Kansas Administrative Regulations › Agency 36 - KANSAS DEPARTMENT OF TRANSPORTATION › Article 39 - RAIL SERVICE ASSISTANCE PROGRAM › Section 36-39-3 - Requirements and conditions for application for a loan guarantee

Current through Register Vol. 43, No. 28, July 11, 2024
(a) Each
			 qualified entity and its lender shall file with the secretary the original and
			 10 copies of each application.
(b)
			 The loan guarantee program's aggregate annual obligations shall not exceed
			 $5,000,000. If, at the time of application, loan guarantees have previously
			 been approved by the legislature or state finance council during the same
			 fiscal year, the amount requested shall not exceed the difference of $5,000,000
			 and the amounts previously approved during that fiscal year. The sum of the
			 amounts sought in each fiscal year, including any outstanding loan guarantees
			 previously approved pursuant to K.S.A. 1995 Supp.
			 75-5046, shall not exceed
			 $20,000,000.
(c) The applicant and
			 lender shall acknowledge in the application that obligations of the state of
			 Kansas resulting from the approval of an application shall be limited to
			 payment of the remaining principal of the specific loan after lenders have
			 exhausted all other available remedies against the obligor.
(d) Each application shall include the
			 following:
(1) the full and correct name,
			 principal business address, telephone number and facsimile number of the
			 applicant;
(2) the date of the
			 applicant's incorporation, or organization if not a corporation, and the name
			 of the government, state, or territory under the laws of which it was
			 incorporated or organized. If the applicant is a partnership, association or
			 other form of organization other than a corporation, a full description of the
			 organization shall be furnished;
(3) the name, title, and address of the
			 person to whom correspondence regarding the application should be addressed;
(4) a certified copy of proposed
			 or executed loan agreements, including related agreements or other documents,
			 and detailed descriptions of the loan guarantee, including:
(A) the total amount of the loan to be
			 guaranteed;
(B) a description of
			 all facilities included in or directly affected by the proposed project, the
			 physical condition of such facilities and a description of the project;
(C) each part or sub-part into
			 which the project may reasonably be divided and the priority and schedule of
			 expenditures for each part or sub-part;
(D) the estimated timing of the expenditure
			 of the proceeds of the loan;
(E) a
			 statement of whether the project involves another railroad or other
			 participant, through joint execution, coordination, or otherwise. The applicant
			 shall include a description of the relative participation of the applicant and
			 the other railroad or participant, including a statement of the financing
			 arrangements of each participant, the portion of the work to be performed by
			 each participant and the contemplated level of usage of the facility by each
			 participant when the work is completed, along with a statement by a responsible
			 officer or official of the other railroad or participant that the information
			 provided reflects their agreement on these matters;
(F) the effective date of the loan;
(G) a schedule of repayment of the
			 principal and interest;
(H) a
			 description of the security to be offered the secretary in connection with any
			 loan guarantee, including a description of the priority of this loan in
			 relation to other liens or security interests on the property that is
			 designated as security, the applicant's opinion of the value of this security,
			 and the basis for the opinion; and
(I) a description of the lender's security
			 and remedies against the obligor or any other parties before the state of
			 Kansas is obligated to pay any defaulted loan; and
(J)
(i) if
			 the loan for which a guarantee is sought is outstanding, the effective interest
			 rate of the loan for which a loan guarantee is sought; or
(ii) if the applicant has discussed with a
			 potential lender the terms of a loan guarantee to be issued, the proposed
			 effective rate of interest.
