1. (a) General provisions. This fund covers housing, public facilities, and public service projects. Eligible units of general local government may apply for funding of a single purpose project such as housing assistance, sewer improvements, water improvements, drainage, roads, or community centers, or for a multi-purpose project which consists of any combination of such eligible activities. An application submitted for the community development fund can receive a grant from the community development fund regional allocation.

   1. (1) An applicant may not submit a single jurisdiction application or be a participant in a multi-jurisdiction application under this fund and also submit a single jurisdiction application or be a participant in a multi-jurisdiction application submitted under any other TxCDBG fund category at the same time if the proposed activity under each application is the same or substantially similar.
   2. (2) In addition to the threshold requirements of §255.1(h) and (n) of this title, in order to be eligible to apply for community development funds, an applicant must document that at least 51% of the persons who would directly benefit from the implementation of each activity proposed in the application are of low to moderate income.
   3. (3) Applicants must demonstrate they are adequately addressing water supply and water conservation issues (in particular contingency plans to address drought-related water supply issues), as described in the application guidance. Applications requesting funds for projects other than water and sewer must include a description of how the applicant's water and sewer needs would be met and the source of funding that would be used to meet these needs.
2. (b) Funding cycle. This fund is allocated to eligible units of general local government on a biennial basis for the 2011 and 2012 program years pursuant to regional competitions held for the 2011 program year applicants. Applications for funding must be received by the TxCDBG by the dates and times specified in the most recent application guide for this fund.

3. (c) Allocation Plan. The original CD formula is used to allocate 40 percent of the annual state CDBG allocation; and the HUD formula is used to allocate 21.71 percent of the annual state CDBG allocation.

   1. (1) Original CD formula (40%) factors:

      1. (A) Non-Entitlement Population--30%
      2. (B) Number of Persons in Poverty--25%
      3. (C) Percentage of Poverty Persons--25%
      4. (D) Number of Unemployed Persons--10%
      5. (E) Percentage of Unemployed Persons--10%
      6. (F) To the extent possible, the information used to calculate the regional allocations through these factors will be based on the eligible nonentitlement applicants within each region. The population and poverty information used is from the current available decennial census data. The unemployment information used is the current available annual average information.
   2. (2) HUD formula (21.71%)--the formula is the same methodology that HUD uses to allocate CDBG funds to the non-entitlement state programs. The HUD factors, percentages, and methodology are specified in 42 U.S.C. 5306(d). The TxCDBG will use available data to calculate the allocations to each region.

   3. (3) Each state planning region is provided with a 2011 program year community development fund target allocation and a 2012 program year community development fund target allocation for applications in the region that are ranked through the 2011 program year regional competitions in accordance with a shared scoring system involving the Department and the regional review committees.

      1. (A) The community development fund regional allocations for the first and second years of the biennial process are awarded first in each region based on the community development fund selection criteria that includes each regional review committee and the Department scoring criteria. Where the remainder of the 2011 program year community development fund target allocation is insufficient to completely fund the next highest ranked applicant, the applicant receives complete funding of the original grant request through either 2011 and 2012 program year funds. The remaining funds from all the target allocations are pooled to fund projects from among the highest ranked, unfunded applications from each of the 24 state planning regions. Selection criteria for such applications will consist of the selection criteria scored by the Department under this fund. Marginal applicants' community distress scores are recomputed based on the applicants competing in the marginal pool competition only.
      2. (B) Due to the two-year funding cycle proposed for program years 2011 and 2012, a Community Development Fund pooled marginal competition will not be conducted for program year 2011. A pooled marginal competition may be conducted for program year 2012 using available funds if the State's 2012 allocation is not decreased significantly from the State's estimated 2012 Community Development allocation. All applicants whose marginal amount available is under $75,000 will automatically be considered under this competition. When the marginal amount left in a regional allocation is equal to or above the TxCDBG grant minimum of $75,000, the marginal applicant may scale down the scope of the original project design, and accept the marginal amount, if the reduced project is still feasible. Alternatively, such marginal applicants may choose to compete under the pooled marginal fund competition for the possibility of full project funding. This fund consists of all regional marginal amounts of less than $75,000, any funds remaining from regional allocations where the number of fully funded eligible applicants does not utilize a region's entire allocation and the contribution of marginal amounts larger than $75,000 from those applicants opting to compete for full funding rather than accept their marginal amount. The scoring factors used in this competition are the percentage of the State score received to the maximum possible State score in the region, followed by the per capita income ranking, if needed, with a lower per capita income level ranking higher, followed by a second tie-breaker, if needed, of the highest poverty rate ranking higher; both based on a city's incorporated area and a county's total unincorporated area.
   4. (4) Each Regional Review Committee is encouraged to allocate a percentage or amount of its Community Development Fund allocation to housing projects and, for RRCs in eligible areas, non-border colonia projects proposed in and for that region. Under a set-aside, the highest ranked applications for a housing or non-border colonia activity, regardless of the position in the overall ranking, would be selected to the extent permitted by the housing or non-border colonia set-aside level. If the region allocates a percentage of its funds to housing and/or non-border colonia activities and applications conforming to the maximum and minimum amounts are not received to use the entire set-asides, the remaining funds may be used for other eligible activities. (Under a housing and/or non-border colonia set-aside process, a community would not be able to receive an award for both a housing or non-border colonia activity and an award for another Community Development activity during the biennial process. Housing projects/activities must conform to eligibility requirements in 42 U.S.C. Section 5305 and applicable HUD regulations.)

