(a) This loan application option will provide an eligible applicant that meets all applicable board requirements an alternative to secure a commitment and close a loan for the pre-design, design or building costs associated with a project. Under this option, a loan may be closed and funds necessary to complete planning and design activities released. If planning requirements have not been satisfied, design and building funds will be held or escrowed and released in the sequence described in this section. Following completion of planning activities and environmental assessment, the executive administrator may require the applicant to make changes in order to proceed with the project. If the portion of a project associated with funds in escrow cannot proceed, the loan recipient shall use the escrowed funds to pay off the obligations to the board in inverse order of maturity.
(b) The executive administrator may recommend to the board the use of this section if, based on available information, there appear to be no significant permitting, social, environmental, engineering, or financial issues associated with the project. An application for pre-design funding may be considered by the board despite a negative recommendation from the executive administrator.
(c) Applications for pre-design funding must include the following information:
  (1) for loans including building cost, a preliminary engineering feasibility report which will include at minimum: a description and purpose of the project; area maps or drawings as necessary to fully locate the project area(s); a proposed project schedule; estimated project costs and budget including sources of funds; current and future populations and projected water needs and sources; alternatives considered; and a discussion of known permitting, social or environmental issues which may affect the alternatives considered and the implementation of the proposed project;
  (2) contracts for engineering services;
  (3) evidence that an approved water conservation plan will be adopted prior to the release of loan funds;
  (4) all information required in §384.22(b)(1) of this title (relating to Application for Assistance); and
  (5) any additional information the executive administrator may request to complete evaluation of the application.
(d) After board commitment and completion of all closing and release prerequisites as specified in §384.41 of this title (relating to Loan Closing), §384.42 of this title (relating to Deed of Trust and Other Required Documentation), and §384.43 of this title (relating to Release of Funds), funds will be released in the following sequence:
  (1) for planning and permitting costs, after receipt of executed contracts for the planning or permitting phase;
  (2) for design costs, after receipt of executed contracts for the design phase and upon approval of an engineering feasibility report as specified in §363.13 of this title (relating to Engineering Feasibility Data) and compliance with §363.14 of this title (relating to Environmental Assessment);
  (3) for building costs, after issuance of any applicable permits, and after bid documents are approved and executed construction documents are contingently awarded.
(e) Board staff will use preliminary environmental data provided by the applicant, as specified in subsection (d) of this section and make a written report to the executive administrator on known or potential significant social or environmental concerns. Subsequently, these projects must have a favorable executive administrator's recommendation which is based upon a full environmental review during planning, as provided under §363.14 of this title.
(f) The executive administrator will advise the board concerning projects that involve major economic or administrative impacts to the applicant resulting from environmentally related special mitigative or precautionary measures from an environmental assessment under §363.14 of this title.

Source Note: The provisions of this §365.23 adopted to be effective January 1, 2002, 26 TexReg 11031; transferred effective February 15, 2020, as published in the January 24, 2020 issue of the Texas Register, 45 TexReg 593