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) Instruments needed for closing. The documents that shall be required at the time of closing shall include the following:

   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 ordinances or resolutions adopted by the governing body authorizing the issuance of debt sold to the Board that has received prior approval by the executive administrator and that shall have sections providing as follows:

      1. (A) that an escrow or trust account shall be created that shall be separate from all other funds and as follows:

         1. (i) the account shall be maintained at a designated state depository institution; a properly chartered and licensed trust institution or an investment pool approved by the executive administrator;
         2. (ii) funds shall not be released from the escrow or trust account or investment pool without approval of the executive administrator who shall issue written authorization for the release of the funds;
         3. (iii) escrow account, trust account and investment pool account statements shall be provided on a monthly basis to the executive administrator;
         4. (iv) the investment of any loan or grant proceeds deposited into an approved escrow or trust account, including any proceeds invested with an investment pool, shall be handled in a manner that complies with the Public Funds Investment Act, Texas Government Code, Chapter 2256 as amended; and
         5. (v) the escrow or trust 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, as amended;
      2. (B) that a home rule municipality with a population of more than 1,000,000 persons whose charter provides for an elected comptroller, auditor or treasurer may execute a Trust and Agency Certificate in lieu of establishing an escrow account or trust account in accordance with the Local Government Code, Chapter 104, as amended;
      3. (C) that a construction fund shall be created at a designated state depository institution that shall be kept separate from all other funds of the Applicant;
      4. (D) that the Applicant fix and maintain rates, in accordance with state law, and to collect charges to provide adequate operation and maintenance of the project;
      5. (E) the use of a book-entry-only system;
      6. (F) the use of a paying agent/registrar that is a Depository Trust Company (DTC) participant;
      7. (G) the payment all DTC closing fees assessed by the Board's custodian bank be directed to the Board's custodian bank by the Applicant;
      8. (H) evidence that one fully registered bond has been sent to the DTC or to the Applicant's paying agent/registrar prior to closing;
      9. (I) the initial payment made to the Board be paid via wire transfer at no cost to the Board;
      10. (J) the partial redemption of bonds or other authorized securities be made in inverse order of maturity;
      11. (K) that insurance coverage be obtained and maintained in an amount sufficient to protect the Board's interest in the project;
      12. (L) 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;
      13. (M) 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;
      14. (N) the Applicant shall annually submit an audit, prepared by a certified public accountant in accordance with generally accepted auditing standards;
      15. (O) the Applicant shall submit a final accounting at the final release of retainage;
      16. (P) the Applicant shall document the adoption of a water conservation program and the implementation of an approved water conservation program for the duration of the loan;
      17. (Q) 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;
      18. (R) that the Applicant shall establish a dedicated source of revenue for repayment of the financial assistance;
      19. (S) that interest payments shall commence no later than 1 year after the date of closing and annual principal payments will commence either one year after completion of project construction; and
      20. (T) 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 determination until all financial obligations to the state have been discharged;
   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 loan closing; a final electronic version of the memorandum shall be submitted no later than seven days before closing; and
   7. (7) any additional information specified in writing by the executive administrator.
3. (c) Certified 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 that 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 §375.91 adopted to be effective September 8, 2010, 35 TexReg 8126.