Current through Register Vol. 49, No. 13, September 23, 2024
Subpart
1.
In general.
A. In
general, the rate of interest on a loan must be based on the principal
redemption schedule of the loan, the appropriate bond yield scale identified in
subpart
2, and the applicable
interest rate discounts identified in subpart
3.
B. The interest rate on a loan must be set
based on the date that the authority receives from the applicant a formal
request to proceed with the loan agreement. This must be after the authority
has received all of the following:
(1) a
complete application;
(2) project
certification by the Pollution Control Agency; and
(3) documentation of as-bid costs.
C. In no case may the interest
rate on a loan be less than one percent.
D. For loans funded in whole or in part with
proceeds of authority bonds, the rate of interest on those loans must not
exceed a rate which results in the yield on the loan being materially higher
than the yield on the bonds as required and defined in the Internal Revenue
Code of 1986, as amended, and the regulations and interpretations of the United
States Department of Treasury promulgated with respect thereto, including and
without limitation Code of Federal Regulations, title 26, section
1.148(2)(d).
Subp. 2.
Bond yield
scale.
The bond yield scale used in calculating the loan rate is the
greater of the authority scale, if authority bond proceeds are available, or
the market scale, as described in items A and B.
A. For loans secured with a tax-exempt
general obligation bond, the rate must be based on the greater of the Aaa
market scale or the unadjusted authority scale.
B. For loans secured with a taxable general
obligation bond, the rate must be based on the greater of the Aa market scale
or the authority scale adjusted for the difference between the Aaa market scale
and the Aa market scale.
Subp.
3.
Interest rate discounts.
Interest rate discounts must be provided as described in
items A and B unless item C applies.
A. Borrowers are eligible for a base discount
as determined by the authority in part
7380.0422, subpart
1, item C.
B. Borrowers with a project service area
population under 2,500 must receive additional discounts on loan amounts up to
$20,000 per household as provided in subitems (1) and (2).
(1) A borrower must receive an interest rate
discount of 50 basis points if the median household income level of the
borrower is below the median household income level for the metropolitan or
nonmetropolitan area, as applicable, based on the most recent census.
(2) A borrower must receive an interest rate
discount based on its estimated average annual residential system cost per
household after completion of the project. If the estimated average annual
residential cost per household, as a percentage of median household income of
the borrower, is greater than:
(a) 2.00
percent, the borrower must receive a discount of 150 basis points;
(b) 1.75 percent but less than 2.00 percent,
the borrower must receive a discount of 125 basis points;
(c) 1.50 percent but less than 1.75 percent,
the borrower must receive a discount of 100 basis points;
(d) 1.25 percent but less than 1.50 percent,
the borrower must receive a discount of 75 basis points; or
(e) 1.00 percent but less than 1.25 percent,
the borrower must receive a discount of 50 basis points.
C. For loans with projects
involving a significant wastewater contributor, the interest rate discounts
provided in items A and B must not be applied unless a significant wastewater
contributor agreement is in place.
Subp. 4.
Demographic data.
For the purpose of calculating interest rate discounts in
subpart
3, the data used to determine
the population and the median household income of the borrower must be that
which most accurately measures the current population and median household
income of the project's service area.
If there is reason to believe that the United States Census
data or the data from the state demographer is not a current, accurate
representation of the median household income or population of the project's
service area, the borrower may document the reasons why the data is not an
accurate representation, and obtain additional information regarding median
household income or population of the project's service area. The information
must consist of reliable data from local, regional, state, or federal sources,
or from a survey conducted by a reliable impartial source. If the authority
determines that the demographic data submitted by the borrower does not reflect
the most current or accurate measure of the population and median household
income of the project's service area, the authority shall update the
demographic data to reflect the most current and accurate figures.
Statutory Authority: MS s
446A.07;
446A.081;
446A.11
