MISSISSIPPI LEGISLATURE

2004 Regular Session

To: Ways and Means

By: Representative Smith (39th), Morris

House Bill 1762

(As Sent to Governor)

AN ACT TO AMEND SECTION 31-25-28, MISSISSIPPI CODE OF 1972, TO AUTHORIZE THE DEPARTMENT OF ENVIRONMENTAL QUALITY TO BORROW MONEY FROM THE MISSISSIPPI DEVELOPMENT BANK FOR THE PURPOSE OF PROVIDING FUNDS FOR LOAN PROGRAMS ADMINISTERED BY SUCH AGENCY; TO PROVIDE THAT THE DEPARTMENT OF ENVIRONMENTAL QUALITY MAY PLEDGE FUNDS RECEIVED BY IT AS LOAN REPAYMENTS UNDER SUCH A LOAN PROGRAM TO REPAY ANY LOAN MADE BY THE MISSISSIPPI DEVELOPMENT BANK TO THE DEPARTMENT OF ENVIRONMENTAL QUALITY; TO AUTHORIZE THE MISSISSIPPI DEPARTMENT OF REHABILITATION SERVICES TO BORROW MONEY FROM THE MISSISSIPPI DEVELOPMENT BANK FOR THE PURPOSE OF REFUNDING CERTIFICATES OF PARTICIPATION ISSUED BY THE DEPARTMENT; TO EXEMPT LOANS MADE BY THE MISSISSIPPI DEVELOPMENT BANK UNDER THIS ACT FROM CERTAIN CRITERIA REQUIRED FOR OTHER LOANS MADE BY THE BANK TO THE DEPARTMENT OF ENVIRONMENTAL QUALITY; TO AMEND SECTIONS 31-25-27, 49-17-85 AND 49-17-86, MISSISSIPPI CODE OF 1972, IN CONFORMITY TO THE PROVISIONS OF THIS ACT; AND FOR RELATED PURPOSES.

     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

     SECTION 1.  Section 31-25-28, Mississippi Code of 1972, is amended as follows:

     31-25-28.  (1)  Local governmental units may borrow money or receive grants from the bank for any of the purposes set forth in this section or Section 31-25-20(g) and pay to the bank such fees and charges for services as the bank may prescribe.  Whenever any such loan is made to a local governmental unit, such local governmental unit may use available revenues for the repayment of the principal of, premium, if any, and interest on such loan, and pledge such available revenues or monies for the repayment of the principal of, premium, if any, and interest on such loan.  It is the intention of the Legislature that any such pledge of revenues or other monies shall be valid and binding from the date the pledge is made; that such revenues or other monies so pledged and thereafter received by the local governmental unit shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and that the lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the local governmental unit irrespective of whether such parties have notice thereof; and neither the resolutions, contracts or any other instrument by which a pledge is created need be recorded.

     (2)  Local governmental units may contract with the bank with respect to any such loan and such contract shall contain such terms and conditions as may be prescribed by the bank.

     (3)  Local governmental units may in connection with any such loan enter into any covenants and agreements with respect to such local governmental unit's operations, revenues, assets, monies, funds or property, or such loan, as may be prescribed by the bank.

     (4)  Upon the making of any such loan by the bank to any local governmental unit, such local governmental unit shall be held and be deemed to have agreed that if such governmental unit fails to pay the principal of, premium, if any, and interest on any such loan as when due and payable, such governmental unit shall have waived any and all defenses to such nonpayment, and the bank, upon such nonpayment, shall thereupon avail itself of all remedies, rights and provisions of law applicable in such circumstance, including without limitation, any remedies or rights theretofore agreed to by the local governmental unit, and that such loan shall for all of the purposes of this section, be held and be deemed to have become due and payable and to be unpaid.  The bank may carry out the provisions of this section and exercise all of the rights and remedies and provisions of law provided or referred to in this section and of all other applicable laws of the state.

