99-626 C.M.R. ch. 2, § 5 - APPLICATION PROCEDURES

Current through 2022-14, April 6, 2022

A. Application

(1) An Applicant shall submit an application complying with the requirements of this rule on forms developed by the Authority as may be specified with supporting information as required by this rule and additional information as requested by the Authority.

(2) The Authority shall be responsible for making application forms available.

(3) In its evaluation of an application, the Authority will consider the following, in addition to other requirements of this Rule:

(a) Project Description - Describe how financial assistance from the Program will be used. Include a Project capital budget.

(b) Comprehensive Nature of Project - Description of how the Project relates to the Municipality's total economic development effort. Include a description of how the Project will address the requirements of Section 2, 3 or 4 of this Rule as applicable. The application must detail how the Project will address the problems identified and must include a plan to market and manage the facility, including an operating budget and pro forma cash flow projections.

(c) Feasibility - Identification of tasks, timetables and the responsible parties to implement the proposed Project. Application must also identity the market need for the project.

(d) Right to develop - Evidence of the Applicant's right, title and interest.

(e) Evidence of local support.

(f) Commitment/Match - Identity and describe the source, amount and terms of the matching funds, as applicable.

(4) No application will be considered complete unless all questions are answered and all supporting information is provided.

(5) Upon approval of an application by the Authority, a commitment shall be issued setting forth the terms and conditions under which the financial assistance from the Program will be provided. The commitment shall include a list of conditions that must be satisfactorily met. The following requirements may be specified.

* Drawings, plans, specifications

* Appraisals, bonds, guaranties

* Permits, approvals, surveys, title insurance, opinions

* Financial statements, cost, other certifications and

* Other instruments evidencing full compliance with the Authority's requirements and in form and content satisfactory to the Authority.

(6) No commitment shall become effective until the Applicant has signed it and the Applicant has agreed to pay to the Authority the fees specified in the program application, and other applicable fees. Authority fees, excluding the Authority's costs in connection with the financial assistance, will not exceed 2% of the total financial assistance.

(7) If, upon examination of the application and supporting information, the Authority rejects an application, the Applicant shall be informed of the rejection and the reasons. Rejection of a Project may occur at any time.

B. Special Terms for Construction/Development Loans

(1) Construction/Development lending is financing to be used for acquiring property or rights to property, including land or structures, with the intent to develop or convert it to income-producing property; commercial use; industrial use; or similar uses, including the necessary costs of renovation or development of property. Due to the additional risks associated with construction lending including, but not limited to cost overruns and/or failure to complete, additional application materials may be required. An applicant may be required to submit all or some of the following before a commitment can be issued.

(a) Site plans, including plans for landscaping and lighting the building, surface water runoff control, utilities connections, and all other non-eligible costs. The plans and specifications shall clearly outline the scope of work for the Project. Plans and Specifications documenting the following may be required: a boundary survey indicating property lines, all utilities including water, sewer and power, building footprint, landscaping, surface water runoff control and associated parking. The Applicant may be required to submit plans and specifications for the proposed Project that have been prepared by either a registered architect and engineer in Maine or another party acceptable to the Authority.

(b) Floor plans, elevations, wall sections, foundation plan, structural system, mechanical and electrical systems and details indicating the size, height and overall scope of the proposed building.

(c) Specifications indicating the type and quality of the systems and material that will be used in the construction of the building.

(d) Building design, including the foundation, structure and architectural design.

(e) Evidence of the suitability of the proposed site, including soil analysis and municipal services.

(f) Evidence of construction bonding or builders risk insurance.

(g) Evidence that an adequate access road exists to the project.

(h) Evidence that all appropriate licenses and permits to construct, operate and occupy the building have been obtained.

(i) Evidence that the site is consistent with all applicable ordinances and requirements.

(j) Evidence that the Applicant has right, title and interest to the Project.

(k) Final bid documents and an assignment of construction documents for the Project.

(l) Lien waivers and independent party inspection of work completion, at the Borrower's expense.

