31 Tex. Admin. Code § 371.52 – Lending Rates

(a) Procedure for setting fixed interest rates.
1. (1) The development fund manager will set fixed rates for loans on a date that is:
  1. (A) five business days prior to the adoption of the political subdivision's bond ordinance or resolution; and
  2. (B) not more than 45 days before the anticipated closing of the loan from the board.
2. (2) After 45 days from the assignment of the interest rate on the loan, rates may be extended only with the development fund manager's approval.
(b) Fixed Rates. The fixed interest rates for DWSRF loans under this chapter are set at rates 120 basis points below the fixed rate index rates for borrowers plus an additional reduction under paragraph (1) of this subsection, or if applicable, are set at the total basis points below the fixed rate index for borrowers derived under paragraph (2) of this subsection. Using individual coupon rates for each maturity of proposed debt based on the appropriate index's scale, the fixed rate index rates shall be established for each uninsured borrower based on the borrower's market cost of funds as they relate to the Delphis Hanover Corporation Range of Yield Curve Scales (Delphis) or the 90 index scale of the Delphis. For borrowers with either no rating or a rating less than investment grade, the 90 index scale of the Delphis will apply. The fixed rate index rates shall be established for each insured borrower based on the higher of the borrower's uninsured fixed rate index scale or the Delphis 96 index scale.
1. (1) Under §371.22(c) of this title (relating to Administrative Cost Recovery) an additional 30 basis points reduction will be used, for total fixed interest rates of 150 basis points below the fixed index rates for such borrowers.
2. (2) For borrowers filing applications on or after September 21, 1997 for loans with an average bond life in excess of 14 years or, at the discretion of the board for borrowers filing applications on or after September 21, 1997 for loans which have debt schedules less than 20 years and which produce a total fixed lending rate reduction in excess of a "standard loan structure" (defined as a debt service schedule in which the first year of the maturity schedule is interest only followed by 20 years of principal maturing on the basis of level debt service), the following procedures will be used in lieu of the provisions of paragraph (1) of this subsection to determine the fixed lending rate reduction:
  1. (A) The interest rate component of level debt service will be determined by using the 13th year coupon rate of the appropriate index of the Delphis scales that corresponds to the 13th year of principal of the standard loan structure and that is measured from the first business day on the month the loan application will be presented to the board for approval.
  2. (B) Level debt service will be calculated using the 13th year Delphis Scale coupon rate as described in subparagraph (A) of this paragraph and the par amount of the loan according to a standard loan structure. For a loan which has been proposed for a term of years equal to a standard loan structure, the dates specified in the loan application shall be used for interest and principal calculation. For a loan which has been proposed for a term of years less than a standard loan structure or longer than a standard loan structure, level debt service will be calculated beginning with the dated date and based upon the principal and interest dates specified in the application, and continuing for the term of a standard loan structure.
  3. (C) A calculation will be made to determine how much a borrower's interest would be reduced if the loan had been made according to the total fixed lending rate reduction provided in paragraph (1) of this subsection and based upon the principal payments calculated in subparagraph (B) of this paragraph.
  4. (D) The board will establish a total fixed lending rate reduction for the loan that will achieve the interest savings in subparagraph (C) of this paragraph based upon the principal schedule proposed by the borrower.
(c) Variable Rates. The interest rate for DWSRF variable rate loans under this chapter will be set at a rate equal to the actual interest cost paid by the board on its outstanding variable rate debt plus the cost of maintaining the variable rate debt in the DWSRF. Variable rate loans are required to be converted to long-term fixed rate loans within 90 days of project completion unless an extension is approved in writing by the development fund manager. Within the time limits set forward in this subdivision, borrowers may request to convert to a long-term fixed rate at any time, upon notification to the development fund manager and submittal of a resolution requesting such conversion. The fixed lending rate will be calculated under the procedures and requirements of subsections (a) and (b) of this section.
(d) Private borrowers. 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.
(e) NPNC borrowers. NPNC borrowers that issue tax-exempt obligations and that operate community/non-community water systems will receive interest rates pursuant to subsections (a), (b) and (c) of this section.
(f) The development fund manager may adjust a borrower's interest rate at any time prior to closing as a result of a change in the borrower's credit rating.

Source Note:The provisions of this §371.52 adopted to be effective August 6, 1997, 22 TexReg 7057; amended to be effective November 5, 1997, 22 TexReg 10743; amended to be effective February 5, 1998, 23 TexReg 784; amended to be effective June 10, 1998, 23 TexReg 5980; amended to be effective October 8, 1998, 23 TexReg 10042; amended to be effective December 8, 1999, 24 TexReg 10886.