Florida Regulations 67-21.018: Refundings and Troubled Development Review
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(1) Refunding of previously issued Bonds shall in all instances be at the option of the Corporation and not an obligation of the Corporation.
(2) The Corporation shall endeavor where feasible to refund Bonds which are either in default or face a pending default.
(3) Approval by the Corporation for a refunding of an issue of Bonds for reasons related to pending default shall be subject to the following:
(a) Determination of the likelihood of the impending default;
(b) Submission of a sworn certificate of impending default by the owner or Credit Enhancer;
(c) Submission of sworn certificate from the owner or Credit Enhancer that conditions causing default are likely to continue;
(d) Submission of certified information from a certified public accountant concerning cash contributions to the Development, financial condition of the Development, including analysis of tax benefits derived from Development losses, and the financial condition of the owner or Credit Enhancer;
(e) Independent evidence of market conditions in the Development location;
(f) Evidence of effort by the owner or Credit Enhancer to procure other sources of capital infusion;
(g) Statement by the owner or Credit Enhancer of the continued public purpose to be achieved by refunding;
(h) Agreement by the owner or Credit Enhancer to update the MMRB Land Use Restriction Agreement, including retention of state and federal income limits;
(i) New Credit Underwriting by the Corporation, with new Bond amount determined by the Corporation based upon real estate underwriting criteria and equal to the lesser of the amount determined by the Corporation or the Credit Enhancer, to provide assurance that a similar default condition will not present itself in the future;
(j) The full risk of refunding is taken by the Credit Enhancer through full indemnification of the Corporation; with consideration given to personal indemnification from the owner if sufficient financial strength can be demonstrated;
(k) All costs of refunding are paid by the owner or the Credit Enhancer outside of Bond proceeds, including all applicable fees;
(l) Retention of annual fees by the Corporation;
(m) Provision of other evidence of the immediacy of default;
(n) Retention of the Credit Enhancement, or an acceptable non-Credit Enhancement structure; and,
(o) Management of the Development is reviewed and approved by the Corporation.
(4) In connection with all refundings, the following shall apply:
(a) All outstanding fees of the Corporation and any of its assigned professionals shall be paid in connection with the refunding;
(b) The set-asides required by the original MMRB Land Use Restriction Agreement shall be increased by an amount and extended for a period determined by the Corporation. With regard to said determination, the Corporation shall consider the facts and circumstances, inclusive of each Applicant’s request, in evaluating whether the changes made are prejudical to the Development or to the market to be served by the Development;
(c) A Credit Underwriting Report shall be required, which may incorporate any Credit Underwriting undertaken within the past twelve months in connection with a transfer of ownership of the same Development;
(d) A guarantee of recourse obligations and an environmental indemnity shall be required;
(e) Additional operating deficit or other guarantees and establishment of replacement reserves or increase in existing reserves may be required as specified in the Credit Underwriting Report;
(f) The MMRB Loan shall, on the earlier of 24 months after closing or stabilized occupancy in the case of major rehabilitation, begin full amortization over the remaining life of the Bonds; and in no event shall it exceed the economic remaining life of the property, provided that, in the case of a refunding relating to a pending financial default, such amortization may be delayed to the extent recommended in the Credit Underwriting Report;
(g) Any material changes to the underlying documents shall be deemed to constitute a refunding for purposes hereof;
(h) Any extension or extensions of maturity cumulatively exceeding 60 months shall be deemed to constitute a refunding for purposes hereof; and,
(i) The owner of the Development must provide a written request for the refunding and a detailed opinion from Applicant’s counsel describing the scope of the transaction. It shall not be necessary to complete an Application in connection with a refunding request.
Rulemaking Authority 420.507, 420.508 FS. Law Implemented 420.507, 420.508, 420.509 FS. History-New 1-7-98, Formerly 9I-21.018, Amended 1-26-99, 11-14-99, 2-11-01, 3-17-02, Repromulgated 4-6-03, 3-21-04, Amended 2-7-05, Repromulgated 1-29-06, 4-1-07, 3-30-08, 8-6-09, 11-7-11, Amended 7-16-13, Repromulgated 2-2-15, 9-15-16, 5-24-17, 7-8-18, 7-11-19, 6-23-20, 5-18-21, 7-6-22, 6-28-23.
