Texas Public Finance Authoritys Agency Orientation

1
Texas Public Finance Authoritys Agency
Orientation

• Kim Edwards Executive Director 463-5700
• Judith Porras General Counsel 463-5681
• John Hernandez Deputy Director 463-3101
• Gabriela Klein Financial Analyst 463-3142
• March 23, 2004
• www.tpfa.state.tx.us

2
TPFA Debt Instruments
3
Bond Issuance Process

• Legislative approval
• Agency adopts a resolution
• Agency submits request for financing to TPFA
• TPFA Board approves request
• Bond Review Board approval
• Bond sale/closing

4
Legislative Approval
5
Agency Resolution

• Authorizing the request for financing and
  delegating authority to sign required documents
  and take other required action to accomplish the
  financing

6
Request for Financing

• Submitted by Client Agency at least 12 weeks
  before funds are required.
• Includes
• Agency Resolution delegating authority
• Legal Authority for Project
• Project Analysis (ie, Project Description,
  Project Budget, Schedule)
• Disbursement (also referred to as Expenditure
  or Draw) Schedule
• Addition information
• The Request for Financing is required by TPFA
  Board Rules, 34 Texas Administrative Code,
  Section 221.3, available at www.tpfa.state.tx.us

7
Financing Steps

• TPFA Approval
• BRB Approval (www.brb.state.tx.us)
• Bond Sale / Closing

8
Pre-planning

• Project description
• Timing of funding (how much money will you need,
  when will you need it)
• Special information (e.g., use of facility by
  entities other than state or local governments
  management contracts repayment sources other
  than General Revenue)
• Contact information (name, title, phone, email)
  for Finance/Budget, Project Manager, and General
  Counsel

9
Financing Documents
10
Major Documents in Bond Issue

• Request for Financing
• Memorandum of Understanding
• Reimbursement Resolution (if necessary)
• Financing Agreement (GOs) or Lease Agreement
  (appropriation-backed lease revenue bonds)
• Resolution of the Board of the Authority
  authorizing the issuance and sale of the Bonds
  and the terms and conditions thereof.
• Official Statement
• Funds Management Agreement
• Tax or Arbitrage Certificate

11
Memorandum of Understanding

• Required by Texas Government Code, Section
  1232.102.
• States the respective rights and responsibilities
  of the Agency and the Authority.
• Required for GO and Revenue Bond Issues
• Should execute new MOUs for the new projects
  under HJR97/HB3064
• MOUs for tuition revenue bonds are fairly recent
  and probably do not need to be redone.

12
Financing Agreement (for GOs)

• Sets out the conditions of the financing
• Rights and Obligations of the Agency
• Complete project and spend the money
• Operate, maintain, use the Project for intended,
  specified governmental purposes
• Comply with tax covenants
• Help Authority comply with tax and continuing
  securities disclosure requirements.

13
Bond Proceeds
14
Draws

• Draw - transfer of bond proceeds from TPFA to
  client agency
• Currently processed on the 8th and 23rd of each
  month

15
Status Reports

• Reports are due by the 20th of each month
• Include percentage of work completed
• Report deviations from the original expenditure
  schedule
• Report project status and identify problems
  including cost overruns and project delays

16
Project Completions

• Submit a project completion certificate upon
  completion of the financed projects or when no
  further proceeds will be expended for project
  costs.

17
Arbitrage Rebate
18
Arbitrage for Tax Exempt Bonds

• Investing tax-exempt proceeds in taxable
  securities, resulting in a profit or loss.
• Source First Southwest Asset Management

Positive Arbitrage
Negative Arbitrage
19
24 Month Spending Exception for Construction
Projects

• The interest earnings from an issue can be
  exempted from rebate if the gross proceeds are
  spent as illustrated
• The first three benchmarks include reasonably
  expected interest earnings based on the original
  expenditure schedule and the fourth is based on
  actual interest earnings.

20
Arbitrage Rebate Calculations

• Calculations are performed as of August 31st of
  each year.
• An amount sufficient to cover the rebate
  liability is transferred from the project fund to
  the rebate fund when the liability is recognized.
  
• Installments must be paid to the IRS at least
  every 5th bond year.

21
Shared Funds - Highlights of AFR requirements
TIP For additional information
seeReporting Requirements and Technical
Guidance for Annual Financial Reports of State
Agencies
22
Introduction

• A number of state funds are appropriated for
  use by more than one agency. These funds are
  called shared funds. The procedures in the
  Reporting Requirements for the AFR are provided
  to ensure Cash in State Treasury is not double
  counted and all shared fund activity is reported
  by the appropriate agency.
• Reporting Requirements and Technical Guidance
  for Annual Financial Reports of State Agencies. -
  Comptroller of Public Accounts (CPA)

23
Agency Responsibilities

• Controlling Agency TPFA
• The controlling agency is the agency required to
  reconcile the entire cash activity for the fund
  and report the Cash in State Treasury balance on
  the Annual Financial Report.
• Non-Controlling Agency Client Agency
• A Non-Controlling Agency is any other state
  agency authorized to spend money from a shared
  fund. . . The agency should not report the
  shared Cash in State Treasury balance on the
  Annual Financial Report.
• Universities and Texas Parks Wildlife
  Department are exceptions
• Source Requirements for the Annual Financial
  Reports (Page 3.27 June 2003)

24
Non-Controlling Agencies

• Operating Transfers-In must be reported in the
  amount of cash and accrued transactions incurred
  by the agency.
• Any Cash in State Treasury Balance should be
  reclassified with a shared cash adjustment.
• Non-Controlling agencies will account for the
  year-end accruals reported as payables by
  offsetting them with a Due-From.
• Source Requirements for the Annual Financial
  Reports (Page 3.28 June 2003)

25
Fixed Asset Reporting
26
Bond Schedules
27
Deadlines

• 08/31/ USAS Cash Adjustments
• 09/30/ Coordination of Interagency Transactions
• 10/15/ Interagency Transactions entered in
  USAS (via RTI process)
• 10/30/ Last RTI transaction date
• 11/20/ Interagency Transactions Certification
• 11/20/ AFR Due

28
Using the Proceeds

• TPFA requires client agencies to set up a
  collected budget in their project funds.
• For information regarding the use of collected
  budgets in a project fund, contact TPFA or your
  appropriation control officer.

29
Debt Service

• Debt Service/Proceeds Contact Pamela
  Scivicque Business Manager 463-3141 pscivicq_at_tp
  fa.state.tx.us
• MLPP Debt Service Contact Tracey Peña
  MLPP Coordinator 463-5695 tpena_at_tpfa.state.tx.us