Section 10.402 - Requests for Subordination Agreements, HUD Amendments to Restrictive Covenants, or HUD Riders to Restrictive Covenants(a) Requests for Subordination Agreements, HUD Amendments to Restrictive Covenants or HUD Riders to Restrictive Covenants from the Department must be reviewed and approved by the Department's Asset Management Division and Legal Division prior to execution. The Development Owner must demonstrate that the Development will remain feasible with the proposed new debt. For HTC Developments seeking to refinance within two years from the issuance of the IRS Form(s) 8609, a review of the Development's cost certification will be conducted to determine if the change in the financing structure would have affected the credit award. If it is determined that the change to the financing structure, net of additional costs associated with the refinance, would have resulted in over sourcing the Development, thereby resulting in an adjustment to the credit award, the Development Owner may be required to fund a Special Reserve Account in accordance with § 10.404 of this subchapter (relating to Reserve Accounts). Approval from the Board will be required for loan amounts that would cause the Developments to be over-sourced after accounting for the additional costs associated with the refinance and the deposit into the Special Reserve Account. Subordinations or re-subordinations of Developments with Direct Loans from the Department are also subject to the requirements under § 13.13(c)(2) of this title (relating to Multifamily Direct Loan Rule) and Chapter 11, Subchapter D of this title (relating to Underwriting and Loan Policy), including but not limited to §11.302(g)(4).(b) All requests must include: (1) Requested document on Department approved template, if available, and completed with the Development specific information;(2) Documentation such as a loan commitment or application that identifies the proposed loan amount and terms;(3) If the proposed legal description is different from the legal description in the Department's regulatory agreement, a survey, title commitment, or recorded plat that agrees with the legal description in the requested document. Changes to the Development Site may be subject to further review and approval under § 10.405 of this subchapter (relating to Amendments and Extensions); and(4) Development's most recent 12-month trailing operating statement. If the financial statement indicates that the proposed new debt cannot be supported by the Development, the Development Owner must submit an operating pro forma and a written explanation for the differences from the actual performance of the Development.10 Tex. Admin. Code § 10.402
The provisions of this §10.402 adopted to be effective December 24, 2013, 38 TexReg 9293; amended by Texas Register, Volume 39, Number 49, December 5, 2014, TexReg 9518, eff. 12/9/2014; Adopted by Texas Register, Volume 41, Number 01, January 1, 2016, TexReg 174, eff. 1/6/2016; Adopted by Texas Register, Volume 41, Number 53, December 30, 2016, TexReg 10570, eff. 1/5/2017; Adopted by Texas Register, Volume 42, Number 52, December 29, 2017, TexReg 7610, eff. 1/3/2018; Amended by Texas Register, Volume 43, Number 51, December 21, 2018, TexReg 8297, eff. 12/30/2018; Adopted by Texas Register, Volume 45, Number 05, January 31, 2020, TexReg 722, eff. 2/5/2020; Adopted by Texas Register, Volume 47, Number 04, January 28, 2022, TexReg 0266, eff. 2/3/2022; Amended by Texas Register, Volume 49, Number 08, February 23, 2024, TexReg 1054, eff. 2/27/2024