| (a) Instruments needed for closing. The documents which
shall be required at the time of closing shall include the following:
(1) if not closing under the pre-design funding option,
evidence that 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 bond ordinance, order or
resolution adopted by the governing body authorizing the issuance
of debt to be sold to the board, or an executed promissory note and
loan agreement, that is acceptable to the executive administrator
and which shall have sections providing as follows:
(A) if loan proceeds are to be deposited into an escrow
account at the closing on all or a portion of the loan, then an escrow
account shall be created that shall be separate from all other accounts
and funds, as follows:
(i) the account shall be maintained by an escrow agent
as defined in §363.2 of this title (relating to Definitions of
Terms);
(ii) funds shall not be released from the escrow account
without written approval by the executive administrator;
(iii) upon request of the executive administrator,
the escrow account statements shall be provided to the executive administrator;
(iv) the investment of any loan or grant proceeds deposited
into an approved escrow account shall be handled in a manner that
complies with the Public Funds Investment Act, Texas Government Code,
Chapter 2256; and
(v) the escrow account shall 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) that a construction account shall be created which
shall be separate from all other accounts and funds of the applicant;
(C) that a final accounting be made to the board of
the total sources and authorized use of project funds within 60 days
of the completion of the project and that any surplus loan funds be
used in a manner as approved by the executive administrator;
(D) that an annual audit of the rural community, prepared
in accordance with generally accepted auditing standards by a certified
public accountant or licensed public accountant be provided annually
to the executive administrator;
(E) that the rural community shall fix and maintain
rates and collect charges to provide adequate operation, maintenance
and insurance coverage on the project in an amount sufficient to protect
the board's interest;
(F) that the rural community shall maintain current,
accurate and complete records and accounts in accordance with generally
accepted accounting principles necessary to demonstrate compliance
with financial assistance related legal and contractual provisions;
(G) that the rural community covenants to abide by
the board's rules and relevant statutes, including the Texas Water
Code, Chapters 15, 16, and 17;
(H) that the rural community, or an obligated person
for whom financial or operating data is presented, will undertake,
either individually or in combination with other issuers of the rural
community's obligations or obligated persons, in a written agreement
or contract to comply with requirements for continuing disclosure
on an ongoing basis substantially in the manner 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 being for the benefit
of the board and the beneficial owner of the rural community's obligations,
if the board sells or otherwise transfers such obligations, and the
beneficial owners of the board's bonds if the rural community is an
obligated person with respect to such bonds under rule 15c2-12;
(I) that all payments shall be made to the board via
wire transfer at no cost to the board;
(J) that the partial redemption of bonds or other authorized
securities be made in inverse order of maturity;
(K) that insurance coverage be obtained and maintained
in an amount sufficient to protect the board's interest in the project;
(L) that the rural community shall establish a dedicated
source of revenue for repayment; and
(M) any other recitals mandated by the executive administrator;
(3) unqualified approving opinions of the attorney
general of Texas and if bonds are issued, a certification from the
comptroller of public accounts that such debt has been registered
in that office;
(4) if bonds are issued, an unqualified approving opinion
by a recognized bond attorney acceptable to the executive administrator,
or if a promissory note and loan agreement is used, an opinion from
the rural community's attorney which is acceptable to the executive
administrator;
(5) executed escrow agreement entered into by the entity
and an escrow agent satisfactory to the executive administrator, in
the event that funds are escrowed, or a certificate of trust as defined
in §363.2 of this title, if applicable;
(6) other or additional data and information, if deemed
necessary by the executive administrator.
(b) Loan agreement and promissory note. The loan agreement
and promissory note shall be executed at the time of closing. The
loan agreement shall provide for the following:
(1) the term of the loan and a schedule for repayment
of principal and interest;
(2) that an annual audit of the rural community, prepared
in accordance with generally accepted auditing standards by a certified
public accountant or licensed public accountant, be provided annually
to the executive administrator for the term of the loan;
(3) that a final accounting be made to the executive
administrator of the total sources and authorized use of project funds
within 60 days of the completion of the project and that any surplus
loan funds be used in a manner as approved by the executive administrator;
(4) that the rural community shall fix and maintain
rates and collect taxes and/or charges to provide:
(A) adequate operation, maintenance and insurance coverage
on the project in an amount sufficient to protect the board's interest;
and
(B) adequate revenue to pay principal and interest
on the loan as it comes due;
(5) that the rural community covenants to abide by
the board's rules and relevant statutes, including the Texas Water
Code, Chapter 15;
(6) that the rural community covenants to comply with
all applicable state and federal environmental requirements prior
to the initiation of construction and any mitigation which might be
required after construction;
(7) that the rural community will apply any unused
funds to the repayment of loan principal; in inverse order of maturity
or in a manner as approved by the executive administrator;
(8) that the rural community shall maintain current,
accurate and complete records and accounts in accordance with generally
accepted accounting principles necessary to demonstrate compliance
with financial assistance related legal and contractual provisions;
and
(9) any additional conditions that may be imposed by
the board or requested by the executive administrator.
(c) Bonds. If bonds are issued, the documents which
shall be submitted by the time of closing shall comply with the requirements
of §363.42 of this title (relating to Loan Closing).
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| Source Note: The provisions of this §363.931 adopted to be effective November 7, 2001, 26 TexReg 8848; amended to be effective May 6, 2003, 28 TexReg 3732; amended to be effective July 30, 2012, 37 TexReg 5597 |
