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Title II — Terms and limitations on direct loans and loan guarantees

S. 1716 · 113th Congress · Nov 14, 2013 · Lineage

II Terms and limitations on direct loans and loan guarantees

Sec. 201 Eligibility criteria for assistance from IFA and terms and limitations of loans

(a)
Public benefit required—
(1)
In general— Any project the use or purpose of which is private and for which no public benefit is created, as determined by the Board of Directors, shall not be eligible for financial assistance from IFA under this Act.
(2)
Criteria— Financial assistance under this Act shall only be made available if the applicant for assistance has demonstrated to the satisfaction of the Board of Directors that—
(A)
the eligible infrastructure project for which assistance is being sought—
(i)
is not for the refinancing of an existing infrastructure project; and
(ii)
meets—
(I)
any pertinent requirements set forth in this Act;
(II)
any criteria established by the Board of Directors or chief executive officer in accordance with this Act; and
(III)
the definition of an eligible infrastructure project; and
(B)
for projects involving public-private partnerships, the project has received contributed capital or commitments for contributed capital equal to not less than 10 percent of the total cost of the eligible infrastructure project for which assistance is being sought, where such contributed capital includes 1 or more of the following—
(i)
equity;
(ii)
deeply subordinate loans or other credit and debt instruments, which shall be junior to any IFA assistance provided for the project;
(iii)
appropriated funds or grants from governmental sources other than the Federal Government; or
(iv)
irrevocable private contributions of funds, grants, property (including rights-of way), and other assets that directly reduce or offset project costs.
(b)
Considerations— The criteria established by the Board of Directors pursuant to this Act shall provide adequate consideration of—
(1)
the economic, financial, technical, environmental, and public benefits and costs of each eligible infrastructure project under consideration for financial assistance under this Act, prioritizing eligible infrastructure projects that—
(A)
demonstrate a clear and measurable public benefit;
(B)
offer value for money to taxpayers;
(C)
contribute to regional or national economic growth;
(D)
lead to long-term job creation; and
(E)
mitigate environmental concerns;
(2)
the means by which development of the eligible infrastructure project under consideration is being financed, including—
(A)
the terms, conditions, and structure of the proposed financing;
(B)
the creditworthiness and standing of the project sponsors, providers of equity, and cofinanciers;
(C)
the financial assumptions and projections on which the eligible infrastructure project is based; and
(D)
whether there is sufficient State or municipal political support for the successful completion of the eligible infrastructure project;
(3)
the likelihood that the provision of assistance by IFA will cause the development to proceed more promptly and with lower costs for financing than would be the case without IFA assistance;
(4)
the extent to which the provision of assistance by IFA maximizes the level of private investment in the eligible infrastructure project or supports a public-private partnership, while providing a significant public benefit;
(5)
the extent to which the provision of assistance by IFA can mobilize the participation of other financing partners in the eligible infrastructure project;
(6)
the technical and operational viability of the eligible infrastructure project;
(7)
the proportion of financial assistance from IFA;
(8)
the geographical location of the project, prioritizing geographical diversity of projects funded by IFA;
(9)
the size of the project and the impact of the project on the resources of IFA; and
(10)
the infrastructure sector of the project, prioritizing projects from more than 1 sector funded by IFA.
(c)
Application—
(1)
In general— Any eligible entity seeking assistance from IFA under this Act for an eligible infrastructure project shall submit an application to IFA at such time, in such manner, and containing such information as the Board of Directors or the chief executive officer may require.
(2)
Review of applications—
(A)
In general— IFA shall review applications for assistance under this Act on an ongoing basis.
(B)
Preparation— The chief executive officer, in cooperation with the senior management, shall prepare eligible infrastructure projects for review and approval by the Board of Directors.
(3)
Dedicated revenue sources— The Federal credit instrument shall be repayable, in whole or in part, from tolls, user fees, or other dedicated revenue sources derived from users or beneficiaries that also secure the eligible infrastructure project obligations.
(d)
Eligible infrastructure project costs—
(1)
In general— Except as provided in paragraph (2), to be eligible for assistance under this Act, an eligible infrastructure project shall have project costs that are reasonably anticipated to equal or exceed $50,000,000.
(2)
Rural infrastructure projects— To be eligible for assistance under this Act a rural infrastructure project shall have project costs that are reasonably anticipated to equal or exceed $10,000,000.
(e)
Loan eligibility and maximum amounts—
(1)
In general— The amount of a direct loan or loan guarantee under this Act shall not exceed the lesser of—
(A)
49 percent of the reasonably anticipated eligible infrastructure project costs; and
(B)
the amount of the senior project obligations, if the direct loan or loan guarantee does not receive an investment grade rating.
(2)
Maximum annual loan and loan guarantee volume— The aggregate amount of direct loans and loan guarantees made by IFA shall not exceed—
(A)
during the first 2 fiscal years of the operations of IFA, $10,000,000,000 per year;
(B)
during fiscal years 3 through 9 of the operations of IFA, $20,000,000,000 per year; and
(C)
during any fiscal year thereafter, $50,000,000,000.

