Sec. 31323. Secured loans
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Subject to paragraphs
(2)and (3), the Assistant Secretary may enter into agreements with one or more obligors to make secured loans, the proceeds of which shall be used— to finance eligible project costs of any project selected under section 31322; to refinance interim construction financing of eligible project costs of any project selected under section 31322; or to refinance long-term project obligations or Federal credit instruments, if the refinancing provides additional funding capacity for the completion, enhancement, or expansion of any project that— is selected under section 31322; or otherwise meets the requirements of section 31322. A loan under paragraph
(1)shall not refinance interim construction financing under paragraph (1)(B)— if the maturity of such interim construction financing is later than 1 year after the substantial completion of the project; and later than 1 year after the date of substantial completion of the project. Before entering into an agreement under this subsection, the Assistant Secretary, in consultation with the Director of the Office of Management and Budget, shall determine an appropriate capital reserve subsidy amount for each secured loan, taking into account each rating letter provided by a rating agency under section 31322(b)(2)(A)(ii) or, in the case of a small project, the alternative documentation provided under section 31322(b)(2)(B). A secured loan under this section with respect to a project shall be on such terms and conditions and contain such covenants, representations, warranties, and requirements (including requirements for audits) as the Assistant Secretary determines to be appropriate. The amount of a secured loan under this section shall not exceed the lesser of 49 percent of the reasonably anticipated eligible project costs or, if the secured loan is not for a small project and does not receive an investment-grade rating, the amount of the senior project obligations. A secured loan under this section— shall— be payable, in whole or in part, from— amounts charged to— subscribers of broadband service for such service; or subscribers of any related service provided over the same infrastructure for such related service; user fees; payments owing to the obligor under a public-private partnership; or other dedicated revenue sources that also secure the senior project obligations; and include a coverage requirement or similar security feature supporting the project obligations; and may have a lien on revenues described in subparagraph (A), subject to any lien securing project obligations. The interest rate on a secured loan under this section shall be 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. The final maturity date of the secured loan shall be the lesser of— 35 years after the date of substantial completion of the project; and if the useful life of the infrastructure for the provision of broadband service being financed is of a lesser period, the useful life of the infrastructure. Except as provided in subparagraph (B), the secured loan shall not be subordinated to the claims of any holder of project obligations in the event of bankruptcy, insolvency, or liquidation of the obligor. The Assistant Secretary shall waive the requirement under subparagraph
(A)for a public agency borrower that is financing ongoing capital programs and has outstanding senior bonds under a preexisting indenture, if— the secured loan— is rated in the A category or higher; or in the case of a small project, meets an alternative standard that the Assistant Secretary shall establish under section 31325 for purposes of this subclause; the secured loan is secured and payable from pledged revenues not affected by project performance, such as a tax-backed revenue pledge or a system-backed pledge of project revenues; and the BIFIA program share of eligible project costs is 33 percent or less. If the Assistant Secretary waives the nonsubordination requirement under this subparagraph— the maximum credit subsidy to be paid by the Federal Government shall be not more than 10 percent of the principal amount of the secured loan; and the obligor shall be responsible for paying the remainder of the subsidy cost, if any. The Assistant Secretary may establish fees at a level sufficient to cover all or a portion of the costs to the Federal Government of making a secured loan under this section. The proceeds of a secured loan under the BIFIA program, if the loan is repayable from non-Federal funds— may be used for any non-Federal share of project costs required under this chapter; and shall not count toward the total Federal assistance provided for a project for purposes of paragraph (9). The total Federal assistance provided for a project receiving a loan under the BIFIA program shall not exceed 80 percent of the total project cost. The Assistant Secretary shall establish a repayment schedule for each secured loan under this section based on— the projected cash flow from project revenues and other repayment sources; and the useful life of the infrastructure for the provision of broadband service being financed. Scheduled loan repayments of principal or interest on a secured loan under this section shall commence not later than 5 years after the date of substantial completion of the project. If, at any time after the date of substantial completion of the project, the project is unable to generate sufficient revenues to pay the scheduled loan repayments of principal and interest on the secured loan, the Assistant Secretary may, subject to subparagraph (C), allow the obligor to add unpaid principal and interest to the outstanding balance of the secured loan. Any payment deferred under subparagraph
(A)shall— continue to accrue interest in accordance with subsection (b)(4) until fully repaid; and be scheduled to be amortized over the remaining term of the loan. Any payment deferral under subparagraph
(A)shall be contingent on the project meeting criteria established by the Assistant Secretary. The criteria established pursuant to clause
(i)shall include standards for reasonable assurance of repayment. Any excess revenues 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 the secured loan without penalty. The secured loan may be prepaid at any time without penalty from the proceeds of refinancing from non-Federal funding sources. Subject to paragraph (2), as soon as practicable after substantial completion of a project and after notifying the obligor, the Assistant Secretary may sell to another entity or reoffer into the capital markets a secured loan for the project if the Assistant Secretary determines that the sale or reoffering can be made on favorable terms. In making a sale or reoffering under paragraph (1), the Assistant Secretary may not change the original terms and conditions of the secured loan without the written consent of the obligor. The Assistant Secretary may provide a loan guarantee to a lender in lieu of making a secured loan under this section if the Assistant Secretary determines that the budgetary cost of the loan guarantee is substantially the same as that of a secured loan. The terms of a loan guarantee under paragraph
(1)shall be consistent with the terms required under this section for a secured loan, except that the rate on the guaranteed loan and any prepayment features shall be negotiated between the obligor and the lender, with the consent of the Assistant Secretary. The Assistant Secretary shall develop one or more expedited application processes, available at the request of entities seeking secured loans under the BIFIA program, that use a set or sets of conventional terms established pursuant to this section. In establishing the streamlined application process required by this subsection, the Assistant Secretary may allow for an expedited application period and include terms such as those that require— that the project be a small project; the secured loan to be secured and payable from pledged revenues not affected by project performance, such as a tax-backed revenue pledge, tax increment financing, or a system-backed pledge of project revenues; and repayment of the loan to commence not later than 5 years after disbursement.