100 ARTICLE 68:01
ECONOMIC DEVELOPMENT FINANCE AUTHORITY Chapter
68:01:01 General provisions.
68:01:02 APEX loan program, Repealed.
68:01:03 NNC guarantee program, Repealed.
101
CHAPTER 68:01:01
GENERAL PROVISIONS
Section
68:01:01:01 Definitions.
68:01:01:02 Permissible uses of loan proceeds, Repealed.
68:01:01:03 Loan reserve account requirement.
68:01:01:04 Project costs inclusions and exclusions.
68:01:01:05 Additional loan requirements.
68:01:01:06 Priority of funds available, Repealed.
102 68:01:01:01. Definitions. Words used in this article mean:
(1) "Account" or "accounts," one or more of the trust accounts created pursuant to a series
supplemental resolution;
(2) "Act," SDCL 1-16B;
(3)(2) "Authority," the South Dakota Economic Development Finance Authority;
(4)(3) "Borrower," an enterprise as defined in SDCL 1-16B-6 1-16B-1 that enters into a
loan agreement with the authority;
(5)(4) "Capitalized interest," interest on a series of bonds expected to be paid from a portion
of the proceeds of the bonds;
(6)(5) "Collateral," for a particular loan, one or more of the following:
(a) The project;
(b) Any other real or personal property that may be made subject to a security instrument;
(c) A guaranty of a loan by any person or business entity;
(d) An assignment of leases and rents of a project;
(e)(d) A letter of credit or surety obligation; and
103 (f)(e) Any other collateral or security property which may be provided to secure the
loan;
(7)(6) "Completed" or "completion," the filing by the borrower with the trustee of the
certificate of completion of a project;
(8)(7) "Costs of issuance," all items of expense payable or reimbursable directly or
indirectly by the authority and related to the authorization, sale, and issuance of bonds including
printing and photocopying costs; filing and recording fees; initial fees and charges of the trustee;
initial capital reserve fund premiums, if any; initial costs of providing any credit enhancement;
legal fees and charges; professional consultants' fees; costs of credit ratings; fees and charges for
the execution, transportation, and safekeeping of bonds; underwriter's discount or placement fees
and expenses, including filing or registration fees under applicable securities laws; costs and
expenses of refunding; and other costs, charges, and fees in connection with the original issuance
of bonds;
(9)(8) "Credit enhancement," one of the following:
(a) A guarantee provided by any person or business entity;
(b) Governmental insurance;
(c) Letters of credit; or
(d) Surety obligations issued to secure the prompt payment of debt service on a series of
bonds;
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(10)(9) "Letter of credit," an irrevocable letter of credit instrument issued in favor of the
trustee or the authority for the account of a borrower by a commercial bank, savings and loan
association, a United States branch or agency of a foreign bank, or another corporation organized
under the laws of one of the states of the United States;
(11)(10) "Loan," an agreement made by the authority to a borrower to finance costs of a
project;
(12) "Loan repayment," the scheduled payments of principal and interest on a loan payable
by a borrower pursuant to the provisions of a loan agreement;
(13)(11) "Loan reserve account," the account designated to hold the required loan reserve
of a particular series of bonds, created pursuant to the series supplemental resolution;
(14) "Mortgage," a mortgage and security agreement and a uniform commercial code
financing statement, in a form acceptable to the authority, granting a security interest in, or a lien
on, the property comprising a project and any other property as the authority determines;
(15)(12) "Program," the authority's South Dakota economic development loan program
implemented under the act SDCL chapter 1-16B and this article;
105 (16)(13) "Project," an economic a development project as defined by SDCL 1-16B-3 1-16B-
1, including that involves the acquisition or improvement of land; the acquisition, construction,
rehabilitation, removal, or improvement of buildings,; or the acquisition and installation of fixtures
useful in connection with an enterprise owned or leased by a borrower and located or to be located
in the state;
(17)(14) "Series of bonds," a designated series of bonds authorized by a series supplemental
resolution;
(18)(15) "Series supplemental resolution," a resolution adopted by the board authorizing the
issuance of a single series of bonds; and
(19)(16) "Surety obligation," a municipal bond insurance policy or unconditional surety
bond or similar obligation which may be drawn upon by the trustee for the payment of the principal
on, and the redemption price of, any series of bonds.
Source: 13 SDR 134, effective March 31, 1987; 21 SDR 14, effective August 3, 1994.
General Authority: SDCL 1-16B-14(4) 1-16B-70.
Law Implemented: SDCL 1-16B-14(4); 1-16B-14(7), 1-16B-15.
106 68:01:01:02. Permissible uses of loan proceeds. The proceeds of a loan may be used to
refund state or municipal obligations or obligations issued on behalf of a state agency,
instrumentality, or political subdivision, the proceeds of which were applied to finance eligible
project costs Repealed.