     (5)  Any local governmental unit that borrows from the bank under this section may agree in writing with the bank that, as provided in this subsection, the State Tax Commission or any state agency, department or commission created pursuant to state law shall (a) withhold all or any part (as agreed by the local governmental unit) of any monies that such local governmental unit is entitled to receive from time to time pursuant to any law and that is in the possession of the State Tax Commission or any state agency, department or commission created pursuant to state law and (b) pay the same over to the bank to satisfy any delinquent payments on any such loan made to such local governmental unit under the provisions of this section and any other delinquent payments due and owing the bank by such local governmental unit, all as the same shall occur.  If the bank files a copy of such written agreement, together with a statement of delinquency, with the State Tax Commission or any state agency, department or commission created pursuant to state law, then the State Tax Commission or any state agency, department or commission created pursuant to state law shall immediately make the withholdings provided in such agreement from the amounts due the local governmental unit and shall continue to pay the same over to the bank until all such delinquencies are satisfied.

     (6)  Before authorizing any loan for any of the purposes enumerated in Section 31-25-20(e), the governing authority of the local governmental unit shall adopt a resolution declaring its intention so to do, stating the amount of the loan proposed to be authorized and the purpose for which the loan is to be authorized, and the date upon which the loan will be authorized.  Such resolution shall be published once a week for at least three (3) consecutive weeks in at least one (1) newspaper published in such local governmental unit.  The first publication of such resolution shall be made not less than twenty-one (21) days before the date fixed in such resolution for the authorization of the loan and the last publication shall be made not more than seven (7) days before such date.  If no newspaper is published in such local governmental unit, then such notice shall be given by publishing the resolution for the required time in some newspaper having a general circulation in such local governmental unit and, in addition, by posting a copy of such resolution for at least twenty-one (21) days next preceding the date fixed therein at three (3) public places in such local governmental unit.  If fifteen percent (15%) of the qualified electors of the local governmental unit or fifteen hundred (1500), whichever is the lesser, file a written protest against the authorization of such loan on or before the date specified in such resolution, then an election on the question of the authorization of such loan shall be called and held as otherwise provided for in connection with the issuance of general obligation indebtedness of such local governmental unit.  Notice of such election shall be given as otherwise required in connection with the issuance of general obligation indebtedness of such local governmental unit.  If three-fifths (3/5) of the qualified electors voting in the election vote in favor of authorizing the loan, then the governing authority of the local governmental unit shall proceed with the loan; however, if less than three-fifths (3/5) of the qualified electors voting in the election vote in favor of authorizing the loan, then the loan shall not be incurred.  If no protest be filed, then such loan may be entered into by the local governmental unit without an election on the question of the authorization of such loan, at any time within a period of two (2) years after the date specified in the resolution.  However, the governing authority of any local governmental unit in its discretion may nevertheless call an election on such question, in which event it shall not be necessary to publish the resolution declaring its intention to authorize such loan as provided in this subsection.

     (7)  (a)  The Department of Environmental Quality may borrow money from the bank for any purpose as otherwise authorized by this act or for the purpose of funding loan programs (including revolving loan programs) for such local governmental unit, or both.  The Department of Environmental Quality may contract with the bank with respect to any loan from the bank to fund such loan programs and such loan from the bank may include any terms and conditions as provided for in this section.  If the Department of Environmental Quality borrows funds pursuant to this subsection (7), then such local governmental unit shall certify the following to the bank prior to making the loan from the bank:

              (i)  The revolving loan program or other program to be funded through the issuance of the bonds;

              (ii)  Available revenues which such local governmental unit intends to use to repay the loan; and

              (iii)  That such local governmental unit does not intend to request an additional appropriation from the Legislature to pay debt service on the loan from the bank or for such security.

          (b)  If such local governmental unit meets the requirements of paragraph (a) of this subsection (7), then such local governmental unit shall not be required to meet the requirements of Section 31-25-27(14).  Notwithstanding any other provision of law, including any limitations or restrictions under Section 49-17-81 et seq., such local governmental unit may designate or pledge any funds, revenues or any other amounts received under its loan programs designated under paragraph (a)(i) of this subsection (7) to repay a loan from the bank under this subsection (7).  Funds, revenues or any other amounts received under a loan program as provided under this subsection (7) specifically include, but are not limited to, any principal and/or interest loan repayments from any participant under the program, any investment earnings, or other amounts held by the Department of Environmental Quality in connection with the applicable loan program.  Any loan program of the Department of Environmental Quality otherwise authorized by law shall be deemed to be a public purpose for purposes of this act which the bank may loan funds under the provisions of this act.

          (c)  In connection with a loan under this subsection (7), the bank may administer and manage loan programs as provided in the contracts with the bank to loan funds thereunder.

