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§ 5175. Loan Terms and Conditions.

14 CA ADC § 5175Barclays Official California Code of Regulations

Barclays California Code of Regulations

Title 14. Natural Resources

Division 4. Division of Boating and Waterways

Chapter 1. Division of Boating and Waterways

Article 1.4. Recreational Marina Loan Regulations

14 CCR § 5175

§ 5175. Loan Terms and Conditions.

Currentness

Loan Terms and conditions, in addition to those specified in Sections 76 through 77.1 of the Harbors and Navigation Code, shall also include the following provisions:

(a) The borrower shall establish and capitalize a reserve fund in an amount and under terms and conditions specified by the department.

(1) The reserve fund shall be an interest-bearing account.

(2) In order to withdraw funds from the reserve fund, the signature of the director, or his or her designee, shall be required.

(3) All funds remaining in the reserve fund account shall be returned to the borrower upon full performance of the loan contract. However, unless and until all reserve funds, including accumulated interest, are first committed to improvements at the marina, the borrower may not apply for additional department funding for any project within the marina for a period of five years beginning on the last date any reserve funds are returned to the borrower.

(b) The loan shall be secured by collateral equal to or greater than 110 percent of the loan amount, such as, but not limited to, a mortgage or security interest in real estate, and buildings or personal property of the borrower. These items may only be subject to encumbrances that the department may approve, such as, assignment or pledges of leases, and personal or corporate guarantees. Only the unencumbered equity portion of the property accepted as collateral shall be considered as collateral. Personal guarantees of the principals shall be required, unless reasons satisfactory to the department are presented that justify not requiring such guarantees. The value of the collateral shall be subject to reappraisal as requested by the department from time to time at its discretion, and if, as a result of such reappraisal, it is determined that the value of the collateral has dropped below 110 percent of the then-outstanding loan amount, the borrower shall provide additional collateral as security as required by the department.

(c) Real estate or stationary machinery or equipment pledged as a significant portion of collateral for repayment of a guaranteed loan shall be located within the State of California. Real estate pledged as collateral shall not include land that has been used as a solid waste disposal site. Any appraisal of property shall be conducted by a licensed appraiser acceptable to the borrower and the department.

(d) The borrower shall obtain and maintain, throughout the duration of the loan, fire and extended coverage insurance in an amount equal to 100 percent of the current replacement cost of all improvements which are part of the collateral, with the department named as additional insured.

(e) The borrower will obtain insurance to cover liability arising from design, planning, construction, maintenance or operation of the project, with the department named as additional insured, in the following minimum amounts:

(1) Bodily injury $300,000 each person, $1,000,000 each occurrence.

(2) Property and product damage $500,000 each occurrence, $1,000,000 each aggregate.

(f) The loan shall become due and payable in full upon transfer of the marina, unless such transfer is:

(1) By reason of death of the borrower, and the marina is transferred to the borrower's heirs.

(2) Transfer is to another business entity controlled by the borrower, provided that the transaction does not result in a material change in control or ownership of the recreational marina and collateral associated with the loan.

(g) The loan shall not be subordinated to any future loans obtained by a private marina owner except in those cases involving loans acquired for refinancing previous senior loans.

(h) A provision that the department, the Department of General Services, the Bureau of State Audits, or their designated representative shall have the right to review and copy any records for possible audit for a minimum of three years after final payment, unless a longer period of records retention is stipulated.

(i) A provision that the borrower agrees to allow the auditor(s) access to such records during normal business hours and to allow interviews of any employees who might reasonably have information related to such records.

Credits

Note: Authority cited: Sections 63.9(e) and 76.8, Harbors and Navigation Code. Reference: Sections 76.3, 76.6 and 85.2, Harbors and Navigation Code; and Department of General Services (DGS), Standard Agreement Language, as found in GTC 699 (and as may be subsequently amended by DGS).