447.704. Loan guarantees, guidelines, conditions--private lender immune from liability, when. - Missouri Statutes

Loan guarantees, guidelines, conditions--private lender immune fromliability, when.

447.704. 1. The director of economic development, with the approvalof the director of the department of natural resources, subject to otherapplicable provisions of sections 447.700 to 447.718, may guarantee loansissued by private financial institutions to persons for the purpose ofpaying the allowable costs of an eligible project if:

(1) The project otherwise qualifies as an eligible project and iseconomically sound, except that the costs of remediation may exceed thefair market value of the property prior to redevelopment;

(2) The private lender is unwilling to make the loan without theguarantee, and that the guarantee is the minimum necessary to cause theloan;

(3) The amount to be guaranteed will not exceed one million dollarsof the total allowable costs of the eligible project;

(4) The loan will be adequately secured by a mortgage, lien,assignment or pledge, at such a level of priority as is acceptable to thelender and the director of economic development; and

(5) When completed, the eligible project is projected to create notless than ten new jobs, or shall retain a business which supplies not lessthan twenty-five existing jobs, or a combination thereof, providing notless than an average of thirty-five hours of employment per week per job.Such projection shall be made by the department of economic development.

2. The determinations of the director of economic developmentpursuant to subsection 1 of this section shall be conclusive for purposesof the validity of a guarantee agreement signed by the director.

3. Fees, charges, rates of interest, times of payment of interest andprincipal and other terms, conditions and provisions of, and security for,loans guaranteed from the property reuse fund pursuant to this sectionshall be such as the director of economic development determines to beappropriate and in furtherance of the purpose for which the guarantees aremade. The director shall give special consideration in setting therequired job creation ratios and project locations for loan guarantees thatare for voluntary remediation actions. Interest rates on such guaranteedloans shall not exceed three percentage points above the prime interestrate and the director may require a lower rate be used as is appropriatebased upon the financial merits of the application and financial statementof the borrower. Nor may the term of the underlying loan exceed twentyyears.

4. The director of economic development may take all actionsnecessary or appropriate to collect on loan defaults and deficiencies orotherwise deal with the borrower for any loan guarantee made pursuant tothis section. The director of economic development shall enact appropriateregulations establishing guidelines for the property reuse fund guaranteeprogram, including guidelines regarding the manner and timing of payouts ofguarantee moneys, the order and manner in which security, other than theunderlying abandoned or underutilized property, provided by the borrowerwill be valued, and in the event of default or breach of this program,applied to the reduction of the borrower's debt prior to payment ofguarantee moneys to the private lender.

5. The director of economic development may fix service charges formaking of a loan guarantee. Such charges shall be payable at such timesand place and in such amounts and manner as may be prescribed by thedirector.

6. The private lender shall be immune from any liability arising outof the performance of the project, including potential liability from theincomplete or unsuccessful remediation of the facility; its lender statusby which it holds indicia of ownership primarily to protect its securityinterest; and any potential liability arising out of or under theenvironmental laws of this state pursuant to the protections of sections427.011 to 427.041, RSMo. Upon written request from a private lender whohas foreclosed upon the property of an eligible project and has held theabandoned or underutilized property for a period of at least two years, orlonger, the director of the department of economic development shall usethe guarantee moneys from the property reuse fund to repay the lender theunpaid amount of the defaulted loan. Such written request by the privatelender shall describe the efforts made to sell the property and, to theextent known, the reasons the property is unable to be sold to a new buyer.

(L. 1995 H.B. 414, A.L. 1998 S.B. 827)