Compliance Requirements and Suspension and Recapture of Funds

PURPOSE: This rule establishes the compliance requirements for the Missouri Housing Trust Fund (MHTF) and grounds upon which disbursement of MHTF grant funds may be suspended and when MHTF funds may be recaptured from a grantee. PUBLISHER’S NOTE: The secretary of state has determined that the publication of the entire text of the material which is incorporated by reference as a portion of this rule would be unduly cumbersome or expensive. This material as incorporated by reference in this rule shall be maintained by the agency at its headquarters and shall be made available to the public for inspection and copying at no more than the actual cost of reproduction. This note applies only to the reference material. The entire text of the rule is printed here. (1) For any grantee receiving Missouri Housing Trust Fund (MHTF) funds for an eligible use set forth in sections 215.038(6)–(11), RSMo (as the same may be amended from time-to-time), prior to receiving any disbursements under a grant agreement for such funds, the grantee shall be required to execute and record a land use restriction agreement binding the use and transfer of the property for a period of eighteen (18) years following the final disbursement of MHTF funds under the grant agreement, or such longer period as the commission may require. The land use restriction agreement shall be in such form as the commission may prescribe. (2) Any grantee receiving MHTF funds for the payment of rental subsidies as provided for under sections 215.038 (2)–(3), RSMo (as the same may be amended from time-totime), shall, where such subsidies are awarded to a specific MHTF development owned by the grantee and not to a grantee that is an independent agency providing rental subsidies to qualified applicants, record a land use restriction agreement binding the use and transfer of the property for the duration of the grant agreement. The land use restriction agreement shall be in such form as the commission may prescribe. (3) For any property benefiting from mortgage assistance payments provided for under sections 215.038(12) or 215.038(14), RSMo (as the same may be amended from time-totime), if such assistance payments are made for six (6) or more consecutive months, the grantee receiving such assistance or providing assistance to an eligible person shall record a land use restriction agreement binding the use and transfer of the property for the greater of one (1) year or the time period for which such assistance payments are received. (4) Any individual receiving MHTF funds to finance repairs to their residence as provided for under section 215.038(15), RSMo (as the same may be amended from time-to-time) (which grants shall not exceed the limits set forth in the application proposal guide), shall, prior to the disbursement of any grant funds, be required to record a regulatory agreement in such form as the commission may prescribe, which shall restrict the use and transfer of the property for the period(s) set forth in the applicable application proposal guide. (5) Maintaining Adequate Housing Conditions for Tenants. (A) All grantees are encouraged to provide housing of a similar quality and similar in amenities to market rate housing in the same area where the MHTF development is located. (B) At a minimum, the MHTF development shall comply with the housing quality standards established by Title 24, Code of Federal Regulations, Part 982, published annually in April, herein incorporated by reference and made a part of this rule, as published by the United States Superintendent of Documents, 732 N Capital Street NW, Washington, DC 20402-0001, phone: toll free (866) 512-1800, DC area (202) 512-1800, website: http://bookstore.gpo.gov. This rule does not incorporate any subsequent amendments or additions. (C) All MHTF developments must meet local building codes, ordinances, zoning Development Commission laws, and federal regulations that may be applicable. (D) If the commission or any of its agents receives any report that a grantee is placing tenants or clients in physical danger due to substandard living conditions, the commission staff shall perform an immediate site visit to inspect the conditions identified in the complaint. If the complaints are confirmed, the commission and its staff shall take appropriate actions necessary up to and including recapture of MHTF fund and/or suspension or debarment of the grantee pursuant to 4 CSR 170-8. (6) All aspects of each MHTF development must comply with any and all applicable federal, state, and/or local regulations and laws, including any such regulations or laws regarding accessibility of affordable housing units for disabled persons, and existence or storage of hazardous materials on the property where the MHTF development is located. (7) All rental MHTF developments must comply with all applicable federal, state, and local laws prohibiting discrimination in housing on the grounds of race, color, creed, age, sex, handicap, familial status, or national origin. (8) Procedures for Monitoring the Compliance of MHTF Developments and/or Agencies Receiving MHTF Funds. (A) For every year during the compliance