1. (a) The Department will retain funds for Administrative activities. A portion of these Administrative funds in an amount not to exceed .25% of the Department's total allocation of ESG funds may be retained by TDHCA to procure entities to administer a Local Competition for funding within a CoC region. Funds for Administrative or Program Participant services may be retained by TDHCA to subgrant specific ESG activities, such as legal services.
2. (b) If the Department receives ESG funding from HUD that has additional activity or geographic restrictions, the Department may elect not to use the Allocation Formula. Retained funds are not subject to the Allocation Formula.

3. (c) ESG funds not retained for the purposes outlined above will be made available by CoC region based on an Allocation Formula. Allocation Formula factors noted in paragraphs (1) - (4) of this subsection will be used to calculate distribution percentages for each CoC region as follows:

   1. (1) Fifty percent weight will be apportioned to renter cost burden for Households with incomes less than 30% Area Median Family Income (AMFI), as calculated in the U.S. Department of Housing and Urban Development's (HUD) Comprehensive Housing Affordability Strategy;
   2. (2) Fifty percent weight will be apportioned for the number of persons in poverty from the most recent five-year estimate of the American Community Survey released by the U.S. Census Bureau;
   3. (3) Fifty percent weight will be apportioned to point-in-time counts, which are annual counts of sheltered and unsheltered persons experiencing homelessness on one day during the last two weeks of January as required by HUD for CoCs. If a CoC did not conduct a point-in-time count or only completed a partial point-in-time count, the results of the most recent point-in-time count conducted that covered both the sheltered and unsheltered persons experiencing homelessness will be utilized for the purposes of the Allocation Formula; and
   4. (4) Negative 50% weight will be apportioned based on a total of all ESG funding allocated by HUD to local jurisdictions within the CoC region, and ESG funding awarded by the Department within the region from the previous fiscal year.
4. (d) Each CoC region is allocated a minimum amount of $100,000. This is accomplished by taking the amounts of all regions with over $100,000 during the initial allocation and redistributing a proportional share to the regions with less than $100,000. If the Department distributes by Allocation Formula less than the amount required to provide all regions with $100,000, then the funds will be split evenly among the CoC regions.

5. (e) Those ESG funds allocated based on the formula in subsection (b) of this section will be made available for the provision of Program Participant services; they will be made available through a NOFA which may be released on an annual or biennial basis.

   1. (1) Not more than 60% of allocated funds may be awarded for the provision of street outreach and emergency shelter activities.

   2. (2) Contract funding limits include the funding request for all Program Participant services proposed in the Application, HMIS, and Administrative funds.

      1. (A) Applicant must apply for an award amount of at least $50,000 and not more than $300,000 for all Program Participant services proposed in the Application.
      2. (B) Funds awarded for HMIS are limited to 12% of the amount of funds awarded for Program Participant services.
      3. (C) Administrative activities are limited to three percent of the amount of funds awarded for Program Participant services.
6. (f) ESG funds that have been deobligated by the Department or that have been voluntarily returned from an ESG Contract may be reprogrammed at the discretion of the Department, are not included in the Allocation Formula or award process detailed in subsections (c)-(e) or (g)-(m) of this section.
7. (g) ESG funds received by the Department from HUD for its 2021 annual allocation of funds will be allocated in accordance with the Allocation Formula (less the amount retained for the Department's Administrative activities), but are not subject to the award process and requirements outlined in §7.38 of this subchapter (relating to Award and Funding Process for Allocated Funds) This was correct.

8. (h) The 2021 allocation of ESG funds received by the Department will be offered to eligible Subrecipients of ESG funds that were awarded funds under the 2020 ESG NOFA. A 2021 ESG Applicant is ineligible for funding if it:

   1. (1) does not submit an Application for funding within 21 days of the request from TDHCA;
   2. (2) does not resolve administrative deficiencies within the timeframe and in the manner outlined in §7.37 of this subchapter (relating to Application Review and Administrative Deficiency Process for Department NOFAs);
   3. (3) has four or more months of delinquent monthly reports for the Contract under the 2020 ESG NOFA; or, if the Applicant has no contract issued under that NOFA, four or more months of delinquent monthly reports for the existing Contract(s) for ESG Coronavirus Aid Relief and Economic Security (CARES) funds per §7.5(b) of this Chapter (relating to Subrecipient Reporting);
   4. (4) does not satisfy the requirements of the Previous Participation Review as provided for in §1.302 of this Title, (relating to Previous Participation Reviews for Department Program Awards Not Covered by §1.301 of this Subchapter);
   5. (5) has unresolved monitoring findings in any TDHCA funded program after the corrective action period; or
   6. (6) is not approved by the Department's Governing Board.
9. (i) Any offer of 2021 ESG funds made under this section is contingent on retaining similar terms and conditions or agreeing to adjustments reflective of funding amount, including but not limited to performance and match requirements, in the Contract issued under the 2020 ESG NOFA.
10. (j) If the total amount of the 2021 ESG funding allocated to TDHCA (less the amount available for TDHCA's Administrative activities) is less than 100% of the award amounts of the Contracts issued under the 2020 ESG NOFA, offers of funding will be proportionally reduced based on the total reduction in the amount of the 2021 allocation.

11. (k) If the total amount of the 2021 ESG funding allocated to TDHCA is equal to or greater than the 2020 ESG allocation, or if there are funds available from reduced awards (e.g. an Applicant is ineligible or accepts less than the full offer of 2021 ESG funding), this subparagraph will apply. If the federal cap of no more than 60% of funds being used for emergency shelter/street outreach (or other federal limitation) for the 2021 ESG funds would be exceeded based on all awardees from the 2020 ESG NOFA accepting a potential offer of 2021 funds, a reduced award may be offered to ensure the cap is not exceeded. All other offers of funds would then be limited to ESG Applicants providing rapid re-housing and homelessness prevention program components, or other activities which are not subject to a federal cap.

    1. (1) ESG Subrecipients that received an award under the 2020 ESG NOFA will be offered an award amount up to 100% of their 2020 ESG Contract award amount, prior to amendments.
    2. (2) Excess amounts will be offered to ESG Subrecipients awarded under the 2020 ESG NOFA that received a partial award of funds, up to their original request. The funds will be divided among all ESG Subrecipients with partial awards under the 2020 ESG NOFA. This proportional share, or the amount needed to increase the partial awards up to the original Application request, whichever is less, will be offered to these Subrecipients. If this process results in one or more Subrecipients receiving funds adequate to fulfill the original Application request, the funds in excess of the full award amount will be offered again to the remaining Subrecipients with a partial award. This process will continue until all partial awards of these Subrecipients are funded up to the original Application request, or until excess amounts are exhausted.
    3. (3) Any remaining 2021 ESG funds may be offered to ESG CARES Subrecipients in regions where the full allocation of 2021 ESG funds were not fully utilized, or may be retained by TDHCA to subgrant to specific ESG activities, such as legal services. All Applicants must be able to satisfy the eligibility requirements of subsection (h) of this section (except that instead of late reports of ESG funding late reports of ESG-CV will be used), and must agree to provide Match in the amount of 100% of the award of 2021 ESG funds.
12. (l) An ESG Applicant may have the right to appeal funding decisions per 10 TAC §1.7 of this chapter (relating to Appeals Process).
13. (m) The Department reserves the right to negotiate the final Contract amount and local Match requirement with an Applicant.

Source Note:The provisions of this §7.33 adopted to be effective March 25, 2019, 44 TexReg 1509; amended to be effective June 3, 2021, 46 TexReg 3381.