10 TAC §§181.1 - 181.10
The Texas Department of Economic Development (department)
proposes amendments to §§181.1 - 181.10, Texas Leverage Fund Program,
relating to loans made to local industrial development corporations established
pursuant to the Development Corporation Act of 1979, Texas Civil Statutes,
Article 5190.6, §4A and §4B, as amended.
The proposed amendments are necessary to accurately reflect current law
and to allow for the re-adoption of the rules. The amendments eliminate references
to the Texas Department of Commerce and the policy board, which were abolished
by Senate Bill 932 of the 75th Legislature, and replace them with references
to the department and the governing board. Minor grammatical corrections have
also been made.
Proposed amendments to §181.2 delete working from the definition of
full time equivalent job to clarify the definition and eliminate possible
ambiguity or confusion.
Proposed amendments to §181.5 delete text that merely restated language
found in Texas Civil Statutes, Article 5190.6.
Proposed amendments to §181.2, the definition of IDC, and §181.7(H)
change the order of the wording slightly for clarification.
Craig Pinkley, Director of Finance, has determined for each year of the
first five years that the amendments are in effect there will be no fiscal
implications to the state of to local governments as a result of the amendments.
No cost to either government or the public will result from the amendments.
There will be no impact on small businesses or micro-businesses.
Mr. Pinkley has also determined that for each year of the first five years
the amendments are in effect the public benefit anticipated as a result of
the amendments will be the avoidance of any confusion that may be caused by
incorrect references or legal citations. No economic costs are anticipated
to persons who are required to comply with the proposed amendments.
Written comments on the proposed amendments may be hand delivered to Mary
Herrick, Legal Assistant, Texas Department of Economic Development, 1700 North
Congress, Suite 130, Austin, Texas 78701, mailed to P.O. Box 12728, Austin,
Texas 78711-2728, or faxed to (512)9360415, within 30 days of publication.
The amendments are proposed pursuant to Government Code 481.0044(a),
which directs the Governing Board of the department to adopt rules for administration
of department programs, and Government Code, Chapter 2001, Subchapter B which
prescribes the standards for rulemaking by state agencies.
Texas Government Code, Chapter 481, is affected by this proposal.
§181.1.General Rules.
(a)
Introduction. Pursuant to the authority granted by the
Texas Government Code, Chapter 481, as amended and the Administrative Procedure
Act, Texas Government Code, Chapter 2001, Subchapter B, Rulemaking, as amended,
the Texas Department of
Economic Development Department
[
Commerce
] prescribes the following rules regarding practice and procedure
applicable to local industrial development corporations established pursuant
to the Development Corporation Act of 1979, Texas Civil Statutes, Article
5190.6, §4A and §4B, as amended. The rules relate to loans made
to industrial development corporations under
the Department's
[
Commerce's
] Texas Leverage Fund Program.
(b)
Authority.
(1)
Pursuant to the provisions of the Constitution of the State
of Texas, Article III, §52-a, adopted by the voters of the State of Texas
on November 3, 1987, and the Texas Government Code, Chapter 481, as amended,
the
Texas Department of Economic Development,
[
Commerce
]
an agency of the State of Texas, is authorized to provide for the issuance
of revenue bonds or notes for the purpose of providing money to fund economic
development programs.
(2)
The
Department's
[
Commerce
]
Governing
[
policy
] board adopted a Master Resolution as of
September 9, 1992, establishing a $300,000,000 Taxable Commercial Paper Note
Program Series A for the purpose of providing money to establish certain
Department
[
Commerce
] loan programs. By First Supplemental
Resolution dated as of September 9, 1992, the
Governing
[
policy
] board authorized the issuance of $25,000,000 in aggregate principal
amount at any one time outstanding of its Taxable Commercial Paper Notes Series
A to fund economic development programs.
(c)
Delegation of Authority to Executive Director. Pursuant
to the Texas Government Code, §481.075(a) and the Master Resolution,
the
Governing
[
policy
] board has delegated to the executive
director, or his/her designee, the authority to approve each loan made under
the Texas Leverage Fund Program. Further, the
Governing
[
policy
] board delegated to the executive director, or his/her designee,
all necessary authority in regard to collection, settlement and enforcement
of each and every loan approved and funded under this program.
