3 AAC 101.080 - Terms of financing

(a) The principal amount of a loan or guarantee may not exceed 75 percent of the appraised value of the collateral for the loan or guarantee.

(b) Any financing the authority provides must be secured by a mortgage that is a first lien on the real property in fee simple or on a leasehold estate or an easement where the qualified energy development is located. The authority may review and approve other security provisions and arrangements as well as encumbrances against the real property that do not affect the authority's security.

(c) Any financing the authority provides must be secured by a first position security interest in the applicant's rights under, and the proceeds of, any contract for the sale of power, electricity, or heat from the qualified energy development.

(d) Any financing for a qualified energy development must require complete amortization provisions and require periodic payments by the borrower. The term for a financing may not exceed the following calculated from the date the financing is made:

(1) a financing to a qualified energy development project may not exceed the limitations established in AS 44.88.690(b); and

(2) in no case may the term of a financing under the SETS program and fund exceed the remaining estimated economic life of the collateral for the loan.

(e) Before closing a transaction where construction of the improvements in part or whole has taken place, the authority will require a statement in writing from

(1) the author of the appraisal the authority has obtained regarding the qualified energy development, or another appraiser acceptable to the authority, that construction was substantially completed according to the plans and specifications contemplated in the appraisal and that the completed value is at least equal to an amount which would meet the requirements of (a) of this section;

(2) an authorized official that the buildings and structures may be occupied and that the occupancy, buildings, and structures conform to all requirements of federal, state and municipal law and regulations; or if there is no authorized official for the location in which the structure will be located, or if requested by the authority, a registered architect or professional engineer that the property serving as security for the loan is structurally sound and that the buildings or structures conform to applicable building standards.

(f) The terms and conditions of any land lease or easement that secures financing for a qualified energy development are subject to the approval of the authority. The term of the lease or easement must exceed the effective term of the financing by at least 10 years. However, the authority may approve a land lease or easement for a shorter term if there is an irrevocable option to renew the lease or easement that is acceptable in the sole discretion of the authority.

(g) Unless waived by the authority, the applicant shall obtain insurance coverage for the improvements on the real property from responsible companies in such amounts and against such risks as is satisfactory to the authority. The applicant shall obtain and pay for an American Land Title Association (ALTA) title insurance loan or encumbrance policy if real property or a real property encumbrance, such as an easement or right of way, is involved. The authority may require endorsements to the title insurance policy, including ALTA energy project endorsements where applicable.

(h) The authority may, in its discretion, provide financing for a qualified energy development where the security for the financing will be subordinate to a lien or security interest in favor of senior financing on the qualified energy development if

(1) one of the following is satisfied:

(A) the qualified energy development is currently financed by the authority under one or more of its programs;

(B) the financing will be secured by real property that has sufficient value to provide security for the subordinate financing;

(C) the subordinate financing is for expansion and improvements of an existing qualified energy development at the time of the application; and

(2) the applicant demonstrates to the satisfaction of the authority that the additional debt can be repaid from the revenue earned by the collateral offered as security for the subordinate financing.

(i) If required by the authority, the applicant must obtain a guarantee for repayment of the financing the authority provides from the following persons:

(1) a partner or member of the applicant;

(2) a joint venturer with the applicant;

(3) any stockholder of the capital stock of the applicant;

(4) the parent entity if the applicant is a subsidiary; or

(5) any such other credit support from any such other party as the authority may accept.

(j) In any financing agreement, the authority may require the applicant to provide covenants regarding the applicant's organization, operations, or finances. Any financing the authority provides that is in the form of a guarantee may be limited in duration or dollar amount, and may be subject to other conditions and restrictions, as the authority in its discretion determines to be appropriate.

Notes

3 AAC 101.080

Eff. 4/25/2013, Register 207

Even though 3 AAC 101.080 was adopted and effective 4/25/2013, it was not published until Register 207, October 2013.

Authority:AS 44.88.085

AS 44.88.670

AS 44.88.680