33 U.S.C. § 3908 — Secured loans

Page 1016 TITLE 33—NAVIGATION AND NAVIGABLE WATERS § 3908 (c) Federal requirements Nothing in this section supersedes the applica- bility of other requirements of Federal law (in- cluding regulations). (Pub. L. 113–121, title V, § 5028, June 10, 2014, 128 Stat. 1335; Pub. L. 114–94, div. A, title I, § 1445, Dec. 4, 2015, 129 Stat. 1437; Pub. L. 114–322, title IV, § 5008(b)(2)(D), Dec. 16, 2016, 130 Stat. 1897; Pub. L. 115–270, title IV, § 4201(a)(2), Oct. 23, 2018, 132 Stat. 3877; Pub. L. 117–58, div. E, title II, § 50214, Nov. 15, 2021, 135 Stat. 1173.) Editorial Notes AMENDMENTS 2021—Subsec. (a)(1)(D)(ii). Pub. L. 117–58 substituted ‘‘a final rating opinion letter from at least 1 rating agency’’ for ‘‘final rating opinion letters from at least 2 rating agencies’’. 2018—Subsec. (a)(1)(E). Pub. L. 115–270 amended sub- par. (E) generally. Prior to amendment, text read as follows: ‘‘The Administrator shall develop a credit evaluation process for a Federal credit instrument pro- vided to a State infrastructure financing authority for a project under section 3905(9) of this title or an entity for a project under section 3905(10) of this title, which may include requiring the provision of a final rating opinion letter from at least 2 rating agencies.’’ 2016—Subsec. (a)(1)(E). Pub. L. 114–322, § 5008(b)(2)(D)(i), substituted ‘‘section 3905(9)’’ for ‘‘sec- tion 3905(8)’’ and ‘‘section 3905(10)’’ for ‘‘section 3905(9)’’. Subsec. (b)(3). Pub. L. 114–322, § 5008(b)(2)(D)(ii), sub- stituted ‘‘section 3905(9)’’ for ‘‘section 3905(8)’’. 2015—Subsec. (a)(5) to (7). Pub. L. 114–94 redesignated pars. (6) and (7) as (5) and (6), respectively, and struck out former par. (5). Prior to amendment, text of par. (5) read as follows: ‘‘No project receiving Federal credit as- sistance under this chapter may be financed (directly or indirectly), in whole or in part, with proceeds of any obligation— ‘‘(A) the interest on which is exempt from the tax imposed under chapter 1 of title 26; or ‘‘(B) with respect to which credit is allowable under subpart I or J of part IV of subchapter A of chapter 1 of title 26.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2015 AMENDMENT Amendment by Pub. L. 114–94 effective Oct. 1, 2015, see section 1003 of Pub. L. 114–94, set out as a note under section 5313 of Title 5, Government Organization and Employees. ‘‘SECRETARY’’ DEFINED Secretary means the Secretary of the Army, see sec- tion 2 of Pub. L. 113–121, set out as a note under section 2201 of this title. § 3908. Secured loans (a) Agreements (1) In general Subject to paragraphs (2) and (3), the Sec- retary or the Administrator, as applicable, may enter into agreements with 1 or more ob- ligors to make secured loans, the proceeds of which shall be used to finance eligible project costs of any project selected under section 3907 of this title. (2) Financial risk assessment Before entering into an agreement under this subsection for a secured loan, the Sec- retary or the Administrator, as applicable, in consultation with the Director of the Office of Management and Budget and each rating agency providing a rating opinion letter under section 3907(a)(1)(D) of this title, shall deter- mine an appropriate capital reserve subsidy amount for the secured loan, taking into ac- count each such rating opinion letter. (3) Investment-grade rating requirement The execution of a secured loan under this section shall be contingent on receipt by the senior obligations of the project of an invest- ment-grade rating. (b) Terms and limitations (1) In general A secured loan provided for a project under this section shall be subject to such terms and conditions, and contain such covenants, rep- resentations, warranties, and requirements (including requirements for audits), as the Secretary or the Administrator, as applicable, determines to be appropriate. (2) Maximum amount The amount of a secured loan under this sec- tion shall not exceed the lesser of— (A) an amount equal to 49 percent of the reasonably anticipated eligible project costs; and (B) if the secured loan does not receive an investment-grade rating, the amount of the senior project obligations of the project. (3) Payment A secured loan under this section— (A) shall be payable, in whole or in part, from State or local taxes, user fees, or other dedicated revenue sources that also secure the senior project obligations of the relevant project; (B) shall include a rate covenant, coverage requirement, or similar security feature sup- porting the project obligations; and (C) may have a lien on revenues described in subparagraph (A), subject to any lien se- curing project obligations. (4) Interest rate The interest rate on a secured loan under this section shall be not less than the yield on United States Treasury securities of a similar maturity to the maturity of the secured loan on the date of execution of the loan agree- ment. (5) Maturity date (A) In general The final maturity date of a secured loan under this section shall be the earlier of— (i) the date that is 35 years after the date of substantial completion of the