S.D. Admin. R. 74:05:07:20

Current through Register Vol. 51, page 54, October 28, 2024

Section 74:05:07:20 - Funding agreements

If an application is approved for funding, the board shall execute a funding agreement with the sponsoring entity which may include in its provisions the following requirements of the sponsoring entity:

(1) To acquire all property rights necessary for the facility including water rights, rights-of-way, and interest in land needed for the construction, operation, and maintenance of the facility; to furnish title insurance, a title opinion, or other documents showing the ownership of the land, mortgages, encumbrances, or other lien defects; and to obtain and record the releases, consents, or subordinations to the property rights for holders of outstanding liens or other instruments as necessary for the construction, operation, and maintenance of the facility;

(2) To provide security as required in § 74:05:07:13;

(3) To provide for the receipt of revenues to meet the requirements of debt service, operation, and maintenance and to establish reserves in an amount sufficient to assure that expenses and payments will be paid on time for loan installments, emergency maintenance, and replacement of assets that have a useful life less than the repayment period of the loan;

(4) To acquire and maintain insurance coverage, including fidelity bonds, as may be required;

(5) To establish and maintain books and records relating to the construction and operation of the facility and its financial affairs;

(6) To provide the board or its designated agent access to all books and records relating to the facility and access to the property of the system so that the board or its designated agent may ascertain whether the sponsoring entity is complying with the provisions of this chapter and with the funding agreement;

(7) Not to sell, transfer, lease, or otherwise encumber the facility, any portion of the facility, or interest in the facility without the prior written consent of the board while the funding agreement is in effect;

(8) In the case of a loan, if the undertaking would obligate the source of funds pledged to repay the loan, to agree not to enter into an agreement or incur other liabilities in connection with the facility, exclusive of normal maintenance, without the prior written consent of the board;

(9) In the case of a loan, to agree that upon default in the payments of principal and accrued interest on the loan or in the performance of any covenant or condition, the board, at its option, may do one or more of the following:

(a) Declare immediately due and payable the entire principal amount then outstanding and the accrued interest and all costs associated with collection of the outstanding balance;

(b) For the account of the borrower, incur and pay reasonable expenses for repair, maintenance, and operation of the facility and other expenses necessary to cure the cause of default; or

(c) Take possession of the facility and repair, maintain, or operate the facility or sell, lease, or otherwise dispose of the facility to another entity; and

(10) To secure written approval from the board or its designated agent for significant changes in project scope before or during construction according to conditions and specifications set forth in the funding agreement.

S.D. Admin. R. 74:05:07:20

13 SDR 23, effective 9/3/1986; 13 SDR 129, 13 SDR 141, effective 7/1/1987; 19 SDR 202, effective 7/4/1993; requirement for proof of water right transferred from

General Authority: SDCL 46A-1-65.

Law Implemented: SDCL 46A-1-61, 46A-1-63.1, 46A-1-64.