Section 961.10. Loans

(a) The term of loans shall normally be 20 years from the day the loan agreements are executed. The Board may specify different terms in cases that it deems necessary or desirable to do so.

(b) The borrower shall pay interest at the determined rate on funds disbursed during construction. Upon completion of the project and its acceptance by the Board, or upon 3 years from the date the loan agreements are executed, whichever comes first, payments of principal and interest shall become due and payable upon an amortization schedule to be established by the Board. The Board may defer the initiation of the repayment of principal up to 5 years from the date the loan agreements are executed. The borrower may begin principal and interest payments sooner than required in this subsection if it so chooses.

(c) The minimum rate of interest to be paid on a loan shall be 1%. The maximum rate of interest may not exceed the following:

(1) For projects in counties where the unemployment rate exceeds the Statewide unemployment rate by 40% or more, 1% for the first 5 years and 25% of the bond interest rate for the remainder of the loan.

(2) For projects in counties where the unemployment rate exceeds the Statewide unemployment rate, but exceeds it by less than 40%, 30% of the bond interest rate for the first 5 years and 60% of the bond interest rate for the remainder of the loan.

(3) For other projects, 60% of the bond interest rate for the first 5 years and 75% of the bond interest rate for the remainder of the loan.

(4) For projects located within municipalities for which unemployment rates exist that would qualify the project for lower interest rates than if the relevant county unemployment rates were used, the unemployment rate of that municipality may be used in determining the interest rate on the loan.

(d) For purposes of this subsection, the phrase ‘‘unemployment rate of the county’’ means the average unemployment rate for the county in the most recent calendar year for which data have been finalized. For the projects which serve multiple counties, the highest unemployment rate of the counties involved shall be used. The unemployment data utilized shall be data reported by the Department of Labor and Industry. For purposes of this subsection, the phrase ‘‘bond interest rate’’ is the rate of interest paid by the Commonwealth immediately preceding the date of the loan for the general obligation bonds used to finance the loan.

(e) In establishing the interest rate of a loan, the Board will consider the ultimate effect that the financing of a project’s costs will have on the rates customers will have to pay. A rate increase will be compared with local incomes and ability to pay in determining a loan’s interest rate. In the process of setting an interest rate, the Board may consider factors including, but not limited to:

(1) The current market interest rate.

(2) The financial, social and economic condition of the area served by the project including, but not limited to, the unemployment rate in the project county as it compares to the Statewide average unemployment rate.

(3) The financial condition of the applicant.

(4) The median household income in the system’s service area.

(5) Historical, existing and projected user fees.

(6) The financial condition of the Authority and the necessity to maintain the Authority’s funds in a financially sound manner.

(f) Loans shall be made subject to the terms and conditions that the Board establishes.