relevant project (as determined by the Secretary or the Administrator, as applicable); and (ii) if the useful life of the project (as de- termined by the Secretary or Adminis- trator, as applicable) is less than 35 years, the useful life the project. (B) Special rule for State infrastructure fi- nancing authorities The final maturity date of a secured loan to a State infrastructure financing author- Page 1017 TITLE 33—NAVIGATION AND NAVIGABLE WATERS § 3908 ity under this section shall be not later than 35 years after the date on which amounts are first disbursed. (6) Nonsubordination A secured loan under this section shall not be subordinated to the claims of any holder of project obligations in the event of bankruptcy, insolvency, or liquidation of the obligor of the project. (7) Fees (A) In general Except as provided in subparagraph (B), the Secretary or the Administrator, as ap- plicable, may establish fees at a level suffi- cient to cover all or a portion of the costs to the Federal Government of making a se- cured loan under this section. (B) Financing fees On request of an eligible entity, the Sec- retary or the Administrator, as applicable, shall allow the fees under subparagraph (A) to be financed as part of the loan. (8) Non-Federal share The proceeds of a secured loan under this section may be used to pay any non-Federal share of project costs required if the loan is re- payable from non-Federal funds. (9) Maximum Federal involvement (A) In general Except as provided in subparagraph (B), for each project for which assistance is pro- vided under this chapter, the total amount of Federal assistance shall not exceed 80 per- cent of the total project cost. (B) Exceptions Subparagraph (A) shall not apply to any rural water project— (i) that is authorized to be carried out by the Secretary of the Interior; (ii) that includes among its beneficiaries a federally recognized Indian tribe; and (iii) for which the authorized Federal share of the total project costs is greater than the amount described in subpara- graph (A). (C) Exception for projects funded by a State infrastructure financing authority Notwithstanding subparagraph (A), a State infrastructure financing authority may fi- nance up to 100 percent of the costs of a project using the proceeds of financial as- sistance authorized under section 3912(e) of this title, provided that, in the event of a de- fault with respect to any such assistance, the State infrastructure financing authority is solely responsible for immediate repay- ment of such costs. (10) Credit Any eligible project costs incurred and the value of any integral in-kind contributions made before receipt of assistance under this chapter shall be credited toward the 51 percent of project costs to be provided by sources of funding other than a secured loan under this chapter (as described in paragraph (2)(A)). (c) Repayment (1) Schedule The Secretary or the Administrator, as ap- plicable, shall establish a repayment schedule for each secured loan provided under this sec- tion, based on the projected cash flow from project revenues and other repayment sources. (2) Commencement (A) In general Scheduled loan repayments of principal or interest on a secured loan under this section shall commence not later than 5 years after the date of substantial completion of the project (as determined by the Secretary or Administrator, as applicable). (B) Special rule for State infrastructure fi- nancing authorities (i) Timing of scheduled loan repayments Scheduled loan repayments of principal or interest on a secured loan to a State in- frastructure financing authority under this chapter shall commence not later than 5 years after the date on which amounts are first disbursed. (ii) Repayments None of the funds for repayment of a se- cured loan under this title from a State in- frastructure financing authority may come from funds provided to a State re- volving loan fund under title VI of the Federal Water Pollution Control Act (33 U.S.C. 1381 et seq.) or section 300j–12 of title 42. (3) Deferred payments (A) Authorization If, at any time after the date of substan- tial completion of a project for which a se- cured loan is provided under this section, the project is unable to generate sufficient reve- nues to pay the scheduled loan repayments of principal and interest on the secured loan, the Secretary or the Administrator, as ap- plicable, subject to subparagraph (C), may allow the obligor to add unpaid principal and interest to the outstanding balance of the secured loan. (B) Interest Any payment deferred under subparagraph (A) shall— (i) continue to accrue interest in accord- ance with subsection (b)(4) until fully re- paid; and (ii) be scheduled to be amortized over the remaining term of the secured loan. (C) Criteria (i) In general Any payment deferral under subpara- graph (A) shall be contingent on the project meeting such criteria as the Sec- retary or the Administrator, as applicable, may establish. (ii) Repayment standards The criteria established under clause (i) shall include standards for reasonable as- surance of repayment. Page 1018 TITLE 