Finance Paper

WRD-006

1/10/06

TEXAS WATER DEVELOPMENT BOARD

Financial Assistance Application Procedures (WRD-006)

A complete application consists of: (1) general, legal, and fiscal information (outlined below); (2) an engineering feasibility report; (3) an environmental assessment; and (4) a water conservation and emergency water demand management plan (required for financial assistance of more than $500,000). Assistance is available on request (call 512/463 7779). All applications should be sent to the following address:

Texas Water Development Board

Office of Project Finance & Construction Assistance

P.O. Box 13231

1700 N. Congress Avenue

Austin, Texas 78711 3231

(78701 for courier deliveries)

Initially, an original and eight (8) copies of a document containing the following general, legal, and fiscal materials (except as otherwise indicated) should be submitted to the Texas Water Development Board. Applications submitted by e-mail must be followed with paper copies within five (5) business days to be considered as a complete application. Two (2) additional unbound double sided copies (no staples or permanent binding) will be requested following staff review and comment.

GENERAL INFORMATION:

1. Legal name of applicant(s) and each participating political subdivision and authority of law under which created and authority of law under which entity was created and debt is being issued; location, and population,

2. Name, title, address, phone, and fax numbers and e mail address (if available) of official representative(s);

3. Names and titles of principal officers;

4. Name, address, phone, and fax numbers, e mail address (if available) and contact person of: (a) project engineer; (b) bond counsel; (c) legal counsel [if other than bond counsel]; (d) financial advisor; and (e) any other consultant representing the applicant before the Board;

5. Comprehensive description of the project;

6. For each participating political subdivision (including federal or state agencies), provide breakdown of ownership interest, allocation of project costs including financing sources and current project status; and

7. Engineer's most current itemized project cost estimate (include all costs, specifically construction, engineering services, legal and fiscal costs, and funding sources in a Sources and Uses Statement format).

FISCAL INFORMATION:

1. Full legal name and a description of the security for the proposed debt issue(s); give full explanation of pledge being offered including flow of funds, additional bonds requirements, and any existing rate covenants'

2. All bonds are book-entry only, include acknowledgement that applicant is aware of and will abide by Depository Trust Company language;

3. Disclose all issues that may affect the project or the applicant's ability to issue and/or repay debt;

4. Circumstances surrounding prior default(s) on any debt;

5. Total outstanding debt. Segregate by type (G.O. or Revenue) and present a consolidated schedule for each, showing total annual requirements (include any authorized but unissed debt,);

6. G.O. and Revenue Debt per capita (regardless of pledge); and

7. Direct and overlapping tax rate table (regardless of pledge);

8. Assessed valuation per capita (regardless of pledge);

9. Five year sales tax collection history (regardless of pledge).

10. PROFORMA:

a. If system revenues are anticipated to be used to repay the proposed debt, a proforma detailing projected gross revenues, operating and maintenance expenditures, net revenues available for debt service showing coverage of current and proposed debt paid from revenues and a clear statement of the revenue pledge being offered; and

b. If taxes are anticipated to be used to repay the proposed debt, a proforma indicating the tax rate necessary to repay current and proposed debt paid from taxes. List the assumed collection rate and tax base used to prepare the schedule;

11. List of top ten (10) customers of the water and wastewater system by revenue with corresponding usage and percentage of total use, include whether any are in bankruptcy

12. Five year comparative system operating statement (not condensed), including audited prior years and unaudited year to date, with number of customers for each year;

13. Schedule of current water and sewer rates (include any additional service charges) and proposed rates needed to finance the project; average monthly residential water and wastewater usage, and corresponding average residential monthly bill;

14. Preceding five year historical data regarding assessed valuation taxes (Residential, Commercial and Industrial) including net ad valorem taxes levied and corresponding tax rate (detailing debt service and general purposes), and tax collection rate;

15. Current top ten (10) taxpayers showing percentage of ownership to total assessed valuation; also, state if any are in bankruptcy and explain anticipated prospective impacts;

16. Maximum tax permitted by law per $100 of property value;

17. One (1) copy of an annual audit including management letter for latest preceding fiscal year prepared by a C.P.A. or firm of accountants.

18. State if bond insurance will be purchased for the loan and if it will be financed with loan proceeds;

19. State if planning to use pre-design funding option; (If planning to use the pre-design funding option, see sequence of submittals on back of this page);

20. State if planning to use any other credit enhancement (i.e., surety bonds), the authority for its

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