period indicated in the land use restriction agreement, any grantee supplying affordable housing units receiving MHTF funding shall certify to the commission and its staff that all tenants of the MHTF development, or all clients receiving rental assistance, as the case may be, are income eligible under the terms of the state housing act and these regulations. (B) In order to ensure that each recipient of MHTF funds complies with the terms of its grant agreement, the state housing act, and these regulations, and that the certifications required under the preceding paragraph are true and accurate, the commission staff shall regularly monitor compliance of grantees using such policies and procedures as the commission and its staff may deem necessary, including, but not limited to: 1. Performing announced and/or unannounced site visits to audit the grantee’s tenant/client files in order to verify the income qualification of the grantee’s tenants, as well as to ensure that the MHTF development is being maintained in accordance with the rules and requirements set forth by the MHTF grant agreement, the state housing act, and/or these regulations; 2. Performing announced and/or unannounced site visits to audit tenant/client files of the grantee in order to verify the income qualification of the clients being served by the agencies, as well as to ensure that the agency is generally maintaining compliance with the rules and requirements set forth by the MHTF grant agreement, the state housing act, and/or these regulations; and 3. Performing announced and/or unannounced site visits to construction sites for MHTF developments receiving MHTF funds in order to ensure that the MHTF development is being constructed in accordance with the plans and specifications approved by the commission staff and to ensure that all work for which disbursements have been made has been satisfactorily performed. (C) If a commission staff member performing a review of tenant/client files during any site visit determines that some of the files reviewed lack the documentation required by the commission to evidence tenant/client eligibility, the staff member performing the review and/or the commission and its staff, as the case may be, shall take the following actions: 1. Recourse for findings of minor noncompliance. A. If one (1) or more, but less than one-half (1/2) of the files reviewed are deemed non-compliant, this shall be deemed an event of minor non-compliance. B. In the event there is a finding of minor non-compliance, the commission staff shall inform the grantee of the findings and shall document the same in the grantee’s file maintained by the trust fund department. C. The first time such non-compliance is documented, the grantee shall receive a warning. For each subsequent finding of non-compliance, the trust fund department may take any such action against the grantee that it deems appropriate in its sole discretion. Such actions may include, but are not limited to, suspension of the grantee’s funding pursuant to 4 CSR 170-7.500(3)(C) and/or recapture of all or a part of the MHTF funds disbursed to the grantee under its proposal(s) pursuant to the procedures set forth in 4 CSR 170-7.500(11); 2. Recourse for findings of major noncompliance. A. If one-half (1/2) or more of the files reviewed are deemed non-compliant, this shall be deemed an event of major noncompliance. B. In the event there is a finding of major non-compliance, the commission staff shall inform the grantee of the findings and shall document the same in the grantee’s file maintained by the trust fund department. C. In addition to the grantee’s noncompliance being documented in its file maintained by the trust fund department, the trust fund department may take any such action against the grantee that it deems appropriate in its sole discretion. Such actions may include, but are not limited to, suspension of the grantee’s funding pursuant to 4 CSR 1707.500(3)(C) and/or recapture of all or a part of the MHTF funds disbursed to the grantee under its proposal(s) pursuant to the procedures set forth in 4 CSR 170-7.500(11); 3. If the trust fund department suspends a grantee’s funding due to non-compliance violations under 4 CSR 170-7.500(3)(C), such grantee shall not be entitled to any further advances under its grant agreement until the grantee has completed all requirements established by the commission staff to have its funding reinstated. If a grantee has its funding suspended three (3) times pursuant to the provisions contained in 4 CSR 1707.500(3)(C), then upon the third event of non-compliance necessitating a suspension of funds, the grantee’s funding shall be terminated and the grant funds recaptured. The trust fund department shall determine whether the recapture of funds will apply only to those grant funds not yet expended, or whether such recapture shall apply to all funds awarded under the initial grant agreement; 4. Any grantee found out of compliance will be placed on a compliance list that will be monitored and reviewed by the trust fund department until such time as the trust fund department determines the grantee has sufficiently remedied any issues of non-compliance such that it should be removed from