S.D. Admin. R. 74:05:10:15

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

Section 74:05:10:15 - Funding agreements

If an application is approved for funding, the board shall execute a funding agreement with the applicant. Funding agreements may include the following requirements of the sponsoring entity:

(1) To acquire all property rights necessary for the project including water rights, rights-of-way, and interest in land needed for the construction, operation, and maintenance of the project; 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 project;

(2) To provide security as required in § 74:05:10:29;

(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 and performance bonds, as may be required;

(5) To establish and maintain books and records relating to the construction and operation of the project and its financial affairs, including a final report;

(6) To submit an annual financial audit or a final financial audit, or both, performed by a qualified independent accountant licensed in South Dakota;

(7) To provide the board and the secretary access to all books and records relating to the project and access to the property of the project so that the board may ascertain whether the sponsoring entity is complying with the provisions of this chapter and with the funding agreement;

(8) Not to sell, transfer, lease, or otherwise encumber the project, any portion of the project, or interest in the project without the prior written consent of the board while the funding agreement or its conditions are in effect;

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

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

(11) 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 project and other expenses necessary to cure the cause of default; or

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

S.D. Admin. R. 74:05:10:15

17 SDR 7, effective 7/22/1990; 19 SDR 61, effective 10/25/1992; 21 SDR 97, effective 11/28/1994; 23 SDR 12, effective 7/30/1996; 28 SDR 95, effective 12/19/2001; 40 SDR 14, effective 7/29/2013.

General Authority: SDCL 46A-1-84.

Law Implemented: SDCL 46A-1-83, 46A-1-84.

Requirements for accountants, SDCL chapter 36-20 B, ARSD art 20:75; Recipient's accounting methods, § 74:05:10:23.