Section 21.926 - Calculation of Annual Prepayment Amount(a) General. (1) The annual prepayment amount for each year of the initial three-year period and all subsequent three-year periods of a master agreement will be equal to 75 percent of the averaged annual relocation/adjustment costs incurred or paid for the relocation of utility facilities during the applicable preceding three years of each period as determined by subsections (c) and (d) of this section.(2) If a relocation project contains both work that is eligible under this subchapter and work that is eligible for reimbursement under Transportation Code, § 203.092, only the work that is eligible for reimbursement under this subchapter will be used in calculating the annual prepayment amount.(3) Relocation/adjustment costs related to utility facilities on highway improvement projects that are paid or incurred within the applicable three year period will be included in calculating the annual prepayment amount, regardless of when the highway improvement project or relocation work began or ended.(4) Relocation/adjustment costs will be included in calculating the annual prepayment amount regardless of whether those costs are developed, recorded, and paid for by means of actual costs accumulated in accordance with a work order accounting procedure, lump-sum agreement, unit costs, or other costing methods founded on generally accepted industry practices.(b) Three-year calculation period. (1) In this subsection, "year" means 12 consecutive months.(2) The period for calculating the initial annual prepayment amount is the three-year period ending on the last day of the third calendar month preceding the month in which the department receives the utility's application under § 21.924 of this subchapter.(3) The period for calculating each subsequent annual prepayment amount is the three-year period ending on the last day of the third full calendar month preceding the anniversary date of the execution of the master agreement on which that subsequent period begins.(c) Initial three-year period. (1) For purposes of this subsection, "relocation/adjustment costs incurred" does not include invoices received but not yet paid by the utility for services or materials provided by third parties.(2) For determination of the annual prepayment amount for the initial three-year period, the utility shall provide to the department the amount of the relocation/adjustment costs incurred or paid by the utility for each year of the preceding three-year calculation period as part of its application required under § 21.924 of this subchapter.(3) The utility shall submit an accounting ledger certified by the utility's president, chief executive officer, or senior level executive as being correct for the preceding three-year calculation period, listing for each year of that period all of the relocation/adjustment costs incurred or paid for relocation of the utility's facilities. The accounting ledger must contain or have attached: (A) a listing of all applicable relocations with each relocation identified by one or more of the following characteristics based on the best information available to the utility: (i) state highway designation;(iii) the department's highway control section number;(iv) the utility's project work order number; or(v) date of relocation completion;(B) the total relocation/adjustment costs incurred or paid by the utility for each relocation identified in the list provided under subparagraph (A) of this paragraph; and(C) a summary ledger or recapitulation summary ledger that identifies the amounts incurred or paid for each major cost category of direct and related indirect and overhead costs for each relocation identified in the list provided under subparagraph (A) of this paragraph, with any deductions for betterments and other credits, or if that major cost category information is not reasonably available to the utility, an explanation of how the relocation/adjustment costs were calculated together with information or data maintained in the utility's ordinary course of business to generally support the explanation.(4) If actual betterment costs are not reasonably available, the utility for purposes of paragraph (3)(C) of this subsection may approximate the deduction for betterment in the calculation of relocation/adjustment costs, by using a betterment factor developed from the average betterment credit for the adjustment or modification of its facilities on projects for improvement of the state highway system that were reimbursable under Transportation Code, § 203.092 during the same preceding three-year calculation period.(5) The utility shall submit to the department the location where the records supporting the accounting ledger described by paragraph (3) of this subsection can be inspected and the identity and contact information of the utility representative with whom to coordinate the audit. The utility shall allow the department and its representatives, upon 30 days written notice to the utility and at the department's sole expense, to audit during the utility's regular business hours, the records that the department reasonably deems necessary for the purpose of verifying the accounting ledger.(6) an audit under paragraph (5) of this subsection must be completed, and the department shall submit in writing to the utility any of its objections to the utility's calculation of relocation/adjustment costs within 60 days after the date the department sends notice of the audit.