§181.2.Definitions.
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, Texas Civil
Statutes, Article 5190.6, as amended.
(2)
Applicant--An IDC filing an application for a Texas Leverage
Fund program loan.
(3)
Application--The information submitted by an applicant
to
the Department,
[
Commerce
] including supporting documentation
and schedules, required by
the Department
[
Commerce
]
for loan underwriting and loan approval under this program.
(4)
Approval--The executive director's, or his/her designee's,
approval of the terms and conditions for a program loan and loan agreement
between
the Department
[
Commerce
] and the IDC.
(5)
Bank--The financial institution providing credit facilities
for this program.
(6)
Blighted or economically depressed areas--As defined by
the Act, §2(10) and §180.2(a)(3)(D) of this title (relating to Industrial
Revenue Bond Program).
(7)
Board of directors--The governing body of an IDC.
(8)
City--The governmental entity creating the IDC.
[(9)
Commerce-- The Texas Department of Commerce.]
(9)
[
(10)
]Cost--As defined by the Act, §2(4)
as applied to the use of program loan proceeds to fund eligible projects.
(10)
[
(11)
]Debt Service Coverage Ratio--The
ratio of the projected or actual sales and use tax receipts generated by the
levy and collection of the economic development sales and use tax by the city
for the benefit of an IDC, which sales and use tax receipts shall be determined
by using the lowest 12 consecutive months of sales and use tax receipts of
the 18 months immediately preceding the date of determination thereof, to
the scheduled maximum annual principal of and interest on the program loan
plus the scheduled maximum annual principal of and interest on any other debt
or obligation existing on the date of the program loan secured in whole or
in part by and payable from such economic development sales and use tax on
a parity with the proposed program loan and giving the holder thereof an equal
and ratable claim to the proceeds of the economic development sales and use
tax. In the event that an economic development sales and use tax has not been
previously collected or has not been collected for at least 18 months, then
there shall be estimated by
the Department
[
Commerce
]
the economic development sales and use tax that may have been collected over
that period had such economic development sales and use tax been in place.
(11)
Department-The Department of Economic
Development.
(12)
Development areas--As defined by the Act, §2(10)
and §180.2(a)(3)(L) of this title.
(13)
Economic development sales and use tax--That certain sales
and use tax that may be levied by a city for the benefit of an IDC under either §4A
or §4B of the Act.
(14)
Executive director--The executive director of
the
Department of Economic Development
[
Commerce.
]
(15)
Federally assisted new communities--As defined by the
Act, §2(10) and §180.2(a)(3)(O) of this title.
(16)
Full time equivalent job--Permanent employment for 1,820
hours or more per year or 35 hours or more per week per person
(17)
Governing board--The Texas Department
of Economic Development Governing board
(18)
[
(17)
]IDC--An industrial development
corporation created by a city pursuant to the Act, §4A or §4B.
(19)
[
(18)
]Interest rate--The floating
prime or base rate published in the Wall Street Journal from time to time
(Wall Street Journal Prime Rate) or the interest rate in effect under the
Program guidelines from time to time.
(20)
[
(19)
]Largest Four Year Sales Tax
Decline--A decline in the total sales tax receipts of the city calculated
as follows: (HIGH - LOW) / HIGH X 100. For the purpose of this definition
"LOW" shall mean the lowest sum of sales tax revenue receipts collected by
a city for any calendar year (adjusted for changes in sales tax rates) during
the four year period preceding the date of calculation, as determined from
the most recent June 30 or December 31, as applicable, for which sales tax
data is available, and "HIGH" shall mean the highest sum of sales tax revenue
received collected for any calendar year (adjusted for changes in sales tax
rates) during the four year period preceding the date of calculation, as determined
from the most recent June 30 or December 31, as applicable, for which sales
tax data is available and which occurred in a calendar year preceding the
calendar year in which the "LOW" occurred.
