Before Loan Execution:
Before executing a loan with the Authority, prospective borrowers must meet any conditions determined by the Authority’s staff and Board of Directors prior to loan execution. Some of these conditions may include the following, but other conditions may apply on a case by case basis:
- The governmental agency must implement an increase in user rates sufficient to meet the Authority’s rate covenant.
- The governmental agency must have all other sources of project financing in place.
- The governmental agency must meet all mandatory Technical, Managerial, and Financial requirements (“DWRF” only).
The governmental agency will also be required to submit a signed loan authorizing resolution/ordinance before loan execution.
Additionally, Authority loan agreements require a general counsel for the governmental agency to sign an opinion on the governmental agency that becomes part of the loan agreement. The template for this required opinion can be found here.
A “Red Book” bond counsel also must sign off on an opinion that becomes part of the loan agreement. The template for this required opinion can be found here.
After Loan Execution:
All Authority loans are subject to Davis Bacon wage requirements. The Authority’s Loan Agreements include other requirements that must be met throughout the life of a loan from the Authority. These include the following:
Please note that the Rate Covenant and Additional Bonds Test do not apply to loans with a General Obligation source of repayment.