4. (d) Selection procedures.

   1. (1) Prior to the submission deadline specified in the most recent application guide for this fund, each eligible unit of general local government may submit one application to the Department for funding under the community development fund regional allocations. Two copies of the application must be submitted to the Department.
   2. (2) Upon receipt of an application, the Department staff performs an initial review to determine whether the application is complete and whether all proposed activities are eligible for funding, if ranked. The results of this initial review are provided to the applicant. If not subject to disqualification, the applicant may correct any deficiencies identified within 10 calendar days of the date of the staff's notification.
   3. (3) Each Regional Review Committee is responsible for determining local project priorities and objective factors for all its scoring components based on public input in accordance with the requirements in the applicable TxCDBG Action Plan. The RRC shall establish the numerical value of the points assigned to each scoring factor and determine the total combined points for all RRC scoring factors. The RRCs are responsible for convening public hearings to discuss and select the objective scoring factors that will be used to score applications at the regional level in accordance with the requirements in the applicable TxCDBG Action Plan. The public must be given an opportunity to comment on the priorities and the scoring criteria considered. The final selection of the scoring factors is the responsibility of each RRC and must be consistent with the requirements in the applicable TxCDBG Action Plan. Each RRC shall develop a Regional Review Committee Guidebook, in the format provided by TxCDBG staff, to notify eligible applicants of the objective scoring factors and other RRC procedures for the region. RRCs are encouraged to establish a priority scoring factor that considers the nature and type of the project. The RRC must clearly indicate how responses would be scored under each factor and use data sources that are verifiable to the public. After the RRC has adopted its scoring factors, the score awarded to a particular application under any RRC scoring factor may not be dependent upon an individual RRC member's judgment or discretion. (This does not preclude collective RRC action that the state TxCDBG has approved under any appeals process.)
   4. (4) The RRC shall select one of the following entities to develop the RRC Guidebook, calculate the RRC scores, and provide other administrative RRC support: Regional Council of Governments (COG), or TxCDBG staff or TxCDBG designee, or A combination of COG and TxCDBG staff or TxCDBG designee.
   5. (5) The RRC Guidebook should be adopted by the RRC and approved by TxCDBG staff at least 90 days prior to the application deadline. The selection of the entity responsible for calculating the RRC scores must be identified in the RRC Guidebook and must define the role of each entity selected. The Department shall be responsible for reviewing all scores for accuracy and for determining the final ranking of applicants once the RRC and TxCDBG scores are summed. The RRC is responsible for providing to the public the RRC scores, while the TxCDBG is responsible for publishing the final ranking of the applications.
   6. (6) Following a final technical review, the Department staff presents the funding recommendations for the 2011 and 2012 community development fund regional allocations. Department staff makes a site visit to each of the applicants recommended for funding prior to the completion of contract agreements.
   7. (7) Upon announcement of the 2011 and 2012 program year contract awards, the TxCDBG staff works with recipients to execute the contract agreements. While the award must be based on the information provided in the application, the TxCDBG may negotiate any element of the contract with the recipient as long as the contract amount is not increased and the level of benefits described in the application is not decreased. The level of benefits may be negotiated only when the project is partially funded with the remainder of the target allocation within a region.