(21)
[
(20)
]Largest Fifteen Year Sales
Tax Decline--A percentage decline in the total sales tax receipts of a participating
city calculated as follows: (HIGH - LOW) / HIGH X 100. For purposes of this
definition "LOW" shall mean the lowest sum of sales tax revenue receipts collected
by the city for any calendar year (adjusted for changes in sales tax rates)
during the 15 year period preceding the date of calculation, as determined
from the most recent December 31, and "HIGH" shall mean the highest sum of
sales tax revenue receipts collected for any calendar year (adjusted for changes
in sales tax rates) during this same period and which occurred in a calendar
year preceding the calendar year in which the "LOW" occurred.
(22)
[
(21)
]Parity debt--Debt or other
obligations, existing or incurred during the term of the program loan, secured
in whole or in part by and payable from the economic development sales and
use tax receipts of the city on a parity with the program loan and giving
the holder an equal and ratable claim to the proceeds of the economic development
sales and use tax.
[(22)
Policy board--The Commerce policy board.]
(23)
Program--The Texas Leverage Fund.
(24)
Program guidelines--The
Department
[
Commerce
] guidelines relating to the program in effect at any particular time
pursuant to the Act and the authority granted by the
Governing
[
policy
] board to
the Department
[
Commerce
] under
the Master Resolution and First Supplemental Resolution, as amended.
(25)
Program loan--Loan from
the Department
[
Commerce
] to the IDC under the program.
(26)
Project--An eligible project as defined by the Act.
(27)
Projected Debt Service--The scheduled maximum annual debt
service on all parity debt including any program loan.
(28)
Rating--The long-term general obligation debt rating assigned
by a rating agency. Any reference in these rules to the rating structure of
one rating agency shall be deemed to include a reference to the equivalent
rating or ratings of the other rating agency.
(29)
Rating agency--Standard & Poor's Corporation, Moody's
Investors Service and Fitch Investors Service, Inc.
(30)
Resolution--The resolution, order, ordinance, or other
official action by the governing body of the city or IDC.
(31)
Rules--The rules of
the Department
[
Commerce.
]
(32)
State--The State of Texas.
(33)
Texas Enterprise Zone Act--Texas Government Code, §§2303.001
et seq., as amended.
(34)
Texas Leverage Fund--The economic development program
of
the Department
[
Commerce
] pursuant to which
the Department
[
Commerce
] makes loans, meeting certain criteria
approved by the
Governing
[
policy
] board in accordance
with the Master Resolution and First Supplemental Resolution, as amended,
to certain local industrial development corporations to fund the cost of certain
eligible projects as defined by the Act and which loans are secured by and
paid from the economic development sales and use tax receipt proceeds.
(35)
Trustee--A corporation with corporate trust powers serving
in the capacity of trustee under the Texas Department of
Economic Development
[
Commerce
] Taxable Commercial Paper Notes Series A pursuant
to a trust agreement between the corporation and
the Department
[
Commerce
] as authorized by the
Governing
[
policy
]
board under the Master Resolution and First Supplemental Resolution, as amended.
(36)
User--An individual, partnership, corporation, or any
other private entity, whether organized for profit or not for profit, or a
city, county district, or any other political subdivision or public entity
of the state or federal government.
§181.3.Program.
Established by the
Department
[
Commerce
]
Governing
[
policy
] board pursuant to the authority recited
in §181.1(b) of this title (relating to Authority), the program provides
a source for IDCs to leverage economic development sales and use tax receipt
proceeds.
The Department
[
Commerce
] provides a program
loan to the IDC to fund the cost of an eligible project as defined by the
Act and in accordance with
the Department's
[
Commerce's
]
program guidelines. The program loan is secured by a pledge to
the Department
[
Commerce
] of the IDC's economic development sales and use
tax receipt proceeds.
§181.4.Program Loan Limitations.
The Department's
[
Commerce's
] maximum total program
loans outstanding at any one time, including any unfunded program loan commitments,
shall not exceed $25,000,000, or any lesser amount as determined by
the Department
[
Commerce
] and the Bank from time to time.
§181.5.Eligible Projects.