Sec. 202 Loan terms and repayment

(a)
In general— A direct loan or loan guarantee under this Act with respect to an eligible infrastructure project shall be on such terms, subject to such conditions, and contain such covenants, representations, warranties, and requirements (including requirements for audits) as the chief executive officer determines appropriate.
(b)
Terms— A direct loan or loan guarantee under this Act—
(1)
shall—
(A)
be payable, in whole or in part, from tolls, user fees, or other dedicated revenue sources derived from users or beneficiaries; and
(B)
include a rate covenant, coverage requirement, or similar security feature supporting the project obligations; and
(2)
may be secured by a lien—
(A)
on the assets of the obligor, including revenues described in paragraph (1); and
(B)
which may be subordinated to any other lien securing project obligations.
(c)
Base interest rate— The base interest rate on a direct loan under this Act shall be not less than the yield on Treasury obligations of a similar maturity to the maturity of the direct loan on the date of execution of the loan agreement.
(d)
Risk assessment— Before entering into an agreement for assistance under this Act, the chief executive officer, in consultation with the Director of the Office of Management and Budget and each rating agency providing a preliminary rating opinion letter under this section, shall determine an appropriate Federal credit subsidy amount for each direct loan and loan guarantee, taking into account that preliminary rating opinion letter, as well as any comparable market rates available for such a loan or loan guarantee, should any exist.
(e)
Credit fee—
(1)
In general— With respect to each agreement for assistance under this Act, the chief executive officer shall charge a credit fee to the recipient of that assistance to pay for, over time, all or a portion of the Federal credit subsidy determined under subsection (d), with the remainder paid by the account established for IFA.
(2)
Direct loans— In the case of a direct loan, the credit fee described in paragraph (1) shall be in addition to the base interest rate established under subsection (c).
(f)
Maturity date— The final maturity date of a direct loan or loan guaranteed by IFA under this Act shall be not later than 35 years after the date of substantial completion of the eligible infrastructure project, as determined by the chief executive officer.
(g)
Preliminary rating opinion letter—
(1)
In general— The chief executive officer shall require each applicant for assistance under this Act to provide a preliminary rating opinion letter from at least 1 rating agency, indicating that the senior obligations of the eligible infrastructure project, which may be the Federal credit instrument, have the potential to achieve an investment-grade rating.
(2)
Rural infrastructure projects— With respect to a rural infrastructure project, a rating agency opinion letter described in paragraph (1) shall not be required, except that the loan or loan guarantee shall receive an internal rating score, using methods similar to the rating agencies generated by IFA, measuring the proposed direct loan or loan guarantee against comparable direct loans or loan guarantees of similar credit quality in a similar sector.
(h)
Investment-Grade rating requirement—
(1)
Loans and loan guarantees— The execution of a direct loan or loan guarantee under this Act shall be contingent on the senior obligations of the eligible infrastructure project receiving an investment-grade rating.
(2)
Rating of IFA overall portfolio— The average rating of the overall portfolio of IFA shall be not less than investment grade after 5 years of operation.
(i)
Terms and Repayment of direct loans—
(1)
Schedule— The chief executive officer shall establish a repayment schedule for each direct loan under this Act, based on the projected cash flow from eligible infrastructure project revenues and other repayment sources.
(2)
Commencement— Scheduled loan repayments of principal or interest on a direct loan under this Act shall commence not later than 5 years after the date of substantial completion of the eligible infrastructure project, as determined by the chief executive officer of IFA.
(3)
Deferred payments of direct loans—
(A)
Authorization— If, at any time after the date of substantial completion of an eligible infrastructure project assisted under this Act, the eligible infrastructure project is unable to generate sufficient revenues to pay the scheduled loan repayments of principal and interest on the direct loan under this Act, the chief executive officer may allow the obligor to add unpaid principal and interest to the outstanding balance of the direct loan, if the result would benefit the taxpayer.
(B)
Interest— Any payment deferred under subparagraph (A) shall—
(i)
continue to accrue interest, in accordance with the terms of the obligation, until fully repaid; and
(ii)
be scheduled to be amortized over the remaining term of the loan.
(C)
Criteria—
(i)
In general— Any payment deferral under subparagraph (A) shall be contingent on the eligible infrastructure project meeting criteria established by the Board of Directors.
(ii)
Repayment standards— The criteria established under clause (i) shall include standards for reasonable assurance of repayment.
(4)
Prepayment of direct loans—
(A)
Use of excess revenues— Any excess revenues that remain after satisfying scheduled debt service requirements on the eligible infrastructure project obligations and direct loan and all deposit requirements under the terms of any trust agreement, bond resolution, or similar agreement securing project obligations under this Act may be applied annually to prepay the direct loan, without penalty.
(B)
Use of proceeds of refinancing— A direct loan under this Act may be prepaid at any time, without penalty, from the proceeds of refinancing from non-Federal funding sources.
(j)
Loan guarantees— The terms of a loan guaranteed by IFA under this Act shall be consistent with the terms set forth in this section for a direct loan, except that the rate on the guaranteed loan and any payment, prepayment, or refinancing features shall be negotiated between the obligor and the lender (as defined in section 601(a) of title 23, United States Code) with the consent of the chief executive officer.
(k)
Compliance with FCRA—
(1)
In general— Except as provided in paragraph (2), direct loans and loan guarantees authorized by this Act shall be subject to the provisions of the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).
(2)
Exception— Section 504(b) of the Federal Credit Reform Act of 1990 (2 U.S.C. 661c(b)) shall not apply to a loan or loan guarantee under this Act.
(l)
Policy of Congress— It is the policy of Congress that IFA shall only make a direct loan or loan guarantee under this Act if IFA determines that IFA is reasonably expected to recover the full amount of the direct loan or loan guarantee.

