10 TAC §§179.1 - 179.6
The Office of the Governor, Economic Development and Tourism
Division, proposes new Chapter 179, §§179.1 - 179.6, Texas Small
Business Industrial Development Corporation, relating to use of bond proceeds
from the Texas Public Facilities Capital Access Program, Series 1986, for
the Texas Industry Development Program as authorized by the Development Corporation
Act of 1979 (the Act), Texas Civil Statutes, Article 5190.6. The program is
administered by the Texas Economic Development Bank (the bank) created within
the Office of the Governor, Economic Development and Tourism Division, pursuant
to Texas Government Code, Chapter 489, Subchapters A and B.
The proposed new rules are necessary to implement a program that will finance
economic development projects in the state. Use of funds under the program
will be approved by the board of directors of the Texas Small Business Industrial
Development Corporation appointed under Section 4 of the Act in accordance
with the Act, the bond covenants, and these rules.
Proposed §179.1 limits the scope of the rules.
Proposed §179.2 defines terms used in the rules.
Proposed §179.3 sets out guidelines for the use of bond proceeds and
for the filing of bond procedures.
Proposed §179.4 sets out guidelines for project eligibility, costs
and objectives.
Proposed §179.5 sets out loan requirements.
Proposed §179.6 sets out reporting and monitoring requirements.
Mike Chrobak, Chief Financial Officer for the bank, has determined for
each year of the first five years that the rules are in effect there will
be no fiscal implications to the state or to local governments as a result
of the rules. No cost to either government or the public will result from
the rules. There will be no cost to small businesses or micro-businesses.
Mr. Chrobak has also determined that for each year of the first five years
the rules are in effect the public benefit anticipated as a result of the
rules is the economic benefit to the state that results from the implementation
of the program and resulting public and private economic development projects.
No economic costs are anticipated to persons who are required to comply with
the proposed amendments, other than fees charged to program users.
Written comments on the proposed rules may be hand delivered to the Office
of the Governor, General Counsel Division, 1100 San Jacinto, Austin, Texas
78701, mailed to P.O. Box 12428, Austin, Texas 78711-2428, faxed to (512)
463-1932, or emailed to rabbott@governor.state.tx.us. Comments should be addressed
to the attention of Robin Abbott, Assistant General Counsel. Comments must
be received within 30 days of publication of the proposed rules.
The new rules are proposed pursuant to Texas Government Code, §489.002,
which authorizes the division to adopt rules for implementation of the program,
and Texas Government Code, Chapter 2001, Subchapter B, which prescribes the
standards for rulemaking by state agencies.
Texas Government Code, Chapter 489, and Texas Civil Statutes, Article 5190.6
are affected by this proposal.
§179.1.Scope.
The rules in this chapter apply only to the Texas Small Business Industrial
Development Corporation.
§179.2.Definitions.
(a)
The following words and terms, when used in this chapter,
shall have the following meanings, unless the context clearly indicates otherwise.
(1)
Act--The Development Corporation Act of 1979, as amended,
Texas Civil Statutes, Article 5190.6.
(2)
Applicant--Any user authorized in the program guidelines;
may include any user who proposes to acquire, or construct, or invest in the
construction of a project on terms and conditions prescribed by the corporation.
(3)
Bank--means the Texas Economic Development Bank established
under Government Code, Chapter 489.
(4)
Board of Directors--The Texas Small Business Development
Corporation Board of Directors as defined by the Development Corporation Act
of 1979, Texas Civil Statutes, Article 5190.6, §4(d).
(5)
Bond program--Any bond program adopted and implemented
by the corporation for the issuance of its single or composite issue bonds.
(6)
Chief Financial Officer (CFO)--The Chief Financial Officer
of the Texas Economic Development Bank.
(7)
Code--The Internal Revenue Code of 1954, as amended, and
includes the applicable treasury regulations promulgated thereunder.
(8)
Corporation--The Texas Small Business Industrial Development
Corporation.
(9)
Division--The Economic Development and Tourism Division
in the Office of the Governor, or any successor to its duties.
(10)
Primary job--A job that is:
(A)
available at a company for which a majority of the products
or services of that company are ultimately exported to regional, statewide,
national, or international markets, infusing new dollars into the Texas economy;
and
(B)
included in one of the sectors of the North American Industry
Classification System (NAICS) listed in the Act.
