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Title II — Secured loans and loan guarantees for parks and recreation infrastructure development

H.R. 2424 · 113th Congress · Jun 18, 2013 · Lineage

II Secured loans and loan guarantees for parks and recreation infrastructure development

Sec. 201 Purposes

The purposes of this title are—
(1)
to promote increased development of parks and recreation infrastructure by establishing additional opportunities for financing parks and recreation projects;
(2)
to attract new investment capital to infrastructure projects that are capable of generating revenue streams through user fees or other dedicated funding sources;
(3)
to complement existing Federal funding sources and address budgetary constraints on the National Park Service; and
(4)
to leverage private investment in parks and recreation infrastructure.

Sec. 202 Authority to provide assistance

The Secretary of Housing and Urban Development may provide financial assistance under section 208 to eligible entities to carry out parks and infrastructure projects selected for such assistance pursuant to section 207.

Sec. 203 Eligible entities

Financial assistance under section 208 may be provided only to the following entities:
(1)
A corporation.
(2)
A partnership.
(3)
A joint venture.
(4)
A trust.
(5)
A Federal, State, or local governmental entity, agency, or special purpose park and recreation district.
(6)
A State infrastructure financing authority.

Sec. 204 Projects eligible for assistance

Financial assistance may be provided under section 208, subject to section 207, only for the following types of projects:
(1)
A project for the development of indoor or outdoor parks, buildings, sites, or other facilities that are dedicated to recreation purposes and administered by public or private nonprofit agencies to serve the recreation needs of community residents, including multiple-use community centers that have recreation as a primary purpose, but not including major sports arenas, exhibition areas, and conference halls used primarily for commercial sports, spectator, or display activities.
(2)
A project for the construction, planning, and design of on-road and off-road trail facilities for pedestrians, bicyclists, and other nonmotorized forms of transportation, including sidewalks, bicycle infrastructure, pedestrian and bicycle signals, traffic calming techniques, lighting and other safety-related infrastructure, and transportation projects to achieve compliance with the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.).
(3)
A project for the construction, planning, and design of infrastructure-related projects and systems that will provide safe routes for non-drivers, including children, older adults, and individuals with disabilities to access daily needs.
(4)
A project for the conversion and use of abandoned railroad corridors for trails for pedestrians, bicyclists, or other nonmotorized transportation users.
(5)
A project for the construction of turnouts, overlooks, and viewing areas.

Sec. 205 Activities eligible for assistance

Amounts from a loan made or guaranteed under section 208 provided for an eligible project may be used for costs of carrying out such project, including costs of—
(1)
development-phase activities, including planning, feasibility analysis, revenue forecasting, environmental review, permitting, preliminary engineering and design work, and other preconstruction activities;
(2)
construction, reconstruction, rehabilitation, preservation, and replacement activities;
(3)
the acquisition of real property (including water rights, land relating to the project, and improvements to land), environmental mitigation, construction contingencies, and acquisition of equipment;
(4)
capitalized interest necessary to meet market requirements, reasonably required reserve funds, capital issuance expenses, and other carrying costs during construction; and
(5)
refinancing interim construction funding, long-term project obligations, or a secured loan or loan guarantee made under this title.

Sec. 206 Applications

(a)
In general— The Secretary shall provide for eligible entities to submit applications for selection of eligible projects to receive financial assistance under section 208, at such time, in such manner, and containing such information as the Secretary may require.
(b)
Combined projects— The Secretary shall provide that in the case only of an eligible entity described in section 203(6), such an entity may submit a single application for a combination of projects, each of which is an eligible project under paragraphs (1) through (5) of section 205.

