State Codes and Statutes

State Codes and Statutes

Statutes > North-carolina > Chapter_159G > GS_159G-40

§ 159G‑40.  Terms of loan and execution of loandocuments.

(a)        Approval by Local Government Commission. – The Departmentmay not award a loan under this Article unless the Local Government Commissionapproves the award of the loan and the terms of the loan. The terms of a loanawarded from the CWSRF and the DWSRF must be consistent with federal law. Inreviewing a proposed loan to a local government unit, the Local GovernmentCommission must consider the loan as if it were a bond proposal and review theproposed loan in accordance with the factors set out in G.S. 159‑52 forreview of a proposed bond issue. The Local Government Commission must review aproposed loan to a nonprofit water corporation in accordance with the factorsset out in G.S. 159‑153.

(b)        Interest Rate and Maturity. – The interest rate payable onand the maximum maturity of a loan are subject to the following limitations:

(1)        Interest rate. – The interest rate for a loan may not exceedthe lesser of four percent (4%) or one half the prevailing national market ratefor tax‑exempt general obligation debt of similar maturities derived froma published indicator. When recommended by the Department, the Local GovernmentCommission may set an interest rate for a loan for a targeted interest rate projectat a rate that is lower than the standard rate to achieve the purpose of thetarget.

(2)        Maturity. – The maximum maturity for a loan for a projectthat is not a high‑unit‑cost project may not exceed 20 years or theproject's expected life, whichever is shorter. The maximum maturity for a loanfor a high‑unit‑cost project is 30 years or the project's expectedlife, whichever is shorter.

(c)        Security for Loan. – A local government unit may pledge anyof the following, alone or in combination, as security for an obligation torepay the principal of and interest on a loan awarded under this Article:

(1)        User fee revenues derived from operation of the wastewatersystem or public water system that benefits from the project for which the loanis awarded.

(2)        A mortgage, deed of trust, security interest, or similarlien on part or all of the real and personal property comprising the wastewatersystem or public water system that benefits from the project for which the loanis awarded.

(3)        Its full faith and credit if it meets the requirements ofArticle 4 of Chapter 159 of the General Statutes.

(4)        Nontax revenue not included in subdivision (1) of thissubsection.

(d)        Debt Instrument. – A local government unit and a nonprofitwater corporation may execute a debt instrument payable to the State toevidence an obligation to repay the principal of and interest on a loan awardedunder this Article. The Treasurer, with the assistance of the Local GovernmentCommission, must develop debt instruments for use by local government units andnonprofit water corporations under this section. The Local GovernmentCommission must develop procedures for loan recipients to deliver debtinstruments to the State without public bidding. (2005‑454, s. 3.)