Current through Register Vol. 49, No. 13, September 23, 2024
Subpart
1.
In general.
A.
Except as provided in part
7380.0275 for participation loans,
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 Department of Health; 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 must
be the greater of the authority scale, if authority bond proceeds are
available, or the market scale, as described in items A to D.
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.
C. For
loans under item A, the authority has the option to accept a tax-exempt revenue
bond, in place of a tax-exempt general obligation bond, from a city of the
first class that cannot issue a general obligation bond to finance a water
supply system without first obtaining the approval of the electors at a
referendum. The rate for a loan secured with a tax-exempt revenue bond must be
based on the greater of the Aaa market scale or the unadjusted authority
scale.
D. For loans under item B,
the authority has the option to accept a taxable revenue bond, in place of a
taxable general obligation bond, from a city of the first class that cannot
issue a general obligation bond to finance a water supply system without first
obtaining the approval of the electors at a referendum. The rate for a loan
secured with a taxable revenue bond 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
7380.0255, 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 average residential system
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 water user, the interest rate discounts provided in
items A and B must not be applied unless a significant water user 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 median household income of the borrower must be that which
most accurately measure 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
