MISSISSIPPI LEGISLATURE

2006 Regular Session

To: Conservation and Water Resources

By: Representative Compretta, Dedeaux

House Bill 1313

AN ACT TO PROVIDE THAT THE BALANCE ON A LOAN MADE TO A COUNTY, MUNICIPALITY, DISTRICT OR OTHER WATER ORGANIZATION FOR EXPANSION OR REPAIR OF A WATER SYSTEM FROM THE "LOCAL GOVERNMENTS AND RURAL WATER SYSTEMS IMPROVEMENTS REVOLVING LOAN FUND" OR ON A LOAN TO A POLITICAL SUBDIVISION FOR CONSTRUCTION OF A WATER POLLUTION CONTROL PROJECT FROM THE "WATER POLLUTION CONTROL REVOLVING FUND" SHALL BE HELD IN ABEYANCE IF THE COUNTY, MUNICIPALITY, DISTRICT OR OTHER WATER ORGANIZATION, OR POLITICAL SUBDIVISION IS LOCATED IN A SPECIFIC AREA OF THE STATE COVERED BY THE PRESIDENTIAL DECLARATION OF MAJOR DISASTER PERTAINING TO HURRICANE KATRINA; TO PROVIDE THAT IF THE BORROWER IS UNABLE TO PAY THE SUMS IN ARREARS ON SUCH A LOAN BECAUSE OF HURRICANE KATRINA, THEN REPAYMENT OF THE BALANCE REMAINING ON THE LOAN AFTER AUGUST 29, 2005, SHALL BE HELD IN ABEYANCE; TO PROVIDE THAT ANY LOAN AGREEMENT EXECUTED BEFORE AUGUST 29, 2005, WITH REGARD TO SUCH LOAN PROGRAMS SHALL BE AMENDED BY OPERATION OF LAW TO INCLUDE A "HURRICANE KATRINA ABEYANCE STIPULATION"; TO AMEND SECTION 41-3-16, MISSISSIPPI CODE OF 1972, PERTAINING TO THE "LOCAL GOVERNMENTS AND RURAL WATER SYSTEMS IMPROVEMENTS REVOLVING LOAN FUND," IN CONFORMITY THERETO; TO AMEND SECTIONS 49-17-85 AND 49-17-87, MISSISSIPPI CODE OF 1972, PERTAINING TO THE "WATER POLLUTION CONTROL REVOLVING FUND," IN CONFORMITY THERETO; TO BRING FORWARD SECTION 49-17-89, MISSISSIPPI CODE OF 1972, PERTAINING TO THE "WATER POLLUTION CONTROL REVOLVING FUND," FOR PURPOSES OF AMENDMENT; AND FOR RELATED PURPOSES.

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

SECTION 1. (1) (a) The Legislature finds that Hurricane Katrina was the worst natural disaster in the state's history. Extensive and prolonged damage caused by the storm has been devastating to infrastructure and to the civil, social, economic and environmental well-being of Mississippi. Extraordinary and unprecedented assistance to the affected areas is required if this region is to recover from the effects of the devastation.

(b) The Legislature further finds that the devastation caused by Hurricane Katrina in Mississippi continues to affect all aspects of the economy, the environment, public health and safety, infrastructure, public and private institutions, and the general welfare of the region and, indirectly, of the entire state.

(c) The provisions of this act are intended to address the welfare of the citizens of the region with respect to the expansion or repair of existing water systems and with respect to the construction of water pollution control projects, and the importance of such projects to public health and safety justify the exercise of the powers authorized in this act.

(2) The provisions of this section shall apply to:

(a) Any county, incorporated municipality, or district or other water organization that has been granted tax exempt status under either federal or state law, that has received a loan under Section 41-3-16 before August 29, 2005, and that is located in the area of the state composed of the six (6) most southern counties of the state covered by the Presidential Declaration of Major Disaster for the State of Mississippi (FEMA-1604-DR) dated August 29, 2005.

(b) Any political subdivision that has received a loan under Sections 49-17-81 through 49-17-89 before August 29, 2005, to assist in the construction of a water pollution control project, and that is located in the area of the state composed of the six (6) most southern counties of the state covered by the Presidential Declaration of Major Disaster for the State of Mississippi (FEMA-1604-DR) dated August 29, 2005.