Sec. 207 Determination of eligibility and project selection

(a)
Selection of projects— Using the selection criteria under subsection (c) of this section, the Secretary shall select, from applications submitted pursuant to section 206, eligible projects that meet the criteria under subsection (b) of this section for financial assistance under section 208.
(b)
Project requirements— An eligible project may not be selected to receive financial assistance under section 208 unless the Secretary determines that the project meets all of the following criteria:
(1)
Creditworthiness—
(A)
In general— Subject to subparagraph (B), the project shall be creditworthy, as determined by the Secretary as applicable, to shall ensure that any financing for the project has appropriate security features, such as a rate covenant, to ensure repayment.
(B)
Preliminary rating opinion letter— The Secretary shall require the applicant for each project to provide, as part of the application for the project under section 206, a preliminary rating opinion letter from at least one rating agency indicating that the senior project obligations of the project (which may be the Federal credit instrument) have the potential to achieve an investment-grade rating.
(C)
Special rule for certain combined projects— The Secretary shall develop a credit evaluation process for a Federal credit instrument provided to a State infrastructure financing authority for a project described in section 206(b), which may include requiring the provision of a preliminary rating opinion letter from at least one rating agency.
(2)
Eligible project costs— The costs of the eligible project shall be reasonably anticipated to be not less than $20,000,000.
(3)
Dedicated revenue sources— The Federal credit instrument for the project shall be repayable, in whole or in part, from dedicated revenue sources that also secure the project obligations.
(4)
Public sponsorship of private entities— In the case of a project carried out by an entity that is not a State or local government or an agency or instrumentality of a State or local government, the project shall be publicly sponsored.
(c)
Selection criteria—
(1)
Establishment— The Secretary shall establish criteria for the selection of projects that meet the eligibility requirements of subsection (b). Such criteria shall be designed to ensure a diversity of project types and geographical locations, and shall include the following:
(A)
The extent to which the project is statewide or regionally significant, with respect to the generation of increased recreational opportunities.
(B)
The extent to which assistance under this title would foster innovative public-private partnerships and attract private debt or equity investment.
(C)
The likelihood that assistance under this title would enable the project to proceed at an earlier date than the project would otherwise be able to proceed.
(D)
The extent to which the project uses new or innovative approaches.
(E)
The amount of budget authority required to fund the Federal credit instrument for the project made available under this title.
(F)
The extent to which the project helps maintain or protect the environment.
(G)
The extent to which assistance under this section reduces the contribution of Federal grant assistance to the project.
(2)
Special rule for certain combined projects— For a project described in section 206(b), the Secretary shall only consider the criteria described in subparagraphs (B) through (G) of paragraph (1).
(d)
Federal requirements— Nothing in this section may be construed to alter, affect, or annul the applicability of any other Federal laws or regulations.