          (d)  The maximum amount that the Department of Environmental Quality may borrow under this subsection (7) shall not exceed Thirty-five Million Dollars ($35,000,000.00) in the aggregate.

          (e)  This subsection (7) shall stand repealed from and after July 1, 2006.

     (8)  In connection with any refunding of the Ten Million Five Hundred Seventy Thousand Dollars ($10,570,000.00), State of Mississippi, Department of Rehabilitation Services, Certificates of Participation (State of Mississippi, Department of Rehabilitation Services Project) dated August 1, 1993, the bank may issue its bonds to provide for such refunding and the Department of Rehabilitation Services may borrow money from the bank for the purpose of providing for the refunding of such Certificates of Participation.  The Department of Rehabilitation Services may contract with the bank with respect to any loan from the bank under this subsection (8), to provide for the refunding of such Certificates of Participation and such loan from the bank may include any terms and conditions as provided for in this section.  In connection with the refunding of the Certificates of Participation pursuant to this subsection (8), such refunding shall result in an overall net present value savings to maturity of not less than two percent (2%) of the Certificates of Participation being refunded.  In connection with any loan under this subsection (8), the Department of Rehabilitation Services shall not be required to meet the requirements of Section 31-25-27(14).

     (9)  This section shall be deemed to provide an additional, alternative and complete method for the doing of the things authorized by this section and shall be deemed and construed to be supplemental to any power conferred by other laws on local governmental units and not in derogation of any such powers.  Any loan made pursuant to the provisions of this section shall not constitute an indebtedness of the local governmental unit within the meaning of any constitutional or statutory limitation or restriction.  In connection with a loan under this chapter, a local governmental unit shall not be required to comply with the provisions of any other law except as provided in this section.

     SECTION 2.  Section 31-25-27, Mississippi Code of 1972, is amended as follows:

     31-25-27.  (1)  Each local governmental unit is hereby authorized and empowered to contract with the bank with respect to the bank's purchase of such local governmental unit's securities and such contract shall contain such terms and conditions as may be prescribed by the bank.  Each local governmental unit is authorized and empowered to pay to the bank such fees and charges for services as the bank may prescribe.

     (2)  Each local governmental unit is hereby authorized to issue securities under the provisions of this act and to sell such securities to the bank to raise money for any purpose or purposes set forth in Sections 21-27-23, 21-33-301, 21-33-325, 21-33-326, 31-27-5, 17-17-301 et seq. and any other state law authorizing the issuance of local governmental unit debt, and for the purpose of refunding any securities issued under the provisions of this act or under the provisions of Section 21-27-11 et seq., or Section 21-33-301 et seq., or Section 31-27-1 et seq.  Such securities may be issued in accordance with Sections 21-33-301, 21-33-303, 21-33-307, 21-33-309, 21-33-311, 21-33-313, 21-33-325 and 21-33-326, or Sections 21-27-23 through 21-27-43 and Sections 21-27-47 through 21-27-71, or Sections 31-27-1 through 31-27-25, or Sections 17-5-3 through 17-5-11, or Sections 49-17-101 through 49-17-123, or Sections 17-17-301 through 17-17-349 or any other state law authorizing issuance of local governmental unit debt, as the case may be, unless otherwise specifically provided in this act; provided, however, the securities of any local governmental unit may be issued with such terms and provisions as may be necessary and appropriate in order to comply with the provisions of any loan agreement described in Section 49-17-87.  Whenever securities shall be issued under this subsection, the governing authority may also pledge to the payment of principal of, premium, if any, and interest on such securities the revenues of any project to be constructed, improved or purchased with the proceeds thereof.  Whenever any project is a part of a system or combined system, then all or any portion of the revenues of such system or combined system may be pledged to secure repayment of such securities as determined by the bank.

