Effective date: 7/20/1999

To receive a loan, a project sponsor must enter into a negotiated written agreement with the Department. The Department shall have the primary responsibility for drafting the agreement and settling its terms. Loan agreements shall provide for the following:
    (1) The project sponsor shall establish a loan repayment reserve account. When pledged revenues result from the operation of water systems or water and sewer systems entirely owned by a single project sponsor responsible for systems operation and for loan repayment, the reserve shall be 0.03 times the total loan amount less the portion of the loan for capitalized interest and loan repayment reserve. When pledged revenues result from other revenues, the project sponsor responsible for loan repayment is other than as previously described in this subsection, the project sponsor has not demonstrated the ability to service long term debt, or all default remedies under subsection (15) below are not available to the Department, the repayment security in the form of coverage in addition to the 1.15 amount and other security features described in subsection (4) below shall be negotiated. However, any loan repayment reserve in excess of that based on the 0.03 factor specified above shall be established using local funds unless the project sponsor qualifies as a financially disadvantaged community.
    (2) Uniform loan repayments shall be made semiannually. The loan recipient shall make monthly deposits of pledged revenues to an escrowed debt service account and shall be responsible for the maintenance of that account.
    (3) The interest rate shall be 60% of the market rate as established using the Thomson Publishing Corporation’s “Bond Buyer” 20-Bond GO Index and shall not exceed that paid on the last bonds sold pursuant to s. 14, Art. VII, State Constitution. The market rate (20-Bond GO Index) shall be established by the Department as of January 1, April 1, July 1, and October 1 of each year and shall be the average weekly yield for the full weeks occurring during the three months immediately preceding the date of determination. Once established in the loan agreement, the interest rate shall be fixed for the principal amount of the loan. Interest rates for additional funds, if any, lent to the project sponsor via a loan agreement amendment shall be established in the same manner as for the initial loan. The procedures for establishing the market rate for any funds lent shall be subject to the following considerations:
    (a) When the loan agreement, as provided to the project sponsor by the Department for execution, is signed and returned to the Department in the same fiscal quarter as it is offered, the market rate shall be the average weekly yield during the preceding fiscal quarter.
    (b) When the loan agreement, as provided to the project sponsor by the Department for execution, is signed and returned to the Department in the fiscal quarter after that in which it is offered, the market rate shall be the greater of the average weekly yield for the fiscal quarter preceding that in which the loan agreement is offered and the fiscal quarter preceding that in which the signed loan agreement is returned to the Department.
    (4) Pledged revenues resulting from the operation of water systems or water and sewer systems entirely owned by a single project sponsor responsible for systems operation and for loan repayment shall be as follows:
    (a) When the project sponsor has demonstrated the ability to service long term debt and all default remedies under subsection (15) below are available to the Department, pledged revenue shall be not less than 1.15 times the amount required to make each semiannual loan repayment unless the project sponsor establishes an escrowed reserve using local funds in an amount not less than one semiannual loan repayment.
    (b) When the project sponsor has demonstrated the ability to service long term debt but all default remedies under subsection (15) below are not available to the Department, pledged revenues shall be not less than 1.15 times the amount required to make each semiannual loan repayment.
    (c) When the project sponsor has not demonstrated the ability to service long term debt and all default remedies under subsection (15) below are not available to the Department, pledged revenues shall be not less than 1.15 times the amount required to make each semiannual loan repayment. In addition, special loan security provisions shall be negotiated that provide assurance that debt service requirements will be fulfilled. The additional security provisions shall be as follows:
    1. Additional escrowed reserve funds equivalent to not less than five semiannual loan repayments. Upon request from a financially disadvantaged community, the Department shall include the equivalent of one of the five additional semiannual loan repayments in the loan repayment reserve funds to be included in the loan principal under subsection (1) above. Escrowed funds shall be accompanied by a lien on the assets of the project sponsor in the amount of the total loan principal less the amount of security of principal provided by the additional escrowed funds.
    2. A letter of credit from a bank or trust company, having a combined capital and unimpaired surplus of not less than $50 million, authorized to transact commercial banking or savings and loan business in the State of Florida and insured by the Federal Deposit Insurance Corporation assuring that no less than five semiannual loan repayments will be made. The letter of credit shall be accompanied by a lien on the assets of the project sponsor in the amount of the total loan principal less the amount of security of principal provided by the letter of credit.
