31 TAC §363.33
The Texas Water Development Board (board) proposes amendments
to 31 TAC §363.33, concerning the Interest Rates for Loans and Purchase
of Board's Interest in State Participation Projects. These amendments are
proposed to allow the board to set a unique interest rate for a loan out of
the Texas Water Development Funds and to restructure the paragraph relating
to setting the rate for such loans for clarification.
Section 363.33(a)(2) of the board rules sets the lending rate for a loan
from the Texas Water Development Funds. The proposed amendments to §363.33(a)(2)
include proposed new subparagraph (D) to allow the board to set a lending
rate for a loan out of the Texas Water Development Funds that is different
than the rate set by the lending rate procedure in order to facilitate the
restructuring of an existing board loan that is in imminent risk of default
as determined by the board. In such a situation, the board would refinance
the existing debt of a political subdivision with a new loan from the Texas
Water Development Funds with an interest rate that maximizes the ability of
the political subdivision to make payments. For example, the new loan may
utilize a 0% or 1% interest rate, a rate that could not be achieved through
the current lending rate procedure. The proposed addition is not intended
to provide a new source of low interest financing for water and wastewater
projects. Rather, the proposed addition is intended to provide the board with
a vehicle to assist to political subdivisions to prevent defaults of loans
with the board.
The amendments are also proposed to §363.33(a)(2) to modify the lettering
of the subparagraphs in §363.33(a)(2) to provide clarification of the
procedures under this section.
James LeBas, Chief Financial Officer, has determined that for the first
five-year period the amendments are in effect that state government will benefit
from an indeterminate gain from avoidance of loan defaults and local government
will benefit from an undetermined amount from avoidance of costs associated
with defaults as a result of enforcement and administration of the amended
section.
Mr. LeBas has also determined that for the first five years the amendments,
as proposed, are in effect the public benefit anticipated as a result of enforcing
the amended section will be to provide flexibility to the board to address
loans from political subdivisions which are in an imminent risk of default
and to prevent the default of such board loans. Mr. LeBas has determined there
will not be economic costs to small businesses or individuals required to
comply with the amendments as proposed.
Comments on the proposal will be accepted for 30 days following publication
and may be submitted to Srin Surapanani, Attorney, General Counsel Office,
Texas Water Development Board, P.O. Box 13231, Austin, Texas 78711-3231, by
e-mail to srin.surapanani@twdb.state.tx.us or by fax at (512) 463-5580.
The amendments are proposed under the authority of the Texas
Water Code, §6.101.
The statutory provisions affected by the proposed amendments are Texas
Water Code, Chapter 17, Subchapter E.
§363.33.Interest Rates for Loans and Purchase of Board's Interest in State Participation Projects.
(a)
Procedure and method for setting fixed interest rates.
(1)
(No change.)
(2)
For loans from the Texas Water Development Fund and Texas
Water Development Fund II or for lending rates for purchases of the board's
interest in state participation projects, the executive administrator will
set the interest rate at
:
(A)
the higher of:
(i)
[
(A)
] the rates established in the
lending rate scale adopted by the board under subsection (b) of this section;
or
(ii)
[
(B)
] either:
(I)
[
(i)
] for tax-exempt issues, the
rates established by the "A" scale of the Delphis Hanover Corporation Range
of Yield Curve Scales (Delphis A scale); or
(II)
[
(ii)
] for taxable issues, the Delphis
A scale adjusted to take into consideration the difference between taxable
and tax-exempt rates in the market, as determined by the executive administrator;
[
or
]
(B)
[
(C)
] for loans with a maturity less
than 15 years, if the interest rates calculated in subparagraph (A) of this
paragraph results in a true interest cost that is less than the minimum true
interest cost of the lending rate scale established under subsection (b) of
this section for those funds, at a rate increased to match the minimum true
interest costs so the board may recover all costs attributed to the bonds
sold by the board
;
[
.
]
(C)
[
(D)
] for loans funded by the board
with proceeds of bonds, the interest
of
[
for
] which
is intended to be tax exempt for purposes of federal tax law, the executive
administrator will limit the interest set pursuant to this subsection at no
higher than the rate permitted under federal tax law to maintain the tax exemption
for the interest on the board's bond
; and
[
.
]
(D)
the board may establish different interest
rates for loans under this paragraph in order to facilitate a restructuring
of an existing board loan that is in imminent risk of default as determined
by the board.
(3)
(No change.)
(b) - (c)
(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 March 15, 2005.
TRD-200501160
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: May 17, 2005
For further information, please call: (512) 475-2052