No. 40956 (New Rule): Rule R704-3. Local Government Emergency Response Loan Program

(New Rule)

DAR File No.: 40956
Filed: 11/04/2016 06:09:20 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The rule is required under Section 53-2a-509 to establish procedures for administering the Local Government Emergency Response Loan Program.

Summary of the rule or change:

The rule establishes the following: 1) the form, content, and procedure for loan applications; 2) criteria and procedures for prioritizing loan applications; 3) procedures for making loans; 4) procedures for administering and ensuring repayment of loans; and 5) procedures for recovering on defaulted loans.

Statutory or constitutional authorization for this rule:

• Section 53-2a-607
• Section 53-2a-608
• Section 53-2a-609

Anticipated cost or savings to:

the state budget:

There will not be an anticipated cost or savings to the state budget as a result of this rule because the rule sets forth procedures and requirements for administering the Local Government Emergency Response Loan Program that the Division of Emergency Management and the Division of Finance are required to administer under Section 53-2a-608.

local governments:

There may be an anticipated cost to local governments that are granted a loan from the Local Government Emergency Response Loan Program because if the local government makes a payment more than 15 days after the payment is due, they will be assessed a late fee in the amount of 10% of the payment due. In addition, if the local government defaults on the loan, they may be assessed a penalty fee and be liable for attorney's fees and collection costs if applicable. The exact cost to local governments cannot be estimated because the cost is based on a percentage of the loan and will only be applied in cases of late payment.

small businesses:

There will not be an anticipated cost or savings to small businesses associated with this rule because the rule outlines procedures for the Division of Emergency Management to administer a loan program that provides for loans to be granted to local government entities in an effort to recover losses as a result of a disaster.

persons other than small businesses, businesses, or local governmental entities:

There will not be an anticipated cost or savings to persons associated with this rule because the rule outlines procedures for the Division of Emergency Management to administer a loan program that provides for loans to be granted to local government entities in an effort to recover losses as a result of a disaster.

Compliance costs for affected persons:

There are not any compliance costs for affected persons associated with this rule because the rule outlines procedures for the Division of Emergency Management to administer a loan program that provides for loans to be granted to local government entities in an effort to recover losses as a result of a disaster.

Comments by the department head on the fiscal impact the rule may have on businesses:

I have reviewed the amendment and found that this rule change will not have a fiscal impact on business.

Keith D. Squires, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Public Safety
Emergency Management
Room 1110 STATE OFFICE BUILDING
450 N STATE ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Tara Behunin at the above address, by phone at 801-538-3426, by FAX at 801-538-3770, or by Internet E-mail at [e-mail]
• Kim Gibb at the above address, by phone at 801-556-8198, by FAX at 801-964-4482, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

01/03/2017

This rule may become effective on:

01/10/2017

Authorized by:

Kris Hamlet, Director

RULE TEXT

R704. Public Safety, Emergency Management.

R704-3. Local Government Emergency Response Loan Program.

R704-3-1. Authority.

This rule is authorized by Section 53-2a-609.

 

R704-3-2. Purpose.

The purpose of this rule is to establish criteria, procedures, and requirements for the administration of the Local Government Emergency Response Loan Fund described in Section 53-2a-607.

 

R704-3-3. Definitions.

(1) Terms used in this rule are defined in Sections 53-2a-102, 53-2a-203, and 53-2a-602.

(2) In addition to the terms referenced in Subsection R701-3-3(1):

(a) "fund" means the Local Government Emergency Response Loan Fund;

(b) "loan" means a loan provided by the Division from the Local Government Emergency Response Loan Fund to an eligible local government entity for costs incurred for providing emergency disaster services as defined in Section 53-2a-602.

 

R704-3-4. Application.

(1) A local government entity wishing to apply for a loan from the fund shall submit to the Division:

(a) an application on a form approved by the Division;

(b) documentation that establishes a local disaster declaration for which the loan is being requested;

(c) documentation certified by the entity's chief financial officer stating that the entity has:

(i) established a local government disaster fund; and

(ii) deposited a minimum average of 5% of total estimated revenues into a local government disaster fund established in accordance with Section 53-2a-605 for at least five fiscal years previous to the date the disaster is declared; and

(d) documentation that establishes costs incurred by the local government entity for disaster recovery and supports the dollar amount of the loan being requested.

 

R704-3-5. Eligibility Review.

(1) The Division shall determine if the applicant:

(a) has fulfilled the application requirements in Section R701-3-4; and

(b) meets the eligibility criteria in Sections 53-2a-607 and 53-2a-608.

 

R704-3-6. Prioritization of Awards for Loan Applications.

(1) In accordance with Subsection 53-2a-609(2), the Division will consider the following criteria in prioritizing and awarding loans:

(a) the total account balance available in the fund;

(b) the severity or scale of the disaster or emergency that has been declared;

(c) the severity of the impact to local government entities that have submitted loan applications; and

(d) other sources of funding that might be available to the local government entity for the purpose of disaster recovery; and

(e) the likelihood the loan amount will be paid repaid in accordance with Section 53-2a-608 based on the local government entity's bond rating.

 

R704-3-7. Making Loans.

(1) Loan funds shall be obligated after all documents to secure a loan are complete, processed, approved, and appropriately signed by the applicant and the director.

(2) Disbursement of loan proceeds to the borrower will take place within 10 business days of the closing date of the loan.

 

R704-3-8. Servicing the Loans, Loan Repayment and Late Penalties.

(1) Loans will be serviced by the Division of Finance.

(2) Loan repayment schedules are outlined in Section 53-2a-608.

(3) The initial installment payment is due on a date established by the Division.

(4) Subsequent installment payments are due on the tenth day of each month.

(5) Loan payments may be made in advance or the remaining principal balance of the loan may be paid in full at any time without penalty.

(6) Penalties for late loan payments shall be:

(a) ten percent of the payment due;

(b) assessed and payable on payments received by the Division more than 15 days after the due date;

(c) assessed only once per scheduled payment; and

(d) noticed to the borrower with the amounts of penalty and the total payment due.

(7) Payments shall be considered received the day of the U.S. Postal Service post mark date or receipted date for payments delivered to the Division by methods other than the U.S. Postal Service.

(8) If a loan payment check is returned due to insufficient funds, a service charge in the amount allowed by law shall be added to the payment amount due.

(9) Notice of loans paid in full shall be sent after all penalties, interest, and principal have been paid.

 

R704-3-9. Recovering on Defaulted Loans.

(1) Loans may be considered in default when two consecutive payments are past due by 30 days or more.

(2) If the loan is determined to be in default under Subsection R701-3-9(1), the Division or the Division of Finance may declare the full amount of the defaulted loan, penalty and interest immediately due.

(3) The Division or Division of Finance need not give notice of default prior to declaring the full amount due and payable.

(4) The borrower shall be liable for attorney's fees and collection costs for defaulted loans, whether incurred before or after court action.

 

KEY: disaster recovery loans, local government disaster loans

Date of Enactment or Last Substantive Amendment: 2017

Authorizing, and Implemented or Interpreted Law: 53-2a-607; 53-2a-608; 53-2a-609

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