Part 1. TEXAS DEPARTMENT OF TRANSPORTATION
Subchapter G. PRIVATE ACTIVITY BONDS
The Texas Department of Transportation (department) adopts Title 43, Chapter 5, new Subchapter G, §§5.81 - 5.88, concerning private activity bonds. Sections 5.81, 5.87, and 5.88 are adopted with changes to the proposed text as published in the February 9, 2007, issue of the Texas Register (32 TexReg 514). Sections 5.82 - 5.86 are adopted without changes to the proposed text as published in the February 9, 2007, issue of the Texas Register (32 TexReg 514) and will not be republished.
EXPLANATION OF ADOPTED 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, pursuant to Transportation Code, §222.035, the program established in the new subchapter provides a method for processing applications submitted by eligible entities other than the department. The department has established a separate method for processing department applications, which will be given priority due to department projects being priority projects with statewide significance. 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. Transportation Code, §222.035(e) requires the establishment of a program to "receive and evaluate" applications. The department cannot "receive and evaluate" its own applications. Legislative history related to Transportation Code, §222.035 indicates that, as there is a limited amount of allocation authority, the Legislature intended to create a mechanism for review of local projects to ensure that only the most worthwhile applications are considered by the US DOT.
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. The notifications will include copies of the applications. The notification of a department application will be provided concurrently with the submission of the application to the US DOT. 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, including the results of the Texas Bond Review Board's evaluation.
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.
COMMENTS
Comments on the proposed new sections were received from the Texas Bond Review Board (Board).
Comment:
The Board commented that §5.81(b) states that department applications will be exempt from Board review. The Board stated that while not directly addressed in the proposed rules, it appears that the department's program considers department applications to have first priority and considers those applications to be exempt from the process set forth in the rules. The Board stated that Transportation Code, §222.035 contemplates a program that governs all applications. The proposed rules do not provide for the processing of all applications under the program or for the priority system that appears to exist. The Board finally indicated that the proposed rules do not provide legal justification for exempting the department's applications from the Board's evaluation as required under Transportation Code, §222.035(e).
Response:
Section 5.81 has been revised to provide that, pursuant to Transportation Code, §222.035, the program established in the new subchapter provides a method for processing applications submitted by eligible entities other than the department. The department has established a separate method for processing department applications, which will be given priority due to department projects being priority projects with statewide significance. 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. Transportation Code, §222.035(e) requires the establishment of a program to "receive and evaluate" applications. The department cannot "receive and evaluate" its own applications. Legislative history related to Transportation Code, §222.035 indicates that, as there is a limited amount of allocation authority, the Legislature intended to create a mechanism for review of local projects to ensure only the most worthwhile applications are considered by US DOT. Section 5.87(a)(1) has been revised to provide that the notification to the Board of a department application will include a copy of the application and will be provided concurrently with the submission of an application to the US DOT.
Comment:
The Board stated that §5.87(b) as drafted indicates a coordinated review of applications, and the rules should provide that the Board receives and evaluates the entire application, not a portion thereof. The Board stated that the current Board statute and Transportation Code, §222.035 do not allow the Board to delegate the evaluation to staff. The rules should provide that a letter would be provided to the department indicating the results of the Board's evaluation and stating any Board comments. The Board also stated that the proposed rules do not specify the time period the Board will have for its evaluation.
Response:
Section 5.87(b) has been revised to provide that the department and the Board will each review the entire application, and that after Board action on an application, the department shall be provided with a letter from the Board or Board staff indicating the results of the Board's evaluation of the application, including any comments on the application. The letter shall be submitted to the department no later than 60 days after the executive director of the Board receives a copy of the application.
Comment:
The Board stated that §5.87(c) directs department staff to provide a summary recommendation to the commission, and that the summary should include the Board's evaluation, including any comments.
Response:
Section 5.87(c) has been revised to provide that the summary memorandum shall include a copy of the letter indicating the results of the Board's evaluation.
Comment:
The Board stated that it should receive a copy of any documentation regarding the commission's and the US DOT's disposition of any application under the new statute.
Response:
Section 5.87(a)(1) has been revised to provide that the notification to the Board of a department application will include a copy of the application and will be provided concurrently with the submission of an application to the US DOT. Section 5.88(c) has been revised to provide that the executive director of the department will notify the executive director of the Board, in writing, upon completion of the review and analysis of an application and whether an application has been approved or disapproved by the commission. The department shall also provide the executive director of the Board with a copy of the US DOT disposition of an application.
