300 KAR 2:020. Tourism Development Loan Program; criteria for making and collecting loans

Link to law: http://www.lrc.ky.gov/kar/300/002/020.htm
Published: 2015

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      300 KAR 2:020. Tourism Development

Loan Program; criteria for making and collecting loans.

 

      RELATES TO: KRS 148.850, 148.851,

148.853, 148.855, 148.857, 148.859, 148.860

      STATUTORY AUTHORITY: KRS 148.850(4)

      NECESSITY, FUNCTION, AND CONFORMITY:

KRS 148.850(4) requires the Secretary of Tourism to establish criteria for the

disbursement and collection of funds appropriated to the Tourism Development

Loan Program. This administrative regulation establishes those criteria.

 

      Section 1. Definitions. As used in

this administrative regulation, the following terms have the following

meanings:

      (1) "Authority" means the

Tourism Development Finance Authority.

      (2) "Cash match basis"

means the amount of investment by the borrower from equity or other loan

sources, which is equal to or greater than the amount borrowed through the

program.

      (3) "Fixed costs" are costs

incurred in acquiring, constructing, reconstructing, rehabilitating,

renovating, enlarging, improving, equipping, maintaining, or furnishing the

tourism project, including site clearance and preparation.

      (4) "Fund" means the loan

fund authorized for the Tourism Development Loan Program by KRS 148.850(4).

 

      Section 2. Criteria. The following

criteria shall be utilized by the authority in evaluating and making loans

under the Tourism Development Loan Program:

      (1) Fixed asset lending shall be made

to qualified businesses, on a cash match basis;

      (2) A first, co-first, or second

secured position on fixed asset collateral in favor of the authority is

required of all loans;

      (3) Prior to final approval of any

loan to be provided, and as a condition precedent thereto, the authority shall

determine that the benefits to be derived by the Commonwealth and the local

economic area from the establishment and operation of the eligible project

shall exceed the cost of providing such assistance; and

      (4) The project proposed to be

financed shall be economically feasible, as determined by the authority.

 

      Section 3. Considerations. The

authority shall consider and take into consideration, inter alia, the

following:

      (1) Payrolls, and the taxes

generated, at both state and local levels, by the eligible project and taxes

generated by the employment and economic activity created or preserved by the

eligible project;

      (2) The size, nature, and cost of the

eligible project, including the prospect of the eligible project for attracting

and retaining visitors to the Commonwealth;

      (3) The needs (and degree of needs)

of the area in which the eligible project is to be located;

      (4) The financial needs of the

applicant;

      (5) The amount of any kind of

assistance, if any, to be provided to any applicant by other government

agencies through tax exemption or abatement, financing assistance with

industrial development bonds, and otherwise, with respect to the eligible

project;

      (6) The amount of capital made

available to the eligible project by other lenders and by the owners of the

eligible project; and

      (7) The number of projected new

visitors, in the context of the size of the loan being made, attributable to

the tourism project.

 

      Section 4. Eligibility Standards. The

authority, subject to the other applicable provisions of this administrative

regulation, shall make loans only from monies in the fund. Program loans shall

be made if the authority determines that:

      (1) The project is an eligible

project and is economically sound;

      (2) The amount to be loaned from the

fund shall not exceed fifty (50) percent of the total fixed costs of the

eligible project;

      (3) The amount of the loan from the fund

to be repaid shall be adequately secured by a mortgage, lien, assignment, or

pledge, at such level of priority as the authority may require;

      (4) The determinations of the

authority shall be conclusive for purposes of the validity of a loan commitment

evidenced by an agreement of the authority;

      (5) Rates of interest, times of

payment of interest and principal, and other terms, conditions and provisions

of, and security for, program loans made from the fund pursuant to this section

shall be such as the authority determines to be appropriate and in furtherance

of the purpose for which the loans are made. Repayments of loans shall conform

to the requirements of the loan contract; and

      (6) The authority is authorized to

take action established in the loan contract as may be necessary to collect on

the loan. (27 Ky.R. 1663; Am. 2126; eff. 2-15-2001.)