1. (a) Use of fund. The fund may be used for the following purposes:

   1. (1) to make loans on the condition that:

      1. (A) such loans are made at or below market interest rates, including interest free loans at terms not to exceed 20 years;
      2. (B) annual principal and interest payments will commence not later than one year after completion on any project and all loans will be fully amortized not later than 20 years after project completion; and
      3. (C) the recipient of a loan will establish a dedicated source of revenue for repayment of loans;
   2. (2) to buy or refinance the bonds of eligible applicants within the state at or below market rates, when such debt obligations were incurred after March 7, 1985;
   3. (3) for the reasonable costs of administering the fund and conducting activities under the Act, Title VI;
   4. (4) as a source of revenue or security for the payment of principal and interest on revenue or general obligation bonds issued by the state if the proceeds of sale of such bonds will be deposited in the fund;
   5. (5) to earn interest on fund accounts; and
   6. (6) to guarantee or purchase insurance for local debt obligations.
2. (b) Refinancing of debt. Applications for which refinancing is sought must include provisions for purchase of insurance for the local debt obligation.

Source Note:The provisions of this §375.12 adopted to be effective February 11, 1999, 24 TexReg 769; amended to be effective February 10, 2000, 25 TexReg 812.