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TRLF DEED Rules

7380.0705 PURPOSE

The transportation revolving loan fund provides loan assistance to eligible borrowers for approved transportation projects. The program is jointly administered by the Minnesota Department of Transportation and the Minnesota Public Facilities Authority. Minnesota Statutes, section 446A.085, authorizes the Minnesota Public Facilities Authority to manage and administer the fund and establishes the transportation committee of the Minnesota Public Facilities Authority to review and approve financial assistance to projects certified by the commissioner of transportation. Parts 7380.0705 to 7380.0775 provide for the authority's administration of its duties under Minnesota Statutes, section 446A.085. Parts 8800.0050 to 8800.0500 provide for the Department of Transportation's responsibilities.

 STAT AUTH: MS s 446A.085

 HIST: 23 SR 1353

7380.0715 DEFINITIONS.

Subpart 1. Scope. The terms used in parts 7380.0705 to 7380.0775 have the meanings given them in this part.

Subp. 2. Act. "Act" means the National Highway System Designation Act of 1995, Public Law Number 104-59, as amended.

Subp. 3. Applicant. "Applicant" means an eligible borrower under Minnesota Statutes, section 446A.085, subdivision 1, paragraph (b), that applies for a loan from the fund.

Subp. 4. Application. "Application" means the documents submitted to the executive director of the authority by an applicant that contain information and data in support of the applicant's loan request to the authority. The application includes the complete application forms provided by the authority. Municipal applicants must submit a municipal profile and current annual budget, or financial forecasts, as applicable, and financial audits for the last three years.

Subp. 5. Authority. "Authority" means the Minnesota Public Facilities Authority created in Minnesota Statutes, chapter 446A.

Subp. 6. Basis point. "Basis point" means the shorthand reference to 1/100 (0.01) of one percent.

Subp. 7. Bond market index. "Bond market index" means a nationally recognized index of yields on tax-exempt bonds, mainly of investment grade, that issuers would pay on issues of various maturities.

Subp. 8. Debt service account. "Debt service account" means a separate bookkeeping account established and maintained in a borrower's official financial records to account for the accumulation of resources for, and the payment of, the general obligation bond or revenue bond purchased by the authority.

Subp. 9. Dedicated sources of revenue. "Dedicated sources of revenue" means one or more sources of revenue pledged by a borrower for repayment of the loan.

Subp. 10. Department. "Department" means the Minnesota Department of Transportation.

Subp. 11. Eligible costs. "Eligible costs" means all or part of the cost of a project that may be financed by a loan from the fund provided the costs are permitted under the act and Minnesota Statutes, section 446A.085. Eligible costs include capitalized interest.

Subp. 12. Executive director. "Executive director" means the executive director of the authority.

Subp. 13. Financial capability. "Financial capability" means the capability of a borrower to retire debt incurred from the fund, as determined by its fiscal and socioeconomic data through such measures as: population trends, median household income, debt per capita, composition of municipal long-term debt, debt service coverage ratio, revenue coverage ratio, planned capital improvements, liquidity, revenue forecasts, audits or financial statements, as applicable, income and earning forecasts, financial forecasts, credit reports, and net worth calculations.

Subp. 14. Fund. "Fund" means the transportation revolving loan fund created in Minnesota Statutes, section 446A.085.

Subp. 15. General obligation bond. "General obligation bond" means a bond or note that is secured by the full faith and credit of a borrower as provided in Minnesota Statutes, chapter 475.

Subp. 16. Loan. "Loan" means financial assistance as defined in Minnesota Statutes, section 446A.085, subdivision 1, paragraph (d).

Subp. 17. Loan agreement. "Loan agreement" means the financing agreement between the borrower and the authority that provides the interest rate and the terms and conditions of the loan.

Subp. 18. Municipal profile. "Municipal profile" means a written document prepared by a municipality that describes population trends, major employers, building permits, largest taxpayers, trends of estimated market values, property tax rates, property tax collection, net tax capacity, indebtedness, budget forecasts, project capital expenditures, educational and health care facilities, and other information deemed necessary by the authority or its rating agencies to make an informed determination on the creditworthiness of the municipality.