33—NAVIGATION AND NAVIGABLE WATERS § 3909 (4) Prepayment (A) Use of excess revenues Any excess revenues that remain after sat- isfying scheduled debt service requirements on the project obligations and secured loan and all deposit requirements under the terms of any trust agreement, bond resolu- tion, or similar agreement securing project obligations may be applied annually to pre- pay a secured loan under this section with- out penalty. (B) Use of proceeds of refinancing A secured loan under this section may be prepaid at any time without penalty from the proceeds of refinancing from non-Federal funding sources. (d) Sale of secured loans (1) In general Subject to paragraph (2), as soon as prac- ticable after the date of substantial comple- tion of a project and after providing a notice to the obligor, the Secretary or the Adminis- trator, as applicable, may sell to another enti- ty or reoffer into the capital markets a se- cured loan for a project under this section, if the Secretary or the Administrator, as appli- cable, determines that the sale or reoffering can be made on favorable terms. (2) Consent of obligor In making a sale or reoffering under para- graph (1), the Secretary or the Administrator, as applicable, may not change the original terms and conditions of the secured loan with- out the written consent of the obligor. (e) Loan guarantees (1) In general The Secretary or the Administrator, as ap- plicable, may provide a loan guarantee to a lender in lieu of making a secured loan under this section, if the Secretary or the Adminis- trator, as applicable, determines that the budgetary cost of the loan guarantee is sub- stantially the same as that of a secured loan. (2) Terms The terms of a loan guarantee provided under this subsection shall be consistent with the terms established in this section for a se- cured loan, except that the rate on the guaran- teed loan and any prepayment features shall be negotiated between the obligor and the lender, with the consent of the Secretary or the Administrator, as applicable. (Pub. L. 113–121, title V, § 5029, June 10, 2014, 128 Stat. 1338; Pub. L. 114–322, title IV, § 5008(c), Dec. 16, 2016, 130 Stat. 1897; Pub. L. 115–270, title IV, § 4201(a)(3), (b)(1), Oct. 23, 2018, 132 Stat. 3877, 3878.) Editorial Notes REFERENCES IN TEXT This title, referred to in subsec. (c)(2)(B)(ii), is title V of Pub. L. 113–121, June 10, 2014, 128 Stat. 1322. Subtitle C (§§ 5021–5035) of title V of Pub. L. 113–121 enacted this chapter. For complete classification of title V to the Code, see Tables. The Federal Water Pollution Control Act, referred to in subsec. (c)(2)(B)(ii), is act June 30, 1948, ch. 758, as amended generally by Pub. L. 92–500, § 2, Oct. 18, 1972, 86 Stat. 816. Title VI of the Act is classified generally to subchapter VI (§ 1381 et seq.) of chapter 26 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 1251 of this title and Tables. AMENDMENTS 2018—Subsec. (b)(9)(C). Pub. L. 115–270, § 4201(b)(1), added subpar. (C). Subsec. (c)(2)(B). Pub. L. 115–270, § 4201(a)(3), des- ignated existing provisions as cl. (i), inserted heading, and added cl. (ii). 2016—Subsec. (b)(7). Pub. L. 114–322, § 5008(c)(1), des- ignated existing provisions as subpar. (A), inserted heading, substituted ‘‘Except as provided in subpara- graph (B), the Secretary’’ for ‘‘The Secretary’’, and added subpar. (B). Subsec. (b)(10). Pub. L. 114–322, § 5008(c)(2), added par. (10). Statutory Notes and Related Subsidiaries ‘‘SECRETARY’’ DEFINED Secretary means the Secretary of the Army, see sec- tion 2 of Pub. L. 113–121, set out as a note under section 2201 of this title. § 3909. Program administration (a) Requirement The Secretary or the Administrator, as appli- cable, shall establish a uniform system to serv- ice the Federal credit instruments made avail- able under this chapter. (b) Fees (1) In general The Secretary or the Administrator, as ap- plicable, may collect and spend fees, contin- gent on authority being provided in appropria- tions Acts, at a level that is sufficient to cover— (A) the costs of services of expert firms re- tained pursuant to subsection (d); and (B) all or a portion of the costs to the Fed- eral Government of servicing the Federal credit instruments provided under this chap- ter. (2) Prohibition on pass through fees The Administrator, in the case where a State infrastructure financing authority ob- tains financial assistance under section 3912(e) of this title, shall require as a condition of ob- taining such assistance, that the State infra- structure financing authority is prohibited from passing any portion of the fees required under section 3908(b)(7) of this title to any party that utilizes any portion of such assist- ance for a project funded by such authority. (c) Servicer (1) In general The Secretary or the Administrator, as ap- plicable, may appoint a financial entity to as- sist the Secretary or the Administrator in servicing the Federal credit instruments pro- vided under this chapter. (2) Duties A servicer appointed under paragraph (1) shall act as the agent for the Secretary or the Administrator, as applicable.