyer properties are units of general local government (including public housing authorities) who will followare required by federal rules to follow 24 CFR Part 85, nonprofit organizations as described in Section 501(c)(3) or (c)(4) of the Internal Revenue Code who are required by federal rules to follow 24 CFR Part 84, and Housing Finance Corporations authorized under the provisions of the Texas Housing Finance Corporation Act, Texas Government Code, Chapter 394.

In accordance with NSP guidelines, activities under NSP3 may include the establishment of financing mechanisms for purchase and redevelopment of foreclosed homes and residential properties, purchase and rehabilitation of homes and residential properties that have been abandoned or foreclosed, and the redevelopment of demolished or vacant properties.

SELECTION CRITERIA AND PRIORITIES
The State of Texas (State) has established the priorities and scoring that will be used in the application review process and are described below. While the criteria are important to demonstrate a successful proposal, the scoring structure is also designed to ensure that the State complies with the requirements of the HUD Notice designed to prioritize areas of greatest need, meets applicable CDBG regulations, meets Department priorities, and efficiently and effectively expends the funds.  Each applicant will be required to submit a properly completed application.  Each applicant organizational andi

a) All initial round applications must meet a minimum threshold total score of 38 points to be considered for funding.  Subsequent round Aapplication considered for award after April 15, 2011, must meet a minimum score of 33 points.  Should applications meeting this minimum score threshold exceed available funding, such eligible applications will be retained regardless of date of submission until such a time that funding is available in sufficient amounts to fund the applications or a subsequent Texas NSP NOFA covering NSP3 funds is released. 

i) Maximum Total Score = 55 Points (initial application period) or 50 points:

1. Greatest Need (20 Points); Minimum Score 16 points.
2. Rental Property (10 Points) or (5 Points after Initial Application)
3. Prior experience with Texas NSP and TDHCA  (Up to 5 Points)
4. Local at Risk Priorities (10 Points)
5. Low-Income Households (Up to 5 Points)
6. Low Poverty Area (1 Point)
7. Transit Area (1 Point)
8. Education Opportunities (1 Point)
9. Special Needs/Hard to Serve Populations (Up to 2 points)

ii) Greatest Need (20 Points):  NSP3 activities must be completed in eligible census tracts, as determined by HUD under the Neighborhood Stabilization 3 NOFA.  Applicants are required to provide evidence that activities will meet a Neighborhood Stabilization purpose, in a census tract with a threshold foreclosure needs score of 16 or more.  The HUD data and mapping tool may be found on the HUD website, here: https://www.huduser.org/nspgis/nsp.html These areas may change as the data is updated, and the target score will be determined as that which was in place as of the date of application. 

iii) Rental Properties (10 Points till April 15th, 5 points thereafter):  The NSP3 allocation included statutory language requiring the establishment of procedures to create preferences for the development of affordable rental housing for properties assisted with NSP3 funds.  Texas NSP3 is demonstrating this preference through a points system.

iv) Local At-Risk Priorities:  (10 Points) The identified cities listed in Table 1, as attached to the NOFA, are communities at risk of losing affordable units with existing or former funding through the Department.  Eligible applications that are located and willing and able to commit to minimum unit, affordability term and amount of non-federal funds for each specified city, as identified in the chart in Addendum 1 will receive points under this scoring item.  The Applicant must be willing to execute a Texas HOME LURA and be able to meet all of the conditions of the federal requirements of a HOME funded development in conjunction with the requirements of this NOFA.  These areas may change as the data is updated, and the points will be determined as that which was in place as of the dae

v) Previous Participation with Texas NSP and TDHCA funds (5 Total Points):   An Applicant will receive two points for having prior State of Texas NSP experience and three points for experience with other TDHCA funds.  The experience must have been completed with the same type of construction as the Application is proposing (single family, multifamily, new construction, rehabilitation, etc.) and have acquired their experience in connection with a development with at least 80% as many units as the Units in the development for which Application is being made.  The experience will be documented as outlined in the most current QAP plan, as applicable.

