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FINANCE AUTHORITY OF MAINE

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FINANCE AUTHORITY OF MAINE

94-457 FINANCE AUTHORITY OF MAINE

Chapter 317: NUTRIENT MANAGEMENT LOAN PROGRAM

    Summary: This rule establishes the procedures, standards and fees applicable to Borrowers applying for loans from the Authority's program of direct loans for the finance of construction of livestock manure and milk room waste containment and handling facilities as set forth in the Nutrient Management Act 7 MRSA ?4201 et seq., and Chapter 565 of the Rules of the Department of Agriculture, Food and Rural Resources, from a portion of the Clean Water Revolving Loan Fund, provided by the United States Environmental Protection Agency through the Maine Municipal Bond Bank and the Maine Department of Environmental Protection.

1. Definitions.

     A. Reference to terms defined elsewhere. Terms used in this rule which are not

    defined herein shall have the meaning ascribed to them in the Nutrient

    Management Act, 7 MRSA ?4201 et seq., or if not there defined, in Chapter 565

    of the Rules of the Department of Agriculture, Food and Rural Resources, or if not

    there defined, in Title VII of the Federal Water Pollution Control Act, 33 U.S.C.

    ?1251 et seq., and finally, if not there defined, in the Finance Authority of Maine

    Act, 10 M.R.S.A. Section 961 et seq., unless clearly specified otherwise or unless

    the context clearly indicates otherwise.

     B. Defined Terms.

     1) "Borrower" means a person or entity which meets the eligibility

    requirements set forth in Section 3 of this rule, and includes a prospective

    borrower where the context requires. If the borrower is a real estate

    holding company or is a subsidiary or affiliate of or is related to an entity

    with 50% or more common ownership "borrower" shall include the parent,

    affiliated or related entity when determining eligibility.

     2) “Chief Executive Officer” means the chief executive officer of the

    Authority or someone acting under the supervisory control of the chief

    executive officer.

     3) "Commissioner" means the Commissioner of the Department, or a person

    acting under the supervisory control of the Commissioner of the

    Department.

     4) “Department” shall mean the State of Maine Department of Agriculture,

    Food and Rural Resources.

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     2) The loan is made to the same individual or entity, who operated the project

    at the time the project was undertaken.

     3) The loan will assist in maintaining a viable business.

     D. The terms of a loan made under this section shall be set in accordance with section

    6 hereof.

4. Application Procedure and Content.

     Each borrower shall submit a program application, and evidence that a copy has been

    delivered to the Commissioner, on such forms and with such attachments as the Authority

    may require consistent with the purposes of the program and this Rule. The Authority will

    review each application for completeness and eligibility. Applications which are not

    substantially complete may be deemed not received until completed. The Authority shall

    determine when an application is received, which determination shall be final. An

    application shall contain, at a minimum, such general information identifying and

    describing the borrower, the proposed project, and the proposed financing of the project

    as specified in the application form and as otherwise requested by the Authority.

5. Criteria and Considerations.

     A. No application will be approved unless the Commissioner has certified to the

    Authority that project for which the loan is sought is an eligible project.

     B. No application will be approved unless the Authority determines that the

    application is complete and that information sufficient to make an informed

    decision on the application has been received.

     C. No application will be approved unless the applicant demonstrates to the Authority

    the existence of a viable source of repayment for the loan, including, without

    limitation, the ability to repay the loan from cashflow from operations, liquidation

    of collateral, or other sources.

     D. The Authority shall rely upon information provided to it by the Department

    regarding whether a project is eligible.

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6. Terms and Conditions; Premiums, Fees and Other Charges.

     A. Periodic payments of principal, together with interest at the annual rate of 2%,

    shall be established in accordance with a borrower's individual needs. In all cases

    the first principal payment shall be required to be made within one year of project

    completion, except loans under ?3 (C), in which case the first principal payment

    shall be required to be made within 1 (one) year of loan closing.

     B. Direct loans shall not exceed terms of twenty (20) years or the useful life of the

    assets financed, whichever is less.

     C. Additional requirements and covenants of each loan may be established by the

    Authority, provided that each borrower shall at a minimum be required to maintain

    and repair collateral, maintain adequate insurance covering public liability, hazard,

    and flood insurance if borrower is located in a flood plain, and comply with all

    applicable federal, State and local laws, regulations, ordinances and orders.

