Texas Administrative Code › Title 31 - NATURAL RESOURCES AND CONSERVATION › Part 10 - TEXAS WATER DEVELOPMENT BOARD › Chapter 371 - DRINKING WATER STATE REVOLVING FUND › Subchapter G - LOAN CLOSINGS AND AVAILABILITY OF FUNDS › Section 371.72 - Financial Assistance Secured by Promissory Notes and Deeds of Trust

Current through Reg. 49, No. 28; July 12, 2024
(a) Applicability. This section contains
				  closing requirements for a water supply corporation, an eligible NPNC, or an
				  eligible private Applicant or other Applicant that is not authorized to issue
				  bonds or other securities. This section applies to financial assistance for
				  either pre-design or construction funding.
(b) Use of consultants. The executive
				  administrator may recommend, but not require, that the entity engage the
				  services of a financial advisor or other consultant to ensure the
				  appropriateness of the proposed debt and to provide advice to the entity.
(c) Documents required for
				  closing. The following documents and conditions are required for closing
				  financial assistance secured by promissory notes and deeds of trust:
(1) evidence that applicable requirements and
				  regulations of all identified local, state, and federal agencies having
				  jurisdiction have been met, including but not limited to permits and
				  authorizations;
(2) an executed
				  promissory note and loan agreement in a form approved by the executive
				  administrator;
(3) a Deed of Trust
				  and Security Agreement that must contain a first mortgage lien evidenced by a
				  deed of trust on all the real and personal property of the water system;
				  provided, however, this is not needed if the financial assistance consists of
				  100 percent principal forgiveness;
(4) an owner's title insurance policy for the
				  benefit of the Board covering all the real property identified in the deed of
				  trust; provided, however, this is not needed if the financial assistance
				  consists of 100 percent principal forgiveness;
(5) evidence that the rates on which the
				  Applicant intends to rely for repayment of the financial assistance have
				  received final and binding approval from the Utility Commission and, for
				  Applicants required to utilize a surcharge account, evidence that the approval
				  of the Utility Commission was conditioned on the creation of a surcharge
				  account;
(6) a certified copy of
				  the resolution adopted by the governing body authorizing the indebtedness and a
				  certificate from the secretary of the governing body attesting to adoption of
				  the resolution in accordance with the bylaws or rules of the governing body and
				  in compliance with the Open Meetings Act, if applicable;
(7) a legal opinion from Applicant's counsel
				  that provides:
(A) that the entity has the
				  legal authority to enter into the loan agreement and to execute a promissory
				  note;
(B) that the entity is not
				  in breach or default of any state or federal order, judgment, decree, or other
				  instrument which would have a material effect on the loan transaction;
(C) that there is no pending suit,
				  action, proceeding, or investigation by a public entity that would materially
				  adversely affect the enforceability or validity of the required financial
				  assistance documents;
(D) evidence
				  that the entity is in good standing with the Texas Office of the Secretary of
				  State; and
(E) a statement
				  addressing any other issues deemed relevant by the executive administrator.
(8) evidence that an
				  approved water conservation plan has been adopted and will be implemented
				  through the life of the project;
(9) evidence of the Applicant's agreement to
				  comply with special environmental conditions contained in the Board's
				  environmental finding;
(10)
				  evidence that the Applicant has established a dedicated source of revenue for
				  repayment of the financial assistance;
(11) evidence that the Applicant has adopted
				  final water rates and charges that are not subject to appeal to the Utility
				  Commission;
(12) copies of
				  executed service and revenue contracts;
(13) evidence that the Applicant has the
				  technical, managerial, and financial capacity to maintain the system unless the
				  use of the funds will be to ensure that the system has the technical,
				  managerial, and financial capacity to comply with the national primary or
				  applicable state drinking water regulations over the long term;
(14) if the project will result in the
				  development of surface water or groundwater resources, the Applicant must
				  provide information showing that it has the legal right to use the water that
				  the project will provide. Upon receipt of the information, the executive
				  administrator will prepare a finding that the Applicant has a reasonable
				  expectation of obtaining the water rights to the water that the project will
				  provide prior to any release of funds for planning, land acquisition, and
				  design activities. Prior to the release of funds for construction, a written
				  water rights certification must be prepared by the executive administrator. The
				  certification will be based on the Applicant's information showing the
				  necessary water rights have been acquired.
(15) when any portion of the financial
				  assistance is to be held in an escrow account, the Applicant shall execute an
				  escrow agreement, approved as to form and substance by the executive
				  administrator; and
(16) any
				  additional information specified in writing by the executive administrator.