| (3) Application for guarantee of refunding issue. The
commissioner will consider an application for the guarantee of a refunding
issue that meets all applicable requirements specified in this section
even if the applicant school district has declared a state of financial
exigency for the district's current fiscal year. In addition to fulfilling
all applicable requirements specified in this section, the applicant
school district must also describe, in its application, the reason
financial exigency was declared and how the refunding issue will support
the district's financial recovery plan.
(i) Allocation of specific holdings. If necessary to
successfully operate the BGP, the commissioner may allocate specific
holdings of the PSF to specific bond issues guaranteed under this
section. This allocation will not prejudice the right of the SBOE
to dispose of the holdings according to law and requirements applicable
to the fund; however, the SBOE will ensure that holdings of the PSF
are available for a substitute allocation sufficient to meet the purposes
of the initial allocation. This allocation will not affect any rights
of the bond holders under law.
(j) Defeasance. The guarantee will be completely removed
when bonds guaranteed by the BGP are defeased, and such a provision
must be specifically stated in the bond order. If bonds guaranteed
by the BGP are defeased, the district must notify the commissioner
in writing within ten calendar days of the action.
(k) Bonds issued before August 15, 1993. For bonds
issued before August 15, 1993, a school district seeking the guarantee
of eligible bonds must certify that, on the date of issuance of any
bond, no funds received by the district from the Available School
Fund (ASF) are reasonably expected to be used directly or indirectly
to pay the principal or interest on, or the tender or retirement price
of, any bond of the political subdivision or to fund a reserve or
placement fund for any such bond.
(l) Bonds guaranteed before December 1, 1993. For bonds
guaranteed before December 1, 1993, if a school district cannot pay
the maturing or matured principal or interest on a guaranteed bond,
the commissioner will cause the amount needed to pay the principal
or interest to be transferred to the district's paying agent solely
from the PSF and not from the ASF. The commissioner also will direct
the comptroller of public accounts to withhold the amount paid, plus
interest, from the first state money payable to the district, excluding
payments from the ASF.
(m) Bonds issued after August 15, 1993, and guaranteed
on or after December 1, 1993. If a school district cannot pay the
maturing or matured principal or interest on a guaranteed bond, the
commissioner will cause the amount needed to pay the principal or
interest to be transferred to the district's paying agent from the
PSF. The commissioner also will direct the comptroller of public accounts
to withhold the amount paid, plus interest, from the first state money
payable to the district, regardless of source, including the ASF.
(n) Payments. For purposes of the provisions of TEC,
Chapter 45, Subchapter C, matured principal and interest payments
are limited to amounts due on guaranteed bonds at scheduled maturity,
at scheduled interest payment dates, and at dates when bonds are subject
to mandatory redemption, including extraordinary mandatory redemption,
in accordance with the terms of the bond order. All such payment dates,
including mandatory redemption dates, must be specified in the bond
order or other document pursuant to which the bonds initially are
issued. Without limiting the provisions of this subsection, payments
attributable to an optional redemption or a right granted to a bondholder
to demand payment on a tender of such bonds according to the terms
of the bonds do not constitute matured principal and interest payments.
(o) Guarantee restrictions. The guarantee provided
for eligible bonds under the provisions of TEC, Chapter 45, Subchapter
C, is restricted to matured bond principal and interest. The guarantee
applies to all matured interest on eligible bonds, whether the bonds
were issued with a fixed or variable interest rate and whether the
interest rate changes as a result of an interest reset provision or
other bond order provision requiring an interest rate change. The
guarantee does not extend to any obligation of a district under any
agreement with a third party relating to bonds that is defined or
described in state law as a "bond enhancement agreement" or a "credit
agreement," unless the right to payment of such third party is directly
as a result of such third party being a bondholder.
(p) Notice of default. A school district that has determined
that it is or will be unable to pay maturing or matured principal
or interest on a guaranteed bond must immediately, but not later than
the fifth business day before maturity date, notify the commissioner.
(q) Payment from PSF.
(1) Immediately after the commissioner receives the
notice described in subsection (p) of this section, the commissioner
will instruct the comptroller to transfer from the appropriate account
in the PSF to the district's paying agent the amount necessary to
pay the maturing or matured principal or interest.
(2) Immediately after receipt of the funds for payment
of the principal or interest, the paying agent must pay the amount
due and forward the canceled bond or coupon to the comptroller. The
comptroller will hold the canceled bond or coupon on behalf of the
PSF.
(3) Following full reimbursement to the PSF with interest,
the comptroller will further cancel the bond or coupon and forward
it to the school district for which payment was made. Interest will
be charged at the rate determined under the Texas Government Code, §2251.025(b).
Interest will accrue as specified in the Texas Government Code, §2251.025(a)
and (c).
(r) Bonds not accelerated on default. If a school district
fails to pay principal or interest on a guaranteed bond when it matures,
other amounts not yet mature are not accelerated and do not become
due by virtue of the school district's default.
(s) Reimbursement of PSF. If payment from the PSF is
made on behalf of a school district, the school district must reimburse
the amount of the payment, plus interest, in accordance with the requirements
of TEC, §45.061.
(t) Repeated failure to pay. If a total of two or more
payments are made under the BGP or the credit enhancement program
authorized under §61.1038 of this title on the bonds of a school
district, the commissioner will take action in accordance with the
provisions of TEC, §45.062.
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