What are the financing costs – i.e., is there a % on top of the borrowing that is for financing costs?

There are two loans: (i) a Line of Credit (LOC) Loan for short term financing issued upon commencement of design and maturing upon construction completion, which is comprised of private short-term capital and Local Aid Infrastructure Funds (LAIF); and (ii) a long-term loan issued upon construction completion, which is comprised of bond proceeds and LAIF funds. There is a 2% loan administrative fee of the total project cost for application review and requisition processing, which accrues at the time of the Line of Credit Loan closing. Please note the borrower is not required to pay the administration fee, principal or interest (if applicable) until conversion to long-term financing (LOC loan maturity). At the time of conversion, the administration fee, principal, and interest (if applicable) are financed through the long-term loan.

What are the ongoing administrative costs?

A loan servicing fee in the amount of 0.15% of the total long-term loan amount is payable annually for the long-term loan term. This fee is not financed in the long-term loan.

What if we budget $1 million for the project and do to the availability of other funding sources, we only need $500K at the end of construction; does the county need to borrow the whole million and pay interest costs on funds it did not need – is this truly a “bank Loan” or is this related to a tax exempt bond sale that will have fixed payments?

Similar to bond anticipation notes, the LOC Loan provides flexibility to accommodate cost adjustments incurred during construction prior to conversion to long-term financing. There is no penalty if the borrower pays the LOC Loan amount in full or in part upon maturity of the LOC Loan. Upon long-term loan closing, the borrowers repay the loan amount semi-annually.

If it is a Tax Exempt bond – are we joining with other local units on a large sale i.e., a pooled financing – and if so, do the call provisions require all local units to participate and take whatever legal action is required for the refunding?

The Infrastructure Bank (I-Bank) conducts pooled financings the proceeds of which fund a portion of each borrower's long-term loan. Call provisions are standard features in our tax exempt financings. The I-Bank exercises call provisions only to refinance existing debt where the net present value savings is greater than 3% and even then, each series participant (borrower) is not obligated to participate in the refunding. We have not accelerated a borrower's loan repayments and only do so in the event of default.

If a Tax Exempt bond – is the State also issuing debt?


What happens if one or more of the participants in the pool (if it is a pooled financing) is unable or unwilling to make payments – how is the shortfall covered?

In the event of payment default, sources of funds include (i) prior repayments from other pool participants, (ii) prior repayments from participants in prior pools, and (iii) enforcement of the I-Bank's remedies as a bond holder, i.e., the defaulting borrower's general obligation pledge, and state aid intercept.

Is there a subsidy on the interest – if so is it subject to the single audit act – if it is are there any special tests and conditions that need to be provided?

The interest rate paid by borrowers for I-Bank funds is not lower than the cost of interest incurred by the I-Bank. As discussed above however, I-Bank borrowers are not obligated to pay, principal, interest (as applicable) or administrative fees during the term of the LOC loan.

Does the I-Bank pay the interest charges to vendors if the county does not receive cash flow in time to make payments – or is the borrower expected to carry this cost?

The I-Bank typically disburses funds for all eligible activities within 21 days of receipt of requisitions. It does not hold borrowers harmless for their legal obligations to pay their contractors.

Does the vendor have to be paid before a borrower seeks reimbursements?

No. However, funds are disbursed upon a borrower's submission of a requisition and back up invoices from the contractor(s). Borrowers submitting requisitions immediately upon receipt, typically receive disbursements sufficiently in advance of their repayment obligations to avoid having to utilize their own funds (albeit temporarily) to pay the contractor(s) for requisitioned expenses.

What type of engineering costs are required – are there any special inspections – any additional sign offs by other professionals etc. – does the trust make inspections?

Regarding applications, the applicant is required to certify to comply with various program and state legal requirements, and its licensed professional engineer signs and seals the plans and specifications. Regarding the issuance of loans, the borrower's (a) governing body (i) approves an ordinance appropriating funds, and authorizing the issuance of the short-term note and long-term bond; and (ii) adopts and authorizes a resolution authorizing program participation, (b) bond counsel issues an opinion, (c) general counsel issues a supporting opinion, and (d) professional engineer issues a certification of the project's useful life. Regarding the disbursement of funds, the applicant and its licensed engineer certifies payment requisitions.

Does the borrower need additional note disclosure for this type of arrangement?

Primary and secondary market disclosure is not necessary with regard to the I-Bank's issuance of the note with its private placement carrier for short-term financing. At the time of conversion to long-term funding, through the issuance of the I-Bank of its tax exempt bonds, primary and secondary market disclosure with respect to the borrower would be expected to be necessary. The I-Bank takes no position with regard to a borrower's obligations in its financial statements and recommends that you discuss such matters with your financial auditor.

Is it considered a “bank loan” for GASB disclosure requirements?

We defer to your professional financial auditor.

Is it subject to debt limit?