1. (a) Commission analysis. The commission will determine the sufficiency of the information, the probable reliability of the projections, and the anticipated financial condition of the applicant and the project.

2. (b) Small loan applications.

   1. (1) Applications for financial assistance in the amount of $250,000 or less may be approved by the commission without going through both the preliminary and final approval processes prescribed in subsections (c) and (e) of this section. These applications may be approved by the commission using one final approval process.
   2. (2) All considerations, determinations, and project requirements prescribed in subsections (c)-(e) and (h) of this section must be complied with prior to any final approval of applications under this subsection, with the exception of the negotiation process prescribed in subsection (c)(3) of this section, which may be completed after final approval. These applications are also subject to subsections (f) and (g) of this section.
   3. (3) The commission may require small loan applications to be subject to both the preliminary and final approval steps of this section. In making this determination, the commission will consider the complexity and size of the project, the type of infrastructure or asset involved, and the complexity of the project's and the applicant's financial status.

3. (c) Preliminary approval.

   1. (1) Considerations. Prior to granting preliminary approval of an eligible project, the commission will consider:

      1. (A) whether the project is on the state highway system;
      2. (B) transportation need for and anticipated public benefit of the project;
      3. (C) the present and projected financial condition of the bank;
      4. (D) potential social, economical, and environmental impacts;
      5. (E) conformity with the purposes of the bank; and
      6. (F) evidence of local public support.

   2. (2) Project requirements. The commission may grant preliminary approval to a project for bank financing if it finds that:

      1. (A) the project is consistent with the Statewide Transportation Plan and, if appropriate, with the metropolitan transportation plan developed by a metropolitan planning organization;
      2. (B) if the project is in a Clean Air Act non-attainment area, the project will be consistent with the Statewide Transportation Improvement Plan, with the conforming plan and Transportation Improvement Program (TIP) for the metropolitan planning organization in which the project is located (if necessary), and with the State Implementation Plan;
      3. (C) the project will improve the efficiency of the state's transportation systems;
      4. (D) the project will expand the availability of funding for transportation projects or reduce direct state costs; and

      5. (E) the application shows that the project and the applicant are likely to have sufficient revenues to assure repayment of the financial assistance according to the terms of the agreement. In making this finding, the commission will consider:

         1. (i) the probable ability of any pledged revenues to meet all obligations of the project and to repay the financial assistance to the bank;
         2. (ii) management of the project;
         3. (iii) adequacy of working capital and operating funds;
         4. (iv) collateral and other guarantees of repayment;
         5. (v) how quickly the financial assistance will be repaid; and
         6. (vi) the presence of credit insurance or other guarantees.

   3. (3) Authorized actions. By granting preliminary approval, the commission authorizes the executive director to negotiate:

      1. (A) the project's limits, scope, definition, design, and any other factors which might impact the financing of the project;
      2. (B) the amount, type and timing of disbursements of financial assistance;
      3. (C) interest rates including subsidies;
      4. (D) fees;
      5. (E) charges;
      6. (F) repayment schedules;
      7. (G) term to maturity of any financial assistance;
      8. (H) collateral securing the financial assistance;
      9. (I) appropriate covenants applicable to the financial assistance;
      10. (J) default provisions; and
      11. (K) all other provisions necessary to complete an agreement under Subchapter E of this chapter (relating to Financial Assistance Agreements).

4. (d) Social, economical, and environmental impact.

   1. (1) Prior to receiving final approval under subsection (e) of this section, the department or the applicant shall complete a study of the social, economical, and environmental impact of the project, consistent with the spirit and intent of the National Environmental Policy Act, Title 42, United States Code, §§4321 et seq., and Title 23, United States Code, §109(h), and shall provide for public involvement and meet all other requirements of Chapter 2, Subchapter C of this title (relating to Environmental Review and Public Involvement for Transportation Projects).
   2. (2) For a project not on the state highway system, the applicant shall be responsible for completing required studies of social, economical, and environmental impacts unless the applicant and the department agree otherwise. If the department agrees to be responsible for these studies, then any costs will be charged according to the department's local participation agreement.
   3. (3) For a project on the state highway system, the department shall be responsible for completing required studies of social, economical, and environmental impacts with any costs to be charged to the project.

5. (e) Final approval. Subsequent to preliminary approval under subsection (c) of this section, the completion of negotiations under subsection (c)(3) of this section, and the approval of the social, economical, and environmental impact required by subsection (d) of this section, the commission may grant final approval if it determines that:

   1. (1) providing financial assistance will protect the public safety and prudently provide for the protection of public funds while furthering the purposes of this chapter; and
   2. (2) the project will provide for all reasonable and feasible measures to avoid, minimize, or mitigate for adverse environmental impacts.
6. (f) Postponement. The commission may postpone final approval if it finds that the current or projected financial condition of the bank warrants this action.
7. (g) Contingencies. The commission may make its preliminary or final approval contingent upon the applicant making changes, levying taxes, performing other acts, or maintaining certain conditions necessary to provide for adequacy of repayments.
8. (h) Order of approval or disapproval. Approval or disapproval of the project, whether preliminary or final, shall be by written order of the commission, and shall include the rationale, findings, and conclusions on which approval or disapproval is based.

Source Note:The provisions of this §6.32 adopted to be effective January 8, 1998, 23 TexReg 151; amended to be effective October 18, 1998, 23 TexReg 10501.