Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
96.540,
147A.021,
Chapter 224A
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
224A.070(1) and
224A.113
authorize the Kentucky Infrastructure Authority to promulgate administrative
regulations in accordance with KRS Chapter 13A to govern the application for
and provision of financial assistance to governmental agencies for the
construction or acquisition of infrastructure projects from the Infrastructure
Revolving Fund established pursuant to
KRS
224A.112.
Section
1. Definitions.
(1) "Applicant"
means any eligible applicant, pursuant to Section 2 of this administrative
regulation, that has submitted an application for funds to the
Authority.
(2) "Authority" is
defined by
KRS
224A.011(4).
(3) "Closing date" means the date established
by the Authority for execution of the assistance agreement upon satisfaction of
the conditions contained in the conditional commitment letter.
(4) "Conditional commitment letter" means a
letter delivered to the applicant stating the Authority's commitment to provide
financial assistance subject to the satisfaction of certain conditions by the
applicant on or before the closing date.
(5) "Kentucky eClearinghouse" means the
automated Kentucky State Clearinghouse coordinating the Federal Executive
Review Process and Kentucky Intergovernmental Review Process, for which the
Department for Local Government, Office of the Governor, has been designated as
the single point of contact for federal or state funding financial assistance
as required by
KRS
147A.021(3)(k).
(6) "Kentucky State Data Center" means the
agency within the Urban Studies Institute of the University of Louisville
designated by the Commonwealth to serve as the repository and analyst of data
and information generated by the U. S. Census Bureau.
(7) "Median household income" means the
statistical middle value in household income, considering all households in
Kentucky, with an equal number of households above and below the middle value,
as determined by the Kentucky State Data Center.
(8) "Regionalization" means the creation of
expanded service areas which take in a large geographic area of multiple
systems; the creation of multijurisdictional utility commissions, special
districts, authorities, or corporations; the utilization of interlocal
cooperation agreements; the consolidated operation or management of multiple
systems which may include regional facilities, smaller systems, or onsite
systems; or the merger, consolidation, or combination of two (2) or more
existing facilities or systems.
Section 2. Eligible Applicants.
(1) Any governmental agency, as defined in
KRS
224A.011, or investor-owned water system, as
provided for in
KRS
96.540,
224A.306,
224A.308,
and
224A.310,
shall be eligible to apply to receive financial assistance for construction or
acquisition of infrastructure projects.
(2) Each applicant shall have or shall attain
the legal authority necessary for constructing, operating, and maintaining, the
proposed infrastructure project. The applicant shall also have the legal
authority to obtain, give security for, and repay a proposed loan. The
applicant shall be responsible for operating, maintaining and managing the
infrastructure project and providing for its continued availability and use at
rates and terms that shall be adequate to meet its obligations as they become
due, including any loan or loans outstanding. If the infrastructure project is
to be operated, maintained, or managed by a third party under contract,
management agreement, or written lease, the applicant shall continue to be
responsible for compliance with the requirements of this section.
Section 3. Eligible Infrastructure
Projects. Monies in the Infrastructure Revolving Fund shall be used for
infrastructure projects that will enhance the health, safety, and welfare in
local communities. Eligible activities shall include infrastructure projects as
defined in
KRS
224A.011(16).
Section 4. Submission Requirements and Review
Process.
(1) An application shall be submitted
to the Kentucky Infrastructure Authority, 1024 Capital Center Drive, Suite 340,
Frankfort, Kentucky 40601, Attention: Executive Director.
(2) Application forms may be obtained from
the Authority.
(3) Applicants may
supplement their applications during the review process to clarify or explain
the project scope, funds pledged as repayment of the loan, or make adjustments
in the application to enhance the programmatic or financial feasibility of the
project.
(4) Applicants shall be
required to submit to the Authority a current endorsement letter from the
Kentucky eClearinghouse.
Section
5. Criteria for Awarding Financial Assistance.
(1) The Authority shall select eligible
projects for financial assistance taking into consideration the following:
(a) Total cost of the project;
(b) Availability of other funding for the
project;
(c) Number of unserved and
underserved households;
(d)
Regional impact of the project; and
(e) Consistency with the Area Water
Management Plan (if applicable).
(2) Financial review of the project applications shall
include analysis of:
(a) The appropriateness
and adequacy of revenues pledged for the repayment of financial
assistance;
(b) The validity of the
assumptions used to project new revenues resulting from the project;
(c) Security of monies other than the
infrastructure financial assistance pledged to fund the project cost;
(d) Ability of the applicant to provide for
maintenance and operations cost of the project and related public service
system;
(e) Ability of the
applicant to service existing debt of the system and debt related to the
project; and
(f) Ability of the
Authority to finance the applicant project using the financing programs
permitted by state and federal law or regulation.
Section 6. Financial
Assistance Process.