Terms Used In Florida Regulations 67-21.018
- Amortization: Paying off a loan by regular installments.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Indemnification: In general, a collateral contract or assurance under which one person agrees to secure another person against either anticipated financial losses or potential adverse legal consequences. Source: FDIC
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
(3) Approval by the Corporation for a refunding of an issue of Bonds for reasons related to pending default shall be subject to the following:
(a) Determination of the likelihood of the impending default;
(b) Submission of a sworn certificate of impending default by the owner or Credit Enhancer;
(c) Submission of sworn certificate from the owner or Credit Enhancer that conditions causing default are likely to continue;
(d) Submission of certified information from a certified public accountant concerning cash contributions to the Development, financial condition of the Development, including analysis of tax benefits derived from Development losses, and the financial condition of the owner or Credit Enhancer;
(e) Independent evidence of market conditions in the Development location;
(f) Evidence of effort by the owner or Credit Enhancer to procure other sources of capital infusion;
(g) Statement by the owner or Credit Enhancer of the continued public purpose to be achieved by refunding;
(h) Agreement by the owner or Credit Enhancer to update the MMRB Land Use Restriction Agreement, including retention of state and federal income limits;
(i) New Credit Underwriting by the Corporation, with new Bond amount determined by the Corporation based upon real estate underwriting criteria and equal to the lesser of the amount determined by the Corporation or the Credit Enhancer, to provide assurance that a similar default condition will not present itself in the future;
(j) The full risk of refunding is taken by the Credit Enhancer through full indemnification of the Corporation; with consideration given to personal indemnification from the owner if sufficient financial strength can be demonstrated;
(k) All costs of refunding are paid by the owner or the Credit Enhancer outside of Bond proceeds, including all applicable fees;
(l) Retention of annual fees by the Corporation;
(m) Provision of other evidence of the immediacy of default;
(n) Retention of the Credit Enhancement, or an acceptable non-Credit Enhancement structure; and,
(o) Management of the Development is reviewed and approved by the Corporation.
(4) In connection with all refundings, the following shall apply:
(a) All outstanding fees of the Corporation and any of its assigned professionals shall be paid in connection with the refunding;
(b) The set-asides required by the original MMRB Land Use Restriction Agreement shall be increased by an amount and extended for a period determined by the Corporation. With regard to said determination, the Corporation shall consider the facts and circumstances, inclusive of each Applicant’s request, in evaluating whether the changes made are prejudical to the Development or to the market to be served by the Development;
(c) A Credit Underwriting Report shall be required, which may incorporate any Credit Underwriting undertaken within the past twelve months in connection with a transfer of ownership of the same Development;
(d) A guarantee of recourse obligations and an environmental indemnity shall be required;
(e) Additional operating deficit or other guarantees and establishment of replacement reserves or increase in existing reserves may be required as specified in the Credit Underwriting Report;
(f) The MMRB Loan shall, on the earlier of 24 months after closing or stabilized occupancy in the case of major rehabilitation, begin full amortization over the remaining life of the Bonds; and in no event shall it exceed the economic remaining life of the property, provided that, in the case of a refunding relating to a pending financial default, such amortization may be delayed to the extent recommended in the Credit Underwriting Report;
(g) Any material changes to the underlying documents shall be deemed to constitute a refunding for purposes hereof;
(h) Any extension or extensions of maturity cumulatively exceeding 60 months shall be deemed to constitute a refunding for purposes hereof; and,
(i) The owner of the Development must provide a written request for the refunding and a detailed opinion from Applicant’s counsel describing the scope of the transaction. It shall not be necessary to complete an Application in connection with a refunding request.
Rulemaking Authority 420.507, 420.508 FS. Law Implemented 420.507, 420.508, 420.509 FS. History-New 1-7-98, Formerly 9I-21.018, Amended 1-26-99, 11-14-99, 2-11-01, 3-17-02, Repromulgated 4-6-03, 3-21-04, Amended 2-7-05, Repromulgated 1-29-06, 4-1-07, 3-30-08, 8-6-09, 11-7-11, Amended 7-16-13, Repromulgated 2-2-15, 9-15-16, 5-24-17, 7-8-18, 7-11-19, 6-23-20, 5-18-21, 7-6-22, 6-28-23.