§ 68210. Loan Agreement.

(a) The Department and Applicant shall execute a Loan Agreement upon final approval of the Loan Application and before fund disbursement;

(b) Each Loan Agreement shall include, at a minimum, the following:

(1) The amount of the Loan;

(2) Payment and prepayment information;

(3) The interest rate and default rate of the Loan as specified in section 68203;

(4) The terms of repayment as specified in subdivision (e);

(5) For a CLEAN Loan Program Loan, a description of the Eligible Property securing the Loan or alternative form of security approved by the Department;

(6) Verification that an ISCP Environmental Oversight Agreement or a CLEAN Loan Program Response Action Agreement or other enforceable agreement with the State Board or a Regional Board, as appropriate, has been fully executed in accordance with section 68211 before fund disbursement;

(7) For a CLEAN Loan Program Loan, agreement regarding completion of Response Actions in accordance with subdivision (f);

(8) For an ISCP Loan, agreement that the Borrower shall provide any and all PEA results to the Department;

(9) Timeframes for complying with the conditions of the Loan Agreement and any special conditions that must be satisfied prior to, or covenants that must be complied with after, the disbursement of funds;

(10) Provision that any remaining unpaid amount of the Loan, with accrued interest, shall be immediately due and payable upon determination by the Department that:

(A) There has been a default, including that the Borrower has failed to comply with the Loan Agreement or other condition of default;

(B) Any information provided by the Borrower is found to be untrue. The Department may agree to a schedule for repayment under this paragraph (10);

(11) Provision that the Borrower agrees to waive any claims against, and to indemnify and hold harmless, the State of California, including the Department, the State Board or a Regional Board, from and against any and all claims, costs, and expenses stemming from Operation and Maintenance or environmental degradation at the Property;

(12) Proof of adequate liability insurance for the Borrower, including coverage for personal injury and property damage, naming the Department as loss payee, and when appropriate, naming the Department as additional insured, up to the amount of the Loan;

(13) Proof of secured creditor insurance as required under subdivision (c) of section 25395.25 of the Health and Safety Code;

(14) Provision that if the Borrower is not the owner of the Property, but intends to purchase the Property before the Loan is satisfied, the purchase price of the Property shall not exceed its estimated current fair market value, which is based on the estimated value of the Property in a cleaned up state, not taking into consideration any necessary Response Action that may be conducted on the Property;

(15) For a CLEAN Loan Program Loan, provision that the Loan is secured by the Property, or is secured by an alternative form of security approved by the Department, and in accordance with the provisions of section 25395.26 of the Health and Safety Code;

(16) Provision that if the Borrower recovers from a responsible party any costs incurred in taking a Response Action at the Property, any money so recovered shall be used first to repay the ISCP and CLEAN Loan Program Loans and to repay monies waived under subdivision (c) of section 68204. A Borrower is not required to first use the money recovered to repay the Loan if the Borrower can demonstrate to the satisfaction of the Department that the recovered money is necessary to, and is being applied to, the total environmental remediation of the Property, and that the total of the recovered money and the Loan amount does not exceed the cost of remediation;

(17) Identification of the Property owner and any options to purchase the Property held by any party;

(18) For a CLEAN Loan Program Loan, if the Borrower uses Loan funds to pay the premium for environmental insurance products approved by the Department to facilitate development of the site, provision describing the type and limits of insurance coverage and demonstration that the insurance products meet the requirements of subdivision (a) of section 25395.22 of the Health and Safety Code;

(19) Provision that the Loan shall not be used to pay Ineligible Costs; and

(20) Any other provision to which the parties agree.

(c) The Department may foreclose on Property or on the alternative to a security interest. Any funds received through a foreclosure or through the enforcement of any other security interest shall be deposited in the Account;

(d) Except as specified in section 25395.28 of the Health and Safety Code, any Response Action carried out at a Property under the CLEAN Loan Program shall be conducted in accordance with the requirements of chapters 6.65 and 6.8 of division 20 of the Health and Safety Code;

(e) The terms of Loan repayment are as follows:

(1) The repayment period for an ISCP Loan shall begin six (6) months after disbursement of the ISCP Loan funds. The repayment period shall not exceed three (3) years;

(2) The repayment period for a CLEAN Loan Program Loan shall begin upon certification or completion of the Response Action or two (2) years after initial disbursement of the CLEAN Loan Program Loan funds, whichever comes first. The repayment period shall not exceed seven (7) years;

(3) If the Loan is to a Local Government Agency or Local Agency, or to a developer or prospective purchaser acting together with a Local Government Agency or Local Agency pursuant to an enforceable agreement, the Department may delay the beginning of the Loan repayment period for not more than the maximum allowable length of the Loan;

(4) If the Administering Agency, or Department if the Department is not the Administering Agency, determines that the Borrower is not making sufficient progress in completing the PEA or Response Action, as appropriate, the Department may require Loan repayment to begin immediately or may determine that the Borrower is in default;

(5) If the Borrower of an ISCP Loan decides not to complete the PEA, the Borrower shall notify the Department in writing of that decision and shall submit to the Department all data, documents, reports, and other information regarding the PEA performed prior to the notification. Repayment of the disbursed Loan amount shall begin immediately. A Borrower that does not complete a PEA is not eligible for a partial waiver of Loan repayment under section 68204.