(3) For purposes of this section, the term "borrower" means any entity as described in subsection (2). If the borrower is unable to pay the sums in arrears on a loan executed under Sections 41-3-16 or 49-17-81 through 49-17-89 before August 29, 2005, because of the destruction of or damage to improvements or structures caused by Hurricane Katrina, or because of economic conditions brought about by the effects of Hurricane Katrina, then repayment of the balance remaining on the loan after August 29, 2005, shall be held in permanent abeyance. Any loan agreement executed before August 29, 2005, by a borrower shall be amended, by operation of this act, to include a provision stipulating that if destruction of or damage to improvements or structures is caused by Hurricane Katrina, or because of economic conditions brought about by the effects of Hurricane Katrina, then repayment of the balance remaining on the loan after August 29, 2005, shall be held in permanent abeyance, which stipulation shall be known as the "Hurricane Katrina Abeyance Stipulation."

SECTION 2. Section 41-3-16, Mississippi Code of 1972, is amended as follows:

41-3-16. (1) (a) There is established a local governments and rural water systems improvements revolving loan and grant program to be administered by the State Department of Health, referred to in this section as "department," for the purpose of assisting counties, incorporated municipalities, districts or other water organizations that have been granted tax exempt status under either federal or state law, in making improvements to their water systems, including construction of new water systems or expansion or repair of existing water systems. Loan and grant proceeds may be used by the recipient for planning, professional services, acquisition of interests in land, acquisition of personal property, construction, construction-related services, maintenance, and any other reasonable use which the board, in its discretion, may allow. For purposes of this section, "water systems" has the same meaning as the term "public water system" under Section 41-26-3.

(b) (i) There is created a board to be known as the "Local Governments and Rural Water Systems Improvements Board," referred to in this section as "board," to be composed of the following nine (9) members: the State Health Officer, or his designee, who shall serve as chairman of the board; the Executive Director of the Mississippi Development Authority, or his designee; the Executive Director of the Department of Environmental Quality, or his designee; the Executive Director of the Department of Finance and Administration, or his designee; the Executive Director of the Mississippi Association of Supervisors, or his designee; the Executive Director of the Mississippi Municipal League, or his designee; the Executive Director of the Consulting Engineers Council, or his designee; the State Director of the United States Department of Agriculture, Rural Development, or his designee; and a manager of a rural water system.

The Governor shall appoint a manager of a rural water system from a list of candidates provided by the Executive Director of the Mississippi Rural Water Association. The Executive Director of the Mississippi Rural Water Association shall provide the Governor a list of candidates which shall contain a minimum of three (3) candidates for each appointment.

(ii) Nonappointed members of the board may designate another representative of their agency or association to serve as an alternate.

(iii) The gubernatorial appointee shall serve a term concurrent with the term of the Governor and until a successor is appointed and qualified. No member, officer or employee of the Board of Directors of the Mississippi Rural Water Associationshall be eligible for appointment.

(c) The department, if requested by the board, shall furnish the board with facilities and staff as needed to administerthis section. The department may contract, upon approval by the board, for those facilities and staff needed to administer this section, including routine management, as it deems necessary. The board may advertise for or solicit proposals from public or private sources, or both, for administration of this section or any services required for administration of this section or any portion thereof. It is the intent of the Legislature that the board endeavor to ensure that the costs of administration of this section are as low as possible in order to provide the water consumers of Mississippi safe drinking water at affordable prices.

(d) Members of the board may not receive any salary, compensation or per diem for the performance of their duties under this section.

