Part 10.
TEXAS WATER DEVELOPMENT BOARD
Chapter 371.
DRINKING WATER STATE REVOLVING FUND
Subchapter D. BOARD ACTION ON APPLICATION
31 TAC §371.52
The Texas Water Development Board (the board) proposes amendments
to 31 TAC §371.52 concerning lending rates under the Drinking Water State
Revolving Fund program. The amendments will set interest rates for loans from
the board to private and other entities for which the interest on the bonds
are subject to the federal income tax (taxable entities). The current method
for setting interest rates for taxable entities is to subtract 185 basis points
from the prime lending rate. The prime lending rate is a base rate for corporate
loans made by commercial banks and it does not follow the conventional indices
and scales normally utilized by the board for establishing interest rates.
The board proposes by this amendment to establish the interest for loans
to these private and other taxable entities to be 140% of the rate charged
on loans by the board to entities the interest on whose bonds is not subject
to the federal income tax (tax exempt entities). This percentage is the average
percentage between the rates published by Bloomberg Taxable Index for BBB
rated bonds and the rates for tax-exempt, general obligation, 20 year maturity,
mixed quality bonds published by Bond Buyer Index tax-exempt for the period
of March 1999 through November 2001. Concurrently with these amendments, the
board is proposing amendments to chapter 375 of the board's rules. Taken together,
these amendments will establish a uniform method by which interest rates are
calculated for private and taxable applicants, in each respective program.
Ms. Melanie Callahan, Director of Fiscal Services, has determined that
for the first five-year period the section is in effect, there is no change
in cost to state government. The loss or increase in revenue to state government
from the implementation of the rule cannot be accurately projected because
the losses or increases will vary depending on market interest rate fluctuations.
A study of the previous 147 weeks shows that under the new provision the state
would receive a higher interest rate from borrowers in a majority of the instances.
There will be no fiscal impact on local government as a result of enforcement
and administration of the section.
Ms. Callahan 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 provide greater stability of interest rates for the
board and for eligible applicants by moving away from a reliance on commercial
rates, which are volatile, and moving to reliance on municipal rates which
are found to be more stable. Ms. Callahan has determined there will be no
adverse impact on small business. The costs to individuals or entities which
access the board's programs cannot be accurately projected because savings
or costs will vary depending on market interest rate fluctuations. A study
of the previous 147 weeks shows that under the new provision the individual
or entity would be assessed a higher interest rate in a majority of the instances.
Comments on the proposed amendments will be accepted for 30 days following
publication and may be submitted to Srin Surapanani, Staff Attorney, Texas
Water Development Board, P.O. Box 13231, Austin, Texas, 78711-3231, by e-mail
to srin.surapanani@twdb.state.tx.us or by fax @ 512/463-5580.
The amendments are proposed under the authority of the Texas
Water Code §6.101 and §15.605 which provide the Texas Water Development
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 proposed amendments are Texas
Water Code Chapter 15, Subchapter J.
§371.52.Lending Rates.
(a)-(c)
(No change)
(d)
Private
and taxable
borrowers.
The interest
rate for loan agreements for those borrowers receiving financial assistance
who are determined to be private or taxable issuers will be 140% of the rate
pursuant to subsections (a), (b) and (c) of this section.
[
(e)-(f)
(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 February 21, 2002.
TRD-200201061
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: April 17, 2002
For further information, please call: (512) 463-7981
Subchapter C. NONPOINT SOURCE POLLUTION LOAN AND ESTUARY MANAGEMENT PROGRAM
Notwithstanding
the provisions of subsections (b) and (c) of this section, the interest rate
for loan agreements for those borrowers receiving financial assistance from
the community/noncommunity water systems financial assistance account will
be the rate derived by subtracting 185 basis points from the prime lending
rate. For the purpose of this subsection, prime lending rate is defined to
be the base interest rate on corporate loans posted by at least 75% of the
nation's 30 largest banks as published in the nationally published Wall Street
Journal and which is in effect as of the date the interest rate is set by
the development fund manager.
]
Chapter 375.
CLEAN WATER STATE REVOLVING FUND