     (3)  Each local governmental unit is hereby authorized to issue securities to the bank to raise money for any purpose or purposes set forth in Sections 19-9-1, 19-9-27 or 19-9-28 and for the purpose of refunding any securities issued under the provisions of this act or under the provisions of Section 19-9-1 et seq.  Such securities may be issued in accordance with Sections 19-9-1, 19-9-3, 19-9-5, 19-9-7, 19-9-9, 19-9-11, 19-9-13, 19-9-15, 19-9-17, 19-9-27 and 19-9-28, or Sections 17-5-3 through 17-5-11, or Sections 49-17-101 through 49-17-123, as the case may be, unless otherwise specifically provided in this act; provided, however, the securities of any local governmental unit may be issued with such terms and provisions as may be necessary and appropriate in order to comply with the provisions of any loan agreement described in Section 49-17-87.  Whenever securities shall be issued under this subsection, the board of supervisors of the county may also pledge to the payment of principal of, premium, if any, and interest on such securities the revenues of any project to be constructed, improved, repaired or purchased with the proceeds thereof.  Whenever any project is a part of a system or combined system, then all or any portion of the revenues of such system or combined system may be pledged to secure repayment of such securities as determined by the bank.

     (4)  In addition, any local governmental unit is hereby authorized to issue securities to the bank to raise money for any purpose or purposes otherwise authorized by state law and for the purpose of refunding any securities issued under the provisions of this act or as otherwise authorized by state law including Section 49-17-83 et seq.  Such securities may be issued in accordance with any other applicable provision of state law related to the issuance of securities including Section 49-17-83 et seq.  Whenever securities shall be issued under this subsection, the governing body of such local governmental unit may also pledge to the payment of principal of, premium, if any, and interest on such securities the revenues of any project to be constructed, improved or purchased with the proceeds thereof.  Whenever any project is a part of a system or combined system, then all or any portion of the revenues of such system or combined system may be pledged to secure repayment of such securities as determined by the bank.

     (5)  Securities issued by a local governmental unit under the provisions of this act:

          (a)  May be sold only to the bank at private sale and may be sold at such price or prices, in such manner and at such times as may be agreed to by the bank and the local governmental unit, and the governing body of the local governmental unit may pay all expenses, premiums, fees and commissions which it may deem necessary and advantageous in connection with the issuance and sale thereof;

          (b)  Shall be secured as provided by Chapter 27, Title 21, Mississippi Code of 1972; Chapter 33, Title 21, Mississippi Code of 1972; or Chapter 9, Title 19, Mississippi Code of 1972, or other provisions of state law, and as provided in this act; and it is the intention of the Legislature that any pledge of earnings, revenues or other monies made by the local governmental unit shall be valid and binding from the time the pledge is made; that the earnings, revenues or other monies so pledged and thereafter received by the local governmental unit shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and that the lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the local governmental unit irrespective of whether such parties have notice thereof; and neither the resolution nor any other instrument by which a pledge is created need be recorded;

          (c)  Neither the officers or members of the governing body of the local governmental unit nor any person executing the bonds shall be personally liable on the bonds or be subject to any personal liability or accountability by reason of the issuance thereof;

          (d)  Shall be issued for the purposes set forth in this act and shall include terms and conditions which meet the state law authorizing the issuance of such local governmental unit debt and/or such terms and conditions consistent with the requirements for issuance of Mississippi Development Bank Bonds under Section 31-25-37.

     (6)  Each local governmental unit issuing securities under the provisions of this act is hereby authorized and empowered in connection with the issuance of such securities to enter into any covenants, agreements as to defaults and agreements as to remedies of the bank for defaults with respect to such local governmental unit's operation, revenues, assets, monies, funds or property as may be prescribed by the bank.

     (7)  The proceeds of securities shall be deposited in one or more special funds established by resolution of the local governmental unit issuing the same and shall be applied to the following:  (a) the purpose for which the securities were issued; (b) the payment of all costs of issuance of the securities; (c) the payments of any fees and charges established by the bank; (d) the payment of interest on the securities for a period of time not greater than the period of time estimated to be required to complete the purpose for which the securities were issued; all to the extent provided by resolution of the governing body of the local governmental unit and approved by the bank.  Such special fund shall be held by commercial banks qualified to act as depositories therefor.

     (8)  In the event the bank determines to issue bonds and in connection therewith to exercise the powers provided in subsection (7) of Section 31-25-37, and if the requirements of subsection (2), (3) or (4) as the case may be, of this section have been satisfied, a local governmental unit is authorized to issue its securities as provided in this section.

     (9)  Securities issued under this act may be validated in the manner and with the force and effect provided in Section 31-13-1 et seq.

     (10)  This act shall be deemed to provide an additional, alternative and complete method for the doing of the things authorized hereby and shall be deemed and construed to be supplemental to any power conferred by other laws on local governmental units and not in derogation of any such powers.

