(a) Definitions. The following words and terms have the following meanings when used in this section, unless the context clearly indicates otherwise.
(1) Average life--The number determined by dividing the sum of all payment periods by the total principal amount.
(2) Borrower--Each eligible Applicant that has received a commitment from the Board.
(3) Interest rate--The individual interest rate for each maturity in an amortized debt schedule as identified by the executive administrator under this chapter.
(4) Market rate--The individual interest rate for each maturity in an amortized debt schedule payment that is the borrower's market cost of funds based on the MMD scale for the borrower as identified under subsection (c)(1) of this section.
(5) MMD--Thomson Reuters Municipal Market Data Range of Yield Curve Scales.
(6) Payment period--The number determined by multiplying the total principal amount due for an individual maturity as set forth in the debt instrument by the standard period for the debt instrument.
(7) Standard period--The number identified by determining the number of days between the date of delivery of the funds to a borrower 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.
(8) Term--For bonds, the length of time between when the bond is issued and the final maturity in the debt instrument; for loans, the period of time any principal is outstanding.
(b) Procedure for setting fixed interest rates.
(1) The executive administrator will set fixed interest rates as described in the IUP and further determined in this section, on a date that is:
(2) After 45 days from the assignment of the interest rate, rates may be extended only with the executive administrator's approval.
(c) Fixed rates. 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 scale appropriate for the borrower pursuant to paragraph (2) of this subsection, apply the identified interest rate adjustment to the market rate for each year of the borrower's scale to determine the interest rate, and apply the interest rate to the proposed principal schedule, as more fully set forth in this subsection.
(1) Identifying the market rate for eligible borrowers.
(2) The fixed rate scale shall be established for each borrower using individual coupon rates for each maturity of the proposed debt based on the appropriate scale.
(3) The program is designed to provide borrowers with an interest rate reduction from the fixed rate scale applicable to the borrower based on a level debt service schedule, or if applicable, the reduction is set at the total basis points below the fixed rate scale for borrowers as derived under paragraph (3) of this subsection. Notwithstanding the foregoing, in no event shall the interest rate as determined under this section be less than zero.
(4) For loans and bond commitments with an average life in excess of 16 years for a term of up to 20 annual maturities or years or an average life in excess of 20 years for a term of up to 30 annual maturities or years (or a pro-rata calculation for terms between 20 and 30 annual maturities or years), and at the discretion of the Board for loans and bond commitments that have debt schedules that produce a total fixed lending rate reduction in excess of a standard loan or bond commitment structure (defined as a debt service schedule in which the first year of the maturity schedule is interest-only followed by principal maturing on the basis of level debt service), the following procedures will be used to determine the total fixed lending rate reduction:
(5) To determine the interest rate, the following procedures will apply:
(d) Variable rates. The interest rate for DWSRF variable rate debt under this chapter will be set at a rate equal to the actual interest cost paid by the Board on its outstanding variable rate debt plus the cost of maintaining the variable rate debt in the DWSRF. Variable rate debt is required to be converted to long-term fixed rate financing within 90 days of project completion unless an extension is approved in writing by the executive administrator. Within the time limits set forward in this subdivision, borrowers may request to convert to a long-term fixed rate at any time, upon notification to the executive administrator and submittal of a resolution requesting such conversion. The fixed lending rate will be calculated under the procedures and requirements of subsections (b) and (c) of this section.
(e) NPNC borrowers. NPNC borrowers that issue tax-exempt obligations and that operate community/non-community water systems will receive interest rates pursuant to subsections (b) - (d) of this section.
(f) Adjustments. The executive administrator may adjust a borrower's interest rate at any time prior to closing as a result of a change in the borrower's credit rating.
Source Note: The provisions of this §371.14 adopted to be effective August 4, 2010, 35 TexReg 6680; amended to be effective January 9, 2012, 36 TexReg 9336; amended to be effective July 30, 2012, 37 TexReg 5602; amended to be effective July 4, 2016, 41 TexReg 4844; amended to be effective March 18, 2019, 44 TexReg 1443; amended to be effective June 10, 2020, 45 TexReg 3863