5. (e) Selection criteria. The following is an outline of the selection criteria used by the Department and the regional review committees for scoring applications under the community development fund.

   1. (1) Regional Review Committee (RRC) Objective Scoring--Each Regional Review Committee is responsible for determining local project priorities and objective factors for all its scoring components based on public input in accordance with the requirements in the applicable TxCDBG Action Plan.

      1. (A) Maximum RRC Points Possible: The RRC shall establish the numerical value of the points assigned to each scoring factor and determine the total combined points for all RRC scoring factors.

      2. (B) RRC Selection of the Scoring Factors: The RRCs are responsible for convening public hearings to discuss and select the objective scoring factors that will be used to score applications at the regional level in accordance with the requirements in the applicable TxCDBG Action Plan. The public must be given an opportunity to comment on the priorities and the scoring criteria considered. The final selection of the scoring factors is the responsibility of each RRC and must be consistent with the requirements in the applicable TxCDBG Action Plan.

         1. (i) Each RRC shall develop a Regional Review Committee Guidebook, in the format provided by TxCDBG staff, to notify eligible applicants of the objective scoring factors and other RRC procedures for the region. RRCs are encouraged to establish a priority scoring factor that considers the nature and type of the project.
         2. (ii) The RRC must clearly indicate how responses would be scored under each factor and use data sources that are verifiable to the public. After the RRC has adopted its scoring factors, the score awarded to a particular application under any RRC scoring factor may not be dependent upon an individual RRC member's judgment or discretion. (This does not preclude collective RRC action that the state TxCDBG has approved under any appeals process.)

   2. (2) State Scoring (TxCDBG Staff Scoring)--Other Considerations--Maximum Points--10% of Maximum Possible Score for Each RRC.

      1. (A) Past Selection--Maximum Points--2% of Maximum Possible RRC Score for each region--are awarded to each 2009/2010 Community Development Fund applicant that did not receive a 2009 or 2010 Community Development Fund, Community Development Fund-Recovery, or Rural Sustainability Fund contract award.

      2. (B) Past Performance--Maximum Points--4% of Maximum Possible RRC Score for each region. An applicant can receive points based on the applicant's past performance on previously awarded TxCDBG contracts. The applicant's score will be primarily based on our assessment of the applicant's performance on the applicant's most recent TxCDBG contract that has reached the end of the original contract period stipulated in the contract within the past 4 years (for CD/CDS contracts only the 2005/2006 and 2007/2008 cycle awards will be considered). The TxCDBG will also assess the applicant's performance on existing TxCDBG contracts that have not reached the end of the original contract period. Applicants that have never received a TxCDBG grant award will automatically receive these points. The TxCDBG will assess the applicant's performance on TxCDBG contracts up to the application deadline date. The applicant's performance after the application deadline date will not be evaluated in this assessment. (Adjustments may be made for contracts that are engaged in appropriately pursuing due diligence such as bonding remedies or litigation to ensure adequate performance under the TxCDBG contract.) The evaluation of an applicant's past performance will include the following:

         1. (i) The applicant's completion of the previous contract activities within the original contract period.
         2. (ii) The applicant's submission of all contract reporting requirements such as Quarterly Progress Reports.
         3. (iii) The applicant's submission of the required close-out documents within the period prescribed for such submission.
         4. (iv) The applicant's timely response to monitoring findings on previous TxCDBG contracts especially any instances when the monitoring findings included disallowed costs.
         5. (v) The applicant's timely response to audit findings on previous TxCDBG contracts.
         6. (vi) The expenditure timeframes on the applicable TxCDBG contracts.
      3. (C) All project activities within the application would provide basic infrastructure or housing activities--2% of the Maximum Possible RRC Score for each region. (Basic infrastructure--the basic physical shared facilities serving a community's population consisting of water, sewage, roads, and flood drainage. Housing activities--as defined in 24 CFR Part 570.)

      4. (D) Cost per Housing Unit (CPHU)--The total amount of TxCDBG funds requested by the applicant is divided by the total number of housing units benefiting from the application activities to determine the TxCDBG cost per housing unit. (Use pro rata allocation for multiple activities.)--Up to 2% of the Maximum RRC Score for each region.

