1. (a) Applicability and required documents. This section applies to closings for financial assistance with entities issuing bonds or other authorized securities. The following documents are required for closing financial assistance secured by bonds or other authorized securities:

   1. (1) evidence that applicable requirements and regulations of all identified local, state, and federal agencies having jurisdiction have been met, including but not limited to permits and authorizations;

   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 that is acceptable to the executive administrator. The ordinance or resolution shall have sections providing as follows:

      1. (A) if financial assistance proceeds are to be deposited into an escrow account at the time of closing, then an escrow account shall be created that shall be separate from all other accounts and funds, as follows:

         1. (i) the account shall be maintained by an escrow agent as defined in §375.1 of this title (relating to Definitions);
         2. (ii) funds shall not be released from the escrow without prior written approval from the executive administrator who shall issue written authorization for the release of the funds;
         3. (iii) upon request of the executive administrator, escrow account statements shall be provided to the executive administrator;
         4. (iv) the investment of any financial assistance proceeds deposited into an approved escrow account shall be handled in a manner that complies with the Public Funds Investment Act, Texas Government Code, Chapter 2256; and
         5. (v) the escrow account shall be adequately collateralized in a manner sufficient to protect the Board's interest in the project in a manner that complies with the Public Funds Collateral Act; Texas Government Code, Chapter 2257;
      2. (B) that the Applicant shall fix and maintain rates, in accordance with state law, and collect charges to provide adequate operation and maintenance of the project;
      3. (C) that a construction account shall be created which shall be kept separate from all other accounts and funds of the Applicant;
      4. (D) that bonds shall be closed in book-entry-only form;
      5. (E) the use of a paying agent/registrar that is a Depository Trust Company (DTC) participant;
      6. (F) that the payment of all DTC closing fees assessed by the Board's custodian bank be directed to the Board's custodian bank by the Applicant;
      7. (G) evidence that one fully registered bond has been sent to the DTC or to the Applicant's paying agent/registrar prior to closing;
      8. (H) that all payments, including the origination fee, are made to the Board via wire transfer at no cost to the Board;
      9. (I) that insurance coverage be obtained and maintained in an amount sufficient to protect the Board's interest in the project;
      10. (J) 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;
      11. (K) the maintenance of current, accurate, and complete records and accounts in accordance with generally accepted accounting principles to demonstrate compliance with requirements in the financial assistance documents;
      12. (L) that the Applicant shall annually submit an audit, prepared by a certified public accountant in accordance with generally accepted auditing standards;
      13. (M) that the Applicant shall submit a final accounting within 60 days of the completion of the project;
      14. (N) that the Applicant shall document the adoption and implementation of an approved water conservation program for the duration of the financial assistance;
      15. (O) the Applicant's agreement to comply with special environmental conditions specified in the Board's environmental finding as well as with any applicable Board laws or rules relating to use of the financial assistance;
      16. (P) that the Applicant shall establish a dedicated source of revenue for repayment of the financial assistance;
      17. (Q) that interest payments shall commence no later than one year after the date of closing;
      18. (R) that annual principal payments will commence no later than one year after completion of project construction; and
      19. (S) any other recitals mandated by the executive administrator;
   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) assurances that the Applicant will comply with any special conditions specified by the Board's environmental finding;
   6. (6) 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 the closing of the financial assistance; a final electronic version of the Memorandum shall be submitted no later than seven days before closing;
   7. (7) when any portion of the financial assistance is to be held in an escrow account, the Applicant shall execute an escrow agreement, approved as to form and substance by the executive administrator;
   8. (8) if applicable, a home rule municipality pursuant to Chapter 104, Local Government Code, shall execute a Certification of Trust as defined in §375.1 of this title; and
   9. (9) any additional information specified in writing by the executive administrator.
2. (b) Certified bond transcript. Within sixty (60) days of closing the financial assistance, 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.

3. (c) Phased closing. The executive administrator may determine that closing the financial assistance in phases is appropriate when:

   1. (1) the project has distinct phases for planning, design, acquisition, and 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 §375.91 adopted to be effective September 8, 2010, 35 TexReg 8126; amended to be effective July 30, 2012, 37 TexReg 5615; amended to be effective July 4, 2016, 41 TexReg 4853; amended to be effective March 18, 2019, 44 TexReg 1445.