(a) In this section:
(1) “Department” means the Texas Department of Housing and Community Affairs.
(2) “Developer” has the meaning assigned by § 303.0425.
(3) “Public facility user” has the meaning assigned by § 303.0425.
(b) A public facility user of a multifamily residential development claiming an exemption under § 303.042(c) and to which § 303.0421 applies must annually submit to the department and the chief appraiser of the appraisal district in which the development is located an audit report for a compliance audit, prepared at the expense of the public facility user and conducted by an independent auditor or compliance expert with an established history of providing similar audits on housing compliance matters, to:
(1) determine whether the public facility user is in compliance with Sections 303.0421 and 303.0425; and
(2) identify the difference in the rent charged for income-restricted residential units and the estimated maximum market rents that could be charged for those units without the rent or income restrictions.

(c) Not later than the 60th day after the date of receipt of the audit conducted under Subsection (b), the department shall examine the audit report and publish a report summarizing the findings of the audit. The report must:
(1) be made available on the department’s Internet website;
(2) be issued to a public facility user that has an interest in a development that is the subject of an audit, the comptroller, the applicable corporation, the governing body of the corporation’s sponsor, and, if the corporation’s sponsor is a housing authority, the elected officials who appointed the housing authority’s governing board; and
(3) describe in detail the nature of any failure to comply with the requirements in Sections 303.0421 and 303.0425.
(d) If an audit report submitted under Subsection (b) indicates noncompliance with Sections 303.0421 and 303.0425, a public facility user:
(1) must be given:
(A) written notice from the department or appropriate appraisal district that:
(i) is provided not later than the 45th day after the date a report has been submitted under Subsection (b);
(ii) specifies the reasons for noncompliance;
(iii) contains at least one option for a corrective action to resolve the noncompliance; and
(iv) informs the public facility user that failure to resolve the noncompliance will result in the loss of an exemption under § 303.042(c);
(B) 60 days after the date notice is received under this subdivision, to resolve the matter that is the subject of the notice; and
(C) if a matter that is the subject of a notice provided under this subdivision is not resolved to the satisfaction of the department and the appropriate appraisal district during the period provided by Paragraph (B), a second notice that informs the public facility user of the loss of the exemption under § 303.042(c) due to noncompliance with Sections 303.0421 and 303.0425; and
(2) is considered to be in compliance with Sections 303.0421 and 303.0425 if notice under Subdivision (1)(A) is not provided as specified by Subparagraph (i) of that paragraph.
(e) An exemption under § 303.042(c) does not apply for a tax year in which a multifamily residential development that is owned by a public facility corporation created under this chapter is determined by the department based on an audit conducted under Subsection (b) to not be in compliance with the requirements of § 303.0421 or 303.0425.
(f) The initial audit report required by Subsection (b) is due not later than June 1 of the year following the first anniversary of:
(1) the date of acquisition for an occupied multifamily residential development that is acquired by a corporation; or
(2) the date a new multifamily residential development first becomes occupied by one or more tenants.
(g) Subsequent audit reports following the issuance of the initial audit report under Subsection (f) are due not later than June 1 of each year.
(h) An independent auditor or compliance expert may not prepare an audit under Subsection (b) for more than three consecutive years for the same public facility user. After the third consecutive audit, the independent auditor or compliance expert may prepare an audit only after the second anniversary of the preparation of the third consecutive audit.
(i) The department shall adopt forms and reporting standards for the auditing process.
(j) An audit conducted under Subsection (b) is subject to disclosure under Chapter 552, Government Code, except that information containing tenant names, unit numbers, or other tenant identifying information may be redacted.