         1. (i) Cost per housing unit is equal to or less than $8,750--2%.
         2. (ii) Cost per housing unit is greater than $8,750 but equal to or less than $17,500--1.75%.
         3. (iii) Cost per housing unit is greater than $17,500 but equal to or less than $26,500--1.25%.
         4. (iv) Cost per housing unit is greater than $26,500 but equal to or less than $35,000--0.5%.
         5. (v) Cost per housing unit is greater than $35,000--0%.
      5. (E) When necessary, a weighted average is used to score to applications that include multiple activities with different beneficiaries. Using as a base figure the TxCDBG funds requested minus the TxCDBG funds requested for administration, a percentage of the total TxCDBG construction and engineering dollars for each activity is calculated. Administration dollars requested is applied pro-rata to these amounts. The percentage of the total TxCDBG dollars for each activity is then multiplied by the appropriate score and the sum of the calculations determines the score. Related acquisition costs are applied to the associated activity.
      6. (F) Statutory - Low and Moderate Income (LMI) Persons National Objective - Scoring factor. To assist in fulfilling the CDBG statutory requirement for the percentage of program year awards that must meet the LMI National Objective, applications that meet the LMI National Objective for each activity (51 percent low/moderate-income benefit for each activity within the application) will receive 2% of the Maximum Possible RRC Score for each region. Further, to ensure the TxCDBG program meets the statutory LMI National Objective requirement, if the ranking in a region would not result in the award of at least 75 percent of the allocated funds for the LMI national objective, then the TxCDBG will make awards based on a revised ranking to achieve at least a 75 percentage level for LMI awards for the region. If there are not sufficient applications in the region to achieve the 75 percent LMI national objective level, the amount of funds in a region equal to the shortfall in meeting this requirement will be re-allocated to a pool for other LMI national objective projects. Awards from the pool of remaining LMI applications would be based the marginal competition selection criteria.
      7. (G) The RRC may not adopt scoring factors that directly negate or offset these state factors.

6. (f) Other TxCDBG State Responsibilities

   1. (1) The TxCDBG staff may establish the maximum number of regional scoring factors that may be used in order to improve review and verification efficiency. Similarly, the TxCDBG staff may determine that certain regional scoring factors may not be used because the data is not readily available or would require excessive effort to verify the information in a timely manner. To ensure consistency, the TxCDBG staff may determine the acceptable data source for a particular regional scoring factor (such as the unemployment rate.)
   2. (2) The state TxCDBG staff will review each RRC Guidebook to ensure that the scoring procedures are in compliance with 24 CFR §91.320(k)(1)(iv). The regulation states in part that "The statement of method of distribution must provide sufficient information so that units of general local government will be able to understand and comment on it and be able to prepare responsive applications." TxCDBG staff will also review the scoring factors selected to ensure that all scoring factors are objective. Each RRC must obtain written approval from TxCDBG staff before implementing the RRC scoring process. As part of the approval process of the RRC Guidebook, the TxCDBG state staff may edit the scoring factors for consistency with the Action Plan, or provide further details or elaboration on the objective scoring methodology, data sources and other clarifying details without the necessity of a subsequent RRC meeting.

   3. (3) The state TxCDBG staff may establish:

      1. (A) a deadline for the RRC to adopt objective factors for all of its scoring components and submit its adopted Guidebook incorporating the objective scoring methodology to the state TxCDBG staff for approval;
      2. (B) an RRC scoring review appeals process in the Guidebook Instructions and/or the Texas Administrative Code.
   4. (4) In the event that an RRC fails to approve an objective scoring methodology to the satisfaction of the TxCDBG consistent with the requirements in this Action Plan by the established deadline or if the RRC fails to implement the approved methodology, TxCDBG will establish for the region scoring factors as described in Appendix B for the 2011/2012 application cycle.
   5. (5) Only the state TxCDBG staff may disqualify an application submitted in a region. The regional scores for RRC factors and the ranking of applications are not considered final until they have been reviewed and approved by the state TxCDBG staff.
   6. (6) An oversubscription pool may be conducted that would use the scoring criteria specified in the marginal competition section that directly follows this section.

