Part 10.
TEXAS WATER DEVELOPMENT BOARD
Chapter 363.
FINANCIAL ASSISTANCE PROGRAMS
Subchapter A. GENERAL PROVISIONS
3.
FORMAL ACTION BY THE BOARD
31 TAC §363.33
The Texas Water Development Board (board) proposes amendment
to 31 TAC §363.33, concerning the Interest Rates for Loans and Purchase
of Board's Interest in State Participation Projects. The changes are proposed
to set the interest rates for revenue bonds when revenue bonds constitute
the consideration for the purchase of the board's interest in a state participation
project by an political subdivision.
Section 363.33(b) of the board rules sets lending rates for loans from
the Texas Water Development Funds, the EDAP Account, and for funds provided
by the board under the State Participation Account. However, the rules do
not contemplate the establishment of a lending rate for a revenue bond exchanged
by a political subdivision for the purchase of a state facility.
The proposed amendment to §363.33(b) establishes a new lending rate
schedule for revenue bonds accepted by the board in connection with the sale
of state facilities. The determinative factor in setting this lending rate
is the existence of outstanding board debt in connection with the board's
purchase of its interest in a state participation project. If no board debt
was incurred in the board's initial purchase of its interest in a facility,
the interest rate is set at the prevailing lending rate for funds from the
State Participation Account. If board debt was incurred in the board's initial
purchase of its interest in a facility, the proposed interest rate is based
on the rate in effect at the time the board provided the funds through the
issuance of bonds to participate in the project. This lending rate structure
maximizes the ability of the board to match incoming revenues with outstanding
debt service while promoting flexibility in the method by which political
subdivisions can buy back the interest in a state facility.
Ms. Pam Gulley, Director of Accounting and Finance, has determined that
for the first five-year period these sections are in effect there will not
be fiscal implications on state and local government as a result of enforcement
and administration of the sections.
Ms. Gulley has also determined that for the first five years the sections
as proposed are in effect the public benefit anticipated will be to provide
flexibility to the board and to political subdivisions to structure the purchase
of the board's interest in state participation projects where revenue bonds
are used as the form of payment.
Ms. Gulley has determined there will be no economic costs to small businesses
or individuals required to comply with the sections as proposed.
Comments on the proposed amendments will be accepted for 30 days following
publication and may be submitted to Srin Surapanani, Staff Attorney, (512)
475-3065, Texas Water Development Board, P.O. Box 13231, Austin, Texas, 78711-3231,
or by fax at (512) 463-5580.
The amendments are proposed under the authority of the Texas
Water Code, §6.101 and §15.737.
The statutory provisions affected by the proposed amendments are Texas
Water Code, Chapter 16, Subchapter F and Texas Water Code, Chapter 17, Subchapter
E.
§363.33.Interest Rates for Loans and Purchase of Board's Interest in State Participation Projects.
(a)
(No change.)
(b)
Lending rate scale. After each bond sale, or as necessary
to meet changing market conditions, the board will set the lending rate scale
for loans and state participation projects based upon cost of funds to the
board, risk factors of managing the board loan portfolio, and market rate
scales. To calculate the cost of funds, the board will add new bond proceeds
to those remaining bond funds that are not currently assigned to schedule
loan closings, weighting the funds by dollars and true interest costs of each
source. The board will establish separate lending rate scales for tax-exempt
and taxable projects from each of the following:
(1)
loans from the Texas Water Development Fund and Texas Water
Development Fund II;
(2)
purchase of the board's interest in state participation
projects from the State Participation Account; [
(3)
loans from the Economically Distressed Area Program Account
; and
(4)
if revenue bonds constitute the consideration
for the purchase of the board's interest in a state participation project
by a political subdivision, the revenue bonds shall bear interest at either:
(A)
the prevailing state participation lending rate, as set
in subsection (b)(2) of this section; or
(B)
if there is outstanding board indebtedness related to the
purchase of its state participation interest, then at the rate then in effect
at the time the board provided funds, through the issuance of bonds, to participate
in the project.
