3 AAC 99.580 - Terms of financing

Development project financing the authority provides for a development project the authority will not own and operate must satisfy the following requirements unless the authority, in its discretion, approves deviating from these requirements:

(1) the principal amount of a development project financing may not exceed 75 percent of the estimated cost of the project;

(2) unless modified as provided in (3) of this section, the development project 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 where the development project is located;

(3) 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; the authority may provide financing for a development project where the security for the financing will be subordinate to a lien or security interest in favor of senior financing if the project applicant demonstrates to the satisfaction of the authority that the additional debt can be repaid from the revenue earned by the project;

(4) the terms and conditions of any land lease that secures the financing the authority provides must be acceptable to the authority, and the term of the lease must exceed the effective term of the financing by at least five years;

(5) the financing the authority provides must be secured by a security interest in the equipment and personal property that are part of, or are used in connection with, the development project, and the financing the authority provides may be secured by any other collateral the authority requires;

(6) the development project financing the authority provides must require complete amortization provisions and require periodic payments by the project applicant;

(7) the term of the financing the authority provides may not exceed the estimated useful life of the development project;

(8) the project applicant must provide and pay for title insurance the authority requires and must insure the improvements on the real property where the development project is to be located, with responsible companies and in such amounts and against such risks as the authority requires;

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

(A) a partner or member of the project applicant;

(B) a joint venture with the project applicant;

(C) any stockholder of the capital stock of the project applicant;

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

(E) any such other credit support from any such other party as the authority may accept;

(10) in the agreement to provide development project financing, the authority may require the proposed owner or operator of the development project to provide covenants regarding the organization, business, or finances of the owner or operator or of the development project;

(11) the authority may defer principal payments or capitalize interest on development project financing;

(12) in addition to the requirements stated in this section, the authority may require the project applicant to commit to any other terms and conditions the authority determines to be necessary in providing the development project financing.

Notes

3 AAC 99.580

Eff. 12/5/2013, Register 209, April 2014

Authority:AS 44.88.080

AS 44.88.085

AS 44.88.172