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DEPARTMENT OF ENVIRONMENTAL QUALITY
DIVISION 178
UNDERGROUND STORAGE TANK
REDUCED INTEREST RATE LOANS
340-178-0005
Authority, Purpose, and Scope
(1) These rules are promulgated in accordance with and under the authority of ORS 466.706 through 466.835 as amended by Chapter 863, Oregon Laws, 1991 (Senate Bill 1215). These rules are in addition to OAR Chapter 340, Division 172.
(2) The purpose of these rules is to:
(a) Provide for the regulation of persons who receive reduced interest rate loans for UST project work;
(b) Provide assistance to owners of underground storage tanks regulated by ORS 466.706 to 466.835 and federal regulation 40 CFR 280; and
(c) Provide for the regulation of commercial lending institutions who issue reduced interest rate loans for UST project work.
(3) These rules establish requirements and standards for:
(a) Reduced interest rates on loans for UST project work;
(b) Applying and qualifying for interest rate payment to commercial lending institutions;
(c) Administration and enforcement of these rules by the Department.
[Publications: The publication(s) referred to or incorporated by reference in this rule are available from the agency.]
Stat. Auth.: ORS 466.706 - ORS 466.895 & ORS 466.995
Stats. Implemented: OL 1989, Ch. 1071 & OL 1991, Ch. 863, Sec. 6 & 6a
Hist.: DEQ 29-1991(Temp), f. 12-18-91, cert. ef. 12-20-91; DEQ 14-1992, f. & cert. ef. 6-11-92
340-178-0010
Definitions
The definitions in OAR 340-172-0010 apply to these rules.
Stat. Auth.: ORS 466.706 - ORS 466.895 & ORS 466.995
Stats. Implemented: ORS 466.706, OL 1989, Ch. 1071 & OL 1991, Ch. 863
Hist.: DEQ 29-1991(Temp), f. 12-18-91, cert. ef. 12-20-91; DEQ 14-1992, f. & cert. ef. 6-11-92
340-178-0020
Reduced Interest Rate Benefits
(1) Any person qualifying for Tier 1, 2, 3, or 4 UST financial assistance under OAR Chapter 340, Division 172 will qualify for a reduced interest rate where the person receives a loan for UST project work from a commercial lending institution.
(2) In addition to the requirements of section (1) of this rule:
(a) A person qualifying for Tier 1 financial assistance is eligible to receive a reduced interest rate of 7.5 percent on a loan for the first $100,000 of eligible UST project costs;
(b) A person qualifying for Tier 2 financial assistance is eligible to receive a reduced interest rate of 5.0 percent on a loan for the first $100,000 of eligible UST project costs;
(c) A person qualifying for Tier 3 financial assistance is eligible to receive a reduced interest rate of 3.0 percent on a loan for the first $100,000 of eligible UST project costs; and
(d) A person qualifying for Tier 4 financial assistance is eligible to receive a reduced interest rate of 1.5 percent on a loan for the first $100,000 of eligible UST project costs.
Stat. Auth.: ORS 466.706 - ORS 466.895 & ORS 466.995
Stats. Implemented: OL 1991, Ch. 863, Sec. 6 & 6a
Hist.: DEQ 29-1991(Temp), f. 12-18-91, cert. ef. 12-20-91; DEQ 14-1992, f. & cert. ef. 6-11-92
340-178-0030
General Provisions, Interest Rate Payment
(1) Commercial lending institutions making loans for UST project work may qualify to receive an interest rate payment from the USTCCA Fund.
(2) The interest rate payment shall be paid to the lender quarterly in arrears, and shall equal the difference in finance charges between the borrower's rate and the lender's rate. The borrower's rate shall equal the total finance charges charged to the borrower by the lender during a calendar quarter, including interest on the loan at the rate shown on the reduced interest rate certificate as the borrower's rate, and interest charged the borrower on any loan fee. The commercial lending institution shall select the method of calculation the lender's rate from subsection (a) or (b) of this section, and shall notify the Department of the selection prior issuing the loan. Once selected, the lender may not change the method of calculating the lender's rate. The lender's rate, as calculated in subsections (a) and (b) of this section, shall be deemed to equal the total finance charges which would have been charged to the borrower during the calendar quarter by the lender, including interest on the loan and any loan fee:
(a) Fixed Rate Option. Under the fixed rate option, the lender's rate shall remain constant throughout the life of the loan. The lender's rate shall be an annual rate equal to the sum of the ten year Treasury constant maturities interest rate for the week immediately preceding the date of the initial note, plus the following:
(A) Three percent (3.0%) for loans with a term which does not exceed four years;
(B) Three and one quarter percent (3.25%) for loans with a term which is more than four years and does not exceed eight years;
(C) Three and three quarter percent (3.75%) for loans with a term which is more than eight years and does not exceed 12 years;
(D) Four and one half percent (4.5%) for loans with a term which is more than 12 years and does not exceed 16 years;
(E) Five and one half percent (5.5%) for loans with a term which is more than 16 years and does not exceed 20 years; or
(F) Six and three quarters percent (6.75%) for loans with a term of exactly 20 years.