Subp. 19. Revenue bond. "Revenue bond" means a bond or note payable from one or more specified sources of revenue and to which the full faith and credit of the issuing entity is not pledged.

Subp. 20. Transportation committee. "Transportation committee" means a committee of the authority, acting on behalf of the authority, as provided in Minnesota Statutes, section 446A.085, subdivision 1.

STAT AUTH: MS s 446A.085

HIST: 23 SR 1353

7380.0725 APPLICATIONS.

Subpart 1. Evaluation of loan applications. The executive director and staff shall evaluate loan applications for projects certified by the department. Loan applications must provide sufficient information to allow the authority to make an informed determination about whether:

  • A. the financing of the project is fully ensured;
  • B. the applicant has the financial capability to repay the loan;
  • C. collateral is being provided by the applicant to secure the loan to the extent required in part 7380.0735, subpart 3; and
  • D. the applicant has the capability to comply with Minnesota Statutes, section 446A.085, parts 7380.0705 to 7380.0775, the loan agreement, and the permissible legal covenants of the general obligation bond or revenue bond that will be issued by the applicant to the authority.

Subp. 2. Approval or rejection of loan applications. The transportation committee shall approve a loan application unless it is rejected for one or more of the following reasons:

  • A. failure of the applicant to ensure full project financing;
  • B. failure of the applicant to demonstrate financial capability to repay the loan;
  • C. failure of the applicant to collateralize the loan to the extent required in part 7380.0735, subpart 3;
  • D. failure to develop a dedicated source of revenue sufficient to ensure timely repayment of the loan; or
  • E. failure of the applicant to demonstrate its capacity to comply with Minnesota Statutes, section 446A.085, parts 7380.0705 to 7380.0775, the loan agreement, and the permissible legal covenants of the general obligation bond or revenue bond issued by the applicant to the authority.

Subp. 3. Loan agreement. When the applicant is ready to proceed with a project for which a loan application has been approved by the transportation committee, the executive director shall prepare a loan agreement.

STAT AUTH: MS s 446A.085

HIST: 23 SR 1353

7380.0735 LOAN CONDITIONS.

Subpart 1. In general. Conditions for loans provided by the authority to borrowers for certified projects are as provided by the act, Minnesota Statutes, section 446A.085, parts 7380.0705 to 7380.0775, any applicable bond resolution or series bond resolution of the authority, the loan agreement, and the general obligation bond or revenue bond issued by the borrower to the authority for the project financing.

Subp. 2. Specific conditions. The conditions in items A to E apply to borrowers receiving a loan from the fund.

  • A. Borrowers other than the department shall provide a general obligation bond or revenue bond to the authority for the full amount of the loan. Borrowers must use a nationally recognized bond counsel identified as such and included in The Bond Buyer's Municipal Marketplace Directory to prepare bond and other related documents and render an opinion to the authority.
  • B. The maximum term of the loan shall not exceed the useful life of the project.
  • C. The borrower shall designate and maintain a dedicated source or sources of revenue sufficient to fully amortize the loan.
  • D. The borrower shall designate and maintain a debt service account.
  • E. The borrower shall begin making interest payments no later than one year after the execution of the loan agreement and principal payments on the loan no later than three years after the execution of the loan agreement. Subsequent principal and interest payments must be made in the amounts and at the times given in the loan agreement.

Subp. 3. Collateral. For borrowers providing a revenue bond for a private activity loan as provided in part 7380.0745, subpart 3, the authority shall take a security interest in privately held capital assets or real property to collateralize the loan.

STAT AUTH: MS s 446A.085

HIST: 23 SR 1353

7380.0745 INTEREST RATE DETERMINATIONS.

Subpart 1. Bond market index. Except as provided in subpart 4, the interest rate charged to a borrower shall be as described in items A to C and shall be based on the bond market index on the day prior to the date of the loan agreement.

  • A. A borrower providing a general obligation bond to the authority shall be charged interest based on the yields for a Aaa rated issue.
  • B. The department shall be charged interest based on the yields for a Aaa rated issue.
  • C. A borrower providing a revenue bond to the authority shall be charged interest based on the yields for a Baa rated issue.

