Section 5: Insurance or reinsurance of loans; rates; approval of loan
Section 5. (a) In furtherance of the purposes of the fund established pursuant to section 4, the Agency is, in addition to the powers granted under section 2, is also empowered:
(1) to provide insurance or reinsurance of loans or portions thereof, or their debt service, including amounts payable as premiums or penalties in the event of mandatory or optional prepayment, made to finance the acquisition, construction, rehabilitation or alteration, or any combination thereof, of industrial development facilities, pollution control facilities, and solid waste disposal facilities, and to provide insurance or reinsurance or reserves or portions thereof, or the yield therefrom, established to secure bonds issued to fund such loans or reserves;
(2) to enter into or arrange agreements for such insurance or reinsurance with users, mortgagors, lending institutions, insurers or others, the Agency being authorized to reinsure or cede risks to such insurers in such amounts as the Agency may determine and such insurers, if otherwise authorized to reinsure or insure such risks in the commonwealth, being hereby authorized to reinsure the Agency or cede risks to the Agency to the same extent as if the Agency were a company, as defined in chapter 175, authorized under that chapter to reinsure or insure such risks;
(3) to fix a rate or rates of premium for such insurance or reinsurance, which need not be uniform and may reflect such risks and classifications of risk as the Agency determines to be reasonable; and
(4) to exercise such other powers as are necessary or incidental to the foregoing, including without limitation making conditional or unconditional commitments for such insurance or reinsurance, authorizing such commitments to be pledged or assigned as security for financing and setting appropriate fees therefor.
(b) The insurance and reinsurance provided by the Agency shall not be subject to the provisions of chapter 175, or any successor thereto, shall be payable solely from the Development Finance Insurance Fund established by section 4 and shall not constitute a debt or pledge of the faith and credit of the commonwealth or of any subdivision thereof.
(c) The board shall not approve the insurance or reinsurance of a loan unless it makes the following findings prior to the disbursement of the proceeds of a loan to a user or mortgagor:
[ Clause (1) of subsection (c) effective until August 10, 2016. For text effective August 10, 2016, see below.]
(1) that the loan is to be secured by a first mortgage of or first security interest in, real or personal property or both satisfactory to the board; or by the assignment of the interest of the lessee under a real estate lease for not less than 99 years, having a period of not less than 75 years to run from the date of the loan in connection with any such loan, any lending institution providing funds, a letter of credit or other property, or any reinsurer providing reinsurance or a commitment to reinsure such loan, may participate in any such mortgage, security interest or assignment and the proceeds thereof following any default, in such manner and in such order of priority of payment as the board shall determine; any such mortgage, security interest or assignment may be assigned by the Agency or granted to the trustee for any bonds of the Agency sold to provide funds for any such loan;
[ Clause (1) of subsection (c) as amended by 2016, 219, Sec. 13 effective August 10, 2016. For text effective until August 10, 2016, see above.]
(1) that the loan is to be secured by a mortgage or security interest in real or personal property, or a combination thereof, deemed satisfactory to the board.
(2) that the mortgagor and mortgagee are responsible parties;
(3) that if not occupied by the user or mortgagor, the project or projects will, or are likely to be, occupied by a responsible party or parties;
(4) that the provisions of the mortgage loan are reasonable and proper, and in making such determination the board may take into account such factors as it deems relevant including, without limitation, the provisions for maintaining, insuring and repairing the project by the mortgagor and the remedies of the board upon default of the mortgagor;
(5) that the project will provide or retain employment having a reasonable relationship to the principal amount of loans to be insured therefor, taking into account, among other things, the investment per employee of comparable industrial development facilities;
(6) that adequate provision is being or will be made to meet any increased demand upon community public facilities that might result from the project;
(7) that the size and scope of the project is such that a definite benefit to the economy of the commonwealth may reasonably be expected to result from the construction or improvement thereof; and the employment created shall be substantially primary employment;
[ Clause (8) of subsection (c) effective until August 10, 2016. For text effective August 10, 2016, see below.]
(8) that the principal amount of the loan, excluding any portion thereof the proceeds of which are to fund reserves and disregarding any other funds or other arrangements obtained for reserve purposes, does not exceed the sum of 90 per cent of the value of the industrial development facility exclusive of machinery and equipment, plus 80 per cent of the cost of the machinery and equipment, plus the reasonable cost of arranging, insuring and issuing bonds to finance such loan as determined by the Agency;
[ Clause (8) of subsection (c) as amended by 2016, 219, Sec. 14 effective August 10, 2016. For text effective until August 10, 2016, see above.]
(8) that the principal amount of the loan, excluding any portion thereof the proceeds of which are to fund reserves and disregarding any other funds or other arrangements obtained for reserve purposes, does not exceed the value of the sum of all assets securing the loan as determined by the agency.
(9) that the duration of the loan shall not exceed 30 years on an industrial development facility exclusive of machinery and equipment and 15 years on machinery and equipment; and that the authorization provisions are satisfactory to the board;
(10) that the insurance or loan agreement provides for subrogation on terms satisfactory to the board upon payment of insured debt service from the fund;
(11) that the public interest is adequately protected by the terms of the loan and of the insurance agreement;
(12) that with respect to all loans on account of a project or projects for any one user or mortgagor, excluding any portions of loans the proceeds of which are to fund reserves and disregarding any other funds or other arrangements obtained for reserve purposes, the debt service or portion thereof including amounts payable as premiums or penalties in the event of mandatory or optional prepayment insured or reinsured by the Agency and not reinsured or insured by other insurers coming due in any one calendar year does not exceed 20 per cent of the amount in the particular fund or funds in the Development Finance Insurance Fund securing such loans when the finding is made; and
(13) that the balance of all loans or portions thereof, excluding portions of loans the proceeds of which are to fund reserves and disregarding any other funds or other arrangements obtained for reserve purposes, insured or reinsured by the Agency and not reinsured or insured by other insurers does not exceed nine times the amount in the Development Finance Insurance Fund when the finding is made.
In addition to the foregoing, the board shall not authorize insurance of a loan for pollution control facilities unless it makes the finding which the finance board is required to make under paragraph (b) of section 22 of chapter 40D.
The board shall consult with the appropriate local and regional planning agencies to ascertain the relationship of a proposed project to any existing local or regional comprehensive plan; that, so far as feasible, the project is to be located in an area of generally high unemployment; and that employment opportunities will become available to the residents of such area.
As used in this section, the terms "industrial development facilities'' or "facilities'' shall, unless the context requires otherwise, mean facilities used in connection with any industrial enterprises, recreation or research and development enterprises or parts thereof, including any or all buildings, docks, wharves, improvements, additions, extensions, replacements, appurtenances, lands, rights in land, riparian rights, water rights, franchises, machinery, equipment, furnishings, landscaping, utilities, approaches, roadways, pollution control facilities and other facilities necessary or desirable in connection therewith or incidental thereto, such as, but not limited to, office, warehouse, terminal, transportation and backup power generating facilities, and solid waste disposal facilities.
Any insurance or reinsurance provided by the Agency under this section shall be conclusive evidence that the board has made such determinations and findings, has given such approvals and has reached such conclusions as are a prerequisite to providing such insurance or reinsurance and the validity of such insurance or reinsurance shall be incontestable except for fraud or misrepresentation on the part of the mortgagor or user.