43 TAC §§5.81 - 5.88
The Texas Department of Transportation (department) proposes
Title 43, Chapter 5, new Subchapter G, §§5.81 - 5.88, concerning
private activity bonds.
EXPLANATION OF PROPOSED SECTIONS
Transportation Code, §222.035, requires the department to establish
and administer a program for private activity bonds issued for highway facilities
or surface freight transfer facilities in this state. The program is required
to include a process by which the department and the Texas Bond Review Board
receive and evaluate applications for issuance of private activity bonds for
highway facilities or surface freight transfer facilities prior to submission
of a request for private activity bond allocation authorization to the United
States Department of Transportation (US DOT).
Section 5.81 describes the purpose of the new subchapter, which is to establish
a process and procedures governing applications for the issuance of private
activity bonds for highway or surface freight transfer facility projects by
any eligible entity authorized to submit an application to the Texas Transportation
Commission (commission). Section 5.81 provides that applications for the issuance
of private activity bonds for highway or surface freight transfer facility
projects of the department are exempt from the requirements of new Subchapter
G, and shall be submitted to US DOT pursuant to procedures established by
the department in accordance with applicable law. Section 5.81 further provides
that for eligible entities authorized to submit an application for the issuance
of private activity bonds to the commission, the process and procedures established
under the proposed rules identify submission requirements and criteria by
which the commission will receive and evaluate such applications.
Section 5.82 defines words and terms used in new Subchapter G.
Section 5.83 establishes general policies regarding the consideration of
applications, limitations on the obligations of federal and state government,
and access to records by governmental entities. Section 5.83 clarifies that
the act of approving an application does not create a financial obligation
on the part of the federal government, the State of Texas, the commission,
or the department. In order to ensure compliance with applicable legal requirements
relating to the use of private activity bonds for an eligible project, §5.83
provides a right of access to any books, documents, papers, or other records
of an applicant approved for an allocation.
In order to assist an eligible entity in the submission of applications, §5.84
provides that the executive director of the department will designate a department
contact for the purpose of providing advice and assistance to potential applicants.
Section 5.85 prescribes application procedures and information required
to be submitted in an application. The submittal requirements include the
information the US DOT has requested to be included in an application for
an allocation submitted to US DOT. Section 5.85 also requires an application
to the department to include a description of the need for the project and
its anticipated benefits, such as reducing congestion and enhancing air quality.
This information is required in order for the commission to approve the most
worthwhile projects for purposes of applying for an allocation, as federal
law caps the available allocation amount.
Section 5.86 authorizes the commission to suspend the application process
if the cap on the available allocation amount is reached or uncertainties
exist warranting suspension, such as uncertainties relating to the implementation
of the program.
Section 5.87 provides that the department will notify the Texas Bond Review
Board of all department applications to the US DOT and when applications are
received from other eligible entities. Section 5.87 also prescribes the process
for the joint review and assessment of applications by the Texas Bond Review
Board and the department, as required by Transportation Code, §222.035.
In order to develop the information and recommendations considered by the
commission in determining whether to approve an application, §5.87 specifies
what provisions in an application will be assessed by the department and the
Texas Bond Review Board, and provides that department staff will provide a
memorandum to the commission on the findings of the application review.
Section 5.88 provides that the commission may consider the advice of department
staff and their consultants that the commission may choose regarding the sufficiency
of the information, the probable accuracy of projections, the anticipated
financial condition of the application and the project, and any other information
the commission determines appropriate. Section 5.88 prescribes other information
and criteria that will be considered by the commission in determining whether
to approve an application. Those criteria are intended to allow the commission
to approve the most worthwhile projects for purposes of applying for an allocation,
as federal law caps the available allocation amount.
FISCAL NOTE
James Bass, Chief Financial Officer, has determined that for each of the
first five years the new sections as proposed are in effect, there will be
no fiscal implications for state or local governments as a result of enforcing
or administering the new sections. There are no anticipated economic costs
for persons required to comply with the sections as proposed.
Mr. Bass has certified that there will be no significant impact on local
economies or overall employment as a result of enforcing or administering
the new sections.
PUBLIC BENEFIT
Mr. Bass has also determined that for each year of the first five years
the sections are in effect, the public benefit anticipated as a result of
enforcing or administering the new sections will be to allow access to tax-exempt
rates for bonds issued for eligible projects, thereby lowering overall project
borrowing costs. There will be no adverse economic effect on small businesses.
