Texas Housing Publishes Notice of LURA QC Terms and 30-Year Affordability

This notice relates to all Texas properties under an active Housing Tax Credit (“HTC”) Land Use Restriction Agreement (“LURA”).

The Texas Department of Housing and Community Affairs (“TDHCA”) reminds Owners that 10 TAC Section 10.408(b) prohibits Development Owners who received an award of credits on or after Jan. 1, 2002, from requesting a Qualified Contract (“QC”) prior to the 30 year anniversary of date the property was placed in service. This requirement is derived from Tex. Gov’t Code Section 2306.185, which requires a 30 year affordability period. These requirements are in force and will guide TDHCA staff’s handling of all QC requests regardless of the implications of language in a property’s LURA.

TDHCA acknowledges that Internal Revenue Code Section 42(h)(6)(E)(i)(II) and Treasury Regulation Section 1.42-18(a)(1)(ii)(B) provide that a QC may be requested by an owner after the 14th year of the compliance period, but notes that the same Code provision and Treasury Regulation Section 1.42-18(a)(2) further provide that such section does not apply “to the extent more stringent requirements are provided . . . in State law.” State law in Texas does provide a more stringent requirement. In particular, Tex. Gov’t Code Section 2306.185(c) was added in 2001, and requires, without exception, that a recipient of tax credits maintain the affordability of the multifamily housing development for a minimum of 30 years.

Accordingly, and as stated in 10 TAC Section 10.408(b), Development Owners who received an award of credits on or after Jan. 1, 2002, are not eligible to request a QC prior to the 30 year anniversary of the date the property was placed in service.

If you have any questions about this email, please contact TDHCA Acting Director of Multifamily Asset Management Rosalio Banuelos at [email protected] or 512-475-3357.