| (1) In determining whether an open-enrollment charter
holder applicant is eligible to receive initial approval for the credit
enhancement, the commissioner will investigate the financial status
of the applicant open-enrollment charter holder and the accreditation
status of all open-enrollment charter schools operated under the charter.
For the open-enrollment charter holder's application to be eligible
for initial approval by the commissioner, each open-enrollment charter
school operated under the charter must be accredited and the open-enrollment
charter holder must be financially sound. The commissioner's review
will include review of the following:
(A) the purpose of the bond issue;
(B) the accreditation status, as defined by §97.1055
of this title (relating to Accreditation Status), of all open-enrollment
charter schools operated under the charter in accordance with the
following, except that, if an open-enrollment charter school operated
under the charter has not yet received an accreditation rating because
it is in its first year of operation, that fact will not impact the
charter holder's eligibility for consideration for the credit enhancement:
(i) if the accreditation status of all open-enrollment
charter schools operated under the charter is Accredited, the open-enrollment
charter holder will be eligible for consideration for the credit enhancement;
(ii) if the accreditation status of any open-enrollment
charter school operated under the charter is Accredited-Warned or
Accredited-Probation, the commissioner will investigate the underlying
reason for the accreditation rating to determine whether the accreditation
rating is related to the open-enrollment charter school's financial
soundness. If the accreditation rating is related to the open-enrollment
charter school's financial soundness, the open-enrollment charter
holder will not be eligible for consideration for the credit enhancement;
or
(iii) if the accreditation status of any open-enrollment
charter school operated under the charter is Not Accredited-Revoked,
the open-enrollment charter holder will not be eligible for consideration
for the credit enhancement;
(C) the open-enrollment charter holder's financial
status and stability, regardless of each open-enrollment charter school's
accreditation rating, including approval of the bonds by the Office
of the Attorney General under the provisions of the TEC, §53.40;
(D) the audit history of the open-enrollment charter
holder and of all open-enrollment charter schools operated under the
charter;
(E) the open-enrollment charter holder's compliance
with statutes and rules of the TEA and with applicable state and federal
program requirements and the compliance of all open-enrollment charter
schools operated under the charter with these statutes, rules, and
requirements;
(F) any interventions and sanctions to which the open-enrollment
charter holder has been subject; to which any of the open-enrollment
charter schools operated under the charter has been subject; and,
if applicable, to which any of the open-enrollment charter school
campuses operated under the charter has been subject;
(G) formal complaints made against the open-enrollment
charter holder, against any of the open-enrollment charter schools
operated under the charter, or against any of the open-enrollment
charter school campuses operated under the charter;
(H) the state academic accountability rating of all
open-enrollment charter schools operated under the charter and the
campus ratings of all open-enrollment charter school campuses operated
under the charter; and
(I) any unresolved corrective actions that are less
than one year old.
(2) For an open-enrollment charter holder to receive
initial approval for credit enhancement:
(A) the applicant open-enrollment charter holder's
lowest credit rating from any credit rating agency may not be the
same as or higher than that of the CSBEP;
(B) the bonded debt for which the credit enhancement
is sought must be structured so that no single annual debt service
payment exceeds two times the quotient produced by dividing the total
proposed annual debt service, as defined in subsection (b)(18) of
this section, for the term of the bonds by the number of years in
the amortization schedule; and
(C) the open-enrollment charter holder must agree,
in its application, that payments of all of the principal of the bonds
will be scheduled during the first six months of the state fiscal
year.
(3) To receive initial approval for credit enhancement
of bonds to be issued for the purchase, repair, or renovation of real
property, the open-enrollment charter holder must agree, in its application,
to execute a lien or require the owner of the property, if different,
to execute a lien on that real property in a form prescribed by the
commissioner and approved by the Office of the Attorney General to
secure repayment of all amounts due to the state from the open-enrollment
charter holder, including reimbursement of any private funds paid
on behalf of an open-enrollment charter school under this section.
The lien must be filed in the real property records of each county
in which the real property is located. In accordance with the TEC, §45.306,
the lien has priority over any other claim against the real property
except a lien granted to the holders of obligations issued to finance
the acquisition of the real property and any security interest or
lien existing before credit enhancement is provided under this section.
The open-enrollment charter holder must disclose all existing liens,
security interests, or other encumbrances on the real property to
be purchased, renovated, or improved and on any improvements proposed
for the real property in the application and confirm that no additional
liens or encumbrances have been placed on the property before the
signing and filing of the lien under this subsection. On the payment
or defeasance of the enhanced bonds, the lien will terminate and be
released insofar as the paid or defeased bonds are concerned. Property
purchased with the bond proceeds is presumed to be public property
under the TEC, §12.128, and remains public property in accordance
with that section.
(e) Limitations on access to the credit enhancement.
(1) The commissioner will limit approval of the credit
enhancement to an open-enrollment charter holder with a historical
debt service coverage ratio of at least 1.1 and a projected debt service
coverage ratio of at least 1.20.
(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)(12), (19), and (7), respectively,
of this section.
(3) To be eligible to receive the credit enhancement,
bonds may not provide for acceleration of amounts of principal or
interest not yet matured by virtue of a charter holder's failure to
make payments or for any other reason.
(f) Application processing. To facilitate prioritization
of applications for the credit enhancement, all applications received
during a calendar month will be held until the twentieth business
day of the subsequent month. On the twentieth business day of each
month, the commissioner will announce the results of the prioritization
described in paragraph (6) of this subsection, if prioritization was
necessary, and process applications for initial approval of the credit
enhancement up to the available capacity as of the application deadline,
subject to the requirements of this subsection.
(1) The open-enrollment charter holder may not submit
an application for a credit enhancement before the governing body
of the open-enrollment charter holder adopts a board resolution as
defined in subsection (b)(5) of this section.
(2) The actual credit enhancement of the bonds is subject
to the initial approval process and the final approval process prescribed
in subsection (g) of this section.
(3) Refunding issues must comply with the following
requirements to retain eligibility for the credit enhancement for
the refunding bonds.
(A) The open-enrollment charter holder must demonstrate
that issuing the refunding bond(s) will result in a net present value
savings to the open-enrollment charter holder 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.
Cont'd... |
