N.M. Admin. Code § 2.61.5.11

Current through Register Vol. 36, No. 1, January 14, 2025

Section 2.61.5.11 - FINANCING PLAN FOR STATE AGENCY AND COMMISSION BONDS

A. In order to obtain approval of the issuance of state agency and commission bonds, the board will require the issuing authority to prepare a financing plan for presentation to the board at a meeting of the board prior to the sale of the state agency and commission bonds. The financing plan for state agency and commission bonds shall address the following:

(1) Debt management

(a) current outstanding debt and relation of the proposed issue to financial and parity bond limits.

(b) five-year history and five-year forecast of pledged revenue used for proposed debt service. Historical data should be from fiscal year audited financial statements.

(c) current and five-year projected coverage ratios on annual debt service requirements by:

(i) pledged revenue.

(ii) total revenue legally available for debt service.

(iii) maximum fiscal year debt service as a percentage of prior fiscal year audited pledged revenue, if available.

(d) the basis for any projections or forecasts of future year revenue should be explained, and if future revenue needed to support debt service is to be derived from new facilities or projects, a feasibility study reflecting the likelihood of such revenue should be furnished. The study should clearly set forth any assumptions upon which the feasibility study is based.

(2) Debt structure terms

(a) maturity structure of proposed issue.

(b) estimated interest rates on proposed bonds including true-interest-cost, all-inclusive interest cost, and average coupon.

(c) estimated average life of the bonds.

(d) table showing, on a fiscal year basis, total future debt payments by:

(i) new issue.

(ii) outstanding issues.

(iii) total debt payments (new and outstanding issues).

(e) estimated terms and conditions of bonds including covenant and call provisions, if applicable.

(f) Bond insurance or other credit enhancement costs and benefits, if applicable.

(g) Maximum principal amount and the maximum interest rate allowed for bond sale.

(h) Type of investments of proceeds, if applicable, the procedure to be used in selecting and purchasing the investments and representation that investment contracts will be competitively bid with documentation of the bidding process with at least three bona fide independent bidders.

(i) How the proposed debt structures relates to long-term strategic financing plan.

(3) Sales management

(a) Representation and compensation of financial advisor, if any, and method of selection.

(b) Method of sale, including justification for a negotiated sale, if any, and, if negotiated, method of selection of underwriter.

(c) Representation and compensation of bond counsel, special tax counsel, if any, and disclosure counsel, if any, and indication of method of selection.

(d) Breakout of costs of issuance. For negotiated sales, cost of issuance breakout should include underwriters' discount as broken out by management fee, structuring fee, takedown and estimated expenses.

(e) Ratings history, target and strategy.

(f) Anticipated timing of sale.

(4) Legal documents

(a) All resolutions previously adopted by the issuing authority relating to the financing.

(b) Drafts of all resolutions to be adopted by the issuing authority relating to the financing.

(c) Draft parameters resolution of the board approving the bond issue.

(d) Copies (or drafts if not in final form) of all financing documents.

(5) In addition, where state agency and commission bonds are refunding bonds

(a) Estimated gross and net present value savings annually, if any, by each series of refunded bonds.

(b) Interest rate and debt service comparisons between refunding and refunded bonds.

(c) Description of sources and uses of funds.

(d) Redemption dates and call premiums on refunded bonds with an analysis of the potential costs and benefits of delay of issuing the refunding bonds.

(e) Description of re-structuring including reasons and special arbitrage issues, if applicable.

(f) Type of proposed investments used for escrow accounts, the procedure to be used in selecting and purchasing the investments.

(6) Additional information

(a) A certification of the issuing authority certifying that the issuing authority has complied with all statutory requirements for the issuance of state agency and commission bonds.

(b) Any other information that the board, in its discretion, needs in order to fulfill its duty to review and approve proposed state agency and commission bonds.

N.M. Admin. Code § 2.61.5.11

2.61.5.11 NMAC - N, 4-28-2000