§ 4771. Conditions of loan agreement

(a) VEDA may make loans to applicants on behalf of the State for one or more of the purposes set forth in subsection 4770(b) of this title. Each such loan shall be made subject to the following conditions:

(1) The loan shall be evidenced by a note payable over a term not to exceed 30 years. Repayment shall commence not later than one year after completion of the project for which loan funds have been applied.

(2) The loan shall be secured with assets as determined by VEDA. VEDA may also require that the applicant assign all or a portion of the water system revenues as security for the loan, or may require the establishment of a reserve fund.

(3) The loan recipient shall establish a dedicated source of revenue for repayment of the loan which may include a pledge of revenue from user charges, tap fees, development charges, and pledges of accounts receivable and the proceeds therefrom.

(4) The rate of interest charged for loans shall be set by the State Treasurer, taking into consideration prevailing borrowing rates available to similarly situated applicants from private lenders and administrative fees to be charged to applicants. VEDA, in cooperation with the Secretary, shall periodically recommend interest rates to be set by the State Treasurer which are the lowest practicable rates consistent with maintaining the long-term integrity of the Fund. The interest rate set by the State Treasurer may be less than the prevailing borrowing rates available to similarly situated applicants from private lenders, but not less than zero percent.

(5)(A) Notwithstanding subdivision (4) of this subsection, a privately owned nonprofit community type system may qualify for a 40-year loan term at an interest rate, plus administrative fee, to be established by the Secretary of Natural Resources that shall be not more than three percent or less than minus three percent, provided that the applicant system meets the income level and annual household user cost requirements of a disadvantaged municipality as defined in subdivision 4752(12)(A) of this title, and at least 80 percent of the residential units served by the water system is continuously occupied by local residents and at least 80 percent of the water produced is for residential use.

(B) [Repealed.]

(C) If the Secretary determines that a privately owned nonprofit community type system qualifies for a loan under this subdivision, the Secretary shall certify the loan term and interest rate to VEDA. In no instance shall the annual interest rate, plus an administrative fee, be less than is necessary to achieve an annual household user cost equal to one percent of the median household income of the applicant water system computed in the same manner as prescribed in subdivision 4763c(b)(2) of this title.

(b) Loans made to applicants by VEDA on behalf of the State under this subchapter shall be made in accordance with the terms and conditions specified in a loan agreement to be executed by VEDA and the applicant. The loan agreement shall specify the terms and conditions of the loan and repayment by the applicant, as well as other terms and conditions determined necessary by VEDA and the Secretary.

(c) Disbursement of loan proceeds shall be based on certification by the loan recipient demonstrating that costs for which reimbursement is requested have been incurred and paid by the recipient. The recipient shall provide supporting evidence of payment upon the request of VEDA. Partial disbursements of loan proceeds shall be made not more frequently than monthly. Interim financing charges or short-term interest costs may constitute an allowable cost of a project for which a loan is extended, provided VEDA approved in advance the terms, conditions, interest rate, and other related matters concerning such financing or interest cost. In the event short-term financing is unavailable to the applicant, VEDA may make interim loan disbursements not more frequently than monthly to the applicant and its general contractor as co-payees upon submission of a certified request for payment supported by actual invoices or other evidence satisfactory to VEDA of costs incurred.

(d) VEDA reserves the right to require confirmation from an independent registered professional engineer that work has been performed according to project plans and specifications approved by the Secretary prior to making any disbursement of the loan proceeds.

(e) VEDA may include such additional requirements in the loan agreement as it determines necessary for the proper administration of the Fund, and which are consistent with applicable State and federal law and with other programs administered by VEDA under 10 Vt. Stat. Ann. chapter 12.

(f) VEDA may require as part of the loan agreement that the applicant cause an audit of the project costs to be prepared and approved by VEDA prior to making final payment of the loan amount.

(g) In the event of default, any amounts owed upon the loan shall be considered a debt for the purposes of 32 V.S.A. § 5932(4). VEDA may recover such debt pursuant to the set off debt collection remedy established under 32 V.S.A. §§ 5933 and 5934. (Added 1997, No. 62, § 75, eff. June 26, 1997; 2001, No. 61, § 41, eff. June 16, 2001; amended 2003, No. 63, § 60, eff. June 11, 2003; 2003, No. 121 (Adj. Sess.), § 65, eff. June 8, 2004; 2005, No. 92 (Adj. Sess.), § 1, eff. March 2, 2006; 2017, No. 185 (Adj. Sess.), § 19, eff. May 28, 2018; 2019, No. 141 (Adj. Sess.), § 5, eff. July 13, 2020.)