(a) Definitions. For purposes of this section, the term "bonds" includes commercial paper used for refunding purposes, and the term "public securities" includes other obligations authorized to be refunded by law that do not constitute public securities under §1202.001 of the Government Code.
(b) Types of Refundings. Refundings may be accomplished by the issuance of advance or current refunding bonds sold for cash or exchange refunding bonds issued in exchange for the refunded obligations. For state law purposes, all refundings in which the public securities being refunded are not paid and discharged the same day as the refunding bonds are issued are considered to be "advance refundings."
(c) Advance Refundings. Transcripts for net defeasance advance refunding must include documentation from an accounting firm or other qualified entity, other than the issuer, verifying the sufficiency of the investments of the escrowed proceeds to redeem on the redemption date or pay at maturity, as applicable, the refunded public securities. For a gross defeasance, a certificate of sufficiency from the paying agent for the refunded obligations or other qualified entity, other than the issuer, is required. For purposes of this section, "net defeasance" means a deposit of refunding proceeds and any issuer contribution upon closing in escrow, which requires the accrual of investment earnings in order to provide sufficient funds to pay the refunded public securities on the redemption date or at maturity, as applicable; and "gross defeasance" means a deposit of refunding proceeds and any issuer contribution upon closing, which is sufficient to pay the refunded public securities on the redemption date or at maturity, as applicable, without further investment. For an advance refunding pursuant to Subchapter C of Chapter 1207 of the Government Code:
  (1) the financial institution with whom the refunding bond proceeds are to be deposited must enter into an escrow or similar agreement if required by §1207.062 of the Government Code, or otherwise execute an agreement or certificate confirming its agreement to hold the refunding proceeds and any issuer contribution in trust for the owners of the refunded public securities; each agreement shall collateralize uninvested funds until their payment at redemption or maturity to the extent not insured by the Federal Deposit Insurance Corporation; and
  (2) a certification of incumbency, including specimen signatures, and corporate authority of the financial institution executing the agreement required by subsection (d)(1) must be included in the transcript.
(d) Paying Agent for Refunded Public Securities. All paying agents for public securities to be redeemed must acknowledge:
  (1) receipt of a notice of redemption and, in cases in which a notice of redemption is required to be published or mailed to the registered owners prior to the delivery of the refunding bonds, evidence of such publication or a certification by the paying agent/registrar as to provision of notice to registered owners must be included in the transcript; and
  (2) satisfaction of paying agent fees; if fees will not be paid at closing, the paying agent must certify that it will not look to the bond proceeds as payment for its fees but its sole remedy will be an action for payment under the paying agent agreement.
(e) Exchange Refundings. Exchange refunding bonds issued pursuant to the authority of §1207.081 of the Government Code may be sent to the Comptroller for registration after approval if the transcript includes instructions from the issuer to the paying agent for the refunding bonds to hold the bonds and deliver them only upon surrender of the public securities being refunded, and a representation that the refunding bonds will be delivered to the paying agent for further delivery as instructed and not to any other party, or provides a similar mechanism for ensuring delivery only in exchange for the public securities being refunded.
(f) Combination New Money and Refunding Public Securities. For combination new money/refunding bonds issued pursuant to Chapter 1207 of the Government Code, the issuer must provide documentation in accordance with these rules evidencing compliance with any election, notice, or publication requirements for the new money portion.
(g) Public Purpose and Required Findings. A refunding pursuant to Chapter 1207 of the Government Code for which the aggregate amount of payments to be made on the refunding bonds will or may exceed the aggregate amount of payments to be made on the public securities being refunded must include the finding required by §1207.008(a)(1) and must include the finding required by §1207.008(a)(2), unless, as provided by subsection (b) of that section, the governing body of the issuer determines and states in the order, ordinance, or resolution authorizing the refunding that the manner in which the refunding is being executed does not make it practicable to make the determination required by subsection (a)(2) of that section. Refunding transcripts must include a debt service savings or loss schedule showing the amount of debt service savings or loss, reflecting the calculation of any issuer contribution and showing the methodology used. If there is no gross savings or the issuer has made a finding of impracticability under §1207.008(b), a statement must be included in the bond order, ordinance, or resolution explaining the public purpose of the refunding.
(h) Submission of Refunded Public Securities Documents. All refunding transcripts must contain a copy of the order, ordinance or resolution authorizing, or a copy of the trust indenture securing, the public securities being refunded. The documentation submitted should include the pricing certificate for public securities sold pursuant to delegated authority.
(i) Refunding Assumed Public Securities. For refunding bonds being issued to refund public securities for which the obligation to pay has been assumed through annexation of another political subdivision or special district, the following must be included in the transcript:
  (1) if applicable, a certified copy of the action taken by the governing body that conducted the annexation calling the public hearing and authorizing publication of the notice of the hearing;
  (2) if applicable, an original or certified copy of the affidavit of publication of the notice of the hearing with the newspaper clipping attached; and
  (3) a certified copy of the action taken by the governing body annexing the land and assuming the debt.

Source Note: The provisions of this §53.12 adopted to be effective January 5, 2017, 41 TexReg 10543