401 KAR 46:060. Waste Tire Trust Fund Loan Program.
RELATES TO: KRS 224.43, 224.50
STATUTORY AUTHORITY: KRS 224.10-100, 224.50-820, 224.50-834
NECESSITY, FUNCTION, AND CONFORMITY: KRS 224.50-820 establishes the waste tire trust fund to be used for programs to eliminate existing and prevent future accumulations of waste tire piles. KRS 224.50-834 requires the cabinet to establish the loan fund to make low interest loans available to private interests. Pursuant to KRS 224.43-010 it is the policy of the cabinet to encourage a regional approach to solid waste management. This administrative regulation establishes eligibility requirements, application requirements, and prioritization criteria to be used by the Environmental and Public Protection Cabinet to administer this program.
Section 1. General Eligibility Requirements. (1) Any person regularly engaged in a recycling or recovered material processing business, or if entering the field has made prior arrangements in the form of written commitments for supplies, equipment and personnel, or a facility permitted by the cabinet for incineration of waste tires for the recovery of energy may apply for financial assistance from the waste tire trust fund for any project that meets the criteria listed in KRS 224.50-834.
(2) The applicant shall possess the legal authority to construct or acquire, operate, and maintain the project for which loan assistance is sought from the waste tire trust fund.
(3) The applicant shall possess the legal authority to incur a pledge to repay any loan assistance.
(4) The project shall comply with goals and objectives of KRS 224.50-824 and 224.50-834.
(5) The proposed project cost estimates shall be reasonable and attainable given the geographic location of the project, current pricing trends, required professional services, and any other factors that may have a bearing on the project.
(6) The applicant shall assure continued operation and maintenance of the project.
(7) The proposed source of revenue shall be sufficient to operate and repay any debt financing associated with the project.
(8) The applicant shall have approval by resolution from the local governing body as to its consistency with the approved area solid waste management plan.
(9) The applicant nor any of its key personnel nor any third party operator shall:
(a) Intentionally misrepresent or conceal any material fact in the application;
(b) Obtain or attempt to obtain the loan by misrepresentation or concealment;
(c) Have been convicted by final judgment of any felony within five (5) years preceding the filing of the application; and
(d) Been adjudged by an administrative agency or a court to have violated the environmental protection laws or administrative regulations of the United States, the Commonwealth or any other state, and the cabinet determines that the conviction or adjudication is sufficiently probative of the applicant's inability or unwillingness to operate the facility in a lawful manner.
Section 2. Application Submission Requirements and Review Process. (1) The application form, DEP 0042, entitled "Waste Tire Trust Fund Application for Loan Assistance" (October 1992) and its requirements are hereby incorporated by reference. Copies may be obtained from the cabinet's Division of Waste Management, 14 Reilly Road, Frankfort, Kentucky 40601 during the normal work hours of 8 a.m. to 4:30 p.m., Monday through Friday. The applicant shall submit the original and three (3) copies of the completed application form to the Division of Waste Management.
(2)(a) The cabinet shall review and prioritize applications in cycles. The first application cycle shall begin on May 1, 1993. The cabinet shall accept applications from May 1, 1993 through COB June 30, 1993, at which time all applications received during this period shall be reviewed and prioritized. Subsequent application cycles shall be annual, beginning on August 1 and ending COB August 31, in each year that the balance in the waste tire trust fund on June 30 exceeds $335,000.
(b) The initial and subsequent cycles shall be advertised in public notices, which shall be published pursuant to KRS 424.130 in major newspapers with statewide circulation and distributed to all county judge executives and mayors of first and second class cities, as well as other parties who have notified the division of an interest in submitting an application. The public notice for the initial cycle shall be published no earlier than April 10, 1993 and no later than April 24, 1993. For years in which subsequent cycles will be held, the public notice shall be published no earlier than July 11 and no later than July 25.
(3) The application shall be properly completed and accurate.
