42 USC 16373 - Secured loans

U.S Code last checked for updates: Nov 22, 2024

§ 16373.

Secured loans

(a)

Agreements

(1)

In general

Subject to paragraph (2), the Secretary may enter into agreements with 1 or more obligors to make secured loans, the proceeds of which—

(A)

shall be used—

(i)

to finance eligible project costs of any project selected under section 16372 of this title;

(ii)

to refinance interim construction financing of eligible project costs of any project selected under section 16372 of this title; or

(iii)

to refinance long-term project obligations or Federal credit instruments, if the refinancing provides additional funding capacity for the completion, enhancement, or expansion of any project that—

(I)

is selected under section 16372 of this title; or

(II)

otherwise meets the requirements of that section; and

(B)

may be used in accordance with subsection (b)(7) to pay any fees collected by the Secretary under subparagraph (B) of that subsection.

(2)

Risk assessment

(b)

Terms and limitations

(1)

In general

(2)

Maximum amount

(3)

Payment

A secured loan under this section shall be payable, in whole or in part, from—

(A)

user fees;

(B)

payments owing to the obligor under a public-private partnership; or

(C)

other revenue sources that also secure or fund the project obligations.

(4)

Interest rate

(A)

In general

(B)

Limited buydowns

(i)

In general

Subject to clause (iii), the Secretary may lower the interest rate of a secured loan under this section to not lower than the interest rate described in clause (ii), if the interest rate has increased during the period—

(I)

beginning on, as applicable—

(aa)

the date on which an application acceptable to the Secretary is submitted for the applicable project; or

(bb)

the date on which the Secretary entered into a master credit agreement for the applicable project; and

(II)

ending on the date on which the Secretary executes the Federal credit instrument for the applicable project that is the subject of the secured loan.

(ii)

Description of interest rate

The interest rate referred to in clause (i) is the interest rate reflected in the yield on United States Treasury securities of a similar maturity to the maturity of the secured loan in effect, as applicable to the project that is the subject of the secured loan, on—

(I)

the date described in clause (i)(I)(aa); or

(II)

the date described in clause (i)(I)(bb).

(iii)

Limitation

(5)

Maturity date

The final maturity date of the secured loan shall be the earlier of—

(A)

the date that is 35 years after the date of substantial completion of the project; and

(B)

if the useful life of the capital asset being financed is of a lesser period, the date that is the end of the useful life of the asset.

(6)

Nonsubordination

(A)

In general

(B)

Preexisting indenture

(i)

In general

The Secretary shall waive the requirement under subparagraph (A) for a public agency borrower that is financing ongoing capital programs and has outstanding senior bonds under a preexisting indenture, if—

(I)

the secured loan is rated in the A category or higher; and

(II)

the secured loan is secured and payable from pledged revenues not affected by project performance, such as a tax-backed revenue pledge or a system-backed pledge of project revenues.

(ii)

Limitation

If the Secretary waives the nonsubordination requirement under this subparagraph—

(I)

the maximum credit subsidy amount to be paid by the Federal Government shall be not more than 10 percent of the principal amount of the secured loan; and

(II)

the obligor shall be responsible for paying the remainder of the subsidy amount, if any.

(7)

Fees

(A)

In general

(B)

Amendment to add cost of fees to secured loan

(8)

Maximum Federal involvement

(c)

Repayment

(1)

Schedule

The Secretary shall establish a repayment schedule for each secured loan under this section based on—

(A)

the projected cash flow from project revenues and other repayment sources; and

(B)

the useful life of the project.

(2)

Commencement

(3)

Deferred payments

(A)

In general

(B)

Interest

Any payment deferred under subparagraph (A) shall—

(i)

continue to accrue interest in accordance with subsection (b)(4) until fully repaid; and

(ii)

be scheduled to be amortized over the remaining term of the loan.

(C)

Criteria

(i)

In general

(ii)

Repayment standards

(4)

Prepayment

(A)

Use of excess revenues

(B)

Use of proceeds of refinancing

(d)

Sale of secured loans

(1)

In general

(2)

Consent of obligor

(e)

Loan guarantees

(1)

In general

(2)

Terms

(Pub. L. 109–58, title IX, § 999C, as added Pub. L. 117–58, div. D, title III, § 40304(a), Nov. 15, 2021, 135 Stat. 995.)

cite as: 42 USC 16373