(a) Board Participation. Unless otherwise directed by legislation, the board will only use the SWIFT or SWIRFT to provide financial assistance for all or a part of the cost to construct the excess capacity of a water plan project where:
  (1) at least 20 percent of the total facility capacity of the proposed project will serve existing need; or
  (2) the applicant will finance at least 20 percent of the total project cost from sources other than Board Participation from the SWIFT and SWIRFT.
(b) Application for Assistance. In addition to the information required in §363.12 of this chapter (relating to General, Legal, and Fiscal Information) and §363.1307 of this subchapter (relating to Pre-design Funding Option) and any other information that may be required by the executive administrator or the board, the applicant shall provide:
  (1) a proposed schedule for purchase of the board's interest in the project;
  (2) information to demonstrate the findings required in §363.1309 of this subchapter (relating to Findings Required);
  (3) if payment under the master agreement is based either wholly or in part from revenues of contracts with others, a copy of any actual or proposed contracts under which applicant's gross income is expected to accrue. Prior to release of funds, an applicant shall submit executed copies of such contracts to the executive administrator; and
  (4) if an election is required by law to authorize participation in the project, the executive administrator may require applicant to provide the election date and election results as to each proposition necessary for the participation of the applicant as part of the application.
(c) Determination. The board may provide funding for board participation from SWIFT and SWIRFT when the information available to the board is sufficient for the board to determine that:
  (1) it is reasonable to expect that the state will recover its investment in the facility based upon a determination that the revenue to be generated by the projected number of customers served by the facility will be sufficient to purchase the excess capacity owned by the state;
  (2) the estimated cost of the facility as set forth in the application exceeds the current financing capabilities of the area to be served by the facility based on a review of the existing rates of the applicant available for payment of the facility collected from the number of connections at the end of construction and other revenues available for payment of the facility;
  (3) the optimum regional development cannot be reasonably financed by local interests based on an assessment of the estimated cost to construct the alternate facility and the revenue to be generated by the projected number of customers of the facility;
  (4) the public interest will be served by acquisition of the facility based on a determination that the cost of the facility to the public is reduced by the board's participation in the facility; and
  (5) the facility to be constructed or reconstructed contemplates the optimum regional development which is reasonably required under all existing circumstances of the site based on a determination that design capacity of the components of the facility are sufficient to meet the foreseeable needs of the area over the useful life of the facility.
(d) Master Agreement. The board and the political subdivision shall enter into and execute a master agreement the text of which shall include, but not be limited to, the responsibilities, duties, and liabilities of each party, including the responsibility of a designated political subdivision to assure that proper procedures are observed in advertising for bids and selecting a bidder to construct the project; the board's cost of acquisition; procedures for disbursement of board funds for the project; recognition of a political subdivision's right of first refusal prior to any sale of the board's interest in the project; a non-competitive clause; a schedule for purchase of the board's interest in the project by the political subdivision; and any other provisions deemed appropriate and necessary by the board.
(e) Construction. On projects to be constructed or enlarged by a political subdivision or subdivisions, one political subdivision may be designated under an agreement with the board to act as manager for the project and perform the functions customarily performed by a manager-owner.
(f) Disbursement of State Funds. State funds expended for the acquisition and/or development of facilities in a project shall be disbursed in accordance with the provisions of the master agreement and any other contracts by the board pursuant thereto.
(g) Acquisition of Board's Ownership Interest.
  (1) A prospective political subdivision purchaser of the board's ownership interest in a facility or of the use of such board interest other than under terms specified in the master agreement shall submit an application in the form and number prescribed by the executive administrator. The executive administrator may request any additional information needed to evaluate the application, and may return any incomplete application.
  (2) Upon receipt of an application by a prospective purchaser of the board's ownership interest in a facility or use of the facility, the board will send notice of its receipt by regular United States mail to all co-owners of the facility, and any users of the facility or water from the facility.
  (3) The application shall be scheduled on the board's agenda, and representatives of the prospective purchaser and other interested parties shall be notified of the time of the meeting. At the conclusion of the meeting to consider the project, the board may resolve to approve, disapprove, approve with conditions, or continue consideration of the application. A commitment will include a date after which the financial assistance will no longer be available. That date shall be the end of that month which is twelve months from the month of board commitment.
  (4) If the board approves the application, a transfer resolution will be adopted which shall prescribe the terms and conditions necessary for the sale, transfer, or lease, if such terms have not been specified in the master agreement between the board and political subdivision.
  (5) Before the board's adoption of the transfer resolution, the executive administrator shall negotiate a transfer agreement with the prospective purchaser regarding the sale, transfer, or lease of board-owned interests. The transfer agreement shall include the interest transferred, the character of the interest transferred, the formula used to compute the price to be paid for the facilities to be acquired, provisions governing lease or rental of facilities, a hold harmless clause, recognition of the right of first refusal of any of the participating political subdivisions, a clause stating the conditions under which the contract may be terminated, and other provisions appropriate to the subject of the transfer agreement including provisions setting standards for operation and maintenance of the project. The attorney general of Texas shall approve as to legality any contract authorized under this subchapter.

Source Note: The provisions of this §363.1308 adopted to be effective November 26, 2014, 39 TexReg 9209