(a)
Section 4A City Projects. The projects of an applicant
created pursuant to the Act, §4A must meet the definition of "Project"
as that term is defined by the Act, §2(10), subject to the limitations
imposed by the Act, §4A(i). [
The costs of the following types of
projects are eligible for program loans for §4A applicants: ]
[(1)
Land, building, equipment, facilities,
and improvements found by the board of directors to be required or suitable
for the promotion of development and expansion of: ]
[(A)
manufacturing and industrial facilities;]
[(B)
distributions centers; or ]
[(C)
small warehouse facilities capable of serving as decentralized
storage and distribution centers. ]
[(2)
Land, building, equipment, facilities,
and improvements found by the board of directors required or suitable for
the promotion of commercial development and expansion of:]
[(A)
blighted or economically depressed areas and development
areas; ]
[(B)
federally designated empowerment zones and enterprises
communities designated under the Internal Revenue Code of 1986, §1391;
]
[(C)
federally assisted new communities located within a home-rule
city; ]
[(D)
enterprise zones designated under the Texas Enterprise
Zone Act; ]
[(3)
Infrastructure improvements necessary
for economic development tied to a specific business or documented as part
of an economic development plan, including:]
[(A)
railroad spurs, extensions, switches, and turnouts; ]
[(B)
water and sewer lines; ]
[(C)
road construction; ]
[(D)
natural gas lines;]
[(E)
electric overhead power lines and transformers; ]
[(F)
harbor/channel dredging;]
[(G)
drainage channels and ponds; ]
[(H)
pre-treatment facilities; ]
[(I)
landfills, incinerators, and related equipment; ]
[(J)
purchase of land, easements, right of ways and engineering
services related to eligible infrastructure items;]
[(K)
general aviation business service airports that are integral
parts of an industrial park;]
[(L)
port related facilities to support waterborne commerce;
and]
[(M)
transportation facilities, solid waste disposal facilities,
or air or water pollution control facilities, provided that:]
[(i)
such facilities are not the primary project; and]
[(ii)
such facilities benefit property acquired for a permissible
project which is the primary project.]
(b)
Section 4B City Projects. An applicant created pursuant
to the Act, §4B must meet the definition of "Project" as that term is
defined by the Act, §4B(a)(2). [
The cost of the following types
of projects are eligible for a program loan for a §4B applicant: ]
[(1)
Land, buildings, equipment, facilities,
and improvements included in the definition of "Project" as that term is defined
by the Act, §2(10), including recycling facilities; ]
[(2)
Land, buildings, equipment, facilities,
and improvements found by the board of directors of applicant to be required
or suitable for use for professional and amateur (including children's) sports,
athletic, entertainment, tourist, convention, and public park purposes and
events, including: ]
[(A)
stadiums; ]
[(B)
ball parks; ]
[(C)
auditoriums; ]
[(D)
amphitheaters;]
[(E)
concert halls; ]
[(F)
learning centers; ]
[(G)
parks and park facilities; ]
[(H)
open space improvements; ]
[(I)
municipal buildings; ]
[(J)
museums;]
[(K)
exhibition facilities; and]
[(L)
related store, restaurant, concession, automobile parking
facilities, related area transportation facilities, related roads, streets,
water and sewer facilities, and other related improvements that enhance any
of those facilities enumerated in this paragraph. ]
[(3)
Land, buildings, equipment, facilities,
and improvements found by the board of directors of applicant to promote or
develop new or expanded business enterprises, including a project to provide:]
[(A)
public safety facilities;]
[(B)
streets and roads; ]
[(C)
drainage and related improvements; ]
[(D)
demolition of existing structures;]
[(E)
general municipally owned improvements; ]
[(F)
any improvements or facilities that are related to any
of those projects; and]
[(G)
any other project that the board of directors in its discretion
determines promotes or develops new or expanded business enterprises.]
(c)
Special Rules for Commercial Projects in Blighted or Economically
Depressed Areas and Development Areas. Under the Act, the financing of the
cost of eligible projects for commercial use is confined to, among others,
geographic areas within the corporate limits of a city found and determined
by the governing body of such city to be either a blighted area or economically
depressed (or areas immediately adjacent thereto) or a development area. Rules
for establishing a blighted area are set forth in 180.2(b)(9)(A) of this title
(relating to Industrial Revenue Bond Program). Rules for establishing an economically
depressed area or a development area are set forth in §180.2(b)(9)(B)
of this title. Such rules are applicable to commercial projects located in
blighted or economically depressed areas and development areas for which application
is made for a program loan.
§181.6.Consideration of Applications by the Texas Department of Economic Development [ Commerce ].