vi) Assistance to Low-Income Households at or Below 50% AMFI (5 Total Points): In order to emphasize affordability for households at or below 50% of AMFI, the State will give up points to proposals that will serve households in this income category.  Each household served in this income category will receive a point, up to five points.

vii) Low Poverty Area (1 point): The development is in a census tract that has no greater than 10% poverty threshold population according to the most recent census data as of the date of the application.

viii) Transit District (1 point):  The development or unit is in a mixed-use residential and commercial area, located within a radius of one-quarter mile from an existing or proposed transit stop, designed to encourage pedestrian activities and maximize access to public transportation.

ix) Educational Opportunities (1 point): The development or unit will serve families with children (at least 70% of the Unit or units must have an eligible bedroom mix of two bedrooms or more) and is proposed to be located in an elementary school attendance zone that has an academic rating of "Exemplary" or "Recognized," or comparable rating if the rating system changes. An elementary attendance zone does not include magnet school or elementary schools with district-wide possibility of enrollment or no defined attendance zones. The date for consideration of the attendance zone is that in existence as of the received date of the application and the academic rating is the most current rating determined by the Texas Education Agency as of that same date.

x) Special Needs or Hard to Serve Populations (1 point per category up to 2 points):  At least 51% of the NSP assisted unit or units are designed to serve, Elderly, Persons with Disabilities, Transitioning out of Homelessness, Victims of Domestic Violence, Veterans, Transitioning out of Foster Care, Prisoner Reentry, or Migrant Farmworkers.

xi) Tiebreaker:  In the event that two or more Applications receive the same priority based upon the scoring and are both practicable and economically feasible, the Department will utilize the factors in this section, in the order they are presented, to determine which Development will receive a preference in consideration for an awarded of funds.
(1) Applications involving any Rehabilitation or Reconstruction of existing Units will win this first tier tie breaker over Applications involving solely New Construction or Adaptive Reuse.
(2) The Application with the least amount of Texas NSP funds per Texas NSP restricted unit will win this second tier tie breaker.

xii) Department Priorities:   The Federal NSP3 NOFA contains a requirement

MARKET ANALYSIS

Each applicant will be required to demonstrate how their proposal addresses their local needs and how, if applicable, it coordinates with their community consolidated plan.   In addition, multi-family properties will go through an underwriting process to ensure that the area market can support the proposed rental project.

The Texas NSP will adopt the HOME program standards for continued affordability for rental housing at 24 CFR 92.252 and homeownership at 24 CFR 92.254. The Texas NSP will follow the Single Family Mortgage limits under Section 203(b) of the National Housing Act which are allowable under HOME program standards.  The ability of TDHCA to enforce this requirement for the full affordability period will be secured with a recapture provision in the loan documents.

The Texas NSP will use local code to determine the definition of a blighted structure except that moral blight is not eligible.  If there is no local definition, blighted structure shall mean that a structure exhibits objectively determinable signs of deterioration sufficient to constitute, in the Departments sole and reasonable judgment a likely threat to human health, safety, or the public welfare.

The Texas NSP will adopt the HOME program standards for affordable rents at 24 CFR 92.252(a), (b), (c), (d), (e), (f) and (j).

Single Family Housing

i) All housing that is constructed or rehabilitated with NSP3 funds must meet all applicable local codes, rehabilitation standards, ordinances, and zoning ordinances at the time of project completion.  In the absence of a local code for new construction or rehabilitation, the housing must meet the International Residential Code and the National Electrical Code, as applicable. In addition, housing that is rehabilitated with NSP3 funds must meet all applicable energy efficiency standards established by §2306.187 of the Texas Government Code, and energy standards as verified by RESCHECK.

ii) If a Texas NSP3 assisted single-family or duplex is newly constructed and reconstructed, the applicant must also ensure compliance with the universal design features in new construction, established by §2306.514 of the Texas Government Code, and as implemented by TDHCA.

iii) All NSP3 assisted properties must meet all applicable State and local housing quality standards and code requirements, which at a minimum must address Universal Physical Condition Standards (UPCS) or the housing quality standards (HQS) in 24 CFR §982.40, but only if HQS is required for another funding source. If there are no such standards or code requirements, the housing must meet Universal Physical Condition Assessment guidelines, unless HQS is required for another fund source. When NSP3 funds are used for rehabilitation the entire unit must be brought up to the applicable property standards, pursuant to 24 CFR §92.251(a)(1).

iv) All NSP3 assisted ownership units must pass inspection by a licensed Texas Real Estate Commission inspector prior to occupation.