(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 May 16, 2001.
TRD-200102755
Suzanne Schwartz
General Counsel
Texas Water Development Board
Earliest possible date of adoption: July 18, 2001
For further information, please call: (512) 463-7981
31 TAC §363.34
The Texas Water Development Board (the board) proposes new
31 TAC §363.34, Financial Guarantees for Political Subdivision Bonds
and Required Reserves. Chapter 363 governs the administration of the Water
Assistance Fund and the Development Funds I and II. The new section is proposed
to describe the minimum criteria that financial guarantors must meet in order
to provide insurance for municipal bond debt payments owed to the board.
The Board currently holds approximately $1,500,000,000 in political subdivision
bonds which are insured. Additionally, the Board holds approximately $99,700,000
in political subdivision bonds which have provided surety policies in place
of cash reserve funds. These financial guarantees are expressed through policies
of insurance which are written by major national insurance companies. The
presence of these financial guaranty policies in the Board's portfolio serves
to enhance the Board's credit ratings, which result in interest savings to
the Board and its applicants. The proposed criteria for financial guarantors
ensures that the financial guarantors have AAA rating from national rating
agencies. The criteria is considered essential to safeguard the stability
of the board's portfolio of municipal bonds.
Pam Gulley, Director of Accounting and Finance, has determined that for
the first five-year period the section is in effect there will be no fiscal
implications on state and local government as a result of enforcement and
administration of the section.
Ms. Gulley has also determined that for the first five years the section
as proposed is in effect the public benefit anticipated as a result of enforcing
the section will be to safeguard the board's loan portfolio through the requirement
that all companies serving as guarantor's of bonded debt held by the board
meet proven standards of financial stability. Ms. Gulley has determined there
will be no economic costs to small businesses or individuals required to comply
with the section as proposed.
Comments on the proposed new section will be accepted for 30 days following
publication and may be submitted to Randy Galbreath, Director, Audit and Funds
Management Division, Texas Water Development Board, P.O. Box 13231, Austin,
Texas, 78711-3231, by e-mail to randy.galbreath@twdb.state.tx.us or by fax
at (512) 475-2998.
The new section is proposed under the authority of the Texas
Water Code, §6.101, which provides the Texas Water Development Board
with the authority to adopt rules necessary to carry out the powers and duties
in the Water Code and other laws of the State.
The statutory provisions affected by the new section are Texas Water Code, §6.012(a)(2)
and §6.101.
§363.34.Financial Guarantees for Political Subdivision Bonds and Required Reserves.
(a)
Financial Guarantees. The board will consider accepting
surety bonds in lieu of required cash reserve deposits and insurance policies
for political subdivision bonds. At the time of loan commitment and at loan
closing, only those financial guarantors that have been approved by the board
or its Finance Committee are authorized to underwrite financial guarantee
policies on political subdivision bonds approved by the board.
(b)
Criteria for Authorized List. The board will maintain a
list of authorized financial guarantors. In order to be considered for placement
on the list, a guarantor must meet the following minimum criteria:
(1)
the financial guarantor must be a nationally recognized
provider of municipal bond insurance and must have a triple--A insurer financial
strength rating with Standard & Poor's, Moody's Investors Service, Inc.
and Fitch, Inc.; and
(2)
the financial guarantor must have a triple--A insurer financial
enhancement rating with Standard & Poor's.
(c)
Review of Policies. The executive administrator shall review
all policies of insurance submitted by authorized financial guarantors and
may reject any policy of insurance or surety bond which does not protect the
interests of the board's financial program.
(d)
Removal from Authorized List. The executive administrator
may remove a financial guarantor from the authorized list at any time that
a change in status would cause the financial guarantor to fail to meet the
minimum criteria.
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 May 17, 2001.