(a)
Application forms. Applications shall be filed by applicants
on forms prescribed by
the Department
[
Commerce.
] Applications
and other written communications relating to the program shall be addressed
to the attention of the Texas Leverage Fund, Texas Department of
Economic
Development
[
Commerce,
] P.O. Box 12728, Austin, Texas 78711-2728.
Applications shall be as complete as practicable, not requiring addendum in
order to be approved. Requests for an application and program guidelines should
also be sent to address indicated.
(b)
Assistance.
Department
[
Commerce
]
staff will be available prior to submission of applications to assist applicants
in determining program eligibility.
(c)
Denial of application.
Department
[
Commerce
] may deny applications for program loans for the following reasons:
(1)
The applicant and/or the city do not submit all required
information to
the Department
[
Commerce.
]
(2)
The applicant and/or the city do not meet the minimum financial
criteria established by
the Department
[
Commerce
] for
program loans under the program guidelines in effect at the time application
is made.
(3)
The Department
[
Commerce
] is unable
to approve program loans due to unavailability of funding.
§181.7.Contents of Application.
Required information. Applications must set forth the information necessary
for
the Department
[
Commerce
] to determinate program
eligibility. Applications shall include the following information:
(1)
IDC information, including:
(A)
applicant's legal name;
(B)
corporate charter number;
(C)
date of incorporation;
(D)
federal employer identification number;
(E)
physical and mailing addresses;
(F)
telephone and fax numbers;
(G)
contact name and title; and
(H)
whether the IDC was created under the Act, §4A or §4B.
(2)
information on the election for economic development sales
and use tax, including:
(A)
election date;
(B)
date tax effective;
(C)
expiration date (if any);
(D)
rate of tax adopted;
(E)
date tax proceeds first received from comptroller; and
(F)
limitations/restrictions on use of tax receipt proceeds.
(3)
information on any election for an additional sales and
use tax under Chapter 321, Texas Tax Code, including:
(A)
election date;
(B)
date tax effective;
(C)
rate of tax adopted;
(D)
date tax proceeds first received from the comptroller;
(E)
date tax was repealed or modified after passage; and
(F)
if applicable, describe any changes to the tax.
(4)
names and titles of IDC officers and board of directors;
(5)
names, addresses, and telephone and fax numbers of mayor,
city manager and city attorney;
(6)
executed acknowledgment that all underwriting responsibilities
for loans to a user are those of the IDC and city, and that the Department
Commerce has no responsibility for loan repayment by the user;
(7)
completion of the debt service coverage ratio worksheet
in accordance with the instructions provided by the Department Commerce, including:
(A)
the city's general obligation bond rating;
(B)
the rating agency;
(C)
the target funding date for the program loan;
(D)
the program loan amount;
(E)
the terms term of program loan;
(F)
the IDC's annual debt service amount; and
(G)
the IDC's parity debt service amount.
(8)
a listing of all parity and non-parity debt obligations,
including:
(A)
creditor's name, address, and telephone and fax numbers;
(B)
loan origination date;
(C)
original loan amount;
(D)
current loan balance;
(E)
monthly loan payment;
(F)
maturity date; and
(G)
collateral description and value.
(9)
user information, including:
(A)
business name, address, and telephone and fax numbers;
(B)
contact name and title;
(C)
type of legal entity;
(D)
minority or woman-owned ownership percentage;
(E)
business description including:
(i)
the standard industrial classification code number;
(ii)
industry category;
(iii)
current number of employees;
(iv)
total annual sales;
(v)
number of years in business;
(vi)
date started doing business; and
(vii)
brief description of business;
(10)
a summary of the project, including:
(A)
project address and the county in which located;
(B)
the number of full time equivalent jobs created and/or
retained as a result of project;
(C)
a concise description of the type of project, including:
(i)
primary purpose of project;
(ii)
ownership of project such as IDC, city, or user;
(iii)
components of project such as land, buildings, infrastructure,
equipment, facilities, and improvements;
(iv)
whether project is located in one of the following designated
areas:
(I)
blighted or economically depressed area;
(II)
development area;
(III)
federally designated empowerment zone and enterprise
community designated under the Internal Revenue Code of 1986, §1391;
(IV)
federally assisted new community;
(V)
enterprise zone designated under the Texas Enterprise Zone
Act.
