Section 3.99.575. Interest rates and prepayment fees.

	(a)  If the authority provides development project financing for a development project that the authority will not own and operate, the initial interest rate on the financing will be set at the time the authority issues a development project financing commitment letter. The initial interest rate will be from 250 to 450 basis points above the interest rate paid on the securities of the United States Treasury that have a maturity date comparable to the term of the authority's financing. In the event that no United States Treasury security is directly comparable in maturity to the authority's development project financing, the authority may use the United States Treasury security the authority in its discretion determines to be most directly comparable as possible. The authority will establish the initial interest rate for the financing within this range based on the authority's evaluation of the relative risk of the transaction. In evaluating the risk of the transaction, the authority may consider the nature of the project applicant and its creditworthiness; the nature of the development project and its financial strengths or weaknesses; the size, length, and other terms of the financing; the collateral for the financing; and any other factors the authority reasonably determines to bear on the risk in the transaction.  
	(b)  If the authority provides development project financing for a development project that the authority will not own and operate, the authority may charge a fixed interest rate for the entire term of the financing or the authority may require that the rate of interest on the financing be adjusted from time to time at intervals the authority decides are appropriate. The authority will select a fixed or adjustable interest rate for the financing, establish the intervals for adjusting the interest rate, and determine the method by which the interest rate is adjusted based on the authority's evaluation of the risk of the transaction and based on the practices of private commercial lenders with respect to comparable financing. In the commitment letter for the development project financing the authority provides to the project applicant, the authority will state whether the rate of interest is fixed or adjustable, the intervals for adjusting the interest rate, and the method by which the interest rate is to be adjusted.  
	(c)  The authority may require a prepayment fee on a development project financing. The prepayment fee will be in the amount the authority determines is appropriate and will be stated in the commitment letter for the development project financing. The authority will not charge a prepayment fee on any prepayment that occurs later than five years after the date of the finance closing or as specified in the covenants of bonds issued for the project financing.  

Authorities

44.88.080;44.88.085;44.88.172;44.88.212

Notes

Authority

AS 44.88.080 AS 44.88.085 AS 44.88.172 AS 44.88.212

History

Eff. 12/5/2013, Register 209