     (11)  Any person who attempts to or obtains financial aid for a local governmental unit hereunder or who attempts to or sells securities of a governmental unit to the bank by false or misleading information or who shall by fraud attempt to obtain monies from the bank or its approval for the payment of monies or shall fraudulently attempt to or does prevent the collection of any monies due to the bank shall, upon conviction, be guilty of a felony for each offense.

     (12)  Upon the sale and issuance of any securities to the bank by any governmental unit, such governmental unit shall be held and be deemed to have agreed that in the event of the failure of such governmental unit to pay the interest on or the principal of any of such securities owned or held by the bank as and when due and payable, such governmental unit shall have waived any and all defenses to such nonpayment, and the bank upon such nonpayment shall thereupon constitute a holder or owner of such securities as being in default, and the bank may then and thereupon avail itself of all remedies, rights and provisions of law applicable in such circumstance, including without limitation any remedies or rights theretofore agreed to by the local governmental unit, and that all of the securities of the issue of securities of such governmental unit as to which there has been such nonpayment, shall for all of the purposes of this section be held and be deemed to have become due and payable and to be unpaid.  The bank is hereby authorized and empowered to carry out the provisions of this section and to exercise all of the rights and remedies and provisions of law herein provided or referred to.

     (13)  Any local governmental unit which borrows from the bank is hereby authorized and empowered to agree in writing with the bank that, as provided in this subsection, the State Tax Commission or any state agency, department or commission created pursuant to state law shall (a) withhold all or any part (as agreed by the local governmental unit) of any monies which such local governmental unit is entitled to receive from time to time pursuant to any law and which is in the possession of the State Tax Commission, or any state agency, department or commission created pursuant to state law and (b) pay the same over to the bank to satisfy any delinquent payments on any securities issued by such local governmental unit under the provisions of this act and any other delinquent payments due and owing the bank by such local governmental unit, all as the same shall occur.  In the event the bank shall file a copy of such written agreement, together with a statement of delinquency, with the State Tax Commission, or any state agency, department or commission created pursuant to state law then the State Tax Commission or any state agency, department or commission created pursuant to state law shall immediately make the withholdings provided in such agreement from the amounts due the local governmental unit and shall continue to pay the same over to the bank until all such delinquencies are satisfied.

     (14)  (a)  Except as otherwise provided in Section 31-25-28 (7) and (8), if the state or any agency thereof, the institutions of higher learning of the state or any education building corporation established for institutions of higher learning, borrows funds from the bank under Section 31-25-28 or sells its securities to the bank pursuant to this act, then such local governmental unit shall certify the following to the bank prior to the issuance of bonds:

              (i)  The legal authority for such local governmental unit to borrow funds; and

              (ii)  That such local governmental unit does not intend to request an additional appropriation from the Legislature to pay debt service on the loan or for such security.

          (b)  If the state or any agency thereof, the institutions of higher learning of the state or any education building corporation established for institutions of higher learning, does not make the certification required under paragraph (a)(ii) of this subsection, then such local governmental unit shall not borrow funds from the bank under Section 31-25-28 or sell its securities to the bank pursuant to this act unless an appropriation by the Legislature authorizes the payment of debt service for the first year of the loan or for such security.

     (15)  Any local governmental unit may borrow money from the bank loaned under any loan guaranty program of any department or agency of the United States, including the United States Department of Agriculture Rural Utility Services Water and Waste Disposal Guaranteed Loan Program and Community Programs Guaranteed Loan Program or any such successor guaranty programs.

     (16)  Notwithstanding any law to the contrary, each local governmental unit is authorized and empowered to contract with the bank for the exercise by the bank of any and all of the bank's powers as set out in this act with respect to the proceeds of such local governmental unit's securities or certificates of participation issued by such local governmental unit pursuant to any state law authorizing the issuance of local governmental unit debt.

     (17)  Subsections (15) and (16) of this section shall be deemed to provide all necessary authority for the doing of the things authorized thereby and shall be liberally construed to accomplish the purposes and authorizations therein stated.

     SECTION 3.  Section 49-17-85, Mississippi Code of 1972, is amended as follows:

     49-17-85.  (1)  There is established in the State Treasury a fund to be known as the "Water Pollution Control Revolving Fund" which shall be administered by the commission acting through the department.  The revolving fund may receive bond proceeds and funds appropriated or otherwise made available by the Legislature in any manner and funds from any other source, public or private.  The revolving fund shall be maintained in perpetuity for the purposes established in this section.

