Texas Register, Volume 37, Number 30, Pages 5519-5676, July 27, 2012 Page: 5,620
5519-5676 p. ; 28 cm.View a full description of this periodical.
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(1) Average life--The number determined by dividing the
sum of the payment periods of all maturities of a loan by the total num-
ber of maturities.
(2) Borrower--Each eligible Applicant receiving a loan
from the Board.
(3) Loan interest rate--The individual interest rate for each
maturity of a loan as identified by the executive administrator under
this chapter.
(4) Market rate--The individual interest rate for each ma-
turity of a loan payment that is the borrower's market cost of funds
based on the MMD scale for the borrower as identified under subsec-
tion (c)(1) of this section.
(5) MMD--Thomson Municipal Market Data Range of
Yield Curve Scales.
(6) Payment period--The number determined by multiply-
ing the total principal amount due for an individual maturity as set forth
in the loan by the standard period for the loan.
(7) Standard period--The number identified by determining
the number of days between the date of delivery of the funds to a bor-
rower and the date of the maturity of a bond or loan payment pursuant
to which the funds were provided calculated on the basis of a 360-day
year composed of twelve 30-day periods and dividing that number by
360.
(b) Procedure for setting fixed interest rates. The interest rates
will be determined by this section and as described in an IUP.
(1) The executive administrator will set fixed rates for
loans on a date that is:
(A) five business days prior to the adoption of the po-
litical subdivision's bond ordinance or resolution or the execution of a
loan agreement; and
(B) not more than 45 days before the anticipated closing
of the loan from the Board.
(2) After 45 days from the assignment of the interest rate on
the loan, rates may be extended only with the executive administrator's
approval.
(c) Fixed rates for non-equivalency projects. The fixed interest
rates for financial assistance under this chapter will be determined as
provided in this subsection. The executive administrator will identify
the market rate for the borrower, determine the amount of adjustment
from the market interest rate appropriate for the borrower, apply the
identified interest rate adjustment to the market rate for the borrower to
determine the loan interest rate, and apply the loan interest rate to the
proposed principal schedule, as more fully set forth in this subsection.
(1) To identify the market rate:
(A) for borrowers that have a rating by a recognized
bond rating entity and will not have bond insurance, the executive ad-
ministrator will rely on the higher of the MMD scale for the current
bond rating of the borrower or the MMD BAA scale;
(B) for borrowers with no rating by a recognized bond
rating entity or for borrowers with a rating that is less than investment
grade as determined by the executive administrator, the executive ad-
ministrator will rely on the MMD BAA scale or
(C) for borrowers that are rated by a recognized rating
entity with bond insurance or for borrowers with no rating by a rec-
ognized bond rating entity with insurance, the executive administratorwill rely on the higher of the borrower's uninsured fixed rate scale or
the insurer's fixed rate scale.
(2) The program is designed to provide borrowers with a
reduction not to exceed 130 basis points below the market rate based
on a level debt service schedule. Notwithstanding the foregoing, in no
event shall the loan interest rate as determined under this section be
less than zero.
(3) To determine the loan interest rate, the following pro-
cedures will apply:
(A) Unless otherwise requested by the borrower under
subparagraph (B) of this paragraph, the loan interest rate will be deter-
mined based on a debt service schedule that provides interest only to
be paid in the first year of the debt service schedule and in which the
remaining annual debt service payments are level, as determined by the
executive administrator. The executive administrator will identify the
appropriate MMD scale for the borrower and identify the market rate
for the maturity due in the year preceding the year in which the average
life is reached. The executive administrator will reduce that market rate
by the number of basis points applicable according to paragraph (2) of
this subsection and thereby identify a proposed loan interest rate. The
proposed loan interest rate will be applied to the proposed principal
repayment schedule. If the resulting debt service schedule is level to
the satisfaction of the executive administrator, then the proposed loan
interest rate will be the loan interest rate for the loan. If the resulting
debt service schedule is not level to the satisfaction of the executive
administrator, then the executive administrator may adjust the interest
rate for any or all of the maturities to identify the loan interest rate that
as closely as possible achieves the interest savings applicable.
(B) A borrower may request a debt service schedule in
which the annual debt service payments are not level through the term
of the loan, as determined by the executive administrator. In this event,
the executive administrator will approximate a level debt service sched-
ule for the loan amount and identify a proposed loan interest rate that
provides for annual debt service payments that are level for the term of
the loan following the procedures set forth in paragraph (1)(A) of this
subsection. From the level debt service schedule, the executive ad-
ministrator will determine the amount of the subsidy that would have
been provided if the annual debt service payments had been level. The
executive administrator will then identify the loan interest rate that as
closely as possible provides the borrower the identified subsidy amount
for the principal schedule requested by the borrower.
(d) Fixed rates for equivalency projects. The fixed interest
rates for CWSRF loans under this subchapter are set at rates not to
exceed 195 basis points below the fixed rate scale for borrowers plus
an additional reduction under paragraph (1) of this subsection, or if ap-
plicable, are set at the total basis points below the fixed rate scale for
borrowers derived under paragraph (2) of this subsection. The fixed
rate scale shall be established for each uninsured borrower based on
the borrower's market cost of funds as they relate to the MMD or the
BAA scale of the MMD for borrowers with either no rating or a rating
less than investment grade, using individual coupon rates for each ma-
turity of proposed debt based on the appropriate scale. The fixed rate
scale shall be established for each insured borrower based on the higher
of the borrower's uninsured fixed rate scale or the MMD AA scale.
(1) Under 375.16 of this title (relating to Fees of Financial
Assistance) an additional reduction not to exceed 25 basis points will be
used, for total fixed interest rates not to exceed 195 basis points below
the fixed scale for such borrower.
(2) For borrowers filing applications on or after September
21, 1997 for loans with an average bond life in excess of 14 years or,
at the discretion of the Board for borrowers filing applications on or37 TexReg 5620 July 27, 2012 Texas Register
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Texas. Secretary of State. Texas Register, Volume 37, Number 30, Pages 5519-5676, July 27, 2012, periodical, July 27, 2012; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth243959/m1/100/: accessed May 5, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.