Texas Administrative Code
Title 10 - COMMUNITY DEVELOPMENT
Part 5 - OFFICE OF THE GOVERNOR, ECONOMIC DEVELOPMENT AND TOURISM OFFICE
Chapter 180 - INDUSTRIAL PROJECTS
Section 180.2 - Industrial Revenue Bond Program
Universal Citation: 10 TX Admin Code ยง 180.2
Current through Reg. 49, No. 38; September 20, 2024
(a) General.
(1) Filing of applications.
Applications shall be filed by the applicant with the Finance Division of the
Office. Each application shall be as complete as practicable, and not requiring
addendum in order to be approved. To insure adequate time for review by the
Office staff, an application should be filed with the Office at least 14 days
prior to the Office's approval.
(2)
Filing fee. Each application for approval shall be accompanied by a
nonrefundable filing fee in the amount equal to one-tenth of 1.0% of the face
amount of the bond issue or $25,000, whichever is less, but in no event less
than $500. This fee is payable to the department upon the initial filing of
such application.
(3) Definitions.
The following words and terms, when used in this chapter, shall have the
following meanings, unless the context clearly indicates otherwise.
(A) Act--The Development Corporation Act,
Texas Local Government Code, Title 12, as amended.
(B) Application--The application to the
department, the contents of which are outlined in subsection (b) of this
section.
(C) Approval--The approval
of a lease, sale, or loan agreement or bonds issued by a corporation or any
other document submitted as a part of the application to the
department.
(D) Board of
directors--The board of directors of any corporation organized pursuant to the
Act.
(E) Bonds--Bonds, notes, and
other evidences of indebtedness.
(F) City--Any municipality of the state
incorporated under the provisions of:
(i) any
general or special law; or
(ii) the
home-rule amendment to the constitution.
(G) Corporation--An industrial development
corporation organized pursuant to the Act, §4(a).
(H) Cost--The cost of acquisition,
construction, reconstruction, improvement, and expansion, including the cost of
the acquisition of all land, rights-of-way, property rights, easements, and
interests, the cost of all machinery and equipment, financing charges,
inventory, raw materials and other supplies, research and development costs,
interest prior to and during construction and for one year after completion of
construction, whether or not capitalized, necessary reserve funds, cost of
estimates and of engineering and legal services, plans, specifications,
surveys, estimates of cost and of revenue, other expenses necessary or incident
to determining the feasibility and practicability of acquiring, constructing,
reconstructing, improving, and expanding any such project, administrative
expense and such other expense as may be necessary or incident to the
acquisition, construction, reconstruction, improvement, and expansion thereof,
the placing of the same in operation, and the financing or refinancing of any
such project, including the refunding of any outstanding obligations,
mortgages, or advances issued, made or given by any person for any of the cost
mentioned in this definition.
(I)
County--A county of this state.
(J)
Development area--Any area or areas of a city that the city finds and
determines, after a public hearing, should be developed in order to meet the
development objectives of the city.
(K) District--A conservation and reclamation
district established under authority of Texas Constitution, Article XVI,
§59.
(L) Executive
director--The executive director of the Office.
(M) Federally assisted new community--Those
federally assisted areas which have received or will receive assistance in the
form of loan guarantees under the National Housing Act, Title X, and a portion
of the federally assisted area has received grants under the
42 U.S.C.A.
§5307.
(N) Governing body--The board, council,
commission, commissioners' court, or legislative body of the unit.
(O) Governmental agency--
(i) the United States or any political
subdivision, agency, territory, or insular possession thereof;
(ii) the District of Columbia; or
(iii) the State of Texas or any other state
of the United States, or any unit, county, city, municipal corporation,
district, political subdivision, or agency of the State of Texas, or of any
other state of the United States.
