TDHCA has announced a rule action relating to 10 TAC Chapter 1, Subchapter D, Uniform Guidance for Recipients of Federal and State Funds, Section 1.403 Single Audit Requirements, that was approved by the TDHCA Governing Board on November 6, 2025. This rule will be released for public comment and returned to the Board for final adoption.

The rule, including its preamble, is expected to be published in the Texas Register edition for November 21, 2025. The published version will constitute the official version for purposes of public comment and can be found at the following link: https://www.sos.texas.gov/texreg/index.shtml.

The purpose of this action: This rule currently requires that Subrecipients or Multifamily Development owners applying for or in receipt of direct loan funds (MF owners), that expend $1,000,000 or more in an entity's fiscal year in federal and/or state awards or have an outstanding loan balance associated with a federal or state resource of $1,000,000 with continuing compliance requirements, must have a Single Audit or program-specific audit conducted. The Single Audit on occasion identifies issues that would suggest that the Subrecipient or MF owner has weaknesses in their operations and/or controls that indicate that they are not likely to be strong candidates in receiving or handling state or federal funds, responsibly. This may occur at the time of the Subrecipient or MF owner applying for funds or during the terms of a contract. The Department's rules have not been specific on which types of audit findings may prompt the Department not to fund, or to stop funding, a contract. The proposed rule action revises the rule to more clearly specify that the Department will not award funds, and/or may cancel a contract with a Subrecipient or MF Owner, when certain audit findings have been identified in the Single Audit and are significant enough that the state or federal funds are being put at risk. This rule change is intended to protect federal and state funds from being used improperly, and to minimize the likelihood of disallowed costs that may need to be repaid by the Subrecipient, and ultimately by the Department. This rule will be returned to the Board for final adoption.

The proposed rule action can be found on the TDHCA Public Comment Center at https://www.tdhca.texas.gov/tdhca-public-comment-center.

Written comments may be submitted to the Texas Department of Housing and Community Affairs, Brooke Boston, via email to brooke.boston@tdhca.texas.gov.

ALL COMMENTS MUST BE RECEIVED BY 5 p.m., Central Time, on December 21, 2025.