(a) Purpose. This chapter clarifies the roles and duties of the Local Operators (LO) for Housing Choice Vouchers (Section 8) administered by the Texas Department of Housing and Community Affairs (the Department); identifies a process for potential expansion of the Department's Housing Choice Voucher program to additional areas of the state; and outlines the procedures for the Department to procure new LOs and renew existing LOs. (b) Definitions.   (1) Applicant--A Person who has submitted an Application for Department funds or other assistance.   (2) Application--A request for funds submitted to the Department in a form prescribed by the Department, including any exhibits or other supporting material.   (3) Application Acceptance Period--The period of time that Applications may be submitted to the Department as more fully described in the applicable Notice of Funding Availability (NOFA).   (4) Application Deficiency--A deficiency or inconsistency, which in the Department's reasonable judgment, may be cured by supplemental information or explanation that will not necessitate a substantial reassessment or re-evaluation of the Application.   (5) Board--The governing board of the Texas Department of Housing and Community Affairs.   (6) Contract--The executed written agreement between the Department and an Administrator performing an activity related to a program that outlines performance requirements and responsibilities assigned by the document.   (7) Department--The Texas Department of Housing and Community Affairs.   (8) Effective Date--The date on which all applicable parties have signed a Contract.   (9) Executive Director--Executive Director of the Texas Department of Housing and Community Affairs.   (10) HUD--U.S. Department of Housing and Urban Development.   (11) Local government--A county, municipality, special district, or any other political subdivision of the state, a public, nonprofit housing finance corporation created under Chapter 394 of the Texas Local Government Code, or a combination of those entities. (§2306.004).   (12) Local Operators (LOs)--LOs are the local administrators who perform unit inspections, provide client processing and perform other administrative duties on the Department's behalf as Housing Choice Vouchers are issued and maintained in the local communities served by the Department's Housing Choice Voucher Program.   (13) Material Deficiency--Any individual Deficiency or group of Deficiencies which, if addressed, would require, in the Department's reasonable judgment, a substantial reassessment or re-evaluation of a LO Application or eligibility for LO Renewal or which, are repeated and pervasive that they indicate a failure by the LO to submit a substantively complete and accurate Application.   (14) NOFA--Notice of Funding Availability, published in the Office of the Secretary of State's Texas Register Publication.   (15) Nonprofit Organization--A public or private organization that:     (A) has evidence of a current tax exemption ruling from the Internal Revenue Service (IRS) under §501(c)(3) of the Internal Revenue Code of 1986, a charitable, nonprofit corporation, or §501(c)(4) of the Internal Revenue Code of 1986, a community or civic organization, of the Internal Revenue Code of 1986, as evidenced by a certificate from the IRS that is dated 1986 or later. The exemption ruling must be effective on the date of the Application and must continue to be effective throughout the length of any contract agreements; or a current group exemption letter from the IRS that is dated 1986 or later, that reflects the Applicant classified as a subordinate of a central non-profit organization under the Internal Revenue Code. The group exemption letter must specifically list the Applicant; and     (B) a private nonprofit organization's pending Application for §501(c)(3) or (4) of the Internal Revenue Code of 1986, status cannot be used to comply with the tax status requirement.   (16) Open Application Cycle--A defined period during which Applications may be submitted according to a published NOFA and which will be reviewed on a first come-first served basis until all funds available are committed or until the NOFA is closed, whichever is earlier.   (17) Owner--The Person who owns a unit for which a Section 8 Housing Choice Voucher is being considered or being used.   (18) Program--The Section 8 Housing Choice Voucher Program operated by the Department.   (19) Program Noncompliance--LOs of the Department's Section 8 program will be in Program Noncompliance if they do not meet the performance requirements or the LO eligibility requirements. (c) Performance Requirements. The duties and expectations of the LO include the following and will be included in the LO contract. LO must:   (1) follow and comply with HUD's rules and regulations, including the U.S. Housing Act of 1937, the Annual Contributions Contract between the Department and HUD, the Housing Assistance Program contract between the Department and the owner of the unit occupied by an assisted family, as well as the Department's Administrative Plan and other applicable laws covering the Program;   (2) designate a specific contact to serve as a liaison with the Department;   (3) disseminate to Housing Choice Voucher recipients information concerning the availability and nature of housing assistance for lower-income families;   (4) make public invitations to Owners to make dwelling units available for leasing to eligible families;   (5) assist in receiving and reviewing applications from the public for participation in the program;   (6) assist in verifying program eligibility and selecting eligible families for participation according to Departmental rules and policies;   (7) assist in the issuance of Housing Choice Vouchers to selected eligible families and provide the family with necessary information regarding the program in accordance with 24 CFR §982.301;   (8) determine each eligible family's unit size requirements in accordance with Subpart K of 24 CFR Part 982;   (9) assist in determining the amount of total tenant payment and housing assistance payment, including calculation of allowances for utilities and other services under 24 CFR §982.505;   (10) certify rent reasonableness under 24 CFR §982.507;   (11) assist in facilitation of the owner's execution of the Housing Choice Voucher Contract in a form prescribed by HUD under 24 CFR §982.451;   (12) annually, assist in re-determination of families eligibility and amount of housing assistance payment in accordable with HUD established schedules and under 24 CFR §982.516, and submit redetermination information to the Department within ninety (90) to one-hundred-twenty (120) days of request;   (13) perform any necessary Housing Quality Standard inspections and notify Owners and families of property inspection determinations;   (14) perform any necessary Housing Quality Standard inspections for new admissions within sixty (60) days, or within one-hundred-twenty (120) days with Department approval of sixty (60) day extension;   (15) assist in coordination of portability requests from housing choice voucher families in accordance with Department policies;   (16) assist in processing changes in income and changes in household requests in accordance with Department policies;   (17) provide for prompt and timely lease up of vouchers when released by the Department or when existing vouchers become available through clients exiting the Program;   (18) maintain confidential client files in a manner that protects the privacy of each client and to maintain the same for future reference;   (19) store physical client files in a secure space in a manner that ensures confidentiality and in accordance with LO policies and procedures;   (20) add, based on availability, housing choice vouchers to the LO service area; and   (21) perform such other functions as directed by the Department. (d) Eligibility of Local Operators.   (1) Eligibility Criteria for Applicants and Contract Renewals. New applicants for LO designation and currently designated LOs wishing to renew their contract must meet the following eligibility criteria:     (A) Organizations or entities eligible to be a LO of the Department's Housing Choice Voucher Program are:       (i) Nonprofit organizations;       (ii) Local Units of Government;       (iii) For-profit organizations;       (iv) Public Housing Authorities (PHA's); or       (v) Other eligible entities.     (B) Eligible organizations must have a publicly accessible confidential meeting space available to meet with Housing Choice Voucher families.     (C) Eligible organizations must have access to the internet, electronic mail, and a telephone for communication with the Department.   (2) Ineligibility Criteria for LOs. The following conditions will cause a new Applicant for LO designation or a currently designated LO wishing to renew their contract, to be ineligible:     (A) Program Noncompliance--Each Application and Contract Renewal will be reviewed for Program Noncompliance. Applications and contract renewals found in Program Noncompliance or otherwise violating this chapter at the time of Application and prior to Contract execution are ineligible for funding and will be terminated without being processed as a material deficiency.     (B) Failure to comply with federal and state law and/or failure to comply with the terms outlined in the LO contract; or refusal by the LO to assist in issuing housing choice vouchers in a timely manner and/or unwillingness to add vouchers to the LO service area may result in the termination of a LO contract.     (C) The Applicant has failed to perform the performance requirements outlined in subsection (c) of this section.     (D) The Applicant is an Administrator of a previously funded Contract for which Department funds have been partially or fully de-obligated due to failure to meet contractual obligations during the 12 months prior to the Application submission date.     (E) The Applicant has failed to submit or is delinquent in a response to provide an explanation, or evidence of corrective action as a result of a technical assistance visit by the Department.     (F) The Applicant has been or is barred, suspended, or terminated from procurement in a state or federal program or listed in the "List of Parties Excluded from Procurement of Non-procurement Programs" or has otherwise been debarred by HUD or the Department.     (G) The Applicant has violated the state's revolving door policy.     (H) The Applicant has been convicted of a state or federal felony crime involving fraud, bribery, theft, misrepresentation of material fact, misappropriation of funds, or other similar criminal offenses within 15 years preceding the Application deadline.     (I) The Applicant at the time of Application submission is:       (i) subject to an enforcement or disciplinary action under state or federal securities law or by the Financial Industry Regulatory Authority (FINRA) is subject to a federal tax lien; or       (ii) is the subject of an enforcement proceeding with any governmental entity. (e) Local Operator Contract Execution and Renewal.   (1) Upon Board approval of a new LO, the Department's Executive Director and the LO shall enter into and execute an agreement for the administration of the Housing Choice Voucher program. The Department, acting by and through its Executive Director or his/her designee, may authorize, execute, and deliver modifications, amendments or extensions to the contract.   (2) Contracts will be for an initial one year period with an automatic renewal in one year increments for a period not to exceed four (4) additional years conditioned on maintaining compliance with the eligibility criteria in subsection (d) of this section and having performed according to the performance requirements outlined in subsection (c) of this section. If the LO meets these requirements and is not in Program Noncompliance with the Department, the contract with the LO will be renewed.   (3) LOs in an existing contract will, upon expiration of the current contract, be eligible to execute a contract under paragraph (2) of this subsection so long as they are maintaining compliance with the eligibility criteria in subsection (d) of this section and have performed according to the performance requirements outlined in subsection (c) of this section. If the LO meets these requirements and is not in Program Noncompliance with the Department, the new contract described in paragraph (2) of this subsection will be executed. (f) New Local Operator Application Procedures and Requirements.   (1) If a LO has terminated its contract with the Department or chosen not to renew a contract with the Department, and the Department chooses to find a replacement LO to continue providing services to existing clients in the geographic area served by the prior LO, the Department will release a Notice of Funding Availability (NOFA) specifying the defined geographic area requiring continued service, information on the volume and geographic locations of the existing pool of voucher holders, and the LO requirements for operating the program if selected. Cont'd...