(2) (a) There is created a special fund in the State Treasury to be designated as the "Local Governments and Rural Water Systems Improvements Revolving Loan Fund," referred to in this section as "revolving fund," which fund shall consist of those monies as provided in Sections 6 and 13 of Chapter 521, Laws of 1995. The revolving fund may receive appropriations, bond proceeds, grants, gifts, donations or funds from any source, public or private. The revolving fund shall be credited with all repayments of principal and interest derived from loans made from the revolving fund. The monies in the revolving fund may be expended only in amounts appropriated by the Legislature, and the different amounts specifically provided for the loan program and the grant program shall be so designated. Monies in the fund may only be expended for the grant program from the amount designated for such program. The revolving fund shall be maintained in perpetuity for the purposes established in this section and Sections 6 through 20 of Chapter 521, Laws of 1995. Unexpended amounts remaining in the revolving fund at the end of a fiscal year shall not lapse into the State General Fund, and any interest earned on amounts in the revolving fund shall be deposited to the credit of the fund. Monies in the revolving fund may not be used or expended for any purpose except as authorized under this section and Sections 6 through 20 of Chapter 521, Laws of 1995. Any monies in the fund may be used to match any federal funds that are available for the same or related purposes for which funds are used and expended under this section and Sections 6 through 20 of Chapter 521, Laws of 1995. Any federal funds shall be used and expended only in accordance with federal laws, rules and regulations governing the expenditure of those funds. No person shall use any monies from the revolving fund for the acquisition of real property or any interest in real property unless that property is integral to the project funded under this section and the purchase is made from a willing seller. No county, incorporated municipality or district shall acquire any real property or any interest in any real property for a project funded through the revolving fund by condemnation. The board's application of Sections 43-37-1 through 43-37-13 shall be no more stringent or extensive in scope, coverage and effect than federal property acquisition laws and regulations.

(b) There is created a special fund in the State Treasury to be designated as the "Local Governments and Rural Water Systems Emergency Loan Fund," hereinafter referred to as "emergency fund," which fund shall consist of those monies as provided in Sections 6 and 13 of Chapter 521, Laws of 1995. 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. The monies in the emergency fund may be expended only in amounts appropriated by the Legislature. The emergency fund shall be maintained in perpetuity for the purposes established in this section and Section 6 of Chapter 521, Laws of 1995. 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. Monies in the emergency fund may not be used or expended for any purpose except as authorized under this section and Section 6 of Chapter 521, Laws of 1995.

(c) The board created in subsection (1) shall establish loan and grant programs by which loans and grants may be made available to counties, incorporated municipalities, districts or other water organizations that have been granted tax exempt status under either federal or state law, to assist those counties, incorporated municipalities, districts or water organizations in making water systems improvements, including the construction of new water systems or expansion or repair of existing water systems. Any entity eligible under this section may receive either a loan or a grant, or both. No grant awarded under the program established in this section may be made using funds from the loan program. Grants may be awarded only when the Legislature specifically appropriates funds for that particular purpose. The interest rate on those loans may vary from time to time and from loan to loan, and will be at or below market interest rates as determined by the board. The board shall act as quickly as is practicable and prudent in deciding on any loan request that it receives. Loans from the revolving fund or emergency fund may be made to counties, incorporated municipalities, districts or other water organizations that have been granted tax exempt status under either federal or state law, as set forth in a loan agreement in amounts not to exceed one hundred percent (100%) of eligible project costs as established by the board. The board may require county, municipal, district or other water organization participation or funding from other sources, or otherwise limit the percentage of costs covered by loans from the revolving fund or the emergency fund. The maximum amount for any loan from the emergency fund shall be Five Hundred Thousand Dollars ($500,000.00), and the maximum amount for any loan from the revolving fund shall be One Million Five Hundred Thousand Dollars ($1,500,000.00).

(d) (i) A county that receives a loan from the revolving fund or the emergency fund shall pledge for repayment of the loan any part of the homestead exemption annual tax loss reimbursement to which it may be entitled under Section 27-33-77, as may be required to meet the repayment schedule contained in the loan agreement. An incorporated municipality that receives a loan from the revolving fund or the emergency fund shall pledge for repayment of the loan any part of the sales tax revenue distribution to which it may be entitled under Section 27-65-75, as may be required to meet the repayment schedule contained in the loan agreement. All recipients of such loans shall establish a dedicated source of revenue for repayment of the loan. Before any county or incorporated municipality shall receive any loan, it shall have executed with the State Tax Commission and the board a loan agreement evidencing that loan. The loan agreement shall not be construed to prohibit any recipient from prepaying any part or all of the funds received. The repayment schedule in each loan agreement shall provide for (i) monthly payments, (ii) semiannual payments or (iii) other periodic payments, the annual total of which shall not exceed the annual total for any other year of the loan by more than fifteen percent (15%). The loan agreement shall provide for the repayment of all funds received from the revolving fund within not more than fifteen (15) years or a term as otherwise allowed by the federal Safe Drinking Water Act, and all funds received from the emergency fund within not more than five (5) years from the date of project completion, and any repayment shall commence not later than one (1) year after project completion. The State Tax Commission shall withhold semiannually from counties and monthly from incorporated municipalities from the amount to be remitted to the county or municipality, a sum equal to the next repayment as provided in the loan agreement.

