Part 3. TEACHER RETIREMENT SYSTEM OF TEXAS

Chapter 41. HEALTH CARE AND INSURANCE PROGRAMS

Subchapter C. TEXAS SCHOOL EMPLOYEES GROUP HEALTH (TRS-ACTIVECARE)

34 TAC §§41.34, 41.41, 41.50

The Teacher Retirement System of Texas (TRS) proposes amendments to §§41.34, 41.41, and 41.50, relating to the Texas School Employees Uniform Group Health Coverage Program known as TRS-ActiveCare. Section 41.34 relates to eligibility for coverage in TRS-ActiveCare; §41.41 relates to premium payments for TRS-ActiveCare; and §41.50 concerns the adjudication of claims in TRS-ActiveCare. The proposed amendment to §41.34 clarifies the length of TRS-ActiveCare eligibility for an individual who is eligible for or participating in COBRA continuation coverage through the individual's employer when the employer first becomes a participating entity in TRS-ActiveCare. The proposed amendment also provides that the individual's eligibility for TRS-ActiveCare coverage continues only so long as the individual's eligibility for COBRA continuation coverage exists. The proposed amendments to §41.41 clarify the TRS-ActiveCare premium billing process and reduce the time frame for participating entities to request changes to their premium bills. The proposed amendments also clarify that the premium bill includes all employees enrolled in TRS-ActiveCare who are employed by a participating entity on the date that the bill is generated rather those employed on the first day of the month. Additionally, the proposed amendments reduce the time period for a participating entity to request an adjustment to the premium bill from 90 days to 45 days. The proposed amendments to §41.50 permit the TRS-ActiveCare Appeal Committee, after a request for an appeal conference, to resolve the appeal in favor of the claimant without the necessity of an appeal conference. The proposed amendment would prevent the Appeal Committee from resolving the appeal against the claimant without holding the appeal conference.

Tony Galaviz, Chief Financial Officer, has determined that for each year of the first five-year period the amendments are in effect, there will be no fiscal implications to state or local governments as a result of enforcing or administering the sections. There is no foreseeable effect on local employment or local economies as a result of the proposed amendments.

Mr. Galaviz has also determined that for each year of the first five years the proposed amendments are in effect the public benefit anticipated as a result of the proposed amendments to §41.34 will be that the employers and employees will have notice of the length of TRS-ActiveCare eligibility in certain circumstances. In addition, the proposed amendments to §41.41 provide employers notice of which employees are included in the TRS-ActiveCare premium bills. Additionally, corrections to premium bills will be made more quickly so that providers may not suffer recoupment for payments made on behalf of individuals who were not eligible for TRS-ActiveCare coverage when they received services. The public benefit anticipated as a result of the proposed amendments to §41.50 will be administrative efficiency for TRS and for claimants who may be relieved of traveling to TRS to hold an appeal conference if the appeal can be resolved in the claimant's favor without the necessity of the conference. There is no anticipated adverse economic effect on small businesses or micro-businesses as a result of compliance with the proposed sections. Mr. Galaviz has determined that there are no anticipated economic costs to persons required to comply with the proposed sections for each year of the first five years the proposal will be in effect.

Comments on the proposal may be submitted to Charles L. Dunlap, Executive Director, 1000 Red River, Austin, Texas 78701. To be considered, written comments must be received by TRS no later than 30 days after publication of the amendments for proposal.

These amendments are proposed under the Insurance Code article 3.50-7, §3, which gives TRS authority to adopt rules as necessary to implement and administer the TRS-ActiveCare program. The amendments are also proposed under Government Code, Chapter 825, §825.102, which authorizes the Board of Trustees of the Teacher Retirement System to adopt rules for the transaction of business of the Board.

There are no other codes affected.

§41.34.Eligibility for Coverage under the Texas School Employees Uniform Group Health Coverage Program.

The following persons are eligible to be enrolled in the TRS-ActiveCare program under terms, conditions and limitations established by the trustee unless expelled from the program under provisions of Insurance Code article 3.50-7.

(1) A full-time employee as defined in §41.33 of this title (relating to Definitions Applicable to the Texas School Employees Uniform Group Health Coverage Program).