Sec. 208 Secured loans and loan guarantees

(a)
Authority— The Secretary may enter into agreements with eligible entities to make, and may make, secured loans to such entities as provided under this section for eligible projects selected under section 207 for financial assistance under this section.
(b)
Use—
(1)
In general— The proceeds of a secured loan under this section shall be used only—
(A)
to finance eligible project costs of an eligible project selected under section 207;
(B)
subject to paragraph (2) of this subsection, to refinance interim construction financing of eligible project costs of an eligible project selected under section 207; or
(C)
to refinance long-term project obligations or Federal credit instruments, if such refinancing provides additional funding capacity for the completion, enhancement, or expansion of a project that—
(i)
is selected under section 207; or
(ii)
was originally financed, in whole or in part, with amounts provided other than under this title, if the project otherwise meets the requirements of section 207.
(2)
Limitation on refinancing of interim construction financing— The proceeds of a secured loan under this section made for an eligible project may not be used for the purpose under paragraph (1)(B) after the expiration of the 12-month period beginning upon the date of substantial completion of the project.
(c)
Risk assessment— Before entering into an agreement under this subsection for a secured loan, the Secretary, in consultation with the Director of the Office of Management and Budget and each rating agency providing a preliminary rating opinion letter under section 207(b)(1)(B), shall determine an appropriate capital reserve subsidy amount for the secured loan, taking into account each such preliminary rating opinion letter.
(d)
Investment-Grade rating requirement for senior obligations— The execution of a secured loan under this section shall be contingent on receipt by the senior obligations of the project of an investment-grade rating.
(e)
Terms and limitations—
(1)
Maximum amount— The amount of a secured loan under this section shall not exceed the lesser of—
(A)
an amount equal to 49 percent of the reasonably anticipated eligible project costs; or
(B)
if the secured loan does not receive an investment-grade rating, the amount of the senior project obligations of the project.
(2)
Payment— A secured loan under this section—
(A)
shall be payable, in whole or in part, from State or local taxes, user fees, or other dedicated revenue sources that also secure the senior project obligations of the relevant project;
(B)
shall include a rate covenant, coverage requirement, or similar security feature supporting the project obligations; and
(C)
may have a lien on revenues described in subparagraph (A), subject to any lien securing project obligations.
(3)
Interest rate— The interest rate on a secured loan under this section shall be—
(A)
not less than the yield on United States Treasury securities of a similar maturity to the maturity of the secured loan on the date of execution of the loan agreement; and
(B)
fixed for the term of the loan.
(4)
Maturity date—
(A)
In general— Except as provided in subparagraph (B), the final maturity date of a secured loan under this section for an eligible project shall be not later than 35 years after the date of substantial completion of the project.
(B)
Special rule for State infrastructure financing authorities— The final maturity date of a secured loan under this section made to a State infrastructure financing authority shall be not later than 35 years after the date on which loan amounts are first disbursed.
(5)
Nonsubordination— A secured loan under this section shall not be subordinated to the claims of any holder of project obligations in the event of bankruptcy, insolvency, or liquidation of the obligor.
(6)
Fees— The Secretary may establish fees in connection with a secured loan under this section, in amounts sufficient to cover all or a portion of the costs to the Federal Government of secured loans under this section.
(7)
Use of proceeds for payment of non-Federal share— The proceeds of a secured loan under this section may be used to pay any non-Federal share required with respect to other funding obtained for project costs, but only if such secured loan is repaid using non-Federal funds.
(8)
Maximum Federal involvement— For any project for which assistance is provided under this title, the total amount of Federal assistance from all sources, including this title, shall not exceed 80 percent of the total project cost.
(9)
Others— A secured loan provided for a project under this section shall be subject to such other terms and conditions, and contain such covenants, representations, warranties, and requirements (including requirements for audits), as the Secretary determines to be appropriate.
(f)
Repayment—
(1)
Schedule— The Secretary shall establish a repayment schedule for each secured loan provided under this section, based on the projected cash flow from project revenues and other repayment sources.
(2)
Commencement—
(A)
In general— Except as provided in subparagraph (B), scheduled loan repayments of principal or interest on a secured loan under this section for an eligible project shall commence not later than 5 years after the date of substantial completion of the project.
(B)
Special rule for State infrastructure financing authorities— Scheduled loan repayments of principal or interest on a secured loan made under this section to a State infrastructure financing authority shall commence not later than 5 years after the date on which amounts are first disbursed.
(3)
Deferred payments—
(A)
Authorization— If, at any time after the date of substantial completion of a project for which a secured loan is provided under this section, the project is unable to generate sufficient revenues to pay the scheduled loan repayments of principal and interest on the loan, the Secretary may, subject to subparagraph (C), allow the obligor to add unpaid principal and interest to the outstanding balance of the secured loan.
(B)
Interest— Any payment deferred pursuant to subparagraph (A) shall—
(i)
continue to accrue interest in accordance with subsection (e)(3) until fully repaid; and
(ii)
be amortized over the remaining term of the secured loan.
(C)
Criteria— Any payment deferral pursuant to subparagraph (A) shall be contingent on the project meeting—
(i)
standards for reasonable assurance of repayment, as the Secretary shall establish; and
(ii)
such other criteria as the Secretary may establish.
(4)
Prepayment—
(A)
Use of excess revenues— Any excess revenues from an eligible project that remain after satisfying scheduled debt service requirements on the project obligations and secured loan and all deposit requirements under the terms of any trust agreement, bond resolution, or similar agreement securing project obligations may be applied annually to prepay a secured loan under this section without penalty.
(B)
Use of proceeds of refinancing— A secured loan under this section may be prepaid at any time, without penalty, from the proceeds of refinancing from non-Federal funding sources.
(g)
Sale of secured loans—
(1)
In general— Subject to paragraph (2), if the Secretary determines that the sale or reoffering of a secured loan under this section for an eligible project can be made on favorable terms, the Secretary may sell the loan to another entity or reoffer the loan into the capital markets as soon as practicable after the date of substantial completion of a project and after providing notice to the obligor.
(2)
Consent of obligor— In making a sale or reoffering under paragraph (1), the Secretary may not change the original terms and conditions of the secured loan without the written consent of the obligor.
(h)
Loan guarantees—
(1)
In general— In lieu of making a secured loan under this section for an eligible project, the Secretary may provide a loan guarantee for a project obligation for the project funded by a qualified lender (as such term is defined in section 211), but only if the Secretary determines that the cost as such term is defined in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a) of the loan guarantee is substantially the same as or less than that of making a secured loan.
(2)
Terms— The terms of a loan guarantee provided under this subsection shall be consistent with the terms established in this section for a secured loan, except that the interest rate on the guaranteed loan and any prepayment features shall be negotiated between the obligor and the qualified lender, subject to the consent of the Secretary.

Sec. 209 Program administration

(a)
Requirement— The Secretary shall establish a uniform system to service the Federal credit instruments made available under this title.
(b)
Fees—
(1)
In general— The Secretary may collect and spend fees, to the extent provided in advance in appropriations Acts, in amounts sufficient to cover—
(A)
the costs of services obtained pursuant to subsection (d); and
(B)
all or a portion of the costs to the Federal Government of servicing the Federal credit instruments provided under this title.
(c)
Servicer—
(1)
In general— The Secretary may appoint a financial entity to assist the Secretary in servicing Federal credit instruments provided under this title.
(2)
Duties— A servicer appointed under paragraph (1) shall act as the agent for the Secretary.
(3)
Fee— A servicer appointed under paragraph (1) shall receive a servicing fee, subject to approval by the Secretary.
(d)
Assistance from experts— The Secretary may retain the services, including counsel, of organizations and entities with expertise in the field of municipal and project finance to assist in the underwriting and servicing of Federal credit instruments provided under this title.

