SECTION 363.1306. Interest Rates for Loans

For loans from the SWIFT and SWIRFT, the following procedures will be used to set interest rates.

(1) The executive administrator will set interest rates under this section for loans on a date that is at least five business days prior to the political subdivision's anticipated adoption of the ordinance or resolution authorizing its bonds and not more than 45 days before the anticipated closing of the loan from the board. After 45 days from the establishment of the interest rate of a loan, rates will be reconsidered, and may be extended only with the approval of the executive administrator.

(2) For loans from the fund, the executive administrator will set the interest rates in accordance with the following:

(A) To the extent that the source of funding is provided from bond proceeds, the lending rate scale(s) will be determined as provided under §363.33(b) of this title (relating to Interest Rates for Loans and Purchase of Board's Interest in State Participation Projects).

(B) The loan interest rate will be determined based on a debt service schedule acceptable to the executive administrator. The executive administrator will identify the appropriate scale for the borrower and identify the market rate for the maturity due in each year. The board may set an interest rate subsidy. The executive administrator will reduce the market rate by a subsidy as determined by the board and thereby identify a proposed loan interest rate for each maturity. The proposed loan interest rate will be applied to the proposed principal repayment schedule. In no instance shall the subsidy determined by the board exceed 50 percent of the market rate.

(C) For loans made under §363.1305(a)(4) of this subchapter (relating to Use of Funds), which receive deferred principal and interest payments, the executive administrator will identify the appropriate scale for the borrower and identify the market rate for the maturity due in each year. The board may set an interest rate subsidy. The executive administrator will reduce the market rate by a subsidy as determined by the board and thereby identify a proposed loan interest rate for each maturity. The proposed loan interest rate will be applied to the proposed principal repayment schedule.

Source Note: The provisions of this §363.1306 adopted to be effective November 26, 2014, 39 TexReg 9209