(2) A part-time employee as defined in §41.33 of this title (relating to Definitions Applicable to the Texas School Employees Uniform Group Health Coverage Program).

(3) Dependents, as defined under Insurance Code article 3.50-7, section 2(3)(A), (B) or (C), of either a full-time employee or a part-time employee. A child defined in Insurance Code article 3.50-7, §2(3)(C) is eligible for coverage only if, and only for so long as, such child's mental retardation or physical incapacity is a medically determinable condition that prevents the child from engaging in self-sustaining employment as determined by TRS.

(4) Individuals employed or formerly employed by a participating entity, and their dependents, who are eligible for, or participating in, continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L. 99-272), through a group health benefit plan sponsored by the individual's employer on the first day that employer becomes a participating entity if such individuals or their dependents would have met the requirements for eligibility in paragraphs (1), (2), or (3) of this section on the individual's last day of employment with the participating entity. Notwithstanding the foregoing, the individual is eligible to participate in TRS-ActiveCare only for the duration of the individual's eligibility for COBRA continuation coverage.

(5) Full-time or part-time employees as defined in §41.33 of this title and their eligible dependents may participate in an approved HMO if they reside, live, or work in the approved service area of the HMO and are otherwise eligible to participate in the HMO under the terms of the TRS contract with the HMO.

(6) Individuals who become eligible as determined by TRS for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L. No. 99-272), through their participation in the TRS-ActiveCare program.

(7) Individuals who become eligible for coverage under provisions of the Health Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191, 110 Stat. 1936 (1996)) (HIPAA), except for any provisions of HIPAA from which TRS has elected to be exempt in accordance with its status as a self-insured non-Federal governmental plan.

(8) Any other individuals who are required to be covered under applicable law.

§41.41.Premium Payments.

(a) Each participating entity shall remit to TRS the amount on each bill directed to the participating entity by TRS or the administering firm. The participating entity shall remit payment on or before the sixth day after the last day of each month in which TRS or the administering firm issued a bill. Payment shall be delivered in the same manner (e.g., currently, TEXNET) in which the participating entity delivers retirement contributions. Any waiver granted to a participating entity under Government Code §825.408(a) does not apply to amounts billed under this section or to amounts otherwise owed to TRS for the TRS-ActiveCare program.

(b) A participating entity will be billed for all full-time and part-time employees enrolled in the TRS-ActiveCare program who were employed by the participating entity on the date that TRS or its designee generates the bill for that billing month [ first day of the billing month ] as reported by the participating entity. In addition, a participating entity will be billed retroactively for all full-time and part-time employees who enroll after the date on which the bill is generated for that month [ first day of a month ] and choose coverage for that month. A participating entity will also be billed for any individual covered in accordance with §41.40 of this title (relating to Coverage Continuation While on Leave Without Pay.) Participating entities are responsible for collecting all applicable premiums and other costs that are required to be paid by its full-time employees, part-time employees, and any individuals covered in accordance with §41.40 of this title. A participating entity shall remit the full amount billed each month.

(c) Participating entities shall not modify the amount of any bill or remit any amount different from the amount billed. A participating entity shall report proposed adjustments, including those seeking credit for terminated employees, to the administering firm no later than the 45th [ 90th ] day after the billing date. TRS may reject any [ inappropriate ] proposed adjustments that are inappropriate or untimely , including those adjustments seeking credit for terminated employees reported later than 45 [ 90 ] days after the billing date on which the employee was first incorrectly reported as eligible for coverage . Approved adjustments will be reflected on a subsequent bill.

(d) TRS may take corrective action against a participating entity that fails to remit payment in accordance with the timelines and other requirements of this section, including but not limited to placement of a warrant hold with the Comptroller of Public Accounts.

§41.50.Adjudication of Claims.

(a) A person enrolled in the TRS-ActiveCare program who is denied payment of a claim or other benefit may submit a written request to the administering firm for reconsideration of the claim. A person shall submit a request for reconsideration according to procedures established by the administering firm. All relevant medical information should be submitted to the administering firm prior to a final decision.

(b) A person may appeal the final denial of a claim or other benefit by the administering firm to the Teacher Retirement System of Texas (TRS), acting in its capacity as trustee of the TRS-ActiveCare program.