(P) Guarantor--
(i) any individual, partnership, corporation,
or any other private entity that is a party to a contract with the user, if
such entity is contractually obligated to make payments to or on behalf of the
user in amounts at least equal to the payments required to be made by the user
under its lease, sale, or loan agreement with the corporation, provided the
user has assigned to the corporation its contractual rights to receive such
payments in order to secure said user's obligations under the lease, sale, or
loan agreement;
(ii) any
individual, partnership, corporation, or any other private entity directly
guaranteeing the user's payments in the amounts required under the lease, sale,
or loan agreements;
(iii) any
individual, partnership, corporation, or any other private entity directly
guaranteeing payment of bonds issued to finance the project.
(Q) Office--The Economic
Development and Tourism Office in the Office of the Governor.
(R) Population--The number of inhabitants
within a geographical area as found and determined by the most recent federal
decennial census.
(S) Project--The
project as defined in the Act.
(T)
Resolution--The resolution, order, ordinance, or other official action by the
governing body of a unit.
(U)
Rules--The rules of the Office.
(V)
Unit--A city, county, or district which may create and utilize a
corporation.
(W) User--An
individual, partnership, corporation, or any other private entity, whether
organized for profit or not for profit, or a city, county district, or any
other political subdivision or public entity of the state.
(4) Fee schedules and bond procedures. Each
corporation shall file with the Office a schedule of all fees charged by,
collected by, or otherwise involved with the corporation, directly or
indirectly, in the application for approval to issue industrial revenue bonds.
In addition, a complete set of the corporation's written procedures for
application of industrial revenue bond projects shall be submitted prior to the
Office review of industrial revenue bond applications involving such
corporations. Such written procedures and fee schedules shall be updated upon
amendment, such update to be filed with the Office within 30 days from the
effective date of such amendment. In the event that the procedures and fee
schedule already on file with the Office are still in full force and effect at
the time an application is submitted to the Office, a letter from the issuer
stating such shall be included in the application. All bond procedures filed
with the Office must contain the name, street address, mailing address, and
telephone number of the corporation's authorized agent or
representative.
(b) Application contents.
(1) Generally.
(A) The project description prepared by the
user shall include:
(i) a brief description
of the project, its location, and intended use;
(ii) estimates of the number and type of jobs
to be created as a result of the project and the estimated annual payroll of
employees working at the project. If there is a probability that loss of
existing jobs would occur within the unit as a result of the disapproval of the
lease, sale, or loan agreement, estimate the number and type of existing jobs
which would be lost and the estimated annual payroll of employees currently
holding such jobs;
(iii) a
statement indicating who presently owns the project site describing any liens
and encumbrances, and representing that all necessary interest in real estate
required for the construction, installation, and operation of the project has
been or can be acquired; that all necessary access roads, utilities, and
drainage facilities have been or can be provided; and that all approvals,
permits, consents, or authorizations of any governmental or public agency,
authority, or person required in connection with the construction,
installation, and operation of the project have been or can be
obtained;
(iv) a detailed showing
of the estimated costs of the project, together with a list of the sources from
which payment will be made, which statement shall show actual, or if not
possible, estimated, cost of items as follows:
(I) the acquisition, construction,
reconstruction, improvement, and expansion, including the cost of the
acquisition of all land, rights-of-way, property rights, and easements; if
none, so state;
(II) machinery and
equipment; if none, so state;
(III)
building costs; if none, so state;
(IV) financing charges, specifically
designated fees and expenses of original purchasers, issuer, issuer's counsel,
underwriters, financial advisors, placement agents, bond counsel, other legal
counsel, bond delivery and printing expenses, the cost of preparing and
processing the application, engineering fees, plans, specifications, surveys,
and all other fees and/or expenses in connection with the financing;
(V) interest prior to and during construction
and for one year after completion of construction, if applicable; otherwise,
state inapplicable;
(VI) any
reserve funds; if none, so state;
(VII) all other expenses, such as the costs
of financing or refinancing of any project, including the refunding of any
outstanding obligations, mortgages, or advances issued, made, or given by any
person for any of the aforementioned costs; if none, so state;
(VIII) contingencies; if none, so
state;
(IX) inventory, raw
materials, and other supplies;
(X)
research and development costs;
(v) the approximate date of commencement and
completion of construction of the project.