C. General Terms

(1) Financial assistance will be provided in an amount that corresponds with the funds available to the Authority and is reasonable to develop or redevelop a Project as demonstrated by a contractor's bid package.

(2) Financial assistance must provide a return to the Authority on such terms as will be acceptable to the Authority. Interest on any loan shall be up to 2% over the Wall Street Prime Rate as published in the Wall Street Journal on the date the Letter of Commitment is executed by the parties, provided that the Authority may require higher interest rates on any loan that is not repaid within five (5)years from the date of the loan.

(3) When the Authority is acting as principal, partner or investor, the Authority must be provided with title to the Development Project, or with stock or other equity interest in the Project, on such terms as will be acceptable to the Authority. When the Authority is acting as lender, a loan must be secured by collateral having a fair market value sufficient to provide adequate security for the loan, and/or such guarantees and/or other financial support, or incentives from the Municipality or other party as may be required to assure repayment and Project feasibility. The Authority may require a first lien on collateral.

(4) The term of the financial assistance must be based on the Applicant's financial need and circumstances, and the useful life of the Project. The principal balance and all accrued and unpaid interest must be repaid in full to the Authority no later than 20 years from the date of the loan.

(5) The financial assistance will be used only for acquisition, development or redevelopment costs and/or Construction Costs.

(6) Periodic payments shall be established in accordance with the Applicant's individual needs. The Authority may defer up to one (1) year's payment of interest and principal. The Authority may allow deferred principal and/or interest to be paid at the earlier of the date when the Project is sold, or loan maturity. When the Applicant shows extreme financial need, as determined in the discretion of the Authority, interest due may be abated in whole or in part.

(7) The Authority may limit its disbursements so that the undisbursed portion of the Project financing shall be sufficient at all times to cover the Project costs.

(8) In the event of default, the financial assistance may be declared immediately due and payable.

(9) The Applicant will agree to the following terms and conditions in the loan documentation, as may be applicable:

(a) The Applicant will comply with all applicable planning, zoning, sanitary, building and environmental laws, ordinances and regulations of the federal, state and local governments.

(b) The Applicant will agree not to convey, lease or transfer any collateral for the financial assistance without the prior written consent of the Authority.

(c) The Applicant will expend no portion of the financial assistance directly or indirectly for purposes other than those approved by the Authority.

(d) While the Project remains unoccupied and is owned by the Authority, it is declared by the Act to be property held for a legitimate public use and benefit and to be exempt from all taxes and special assessments of the state or any of its political subdivisions.

(e) The Applicant will keep insured to the satisfaction of the Authority all insurable property constituting the Project and will maintain the Project in good condition and repair.

(f) The Applicant will not materially alter or relocate collateral without the prior written consent of the Authority.

(g) The Applicant will comply with such other covenants as the Authority impose or establish in order to protect the Authority's interests. Any such other covenants shall be expressly set forth in the financial assistance commitment or exhibits or attachments.

(10) Use of Financial Assistance Proceeds. The Applicant shall use financial assistance proceeds for the purposes stated in the commitment and the Applicant's rights under the commitment shall not be assignable, except to the Owner.

(11) Inspection. The Applicant will allow the Authority or its designee access to the Project at any reasonable time to inspect the construction, redevelopment or operation of the Project.

(12) Certification of Payments. The Applicant shall provide to the Authority a certificate of payment from the architect or engineer of record, or such other authorized agent, based on the architect's or engineer's or agent's evaluation of the work and on the data comprising the contractor's application for payment, that the work has progressed to the point indicated and, that to the best of the architect's or engineer's or agent's knowledge, information and belief, the quality and quantity of the work is in accordance with applicable development or redevelopment plans and agreements. Construction loan advances should be made in a manner that limits risks of intervening mechanic liens, which may include requirement of dual party checks and lien waivers exchanged with all payment to contractors, subcontractors and others working on a Project.

Notes

99-626 C.M.R. ch. 2, § 5