Multifamily Rental Housing

i) Housing that is constructed, reconstructed or rehabilitated with NSP funds must meet all applicable local codes, rehabilitation standards, ordinances, and zoning ordinances at the time of project completion.  When NSP funds are used for rehabilitation, the entire unit development must be brought up to the applicable property standards, pursuant to 24 CFR §92.251(a) (1). In the absence of a local code for new construction, reconstruction, or rehabilitation, NSP-assisted new construction, reconstruction or rehabilitation must meet, as applicable, International Residential Code and the National Electrical Code.  In addition, housing that is rehabilitated with NSP3 funds must meet all applicable energy efficiency standards established by §2306.187 of the Texas Government Code, and energy standards as verified by RESCHECK.

ii)   To avoid duplicative inspections when Federal Housing Administration (FHA) financing is involved in an NSP-assisted property, a participating jurisdiction may rely on a Minimum Property Standards (MPS) inspection performed by a qualified person. Gut rehabilitation, reconstruction or new construction of residential buildings up to three stories must be designed to meet the standard for Energy Star Qualified New Homes.  All gut rehabilitation, reconstruction or new construction of mid-or high-rise multifamily housing must be designed to meet American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Standard 90.1-2004, Appendix G plus 20 percent.  Other rehabilitation must meet these standards to the extent applicable to the rehabilitation work undertaken.

iii) Mu

iv) A single-site development of over 16 units must have all the development amenities listed in 10 TAC §49.4(14) or  as defined in the threshold requirements of the Qualified Allocation Plan, current as of the date of application.  If a development is requesting a waiver of any threshold amenity the waiver request must be included in the application.  Requests will be evaluated using the criteria outlined in 10 TAC§49.4(14).

v) All NSP3 assisted properties must meet all applicable State and local housing quality standards and code requirements, which at a minimum must address Universal Physical Condition Standards (UPCS) or the housing quality standards (HQS) in 24 CFR §982.40, but only if HQS is required for another funding source. If there are no such standards or code requirements, the housing must meet Universal Physical Condition Standards, unless HQS is required for another fund source. When NSP3 funds are used for rehabilitation the entire unit must be brought up to the applicable property standards, pursuant to 24 CFR §92.251(a)() (1).

vi) The TDHCA Real Estate Analysis Rules current as of the date of the application, will apply, except that if the Rules and the Federal or Texas NSP guidelines conflict, the provisions described in the HUD notice or described herein will govern.

vii) Any Development proposing New Construction or Reconstruction and located within the one-hundred (100) year floodplain as identified by the Federal Emergency Management Agency (FEMA) Flood Insurance Rate Maps must develop the site so that all finished ground floor elevations are at least one foot above the flood plain and parking and drive areas are no lower than six inches below the floodplain, subject to more stringent local requirements. If no FEMA Flood Insurance Rate Maps are available for the proposed Development, flood zone documentation must be provided from the local government with jurisdiction identifying the one-hundred (100) year floodplain. No buildings or roads that are part of a Development proposing Rehabilitation (excl

viii) All applications with multifamily housing units intended to serve persons with disabilities must adhere to the Department’s Integrated Housing Rule at 10 TAC §1.15. 

ix) Multifamily properties will be restricted under a Land Use Restriction Agreement (LURA), or other such instrument as determined by the Department for these terms. Among other restrictions, the LURA may require the owner of the property to continue to accept subsidies which may be offered by the federal government, prohibit the owner from exercising an option to prepay a federally insured loan, impose tenant income-based occupancy and rental restrictions, or impose any of these and other restrictions as deemed necessary at the sole discretion of the Department in order to preserve the property as affordable housing on a case-by-case basis. 