(v)
applications for §4B projects must include documentation
that the project has been published for at least 60 days as required by the
Act, §4B(a-1) or §4B(a-2) and that no petition from 10% or more
of the registered voters of the city requesting an election has been received
by the city; and
(vi)
applications for §4B projects must also include documentation
that at least one public hearing was held on the proposed project as required
by the Act, §4B(n).
(11)
a cost breakdown of the project specifying sources of
funds (such as program loan, equity and other) and uses of funds (such as
land, infrastructure, building, machinery, equipment, professional fees, debt,
working capital and other);
(12)
a certification that the representations made by the IDC
are true and that no relevant facts have been intentionally omitted;
(13)
IDC's articles of incorporation and bylaws;
(14)
§4A or §4B sales and use tax ballot proposition
(actual wording);
(15)
city's economic development plan (infrastructure projects
only);
(16)
documents in support of the designation by the city of
a blighted or economically depressed area or development area;
(17)
documents in support of federal designation of empowerment
zones or enterprise communities;
(18)
documents in support of grants received under of the Housing
and Community Development Act of 1974, §107(a)(1), as amended, for federally
assisted new communities;
(19)
documents in support of enterprise zone designation under
the Texas Enterprise Zone Act; and
(20)
such other information as may be required by the Department
Commerce in order to make a prudent loan decision on the project application
and to insure that the project and cost are eligible under the Act.
§181.8.General Terms and Conditions of the Texas Department of Economic Development's [ Commerce's ] Financial Commitment.
(a)
Permissible use of financial commitment.
The Department's
[
Commerce's
] financial commitment shall to be used to finance
the cost of the project identified in the application in accordance with the
Act and
the Department's
[
Commerce's
] program guidelines.
(b)
Eligibility. To be eligible to participate, a city must
not have experienced a "Largest Four Year Sales Tax Decline" of greater than
10%.
(c)
Minimum amount of loan. There is no minimum loan amount.
(d)
Maximum amount of loan. No city with a rating of BBB+/Baa
or better shall account for more than $3,000,000 of program loans outstanding
at any one time. No city with a rating less than BBB+/Baa, or city with no
rating shall account for more than $2,000,000 of program loans outstanding
at any one time.
(e)
Interest. The program loan shall bear an interest rate
as provided by the program guidelines in effect from time to time.
(f)
Maximum loan term. No program loan may be amortized for
a period longer than 15 years.
(g)
Security. All program loans must be secured by a first
lien pledge of tax receipt proceeds sufficient, as of the loan closing date,
to comply with a "Debt Service Coverage Ratio," based on loan term and the
"Largest Fifteen Year Sales Tax Decline," as required under the program guidelines.
(h)
Pledge of tax receipt proceeds. All program loans must
be on a parity with or superior to any other debt obligations secured by the
tax receipt proceeds and owing or incurred while any portion of the program
loan is outstanding to insure that
the Department
[
Commerce
] shall have no less than an equal claim to all pledged tax receipt
proceeds.
(i)
Other parity debt. If parity debt exists or is incurred
during the term of the program loan, the "Debt Service Coverage Ratio" based
on total "Projected Debt Service" must exceed the ratios set forth under the
Program guidelines by a factor of 0.1 as of both the closing date of the program
loan and the closing date of any parity debts subsequently incurred.
(j)
Cross-default. The program loan shall be cross-defaulted
with all parity debt obligations and
the Department
[
Commerce
] must be notified in advance of the issuance of any parity debt obligations.
(k)
Purpose of loan. The purpose of the program loan and the
use of funds must comply with all applicable requirements of the Act and the
Department
[
Commerce
] Program guidelines. IDCs are permitted
to use the proceeds of a program loan to fund the eligible cost of any eligible
project as defined by the Act and the
Department
[
Commerce
] program guidelines.
(l)
Program loan approval. The program loan approval shall
be evidenced by a loan commitment letter issued by
the Department
[
Commerce
] to the applicant. The loan commitment requires formal
acceptance and response by the applicant and the city within 45 days from
the date of the loan commitment letter. All program loan agreements must be
approved by the executive director, or his/her designee, before loan closing.
