1. Texas Military Preparedness Commission
Revolving Loan Fund
April 2007
Texas Military Preparedness Commission
Office of the Governor

2. Who can apply for a TMRVL Loan?
Political subdivisions adjacent to, near, or encompassing part of an active military installation or an installation closed as a result of BRAC 2005
Criteria:
Increase military value for BRAC scoring
Provide positive economic impact, such as job creation, for communities negatively impacted by BRAC 2005
Assist communities with infrastructure projects that support new missions
Communities can “partner” with other Communities
Texas Military Preparedness Commission
Office of the Governor

3. Texas Military Preparedness Commission
Project Criteria
Funds must be expended completely within 5 years from when loan was awarded
Minimum amount of loan will be $1M with a maximum determined by available funds and creditworthiness
Applications must be submitted with either
Military Value Enhancement Statement; or
Economic Redevelopment Value Statement
Projects are generally expected to be related to facilities or infrastructure
Texas Military Preparedness Commission
Office of the Governor

4. Benefits of RLF
State’s AA/AA+/AA1 General Obligation Credit rating provides a lower interest rate for entities with a lower credit rating.
Economies of Scale: combining several small bond issues into one larger bond issue lowers up front costs of issuance

5. Example of Debt Service Savings
Tax Exempt: $20M for 20 years
Rating
Interest
Rate1
Total
Debt Service
Savings2
State of Texas
AA1/AA+/AA
4.475%
$30,946,167 -
Sample A GO Credit A
4.573%
$31,217,678
$271,511
Sample BBB GO Credit
BBB
4.662%
$31,462,484
$516,317
Taxable: $20M for 20 years
5.862%
$34,848,319
6.131%
$35,623,105
$774,786
6.375%
$36,333,964
$1,485,645
1 Based on market conditions as of April 9, 2007; TIC reflects 20 year level debt service with premium bonds sized to fund a $20 million project, $5.00/$1000 underwriter’s discount and $200,000 cost of issuance.
2 Over 20 year life of bond issue.

6. Loan Terms and Structure
Loan Terms and Repayment Schedule will be tailored to meet the needs of each borrower
Final term of the loan can not exceed useful life of the project or asset
Pre-payment provisions (call feature) of the loan will match the call feature of the bonds TPFA issues
TPFA Bonds are “Self-Supporting” – all costs and debt service will be paid from loan payments

7. What is the Interest Rate?
Interest rate will be the market rate for State of Texas General Obligation Bonds on the date the bonds are sold
Recent Examples:
Tax-exempt : 4.333%
(Feb. 7, 2007, 20 year; year average life)
Taxable: 5.921%
(Feb. 22, 2007, 30 year; year average life)
AMT: 4.799%
(Feb. 22, 2007, 30 year; year average life)

8. The Use of the Facility may affect the Interest Rate
Taxable vs. Tax-exempt: Facilities with a substantial “non-governmental” or private business use or guarantee may not qualify for tax-exempt interest rates.
Under the tax code the federal government is NOT a a “governmental” entity that is eligible for tax-exempt bond use.
Certain types of facilities, such as airports, qualify for tax-exempt financing but are subject to the Alternative Minimum Tax (AMT).

9. Legal Pledge
Any lawful revenue source can be pledged to repay the loan
Will vary by type of borrower (City, Economic Development Authority, Port Authority)
Examples: Property Tax (General Obligation pledge); Enterprise Revenue System (Utility, Municipal Airport); Sales Tax
Please consult your legal counsel

10. Other Costs
TMPC Administrative fee: 1/10 of 1% (10 bp) of par amount of loan ($1,000 per $1 million loan). Due when loan is funded. May be paid from bond proceeds and included in the loan amount.
Local Costs of Issuance (Financial advisor, Bond counsel, and credit rating if Borrower does not have an existing rating)
Arbitrage Rebate Compliance

11. Allocation of TPFA Costs of Issuance
Loan Amount
% of Total
Pro Rata COI
Borrower A
$5,000,000
25%
$50,000
Borrower B
$10,000,000
50%
$100,000
Borrower C
$4,000,000
20%
$40,000
Borrower D
$1,000,000 5%
$10,000
Total
$20,000,000
100%
$200,000
Bond Counsel
Financial Advisor
Rating Agency Fees
Official Statement printing and distribution
Miscellaneous

12. Example Sources and Uses Schedule
Borrower A
Borrower B
Borrower C
Borrower D
Total
Sources:
Loan Proceeds
$5,130,425
$10,209,150
$4,114,000
$1,066,120
$20,519,695
Uses:
Project Fund
$5,000,000
$10,000,000
$4,000,000
$1,000,000
$20,000,000
TMPC Fee
$5,000
$10,000
$4,000
$1,000
$20,000
TPFA Cost of Issuance
$50,000
$100,000
$40,000
$200,000
Local Cost of Issuance
Underwriter Discount
$25,425
$49,150
$5,120
$99,695

13. Example Debt Service Schedule
1 Based on market conditions as of April 9, 2007; Each Loan amount assumed to include 10bp TMPC Administrative Fee, $50,000 Local Cost of Issuance and pro rata share of TPFA Cost of Issuance and Underwriters Discount,

14. Borrowers should consult with their bond counsel and financial advisor prior to submitting an application.

15. Proposed Timeline: Date Action May 1, 2007 Letters of Interest Due
TMPC Reviews Letters of Interest and determine if there is sufficient interest to implement program (Need at least $20 million in total loans per bond issue).
June 15, 2007
Communities Submit Applications
August 16, 2007
TMPC Commissioners Approve Applications
August 30, 2007
Letters of Commitments from Communities (City Council/Board Resolution)

16. Proposed Timeline (continued):
Date
Action
September 6, 2007
TPFA Board Approves Requests for Financing
November 13, 2007
Bond Review Board Planning Session
November 29, 2007
Bond Review Board Approval
Week of Dec. 3
Governing bodies of Borrowers approve Bond resolution; Bonds sold
December 20, 2007
Loans Funded
Note: Additional approvals by Borrower’s governing body may also be required.

17. Questions? Primary Points of Contact: Applications and Timeline
Al Casals (512)
Finance Questions
Kim Edwards (512)
Legal Questions
Judith Porras (512)