Sec. 203 Compliance and enforcement

(a)
Credit agreement— Notwithstanding any other provision of law, each eligible entity that receives assistance under this Act shall enter into a credit agreement that requires such entity to comply with all applicable policies and procedures of IFA, in addition to all other provisions of the loan agreement.
(b)
Applicability of Federal laws— Each eligible entity that receives assistance under this Act shall provide written assurance, in such form and manner and containing such terms as are to be prescribed by IFA, that the eligible infrastructure project will be performed in compliance with the requirements of all Federal laws that would otherwise apply to similar projects to which the United States is a party, or financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant, or annual contribution.
(c)
IFA authority on noncompliance— In any case in which an eligible entity that receives assistance under this Act is materially out of compliance with the loan agreement, or any applicable policy or procedure of IFA, the Board of Directors may take action—
(1)
to cancel unused loan amounts; or
(2)
to accelerate the repayment terms of any outstanding obligation.

Sec. 204 Audits; reports to the President and Congress

(a)
Accounting— The books of account of IFA shall be—
(1)
maintained in accordance with generally accepted accounting principles; and
(2)
subject to an annual audit by independent public accountants of nationally recognized standing appointed by the Board of Directors.
(b)
Reports—
(1)
Board of Directors— Not later than 90 days after the last day of each fiscal year, the Board of Directors shall submit to the President and Congress a complete and detailed report with respect to the preceding fiscal year, setting forth—
(A)
a summary of the operations of IFA for that fiscal year;
(B)
a schedule of the obligations of IFA and capital securities outstanding at the end of that fiscal year, with a statement of the amounts issued and redeemed or paid during that fiscal year;
(C)
the status of eligible infrastructure projects receiving funding or other assistance pursuant to this Act during that fiscal year, including—
(i)
all nonperforming loans; and
(ii)
disclosure of all entities with a development, ownership, or operational interest in those eligible infrastructure projects;
(D)
a description of the successes and challenges encountered in lending to rural communities, including the role of the Office of Technical and Rural Assistance established under this Act; and
(E)
an assessment of the risks of the portfolio of IFA, which shall be prepared by an independent source.
(2)
GAO evaluation— Not later than 5 years after the date of enactment of this Act, the Comptroller General of the United States shall conduct an evaluation of, and submit to the Committee on Commerce, Science, and Transportation of the Senate and to the Committees on Transportation and Infrastructure and Energy and Commerce of the House of Representatives a report on the activities of IFA for the fiscal years covered by the report that includes—
(A)
an assessment of the impact and benefits of each funded eligible infrastructure project, including a review of how effectively each eligible infrastructure project accomplished the goals prioritized by the eligible infrastructure project criteria of IFA; and
(B)
an evaluation of the effectiveness of, and challenges facing, loan programs at the Department of Transportation and Department of Energy, and an analysis of the advisability of consolidating those programs within IFA.
(3)
GAO study and report— Not later than 10 years after the date of enactment of this Act, the Comptroller General of the United States shall conduct a study and submit to the Committee on Commerce, Science, and Transportation of the Senate and to the Committees on Transportation and Infrastructure and Energy and Commerce of the House of Representatives a report on the status of actions taken to make IFA a self-sustaining entity, including providing recommendations for such legislative or administrative actions as the Comptroller General considers necessary for IFA to achieve self-sustaining status or to promote a greater likelihood of achieving such status.
(c)
Books and Records—
(1)
In general— IFA shall maintain adequate books and records to support the financial transactions of IFA, with a description of financial transactions and eligible infrastructure projects receiving funding, and the amount of funding for each project maintained on a publically accessible database.
(2)
Audits by the Secretary and GAO— The books and records of IFA shall at all times be open to inspection by the Secretary, the Special Inspector General, and the Comptroller General of the United States.

Sec. 205 Effect on other laws

Nothing in this Act affects or alters the responsibility of an eligible entity that receives assistance under this Act to comply with applicable Federal and State laws (including regulations) relating to an eligible infrastructure project.