1. (a) This loan application option will provide an applicant that meets all applicable board requirements an alternative to secure loan proceeds for the planning, design or building costs associated with a project. Under this option, a loan may be closed and funds released to complete planning activities. If all required planning has been completed and approved, design funds may also be released at the time of closing and building funds will be escrowed. If planning requirements have not been satisfied, design and building funds will be escrowed and released in the sequence described in this section. After planning and environmental review, the board may require the applicant to make changes in order to receive the board's approval and proceed with the project. If the portion of a project associated with funds in escrow cannot proceed, the loan recipient shall use the escrowed funds to redeem bonds purchased by the board in inverse order of maturity. General procedures and requirements for pre-design funding are described in this section.
2. (b) The executive administrator may recommend to the board the use of this section if, based on available information, there appear to be no significant permitting, social, environmental, engineering, or financial issues associated with the project. An application for pre-design funding may be considered by the board despite a negative recommendation from the executive administrator.

3. (c) Applications for pre-design funding must include the following information:

   1. (1) for loans including building cost, an engineering plan of study which will include at minimum: a description and purpose of the project; area maps or drawings as necessary to fully locate the project area(s); a proposed project schedule; estimated project costs and budget including sources of funds; current and future populations and projected flows; alternatives considered; and a discussion of known permitting, social or environmental issues which may affect the alternatives considered and the implementation of the proposed project;
   2. (2) contracts for engineering services;
   3. (3) evidence that an approved water conservation plan as required under §375.37 of this title (relating to Required Water Conservation Plan) will be adopted prior to the release of loan funds or the applicant's election to submit the water conservation plan under §375.37(b) of this title (relating to Required Water Conservation Plan);
   4. (4) all information required in §§375.32-375.34 of this title (relating to General, Legal and Fiscal Information); and
   5. (5) any additional information the executive administrator may request to complete evaluation of the application.

4. (d) After board commitment and completion of all closing and release prerequisites as specified in §375.72 of this title (relating to Loan Closing) and §375.74 of this title (relating to Release of Funds), funds will be released in the following sequence:

   1. (1) for planning and permitting costs, after receipt of executed contracts for the planning or permitting phase, and after approval of a water conservation plan if still outstanding under §375.37(b) of this title (relating to Required Water Conservation Plan);
   2. (2) for design costs, after receipt of executed contracts for the design phase and upon approval of an SRF engineering plan as specified in §375.36 of this title (relating to SRF Engineering Plan) and compliance with §375.35 of this title (relating to Required Environmental Review and Determinations) and after board approval under subsection (e) of this section; and
   3. (3) for building costs, after issuance of any applicable permits, and after bid documents are approved and executed construction documents are contingently awarded.
5. (e) Board staff will use preliminary environmental data provided by the applicant, as specified in subsection (c)(1) of this section, and make a written report to the executive administrator on known or potential significant social or environmental concerns to allow the executive administrator to make a recommendation to the board on pre-design funding. Prior to release of funds for design, these projects must have the board's approval based upon an environmental review conducted during planning under the standards of §375.35 of this title (relating to Required Environmental Review and Determination) as applicable.
6. (f) Prior to the board's approval of release of funds for design, the executive administrator shall summarize the project's environmental review and shall inform the board of any environmentally related special mitigative or precautionary measures recommended for the project. The board may elect to affirm or alter the conditions of the original commitment to the applicant or withdraw the commitment to the applicant.

Source Note:The provisions of this §375.40 adopted to be effective February 10, 1995, 20 TexReg 492.