TRD-200102769
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: July 18, 2001
For further information, please call: (512) 463-7981
Subchapter D. BOARD ACTION ON APPLICATIONS
31 TAC §371.53
The Texas Water Development Board (the board) proposes new
31 TAC §371.53, Financial Guarantees for Political Subdivision Bonds
and Required Reserves. Chapter 371 governs the administration of the Drinking
Water State Revolving Fund. The new section is proposed to describe the minimum
criteria that financial guarantors must meet in order to provide insurance
for municipal bond debt payments owed to the board.
The Board currently holds approximately $1,500,000,000 in political subdivision
bonds which are insured. Additionally, the Board holds approximately $99,700,000
in political subdivision bonds which have provided surety policies in place
of cash reserve funds. These financial guarantees are expressed through policies
of insurance which are written by major national insurance companies. The
presence of these financial guaranty policies in the Board's portfolio serves
to enhance the Board's credit ratings, which result in interest savings to
the Board and its applicants. The proposed criteria for financial guarantors
ensures that the financial guarantors have AAA rating from national rating
agencies. The criteria is considered essential to safeguard the stability
of the board's portfolio of municipal bonds.
Ms. Pam Gulley, Director of Accounting and Finance, has determined that
for the first five-year period these sections are in effect there will be
no fiscal implications on state and local government as a result of enforcement
and administration of the sections.
Ms. Gulley has also determined that for the first five years the sections
as proposed are in effect the public benefit anticipated as a result of enforcing
the sections will be to safeguard the board's loan portfolio through the requirement
that all companies serving as guarantor's of bonded debt held by the board
meet proven standards of financial stability. Ms. Gulley has determined there
will be no economic costs to small businesses or individuals required to comply
with the sections as proposed.
Comments on the proposed amendments will be accepted for 30 days following
publication and may be submitted to Randy Galbreath, Director, Audit &
Funds Management Division, Texas Water Development Board, P.O. Box 13231,
Austin, Texas, 78711-3231, by e-mail to randy.galbreath@twdb.state.tx.us or
by fax @ (512) 475-2998.
The new section is proposed under the authority of the Texas
Water Code, §6.101, which provides the Texas Water Development Board
with the authority to adopt rules necessary to carry out the powers and duties
in the Water Code and other laws of the State.
The statutory provisions affected by the new section are Texas Water Code, §6.012(a)(2)
and §6.101.
§371.53.Financial Guarantees for Political Subdivision Bonds and Required Reserves.
(a)
Financial Guarantees. The board will consider accepting
surety bonds in lieu of required cash reserve deposits and insurance policies
for political subdivision bonds. At the time of loan commitment and at loan
closing, only those financial guarantors that have been approved by the board
or its Finance Committee are authorized to underwrite financial guarantee
policies on political subdivision bonds approved by the board.
(b)
Criteria for Authorized List. The board will maintain a
list of authorized financial guarantors. In order to be considered for placement
on the list, a guarantor must meet the following minimum criteria:
(1)
the financial guarantor must be a nationally recognized
provider of municipal bond insurance and must have a triple-A insurer financial
strength rating with Standard & Poor's, Moody's Investors Service, Inc.
and Fitch, Inc.; and
(2)
the financial guarantor must have a triple-A insurer financial
enhancement rating with Standard & Poor's.
(c)
Review of Policies. The executive administrator shall review
all policies of insurance submitted by authorized financial guarantors and
may reject any policy of insurance or surety bond which does not protect the
interests of the board's financial program.
(d)
Removal from Authorized List. The executive administrator
may remove a financial guarantor from the authorized list at any time that
a change in status would cause the financial guarantor to fail to meet the
minimum criteria.
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 May 17, 2001.
TRD-200102768
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: July 18, 2001
For further information, please call: (512) 463-7981
Subchapter A. GENERAL PROVISIONS
and
]
Chapter 371.
DRINKING WATER STATE REVOLVING FUND
Chapter 375.
CLEAN WATER STATE REVOLVING FUND