(ii) For purposes of this subparagraph, the term "borrower" means a county, incorporated municipality, district or other water organization that is located in the area of the state composed of the six (6) most southern counties of the state covered by the Presidential Declaration of Major Disaster for the State of Mississippi (FEMA-1604-DR) dated August 29, 2005. Any loan agreement executed before August 29, 2005, by a borrower as defined in this subparagraph shall be amended, by operation of this act, to include a provision that if the borrower is unable to pay the sums in arrears on the loan, because of the destruction of or damage to improvements or structures caused by Hurricane Katrina, or because of economic conditions brought about by the effects of Hurricane Katrina, then repayment of the loan shall be held in permanent abeyance.

(e) (i) Any county, incorporated municipality, district or other water organization desiring to construct a project approved by the board which receives a loan from the state for that purpose but which is not eligible to pledge for repayment under the provisions of paragraph (d) of this subsection, shall repay that loan by making payments each month to the State Treasurer through the Department of Finance and Administration for and on behalf of the board according to Section 7-7-15, to be credited to either the revolving fund or the emergency fund, whichever is appropriate, in lieu of pledging homestead exemption annual tax loss reimbursement or sales tax revenue distribution.

Loan repayments shall be according to a repayment schedule contained in each loan agreement as provided in paragraph (d) of this subsection.

(f) (i) Any district created pursuant to Sections 19-5-151 through 19-5-207 that receives a loan from the revolving fund or the emergency fund shall pledge for repayment of the loan any part of the revenues received by that district pursuant to Sections 19-5-151 through 19-5-207, as may be required to meet the repayment schedule contained in the loan agreement.

(g) The State Auditor, upon request of the board, shall audit the receipts and expenditures of acounty, an incorporated municipality, district or other water organization whose loan repayments appear to be in arrears, and if the Auditor finds that the county, incorporated municipality, district or other water organization is in arrears in those repayments, the Auditor shall immediately notify the chairman of the board who may take any action as may be necessary to enforce the terms of the loan agreement, including liquidation and enforcement of the security given for repayment of the loan, and the Executive Director of the Department of Finance and Administration who shall withhold all future payments to the county of homestead exemption annual tax loss reimbursements under Section 27-33-77 and all sums allocated to the county or the incorporated municipality under Section 27-65-75 until such time as the county or the incorporated municipality is again current in its loan repayments as certified by the board.

(h) All monies deposited in the revolving fund or the emergency fund, including loan repayments and interest earned on those repayments, shall be used only for providing loans or other financial assistance to water systems as the board deems appropriate. In addition, any amounts in the revolving fund or the emergency fund may be used to defray the reasonable costs of administering the revolving fund or the emergency fund and conducting activities under this section and Sections 6 through 20 of Chapter 521, Laws of 1995, subject to any limitations established in the federal Safe Drinking Water Act, as amended and subject to annual appropriation by the Legislature. The department is authorized, upon approval by the board, to use amounts available to it from the revolving fund or the emergency fund to contract for those facilities and staff needed to administer and provide routine management for the funds and loan program.

(3) In administering this section and Sections 6 through 20 of Chapter 521, Laws of 1995, the board created in subsection (1) of this section shall have the following powers and duties:

(a) To supervise the use of all funds made available under this section and Sections 6 through 20 of Chapter 521, Laws of 1995, for local governments and rural water systems improvements;

(b) To promulgate rules and regulations, to make variances and exceptions thereto, and to establish procedures in accordance with this section and Sections 6 through 20 of Chapter 521, Laws of 1995, for the implementation of the local governments and rural water systems improvements revolving loan program;

(c) To require, at the board's discretion, any loan or grant recipient to impose a per connection fee or surcharge or amended water rate schedule or tariff on each customer or any class of customers, benefiting from an improvement financed by a loan or grant made under this section, for repayment of any loan funds provided under this section and Sections 6 through 20 of Chapter 521, Laws of 1995. The board may require any loan or grant recipient to undergo a water system viability analysis and may require a loan or grant recipient to implement any result of the viability analysis. If the loan recipient fails to implement any result of a viability analysis as required by the board, the board may impose a monetary penalty or increase the interest rate on the loan, or both. If the grant recipient fails to implement any result of a viability analysis as required by the board, the board may impose a monetary penalty on the grant;

