Texas Register, Volume 37, Number 30, Pages 5519-5676, July 27, 2012 Page: 5,606
5519-5676 p. ; 28 cm.View a full description of this periodical.
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Kenneth L. Petersen
General Counsel
Texas Water Development Board
Effective date: July 30, 2012
Proposal publication date: June 1, 2012
For further information, please call: (512) 463-8061
SUBCHAPTER B. FINANCIAL ASSISTANCE
31 TAC 371.13 - 371.16, 371.18
STATUTORY AUTHORITY
The amendments are adopted under the authority of Water Code
6.101, which provides the TWDB with the authority to adopt
rules necessary to carry out the powers and duties in the Water
Code and other laws of the State, and also under the authority
of Water Code 15.6041.
This rulemaking affects Water Code, Chapter 15.
371.14. Lending Rates.
(a) Definitions. The following words and terms, when used
in this section, shall have the following meanings, unless the context
clearly indicates otherwise.
(1) Average life--The number determined by dividing the
sum of the payment periods of all maturities of a loan by the total num-
ber of maturities.
(2) Borrower--Each eligible Applicant receiving a loan
from the Board.
(3) Loan interest rate--The individual interest rate for each
maturity of a loan as identified by the executive administrator under
this chapter.
(4) Market rate--The individual interest rate for each ma-
turity of a loan payment that is the borrower's market cost of funds
based on the MMD scale for the borrower as identified under subsec-
tion (c)(1) of this section.
(5) MMD--Thomson Municipal Market Data Range of
Yield Curve Scales.
(6) Payment period--The number determined by multiply-
ing the total principal amount due for an individual maturity as set forth
in the loan by the standard period for the loan.
(7) Standard period--The number identified by determining
the number of days between the date of delivery of the funds to a bor-
rower and the date of the maturity of a bond or loan payment pursuant
to which the funds were provided calculated on the basis of a 360-day
year composed of twelve 30-day periods and dividing that number by
360.
(b) Procedure for setting fixed interest rates. The interest rates
will be determined by this section and as described in an IUP.
(1) The executive administrator will set fixed rates for
loans on a date that is:
(A) five business days prior to the adoption of the po-
litical subdivision's bond ordinance or resolution or the execution of a
loan agreement; and
(B) not more than 45 days before the anticipated closing
of the loan from the Board.(2) After 45 days from the assignment of the interest rate on
the loan, rates may be extended only with the executive administrator's
approval.
(c) Fixed rates. The fixed interest rates for financial assistance
under this chapter will be determined as provided in this subsection.
The executive administrator will identify the market rate for the bor-
rower, determine the amount of adjustment from the market interest
rate appropriate for the borrower pursuant to paragraph (2) of this sub-
section, apply the identified interest rate adjustment to the market rate
for the borrower to determine the loan interest rate, and apply the loan
interest rate to the proposed principal schedule, as more fully set forth
in this subsection.
(1) To identify the market rate:
(A) for borrowers that have a rating by a recognized
bond rating entity and will not have bond insurance, the executive ad-
ministrator will rely on the higher of the MMD scale for the current
bond rating of the borrower or the MMD BAA scale;
(B) for borrowers with no rating by a recognized bond
rating entity or for borrowers with a rating that is less than investment
grade as determined by the executive administrator, the executive ad-
ministrator will rely on the MMD BAA scale; or
(C) for borrowers that are rated by a recognized rating
entity with bond insurance or for borrowers with no rating by a rec-
ognized bond rating entity with insurance, the executive administrator
will rely on the higher of the borrower's uninsured fixed rate scale or
the insurer's fixed rate scale.
(2) The program is designed to provide a 125 basis point
reduction from the market rate based on a level debt service schedule.
Notwithstanding the foregoing, in no event shall the loan interest rate
as determined under this section be less than zero.
(3) To determine the loan interest rate, the following pro-
cedures will apply:
(A) Unless otherwise requested by the borrower under
subparagraph (B) of this paragraph, the loan interest rate will be deter-
mined based on a debt service schedule that provides interest only to
be paid in the first year of the debt service schedule and in which the
remaining annual debt service payments are level, as determined by the
executive administrator. The executive administrator will identify the
appropriate MMD scale for the borrower and identify the market rate
for the maturity due in the year preceding the year in which the average
life is reached. The executive administrator will reduce that market rate
by the number of basis points applicable according to paragraph (2) of
this subsection and thereby identify a proposed loan interest rate. The
proposed loan interest rate will be applied to the proposed principal
repayment schedule. If the resulting debt service schedule is level to
the satisfaction of the executive administrator, then the proposed loan
interest rate will be the loan interest rate for the loan. If the resulting
debt service schedule is not level to the satisfaction of the executive
administrator, then the executive administrator may adjust the interest
rate for any or all of the maturities to identify the loan interest rate that
as closely as possible achieves the interest savings applicable accord-
ing to paragraph (2) of this subsection while maintaining the principal
schedule proposed by the borrower.
(B) A borrower may request a debt service schedule in
which the annual debt service payments are not level through the term
of the loan, as determined by the executive administrator. In this event,
the executive administrator will approximate a level debt service sched-
ule for the loan amount and identify a proposed loan interest rate that
provides for annual debt service payments that are level for the term of
the loan following the procedures set forth in paragraph (1)(A) of this37 TexReg 5606 July 27, 2012 Texas Register
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Texas. Secretary of State. Texas Register, Volume 37, Number 30, Pages 5519-5676, July 27, 2012, periodical, July 27, 2012; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth243959/m1/86/: accessed April 26, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.