(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 provided 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 §375.1 of this title (relating to Definitions);
(ii) funds cannot be released from the escrow without
prior written approval from the executive administrator, who shall
issue written authorization for release of the 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 on an ongoing basis 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
subsection (a)(2) of this section 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 one year after completion of project construction;
(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) a Private Placement Memorandum containing a detailed
description of the issuance of 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;
(7) 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;
(8) if applicable, a home rule municipality pursuant
to Texas Local Government Code Chapter 104 must execute a Certification
of Trust as defined in §375.1 of this title; and
(9) any additional information specified in writing
by the executive administrator.
(b) Certified bond transcript. Within sixty (60) days
of closing the financial assistance, the Applicant shall submit a
transcript of proceedings relating to the debt purchased by the Board
which must contain those instruments normally furnished by a purchaser
of debt.
(c) Phased closing. The executive administrator may
determine that closing the financial assistance in phases is appropriate
when:
(d) Financial assistance consisting of 100 percent
principal forgiveness. Notwithstanding subsection (a) of this section,
the following documents are required for closing financial assistance
consisting of 100 percent principal forgiveness:
(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 principal forgiveness agreement adopted
by the governing body that is acceptable to the executive administrator.
The agreement must have the following sections:
(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 §375.1 of this title;
(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 that complies with the Public Funds Collateral Act, Texas Government
Code Chapter 2257;
(B) the Applicant must 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 separate from all other
accounts and funds of the Applicant must be created;
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