     (2)  There is established in the State Treasury a fund to be known as the "Water Pollution Control Hardship Grants Fund," which shall be administered by the commission acting through the department.  The grants fund shall be maintained in perpetuity for the purposes established in this section.  Any interest earned on monies in the grants fund shall be credited to that fund.

     (3)  The commission shall promulgate regulations for the administration of the revolving fund program, the hardship grants program and for related programs authorized under this section.  The regulations shall be in accordance with the federal Water Quality Act of 1987, as amended and regulations and guidance issued under that act.  The commission may enter into capitalization grant agreements with the United States Environmental Protection Agency and may accept capitalization grant awards made under Title VI of the Water Quality Act of 1987, as amended.

     (4)  The commission shall establish a loan program which shall commence after October 1, 1988, to assist political subdivisions in the construction of water pollution control projects.  Loans from the revolving fund may be made to political subdivisions as set forth in a loan agreement in amounts not exceeding one hundred percent (100%) of eligible project costs as established by the commission.  Notwithstanding loan amount limitations set forth in Section 49-17-61, the commission may require local participation or funding from other sources, or otherwise limit the percentage of costs covered by loans from the revolving fund.  The commission may establish a maximum amount for any loan in order to provide for broad and equitable participation in the program.

     (5)  The commission shall establish a hardship grants program for rural communities, which shall commence after July 1, 1997, to assist severely economically disadvantaged small rural political subdivisions in the construction of water pollution control projects.  The commission may receive and administer state or federal funds, or both, appropriated for the operation of this grants program and may take all actions necessary to implement the program in accordance with the federal hardship grants program.  The hardship grants program shall operate in conjunction with the revolving loan program administered under this section.

     (6)  The commission shall act for the state in all matters and with respect to all determinations under Title VI of the federal Water Quality Act of 1987, as amended and the federal Omnibus Appropriations and Recision Act of 1996.

     (7)  Except as otherwise provided in this section, the revolving fund may be used only:

          (a)  To make loans on the condition that:

              (i)  The loans are made at or below market interest rates, at terms not to exceed twenty (20) years after project completion; the interest rate and term may vary from time to time and from loan to loan at the discretion of the commission;

              (ii)  Periodic principal and interest payments will commence when required by the commission but not later than one (1) year after project completion and all loans will be fully amortized when required by the commission but not later than twenty (20) years after project completion;

              (iii)  The recipient of a loan will establish a dedicated source of revenue for repayment of loans;

          (b)  To buy or refinance the debt obligation of political subdivisions at or below market rates, where the debt obligations were incurred after March 7, 1985, and where the projects were constructed in compliance with applicable federal and state regulations;

          (c)  To guarantee, or purchase insurance for, obligations of political subdivisions where the action would improve credit market access or reduce interest rates;

          (d)  To provide loan guarantees for similar revolving funds established by municipalities or intermunicipal agencies;

          (e)  To earn interest on fund accounts;

          (f)  To establish nonpoint source pollution control management programs;

          (g)  To establish estuary conservation and management programs;

          (h)  For the reasonable costs of administering the revolving fund and conducting activities under this act, subject to the limitations established in Section 603(d)(7) of Title VI of the federal Clean Water Act, as amended, and subject to annual appropriation by the Legislature; and

          (i)  In connection with the issuance, sale and purchase of bonds under Section 31-25-1 et seq., related to the funding of projects, to provide security or a pledge of revenues for the repayment of the bonds.

     (8)  The hardship grants program shall be used only to provide hardship grants consistent with the federal hardship grants program for rural communities, regulations and guidance issued by the United States Environmental Protection Agency, subsections (3) and (5) of this section and regulations promulgated and guidance issued by the commission under this section.

     (9)  The commission shall establish by regulation a system of priorities and a priority list of projects eligible for funding with loans from the revolving fund.

     (10)  The commission may provide a loan from the revolving fund only with respect to a project if that project is on the priority list established by the commission.

     (11)  The revolving fund shall be credited with all payments of principal and interest derived from the fund uses described in subsection (7) of this section.  However, notwithstanding any other provision of law to the contrary, all or any portion of payments of principal and interest derived from the fund uses described in subsection (7) of this section may be designated or pledged for repayment of a loan as provided for in Section 31-25-28 in connection with a loan from the Mississippi Development Bank.

