1. (a) Disbursement required. No loan shall close unless the Applicant provides an outlay report requesting a disbursement at least seven days prior to the loan closing date.

2. (b) Applicability. This section applies to loan closings for entities issuing bonds or other authorized securities. The following documents are required for closing a loan secured by bonds or other authorized securities:

   1. (1) evidence that applications have been filed for all licenses, permits, registrations, and other authorizations required by local, state and federal laws and rules that are necessary for planning, design, acquisition and construction of the authorized project;

   2. (2) a certified copy of the ordinance or resolution adopted by the governing body authorizing the issuance of debt to be sold to the Board. The ordinance or resolution shall:

      1. (A) require the Applicant's to fix and maintain rates, in accordance with state law, and collect charges to provide adequate operation and maintenance of the project and to provide insurance coverage on the project in an amount sufficient to protect the Board's interest;
      2. (B) require the use of a book-entry-only system;
      3. (C) require the use of a paying agent/registrar that is a Depository Trust Company (DTC) participant;
      4. (D) require that the payment all DTC closing fees assessed by the Board's custodian bank be directed to the Board's custodian bank by the Applicant;
      5. (E) require evidence that one fully registered bond has been sent to the DTC or to the Applicant's paying agent/registrar prior to closing;
      6. (F) require that all payments are made to the Board via wire transfer at no cost to the Board;
      7. (G) require that the partial redemption of bonds or other authorized securities be made in inverse order of maturity;
      8. (H) require that insurance coverage be obtained and maintained in an amount sufficient to protect the Board's interest in the project;
      9. (I) require that the Applicant, or an obligated person for whom financial or operating data is presented, will undertake, either individually or in combination with other issuers of the Applicant's obligations or obligated persons, in a written agreement or contract to comply with requirements for continuing disclosure on an ongoing basis as required by Securities and Exchange Commission (SEC) rule 15c2-12 and determined as if the Board were a Participating Underwriter within the meaning of such rule, such continuing disclosure undertaking being for the benefit of the Board and the beneficial owner of the political subdivision's obligations, if the Board sells or otherwise transfers such obligations, and the beneficial owners of the Board's bonds if the political subdivision is an obligated person with respect to such bonds under rule 15c2-12. The ordinance or resolution shall also contain any other requirements of the SEC or the IRS relating arbitrage, private activity bonds or other relevant requirements regarding the securities held by the Board;
      10. (J) establish a construction fund at an official state depository institution; the fund shall be kept separate from all other funds of the Applicant;
      11. (K) require the maintenance of current, accurate and complete records and accounts in accordance with generally accepted accounting standards to demonstrate compliance with requirements in the loan documents;
      12. (L) require the Applicant to annually submit an audit, prepared by a certified public accountant in accordance with generally accepted auditing standards;
      13. (M) require the Applicant to submit a final accounting within 60 days of the receipt of the final inspection report;
      14. (N) document the adoption of a water conservation program and the implementation of an approved water conservation program for the duration of the loan; and
      15. (O) require the Applicant's agreement to comply with special environmental conditions specified in the Board's environmental determination as well as with any applicable Board laws or rules relating to use of the loan funds;
   3. (3) unqualified approving opinions of the attorney general of Texas and, if bonds or other authorized securities are issued, a certification from the comptroller of public accounts that such debt has been registered in that office;
   4. (4) an unqualified approving opinion by a recognized bond attorney;
   5. (5) if the project will result in the development of surface or groundwater resources, the Applicant shall provide information showing that it has the legal right to use the quantity of water necessary for project effectiveness and efficiency. Upon receipt of the information, the executive administrator shall prepare a finding that the Applicant has a reasonable expectation of obtaining the water rights necessary for project implementation prior to any release of funds for planning, land acquisition and design activities. Prior to the release of funds for construction, a written water rights certification shall be prepared by the executive administrator. The certification shall be based upon the Applicant's information showing the necessary water rights have been acquired;
   6. (6) evidence that the Applicant has the technical, managerial, and financial capacity to maintain the system unless the use of the funds will be to ensure that the system has the technical, managerial, and financial capacity to comply with the national primary or applicable state drinking water regulations over the long term;
   7. (7) a private placement memorandum containing a detailed description of the issuance of debt to be sold to the Board. The Applicant shall submit a draft private placement memorandum at least 30 days prior to loan closing; a final version of the memorandum shall be submitted no later than seven days before closing; and
   8. (8) any additional information specified in writing by the executive administrator.
3. (c) Certified bond transcript. Within sixty (60) days of closing the loan, the Applicant shall submit a transcript of proceedings relating to the debt purchased by the Board which shall contain those instruments normally furnished by a purchaser of debt.

4. (d) Phased closing. The executive administrator may determine that closing a loan in phases is appropriate when:

   1. (1) the project has distinct phases for planning, design, acquisition and for construction or if any one of the phases can be logically and practically divided into discrete sections;
   2. (2) the project utilizes the design-build or construction manager-at-risk process or any process wherein there is simultaneous design and construction;
   3. (3) there are limitations on the availability of funds;
   4. (4) additional oversight is required due to the financial condition of the Applicant or the complexity of the project; or
   5. (5) due to any unique facts arising from the particular transaction.

Source Note:The provisions of this §371.70 adopted to be effective August 4, 2010, 35 TexReg 6680.