25 Pa. Code § 961.10 - Loans
(a) The term of
loans shall normally be 20 years from the day the loan agreements are executed.
The Board may specify different terms in cases that it deems necessary or
desirable to do so.
(b) The
borrower shall pay interest at the determined rate on funds disbursed during
construction. Upon completion of the project and its acceptance by the Board,
or upon 3 years from the date the loan agreements are executed, whichever comes
first, payments of principal and interest shall become due and payable upon an
amortization schedule to be established by the Board. The Board may defer the
initiation of the repayment of principal up to 5 years from the date the loan
agreements are executed. The borrower may begin principal and interest payments
sooner than required in this subsection if it so chooses.
(c) The minimum rate of interest to be paid
on a loan shall be 1%. The maximum rate of interest may not exceed the
following:
(1) For projects in counties where
the unemployment rate exceeds the Statewide unemployment rate by 40% or more,
1% for the first 5 years and 25% of the bond interest rate for the remainder of
the loan.
(2) For projects in
counties where the unemployment rate exceeds the Statewide unemployment rate,
but exceeds it by less than 40%, 30% of the bond interest rate for the first 5
years and 60% of the bond interest rate for the remainder of the
loan.
(3) For other projects, 60%
of the bond interest rate for the first 5 years and 75% of the bond interest
rate for the remainder of the loan.
(4) For projects located within
municipalities for which unemployment rates exist that would qualify the
project for lower interest rates than if the relevant county unemployment rates
were used, the unemployment rate of that municipality may be used in
determining the interest rate on the loan.
(d) For purposes of this subsection, the
phrase "unemployment rate of the county" means the average unemployment rate
for the county in the most recent calendar year for which data have been
finalized. For the projects which serve multiple counties, the highest
unemployment rate of the counties involved shall be used. The unemployment data
utilized shall be data reported by the Department of Labor and Industry. For
purposes of this subsection, the phrase "bond interest rate" is the rate of
interest paid by the Commonwealth immediately preceding the date of the loan
for the general obligation bonds used to finance the loan.
(e) In establishing the interest rate of a
loan, the Board will consider the ultimate effect that the financing of a
project's costs will have on the rates customers will have to pay. A rate
increase will be compared with local incomes and ability to pay in determining
a loan's interest rate. In the process of setting an interest rate, the Board
may consider factors including, but not limited to:
(1) The current market interest
rate.
(2) The financial, social and
economic condition of the area served by the project including, but not limited
to, the unemployment rate in the project county as it compares to the Statewide
average unemployment rate.
(3) The
financial condition of the applicant.
(4) The median household income in the
system's service area.
(5)
Historical, existing and projected user fees.
(6) The financial condition of the Authority
and the necessity to maintain the Authority's funds in a financially sound
manner.
(f) Loans shall
be made subject to the terms and conditions that the Board
establishes.
Notes
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