    3. A personal or corporate, as applicable, obligation ensuring that all semiannual repayments can be made.
    4. Other security features equivalent to those described in subparagraphs 1. through 3. above.
    (d) When the project sponsor has not demonstrated the ability to service long term debt and all default remedies under subsection (15) below are available to the Department, pledged revenues shall be not less than 1.15 times the amount required to make each semiannual loan repayment.
    (5) Pledged revenues resulting from the operation of water systems or water and sewer systems that are not entirely owned by a single project sponsor responsible for systems operation and for loan repayment shall be subject to the negotiated loan security provisions under paragraph (c) above.
    (6) Pledged revenue coverage for the loan from the Department shall not result from or be transferred from or be derived from coverage required by senior lien debt documents.
    (7) When submitting a loan to the Department for execution, the project sponsor shall provide an affirmation by legal counsel that:
    (a) The loan agreement constitutes a valid and legal obligation of the project sponsor;
    (b) The loan agreement specifies the revenues pledged to the repayment of the loan; and
    (c) The pledge is valid and enforceable.
    (8) The Department shall have no lien on or security interest in or claim on any moneys of the project sponsor except as expressly provided in the loan agreement.
    (9) The project sponsor shall provide assurance that:
    (a) Written records will be kept and organized. The Department, the State of Florida, and their agents shall have access to all records pertaining to the loan.
    (b) Accounting and financial reporting related to a project sponsored by a governmental entity will be in accordance with Generally Accepted Government Accounting Principles established by the Government Accounting Standards Board. Accounting and financial reporting related to a project sponsored by other than a governmental entity will be in accordance with Generally Accepted Accounting Principles established by the Financial Accounting Standards Board. The address at which documents may be obtained from either Board is 401 Merritt 7, P. O. Box 5116, Norwalk, CT 06856-5116.
    (c) Facilities will be properly operated and maintained.
    (d) Loan funds will not be used for the purpose of lobbying any governmental entity.
    (10) The project sponsor shall begin repaying a loan no later than the date originally scheduled under the loan agreement.
    (11) Disbursements to the project sponsor shall be for costs paid or incurred, certain allowances, or establishment of a loan repayment reserve. However, capitalized interest is not disbursed to the project sponsor. Disbursements shall be subject to the following requirements:
    (a) Requests for disbursements (other than those relating to allowances) shall be accompanied by certifications and itemized summaries of the materials, labor, or services to identify the nature of the work performed. Certifications shall state that the construction or other service for which payment or reimbursement is sought has been satisfactorily performed.
    (b) The materials, labor, and services being invoiced shall be part of the approved project.
    (c) The disbursement shall be due under the terms of the loan agreement.
    (d) Requests for disbursements for allowances shall be subject to the limitations imposed by Rule 62-552.420, F.A.C.
    (12) No later than three (3) months before the project sponsor’s first loan repayment and annually thereafter until the final loan repayment is made, the project sponsor’s authorized representative or its chief financial officer shall submit a certification that:
    (a) Pledged revenue collections, currently deposited under subsection (2) above plus those projected to be collected at current collection rates before the due date for a semiannual loan repayment will satisfy the rate coverage requirement;
    (b) The monthly escrow account contains the funds required under subsection (2) above.
    (c) The loan repayment reserve account under subsection (1) and, if appropriate, subsection (4) above contains the funds required; and
    (d) Insurance in effect for the facilities generating the pledged revenues adequately covers the customary risks to the extent that such insurance is available.
    (13) Events of default shall include noncompliance with any of the terms of a loan agreement.
    (14) No delay or omission by the Department to exercise any right or power accruing upon an event of default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein, and every such right and power may be exercised as often as may be deemed expedient.
    (15) Remedies for default, including delinquent repayments, include the following:
    (a) Imposition of 6% penalty interest, accruing on any amount due and payable on the 30th day following the repayment due date, in addition to charging the cost to handle and process the debt.
    (b) Interception of local governmental agencies’ revenue sharing or tax sharing, except as otherwise provided by the State Constitution. The Department shall certify any local governmental agency repayment delinquency to the Auditor General and the Comptroller. The certification of delinquency shall not limit the Department from pursuing other remedies for default.
    (c) Imposition of any remedy available to the Department under Florida law.
Specific Authority 403.8532 FS. Implements Florida Statutes § 403.8532. History-New 4-7-98, Amended 8-10-98, 7-20-99.