(c) An appeal of a final denial of a claim or other benefit by the administering firm must be submitted in writing and received by TRS no later than 60 days after the date of the letter from the administering firm finally denying the claim. The appeal shall be directed to the attention of the TRS-ActiveCare Grievance Administrator.

(d) An appeal of denial of a claim shall state the nature of the claim and shall include copies of all relevant documents that were considered by the administering firm, including copies of the correspondence to and from the administering firm.

(e) The TRS Appeal Committee ("Committee") is responsible for review and determination of appeals. The Committee shall be appointed by the TRS Deputy Director and shall serve at the discretion of the Deputy Director.

(f) The Committee shall review an appeal for timeliness and sufficiency and may deny an appeal that is not timely filed. Denial of an appeal for failure to file in a timely manner is a final decision by TRS.

(g) If the Committee determines that the claim should be paid, it shall so inform the administering firm and the person who filed the appeal.

(h) If the Committee determines that the information submitted with the appeal supports the denial by the administering firm, the Committee shall provide a written explanation of the reasons to the claimant and to the administering firm. The explanation shall include information on how the claimant may request an appeal conference.

(i) To obtain an appeal conference, a claimant must submit a request in writing to the TRS-ActiveCare Grievance Administrator no later than 45 days after the date of the written explanation of the Committee.

(j) Upon receipt of a timely request for an appeal conference, the TRS-ActiveCare Grievance Administrator shall schedule an appeal conference with the Committee. The Grievance Administrator shall notify the person who filed the appeal and the administering firm of the time, date, and manner of the conference, as well as the procedures applicable to the conference.

(k) At any time prior to the appeal conference, the Committee may decide to grant the appeal and will notify the claimant of this determination without the necessity of an appeal conference. The Committee can not deny a claim after an appeal conference has been requested without holding the conference.

(l) [ (k) ] At the conference, the Committee shall consider the medical information previously submitted to the administering firm in support of the payment of the claim or benefit, as well as the administering firm's determination regarding medical issues. The Committee may request additional review by the administering firm on medical issues before the Committee issues a decision.

(m) [ (l) ] The Committee shall decide the appeal and shall notify the claimant and the administering firm of the decision in writing. The decision will include an explanation of the basis for the decision.

(n) [ (m) ] The decision of the Committee may be appealed by the claimant to the TRS Executive Director. An appeal to the Executive Director shall be submitted to TRS in writing no later than 30 days after the date of the written decision by the Committee. The appeal shall specifically describe why the claimant alleges that the Committee's decision is erroneous. The Executive Director shall make a decision based on the written appeal and based on the written decision of the Committee, as well as any written documents reviewed by the Committee. Pursuant to the delegation of authority through this section, the decision of the Executive Director is the final decision of TRS.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 11, 2003.

TRD-200304181

Charles Dunlap

Executive Director

Teacher Retirement System of Texas

Proposed date of adoption: September 25, 2003

For further information, please call: (512) 542-6115

Chapter 190. ALLOCATION OF STATE'S LIMIT ON CERTAIN PRIVATE ACTIVITY BONDS

Subchapter A. PROGRAM RULES

34 TAC §§190.1 - 190.3, 190.5 - 190.7

The Texas Bond Review Board proposes amendments to Title 34 TAC, Chapter 190, §§190.1 - 190.3 and §§190.5 - 190.7. The program rules are amended to comply with changes in Chapter 1372, Government Code, as amended. Generally, the amendments will clarify allocation procedures and timelines, include discretion related to late filing, and allow more applications to receive a reservation. The amendments also reflect a shift in the percentage of volume cap initially available to each sub-ceiling. Provisions for the implementation of new programs within certain sub-ceilings are included. A new formula for allocating volume cap to student loan issuers is outlined, along with additional filing requirements and a clarification of eligible participants within this category. Fees will be increased for applications for the multifamily category; 4/5ths of the amount of the fee will be used to fund housing studies.

James T. Buie, Executive Director of the Bond Review Board, has determined that for the first five-year period that the amended and added sections are in effect, there will be no fiscal implications for state and local government as a result of enforcing or administering the amended sections.