(m)
Conditions precedent to loan closing. The following events
shall be conditions precedent to the closing of the program loan:
(1)
Delivery to
the Department
[
Commerce
]
of an opinion of counsel from counsel representing the IDC addressed to
the Department
[
Commerce
], the Trustee, and the Bank in form
and substance acceptable to
the Department
[
Commerce
];
(2)
Delivery to
the Department
[
Commerce
]
of evidence of voter and city council approval of the economic development
sales and use tax under the Act, §4A or §4B in a form acceptable
to
the Department
[
Commerce
];
(3)
Delivery to
the Department
[
Commerce
]
of a certificate of the chief financial officer of the city in a form acceptable
to
the Department
[
Commerce
] that the "Debt Service
Coverage Ratio" required by the
Department
[
Commerce
]
program guidelines has been met;
(4)
Delivery to
the Department
[
Commerce
]
of an incumbency, signature identification and authority certificate for the
IDC and the city in form and substance acceptable to
the Department
[
Commerce
];
(5)
Delivery to
the Department
[
Commerce
]
of a certified copy of a resolution of the IDC authorizing and approving the
program loan and pledging the economic development sales and use tax receipts
in favor of
the Department
[
Commerce
];
(6)
Delivery to
the Department
[
Commerce
]
of a copy of a letter addressed to the Texas State Treasury providing wire
transfer instructions for the program loan proceeds; and
(7)
Delivery to
the Department
[
Commerce
]
of a certified copy of a resolution of the city authorizing and approving
the program loan of the IDC.
§181.9.Loan Closing.
(a)
Time and Place. A loan closing shall take place at the
office of
the Department
[
Commerce
] or such other place
as
the Department
[
Commerce
] shall designate. The time
of a loan closing shall be mutually agreeable to
the Department
[
Commerce
] and the applicant, but in no event later than six months
from the date of the loan commitment letter.
(b)
Documents. The following documents shall be executed and
delivered to
the Department
[
Commerce
] in a form acceptable
to
the Department
[
Commerce
], prior to funding of the
program loan:
(1)
Loan agreement executed by the applicant, the city, and
the Department
[
Commerce
];
(2)
Promissory note executed by the applicant;
(3)
Uniform Commercial Code financing statement executed by
the applicant and
the Department
[
Commerce
].
(c)
Funding of loan. The program loan proceeds shall be made
by wire transfer according to instructions specified by the IDC.
§181.10.Loan Administration.
(a)
Loan servicing.
The Department
[
Commerce
] shall perform all loan administration services for the program loan
except for the receipt of loan payments.
(b)
Loan payments. All payments of principal and interest and
any prepayments on the program loan shall be payable by the IDC by wire transfer
to the Trustee on the first business day of each month.
(c)
Principal and interest payment adjustments. The program
loan shall provide for equal monthly principal and interest payments. Payment
amounts shall be adjusted by
the Department
[
Commerce
]
upon a change in interest rate or a prepayment to amortize the loan over its
original term.
(d)
Other payments. All repayments to the IDC under any loan,
lease or sale agreement to any user in excess of the scheduled payments provided
by such agreements, including prepayments, proceeds of condemnation awards,
foreclosure proceeds, insurance payments or other monies not reinvested in
the collateral, or proceeds from the disposition of an asset, shall be used
by the IDC to prepay a like principal amount on the program loan.
(e)
Reporting. The IDC shall provide to
the Department
[
Commerce
] within 15 days after the end of each quarter
ending November 30, February 28 (or February 29 during a leap year), May 31,
and August 31, the following written reports:
(1)
A quarterly payment status report, including the principal
and interest balance outstanding on the program loan, and all indebtedness
of the IDC secured by the economic development sales and use tax; and
(2)
Quarterly reports on the rating, economic development sales
and use tax revenues, and the "Debt Service Coverage Ratio" of the city, which
shall also take into account any parity debt incurred after the date of the
program loan.
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 August 10, 2001.
TRD-200104623
Tracye McDaniel
Deputy Executive Director
Texas Department of Economic Development
Earliest possible date of adoption: September 23, 2001
For further information, please call: (512) 936-0177