(d) Subsequent three-year period. (1) For determination of the annual prepayment amount for each subsequent three-year period, the department shall provide to the utility the relocation/adjustment costs paid by the department for each year of the preceding three-year calculation period no later than the 10th day preceding the applicable anniversary date of the master agreement.(2) The department shall submit a record of financial reports generated by the department's accounting system and certified by the director or Finance Division Director as being correct for the preceding three-year calculation period, listing for each year all of the relocation/adjustment costs paid by the department, including reimbursements to the utility, for relocation of the utility's facilities. The department's record of financial reports must contain or have attached: (A) a listing of all applicable relocations with each relocation identified by the following characteristics, if available: (i) the department's project number;(ii) state highway designation;(iii) location by county and highway control section;(iv) project utility agreement number; and(v) date of completion based on notice received from the utility; and(B) the total relocation/adjustment costs paid to or on the behalf of the utility by the department for each relocation identified in the list provided under subparagraph (A) of this paragraph.(3) The department will maintain complete and accurate cost records for relocation/adjustment costs paid or reimbursed for relocation of the utility's facilities, in accordance with Generally Accepted Accounting Principles. The department shall allow the utility and its representatives, upon 30 days written notice to the department and at the utility's sole expense, to audit during the department's regular business hours, the records that the utility reasonably deems necessary for the purpose of verifying the department's record of financial reports.(4) An audit under paragraph (3) of this subsection must be completed, and the utility shall submit to the department in writing any of its objections to the department's calculation of relocation/adjustment costs within 60 days after the date the utility sends notice of the audit.(e) Objection to calculation. (1) In the event of an objection to the utility's calculation of relocation/adjustment costs for the initial three-year period or the department's calculation of relocation/adjustment costs for subsequent three-year periods, the procedure provided by this subsection applies.(2) The department and utility shall negotiate in good faith to reach an agreement.(3) Upon the written request of either party, made after the 21st day following the date that a written objection is delivered to the opposing party, the department and utility shall participate in nonbinding mediation with a mutually agreed upon private mediator from outside the department. Each party shall have in attendance at the mediation, or available by other means of communication, a representative who has the authority necessary to negotiate an agreement. The role of the mediator is limited to assisting the parties in attempting to reach an agreement on the calculation of relocation/adjustment costs.(4) The costs for the services of a private mediator under this subsection will be apportioned equally between the department and the utility.(f) Director's determination. (1) If an agreement is not reached in either the negotiation process or mediation, the director will make a final determination regarding the calculation of relocation/adjustment costs for the purposes of establishing the annual prepayment amount, whether for the initial or a subsequent three-year period, within 60 days after the date that a written objection was received.(2) If the final determination is acceptable to the utility, the utility shall so advise the director in writing within 14 days after the date of the final determination.(3) If the final determination is not acceptable to the utility, or if the director does not make the final determination within the 60 day period specified in paragraph (1) of this subsection, the utility may submit a written protest to the executive director. The protest must completely and succinctly state the grounds and factual basis for the protest, and must include all factual documentation in sufficient detail to establish its merits.(4) The utility has the burden of proving its protest under paragraph (3) of this subsection. The protest shall be decided on the basis of the written submission. No hearing will be held. Within 30 days after the date of receipt of the protest, the executive director or the executive director's designee, other than the director, shall issue a final written decision on the annual prepayment amount for the applicable three year period.(g) Payment due date. Notwithstanding any other provision of this subchapter to the contrary, if a written objection to the calculation of relocation/adjustment costs is timely submitted, payment of an annual prepayment amount, either in full or by quarterly installment, is not due until the 30th day after the later of the date of the written agreement of the parties, final determination of the annual prepayment amount, or a final decision after a protest under subsection (f) of this section.43 Tex. Admin. Code § 21.926
The provisions of this §21.926 adopted to be effective March 20, 2008, 33 TexReg 2340