Mr. Buie has also determined that during the five-year period there will be an economic cost to certain private corporations that file applications for development of for-profit multifamily housing units. However, the majority of the economic cost to these corporations will be dedicated toward funding a study on affordable housing, at the request of the affordable housing industry, members of which include said corporations. There is no anticipated economic cost to other persons who are required to comply with the proposed sections. The public benefit will be realized by achieving a more clearly defined purpose/use of the private activity bond allocation program. Although the fiscal impact to state and local government is nil in terms of debt service requirements, an unquantifiable economic impact will occur in a positive manner based upon the location of projects funded via private activity bonds. Whether the use of these bonds is to provide low interest loans to first-time home buyers of low to moderate income, low interest loans to students to finance education, low interest loans to companies for pollution control projects, or for affordable rental housing, these bonds will provide a positive economic impact.

Comments may be submitted to James T. Buie, Texas Bond Review Board, P.O. Box 13292, Austin, Texas 78711-3292; or via email to: buie@brb.state.tx.us with a copy to kasparek@brb.state.tx.us.

The amendments are proposed under Chapter 1372, Government Code, as amended, which gives the Texas Bond Review Board the authority to adopt rules governing the implementation and administration of the allocation of the state's ceiling on private activity bonds.

Chapter 1372, Government Code is affected by these proposed amendments.

§190.1.General Provisions.

(a) - (b) (No change.)

(c) Definition of terms. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) - (2) (No change.)

(3) Application fee-- Excluding residential rental projects, the [ The ] $500 nonrefundable fee submitted to the board simultaneously with an application for reservation or an application for carryforward. For residential rental projects, the $5,000 nonrefundable fee submitted to the board simultaneously with an application for reservation.

(4) Application for carryforward--

(A) The application required to be filed by an issuer with all attachments and amendments to reserve a portion of the state ceiling for carryforward purposes.

(B) In the instance where an issuer is seeking to utilize the allowable number of days to close under the Act and the closing deadline is after December 24, the application for carryforward is a letter sent from the issuer to the board, received not later than December 10th of the program year, notifying the board of intent to close on the applicable date. The letter should include estimated closing date, docket number and bond amount.

(5) (No change.)

(6) Authorized representative - A person authorized by the issuer to execute certain correspondence under §190.3(c) of this title (relating to Bond authorization requirements) and §190.5(h) and (i) of this title (relating to Consideration of Qualified Applications by the Board ).

(7) - (16) (No change.)

(17) Certification regarding fees--The notice given to the board by the issuer or authorized representative of the issuer [ legal counsel ] stating that a check for a required fee was sent by overnight delivery as described in §190.8(c) and (d) of this title (relating to Notices, Filings, and Submissions) in a timely manner.

(18) - (20) (No change.)

(21) Closing fee--The nonrefundable fee in the amount of $1,000 or 0.025% of the principal amount of the bonds certified as provided by §1372.039(a)(1), Government Code, whichever is greater paid by all issuers other than those described by §1372.001(16) . In addition, an issuer exchanging a portion of the state ceiling for mortgage credit certificates shall submit to the board a closing fee in the amount of $1,000 or 0.0125% of the amount of the state ceiling exchanged, whichever is greater. An issuer receiving a carryforward designation shall submit to the board a closing fee of $1,000 or 0.025%, of the amount of carryforward designation received, whichever is greater.

(22) - (45) (No change.)

(46) Qualified water development bond--A bond within the meaning given that term under §1372.001(18).

(47) [ (46) ] Related person--Related person within the meaning given that term under the Code.

(48) [ (47) ] Reservation--A reservation of a portion of the state ceiling for a specific bond issue.

(49) [ (48) ] Reservation date--The earliest date on which a qualified application for reservation is accepted for filing with the board pursuant to the Act and a portion of the state ceiling is or becomes available to the issuer.

(50) [ (49) ] Rules--Any statement of general applicability that implements, interprets, or prescribes law or policy, or describes the board's procedures and practice.

(51) [ (50) ] Significant expenditures--Expenditures greater than the lesser of $1 million or 10% of the reasonably anticipated cost of the project.

(52) [ (51) ] Staff--The staff of the board.

(53) [ (52) ] State--The State of Texas.

(54) [ (53) ] State ceiling--The amount of the authority in the state to issue tax exempt private activity bonds during the calendar year, as determined under the Code.

