Utah Admin. Code R317-101-12 - Interest Buy-Down Agreement
Interest buy-down agreements may consist of:
A. A financing agreement between the Board
and political subdivision whereby a specified sum is loaned or granted to the
political subdivision to be placed in a trust account. The trust account shall
be used exclusively to reduce the cost of financing for the project.
B. A financing agreement between the Board
and the political subdivision whereby the proceeds of bonds purchased by the
Board is combined with proceeds from publicly issued bonds to finance the
project. The rate of interest on bonds purchased by the Board may carry an
interest rate lower than the interest rate on the publicly issued bonds, which
when blended together will provide a reduced annual debt service for the
project.
C. Any other legal method
of financing which reduces the annual payment amount on locally issued bonds.
After credit enhancement agreements have been evaluated by the Board and it is
determined that this method is not feasible or additional assistance is
required, interest buy-down agreements and loans may be considered. Once the
level of financial assistance required to make the project financially feasible
is determined, a cost effective evaluation of interest buy-down options and
loans must be completed. The financing alternative chosen should be the one
most economically advantageous for the state and the applicant.
Notes
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