(d) To review and certify all projects for which funds are authorized to be made available under this section and Sections 6 through 20 of Chapter 521, Laws of 1995, for local governments and rural water systems improvements;

(e) To requisition monies in the Local Governments and Rural Water Systems Improvements Revolving Loan Fund and the Local Governments and Rural Water Systems Emergency Loan Fund and distribute those monies on a project-by-project basis in accordance with this section;

(f) To ensure that the funds made available under this section and Sections 6 through 20 of Chapter 521, Laws of 1995, to a county, an incorporated municipality, a district or a water organization that has been granted tax exempt status under either federal or state law provide for a distribution of projects and funds among the entities under a priority system established by the board;

(g) To maintain in accordance with generally accepted government accounting standards an accurate record of all monies in the revolving fund and the emergency fund made available to counties, incorporated municipalities, districts or other water organizations under this section and Sections 6 through 20 of Chapter 521, Laws of 1995, and the costs for each project;

(h) To establish policies, procedures and requirements concerning viability and financial capability to repay loans that may be used in approving loans available under this section, including a requirement that all loan recipients have a rate structure which will be sufficient to cover the costs of operation, maintenance, major equipment replacement and repayment of any loans made under this section; and

(i) To file annually with the Legislature a report detailing how monies in the Local Governments and Rural Water Systems Improvements Revolving Loan Fund and the Local Governments and Rural Water Systems Emergency Loan Fund were spent during the preceding fiscal year in each county, incorporated municipality, district or other water organization, the number of projects approved and constructed, and the cost of each project.

For efficient and effective administration of the loan program, revolving fund and emergency fund, the board may authorize the department or the State Health Officer to carry out any or all of the powers and duties enumerated above.

(j) Notwithstanding any provision of this section, Section 1 of this act shall apply to the repayment of a loan by a county, incorporated municipality, district or other water organization that is located in the area of the state composed of the six (6) most southern counties of the state covered by the Presidential Declaration of Major Disaster for the State of Mississippi (FEMA-1604-DR) dated August 29, 2005.

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.

(13) Notwithstanding any provision of this section, Section 1 of this act shall apply to the repayment of a loan made to any political subdivision that is located in the area of the state composed of the six (6) most southern counties of the state covered by the Presidential Declaration of Major Disaster for the State of Mississippi (FEMA-1604-DR) dated August 29, 2005.

SECTION 4. Section 49-17-87, Mississippi Code of 1972, is amended as follows:

49-17-87. (1) A political subdivision which receives a loan from the revolving fund or emergency fund is required to and authorized to pledge for the repayment of such loan (a) any part of the sales tax reimbursement to which it may be entitled under Section 27-65-75, and (b) any part of the homestead exemption annual tax loss reimbursement to which it may be entitled under Section 27-33-77, to meet a repayment schedule set forth in a loan agreement. The loan agreement shall provide for (i) monthly payments, (ii) semiannual payments or (iii) other periodic payments, the annual total of which shall not exceed the annual total for any other year of the loan by more than fifteen percent (15%). The loan agreement shall provide for the repayment of all funds received from the revolving fund within not more than twenty (20) years and repayment of all funds received from the emergency fund within not more than ten (10) years from the date of project completion. The State Tax Commission shall pay to the revolving fund or emergency fund monthly, or as often as is practicable, from the amount, which would otherwise be remitted to a political subdivision from its sales tax reimbursement or homestead exemption annual tax loss reimbursement, the amounts set forth in such loan agreement.

(2) (a) Before any political subdivision shall receive any loan from the revolving fund or the emergency fund, it shall have executed with the State Tax Commission and the commission a loan agreement evidencing that loan. The loan agreement hereinabove provided for shall not be construed to prohibit any recipient from prepaying any part or all of the funds received.

(b) For purposes of this paragraph, the term "borrower" means any political subdivision that is located in the area of the state composed of the six (6) most southern counties of the state covered by the Presidential Declaration of Major Disaster for the State of Mississippi (FEMA-1604-DR) dated August 29, 2005. Any loan agreement executed before August 29, 2005, by a borrower as defined in this paragraph shall be amended, by operation of this act, to include a provision that if the borrower is unable to pay the sums in arrears on the loan, because of the destruction of or damage to improvements or structures caused by Hurricane Katrina, or because of economic conditions brought about by the effects of Hurricane Katrina, then repayment of the loan shall be held in permanent abeyance.