7. (g) Forward Commitments to Avoid Application Threshold Issues

   1. (1) As a pilot program under the Community Development Fund, the TxCDBG may designate conditional commitments, contingent upon receiving future CDBG funds from HUD, to make awards to certain eligible applications within a region using future regional Community Development Fund allocations.
   2. (2) A Regional Review Committee may elect to opt out of this pilot program. If the RRC elects to opt out, forward commitments will not be available to any applicant within the region. Note: if the RRC elects to opt out, projects as described below would not be eligible for awards in that region.

   3. (3) These forward commitments would be made under the following terms and conditions:

      1. (A) The purpose of approving a commitment is to allow an applicant to provide a source of funding in conjunction with a larger project where the use of these TxCDBG funds will not occur until several years into the project. It may not be used for other purposes, as determined by TxCDBG staff. (For example, the commitment would provide funding for the water connections associated with a project to build a new water treatment plant. The TxCDBG applicant could provide this commitment in its application to the other funding agency to demonstrate supplemental funding for this phase of the water project.)
      2. (B) The associated project must be ready to proceed within 6 months of receiving the forward commitment, including submission of an application to all other sources of supplemental funding for the complete project. The supplemental funds from other sources that will be used in conjunction with the TxCDBG funds must be committed and awarded to the applicant within 12 months from the date of the TxCDBG commitment.
      3. (C) A maximum of four commitments may be made under this pilot program.
      4. (D) The TxCDBG staff will determine eligible applicants within a region that would qualify and be offered this option. In making this decision, TxCDBG staff will consider, among other things, the anticipated number of months required to before TxCDBG funds would be expended given the magnitude and nature of the project, the regulatory approvals required, the sources of other funding to be provided to the project, and the ranking within the region. If there are more than four eligible applicants that would qualify, a tiebreaker based on the State score as described in Community Development Fund Marginal Competition would be used to determine the four commitments to be made.
      5. (E) For the year the commitment is awarded to the recipient through a contract from TxCDBG, the amount provided for the commitment would be subtracted from the total regional Community Development Fund allocation amount prior to allocation to other eligible applications in the regional Community Development Fund competition.
      6. (F) Not more than two commitments may be outstanding (without fully executed TxCDBG contracts) in any given region at any time.
      7. (G) The TxCDBG commitment would be considered an award to the applicant in the year it was awarded for purposes of scoring.
      8. (H) Termination of commitment: The commitment may be terminated if the applicant does not receive the supplemental funding for the project or fails to comply with other commitment requirements.
      9. (I) Subject to funding availability: All commitments are subject to the TxCDBG program receiving a sufficient regular annual allocation amount from HUD and consequently the Community Development Fund receiving sufficient funds. The TxCDBG may use deobligated funds/program income if available and considered appropriate. The commitment does not obligate TxCDBG or the Department to use any other source of funds to provide the amount committed.
      10. (J) Contingency Plan: The applicant must provide TxCDBG with a contingency plan to outlines the source of replacement funds to complete the project should the TxCDBG regular annual HUD allocation or deobligated funds/program income diminish to the point that the commitment cannot be funded.

Source Note:The provisions of this §30.2 adopted to be effective December 23, 1991, 16 TexReg 7008; amended to be effective September 11, 1992, 17 TexReg 5951; amended to be effective October 13, 1993, 18 TexReg 6641; amended to be effective October 31, 1994, 19 TexReg 8107; amended to be effective July 30, 1996, 21 TexReg 6779; amended to be effective August 5, 1997, 22 TexReg 6937; amended to be effective August 18, 1999, 24 TexReg 6281; amended to be effective September 17, 2000, 25 TexReg 9216; transferred effective October 31, 2001, as published in the Texas Register August 2, 2002, 27 TexReg 6835; amended to be effectiveJanuary 26, 2003, 28 TexReg 537; amended to be effective May 4, 2003, 28 TexReg 3712; amended to be effective November 23, 2004, 29 TexReg 10715; amended to be effective March 4, 2007, 32 TexReg 829; amended to be effective October 29, 2008, 33 TexReg 8763; amended to be effective March 16, 2009, 34 TexReg 1799; amended to be effective December 27, 2009, 34 TexReg 9179; amended to be effective September 11, 2011, 36 TexReg 5676; transferred effective October 1, 2011, as published in the Texas Register December 23, 2011, 36 TexReg 9011.