13.11.036 Loan program for additional connection charge.
A. Property owners who meet the requirements of this section may qualify for a loan of a portion of the additional sewer connection charge established under Section 13.11.035. The principal amount of the loan authorized by this section shall not exceed the amount of the additional connection charge, less any private financing or prepayment by the owner. The actual amount financed shall be determined under the following formula:
Owner’s Share of Sewer Project
(= Total Project Cost/Number of Benefited Properties)
Less 50% or $10,000, whichever is less
Less Private Financing or Prepayment (if any)
_____________________________________
Equals Total Loan Amount.
B. In order for a property owner to qualify for a loan under this section, the property to which the connection is to be made must be developed with an existing single-family home served by an existing septic system. Vacant property, property used for multifamily dwelling units, property served by existing sewers, and nonresidential property shall not qualify for the loan program established by this section.
C. In order to qualify for a loan under this section, the property owner must fill out a credit application and pass an appropriate credit check. The City reserves the right to exercise reasonable business judgment and to disapprove any loan based upon a credit check. The application must be accompanied by a nonrefundable application fee in an amount set in the City’s user fee resolution.
D. The terms of the loan shall be as follows:
1. The loan will be structured as a simple promissory note.
2. The term of the note shall not exceed 10 years, commencing at the time the property is connected to the sewer.
3. The note will bear interest at the rate which is based on the City’s current investment yield at the time of the loan, plus a two percent margin to cover administrative costs and interest rate fluctuations over the loan period.
4. The loan will be secured by an interest in the property. The property interest may take the form of a lien, a deed of trust, or such other instrument as may be acceptable to the City Finance Director and City Attorney.
5. The note shall provide for acceleration of the principal upon default in any payment. In the event of default, the City shall have all available remedies, including, but not limited to, foreclosure of its interest in the property, notification of credit bureaus, use of collection agencies, and terminating service.
6. Loan principal and interest charges will be billed by the City and due monthly. Appropriate penalties may be imposed by the City for delinquent accounts.
7. There shall be no penalty for prepayment.
8. The note will contain a due on sale clause which provides for payment in full of all outstanding principal and interest upon sale of the property.
E. No loan shall be made unless the property owner connects the property to the system and pays the City’s general connection charge and the Metro connection charge at the time the property is connected. In no event shall the loan be used to cover the City’s general connection charge, the Metro connection charge, the property owner’s side sewer costs, the decommissioning of the property’s septic system, or any other charge not included in the additional connection charge established by Section 13.11.035.
F. Nothing in this section requires any person to finance any portion of the additional connection charge through the City. Property owners are free to pay any or all of the additional connection charge at the time of connection and may privately finance any or all of the additional connection charge.
G. Loans shall be limited by available funds. The amount of available funds shall be at the discretion of the City Council and shall be determined periodically by City Council motion, resolution, or ordinance. All funds used for loan purposes shall be derived from operating revenues from the sale of sewer services. (Ord. 1973 § 1 (part), 1998).