(f) For CLEAN Loan Program Loans, the Loan Agreement provision regarding completion of Response Actions shall include the following:

(1) For a Borrower of a CLEAN Loan Program Loan that is a responsible party as defined in section 25323.5 of the Health and Safety Code or a Person subject to regulation under chapter 6.7 (commencing with section 25280) or chapter 6.75 (commencing with section 25299.10) of the Health and Safety Code, agreement to complete all Response Actions as approved by the Administering Agency, even if the Loan amount does not cover the full cost of the Response Action;

(2) For a Borrower of a CLEAN Loan Program Loan that is not a responsible party as defined in section 25323.5 of the Health and Safety Code, agreement to immediately notify the Administering Agency and the Department, if the Department is not the Administering Agency, if:

(A) New information shows that the cost of completing the Response Action will exceed the cost originally projected by the Borrower, and

(B) The Borrower has determined that the Project is no longer economically feasible because the sum of the cost of the Response Action and the current appraised fair market value of the Property is greater than the projected fair market value of the Property after all necessary Response Actions have been completed.

(3) If the Borrower notifies the Administering Agency and the Department under paragraph (2), the Borrower shall:

(A) Provide to the Administering Agency documentation of the cost of Response Action and the current and projected appraised fair market values under paragraph (2);

(B) Begin repayment of the Loan or the Loan amount disbursed to date immediately;

(C) Submit to the Administering Agency all data, documents, reports and other information regarding the Response Action activities on the Property; and

(D) Perform those actions required by the Administering Agency to ensure that the Property will pose no immediate public health or environmental risks and that the Property will not remain in a condition that is visually less attractive than its original condition.

(4) Documentation of the cost of the Response Action submitted by a Borrower under subparagraph (3)(A) shall be prepared by any of the following who are licensed or registered to practice in California and who have demonstrated expertise in Hazardous Material remediation and cost estimation: Class II environmental assessor, engineering geologist, licensed hazardous substance contractor, or licensed professional engineer. An affidavit may be submitted in lieu of a cost documentation report if the affidavit is signed by a person authorized under this subparagraph to prepare a cost documentation report.

HISTORY

1. New section filed 1-18-2001 as an emergency; operative 1-18-2001 (Register 2001, No. 3). Pursuant to Health and Safety Code section 25395.29, a Certificate of Compliance must be transmitted to OAL by 7-17-2001 or emergency language will be repealed by operation of law on the following day.

2. New section refiled 7-6-2001 as an emergency; operative 7-18-2001 (Register 2001, No. 27). Pursuant to Health and Safety Code section 25395.29, a Certificate of Compliance must be transmitted to OAL by 1-14-2002 or emergency language will be repealed by operation of law on the following day.

3. Certificate of Compliance as to 7-6-2001 order transmitted to OAL 1-14-2002; Certificate of Compliance withdrawn from review 2-27-2002. Repealed by operation of Government Code section 11346.1(g) (Register 2002, No. 9).

4. New section filed 3-1-2002 as an emergency; operative 3-1-2002 (Register 2002, No. 9). Pursuant to Health and Safety Code section 25395.29, a Certificate of Compliance must be transmitted to OAL by 8-28-2002 or emergency language will be repealed by operation of law on the following day.

5. Certificate of Compliance as to 3-31-2002 order, including renumbering of former section 68210 to section 68211 and renumbering of former section 68209 to section 68210 with amendment of section and Note, transmitted to OAL 6-21-2002 and filed 8-5-2002 (Register 2002, No. 32).

6. Change without regulatory effect amending subsections (b)(4), (b)(8), (b)(13), (b)(18) and (c)-(d) filed 7-20-2009 pursuant to section 100, title 1, California Code of Regulations (Register 2009, No. 30).

Note

Note: Authority cited: Sections 25150, 25351.5, 25395.29 and 58012, Health and Safety Code. Reference: Sections 25395.20, 25395.21, 25395.22, 25395.25, 25395.28 and 25395.31, Health and Safety Code.