The Texas Department of Housing and Community Affairs (the Department) staff have received multiple queries regarding its evaluation of traditional (no hard debt) applications for supportive housing transactions. More specifically these queries have centered on whether these applications will be treated as they have been before the rule and definition change as it relates to how debt is characterized. For purposes of these queries, this is how the Department understands debt regarding supportive housing under the first definition (10 TAC Sec. 11.1(d)(122)(E)(i)):
The definition of Supportive Housing (10 TAC Sec. 11.1(d)(122)(E)(i)) includes the statement “[p]ermanent foreclosable, must-pay debt is permissible if sourced by federal funds . . .” As referenced in the reasoned response to the adoption of this rule, and specifically this subsection, applicants seeking to finance Supportive Housing without conventional debt may still seek an exception under 10 TAC 11.302(i)(6)(A) to the characterization of federal source debt as it relates to feasibility. In years past, this exception has been necessary to address the federal concept of valid debt as it relates to eligible basis. All applications must still demonstrate financial feasibility to the Department.