(11)
Program guidelines--The guidelines defining the scope
and limitations of a bond program as approved by the Bank and adopted by the
board of directors.
(12)
Project--"Project" includes any use of amounts financed
through the purchase by the Texas Small Business Industrial Development Corporation
of bonds, notes, or other evidences of indebtedness of users under this subsection
if the uses are found by the board of directors of the Texas Small Business
Industrial Development Corporation to be required or suitable for the promotion
of economic development in the state. Those findings may be based solely on
a review by the board of directors of the Texas Small Business Industrial
Development Corporation of the criteria used to determine eligibility of a
user for obtaining a direct loan, grant, loan participation, insurance, or
any other guarantee from the United States of America, the state, or any agency
or instrumentality of either. Proceeds of bonds issued before September 1,
1987, may be used to pay all or part of the costs of a project regardless
of whether the costs or project were within the definition of those terms
under the Texas Department of Commerce Act before that date, or for any other
purposes authorized by this Act.
(13)
State--The State of Texas.
(14)
Texas Industry Development (TID)--The name of the Texas
Small Business Industrial Development Corporation program used for marketing
purposes.
(15)
Unit--The state.
(16)
User--Any individual, partnership, corporation, or any
other private entity, whether organized for profit, or a city, county, district,
or any other political subdivision, public entity, quasi-governmental entity,
or agency of the state or federal government.
(b)
Each word, term, or phrase not otherwise defined in this
section shall have the same meaning as it has in the Act.
(c)
Amendment and suspension of the rules. These sections may
be amended by the board of directors and the Executive Director at any time
in accordance with the Administrative Procedure Act, Texas Government Code,
Subchapter B, as amended. The Executive Director may suspend or waive a section,
not statutorily imposed, in whole or in part, upon the showing of good cause
or when, at the discretion of the Executive Director, the particular facts
or circumstances render such waiver of the section appropriate in a given
instance.
(d)
Application of sections. All sections shall be applied
collectively, to the extent relevant, in connection with specific determinations
made by the bank in the course of its administrative functions. The bank will
make its determination on the basis of specific characteristics and circumstances
of the individual application, and in light of the basic statutory purposes
in the particular area.
(e)
Examination of records. Any party requesting the examination
of records pursuant to the Texas Public Information Act, Texas Government
Code, Chapter 552, shall indicate in writing the specific nature of the documents
to be viewed, and if photocopying is desired, the prevailing standard fee
of the office will be charged to cover the cost of the request.
(f)
Written communication with the Division. Application and
other written communications regarding the program should be addressed to
the attention of the Office of the Governor, Economic Development and Tourism,
Texas Economic Development Bank, Attn: Texas Industry Development Program,
Post Office Box 12428, Austin, Texas 78711-2428.
(g)
The corporation shall approve all fees and other charges
to be paid out of the bond proceeds in a particular bond program.
§179.3.Bonds.
(a)
Use of bond proceeds. The corporation may use the proceeds
of bonds:
(1)
to fund reasonably required reserve accounts;
(2)
to pay all costs incurred in issuing the bonds; and
(3)
to either:
(A)
fund a loan made by the corporation to an applicant to
finance costs of a project as permitted under the Act and the Code; or
(B)
refund or redeem all or part of any outstanding bonds of
the corporation.
(b)
In no event shall the corporation, the board, the governing
body, or the unit have any obligation, financial or otherwise, to any person
for failure of the corporation to issue, sell, or deliver its bonds.
(c)
Bond procedures. The corporation shall file its bond procedures
and any supplements or amendments thereto with the division as required by
the Act. Initial bond procedures and any supplements or amendments thereto
must be approved by the board of directors prior to filing with the division.
§179.4.Projects.
(a)
Project eligibility. To be eligible for financing under
any bond program, a project must meet certain minimum requirements. In general,
a project must:
(1)
be located within the state;
(2)
consist of land, buildings, equipment, facilities, and
improvements (whether one or more), and otherwise meet the definition of a
project set forth in §2(11)(A) of the Act;
(3)
be eligible for tax-exempt financing under the Code, §103(b);
(4)
meet the applicable requirements of any third-party lender
as to project size, location, and any other eligibility requirements of such
third party; and
(5)
have project costs of at least five million.
(b)
Project costs. To the extent not otherwise limited or prohibited
by the program guidelines, an applicant may use bond proceeds to finance only
those project costs which are eligible for financing under applicable provisions
of the Code and the Act.