(B) The list of participants shall include
the name, street, mailing address, and telephone number of each of the
following:
(i) the user, the user's
representative, the user's counsel, counsel's representative, and the user's
corporation's counsel, accounting firm and accounting firm's
representative;
(ii) the
corporation, the corporation's representative, and corporation's counsel,
counsel's representative;
(iii) the
original purchaser, the purchaser's representative, the purchaser's counsel,
and counsel's representative;
(iv)
the guarantor, the guarantor's representative, guarantor's counsel, counsel's
representative, the guarantor's accounting firm, and accounting firm's
representative, or a statement that there is no guarantor;
(v) the financial advisor or placement agent,
and such advisor's or agent's representative, counsel, and counsel's
representative or a statement that there is no financial advisor or placement
agent; no financial advisor or placement agent;
(vi) the underwriter, the underwriter's
representative counsel, and counsel's representative or a statement that there
is no underwriter;
(vii) the
trustee or depository, and the trustee's or depository's representative,
counsel, and counsel's representative or a statement that there is no trustee
or depository;
(viii) the paying
agent, such agent's representative, counsel, and counsel's representative, or a
statement that there is no paying agent;
(ix) the letter of credit bank, the letter of
credit bank's representative, or a statement that there is no letter of credit
bank; and
(x) bond counsel and bond
counsel's representative.
(2) The corporation.
(A) The description of corporation shall
include:
(i) the name, street address, and
mailing address of the members of the board of directors of the
corporation;
(ii) a description of
any other bonds which have been issued by the corporation to finance a project
and a statement as to whether there has been a default in the payment of
principal or of premium, if any, or interest on any such bonds.
(B) The resolution of the
corporation shall be certified by the board of directors and include a
description of the purpose of the bonds, set out the specific amount of bonds
to be issued, and make the appropriate findings required by the Act,
§2(10).
(C) The opinion of
corporation counsel shall be submitted on counsel's letterhead in substantially
the form to be delivered at closing, as to the incorporation and existence of
the corporation and the authority, the actions and other proceedings of the
corporation in connection with the project and the bonds, and further stating
that the lease, sale, or loan agreement constitutes a legal and binding
obligation of the corporation.
(3) The unit. A certified copy of the
resolution of the governing body of the unit satisfying the requirements of the
Act, §25(f), and authorizing the specific bond amount and purpose of the
bonds shall be included.
(4) The
user.
(A) The description of the user shall
include:
(i) the name and address of the
user;
(ii) the state or other
jurisdiction of incorporation or organization, the form of organization, and a
complete description of the organizational structure, including parent,
subsidiaries, and affiliates;
(iii)
a statement of the history and type of business engaged in by the
user;
(iv) the names and ages of
executive or managing officers and directors of the user, an account of the
business experience of each such officer or director, including his principal
occupation and employment and the name and principal business of the
corporation or other organization in which such occupation and employment was
carried on;
(v) a statement of the
user's debt security rating or listing by any published rating agency, or, if
none, such fact shall be noted;
(vi) financial statements as available for
the previous three years;
(vii) in
lieu of the information required by clauses (ii) - (vi) of this subparagraph,
the user's Form 10-K for each of the three preceding fiscal years, together
with the user's most recent Form 10-Q.
(B) Certificate of user. A certificate signed
by an officer of the user to the same effect as the finding required to be made
by the board of directors of the corporation under paragraph (2)(B) of this
subsection.
(C) The proposed
opinion of user counsel shall be submitted on counsel's letterhead in
substantially the form to be delivered at closing, as to the creation and
existence of the user and the authority, actions and other proceedings of the
user in connection with the project and the bonds, and stating that the lease,
sale, or loan agreement constitutes a legal and binding obligation of the user.
