TDHCA has announced a rule action relating to 10 TAC Chapter 1, Subchapter D, Uniform Guidance for Recipients of Federal and State Funds, Section 1.406 Fidelity Bond 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: The Department is required to assure that fiscal control and accounting procedures for federally funded entities will be established to assure the proper disbursal and accounting for the federal funds paid to the state that are passed to these entities. Therefore, the Department requires program Subrecipients to maintain adequate fidelity bond coverage. A fidelity bond is a bond indemnifying the Subrecipient against losses resulting from the fraud or lack of integrity, honesty or fidelity of one or more of its employees, officers, or other persons holding a position of trust. The current rule requires that the fidelity bond be for a minimum of 5% of the Contract amount. However, some activities in the Department that operate on a reservation system do not have any fund amount identified in the contract with the subrecipient, which has resulted in those entities not having a clear requirement for their fidelity bond. Staff has identified this as an area of risk, and as such is recommending that the rule be revised to provide a minimum, regardless of Contract type, of $50,000. An entity would have to provide coverage in an amount that is the greater of 10% of the Contract Amount, or $50,000. 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.