Secured loans and loan guarantees

(a) Authority The Secretary may enter into agreements with eligible entities to make, and may make, secured loans to such entities as provided under this section for eligible projects selected under section 207 for financial assistance under this section. (b) Use (1) In general The proceeds of a secured loan under this section shall be used only— (A) to finance eligible project costs of an eligible project selected under section 207; (B) subject to paragraph (2) of this subsection, to refinance interim construction financing of eligible project costs of an eligible project selected under section 207; or (C) to refinance long-term project obligations or Federal credit instruments, if such refinancing provides additional funding capacity for the completion, enhancement, or expansion of a project that— (i) is selected under section 207; or (ii) was originally financed, in whole or in part, with amounts provided other than under this title, if the project otherwise meets the requirements of section 207. (2) Limitation on refinancing of interim construction financing The proceeds of a secured loan under this section made for an eligible project may not be used for the purpose under paragraph (1)(B) after the expiration of the 12-month period beginning upon the date of substantial completion of the project. (c) Risk assessment Before entering into an agreement under this subsection for a secured loan, the Secretary, in consultation with the Director of the Office of Management and Budget and each rating agency providing a preliminary rating opinion letter under section 207(b)(1)(B), shall determine an appropriate capital reserve subsidy amount for the secured loan, taking into account each such preliminary rating opinion letter. (d) Investment-Grade rating requirement for senior obligations The execution of a secured loan under this section shall be contingent on receipt by the senior obligations of the project of an investment-grade rating. (e) Terms and limitations (1) Maximum amount The amount of a secured loan under this section shall not exceed the lesser of— (A) an amount equal to 49 percent of the reasonably anticipated eligible project costs; or (B) if the secured loan does not receive an investment-grade rating, the amount of the senior project obligations of the project. (2) Payment A secured loan under this section— (A) shall be payable, in whole or in part, from State or local taxes, user fees, or other dedicated revenue sources that also secure the senior project obligations of the relevant project; (B) shall include a rate covenant, coverage requirement, or similar security feature supporting the project obligations; and (C) may have a lien on revenues described in subparagraph (A), subject to any lien securing project obligations. (3) Interest rate The interest rate on a secured loan under this section shall be— (A) not less than the yield on United States Treasury securities of a similar maturity to the maturity of the secured loan on the date of execution of the loan agreement; and (B) fixed for the term of the loan. (4) Maturity date (A) In general Except as provided in subparagraph (B), the final maturity date of a secured loan under this section for an eligible project shall be not later than 35 years after the date of substantial completion of the project. (B) Special rule for State infrastructure financing authorities The final maturity date of a secured loan under this section made to a State infrastructure financing authority shall be not later than 35 years after the date on which loan amounts are first disbursed. (5) Nonsubordination A secured loan under this section shall not be subordinated to the claims of any holder of project obligations in the event of bankruptcy, insolvency, or liquidation of the obligor. (6) Fees The Secretary may establish fees in connection with a secured loan under this section, in amounts sufficient to cover all or a portion of the costs to the Federal Government of secured loans under this section. (7) Use of proceeds for payment of non-Federal share The proceeds of a secured loan under this section may be used to pay any non-Federal share required with respect to other funding obtained for project costs, but only if such secured loan is repaid using non-Federal funds. (8) Maximum Federal involvement For any project for which assistance is provided under this title, the total amount of Federal assistance from all sources, including this title, shall not exceed 80 percent of the total project cost. (9) Others A secured loan provided for a project under this section shall be subject to such other terms and conditions, and contain such covenants, representations, warranties, and requirements (including requirements for audits), as the Secretary determines to be appropriate. (f) Repayment (1) Schedule The Secretary shall establish a repayment schedule for each secured loan provided under this section, based on the projected cash flow from project revenues and other repayment sources. (2) Commencement (A) In general Except as provided in subparagraph (B), scheduled loan repayments of principal or interest on a secured loan under this section for an eligible project shall commence not later than 5 years after the date of substantial completion of the project. (B) Special rule for State infrastructure financing authorities Scheduled loan repayments of principal or interest on a secured loan made under this section to a State infrastructure financing authority shall commence not later than 5 years after the date on which amounts are first disbursed. (3) Deferred payments (A) Authorization If, at any time after the date of substantial completion of a project for which a secured loan is provided under this section, the project is unable to generate sufficient revenues to pay the scheduled loan repayments of principal and interest on the loan, the Secretary may, subject to subparagraph (C), allow the obligor to add unpaid principal and interest to the outstanding balance of the secured loan. (B) Interest Any payment deferred pursuant to subparagraph (A) shall— (i) continue to accrue interest in accordance with subsection (e)(3) until fully repaid; and (ii) be amortized over the remaining term of the secured loan. (C) Criteria Any payment deferral pursuant to subparagraph (A) shall be contingent on the project meeting— (i) standards for reasonable assurance of repayment, as the Secretary shall establish; and (ii) such other criteria as the Secretary may establish. (4) Prepayment (A) Use of excess revenues Any excess revenues from an eligible project that remain after satisfying scheduled debt service requirements on the project obligations and secured loan and all deposit requirements under the terms of any trust agreement, bond resolution, or similar agreement securing project obligations may be applied annually to prepay a secured loan under this section without penalty. (B) Use of proceeds of refinancing A secured loan under this section may be prepaid at any time, without penalty, from the proceeds of refinancing from non-Federal funding sources. (g) Sale of secured loans (1) In general Subject to paragraph (2), if the Secretary determines that the sale or reoffering of a secured loan under this section for an eligible project can be made on favorable terms, the Secretary may sell the loan to another entity or reoffer the loan into the capital markets as soon as practicable after the date of substantial completion of a project and after providing notice to the obligor. (2) Consent of obligor In making a sale or reoffering under paragraph (1), the Secretary may not change the original terms and conditions of the secured loan without the written consent of the obligor. (h) Loan guarantees (1) In general In lieu of making a secured loan under this section for an eligible project, the Secretary may provide a loan guarantee for a project obligation for the project funded by a qualified lender (as such term is defined in section 211), but only if the Secretary determines that the cost as such term is defined in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a) of the loan guarantee is substantially the same as or less than that of making a secured loan. (2) Terms The terms of a loan guarantee provided under this subsection shall be consistent with the terms established in this section for a secured loan, except that the interest rate on the guaranteed loan and any prepayment features shall be negotiated between the obligor and the qualified lender, subject to the consent of the Secretary.