31 TAC §363.33
The Texas Water Development Board (board) proposes amendments
to 31 TAC §363.33, concerning the Interest Rates for Loans and Purchase
of Board's Interest in State Participation Projects. The amendments are proposed
to allow the board to set a unique interest rate for a revenue bond offered
by an entity as consideration for the purchase of the board's interest in
a state participation project.
Section 363.33(b)(4) of the board rules sets the interest rate for a revenue
bond where the revenue bonds constitutes consideration for the purchase of
the board's interest in a state participation project. Currently, the interest
rate is set at either (1) the prevailing state participation lending rate
or (2) the rate in effect at the time the board provided funds for the project,
if bond proceeds were the source of funds and the bonds are outstanding. An
amendment is proposed to §363.33(b)(4) to allow the board to set a unique
interest rate for a revenue bond where no fixed purchase schedule was established
at the time the board initially provided funds for a state participation project.
The proposed new §363.33(b)(4)(C) is intended to provide the board with
a vehicle to assist an entity to purchase the board's interest in a state
participation project by offering flexibility in the consideration offered
by the entity for such a purchase.
James LeBas, Chief Financial Officer, has determined that, for the first
five-year period the amendments are in effect, state government will benefit
from the potential for an acceleration of the purchase of the state's interest
in a state participation project. Local government will benefit an undetermined
amount from a reduction in the cost of purchasing the state's interest in
a state participation project, where a revenue bond is offered as consideration
for the purchase of such interest.
Mr. LeBas has also determined that for the first five years the amendments,
as proposed, are in effect, the public benefit anticipated as a result of
enforcing the proposed amendments will be to provide flexibility to the board
to facilitate the purchase of the board's interest in a state participation
project. Mr. LeBas has determined there will not be economic costs to small
businesses or individuals required to comply with the amendments as proposed.
Comments on the proposal will be accepted for 30 days following publication
and may be submitted to Srin Surapanani, Attorney, Office of General Counsel,
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 at (512) 463-5580.
The amendments are proposed under the authority of the Texas
Water Code, §6.101.
The statutory provisions affected by the proposed amendments are Texas
Water Code, Chapter 16, 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
; or
[
.
]
(C)
a different rate as established
by the board, where no schedule for the purchase of the board's interest in
the project was fixed at the time the board provided funds 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 June 14, 2006.
TRD-200603278
Wendall Corrigan Braniff
General Counsel
Texas Water Development Board
Proposed date of adoption: August 15, 2006
For further information, please call: (512) 475-2052