(55) [ (54) ] State-voted issue--An issue of bonds authorized pursuant to a statewide referendum approved by the voters of the state.

(56) [ (55) ] Tax-exempt enterprise zone facility bonds--An issue of bonds for an enterprise zone facility, as that term is defined under the Code, §1394.

(57) [ (56) ] Unexpended proceeds--Proceeds remaining from a prior issue of bonds, including, in the case of qualified mortgage bonds, any unused portion of mortgage credit certificates.

(d) - (f) (No change.)

§190.2.Allocation and Reservation System.

(a) The state's ceiling shall be determined for each calendar year by the executive director based upon the most recent census estimate of the resident population of the state published by the Bureau of the Census prior to the beginning of such calendar year. The amount of the state ceiling shall be published on the board's web-site in January [ in the Texas Register in the first January issue of ] each year and shall be updated on the site at least weekly thereafter .

(b) On or after October 5 [ 10 ] of the year preceding the applicable program year, the board will accept applications for reservation from issuers authorized to issue private activity bonds. The board shall not grant a reservation to any issuer prior to January 2 of the program year. If two or more issuers file an application for reservation of the state ceiling in any of the categories described in §1372.022, the board shall conduct a lottery establishing the priority order of each such application for reservation. Once the priority order for all applications for reservation filed on or before October 20 of the year preceding the applicable program year is established, subject to §1372.0321 and §1372.0231 reservations for each issuer within the categories described in Subsections 1372.022(b)(2), (3), (4), and (6), shall be granted in the order of priority established by such lottery. If more than 10 applications by issuers, other than issuers of state voted issues, are granted a reservation initially, an additional lottery will be held immediately to determine staggered reservation dates for such issuers. Each issuer of state voted issues granted a reservation initially may participate in the additional lottery or shall be granted a reservation date which is the first business day of the program year.

(c) The order of priority for reservations by housing finance corporations in the category described in §1372.022 (a) [ (b) ](1), Government Code, shall further be determined as provided in §1372.032.

(1) - (3) (No change.)

(d) The order of priority for reservations in the category described in §1372.022, (a) [ (b) ](4) shall further be determined as provided in §1372.0321 and §1372.0231 .

(1) The first category of priority shall include those applications for a reservation for:

(A) projects :

(i) in which 50% of the units are reserved for families and individuals earning not more than 50% of the area median family income and in which the maximum allowable rents are restricted to 30% of 50% area median family income, minus an allowance for utility costs authorized under the federal Low Income Housing Tax Credit Program[ , for 100% of the units ]; and

(ii) the remaining 50% of the residential units in the project are reserved for families and individuals earning not more than 60% of the area median family income and in which the maximum allowable rents are restricted to 30% of 60% of area median family income, minus an allowance for utility costs authorized under the federal Low Income Housing Tax Credit Program; or

(B) projects:

(i) in which 15% of the residential units in the project are reserved for families and individuals earning not more than 30% of the area median family income and in which the maximum allowable rents are restricted to 30% of 30% of area median family income, minus an allowance for utility costs authorized unther the federal Low Income Housing Tax Credit Program; and

(ii) the remaining 85% of the residential units in the project are reserved for families and individuals earning not more than 60% of the area median family income and in which the maximum allowable rents are restricted to 30% of 60% of area median family income, minus an allowance for utility costs authorized under the federal Low Income Housing Tax Credit Program; or

(C) projects:

(i) in which 100% of the residential units in the project are reserved for families and individuals earning not more than 60% or the area median family income and in which the maximum allowable rents are restricted to 30% of 60% of area median family income, minus an allowance for utility costs authorized under the federal Low Income Housing Tax Credit Program; and

(ii) which are located in a census tract in which the median income, based on the most recent information published by the United States Bureau of the Census, is higher than the median income for the county, metropolitan statistical area, or primary metropolitan statistical area in which the census tract is located as established by the United States Department of Housing and Urban Development; or

(D) [ (B) ] on June 1 and after, projects that are located in counties, metropolitan statistical areas, or primary metropolitan statistical areas with area median family income levels below or at the median family income for the state according to the U.S. Department of Housing and Urban Development.

(2) - (5) (No change.)