(5) a statement, in summary form, showing
			 financial obligations to or claims against the state of Kansas or obligations
			 for which the state of Kansas is guarantor, if any. Such statements shall be
			 made by the applicant, any affiliated corporate entity of the applicant or the
			 applicant's parent, and shall describe the following:
(A) the status of any and all claims under
			 litigation; and
(B) any other
			 debts or guarantees existing between the applicant and the state of Kansas,
			 including the name of the department or agency involved in such loans, claims
			 or other debts;
(6) an
			 analysis which includes the following:
(A) a
			 statement that the financing is justified by present and future demand for rail
			 services, that the financing will meet existing needs for such services and
			 that the project will provide shippers with improved service. The applicant
			 shall submit supporting evidence with the statement, including copies of all
			 market analyses and studies which have been performed to determine present and
			 future demand for rail services;
(B) a description of the impact of the
			 financing upon the projected traffic to be originated, terminated, or carried
			 by the obligor for at least the five years immediately following completion of
			 the project;
(C) a five-year
pro forma
statement of cash flow attributable to the project;
			 and
(D) a description of any other
			 benefit which would accrue to the applicant from the proceeds of the
			 obligation;
(7) a
			 business plan, with supporting evidence, showing:
(A) that the applicant is financially capable
			 of acquiring, rehabilitating, or improving facilities in an efficient and
			 economical manner;
(B) that the
			 ratio of benefits-to-costs for any project funded by such guaranteed loan will
			 be greater than one. The benefit-to-cost methodology to be used for this
			 determination shall be the "Benefit-cost methodology for the Local Rail Freight
			 Assistance Program" approved by the F.R.A. in July, 1990;
(C) that the applicant will submit with the
			 application audited financial statements, prepared in accordance with generally
			 accepted accounting principles, for the past two annual accounting periods;
(D) any car supply agreements and
			 the estimated rail traffic;
(E) a
			 balance sheet, income statement, statement of changes in financial position or
			 statement of cash flows, notes to financial statements, operating plans and
			 appraisals of the assets to be acquired;
(F) that the applicant has been turned down
			 by a lending institution and that adequate funding for the proposed project is
			 not otherwise available on terms that would make the proposed project
			 financially feasible, in the absence of a state loan guarantee; and
(G) a written opinion from bond counsel that
			 the guarantee of such loan by the secretary would not adversely affect the
			 rating of bonds issued pursuant to K.S.A. 1995 Supp. 68-2314
et
			 seq.
, and amendments thereto;
(8) a statement, with supporting evidence,
			 that the financing will improve the ability of the applicant to transport
			 freight;
(9) a statement
			 describing the maintenance program for the applicant's entire rail system and
			 the planned maintenance program for the facilities financed by the proceeds of
			 the obligation;
(10) from each
			 existing lender or proposed prospective lender a statement which includes the
			 following:
(A) the lender's full and correct
			 name, principal business address, telephone number and facsimile number;
(B) references to applicable
			 provisions of law, the lender's charter and other governing instruments that
			 confer authority on the lender to accept the obligation;
(C) a copy of the loan agreement between the
			 lender and the applicant;
(D) a
			 brief statement of the circumstances and negotiations leading to the agreement
			 by the lender to accept the proposed obligation;
(E) a copy of the lender's determination that
			 the loan would not be economically feasible without the proposed loan
			 guarantee;
(F) a statement of the
			 nature and extent of any affiliation or business relationship between the
			 existing or prospective lender and any of its directors, partners or principal
			 executive officers, with the applicant and any of its directors, partners, or
			 principal executive officers or with any person whose name is required to be
			 furnished under this article; and
(G) a full and complete statement of all sums
			 to be given to the lender in connection with the proposed obligation,
			 including:
(i) the name and address of each
			 person to whom any payment has been made or will be made and nature of any
			 affiliation, association or prior business relationship between any person
			 named in this paragraph and the lender or any of its directors, partners, or
			 officers;
(ii) the amount of the
			 cash payment or the nature and value of other consideration; and
(iii) any condition upon the obligation of
			 the obligee to make any payment;
(11) a hazardous waste assessment report on
			 the rail lines for which a loan guarantee is requested;
(12) a certificate of title to prove the
			 applicant has the legal ability to allow its property to be encumbered;
(13) proof of liability insurance
			 in effect in the amount of $5,000,000 per occurrence;
(14) an opinion from applicant's counsel that
			 applicant is legally authorized to make this application and has no outstanding
			 litigation or impediment that would impair its ability to perform the
			 obligation;
(15) an
			 acknowledgement by the applicant that the secretary may conduct a pre-audit of
			 applicant's accounting system to determine if the system is adequate to isolate
			 and accumulate project costs; and
(16) any additional information that the
			 applicant deems appropriate to convey a full and complete understanding of the
			 project and its impact or to otherwise assist the secretary in making a
			 determination.