(a) The Department may perform an onsite monitoring review, a mail in desk review and physical inspection of any Development, and review and photocopy all documents and records supporting compliance with Departmental programs through the end of the Compliance Period or the end of the period covered by the LURA, whichever is later. The Development Owner shall permit the Department access to the Development premises and records.     
      (b) The Department will perform monitoring reviews of each low-income Development. The Department will conduct:      
        (1) The first review of HTC Developments by the end of the second calendar year following the year the last building in the Development is placed in service;       
        (2) The first review of all Developments, other than those described in paragraph (1) of this subsection, as leasing commences;       
        (3) During the Federal Compliance Period subsequent reviews will be conducted at least once every three years;       
        (4) After the Federal Compliance Period, Developments will be monitored in accordance with §10.623 of this chapter (relating to Monitoring Procedures for Housing Tax Credit Properties After the Compliance Period);       
        (5) A physical inspection of the Development including the exterior of the Development, Development amenities, and an interior inspection of a sample of Units;       
        (6) Limited reviews of physical conditions, including follow-up inspections to verify completion of reported corrective action, may be conducted without prior notice (unless access to tenant units is required, in which case at least 48 hours notice will be provided); and       
        (7) Reviews, meetings, and other appropriate activity in response to complaints or investigations.       
      (c) The Department will perform onsite file reviews or a mail in desk review and monitor:      
        (1) Low-income resident files in each Development, and review the Income Certifications;       
        (2) The documentation the Development Owner has received to support the certifications;       
        (3) The rent records; and       
        (4) Any additional aspects of the Development or its operation that the Department deems necessary or appropriate.       
      (d) The LURA for most HOME, NSP, TCAP RF, NHTF, and HOME-ARP Developments specifies a required Unit Mix and income level. During the monitoring review it will be determined if the minimum number of affordable Units and exact square footage has been provided. Failure to provide the exact square footage listed in the LURA will be cited as "Failure to provide correct square footage". Failure to provide the required number of Units required by the LURA will be cited as "Household income above income limit upon initial occupancy".      
        (1) Example 2. A TCAP RF LURA requires eight low-income units at 60% AMI with the following Unit mix:                  (A) Three one bedroom, one bath units with a Net Rentable Area (NRA) of 770 sq ft;                   (B) One two bedroom one bath units with a NRA of 900 sq ft; and                   (C) Four three bedroom two bath units with a NRA of 1000 sq ft.         
        (2) If during the monitoring review the Development has eight units designated as TCAP RF, but is not exactly the Units and square footage mix shown in subparagraphs (A) - (C) of this paragraph in Example 612(2) (even if the actual square footage provided is greater) the noncompliance "Failure to provide correct square footage" will be cited.       
      (e) At times other than monitoring reviews, the Department may request for review, in a format designated by the Department, information on tenant income and rent for each Low-Income Unit and may require a Development Owner to submit copies of the tenant files, including copies of the Income Certification, the documentation the Development Owner has received to support that certification, and the rent record for any low-income tenant.     
      (f) The Department will select the Low-Income Units and tenant records that are to be inspected and reviewed. Original records are required for review. The Department will not give Development Owners advance notice that a particular Unit, tenant record, or a particular year will be inspected or reviewed. However, the Department will give reasonable notice, as defined in Treasury Regulation 1.42-5, to the Development Owner that an onsite inspection or a tenant record review will occur so the Development Owner may notify tenants of the inspection or assemble original tenant records for review. If a credible complaint of fraud or other egregious alleged or suspected noncompliance is received, the Department reserves the right to conduct unannounced onsite monitoring visits and/or physical inspections.     
      (g) In order to prepare for monitoring reviews and physical inspections and to reduce the amount of time spent onsite, Department staff must review certain requested documentation described in the notification. Owners are required to submit documentation by the required deadline indicated in the notification. Failure to submit required documentation will result in a finding of noncompliance.     
     Source Note:        The provisions of this §10.618 adopted to be effective February 11, 2019, 44 TexReg 560; amended to be effective May 17, 2020, 45 TexReg 3036; amended to be effective November 3, 2022, 47 TexReg 7271