(e) The order of priority for reservations in the category described in §1372.022 (a) [ (b) ](5), shall further be determined as provided in §1372.033, Government Code. [ Reservations shall be granted in reverse calendar year order of the most recent closing of qualified student loan bonds by each issuer of qualified student loan bonds authorized by §53.47, Education Code, with the most recent closing being the last to receive a reservation and with those issuers that have never received a reservation for student loan bonds being the first to receive a reservation, and, in the case of closings occurring on the same date, reservations shall be granted in an order determined by the board by lot. ]

(f) If state ceiling becomes available on August 15, it shall be available prior to September 1 for all applications for reservations in the order determined by the board by lot, subject to §1372.0321 and [ qualified residential rental project issues in the order of priority described in ] subsection (d) of this section without regard to the provisions of §1372.0231.

(g) - (j) (No change.)

(k) The amount of the state's ceiling that has not been reserved prior to December 1 of the program year and any amount previously reserved that becomes available on or after that date because of the cancellation of a reservation or any other reason, may be designated, by the board, as carryforward for the carryforward purposes outlined in the Code through submission of the application for carryforward and any other required documentation. If the 120-day , 150-day, or 180-day period, as applicable, expires on or after December 24th of a program year in which a reservation was issued, an issuer is required to close on its bonds before December 24th. However, if an issuer's applicable period expires after December 31st, the issuer may elect to notify the board in writing before December 24th of their intent to carry forward the reservation and their expected bond closing date. The granting by the board of a carryforward designation through this described process, will allow an issuer the remaining balance of their 120- day, 150-day, or 180-day period as applicable to close on their bond by the expected closing date. If any issuer makes this election and does not close the bonds on or before the expected closing date, the amount of carryforward designation will be administered by the board in compliance with the requirements of the code.

(l) An issuer may submit an application for carryforward to the board at any time during the year through the last business day in December.

(m) Issuers will be eligible for carryforward according to the priority classifications listed in the Act, specifically §1372.062.

(n) With respect to the amount of the state ceiling set aside under §1372.0231(a)(1) and (3), applications are subject to review and approval by board staff prior to receiving a reservation of allocation.

(o) With respect to the amount of the state ceiling set aside under §1372.0231(a)(1), should the Texas Department of Housing and Community Affairs (TDHCA) opt to participate in the lottery, TDHCA shall submit residential rental project applications to the board during the application period outlined in §1372.028. The board shall include a number of lottery balls in the lottery on behalf of TDHCA equal to the number of applications TDHCA submits that are eligible for participation in the lottery. Prior to the date of the lottery, TDHCA will rank its eligible applications according to the provisions established by TDHCA and shall provide this ranking to the board. After the lottery, the board will assign the lottery numbers drawn on behalf of TDHCA to TDHCA's eligible applications based upon the rank provided by TDHCA, with the lowest lottery number being assigned to the highest-ranking application. TDHCA applications submitted post-lottery are ineligible for lottery numbers and may not receive a reservation ahead of any other project with a lottery number.

§190.3.Filing Requirements for Applications for Reservation.

(a) (No change.)

(b) Application Filing. The issuer shall submit one original and one copy of the application for reservation. Each application must be accompanied by the following:

(1) - (11) (No change.)

(12) a qualified mortgage bond issuer that submits an application for reservation as described in §1372.032, Government Code, shall provide a statement certifying to the most recent closing of qualified mortgage bonds determined as provided in §190.2(c)(3) of this title, and the most recent date of a reservation received for mortgage revenue bonds and state the government unit(s) for which the local population was based for the issuance of bonds or for receipt of a reservation; and for said issuers who have received an allocation of volume cap for the purposes of issuing qualified mortgage bonds within the six years prior to the date of application, a statement on the form prescribed by the Board as to the utilization percentage relating to its most recent allocation calculated in accordance with §1372.0261 . If during the previous year, a qualified mortgage bond issuer submitted an application for reservation that has not been granted at the time of application for the lottery, the issuer may opt to file a statement explaining whether there are any changes in information from the application filed the previous year in lieu of submitting a complete application. If there are changes, the statement must specify current information. The issuer must pay the same application fee whether filing a statement or a complete application ;