Section 3. Criteria for Prioritizing Project Applications. The cabinet shall prioritize all acceptable applications received for each application cycle using a scoring system that measures the degree to which the proposed project:
(1) Promotes reuse and recycling efforts of waste tires or waste tire material;
(2) Eliminates existing and prevents future waste tire piles;
(3) Satisfies the identified needs of the project service area;
(4) Efficiently serves the area geographically and by population;
(5) Is needed within the proposed service area;
(6) Is a regional project; and
(7) Is financially sound. The financial review shall be conducted to consider, but not be limited to, the following:
(a) Appropriateness of the type of revenues pledged for repayment of a loan and operation and maintenance cost of the project;
(b) Validity of the assumptions used to project any revenues pledged to the project;
(c) Assurance that revenues pledged to the project will be collected;
(d) Security of all other sources proposed to fund the project costs;
(e) Credit history of the applicant;
(f) Reasonableness of the projections for operation and maintenance cost of the project; and
(g) Any legal restrictions on the applicant to pledge the proposed revenues for repayment of a loan from the waste tire trust fund or operation and maintenance of the project.
Section 4. Conditions for Assistance from the Waste Tire Trust Fund. (1) The applicant shall execute a loan agreement with the cabinet that sets forth the terms and conditions for completion of the project, and actions thereafter. This shall generally coincide with award of construction or acquisition contracts for the project. No monies shall be released to the applicant until the loan agreement is executed.
(2) All recipients of loans from the waste tire trust fund shall submit quarterly reports to the cabinet using the form DEP 0042A, entitled "Waste Tire Trust Fund Loan Report" (October 1992). The form and its requirements are hereby incorporated by reference. Copies may be obtained from the cabinet's Division of Waste Management, 14 Reilly Road , Frankfort, Kentucky, 40601, during the normal working hours of 8 a.m. to 4:30 p.m. Monday through Friday.
(3) The applicant shall be responsible for the repayment of any loan, and for the continued operation and maintenance of any facility or other project funded by the cabinet. If the project is to be operated, maintained or managed by a third party under contract, management agreement, or written lease, the applicant shall continue to be responsible for compliance with the requirements of this section.
(4) Upon determination of the actual bid cost of a project, the funding awarded by the cabinet may be increased by up to five (5) percent of the original funding commitment. Five (5) percent of the funds committed shall be reserved for this purpose until the funded projects are completed.
(5) Funds shall be released to the applicant on a monthly basis, for actual project costs incurred. An itemized list of expenditures with copies of invoices or other supporting documentation shall be submitted to the cabinet for payment.
(6) The applicant, upon completion of the project, funded by the waste tire trust fund, shall comply with KRS Chapters 109 and 224 and all administrative regulations pertaining to solid waste management.
(7) The applicant shall retain ownership of the facilities and equipment financed by the waste tire trust fund during the useful life of the facility or until the final repayment of the loan, whichever is shorter.
(8) Any proposed change in the project or in the information provided in the original application, shall require prior approval of the cabinet. The cabinet may require approval by the local governing body.
(9) The interest rate shall be established in the loan agreement and shall be based on the index rate at the time of the loan less two (2) percent. The index rate is the average of the Bond Buyer's Index of twenty (20) G. O. Bonds as published weekly in the Bond Buyer (a financial newspaper circulated in New York) calculated based on the weeks falling within each calendar quarter. This average shall be rounded to the nearest one-tenth (.1) of one (1) percent.
(10) Interest shall be payable to the cabinet semiannually beginning with the next successive interest payment date established in the loan agreement after the applicant receives funds.
(11) Principal shall be payable to the cabinet semiannually beginning with the next successive principal payment date established in the executed loan agreement. The total term of principal repayment shall not exceed thirty (30) years, or the useful life of the facilities and equipment financed, whichever comes first. (19 Ky.R. 1245; Am. 1579; 2028; eff. 3-12-93; recodified from 401 KAR 49:220, 11-8-96; TAm eff. 8-9-2007.)