(c)
Statement of objective. To qualify, a project must be found
to be required or suitable for the promotion of economic development as deemed
by the Corporation's board of directors in the performance of its public purposes,
functions and duties.
(d)
A project will not be eligible for funding under the program
for moving existing jobs from one municipality or county in Texas to another
municipality or county within the state.
§179.5.Loans.
(a)
Term of loan. The following requirements regarding the
maximum term of a loan apply to any loan made by the corporation.
(1)
Real property. The maximum term of a loan to finance real
property shall not exceed 20 years, and in no event shall such loan have a
term beyond December 31, 2025.
(2)
Tangible personal property. The maximum terms of a loan
to finance tangible personal property shall not exceed 15 years, and in no
event shall such loan have a term beyond December 31, 2025.
(3)
Combined loans. The maximum term of a loan to finance both
real property and tangible personal property shall have a maturity satisfactory
to the corporation, but in no event shall the term exceed the maximum term
applicable to a real property loan.
(b)
Interest rate. The effective interest rate on any loan
made by the corporation is variable for the term of the loan, as determined
by the corporation, and includes a pro rata and proportionate share of all
fees associated under the program.
(c)
Amortization. Each loan shall be repaid over the term of
the loan in a manner acceptable to the corporation and any third party, insurer,
or guarantor of the loan.
(d)
Equity participation. Unless otherwise approved by the
board of directors of the corporation, no loan may be made by the corporation
to an applicant if the applicant's required equity participation in the project
is paid or to be paid with the proceeds of a third-party loan to be secured
by a lien on the project.
(e)
Rating Requirement. The bond, note or other obligation
issued in respect to a loan must be rated at least "A" or its equivalent by
a nationally recognized municipal bond rating service. A credit enhancement
issued in support of such bonds, notes or other obligation, the result of
which is that such bonds, notes or other obligations are rated at least "A"
or its equivalent, shall satisfy the requirements of this subsection.
(f)
Applications will require a $500.00 application fee and
may require a $25,000.00 closing fee, payable to the Office of the Governor.
(g)
Application for TID Project Loan--The application must:
(1)
Be filed in the format provided and must contain all information
and documentation required under the Act and this chapter, as applicable;
(2)
Include all applicable attachments as specified in the
application or as otherwise directed by the division;
(3)
Contain the name, street address, mailing address, telephone
number, fax number and electronic mail address for the authorized representative,
if the applicant is a public entity, or for the authorized officer, if the
applicant is a business;
(4)
Include a signed statement certifying that the contents
are true and correct to the best knowledge and belief of the public entity's
authorized representative or the business's authorized officer;
(5)
Include information regarding the public entity, including,
but not limited to population, bond rating, bond history, any state or federal
designations incorporating incentives, any local incentives, or participation
in the project;
(6)
Provide documentation that the applicant has authority
to apply and participate in the program, such as:
(A)
a certified copy of the public hearing notice, if applicable
and required to satisfy the provisions of the Code; or
(B)
a certified copy of the ordinance, order or resolution,
as appropriate, with original signatures;
(7)
Include a description of the project, not limited to:
(A)
a tabular summary of the current number of jobs;
(B)
the classification, titles and salary ranges of full-time,
part-time and seasonal jobs to be created, retained and maintained at the
qualified business site;
(C)
projected capital investment;
(D)
a summary of short and long term plans for expansion; and
(E)
application of funds from the project request.
§179.6.Monitoring and Reporting Requirements
(a)
Users will be required to meet reporting and compliance
requirements as requested by the Bank, which may include but are not limited
to:
(1)
Annual submission of certified fiscal year end financial
statements;
(2)
Notification within 10 days of official legal action, which
may include:
(A)
a user name change;
(B)
a sale or assumption of the project financed by the program.
(C)
Notification of legal action must include a copy of the
certificate of amendment to the articles of incorporation, and/or the d.b.a.
statement under which the user operates, or other appropriate documentation
filed with the Texas Secretary of State; and
(3)
Immediate notification of any material adverse change to
the user or the project.
(b)
Projects may be subject to on-site monitoring visits, by
the bank or representatives of the board of directors, with reasonable notice
to the user.
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 8, 2005.
TRD-200502789
Tracye McDaniel
Executive Director
Office of the Governor, Economic Development and Tourism Division
Earliest possible date of adoption: August 21, 2005
For further information, please call: (512) 936-0181