Sec. 210 State and local permits

The provision of financial assistance under section 208 for an eligible project shall not—
(1)
relieve any recipient of such assistance of any obligation to obtain any required State or local permit or approval with respect to the project;
(2)
limit the right of any unit of State or local government to approve or regulate any rate of return on private equity invested in the project; or
(3)
otherwise supersede any State or local law or regulation applicable to the construction or operation of the project.

Sec. 211 Definitions

In this title, the following definitions shall apply:
(1)
Commercial sports— The term “commercial sport” means a sports enterprise of which profit-making forms a major part.
(2)
Eligible entity— The term “eligible entity” means an entity eligible pursuant to section 203 to receive financial assistance under section 208.
(3)
Eligible project— The term “eligible project” means a project for which financial assistance under section 208 may be provided, pursuant to section 204.
(4)
Eligible project costs— The term “eligible project costs” means, with respect to an eligible project, any costs of the project eligible under section 205 to be paid with amounts from a loan made or guaranteed pursuant to section 208.
(5)
Federal credit instrument— The term “Federal credit instrument” means a secured loan made, or loan guarantee provided, under section 208.
(6)
Investment-grade rating— The term “investment-grade rating” means, with respect to project obligations, a rating of BBB minus, Baa3, bbb minus, BBB (low), or higher as assigned by a rating agency.
(7)
Loan guarantee— The term “loan guarantee” means any guarantee or other pledge by the Secretary to pay all or part of the principal of, and interest on, a loan or other debt obligation.
(8)
Obligor— The term “obligor” means—
(A)
with respect to a Federal credit instrument that is a secured loan under section 208, the eligible entity that is primarily liable for payment of the principal of, or interest on, the loan; and
(B)
with respect to a Federal credit instrument that is a loan guarantee under section 208(h), the eligible entity that is primarily liable for payment of the loan or other debt obligation repayment of which is guaranteed pursuant to such section.
(9)
Project obligation— The term “project obligation” means, with respect to an eligible project, any note, bond, debenture, or other debt obligation issued by an obligor in connection with the financing of the project. Such term does not include a Federal credit instrument.
(10)
Qualified lender—
(A)
In general— The term “qualified lender” means any non-Federal qualified institutional buyer, as such term is defined in section 230.144A(a) of title 17, Code of Federal Regulations (or any successor regulation), known as Rule 144A(a) of the Securities and Exchange Commission and issued under the Securities Act of 1933 (15 U.S.C. 77a et seq.).
(B)
Inclusions— Such term includes—
(i)
a qualified retirement plan (as defined in section 4974(c) of the Internal Revenue Code of 1986) that is a qualified institutional buyer; and
(ii)
a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986) that is a qualified institutional buyer.
(11)
Rating agency— The term “rating agency” means a credit rating agency registered with the Securities and Exchange Commission as a nationally recognized statistical rating organization (as defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))).
(12)
Secretary— The term “Secretary” means the Secretary of Housing and Urban Development.
(13)
Secured loan— The term “secured loan” means a direct loan or other debt obligation issued by an obligor and funded by the Secretary pursuant to section 208.
(14)
State— The term “State” means a State, the District of Columbia, the Commonwealth of Puerto Rico, and any other territory or possession of the United States.
(15)
State infrastructure financing authority— The term “State infrastructure financing authority” means the State entity established or designated by the Governor of a State to receive assistance under this title.
(16)
Subsidy amount— The term “subsidy amount” means, with respect to a Federal credit instrument, the amount of budget authority sufficient to cover the estimated long-term cost to the Federal Government of the Federal credit instrument, as calculated on a net present value basis, excluding administrative costs and any incidental effects on governmental receipts or outlays in accordance with the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).
(17)
Substantial completion— The term “substantial completion” means, with respect to a project, the earliest date on which a project is considered capable of performing the functions for which the project is designed.

Sec. 212 Regulations

The Secretary may issue such regulations as the Secretary considers appropriate to carry out this title.

Sec. 213 Funding

From amounts made available for Federal purposes under section 5 of the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 460l–7), there is authorized to be appropriated to the Secretary to carry out this title $50,000,000 for each of fiscal years 2014 through 2018, to remain available until expended, of which in each such fiscal year—
(1)
the Secretary may use for the administration of this title, including program administration under section 209, not more than $2,200,000; and
(2)
the remainder shall be available for costs (as such term is defined in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) of loans and loan guarantees under section 208.

Sec. 214 Report to Congress

Not later than 2 years after the date of enactment of this Act, and every 2 years thereafter, the Secretary shall submit to the Congress a report summarizing the financial performance of the projects that are receiving, or have received, assistance under this title, including a recommendation as to whether the objectives of this title are being met.