User counsel must be licensed in the State of Texas or a supplemental opinion
must be provided by Texas counsel.
(5) Guarantor.
(A) The description of guarantor shall
provide the same information required of the user in paragraph (4)(A) of this
subsection.
(B) The opinion of
guarantor counsel shall be on counsel's letterhead to include an opinion of
counsel for each guarantor, in substantially the form to be delivered at
closing, as to the creation and existence of the guarantor and the authority,
the actions and other proceedings of the guarantor in connection with the
project and the bonds, and stating that the instrument of guarantee constitutes
a legally binding obligation of the guarantor.
(6) The bonds.
(A) The description of the bonds shall
include:
(i) no total amount of bonds to be
issued;
(ii) a maturity schedule
for the bonds;
(iii) the proposed
date of closing and delivery of the bonds;
(iv) if the bonds have been rated by any
published rating agency, or if application for such rating has been made, such
fact shall be noted with the ratings assigned. A letter must be submitted
regarding rating or application for rating;
(v) the security for the bonds.
(B) Investment letters shall
include investment letters from the original purchasers of the bonds, or the
purchasers of the bonds from the underwriter, in the form to be delivered at
closing, substantially to the effect that said purchaser:
(i) is a financial institution or other
accredited investor as defined in the Securities Act of 1933, Regulation D, 17
Code Federal Regulations §230.501(a);
(ii) has been furnished with all necessary
information that it desires in order to enable it to make an informed decision
concerning investment in the bonds; and
(iii) intends to purchase the bonds for its
own account (subject to certain rights to sell, pledge, transfer, convey,
hypothecate, mortgage, or dispose of such bonds at some future date). The
investment letter is not required if the letter regarding bonds in subparagraph
(C) of this paragraph is provided; and
(iv) prior to the release of the Office's
approval letter, investment letters must be signed by purchasers and include
the following information:
(I) name of
purchaser;
(II) signature of
purchaser or authorized representative;
(III) typed name and title of purchaser or
authorized representative; and
(IV)
address and telephone number of purchaser;
(v) the investment letter is not required if
the letter regarding bonds in subparagraph (C) of this paragraph is
provided.
(C) The letter
regarding the bonds shall include a letter from the underwriter, and/or a
letter from the placement agent or financial adviser, submitted on letterhead,
that the bonds are marketable; provided, that the following requirements are
met:
(i) either the user or any guarantor has
a current rating on any of its outstanding securities from Moody's Investors
Service of Ba or higher or from Standard and Poor's Corporation of BB or
higher; or
(ii) the bonds sought to
be issued have received a rating from either Moody's or Standard and Poor's of
at least Baa or BBB, respectively.
(D) The bond counsel opinion, included in the
application, shall be submitted on counsel's letterhead in substantially the
form to be delivered at closing as to the effect that the bonds have been duly
issued and delivered by the corporation in compliance with the Act. Bond
counsel must be licensed in the State of Texas or a supplemental opinion must
be provided by Texas bond counsel.
(7) Agreements.
(A) Any agreements between the participants
involved in the transaction, including, but not limited to, the loan lease, or
sale agreement and the trust indenture, in which:
(i) the user and/or guarantor agrees to pay
all project costs which are not or cannot be paid or reimbursed from the
proceeds of bonds; and
(ii) the
user and/or guarantor agrees at all times, to indemnify and hold harmless the
corporation, Office against all losses, costs, damages, expenses, and
liabilities of whatsoever nature (including, but not limited to, attorney's
fees, litigation and court costs, amounts paid in settlement, and amounts paid
to discharge judgments) directly or indirectly resulting from, arising out of,
or related to the issuance, offering, sale, delivery, or payment of the bonds,
and interest thereon, or the design, construction, installation, operation,
use, occupancy, maintenance, or ownership of the project;
(iii) written notification is provided to the
Office by the trustee, depository, or lender as appropriate, in the event of a
default in the timely payment of monies due in payment of the bonds or interest
coupons or upon notification of the trustee by the Internal Revenue Service
that the interest is, or may be, subject to federal income taxation;
(iv) a provision is included stating that no
additional or refunding bonds will be issued or delivered without prior Office
approval; and
(v) a provision is
included stating that, by virtue of the project being financed under the Act,
the user has not and will not maintain that it is entitled to an exemption from
Texas sales or use taxes on personal property acquired in connection with the
project.