STATUTORY AUTHORITY
The new sections are adopted 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) Pursuant to Transportation Code, §222.035, the program established in this subchapter provides a method for processing applications submitted by eligible entities other than the department. The department has established a separate method for processing department applications, which will be given priority due to department projects being priority projects with statewide significance. 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 the US DOT pursuant to procedures established by the department in accordance with applicable law. The department shall provide the Texas Bond Review Board with a copy 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.
§5.87.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. The notification will be provided concurrently with the submission of an application to the US DOT.
(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 Board. The department and the Board will each review the entire application. After Board action on an application, the department shall be provided with a letter indicating the results of the Board's evaluation of the application. The letter with any Board comments shall be submitted to the department no later than 60 days after the executive director of the Board receives a copy of an application. 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 the Board. The summary memorandum shall include a copy of the letter indicating the results of the Board's evaluation.
§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 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, the Board, and the US DOT. The executive director will notify the applicant and the executive director of the Board, 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. The department shall provide the executive director of the Board with a copy of the US DOT disposition of any application forwarded to the US DOT under this section.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on May 25, 2007.
TRD-200702036
Bob Jackson
General Counsel
Texas Department of Transportation
Effective date: June 14, 2007
Proposal publication date: February 9, 2007
For further information, please call: (512) 463-8683
Subchapter A. MOTOR VEHICLE CERTIFICATES OF TITLE
The Texas Department of Transportation (department) adopts amendments to §17.3 concerning motor vehicle certificates of title. The amendments to §17.3 are adopted without changes to the proposed text as published in the March 16, 2007, issue of the Texas Register (32 TexReg 1489) and will not be republished.
EXPLANATION OF ADOPTED AMENDMENTS
Transportation Code, §520.023, provides that when a vehicle is sold, the seller may submit a vehicle transfer notification form notifying the department of the sale. Upon receipt, the department updates the motor vehicle record to advise users of the record that the vehicle has been sold and the date of sale. Once the record is marked, state law creates a rebuttable presumption that the transferee is the current owner of the vehicle, and is subject to civil and criminal liability arising out of use, operation, or abandonment of the vehicle.
Until a new vehicle title changing ownership is applied for through a county tax office, the department's motor vehicle records remain in the name of the last recorded owner. If the vehicle is sold to a licensed motor vehicle dealer, the dealer is not required to title the vehicle until it is sold to a retail purchaser. In addition, the vehicle may be sold to other dealers through reassignment of the title. In some cases, the vehicle may be operated under the prior owner's name for months or even years. Each of these scenarios creates a problem when the vehicle notification transfer has not been completed because it is the prior owner who is notified when parking tickets or toll violations are issued against the vehicle, if the vehicle is abandoned, or is used in criminal activity, rather than the current owner of the vehicle.
An increasing number of sellers are receiving notification of violations for vehicles they have sold resulting in an increased volume of inquiries and complaints to the department. In part because of the $5 notification fee charged by the department, many sellers of vehicles do not notify the department of the vehicle transfer and therefore are not afforded the protection provided under the law.
Subsection §17.3(f), Department notification of second hand vehicle transfers, is amended to eliminate payment of the $5 fee for submission of a vehicle transfer notification. When the $5 fee was adopted in 1996, the costs associated with implementation of the legislation and processing the notifications was significantly higher than it is today. In 1996, the implementation costs included development, printing, and distribution costs for a new transfer notification form, revisions to the certificate of title record to include a transfer notice, and revision of department publications. Other costs included manual processing, personnel costs and postage for incomplete forms, filing, photocopy, and storage costs, and processing and collection of fees.
Since 1996, the cost to process transfer notifications has significantly decreased. The department contracts with a private vendor for data extraction and validation of transfer forms, data entry, some rejection functions for incomplete or incorrect forms submitted, and scanning or imaging the transfer notifications. The electronic capture of the form eliminates the need to maintain and file hard copies of the forms, storage space, and the time involved to retrieve copies on request.
Elimination of the fee may encourage more sellers to notify the department, and a motor vehicle dealer to provide or submit notifications to the department for their customers, thus improving the integrity of the motor vehicle ownership records. Elimination of the fee will also reduce staff processing times for collection of the fee or rejection of the form when the fee is not submitted.
COMMENTS
No comments on the proposed amendments were received.
STATUTORY AUTHORITY
The amendments are adopted under Transportation Code, §201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the department, and more specifically, Transportation Code, §501.131, which governs the titling of motor vehicles, and Transportation Code, §520.023 which allows the department to adopt a fee for filing a notice of transfer.
CROSS REFERENCE TO STATUTE
Transportation Code, Chapter 501, and Transportation Code, Chapter 520.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on May 25, 2007.
TRD-200702037
Bob Jackson
General Counsel
Texas Department of Transportation
Effective date: June 14, 2007
Proposal publication date: March 16, 2007
For further information, please call: (512) 463-8683