| (a) For loans from the Water Infrastructure Fund, the following procedures will be used to set fixed interest rates. (1) The executive administrator will set fixed interest rates under this section for loans on a date that is five business days prior to the political subdivision's adoption of the ordinance or resolution authorizing its bonds and not more than 45 days before the anticipated closing of the loan from the board. After 45 days from the establishment of the interest rate of a loan, rates will be reconsidered, and may be extended only with the approval of the executive administrator. (2) For loans from the fund, the executive administrator will set the interest rates in accordance with the following: (A) to the extent that the source of funding is provided from bond proceeds, the lending rate scale(s) will be determined as provided under §363.33(b) of this title (relating to Interest Rates for Loans and Purchase of Board's Interest in State Participation Projects); (B) Although the program is designed to provide borrowers with a reduction from the market rate based on a level debt service schedule, in no event shall the loan interest rate as determined under this section be less than zero; (C) The loan interest rate will be determined based on a debt service schedule that provides interest only will be paid in the first year of the debt service schedule and in which the annual debt service payments are level, as determined by the executive administrator. The executive administrator will identify the appropriate scale for the borrower and identify the market rate for the maturity due in each year. The executive administrator will reduce that market rate by a subsidy to be determined by the board and thereby identify a proposed loan interest rate for each maturity. The proposed loan interest rate will be applied to the proposed principal repayment schedule. (D) For loans made under §363.1203(a)(2) of this title (relating to Use of Fund), which receive deferred principal and interest payments, the executive administrator will identify the appropriate scale for the borrower and identify the market rate for the maturity due in each year. The executive administrator will reduce that market rate by a subsidy to be determined by the board and thereby identify a proposed loan interest rate for each maturity. The proposed loan interest rate will be applied to the proposed principal repayment schedule. (b) The board will establish separate lending rate scales for loans according to source of funds, if any funds other than bond proceeds are used. |
