(a) Instruments needed for closing. The documents which shall be required at the time of closing shall include the following:
  (1) if not closing under the pre-design funding option, evidence that requirements and regulations of all identified local, state and federal agencies having jurisdiction have been met, including but not limited to permits and authorizations;
  (2) a certified copy of the bond ordinance, order or resolution adopted by the governing body authorizing the issuance of debt to be sold to the board, or an executed promissory note and loan agreement, that is acceptable to the executive administrator and which shall have sections providing as follows:
    (A) if loan proceeds are to be deposited into an escrow account at the closing on all or a portion of the loan, then an escrow account shall be created that shall be separate from all other accounts and funds, as follows:
      (i) the account shall be maintained by an escrow agent as defined in §363.2 of this title (relating to Definitions of Terms);
      (ii) funds shall not be released from the escrow account without written approval by the executive administrator;
      (iii) upon request of the executive administrator, the escrow account statements shall be provided to the executive administrator;
      (iv) the investment of any loan proceeds deposited into an approved escrow account shall be handled in a manner that complies with the Public Funds Investment Act, Texas Government Code, Chapter 2256; and
      (v) the escrow account shall be adequately collateralized in a manner sufficient to protect the board's interest in the project and that complies with the Public Funds Collateral Act, Texas Government Code, Chapter 2257;
    (B) that a construction account shall be created which shall be separate from all other accounts and funds of the applicant;
    (C) that a final accounting be made to the board of the total sources and authorized use of project funds within 60 days of the completion of the project and that any surplus loan funds be used in a manner as approved by the executive administrator;
    (D) that an annual audit of the political subdivision, prepared in accordance with generally accepted auditing standards by a certified public accountant or licensed public accountant, be provided annually to the executive administrator;
    (E) that the political subdivision shall fix and maintain rates and collect charges to provide adequate operation, maintenance and insurance coverage on the project in an amount sufficient to protect the board's interest;
    (F) that, if applicable, the political subdivision shall document the adoption and implementation of an approved water conservation program for the duration of the loan, in accordance with §363.15 of this title;
    (G) that the political subdivision shall maintain current, accurate and complete records and accounts in accordance with generally accepted accounting principles necessary to demonstrate compliance with financial assistance related legal and contractual provisions;
    (H) that the political subdivision covenants to abide by the board's rules and relevant statutes, including the Texas Water Code, Chapters 15, 16, and 17;
    (I) that the political subdivision, or an obligated person for whom financial or operating data is presented, will undertake, either individually or in combination with other issuers of the political subdivision's obligations or obligated persons, in a written agreement or contract to comply with requirements for continuing disclosure on an ongoing basis substantially in the manner required by Securities and Exchange Commission (SEC) rule 15c2-12 and determined as if the board were a Participating Underwriter within the meaning of such rule, such continuing disclosure undertaking being for the benefit of the board and the beneficial owner of the political subdivision's obligations, if the board sells or otherwise transfers such obligations, and the beneficial owners of the board's bonds if the political subdivision is an obligated person with respect to such bonds under rule 15c2-12;
    (J) that all payments shall be made to the board via wire transfer at no cost to the board;
    (K) that the partial redemption of bonds or other authorized securities be made in inverse order of maturity;
    (L) that insurance coverage be obtained and maintained in an amount sufficient to protect the board's interest in the project;
    (M) that the political subdivision shall establish a dedicated source of revenue for repayment; and
    (N) any other recitals mandated by the executive administrator;
  (3) if applicable, evidence that the political subdivision has adopted a water conservation program in accordance with §363.15 of this title;
  (4) unqualified approving opinions of the attorney general of Texas and if bonds are issued, a certification from the comptroller of public accounts that such debt has been registered in that office;
  (5) if bonds are issued, an unqualified approving opinion by a recognized bond attorney acceptable to the executive administrator, or if a promissory note and loan agreement are used, an opinion from the corporation's attorney which is acceptable to the executive administrator;
  (6) executed escrow agreement entered into by the entity and an escrow agent satisfactory to the executive administrator, in the event that funds are escrowed, or a certificate of trust as defined in §363.2 of this title , if applicable; and
  (7) other or additional data and information, if deemed necessary by the executive administrator.
(b) Certified transcript. Within 60 days of closing, the political subdivision shall submit a transcript of proceedings relating to the debt purchased by the board which shall contain those instruments normally furnished a purchaser of debt.
(c) Additional closing requirements for bonds. A political subdivision shall be required to comply with the following closing requirements if the applicant issues bonds that are purchased by the board:
  (1) all bonds shall be closed in book-entry-only form;
  (2) the political subdivision shall use a paying agent/registrar that is a Depository Trust Company (DTC) participant;
  (3) the political subdivision shall be responsible for paying all DTC closing fees assessed to the political subdivision by the board's custodian bank directly to the board's custodian bank;
  (4) the political subdivision shall provide evidence to the board that one fully registered bond has been sent to the DTC or to the political subdivision's paying agent/registrar prior to closing; and
  (5) if bonds are being sold to the board, the political subdivision shall provide a private placement memorandum containing a detailed description of the issuance of debt to be sold to the board that is acceptable to the executive administrator.

Source Note: The provisions of this §363.42 adopted to be effective July 19, 1991, 16 TexReg 3768; amended to be effective August 12, 1994, 19 TexReg 5847; amended to be effective February 8, 1996, 21 TexReg 665; amended to be effective December 12, 1996, 21 TexReg 11794; amended to be effective October 13, 1997, 22 TexReg 9892; amended to be effective November 5, 1997, 22 TexReg 10743; amended to be effective December 7, 1999, 24 TexReg 10882; amended to be effective May 6, 2003, 28 TexReg 3732; amended to be effective December 25, 2007, 32 TexReg 9721; amended to be effective July 30, 2012, 37 TexReg 5597; amendedto be effective February 3, 2021, 46 TexReg 832