| (E) the applicant school district must agree in its
application that the total annual debt service on bonds approved for
the credit enhancement will be paid on or before August 15 of each
state fiscal year.
(2) Refunding issues must comply with the following
requirements to be eligible for the credit enhancement for the refunding
bonds, except that subparagraph (C) of this paragraph does not apply
to a refunding issue that provides long-term financing for notes issued
to provide interim financing.
(A) Only refunding issues as defined in subsection
(b)(11) of this section are eligible for the credit enhancement.
(B) The bonds to be refunded must have been:
(i) previously guaranteed by the PSF under the guarantee
program authorized under §33.65 of this title or provided credit
enhancement under this section;
(ii) issued on or after November 1, 2008, and before
December 16, 2009; or
(iii) issued as notes to provide interim financing
as defined in subsection (b)(9) of this section.
(C) The district must demonstrate that issuing the
refunding bond(s) will result in a net present value savings to the
district and that the refunding bond or bonds will not have a maturity
date later than the final maturity date of the bonds being refunded.
Net present value savings is determined by computing the net present
value of the difference between each scheduled payment on the original
bonds and each scheduled payment on the refunding bonds. Net present
value savings must be computed at the true interest cost of the refunding
bonds.
(D) If a district files an application for a combination
issue, the application will be treated as a single issue for the purposes
of eligibility for the guarantee or the credit enhancement. A credit
enhancement for the combination issue will be awarded only if both
the new money portion and the refunding portion meet all of the applicable
eligibility requirements described in this subsection. The district
making the application must present data to the commissioner that
demonstrate compliance for both the new money portion of the issue
and the refunding portion of the issue.
(E) The refunding transaction must comply with the
provisions of subsection (e)(7) and (9) of this section.
(g) Limitations on access to the credit enhancement.
(1) The commissioner will limit approval for the credit
enhancement to a district with less than the amount of annual debt
service per student in ADA or less than the amount of total debt service
per student in ADA that is specified as the limitation in §33.65
of this title at the time of the application for a guarantee or a
credit enhancement. The limitation will not apply to school districts
that have enrollment growth, as defined in subsection (b)(5) of this
section, of at least 25%, based on TSDS PEIMS data on enrollment available
at the time of application. The annual debt service amount is the
amount defined by §33.65(b)(1) of this title. The total debt
service amount is the amount defined by subsection (b)(13) of this
section.
(2) The eligibility of bonds to receive the credit
enhancement is limited to those new money, refunding, and combination
issues as defined in subsection (b)(8), (11), and (4), respectively,
of this section.
(h) Financial exigency. A school district that declares
a financial exigency must designate the fiscal year to which the exigency
applies. A state of financial exigency expires at the end of that
fiscal year unless renewed or may be terminated by action of the board
of trustees at any time before the end of the fiscal year.
(1) Declaration for current fiscal year.
(A) Application for credit enhancement of new money
issue. The commissioner will deny approval of an application for the
credit enhancement of a new money issue if the applicant school district
has declared a state of financial exigency for the district's current
fiscal year. The denial of approval will be in effect for the duration
of the applicable fiscal year unless the district can demonstrate
financial stability.
(B) Approval granted before declaration. If in a given
district's fiscal year the commissioner grants approval for the credit
enhancement of a new money issue and the school district subsequently
declares a state of financial exigency for that same fiscal year,
the district must immediately notify the commissioner and may not
offer the bonds for sale unless the commissioner determines that the
district may proceed.
(C) Application for credit enhancement of refunding
issue. The commissioner will consider an application for the credit
enhancement 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.
(2) Declaration in a previous fiscal year. An applicant
school district that declared a state of financial exigency in a previous
district fiscal year but that has not declared such a state for the
district's current fiscal year will not be considered to be in a state
of financial exigency for the purposes of this section.
(i) Defeasance. The credit enhancement will be completely
removed when bonds provided credit enhancement under this section
are defeased, and such a provision must be specifically stated in
the bond resolution. If bonds provided credit enhancement under this
section are defeased, the district must notify the commissioner in
writing within ten calendar days of the action.
(j) Payments. For purposes of the provisions of the
TEC, Chapter 45, Subchapter I, matured principal and interest payments
are limited to amounts due on bonds provided credit enhancement under
this section 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 their
terms. All such payment dates, including mandatory redemption dates,
must be specified in the 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 upon a tender of
such bonds in accordance with the terms of the bonds do not constitute
matured principal and interest payments.
(k) Credit enhancement restrictions. The credit enhancement
provided for eligible bonds in accordance with the provisions of the
TEC, Chapter 45, Subchapter I, is restricted to matured bond principal
and interest. The credit enhancement 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.
(l) Notice of failure or inability to pay. A school
district that has determined that it is or will be unable to pay maturing
or matured principal or interest on a bond for which credit enhancement
is provided under this section must immediately, but not later than
the tenth business day before maturity date, notify the commissioner.
(m) Payment from intercepted funds.
(1) Immediately after the commissioner receives the
notice described in subsection (l) of this section, the commissioner
will instruct the comptroller to transfer to the district's paying
agent from the amount of funds available to make payments under the
SDBEP from the FSP, as identified by the commissioner, 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.
(3) The procedures described in paragraphs (1) and
(2) of this subsection apply to each payment of principal or interest
on bonds as the payment becomes due until the bonds mature or are
defeased according to state law.
(4) If, as a result of payments made under this subsection,
there is insufficient money to fully fund the FSP, the commissioner
will, to the extent necessary, reduce each school district's foundation
school fund allocations, other than any portion appropriated from
the ASF, in the same manner provided by the TEC, §48.266(f),
for a case in which school district entitlements exceed the amount
appropriated. The following fiscal year, the commissioner will increase
each school district's entitlement under the TEC, §48.266, by
an amount equal to the reduction under this paragraph.
Cont'd... |
