Section 3.99.230. Terms of real property loans.

	(a)  The authority may participate in a loan made by an originator to acquire land, or to acquire or construct buildings, improvements, and structures on land, or to make improvements in the energy efficiency of buildings, improvements, and structures on land, if the loan satisfies the conditions prescribed in this section.  
	(b)  The authority may participate in a loan made by an originator to refinance an outstanding loan described in (a) of this section if, in addition to other requirements of this section, the authority is satisfied that (1) the loan to be refinanced was not made with proceeds of outstanding general obligation indebtedness of the authority nor relates to a project that was originally financed with outstanding general obligation indebtedness of the authority, (2) the borrower will receive economic benefit from the refinancing, and (3) the loan is permitted under the code. The authority may participate in a loan for improvements in energy efficiency that will be secured by a lien on real property subordinate to a lien securing an existing loan of the authority or another lender if the requirements of (j) of this section are satisfied, if the borrower will receive economic benefit from the subordinate loan, and if the subordinate loan is permitted under the code. The economic benefit to the borrower may be in the form of an interest rate reduction, a reduction of debt service payments, an extension of the maturity of the loan, the elimination of call or balloon payment provisions, or other economic benefits, including improvements in the energy efficiency of an existing building and improvements and structures on existing real estate.  
	(c)  The amount of the authority's participation in a real property loan will not exceed $25,000,000, except that the authority may participate in a real property loan in an amount greater than $25,000,000 if the loan is for the financing of a qualified energy development and if the legislature has approved the authority's participation. The principal amount of a real property loan may not exceed 75 percent of the appraised value of the collateral offered as security for the loan unless the amount of the real property loan in excess of this limit is federally insured or guaranteed or is insured by a qualified mortgage insurance company, except that in no event may the real property loan to be purchased under this section exceed the total of loan proceeds used to refinance an existing debt plus the cost of new construction, expansion, or acquisition, unless the additional amounts of the loan to be purchased are restricted to uses approved by the authority to finance commercial activity in the state by a business enterprise.  
	(d)  A real property loan must be secured by a mortgage which is a first lien on real property in fee simple or on a leasehold estate or, in the case of a qualified energy development, on an easement, except as provided in (j) of this section. The authority may review and approve other encumbrances against the real property that do not affect the authority's security for the loan.  
	(e)  The loan terms for any real property loan must require complete amortization provisions and require periodic payments by the borrower. The term for a real property loan shall not exceed the following calculated from the date the loan is made:  
		(1) a loan to finance a qualified energy development may not exceed 50 years or 75 percent of the estimated economic life of the collateral offered as security for the loan, whichever is less, as determined by the authority;  
		(2) a loan to finance a tourism destination facility may not exceed 40 years or 75 percent of the estimated economic life of the collateral offered as security for the loan, whichever is less, as determined by the authority; and  
		(3) a loan to finance real property, other than described in (1) and (2) of this subsection, may not exceed 25 years or 75 percent of the estimated economic life of the collateral offered as security for the loan, whichever is less, as determined by the authority.  
	(f)  The authority may allow the loan originator to amortize its portion of the loan using a shorter amortization schedule than the amortization schedule for the authority's portion provided  
		(1) in the authority's opinion, the project or qualified energy development financed can support the increased debt service;  
		(2) the accelerated amortization schedule is required to induce the originator to make the loan; and  
		(3) the originator's term is at least one-half of the amortization term of the authority's participation or 10 years, whichever is less.  
	(g)  Before closing a real property loan where construction of the improvements in part or whole has taken place, an originator shall obtain a statement in writing from  
		(1) the author of the original appraisal, or other appraiser acceptable to the authority, that construction was substantially completed according to the plans and specifications included in the original appraisal required by 3 AAC 99.220(b)(12) and that the completed value is at least equal to an amount which would meet the requirements of (c) of this section;  
		(2) an authorized official that the buildings and structures may be occupied and that the occupancy, buildings, and structures conform to all requirements of federal, state and municipal law; or if there is no authorized official or if requested by the authority, a registered architect or professional engineer that the property offered as security for the real property loan is structurally sound and that buildings or structures conform to applicable building standards.  
	(h)  The terms and conditions of a land lease or, in the case of a qualified energy development, an easement that secures a real property loan for a project or qualified energy development are subject to approval by the authority. The term of the lease or easement must exceed the effective term of the loan by at least 10 years. However, the authority may approve a land lease or easement for a shorter term if there is an irrevocable option to renew the lease or easement that is acceptable in the sole discretion of the authority.  
	(i)  Unless waived by the authority, the applicant shall obtain insurance coverage for the improvements on the real property from responsible companies in such amounts and against such risks as is satisfactory to the authority. An American Land Title Association title insurance loan policy is required if real property is involved.  
	(j)  The authority may, in its discretion, allow secondary financing on a project financed by a real property loan if the applicant demonstrates to the satisfaction of the authority that the additional debt can be repaid from the revenue earned by the real property offered as security for the real property loan.  
	(k)  If required by the authority, the originator must obtain a guarantee for repayment of an applicant from the following persons:  
		(1) a partner or member of the applicant;  
		(2) a joint venturer with the applicant;  
		(3) any stockholder of the capital stock of the applicant; or  
		(4) the parent corporation if the applicant is a subsidiary corporation.  
	(l)  When a real property loan is for a qualified energy development, the originator shall require the applicant to grant the authority a first position security interest in the applicant's rights under, and the proceeds of, any contract for the sale of power, electricity, or heat from the qualified energy development.  

Authorities

44.88.080;44.88.085;44.88.155

Notes

Reference

3 AAC 99.290
3 AAC 99.930

Authority

AS 44.88.080 AS 44.88.085 AS 44.88.155 Editor's note: The amendment to 3 AAC 99.230 was effective September 24, 2015 and published in Register 217, April 2016.

History

In effect before 1988; am 1/11/88, Register 106; am 11/30/90, Register 118; am 7/19/91, Register 119; am 12/2/94, Register 134; am 2/11/99, Register 150; am 11/1/99, Register 153; am 2/8/2001, Register 158; am 8/8/2003, Register 168; am 4/25/2013, Register 207; am 9/24/2015, Register 217

References

3.99.230