SUBMITTAL OF COMMENTS
Written comments on the proposed new sections may be submitted to James
Bass, Chief Financial Officer, Texas Department of Transportation, 125 East
11th Street, Austin, Texas 78701-2483. The deadline for receipt of comments
is 5:00 p.m. on March 12, 2007.
STATUTORY AUTHORITY
The new sections are proposed under Transportation Code, §201.101,
which provides the commission with the authority to establish rules for the
conduct of the work of the department, and more specifically, Transportation
Code, §222.035, which provides the commission with the authority to establish
rules to administer the private activity bond program established under that
section.
CROSS REFERENCE TO STATUTE
Transportation Code, §222.035.
§5.81.Purpose.
(a)
Transportation Code, §222.035, requires the Texas
Department of Transportation to establish and administer a program for private
activity bonds issued for highway facilities or surface freight transfer facilities
in this state that includes a process by which the department and the Texas
Bond Review Board receive and evaluate applications for issuance of private
activity bonds for highway facilities or surface freight transfer facilities
prior to submission of a request for private activity bond allocation authorization
to the US Department of Transportation (US DOT). This subchapter establishes
a process and procedures governing applications for the issuance of private
activity bonds for highway or surface freight transfer facility projects by
any eligible entity authorized to submit an application to the Texas Transportation
Commission.
(b)
The department is an entity eligible to submit applications
to US DOT for qualified projects. Applications for the issuance of private
activity bonds for highway or surface freight transfer facility projects of
the department are exempt from the requirements of this subchapter, and shall
be submitted to US DOT pursuant to procedures established by the department
in accordance with applicable law. The department shall notify the Texas Bond
Review Board of an application submitted by the department pursuant to §5.87(a)(1)
of this subchapter (relating to Department Action).
(c)
For other eligible entities authorized to submit an application
for the issuance of private activity bonds to the commission, the process
and procedures established in this subchapter identify submission requirements
and criteria by which the commission will receive and evaluate such applications.
§5.82.Definitions.
The following words and terms, when used in this subchapter shall have
the following meanings, unless the context clearly indicates otherwise.
(1)
Board--The Texas Bond Review Board.
(2)
Commission--The Texas Transportation Commission.
(3)
Department--The Texas Department of Transportation.
(4)
Eligible entity--An entity authorized by law to finance
an eligible project by the issuance of bonds.
(5)
Eligible project--A qualified highway or surface freight
transfer facility.
(6)
Executive director--The executive director of the department
or designee not below the level of assistant executive director.
(7)
Qualified highway or surface freight transfer facility--Has
the meaning assigned by Section 142(m)(1) of the Internal Revenue Code (26
U.S.C. §142(m)(1)).
§5.83.General Policies.
(a)
Consideration of all applications for private activity
bond issuance will be in accordance with applicable federal and state law,
and applicable rules and regulations.
(b)
The federal government shall not be obligated by any act
of the commission or department under this subchapter.
(c)
Favorable consideration of any application for private
activity bond issuance does not pledge the credit of the state, commission,
or department.
(d)
The Federal Highway Administration, the Comptroller General
of the United States, the Texas State Auditor's Office, and the department,
or any of their authorized representatives, shall have the right of access
to any books, documents, papers, or other records of an applicant approved
for an allocation that are pertinent to the application, in order to make
audits, examinations, excerpts, and transcripts.
§5.84.Department Contact.
The executive director will designate a contact within the department
for the purpose of providing information and assistance to potential applicants.
Assistance may include non-binding advice, counsel, and consultation regarding
all aspects of a possible application. Any advice, assistance, or aid provided
will not constitute a commitment or liability on the part of the department
or commission. Potential applicants are encouraged to communicate with the
contact at the earliest possible date.
§5.85.Application Procedure.