(13) For a qualified residential rental project issue, an issuer shall provide a copy of an executed earnest money contract between the borrower and the seller of the project. This earnest money contract must be in effect at the time of submission of the application to the board and expire no earlier than December 1 of the year preceding the applicable program year. The earnest money contract must stipulate and provide for the borrower's option to extend the contract expiration date through March 1 of the program year, subject only to the seller's receipt of additional earnest money or extension fees, so that the borrower will have site control at the time a reservation is granted. If the borrower owns the property, evidence of ownership must be provided. For subsequent reservations granted after March 1 and throughout the remainder of the program year, the borrower must provide within the close of three business days following the notification of pending reservation:

(A) if applicable, proof of application for Low Income Housing Tax Credits with TDHCA, and

(B) a copy of an earnest money contract that is in full force and effect [ For those reservations granted on or after August 15 or, if not falling on a business day the next business day thereafter, the borrower will have until the close of the fifth business day after receipt of the reservation to provide the earnest money contract ] or the reservation will automatically expire ; [ . ]

(14) The borrower must be specified in the application for reservation of allocation. The borrower may be identified as a to-be-formed entity only if the application for reservation of allocation specifies a related entity or an entity that will be a component of the to-be-formed entity as borrower ; [ . ]

(15) For qualified residential rental project issues where the borrower is an entity or to-be-formed entity that is designated or intends to seek abatement from ad valorem taxation, that intent to seek abatement must be specified on the application for reservation of allocation ; [ . ]

(16) Each issuer of qualified student loan bonds authorized by §53.47, Education Code, shall submit with the application for reservation:

(A) a statement, certified with a notarized signature by an officer of the applicant, that includes the information required by §1372.033(c). The most recent June 30th preceding the application date shall be the "fiscal year ending date" for the purpose of determining the principal amount of Texas eligible loans the applicant purchased in the two most recently completed fiscal years; and

(B) for the issuers two most recent preceding fiscal year ends:

(i) financial statements;

(ii) portfolio amounts;

(iii) default rates; and;

(iv) a detail of how student loans are being used or spent.

(c) Bond authorization requirements. Not later than 35 calendar days after an issue's reservation date, the board or Comptroller of Public Accounts, as applicable, must be in receipt of the following from the issuer:

(1) - (2) (No change.)

(3) a certificate signed by the issuer or authorized representative of the issuer that certifies the principal amount of the bonds to be issued or the portion of the state ceiling that will be converted to mortgage credit certificates;

(4) - (6) (No change.)

(7) if the borrower was originally identified as a to-be-formed entity, the final formation of the borrower must be identified as part of the submission and must meet the specifications set forth in the application for reservation of allocation. No changes will be permitted in the general partner of the borrower after the 35th day after the date of reservation ; [ . ]

(8) if an issuer fails to meet the 35-day deadline, the issuer may request a waiver from the board. The board will consider taking action to waive the missed deadline only if:

(A) the board is notified via facsimile transmission or email of the missed deadline and intent to seek waiver not later than 36 calendar days after an issue's reservation date, and;

(B) the Bond Authorization Requirements filing, accompanied by a statement and evidence regarding extenuating circumstances that prevented a timely filing, is made not later than 38 calendar days after an issue's reservation date. Extenuating circumstances that would be grounds for waiver include acts of God, unforeseen acts of war, or medical emergency;

(9) an issuer described by §1372.022(a)(2) is not required to submit items described under paragraphs (1) and (2) of this section.

(d) Closing fee. The remaining two-thirds of the fee must be paid by all issuers other than those described by §1372.022(a)(2) simultaneously with closing on the bonds. The board shall be in receipt of the fee from the issuer as confirmed by the Comptroller of Public Accounts not later than the fifth business day after the day on which the bonds are closed.

(e) - (f) (No change.)

(g) Application restrictions.

(1) - (3) (No change.)

(4) Except as provided by §1372.037(b) for [ For ] any one project, no issuer, prior to September 1 of the program year, may exceed the following maximum application limits:

(A) - (D) (No change.)

(E) the amount as prescribed in §§1372.033(d),(e) and (f) [ $35 million ] for issuers described by §1372.022 (a)(5) and §1372.033 ; [ Notwithstanding the cap limit described in §1372.037(5), each issuer that has requested and has been offered a reservation in the maximum amount shall be granted in equal amounts any remaining state ceiling set aside for qualified student loan issuers. This will be based on the acceptance by an issuer of a reservation and that an issuer does not refuse any additional reservation. The disbursement of equal shares will be granted in conjunction, subject to availability and acceptance, with the original request. ]

(F) (No change.)

