42 U.S.C. § 8833 : US Code - Section 8833: Guaranteed construction loans

Search 42 U.S.C. § 8833 : US Code - Section 8833: Guaranteed construction loans

(a) Authority of Secretary of Energy
Subject to sections 8835 and 8836 of this title, the Secretary of
Energy may commit to guarantee, and guarantee, against loss on up
to 90 per centum of the principal and interest, any loan which is
made solely to provide funds for the construction of a municipal
waste energy project and which does not exceed 90 per centum of the
cost of the construction of the project involved, as estimated by
the Secretary on the date of the guarantee or commitment to
guarantee.
(b) Estimated project construction costs as determinative of
revised amount of guarantee
In the event the total estimated costs of construction of the
project thereafter exceed the total estimated costs initially
determined by the Secretary of Energy, the Secretary may in
addition, upon application therefor, guarantee, against loss on up
to 90 per centum of the principal and interest, a loan for so much
of the additional estimated total costs as does not exceed 10 per
centum of the total estimated costs.
(c) Terms and conditions
The terms and conditions of loan guarantees under this section
shall provide that, if the Secretary of Energy makes a payment of
principal or interest upon the default by a borrower, the Secretary
shall be subrogated to the rights of the recipient of such payment
(and such subrogation shall be expressly set forth in the loan
guarantee or related agreements).
(d) Termination, cancellation, or revocation, and conclusive nature
of guarantee
Any loan guarantee under this section shall not be terminated,
canceled, or otherwise revoked, except in accordance with the terms
thereof and shall be conclusive evidence that such guarantee
complies fully with the provisions of this chapter and of the
approval and legality of the principal amount, interest rate, and
all other terms of the securities, obligations, or loans and of the
guarantee.
(e) Payment to lender
If the Secretary of Energy determines that -
(1) the borrower is unable to meet payments and is not in
default,
(2) it is in the public interest to permit the borrower to
continue to pursue the purposes of such project, and
(3) the probable net benefit to the United States in paying the
principal and interest due under a loan guarantee agreement will
be greater than that which would result in the event of a
default,
then the Secretary may pay to the lender under a loan guarantee
agreement an amount not greater than the principal and interest
which the borrower is obligated to pay to such lender, if the
borrower agrees to reimburse the Secretary for such payment on
terms and conditions, including interest, which the Secretary
determines are sufficient to protect the financial interests of the
United States.
(f) Preconditions
A loan may not be guaranteed under this section unless the
applicant for such loan has established to the satisfaction of the
Secretary of Energy that the lender is not willing without such a
guarantee to extend credit to the applicant at reasonable rates and
terms, taking into consideration prevailing market rates and terms
for loans for similar periods of time, to finance the construction
of the project for which such loan is sought.
(g) Payment of interest; tax consequences
(1) With respect to any loan or debt obligation which is -
(A) issued after June 30, 1980, by, or on behalf of, any State
or any political subdivision or governmental entity thereof,
(B) guaranteed by the Secretary of Energy under this section,
and
(C) not supported by the full faith and credit of the issuer as
a general obligation of the issuer,
the interest paid on such obligation and received by the purchaser
thereof (or the purchaser's successors in interest) shall be
included in gross income for the purposes of chapter 1 of title 26.
(2) With respect to the amount of obligations described in
paragraph (1) that the issuer would have been able to issue as tax
exempt obligations (other than obligations secured by the full
faith and credit of the issuer as a general obligation of the
issuer), the Secretary of Energy is authorized to pay only to the
issuer any portion of the interest on such obligations, as
determined by the Secretary of the Treasury after taking into
account the interest rate which would have been paid on the
obligations had they been issued as tax exempt obligations without
being so guaranteed by the Secretary of Energy and the interest
rate actually paid on the obligations when issued as taxable
obligations. Such payments shall be made in amounts determined by
the Secretary of Energy, and in accordance with such terms and
conditions as the Secretary of the Treasury shall require.
(h) Fees
(1) A fee or fees may be charged and collected by the Secretary
of Energy for any loan guarantee under this section.
(2) The amount of such fee shall be based on the estimated
administrative costs and risk of loss, except that such fee may not
exceed 1 per centum of the maximum of the guarantee.