Source: 13 SDR 134, effective March 31, 1987; 21 SDR 14, effective August 3, 1994.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-14(4).
107 68:01:01:03. Loan reserve account requirement. For any series of bonds for which a loan
reserve account is required, the borrower must deposit in the loan reserve account the amount, as
of the date of calculation, as follows one of the following amounts, as applicable:
(1) The If the series of bonds is issued on a tax-exempt basis, an amount that is equal to 10
ten percent of the original principal amount of the series of bonds or the lesser amount required
under 26 U.S.C. § 148(d)(1) of the Internal Revenue Code of 1986 (December 31, 2024), to
preserve the tax-exempt status of interest on the series of bonds;
(2) If the series of bonds is issued on a taxable basis, the maximum debt service, assuming
no acceleration of maturity, for the bond year; or
(3) An amount as determined by the authority.
Source: 13 SDR 134, effective March 31, 1987; 21 SDR 14, effective August 3, 1994.
General Authority: SDCL 1-16B-14(4) 1-16B-70.
Law Implemented: SDCL 1-16B-14(4) 1-16B-14(7), 1-16B-15, 1-16B-18.
108 68:01:01:04. Project costs inclusions and exclusions. Project costs include the aggregate
amount of costs authorized by the authority to be incurred for a project and financed or to be
financed by a loan, but exclude any costs of issuance and any amounts deposited or to be deposited
in a loan reserve account or capitalized interest account. Project costs may include cost of issuance,
if the authority does not create a cost of issuance account in the series supplemental resolution,
and the payment of interest due on a loan that corresponds to the payment of interest due on the
series of bonds which that financed the loan, accruing before the completion of the project.
Source: 13 SDR 134, effective March 31, 1987.
General Authority: SDCL 1-16B-14(4) 1-16B-70.
Law Implemented: SDCL 1-16B-14(4) 1-16B-14(7), 1-16B-15, 1-16B-18.
109 68:01:01:05. Additional loan requirements. Loan requirements in addition to those
specified in the act SDCL chapter 1-16B are as follows:
(1) The amount of the loan, net of the amount required to be deposited in the loan reserve
account, may not exceed the lesser of the project costs, plus costs of issuance and capitalized
interest, or the sum of the following: 80 eighty percent of the appraised fair market value of the
project upon completion, less the outstanding principal amount of any prior mortgage which that
is not to be discharged with proceeds of bonds of the series, 50 fifty percent of the appraised fair
market value of any equipment provided as security, and 100 one hundred percent of the stated
amount of any letters of credit or surety obligations;
(2) To the extent project costs exceed the amount of the loan to be deposited in the loan
account, other than to pay costs of issuance, the borrower must provide equity by making a cash
contribution or providing a letter of credit, a surety obligation, additional collateral, or some other
assurance of completion of the project and payment of project costs;
(3) The borrower must shall provide title insurance in an amount equal to the loan less the
amount deposited in the loan reserve account;
(4) The borrower must shall provide evidence satisfactory to the authority that the project
can be completed in a timely fashion;
110 (5) The maximum term of the loan may not exceed 80 eighty percent of the useful life of
the project, 20 twenty years, or the final stated maturity of the series of bonds financing the loan,
whichever is less;
(6) The borrower must shall demonstrate to the satisfaction of the authority a capacity to
make the loan repayments the scheduled payments of principal and interest on the loan pursuant
to the provisions of a loan agreement;
(7) The borrower must shall demonstrate an adequate source of working capital based on
projections;
(8) A guaranty in favor of the authority must be executed by persons having a 20 twenty-
percent-ownership interest in the borrower unless shares of the borrower are traded on a stock
exchange or by any corporate guarantor;
(9) The borrower must shall supply financial statements, which may be audited or
unaudited, for each of the three full fiscal years prior to the date of issuance of the series of bonds
and interim financial statements when available; and
(10) Facilities which that are not owner-occupied must be leased to meet debt service. The
borrower must shall provide assignments of leases land and of rent payments to the authority by
the date of issuance of any bonds. The terms and conditions of any such the leasehold estate
securing a loan are subject to approval of the authority.
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Source: 13 SDR 134, effective March 31, 1987; 21 SDR 14, effective August 3, 1994.
General Authority: SDCL 1-16B-14(4) 1-16B-70.
Law Implemented: SDCL 1-16B-14(4), 1-16B-37 1-16B-14(7), 1-16B-15, 1-16B-18.
112 68:01:01:06. Priority of funds available. Funds are available for eligible projects on a
first-come, first-serve basis for those applicants who meet all the requirements of the loan program
Repealed.
Source: 13 SDR 134, effective March 31, 1987.
General Authority: SDCL 1-16B-14(4).
Law Implemented: SDCL 1-16B-14(4).