(a) The department may make loans to public agencies for projects. Loans for a single project may not exceed five million dollars ($5,000,000).
(b) All loan applications shall include information relating to the public necessity of the project, the urgency of need, the engineering feasibility, the economic justification, and the financial feasibility of the project, as well as other information that the department may require.
(c) All loans made pursuant to this section are subject to all of the following requirements:
(1) Public agencies requesting a loan shall demonstrate, to the satisfaction of the department, that an adequate opportunity for public participation regarding the loan has been provided.
(2) Any election held with respect to the loan shall include the voters of the entire agency except where the agency proposes to accept the loan on behalf of a specified portion, or portions, of the agency, in which case the election shall be held only in that portion or portions of the agency.
(3) Loan contracts may not provide for a moratorium on payment of principal or interest.
(4) Loans shall be for a period of up to 20 years. The interest rate for the loans shall be set at a rate of equal to 50 percent of the interest rate paid by the state on the most recent sale of state general obligation bonds, to be computed according to the true interest cost method. If the interest rate so determined is not a multiple of one-tenth of 1 percent, the interest rate shall be set at the next higher multiple of one-tenth of 1 percent. The interest rate set for each contract shall be applied throughout the contract’s repayment period. There shall be a level annual repayment of principal and the interest on the loans.
(Added by Stats. 1996, Ch. 135, Sec. 1. Approved in Proposition 204 at the November 5, 1996, election.)