     (12)  The commission may establish and collect fees to defray the reasonable costs of administering the revolving fund if it determines that the administrative costs will exceed the limitations established in Section 603(d)(7) of Title VI of the federal Clean Water Act, as amended.  The administration fees may be included in loan amounts to political subdivisions for the purpose of facilitating payment to the commission.  The fees may not exceed five percent (5%) of the loan amount.

     SECTION 4.  Section 49-17-86, Mississippi Code of 1972, is amended as follows:

     49-17-86.  (1)  (a)  There is created a fund in the State Treasury to be designated as the "Water Pollution Control Emergency Loan Fund" hereinafter referred to as "emergency fund."

          (b)  The emergency fund may receive appropriations, bond proceeds, grants, gifts, donations or funds from any source, public or private.  The emergency fund shall be credited with all repayments of principal and interest derived from loans made from the emergency fund.

          (c)  The monies in the emergency fund may be expended only in amounts appropriated by the Legislature.

          (d)  The emergency fund shall be maintained in perpetuity for the purposes established in Sections 49-17-81 through 49-17-89.  Unexpended amounts remaining in the emergency fund at the end of a fiscal year shall not lapse into the State General Fund.  Any interest earned on amounts in the emergency fund shall be deposited to the credit of the fund.

     (2)  The commission shall establish a loan program to assist political subdivisions in making emergency improvements such as repairs to or replacement of machinery, equipment, materials, structures or devices in existing water pollution abatement projects or such other emergency water pollution abatement projects as the commission deems necessary.  Loans from the emergency fund may be made to political subdivisions as set forth in a loan agreement in amounts not exceeding one hundred percent (100%) of eligible project costs as established by the commission.  The commission may require local participation or funding from other sources, or otherwise limit the percentage of costs covered by loans from the emergency fund.  The commission may establish a maximum amount for any loan not to exceed Three Hundred Fifty Thousand Dollars ($350,000.00).

     (3)  Except as otherwise provided in this section, the emergency fund may be used only:

          (a)  To make loans on the condition that:

              (i)  Loans are made at or below market interest rates, at terms not to exceed ten (10) years after project completion; the interest rate may vary from time to time and from loan to loan at the discretion of the commission.

              (ii)  Periodic principal and interest payments will commence when required by the commission but not later than one (1) year after project completion and all loans will be fully amortized when required by the commission but not later than ten (10) years after project completion.

              (iii)  The recipient of a loan shall establish a dedicated source of revenue for repayment of loans.  In addition, the commission may require any loan recipient to impose a per connection surcharge on each customer for repayment of any loan funds provided under this section.

              (iv)  The recipient of the loan is not in arrears in repayments to the Water Pollution Control Revolving Fund, the Water Pollution Control Emergency Loan Fund or under the Water Pollution Abatement Loan Program.

          (b)  To provide financial assistance to political subdivisions in making emergency improvements such as repairs to or replacement of machinery, equipment, materials, structures or devices in existing water pollution abatement projects or such other emergency water pollution abatement projects as the commission deems necessary.

          (c)  To defray the reasonable costs of administering the emergency fund and conducting activities under this section, subject to annual appropriation by the Legislature.

     (4)  The commission shall establish a system of evaluating the eligibility of projects, including a determination of the emergency nature of a situation for which funding is sought.

     (5)  The fund will be credited with all payments of principal and interest derived from the fund uses described in subsection (3) of this section.  However, notwithstanding any other provision of law to the contrary, all or any portion of payments of principal and interest derived from the fund uses described in subsection (3) of this section may be designated or pledged for repayment of a loan as provided for in Section 31-25-28 in connection with a loan from the Mississippi Development Bank.

     (6)  In addition to any amounts allowed under subsection (3)(c), the commission may establish and collect fees to further defray the reasonable costs of administering the emergency fund.  Any administrative fees may be included in loan amounts to political subdivisions for the purpose of facilitating payment to the commission; fees may not exceed five percent (5%) of the loan amount.  The commission may also use administrative fees collected pursuant to Section 49-17-85 to defray the reasonable costs of administering the emergency fund.

     SECTION 5.  This act shall take effect and be in force from and after its passage.