(B) Copies of
official statement, placement agent agreement, bond purchase agreement, letter
of credit agreement, and instrument of guarantee, if any, shall be included as
part of the application submitted to the Office.
(C) If applicable, public hearing information
required by the Tax Reform Act of 1986, §147(f), shall be
included.
(8) Project
approval standards--generally.
(A) The
proposed project will contribute to the economic growth or stability of the
unit by:
(i) increasing or stabilizing
employment opportunity;
(ii)
significantly increasing or stabilizing the property tax base; and
(iii) promoting commerce within the unit and
the state.
(B) The user
has no present intention of disposing of or abandoning the proposed
project.
(C) The user has no
present intention of directing the proposed project to a use other than the
purposes represented to the Office and, if appropriate, the city or
county.
(D) If applicable, the user
must certify and represent that no car, truck, mobile unit, or any vehicle of
any kind whatsoever, which is financed in whole or in part by the proceeds of
the bonds, will be away from the project site for more than 30 continuous
calendar days and that all cars, trucks, mobile units, or vehicles of any kind
whatsoever, financed in whole or in part by the proceeds of the bonds, will be
rendered on the local tax rolls.
(9) Special rules for commercial projects in
economically depressed counties. The Office will not approve the financing of
projects which are to be used for commercial projects in counties except in
conformity with this section and the project approval standards set forth in
paragraph (8) of this subsection.
(A) To
establish an eligible county, the commissioners' court of the county (the
governing body) shall provide evidence satisfactory to the Office that:
(i) the county is a federally designated
economically distressed county; and
(ii) the population of the county is less
than 50,000 according to the last federal decennial census.
(B) The Office may, but shall not
be required to suggest limitations as to the amount or type of projects to be
financed for commercial purposes under the Act and this chapter within such
county.
(C) If the governing body
of the county shall conclude to request the Office to approve projects for
commercial uses, it shall adopt a resolution citing the Act and this chapter,
and further containing:
(i) a description or a
map of the boundaries of the county, and if practicable, the location of any
proposed project;
(ii) a
description of the overall objectives of the county for redevelopment and
recovery of the county, if any;
(iii) a finding and representation to the
Office that the availability of financing of projects for commercial uses under
the Act will contribute significantly to the alleviation of the economically
depressing conditions found to exist in the county;
(iv) a description of the type of projects
for commercial uses desired and authorized by the county to enhance its
redevelopment efforts, together with a description of any exclusions or
limitations by type or amount of commercial project uses which the county would
consider detrimental to its efforts to redevelop the county; and
(v) based upon the county's best estimates at
the time of adoption of the resolution, a description of proposed public
improvements, if any, to be made within reasonable proximity to the proposed
commercial project, the estimated commencement date of such public
improvements, the approximate schedule for such improvements, and the sources
of funds which the county will use for such purposes.
(D) Upon certification of the eligibility of
the affected county as set forth in subparagraph (C) of this paragraph, the
Office will approve projects for commercial uses in the county only after the
applicant demonstrates that:
(i) the specific
project conforms with any limitations specified in the resolution as provided
in this section;
(ii) the governing
body of the county has approved the project and made the determinations and
findings required by this chapter; and
(iii) the specific project to be financed for
commercial uses will significantly contribute to the fulfillment of the overall
redevelopment objectives of the county, if any; and the project conforms to the
project approval standards specified in paragraph (8) of this
subsection.