An eligible entity shall submit an application to the executive director
in a form prescribed by the department. An original application and five copies
are to be delivered to the executive director. The application must, at a
minimum, include the following information:
(1)
an overview of the project, which shall include a description
of the project (location and scope), the total cost of the project, and the
amount and proposed use of the requested private activity bond allocation;
(2)
a copy of the resolution authorizing the issuance of bonds
adopted by the eligible entity;
(3)
financing and development team information, including the
proposed issuer of the bonds, the borrower, and any other key participants
(with prior experience in projects similar to the project proposed listed);
(4)
project development schedule, including timelines for major
financial milestones (particularly the date for issuance of the private activity
bonds) and major construction milestones (permits, environmental, right of
way, etc.);
(5)
estimated project cost information, including a summary
of capital costs by category, table of all project costs by category, identification
of costs that are eligible for private activity bond funding, and a project
expenditure schedule by category type;
(6)
identification of other (in addition to private activity
bonds) project funding sources and a construction period sources and uses
table;
(7)
assumptions used for private activity bond financing (terms,
rate, structure, reserves, legal provisions, etc.), as well as other funding
sources;
(8)
cash flow operating pro forma, with a narrative description
of and assumptions on traffic and revenue (including supporting documentation)
and operating and maintenance costs;
(9)
the proposed pledge of collateral or security, including
the priority of claim, for repayment of the private activity bonds and other
funding sources;
(10)
identification of any financial assistance, guarantees,
or credit enhancement;
(11)
draft bond counsel opinion letter;
(12)
a description of the need for the project and how the
project will reduce congestion, enhance economic opportunity, enhance safety,
improve air quality, and increase the value of transportation assets;
(13)
identification of any revisions or changes to state highway
system facilities necessitated by the project;
(14)
a description of Title 23 or 49, United States Code funding
received by the project, including the date (or anticipated date) of receipt
and types and amount of financial assistance; and
(15)
any additional information the department deems necessary
to fully consider the application.
§5.86.Suspension of Applications.
If the commission determines that private activity bond allocations
from the US DOT are fully committed or other uncertainties exist that warrant
suspension of acceptance of applications, the department will publish a notice
in the
Texas Register
providing that applications
will no longer be accepted. When conditions change, as determined by the commission,
the department will publish a notice in the
Texas
Register
that applications are again being accepted.
§5.87.Department Action.
(a)
Notification to Texas Bond Review Board.
(1)
The department will notify the executive director of the
Board of all department applications to the US DOT for the issuance of private
activity bonds for highway or surface freight transfer facility projects.
The notification will include a copy of the application.
(2)
The department will notify the executive director of the
Board once an application submitted by an eligible entity under this subchapter
is received. Two copies of the application will be forwarded to the executive
director of the Board.
(b)
Review of applications. The department will coordinate
its review of applications with the review carried out by the staff of the
Board. Applications will be reviewed to assess if:
(1)
the application submitted is from an eligible entity;
(2)
the application submitted is for an eligible project and
is otherwise eligible under federal law; and
(3)
the overall financial plan submitted in the application
is reasonable and supports the project's financing (including the issuance
of the private activity bonds), including an assessment of:
(A)
whether the proposed project funding sources are sufficient
to cover estimated project costs;
(B)
whether projected revenues are sufficient to make required
debt service payments;
(C)
the sufficiency of projected debt service coverage ratios;
and
(D)
the capability of the proposed financing and development
team.
(c)
Report to commission. Department staff will provide a summary
memorandum to the commission on the findings of the application review by
the department and Board staff.
§5.88.Commission Action.
(a)
Commission analysis. The commission may consider the advice
of department staff and their consultants regarding the sufficiency of the
information, the probable accuracy of projections, the anticipated financial
condition of the application and the project, and any other information the
commission determines appropriate.
(b)
Criteria. In determining whether to approve an application,
the commission will consider:
(1)
the reasonableness of the financial plan submitted in the
application;
(2)
the transportation need for and anticipated public benefit
of the project, including the impact of the project on reducing congestion,
enhancing economic opportunity, enhancing safety, improving air quality, and
increasing the value of transportation assets;
(3)
the analysis of the application by the staff of the Board;
and
(4)
the ability of the department to construct any improvements
to the state highway system required by the project.
(c)
Notification to applicant and US DOT. The executive director
will notify the applicant, in writing, upon completion of the review and analysis
and of the determination on whether the application is approved for consideration
by the US DOT or disapproved. For approved applications, the executive director
will notify the US DOT and forward the application for US DOT consideration.
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 January 26, 2007.
TRD-200700217
Joanne Wright
Deputy General Counsel
Texas Department of Transportation
Earliest possible date of adoption: March 11, 2007
For further information, please call: (512) 463-8630