(5) - (8) (No change.)

§190.5.Consideration of Qualified Applications by the Board.

(a) - (e) (No change.)

(f) [ If at any time none of the state's ceiling remains available for certificates of reservation in a specific category, but additional amounts become available in such specific category before June 1 of the program year because of cancellations or any other reason, those amounts shall be aggregated and reservations shall be granted from that category on June 1 of the program year to qualified applications in an order determined by priority and by lot number with respect to those applications having such numbers, and otherwise by date and time of receipt by the board. If any portion of state ceiling is or becomes available after June 1 of the program year and before August 15 of the program year in any specific category those amounts shall be aggregated and partial reservations shall be granted from that category on August 15 of the program year to qualified applications in an order determined by lot number with respect to those applications having such numbers, and otherwise by date and time of receipt by the board. ] The board may grant a reservation at any time on or after January 2 and before December 2 if the amount of state ceiling available in any category exceeds the amount of state ceiling applied for in that category by the next applicant. Partial reservations may be granted only in accordance with §1372.036.

(g) (No change.)

(h) If any change in a qualified application or in any of the items accompanying the application should occur prior to the date state ceiling becomes available to an issuer, the issuer or authorized representative shall promptly notify the board of any such change. Upon state ceiling becoming available, an issuer or authorized representative, within three days upon receipt of notice from the board that a portion of the state ceiling will be available to the issuer, must confirm and certify that the information contained in the qualified application and all items accompanying the application are and remain accurate and in full force and effect, except as may be specifically set forth in any amendment to the qualified application (which does not result in the application failing to constitute a qualified application), which amendment will constitute such certification. Prior to receiving a reservation, only an issuer , or authorized representative of the issuer, may amend the application to change the amount of the state ceiling requested, but the board may not accept an amendment to increase the amount of the state ceiling requested unless at the time of the amendment seeking an increase in the amount of state ceiling there are no other qualified applications pending, subsequent in order to said application, for which state ceiling is not available. A reservation date will not be given by the board until the receipt of such certification.

(i) (No change.)

§190.6.Expiration Provisions.

(a) A certificate of reservation for an application within the category described by §1372.022 (a) [ (b) ](1) and (2) shall expire at the close of business on the 180th calendar day after the date on which the reservation is given. A certificate of reservation for an application within the categories described by §1372.022 (a)(4) [ (b)(2)-(6) ] shall expire at the close of business on the 150th calendar day after the date on which the reservation is given. A certificate of reservation for an application within the category described by §1372.022(a)(3)(5) and (6) shall expire at the close of business on the 120th calendar day after the date on which the reservation is given.

(b) (No change.)

(c) If an issuer described by §1372.022(a)(4) fails to close on the bonds on or before the 150th calendar day after which the reservation was granted and fails to withdraw the application on or before the 120th calendar day after which the reservation was granted, the issuer must pay the full closing fee provided by §1372.006(b) not later than the 155th calendar day after which the reservation was granted. The issuer will not receive a subsequent reservation of allocation or be permitted to file an application for reservation until the fee has been paid to the board.

§190.7.Cancellation, Withdrawal and Penalty Provisions.

(a) (No change.)

(b) If the closing documents are not received within five business days after the closing as described in §190.3(e) of this title, the issuer's reservation is cancelled and during the 150-day period beginning on the reservation date of the cancelled reservation for applications within the categories described by §1372.022(a)(3)(5) and (6), the 180-day period for an application within the category described by §1372.022(a)(4) [ §1372.022, (2) ] and the 210-day period for an application within the category described by §1372.022 (a)(1) and (2) [ (1) ];

(1) - (2) (No change.)

(c) Notwithstanding §190.6(c) of this title, if [ If ] an issuer withdraws an application for reservation prior to the expiration date, there is no penalty for such withdrawal.

(d) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on July 10, 2003.

TRD-200304176

James T. Buie

Executive Director

Texas Bond Review Board

Earliest possible date of adoption: August 24, 2003

For further information, please call: (512) 463-9890