(b) Adjusted Fixed Rate Option. Under the adjusted fixed rate option, the lender's interest rate shall adjust, as provided in this subsection:
(A) For a loan with a term which does not exceed three years, the lender's interest rate shall be equal to the ten year Treasury constant maturities interest rate for the week immediately preceding the initial date of the loan, plus three percent;
(B) Where a loan has a term of more than three years and does not exceed six years, a new lender's interest rate shall be calculated by adding three percent to the ten year Treasury constant maturities interest rate for the week immediately preceding the start of the fourth year but in no case shall the lender's interest rate be more than one percentage point above or below the lender's interest rate calculated in paragraph (2)(b)(A) of this rule;
(C) Where a loan has a term of more than six years and does not exceed nine years, a new lender's interest rate shall be calculated by adding three percent to the ten year Treasury constant maturities interest rate for the week immediately preceding the start of the seventh year but in no case shall the lender's interest rate be more than one percentage point above or below the lender's interest rate calculated in paragraph (2)(b)(B) of this rule;
(D) Where a loan has a term of more than nine years and does not exceed 12 years, a new lender's interest rate shall be calculated by adding three percent to the ten year Treasury constant maturities interest rate for the week immediately preceding the start of the tenth year but in no case shall the lender's interest rate be more than one percentage point above or below the lender's interest rate calculated in paragraph (2)(b)(C) of this rule;
(E) Where a loan has a term of more than 12 years and does not exceed 15 years, a new lender's interest rate shall be calculated by adding three percent to the ten year Treasury constant maturities interest rate for the week immediately preceding the start of the 13th year but in no case shall the lender's interest rate be more than one percentage point above or below the lender's interest rate calculated in paragraph (2)(b)(D) of this rule;
(F) Where a loan has a term of more than 15 years and does not exceed 18 years, a new lender's interest rate shall be calculated by adding three percent to the ten year Treasury constant maturities interest rate for the week immediately preceding the start of the 16th year but in no case shall the lender's interest rate be more than one percentage point above or below the lender's interest rate calculated in paragraph (2)(b)(E) of this rule;
(G) Where a loan has a term of more than 18 years and does not exceed 20 years, a new lender's interest rate shall be calculated by adding three percent to the ten year Treasury constant maturities interest rate for the week immediately preceding the start of the 19th year but in no case shall the lender's interest rate be more than one percentage point above or below the lender's interest rate calculated in paragraph (2)(b)(F) of this rule.
(c) The ten year Treasury constant maturities interest rate means the rate of that name as indicated in Federal Reserve statistical release H.15. Federal Reserve statistical release H.15 is released each Monday and is available on the Bloomberg data system. The ten year Treasury constant maturities interest rate for each week may be obtained from the Department.
(3) A commercial lending institution may be paid for interest if:
(a) The borrower pays the annual rate shown on the reduced interest rate certificate;
(b) The loan is amortized with equal payments over the term of the loan.
NOTE: To assure that funds are available from the UST Compliance and Corrective Action Fund (USTCCAF) to pay reduced interest rates during the life of the loan, it is necessary for most loans to have equal payments over the term of the loan. The Department, however, recognizes that the lending policies may differ between commercial lending institutions and may differ between individual loans, particularly during construction. The Department is willing to consider other loan arrangements and other loan repayment schedules subsequent to the initial loan, such as multiple loans and loan refinancing where the interest rate payment conserves the USTCCAF monies so that all qualified interest rate payments are paid in full. Each new loan arrangement may be approved by the Department on a case by case basis. The final maturity date of the loan may not exceed 20 years from the initial note date.
(c) The loan maturity date does not exceed 20 years from the initial closing date;
(d) The borrower has received a reduced interest rate confirmation letter; and
(e) The loan applicant or the commercial lending institution has provided the terms of the loan to the Department. The terms of the loan include but are not limited to:
(A) Amount of loan;
(B) The interest rate calculated in section (2) of this rule;
(C) Reduced interest rate to the borrower; and
(D) The term of the loan from the initial note date.
(4) Only one reduced interest rate certificate may be issued to each facility location. Individual tanks at a facility location with multiple tanks are not eligible for a separate interest rate certificate per tank.
(5) Interest rate payments are limited to loans for UST project work where the loan is provided by a commercial lending institution.