(10) Refunding issues.
(A) A complete application shall be submitted
to the Office for approval of a refunding issue, unless such bond issue does
not exceed the outstanding amount of the refunded bond.
(B) If the refunding issue does not exceed
the outstanding amount of the refunded bond, then the application to the Office
shall contain the following:
(i) information
outlined in paragraphs (1) - (6) of this subsection; and
(ii) pursuant to paragraph (7) of this
subsection, the application shall also include the official statement and any
supplemental agreements relating to the refunding issue, if any, and all others
that have not been previously approved by the Office.
(C) The application for approval of a
refunding issue shall reference, by Office docket number, the application
originally approved by the Office.
(11) Miscellaneous information.
(A) Closing information. Each application
shall contain the proposed time, date, and location for the closing of the
transaction and delivery of the bonds.
(B) Proposed approval letter. Each
application shall contain the proposed approval letter in the same form and
content to which it is desired the Office give its approval.
(c) Final transcript of proceedings.
(1) Executed documents. If the
Office gives approval to an application, upon delivery of the bonds described
in the application, there shall be submitted to the Office a final transcript
of proceedings, containing a copy of the application, and the following
instruments.
(A) Certificate of issuer. A
certificate signed by an officer of the issuer substantially to the effect
that:
(i) as of the closing date there has
been no material adverse change in the affairs of the issuer from that
described in the application for approval to the Office or otherwise disclosed
to and approved by the Office; and
(ii) the instruments provided to the Office
pursuant to subsection (b)(2)(B) and (3) of this section, as executed and
delivered by the respective parties, are substantially in the form previously
approved by the Office.
(B) Certificate of user. A certificate signed
by an officer of the user substantially to the effect that:
(i) as of the closing date there has been no
material adverse change in the affairs of the user from that described in the
application for approval to the Office or otherwise disclosed to and approved
by the Office; and
(ii) the
instruments provided to the Office pursuant to subsection (b)(2)(B) and (3) of
this section, as executed and delivered by the respective parties, are
substantially in the form previously approved by the Office.
(C) Certificate of guarantor. A
certificate for each guarantor signed by an officer of the guarantor
substantially to the effect that, as of the closing date, there has been no
material adverse change in the affairs of the guarantor from that described by
the application or otherwise disclosed to and approved in writing by the
Office.
(D) Opinions of counsel.
Executed opinions of counsel, in substantially the forms previously approved by
the Office in accordance with subsection (b)(2)(C), (4)(C), (5)(B), and (6)(D)
of this section and the opinion of the attorney general authorizing the
issuance of the bonds.
(E)
Investment letter. As appropriate, executed investment letters from the
original purchasers of the bonds, or the purchasers of the bonds from the
underwriter, in substantially the form previously approved by the Office in
accordance with subsection (b)(6)(B) of this section, or if appropriate,
subsection (b)(6)(C) of this section.
(F) Issuance and delivery notification.
Within five days of issuance and delivery of bonds a certified letter signed by
an officer of the issuer, addressed to the Office stating bonds are issued and
delivered including the following information:
(i) time;
(ii) date; and
(iii) location.
(G) Other agreements. Executed copies of all
agreements in substantially the same form as originally submitted in the
application in compliance with subsection (b)(7) of this section.
(H) Additional information. The Office may
require additional information at any time as a precondition to conditional or
final approval, or otherwise, and the costs thereof shall be borne by the
user.
(2) Filing of
transcript of proceedings. The Office requires a complete transcript of all
proceedings relating to the authorization, issuance, sale, and delivery of the
bonds to be bound as a permanent record, spine labeled as to issue, amount and
date, and be submitted to it within 45 days after the bond closing. This
requirement is not a precondition to final approval by the Office; however, the
Office will not review any additional applications submitted by the issuer
until such complies with this requirement, unless an application is submitted
within the 45 day time period. The binding shall be of such quality as will
preserve the enclosures for the term of the bonds.
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