(3) As determined by the commission, any political subdivision desiring to construct a project approved by the department and which receives a loan from the state for that purpose may be required to pledge as security for the repayment of that loan, all or any part of the revenues of any project constructed, improved, repaired, replaced, purchased or refinanced with the proceeds of such loan. Whenever any project is a part of a system or combined system, then all or any portion of the revenues of that system or combined system may be pledged to secure repayment of a loan as determined by the commission.

Except as may be otherwise provided in subsection (2)(b), the agreement shall provide for periodic payments, the annual total of which shall not exceed the annual total for any other year of the loan by more than fifteen percent (15%). The repayment schedule shall provide for the repayment of all funds received from the revolving fund within no more than twenty (20) years and repayment of all funds received from the emergency fund within not more than ten (10) years from the date of project completion. Payments under the loan agreement shall be made prior to the payments of principal or interest on any bonds issued by the political subdivision in connection with the project or projects to which loans from the revolving fund or emergency fund are made.

The State Auditor, upon the request of the commission, shall audit the receipts and expenditures of each district whose monthly payments are to be received by the department, and if the State Auditor should find the political subdivision in arrears, the Auditor shall immediately begin withholding from funds due the taxing district in which the political subdivision is located, under Section 27-33-41, an amount equal to the payment due plus accrued interest, late charges and expenses incurred in the audit and issue a warrant for that amount to the revolving fund or emergency fund as directed below.

The loan agreement hereinabove provided for shall not be construed to prohibit any recipient from prepaying any part or all of the funds received.

(4) Loans or any bonds or other evidences of indebtedness which are incurred or issued either pursuant to this chapter or Section 31-25-1 et seq., in relation to this chapter, or pursuant to any other law as evidence of any loan made or indebtedness incurred pursuant to this chapter, shall not be deemed indebtedness within the meaning specified in Section 21-33-303, with regard to cities or incorporated towns, in Section 19-9-5, with regard to counties, and in any other state law establishing a similar indebtedness limitation with regard to political subdivisions other than cities, incorporated towns and counties.

(5) Notwithstanding any provision of this section, Section 1 of this act shall apply to the repayment of a loan made to any political subdivision that is located in the area of the state composed of the six (6) most southern counties of the state covered by the Presidential Declaration of Major Disaster for the State of Mississippi (FEMA-1604-DR) dated August 29, 2005.

SECTION 5. Section 49-17-89, Mississippi Code of 1972, is brought forward as follows:

49-17-89. (1) Political subdivisions are hereby authorized to borrow monies under the provisions of this act, to issue municipal securities to evidence such loans, and to enter into such other agreements necessary for such loans and municipal securities on such terms and conditions as such political subdivisions shall deem necessary and advisable.

(2) In connection with the issuance of municipal securities by political subdivisions to evidence loans under the provisions of this chapter and as may be required by Section 31-25-1 et seq., the following provisions shall specifically apply:

(a) No notice of intent to issue municipal securities as may otherwise be required by state law shall be required.

(b) The governing body of the political subdivision shall adopt such resolutions as may be necessary to borrow monies under this chapter, to issue and sell municipal securities to evidence such loans, and to approve and authorize the execution of any agreements related thereto.

(d) Such loans and municipal securities shall not be deemed general obligations.

(e) Such municipal securities shall be sold only to evidence the repayment of a loan under this chapter and may be sold at such price or prices, in such form, and subject to such terms and conditions of issue, redemption and maturity, rate of interest and time of payment of interest as otherwise provided for a loan under this chapter.

(f) A political subdivision may pay all expenses, premiums, fees and commissions which it may deem necessary and advantageous in connection with any loan and the issuance and sale of municipal securities under this chapter.

(g) Municipal securities issued under this chapter need not be validated as provided in Section 31-13-1 et seq.

(h) This section shall be deemed to provide an additional, alternate and complete method for the doing of the things authorized hereby and shall be deemed and construed to be supplemental to any provisions of any other laws and not in derogation of any such provisions. In connection with the issuance of municipal securities under this chapter, a political subdivision shall not be required to comply with the provisions of any other law except as provided herein.

SECTION 6. This act shall take effect and be in force from and after its passage.