(6) An interest rate payment may be paid on loans provided by a commercial lending institution that are not guaranteed by the Department where the borrower has received a reduced interest rate certificate from the Department.
(7) The commercial lending institution shall bill the Department for the interest rate reimbursement each calendar quarter.
(8) An applicant may receive a reduced interest rate certificate at more than one facility location.
(9) An interest rate payment may not be made on grant funds, described in OAR Chapter 340, Division 175.
(10) The payment of the interest rate reimbursements is subject to monies being allocated and being available from the Underground Storage Tank Compliance and Corrective Action Fund.
Stat. Auth.: ORS 466.706 - ORS 466.895 & ORS 466.995
Stats. Implemented: OL 1991, Ch. 863, Sec. 6 & 6a
Hist.: DEQ 29-1991(Temp), f. 12-18-91, cert. ef. 12-20-91; DEQ 14-1992, f. & cert. ef. 6-11-92
340-178-0040
Application for Reduced Interest Rate Certificate
Any person wishing to obtain a Reduced Interest Rate Certificate for a loan for UST project work shall submit a written application in accordance with OAR Chapter 340, Division 172 and these rules.
Stat. Auth.: ORS 466.706 - ORS 466.895 & ORS 466.995
Stats. Implemented: OL 1991, Ch. 863, Sec. 6 & 6a
Hist.: DEQ 29-1991(Temp), f. 12-18-91, cert. ef. 12-20-91; DEQ 14-1992, f. & cert. ef. 6-11-92
340-178-0050
Reduced Interest Rate Certificate
(1) In accordance with this division, the Department shall issue a reduced interest rate certificate to an applicant who has filed a complete application and meets the requirements of OAR Chapter 340, Division 172 and this division.
(2) Funds collected and deposited into the Underground Storage Tank Compliance and Corrective Action Fund may be used to make reduced interest rate payments. The Department will pay to the lender all valid claims for interest rate payments to the commercial lending institutions against UST Reduced Interest Rate Confirmation letter. A lender can claim reduced interest rate payment on a calendar quarter basis.
(3) The applicant may not assign any right, title, and interest in the reduced interest rate certificate or confirmation letter to any person other than a subsequent property owner, tank owner or permittee of the underground storage tank facility.
(4) UST Reduced Interest Rate Certificates shall be valid for one year from the date of issue. A certificate may be renewed subject to availability of funds from the USTCCA fund.
Stat. Auth.: ORS 466.706 - ORS 466.895 & ORS 466.995
Stats. Implemented: OL 1991, Ch. 863, Sec. 6 & 6a
Hist.: DEQ 29-1991(Temp), f. 12-18-91, cert. ef. 12-20-91; DEQ 14-1992, f. & cert. ef. 6-11-92
340-178-0060
Interest Rate Payment Confirmation
The Department shall issue an interest rate payment confirmation letter to a lender where the lender has provided a loan to provide UST project work where:
(1) A reduced interest rate certificate has been issued to the loan applicant;
(2) The borrower's interest rate and the lender's interest rate meet the requirements of these rules;
(3) The maturity date of the loan does not exceed 20 years from the initial loan closing date;
(4) The commercial lending institution has approved the loan, subject to receiving the loan guarantee confirmation letter from the Department; and
(5) The lender's interest rate has been provided to the Department.
Stat. Auth.: ORS 466.706 - ORS 466.895 & ORS 466.995
Stats. Implemented: OL 1991, Ch. 863, Sec. 6 & 6a
Hist.: DEQ 29-1991(Temp), f. 12-18-91, cert. ef. 12-20-91; DEQ 14-1992, f. & cert. ef. 6-11-92
340-178-0070
Notice of Default or Termination
Any commercial lending institution administering a reduced interest rate loan under this Division shall notify the Department in writing within 30 days after loan default or termination.
Stat. Auth.: ORS 466.706 - ORS 466.895 & ORS 466.995
Stats. Implemented: OL 1991, Ch. 863, Sec. 6 & 6a
Hist.: DEQ 29-1991(Temp), f. 12-18-91, cert. ef. 12-20-91; DEQ 14-1992, f. & cert. ef. 6-11-92
340-178-0080
Appeal Procedures
An applicant may appeal determinations by the Department under these rules, in accordance with OAR 340-172-0110, by sending a written request for a formal contested case hearing within 20 days after the Department issues a reduced interest rate certificate or denies a reduced interest rate application.
Stat. Auth.: ORS 466.706 - ORS 466.895 & ORS 466.995
Stats. Implemented: OL 1991, Ch. 863, Sec. 6 & 6a
Hist.: DEQ 29-1991(Temp), f. 12-18-91, cert. ef. 12-20-91; DEQ 14-1992, f. & cert. ef. 6-11-92
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