     D. The borrower shall pay a loan origination fee to the Authority equal to 2% of the

    loan amount at closing and shall be responsible for the Authority's out of pocket

    costs and expenses of closing, administering and collecting the loan. CLOSING

    COSTS, BUT NOT LOAN ORIGINATION OR LOAN ADMINSTRATION

    FEES, MAY BE FINANCED. Commencing on the first anniversary date of the

    date of the loan and annually on the same date thereafter, the borrower shall pay to

    the Authority an annual loan administration fee in an amount equal to 1% of the

    outstanding principal balance of the loan remaining due on each such anniversary

    date.

     E. Any loan made pursuant to this program may be assumed by a purchaser of the

    premises on which the project is located, provided that the loan may only be

    assumed by a for-profit entity which would be eligible for a loan on the same terms

    and conditions as the original borrower. The eligibility of any such assuming entity

    shall be determined in the discretion of the Authority.

     F. All project work must be completed by or under the direction of a person

    approved by the Department (and, if required, licensed under applicable law),

    provided however that the Department, the Authority and each of their agents and

    employees shall have no liability, and do not and shall not make any

    representations or warranties (express or implied), with respect to any project,

    including without limitation, liability for defective design, defective construction,

    inadequate financing to complete the project or the project’s fitness for any

    purpose. The Department shall require evidence and certification from the

    borrower of compliance with these conditions, and provide the same to the

    Authority.

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7. Collateral.

     A. Repayment of any loan pursuant to the program shall be secured by such collateral

    as the Authority may require, including without limitation, a mortgage or security

    interest in real estate, buildings or personal property of the business entity, subject

    only to such other encumbrances as the Authority may approve, assignment or

    pledges of leases, and personal or corporate guarantees. Personal guarantees of the

    principals shall be required unless compelling reasons are presented justifying not

    requiring a guarantee.

     B. Loans may, at the discretion of the Authority, be secured by collateral valued for

    collateral purposes at less than the amount of the loan, provided that other viable

    sources of repayment exist.

     C. Real estate or stationary machinery or equipment constituting a significant portion

    of collateral for repayment of a loan shall be located within the State. Mobile

    machinery or equipment, including vessels, constituting a significant portion of

    collateral for repayment of the loan shall be registered with and taxed by the State

    or municipal authorities, if the State or municipal authorities register or tax

    machinery or equipment of a type similar to the collateral, and shall be stored or

    berthed in the State when not in use.

8. Commitment; Rejection.

     A. Upon approval of a direct loan, a commitment will be issued by the Authority

    setting forth the terms and conditions upon which the loan will be extended.

     B. In the event the Authority rejects any application, the Authority will promptly send

    the applicant notice containing reasons for the rejection.

9. Appeal to the Members.

     In the event that an application is rejected by the chief executive officer, the applicant shall

    have the right to appeal the decision of the chief executive officer to the members,

    provided that such appeal shall not affect processing of other applications received prior to

    the notice of appeal. Notice of the appeal, together with a statement of the reasons why

    the chief executive officer's decision should be reversed or modified, shall be given to the

    chief executive officer in writing within 20 days after the date the chief executive officer

    mails the notice of rejection to the applicant. The appeal shall be heard at a meeting of the

    members. The applicant must be present to support the appeal. The appeal shall be based

    on the record before the chief executive officer on the date of the rejection. The decision

    of the chief executive officer shall be final unless the members determine that the rejection

    by the chief executive officer was arbitrary, capricious or an abuse of discretion, in which

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    event the members may overturn or modify the decision of the chief executive officer and

    may direct the chief executive officer to take further action with respect to the application.

    Priority of any application with respect to which the chief executive officer's rejection has

    been overturned or modified shall be determined as of the date and time of receipt of the

    notice of appeal.

10 Waiver of Rule.

     The chief executive officer may waive any requirement of this rule, except to the extent

    that the requirement is mandated by the Act or other applicable law, in cases where the

    deviation from the rule is insubstantial and is not contrary to the purposes of the program.

STATUTORY AUTHORITY: 10 M.R.S.A. Sections 969-A(14)

EFFECTIVE DATE:

     June 21, 1999 (EMERGENCY - expires September 18, 1999)

     October 23, 1999

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