Subp. 2. Discounts. The discount given to a borrower shall be as described in items A and B.

  • A. The authority shall set annually by resolution the discount, if any, that shall be applied to the interest rate determined in subpart 1.
  • B. A borrower under 5,000 population shall receive an additional discount of 100 basis points.

Subp. 3. Private activity loans. If a loan meets the definition of private activity under section 141 of the Internal Revenue Code of 1986, as amended, the interest rate shall be determined by dividing the rate determined in subparts 1 and 2 by 0.75.

Subp. 4. Loans funded through the sale of authority bonds. The interest rates charged to a borrower whose project is funded through the sale of authority bonds shall be based on the yields on the authority's bonds, minus any discount set by resolution of the authority.

STAT AUTH: MS s 446A.085

HIST: 23 SR 1353

7380.0755 OTHER FINANCIAL ASSISTANCE.

In addition to loans, the authority may provide other forms of financial assistance as provided in the act and in Minnesota Statutes, section 446A.085, subdivision 1. The transportation committee shall determine when other forms of financial assistance are appropriate based on existing financial conditions, the impact on the viability of the fund, the financial capacity of the borrower, and the advantages to the borrower.

STAT AUTH: MS s 446A.085

HIST: 23 SR 1353

7380.0765 RELEASE OF FUNDS.

Subpart 1. In general. Subject to the availability of funds, disbursements to the borrower shall be made as project costs are incurred in accordance with applicable state and federal law governing such disbursements. In addition, no disbursements shall be made to a borrower until and unless the authority has determined the total estimated cost of the project and ascertained that the financing of the project is ensured by:

  • A. a loan authorized by state law or appropriation of bonds or other money of the borrower to fund the construction of the project; and
  • B. an irrevocable undertaking, by resolution of the borrower, to use all the money made available for the project exclusively for the project and to pay any additional amount by which the cost of the project exceeds the estimate by the appropriation to the construction fund of additional money or proceeds of additional bonds to be issued by the borrower.

Subp. 2. Adverse change. The authority shall not release funds to a borrower for an approved project until the authority has determined that there has been no adverse change in the financial capacity of the borrower since the day of the completion of the application. The authority reserves the right to suspend or terminate funding to a borrower if the authority determines that there has been an adverse change.

Subp. 3. Withholding, disallowance, or termination of disbursements.

  • A. The authority shall withhold or disallow either total or partial disbursements if the borrower fails to comply with the requirements of the act, Minnesota Statutes, section 446A.085, parts 7380.0705 to 7380.0775, the loan agreement, or the general obligation bond or revenue bond issued by the borrower to the authority.
  • B. If the authority withholds disbursements under item A, the executive director shall give a borrower written notice of the reasons and the time in which the borrower must demonstrate to the authority's satisfaction that the condition has or will be corrected. If the condition has not been corrected in the specified time period, withheld disbursements may be terminated. Termination of disbursements means that the amount of the loan available to the borrower is reduced by the amount terminated.

STAT AUTH: MS s 446A.085

HIST: 23 SR 1353

7380.0770 [Renumbered 7607.0170]

7380.0775 REPORTS, DISCLOSURE, AND AUDITS.

Subpart 1. Project status reports. During the term of the loan the borrower shall provide written reports to the authority. The content and timing of these reports must be as specified in the loan agreement.

Subp. 2. Disclosure. During the term of the loan the borrower must, on its own volition, disclose to the authority any material information or events impacting the creditworthiness of the borrower, including those requirements contained in rule 15c2-12 promulgated by the United States Securities and Exchange Commission, Code of Federal Regulations, title 17, section 240.15c2-12. If and when required by this rule, as determined by the authority, the borrower shall enter into a continuing disclosure document.

Subp. 3. Audits. During the term of the loan, the borrower must provide to the authority on an annual basis a financial audit conducted by an independent accounting firm.

STAT AUTH: MS s 446A.085

HIST: 23 SR 1353

Current as of 12/31/98