Texas Administrative Code › Title 10 - COMMUNITY DEVELOPMENT › Part 5 - OFFICE OF THE GOVERNOR, ECONOMIC DEVELOPMENT AND TOURISM OFFICE › Chapter 181 - TEXAS LEVERAGE FUND PROGRAM › Section 181.8 - General Terms and Conditions of the Office's Financial Commitment

Current through Reg. 49, No. 28; July 12, 2024
(a) Permissible use of financial commitment.
				The Office's financial commitment shall to be used to finance the cost of the
				project identified in the application in accordance with the Act and the
				Office's program guidelines.
(b)
				Eligibility. To be eligible to participate, a city must not have experienced a
				"Largest Four Year Sales Tax Decline" of greater than 10%.
(c) Minimum amount of loan. There is no
				minimum loan amount.
(d) Maximum
				amount of loan. No city with a rating of BBB+/Baa or better shall account for
				more than $6,000,000 of program loans outstanding at any one time. No city with
				a rating less than BBB+/Baa, or city with no rating shall account for more than
				$5,000,000 of program loans outstanding at any one time.
(e) Interest. The program loan shall bear an
				interest rate as provided by the program guidelines in effect from time to
				time.
(f) Maximum loan term. No
				program loan may be amortized for a period longer than 15 years.
(g) Security. All program loans must be
				secured by a first lien pledge of tax receipt proceeds sufficient, as of the
				loan closing date, to comply with a "Debt Service Coverage Ratio," based on
				loan term and the "Largest Fifteen Year Sales Tax Decline," as required under
				the program guidelines.
(h) Pledge
				of tax receipt proceeds. All program loans must be on a parity with or superior
				to any other debt obligations secured by the tax receipt proceeds and owing or
				incurred while any portion of the program loan is outstanding to insure that
				the Office shall have no less than an equal claim to all pledged tax receipt
				proceeds.
(i) Other parity debt. If
				parity debt exists or is incurred during the term of the program loan, the
				"Debt Service Coverage Ratio" based on total "Projected Debt Service" must
				exceed the ratios set forth under the Program guidelines by a factor of 0.1 as
				of both the closing date of the program loan and the closing date of any parity
				debts subsequently incurred.
(j)
				Cross-default. The program loan shall be cross-defaulted with all parity debt
				obligations and the Office must be notified in advance of the issuance of any
				parity debt obligations.
(k)
				Purpose of loan. The purpose of the program loan and the use of funds must
				comply with all applicable requirements of the Act and the Office Program
				guidelines. EDCs are permitted to use the proceeds of a program loan to fund
				the eligible cost of any eligible project as defined by the Act and the Office
				program guidelines.
(l) Program
				loan approval. The program loan approval shall be evidenced by a loan
				commitment letter issued by the Office to the applicant. The loan commitment
				requires formal acceptance and response by the applicant and the city within 45
				days from the date of the loan commitment letter. All program loan agreements
				must be approved by the executive director, or his/her designee, before loan
				closing.
(m) Conditions precedent
				to loan closing. The following events shall be conditions precedent to the
				closing of the program loan:
(1) Delivery to
				the Office of an opinion of counsel from counsel representing the EDC addressed
				to the Office, the Trustee, and the Bank in form and substance acceptable to
				the Office;
(2) Delivery to the
				Office of evidence of voter and city council approval of the economic
				development sales and use tax under the Act, Chapter 504 or Chapter 505 in a
				form acceptable to the Office;
(3)
				Delivery to the Office of a certificate of the chief financial officer of the
				city in a form acceptable to the Office that the "Debt Service Coverage Ratio"
				required by the Office program guidelines has been met;
(4) Delivery to the Office of an incumbency,
				signature identification and authority certificate for the EDC and the city in
				form and substance acceptable to the Office;
(5) Delivery to the Office of a certified
				copy of a resolution of the EDC authorizing and approving the program loan and
				pledging the economic development sales and use tax receipts in favor of the
				Office;
(6) Delivery to the Office
				of a copy of a letter addressed to the Texas State Treasury providing wire
				transfer instructions for the program loan proceeds; and
(7) Delivery to the Office of a certified
				copy of a resolution of the city authorizing and approving the program loan of
				the EDC.