(1) Upon completion of the
credit review by the Authority, the application shall be submitted to the
Authority's board for final action. The credit review shall include an analysis
of the applicant's ability to generate sufficient revenue based on financial
statements provided by the applicant to cover operating costs and to repay the
required principal, interest, fees, and reserves required by receipt of the
financial assistance.
(2) If the
Authority's board approves the application, a Conditional Commitment Letter
shall be issued to the applicant. This letter shall set forth the conditions
and documentations required prior to execution of an assistance agreement.
Funds shall not be provided until the assistance agreement is fully executed.
The commitment shall be made upon the Authority's satisfaction that the project
proposed is financially feasible, the applicant is credit worthy and the
project shall comply with all technical and program requirements set forth in
state and federal law and regulations including certification by the applicant
as to compliance with
KRS
224A.306 requiring a uniform system of
accounts and cost-based rates.
(3)
(a) The Authority shall establish interest
rates based on:
1. Prevailing market
conditions;
2. Availability of
funds; and
3. Demand for financial
assistance.
(b) The
executive director of the Authority shall recommend rates to the Authority's
board for approval at least annually.
(c) The rate of interest on each financial
assistance shall be set forth in the conditional commitment letter.
(d) Interest rates shall be offered at the:
1. Standard rate; and
2. A nonstandard rate or rates, which may be
lower than the standard rate.
(e) Applicants shall receive the standard
rate of interest unless they qualify for a nonstand-ard rate.
(f) An applicant shall qualify for a
nonstandard rate if:
1. The median household
income of the applicant's jurisdiction or service area as published by the
Kentucky State Data Center is below the state median household
income;
2. The applicant can
document that the median household income of the users in the project area is
lower than the state median household income published by the Kentucky State
Data Center;
3. There is as set out
in Section 1(8) of this administrative regulation and verified by the
Authority; or
4. There exists an
order or judgment addressing environmental noncompliance; or
5. Other criteria relating to public health
or safety, environmental concerns, or financial considerations that the
Authority may determine from time to time.
(g) If the nature of the project financed by
the Authority's financial assistance causes interest on any Authority bonds
issued to fund the project to become taxable, the Authority may consider
adjustments in the interest rate to reflect the additional costs of Authority
funds.
(4) Financial
assistance repayments shall not exceed thirty (30) years. Principal and
interest shall be payable semiannually, unless the Authority establishes a more
frequent payment schedule. The repayment period may be less than thirty (30)
years upon election of the Authority.
(a)
Interest payments on the outstanding principal amount of the financial
assistance shall be paid semiannually and shall commence within six (6) months
of the initial disbursement of financial assistance proceeds.
(b) Principal and interest payments shall
commence on June 1 or December 1 immediately succeeding the date of the last
draw of funds unless the principal payments are directly dependent upon
revenues generated from the project. If the principal payments are directly
dependent upon revenues, principal payments shall commence on the June 1 or
December 1 immediately succeeding the date the project is completed. Principal
payments shall be payable semiannually, unless the Authority establishes a more
frequent payment schedule. The Authority may also require that repayment occurs
via an electronic debit of the applicant's ac-count.
(5) The principal amount of financial
assistance shall be equal to the amount approved by the Authority. The final
amount of financial assistance may be adjusted by the Authority's director up
to ten (10) percent of the amount stated in the Conditional Commitment Letter
without further action by the Authority's board, subject to availability of
user fees to service the debt, the Commonwealth's Capital Projects and Bond
Oversight Committee approval, and Authority funds to provide the
increase.
(6) The assistance
agreement between the Authority and applicant shall contain terms and
conditions that maintain the financial integrity of the Infrastructure
Revolving Fund according to the circumstances of each project.
Section 7. Financial Assistance
Closing and Extensions. An applicant shall meet all conditions for closing and
take action to award contracts for the project within not more than twelve (12)
calendar months after the date of the conditional commitment letter. Otherwise,
the commitment shall expire. One (1) extension period of up to six (6) months
may be granted if needed. If the extension is denied, the financial assistance
offer may be rescinded. If a request for a time extension is granted, but all
the conditions still cannot be met during the extension period, the commitment
may be rescinded. The applicant may reapply for any project for which the
commitment has expired or rescinded under this section.
Section 8. Authority to Administer the
Program. The Authority shall monitor the assistance agreements and require that
financial reports be made available to the Authority by the applicant at
reasonable intervals. The Authority shall monitor the cash flows of the project
and perform all actions that shall be required to assure that the agreements
continuously meet the program standards established by this administrative
regulation.
Section 9.
Administrative Fees. There shall be an annual administrative fee of two-tenths
(0.2) percent charged on the unpaid balance of all financial assistance. This
fee shall apply to the unpaid balance of the financial assistance and shall be
used to defray the Authority's expenses of servicing the financial assistance
and necessary operating expenses of the program.
STATUTORY AUTHORITY:
KRS
224A.070(1),
224A.112,
224A.113