1. (a) Under the Code, HTC Development Owners elect a minimum set-aside requirement of 20/50 (20% of the Units restricted at the 50% income and rent limits), 40/60 (40% of the Units restricted at the 60% income and rent limits) or the average income test.
2. (b) HTC projects must meet the required election under IRC §42(g) no later than the end of the first year of the Credit Period. Developments in the first year of the credit period that elect the average income test should lease Units in a manner to ensure that at all times, the average income and rent of the occupied units at the project does not exceed 60%. Example 605(1): A 100 Unit project places in service in April. If by October of that year, 50 of the Units are occupied and the other 50 have never been occupied, the designations of the 50 occupied Units must be equal to or less than 60% AMI and the percentage represented at application.
3. (c) Owners that elect the average income test under IRC §42(g) must disperse 20%, 30%, 40%, 50%, 60%, 70% and 80% Unit designations across all Unit Types in a manner that does not violate fair housing laws.
4. (d) Until and unless the Internal Revenue Service or the Treasury Department issues conflicting guidance, the Department will examine the actual gross rent and income of all households to determine if projects that elected average income test are at or below the federal minimum of 60% AMI.

Source Note:The provisions of this §10.605 adopted to be effective February 11, 2019, 44 TexReg 560.