Additional Requirements (Single and Multifamily Housing)
 
i) NSP assisted new construction or rehabilitation will comply with federal lead-based paint requirements including lead screening in housing built before 1978 in accordance with 24 CFR §Part 92.355 and 24 CFR Part 35, subparts A, B, J, K, M, and R.  Lead-based paint requirements, for Multifamily properties must be discussed in the Property Condition Assessment.

NSP3 subgrantees, shall, to the maximum extent feasible, provide for the hiring of employees who reside in the vicinity, of projects funded this section or contract with small business that are owned and operated by persons residing in the vicinity of such projects.  For the purposes of administering this requirement, HUD has adopted the Section 3 applicability thresholds for community development assistance at 24 CFR §135.3 (a)()(3)(ii).   The NSP3 local hiring requirement does not replace the responsibilities of Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C §1701u), and implementing regulations at 24 CFR Part 135, except to the extent the obligations may be in direct conflict.   Vicinity is defined as the census tract where the project is located.  Small business means a business that meets the criteria set forth in section 3(a) of the Small Business Act.  See 42 U.S.C. §5302(a)(23).  All applicants will be required to have a vicinity preference plan in order to meet threshold scoring criteria.

The Texas NSP3 Selection Critiera and Priorities includes a preference for Affordable Rental Development through the scoring structure.

Texas Department of Housing and Community Affairs
221 E. 11th Street 
Austin, TX 78701

Marni Holloway
Texas NSP Manager
Office: 512-475-3726
Fax: 512-472-1672
marni.holloway@tdhca.state.tx.us

During this quarter, TDHCA received and reviewed applications for NSP3 funds against the NSP3 NOFA scoring criteria.  Two applications met threshold scores, and the related Areas of Greatest Need were published in the second Substantial Amendment.  No public comment was received on the Substantial Amendment.  The TDHCA Governing Board awarded funds to the 2 projects reflected in the Action Plan, and approved submission of the second Substantial Amendment to HUD, at their June 30, 2011 meeting.

In future quarters, TDHCA NSP will continue to work with the Developers through the Environmental Clearance, due diligence and underwriting process.

Administration of the NSP3 funds according to all applicable regulations and requirements.

Administrative activities will be carried out, and records retained at 221 East 11th Street, Austin, TX  78701

During the quarter, TDHCA accepted and evaluated applications against the published NSP3 NOFA scoring criteria.  Two Applicants received awards at the TDHCA Governing Board meeting on June 30, 2011.  The proposed projects will be reviewed and evaluated for compliance with TDHCA underwriting guidelines prior to execution of Developer Agreements.

A second Substantial Amendment describing the areas of greatest need to be served by NSP3 funds was published to the TDHCA-NSP website, and notification was provided via list-serve.  No public comment was received regarding the second Substantial Amendment.

Acquisition and Rehabiliation of foreclosed 24-unit multifamily property to provide affordable rental housing for income-eligible households.   The rehabilitation will meet or exceed standards described in the Multifamily Rental Housing Section of the Housing Rehabilitation/New Construction Standards of this plan.

The Eddingston Court project is located at 100 Eddingston Court, Port Arthur, Texas.  The project is located in Census Tract 48245005500

During this quarter, the applicant submitted an acceptable application for NSP3 funds.  They cleared any administrative deficiencies through the review process, and received an award of funds from the TDHCA Governing Board on June 30, 2011. 

The Developer will be continuing to complete items required for due diligence and underwriting in the future quarters, along with completion of the Environmental Review and submission for Environmental Clearance prior to further action.

New Construction of 30 single-family homes that will be rented to households at or below 50% AMI.  The construction will meet or exceed the Single Family Housing standards in the Housing Rehabilitation/New Construction Standards of this Action Plan.

The El Naranjal subdivision is located in Census Tract 48061014100, in Cameron County, Texas.  All units will be located within the subdivision.

During this quarter, the applicant submitted an acceptable application for NSP3 funds.  They cleared any administrative deficiencies through the review process, and received an award of funds from the TDHCA Governing Board on June 30, 2011. 

The Developer will be continuing to complete items required for due diligence and underwriting in the future quarters, along with completion of the Environmental Review and submission for Environmental Clearance prior to further action.