(a) Program funds may be used for the following under this subchapter:
  (1) Reconstruction of housing on the same site meeting the following conditions:
    (A) Replacement of an owner-occupied site-built house with either a new site-built house or a new Manufactured Housing Unit (MHU) on the same site;
    (B) Replacement of an owner-occupied MHU with a new MHU on the same site;
    (C) A unit that is not owner-occupied has been destroyed may be eligible for Reconstruction under subparagraph (A) or (B) of this paragraph if:
      (i) the unit was the Principal Residence of the Household as of the date of destruction where evidence of the Household's Principal Residence is established by a homestead exemption from the local taxing jurisdiction and Household certification in effect at the date of destruction; and
      (ii) HOME funds are committed within 12 months of the date of destruction.
  (2) New Construction of housing meeting the following conditions:
    (A) Construction of site-built housing on the same site to replace an existing owner-occupied MHU;
    (B) Replacement of existing owner-occupied housing with an MHU or construction of site-built housing on another site contingent upon written approval of the Department; or
    (C) Replacement of a housing unit determined to be uninhabitable within four years of submission of a Reservation for funds on the same site or another site when:
      (i) the unit has been rendered uninhabitable as a direct result of a natural or man-made disaster, a condemnation order from the unit of local government, or a determination from the unit of local government that the unit presents an imminent threat to life, health, and safety of occupants; and
      (ii) the Household's Principal Residence is established by a homestead exemption from the local taxing jurisdiction as of the date of the disaster, condemnation order, or determination of uninhabitably though a Certification.
(b) If a housing unit has an existing mortgage loan and Department funds are provided in the form of a loan, the Department will require a first lien position if the existing mortgage loan has an outstanding balance that is less than the investment of HOME funds and any of the statements described in paragraphs (1) - (3) of this subsection are true:
  (1) A federal affordability period is required;
  (2) Any existing mortgage has been in place for less than three years from the date the Household applies for assistance; or
  (3) The HOME loan is structured as a repayable loan.
(c) The Household must be current on any existing mortgage loans or home equity loans. If the Department's assistance is provided in the form of a loan, the property cannot have any existing home equity loan liens.
(d) Direct Activity Costs, exclusive of Match funds, are limited to the amounts described in this subsection; however, not more than once per year, the Board in its sole discretion, may increase or decrease by up to five percent of the limitation for Direct Activity Costs. Total Activity costs may not exceed HUD Subsidy Limits. Dollar amounts in a Household commitment contract are set at the time of contract execution and may not be adjusted through this process. Current dollar amounts under this subsection will be reflected on the Department's website.
  (1) Reconstruction and New Construction of site-built housing: the lesser of $120 per square foot of conditioned space or $135,000 or for Households of five or more Persons the lesser of $120 per square foot of conditioned space or $150,000 for a four-bedroom unit;
  (2) Replacement with energy efficient MHU: $90,000; and
  (3) Limits established in this subsection may be updated not more than annually at the discretion of the Board.
(e) In addition to the Direct Activity Costs allowable under subsection (d) of this section, a sum not to exceed $15,000 may be requested and if approved, used to pay for any or all of the following, as applicable:
  (1) Necessary environmental mitigation as identified during the Environmental review process;
  (2) Installation of an aerobic septic system; and
  (3) Homeowner requests for accessibility features.
(f) Activity soft costs eligible for reimbursement for Activities of the following types are limited to:
  (1) Reconstruction or New Construction of site-built housing: no more than $12,000 per housing unit;
  (2) Replacement with an MHU: no more than $3,500 per housing unit; and
  (3) Third-party Activity soft costs related to costs incurred in connection with an Activity under this section, such as required housing counseling, appraisals, title reports or insurance, tax certificates, recording fees, surveys, and first year hazard and flood insurance are not subject to a maximum per Activity.
(g) Funds for administrative costs are limited to no more than five percent of the Direct Activity Costs, exclusive of Match funds.
(h) For New Construction Activities, the assistance to an eligible Household shall be in the form of a loan in the amount of the Direct Activity Costs excluding Match funds. The loan will be at zero percent interest and include deferral of payment and annual pro rata forgiveness with a term based on the federal affordability requirements as defined in 24 CFR §92.254.
(i) For Reconstruction Activities, the assistance to an eligible Household will be in the form of a grant agreement with a five year affordability period.
(j) To ensure affordability, the Department will impose resale and recapture provisions established in this Chapter.
(k) Site-built housing units must meet or exceed the 2000 International Residential Code and all applicable local codes, standards, ordinances, and zoning requirements. In addition, Reconstruction and New Construction housing is required to meet 24 CFR §92.251(a)(2) as applicable. MHUs must be installed according to the manufacturer's instructions and in accordance with Federal and State laws and regulations.
(l) Unless an exception is requested by the Household and approved by the Division Director prior to submission of the Activity, each unit must meet the design and quality requirements described in paragraphs (1) - (4) of this subsection:
  (1) Include the following amenities: Wired with RG-6 COAX or better and CAT3 phone cable or better to each bedroom and living room; Blinds or window coverings for all windows; Oven/Range; Exhaust/vent fans (vented to the outside) in bathrooms; Energy-Star or equivalently rated lighting in all rooms, which may include LED bulbs. The living room and each bedroom must contain at least one ceiling lighting fixture and wiring must be capable of supporting ceiling fans;
  (2) Contain no less than two bedrooms. Each unit must contain complete physical facilities and fixtures for living, sleeping, eating, cooking, and sanitation;
  (3) Each bedroom must be no less than 100 square feet; have a length or width no less than 8 feet; be self contained with a door; have at least one window that provides exterior access; and have at least one closet that is not less than two feet deep and three feet wide and high enough to contain at least five feet of hanging space; and
  (4) Be no less than 800 total net square feet for a two bedroom home; no less than 1,000 total net square feet for a three bedroom and two bathroom home; and no less than 1,200 total net square feet for a four bedroom and two bathroom home.
(m) Housing proposed to be constructed under this subchapter must meet the requirements of Chapters 20 and 21 of this Title and must be certified by a licensed architect or engineer.
  (1) The Department will reimburse only for the first time a set of architectural plans are used, unless any subsequent site specific fees are paid to a Third Party architect, or a licensed engineer.
  (2) A NOFA may include incentives or otherwise require architectural plans to incorporate "green building" elements.

Source Note: The provisions of this §23.31 adopted to be effective March 28, 2024, 49 TexReg 1902