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 371.71 - Financial Assistance Secured by Bonds or Other Authorized Securities

Current through Reg. 49, No. 28; July 12, 2024
(a) Applicability and required documents.
				  This section applies to closings for financial assistance with entities issuing
				  bonds or other authorized securities. The following documents and conditions
				  are required for closing financial assistance secured by bonds or other
				  authorized securities:
(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)
				  a certified copy of the ordinance or resolution adopted by the governing body
				  authorizing the issuance of debt to be sold to the Board that is acceptable to
				  the executive administrator. The ordinance or resolution must have sections
				  providing as follows:
(A) if financial
				  assistance proceeds are to be deposited into an escrow account at the time of
				  closing then an escrow account separate from all other accounts and funds must
				  be created, as follows:
(i) the account must
				  be maintained by an escrow agent as defined in §
													371.1 of
				  this title (relating to Definitions);
(ii) funds cannot be released from the escrow
				  account without prior written approval from the executive administrator, who
				  shall issue written authorization for the release of funds;
(iii) escrow account statements must be
				  provided to the executive administrator upon request;
(iv) the investment of any financial
				  assistance proceeds deposited into an approved escrow account must be handled
				  in a manner that complies with the Public Funds Investment Act, Texas
				  Government Code Chapter 2256; and
(v) the escrow account must be adequately
				  collateralized in a manner sufficient to protect the Board's interest in the
				  project and in compliance with the Public Funds Collateral Act, Texas
				  Government Code Chapter 2257.
(B) the Applicant shall fix and maintain
				  rates in accordance with state law, and collect charges to provide adequate
				  operation and maintenance of the project;
(C) a construction account must be created
				  and must be kept separate from all other accounts and funds of the Applicant;
(D) bonds must be closed in
				  book-entry-only form;
(E) the use
				  of a paying agent/registrar that is a Depository Trust Company (DTC)
				  participant is required;
(F) the
				  payment of all DTC closing fees assessed by the Board's custodian bank must be
				  directed to the Board's custodian bank by the Applicant;
(G) the Applicant must provide evidence that
				  one fully registered bond has been sent to the DTC or to the Applicant's paying
				  agent/registrar prior to closing;
(H) all payments, including the origination
				  fee, must be made to the Board via wire transfer at no cost to the Board;
(I) insurance coverage must be
				  obtained and maintained in an amount sufficient to protect the Board's interest
				  in the project;
(J) the Applicant,
				  or an obligated person for whom financial or operating data is presented,
				  either individually or in combination with other issuers of the Applicant's
				  obligations or obligated persons, must undertake in a written agreement or
				  contract to comply with requirements for continuing disclosure as required by
				  Securities and Exchange Commission (SEC) rule 15c2-12 and determined as if the
				  Board were a Participating Underwriter within the meaning of such rule. Such
				  continuing disclosure undertaking is for the benefit of the Board and the
				  beneficial owner of the political subdivision's obligations if the Board sells
				  or otherwise transfers such obligations, and the beneficial owners of the
				  Board's bonds if the political subdivision is an obligated person with respect
				  to such bonds under rule 15c2-12. The ordinance or resolution required in
				  paragraph (2) of this subsection must also contain any other requirements of
				  the SEC or the IRS relating to arbitrage, private activity bonds, or other
				  relevant requirements regarding the securities held by the Board;
(K) current, accurate, and complete records
				  and accounts must be maintained in accordance with generally accepted
				  accounting principles to demonstrate compliance with requirements in the
				  financial assistance documents;
(L) the Applicant must annually submit an
				  audit prepared by a certified public accountant in accordance with generally
				  accepted auditing standards;
(M)
				  the Applicant must submit a final accounting within 60 days of project
				  completion;
(N) the Applicant must
				  document the adoption and implementation of an approved water conservation plan
				  for the duration of the financial assistance;
(O) the Applicant must comply with special
				  environmental conditions specified in the Board's environmental finding as well
				  as with any applicable Board laws or rules relating to use of the financial
				  assistance;
(P) the Applicant must
				  establish a dedicated source of revenue for repayment of the financial
				  assistance;
(Q) interest payments
				  must commence no later than one year after the date of closing;
(R) annual principal payments must commence
				  no later than 18 months after completion of project construction; and
(S) any other recitals mandated by
				  the executive administrator.
(3) unqualified approving opinions of the
				  attorney general of Texas and, if bonds or other authorized securities are
				  issued, a certification from the comptroller of public accounts that such debt
				  has been registered in that office;
(4) an unqualified approving opinion by a
				  recognized bond attorney;
(5)
				  assurances that the Applicant will comply with any special conditions specified
				  by the Board's environmental finding;
(6) 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 will be prepared by the executive administrator. The
				  certification will be based on the Applicant's information showing the
				  necessary water rights have been acquired.
(7) 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;
(8) a Private Placement Memorandum containing
				  a detailed description of the issuance of the debt to be sold to the Board. The
				  Applicant must submit a draft Private Placement Memorandum at least 30 days
				  before closing of the financial assistance; a final electronic version of the
				  Memorandum must be submitted no later than seven days before closing,
(9) when any portion of the
				  financial assistance is to be held in an escrow account, the Applicant must
				  execute an escrow agreement approved as to form and substance by the executive
				  administrator;
(10) if applicable,
				  a home rule municipality pursuant to Texas Local Government Code Chapter 104
				  must execute a Certification of Trust as defined in §
											371.1 of
				  this title; and
(11) any
				  additional information specified in writing by the executive administrator.