the list. As long as a grantee remains on the compliance list, its presence on the list will be noted in, and have a potentially adverse impact on, any subsequent proposals it submits to the trust fund department; and 5. If the trust fund department, in its sole discretion, determines that a grantee’s compliance failures are of such a significant nature that they merit the involvement of and/or action from the commissioners, the trust fund department may report the grantee’s compliance issues to the commissioners at the next scheduled meeting of the commission, or such earlier time as the trust fund department may deem appropriate. The commissioners may direct the trust fund department to take any such action against the non-compliant grantee as they may deem appropriate. (D) If a commission staff member performing an inspection of a construction site determines that any work performed is of unacceptable quality, disbursements of grant funds will be suspended until the work is remediated to a level acceptable to the commission staff. If the grantee fails to remediate the issue within thirty (30) days of the date notice is provided to the grantee of the unacceptable condition, or within such longer time period as the commission staff may allow, all unexpended grant funds shall be subject to recapture. (E) If the grantee fails to comply with the availability requirements for scheduling of site visits, which requirements shall be set by the commission staff from time-to-time and shall be stated in the grant agreement, any grant funds awarded under the grant agreement shall be subject to recapture by the commission. (9) If at any time during the compliance period the commission staff determines an MHTF development or MHTF activity is not in compliance with the applicable provisions of the grant agreement, land use restriction agreement, state housing act, or these regulations, the commission staff may revoke the assistance provided and recapture all undisbursed grant funds. In addition, the commission staff may, where deemed to be in the best interest of the state, recapture all or a portion of the MHTF funds already disbursed under the grant agreement. (10) If a grantee providing home repair grants to individuals pursuant to a grant agreement for MHTF funds between the grantee and the commission becomes aware at any time during the compliance period of a regulatory agreement associated with a home repair grant that the home owner is out of compliance with the terms of said regulatory agreement, the agency must immediately notify the trust fund department of the non-compliance issue. In the event of such non-compliance by the home owner, the commission shall have the right to require the home owner to return a pro-rated portion of the home repair funds granted pursuant to the terms of the regulatory agreement governing the use and sale of the home. If the grantee fails to notify the trust fund department of the non-compliance issue within a reasonable amount of time after the non-compliance comes to the attention of the grantee, in addition to any remedies which may be provided to the commission against the grantee in the grant agreement executed between the parties, the commission may hold the grantee liable to the commission for the amount of funds the commission would have been entitled to recapture under the regulatory agreement (provided the commission is no longer able to recapture such funds from the home owner itself). The commission may, in its sole discretion, when it finds extenuating circumstances for which the otherwise due and payable pro-rated portion of the funds used for home repair should be forgiven for an individual home owner, waive its right to recapture of a pro-rated portion of the home repair grant funds from the homeowner. (11) Process for the Recapture of MHTF Funds. (A) Before any recapture of MHTF funds is ordered, the trust fund manager must document the cause for which the recapture is recommended by completing and signing a recaptured funds form in the form prescribed by the trust fund department, as the same may be amended from time-to-time, and attaching any supporting documentation. (B) The trust fund department shall then provide information regarding disbursements made and the amount of funds remaining available for disbursement to the grantee. (C) The trust fund manager shall then mail a notice to the grantee by certified mail, return receipt requested, notifying the grantee of the commission staff’s decision to recapture MHTF funds under the grant agreement. Such notice shall contain the following information: 1. Notice of the commission staff’s decision to recapture funds under the grantee’s grant agreement; 2. A brief explanation of the grounds upon which such recapture of MHTF funds is based; and 3. Notice of the grantee’s rights to contest the commission staff’s decision pursuant to the procedures set forth in 4 CSR 1707.600, as well as notice of the time frame within which such rights must be exercised. AUTHORITY: section 215.030(5), (12), and (19), RSMo 2000.* Original rule filed Nov. 30, 2011, effective June 30, 2012. *Original authority: 215.030, RSMo 1969, amended 1974, 1982, 1985, 1989, 1993, 1995, 1998.