La. Admin. Code tit. 13 § III-115

Current through Register Vol. 50, No. 11, November 20, 2024

Section III-115 - General Award Provisions

A. These provisions shall be applicable to all awards (whether grants or loans) under this program. All agreements shall demonstrate the intent of the company, LED, LEDC and (if a sponsored project) the public entity, to enter into the award agreement.

1. Award Agreement. After an award has been approved, a written award agreement, contract or cooperative endeavor agreement will be executed between LEDC, acting through LED, the company or business enterprise and (if a sponsored project) the public entity receiving the award. The agreement will specify the amount of the award; the terms and conditions of any award; a promise to pay or to repay any award in the event of default by the awardee; the performance objectives, obligations and requirements the company and the public entity (if any) will be required to meet; and the compliance requirements to be enforced in exchange for state assistance, including but not limited to, time lines for investment, for performance, for job retention and/or creation, as well as the compensation or payroll amounts or levels for such jobs. Under the agreement, the public entity (if any) will oversee the progress of the project and the performance of the company. In a sponsored project, LED or LEDC will disburse funds to the public entity in a manner determined by the LED or LEDC staff. In an unsponsored project, LED or LEDC will disburse funds to the company in a manner determined by the LED or LEDC staff.

2. Interest. As determined by the LEDC Board in its discretion, after considering the recommendations of the Secretary and/or the LED or LEDC staff, or by the staff of LED or LEDC in the absence of a determination by the LEDC board, any award either may or may not require the payment of interest.

a. Award Interest. If interest is to be paid on the award, the rate of interest shall not be less than the then current U.S. Government Treasury security rate that coincides with the term or time period of the award at the time of the award approval, nor more than 2.5 percent above such treasury security rate, as determined by the LEDC board or by the LED or LEDC staff. The award may be repaid in cash payments as hereinafter provided, and may also be repaid by allowing performance credits to be appropriately applied against the unpaid or uncredited balance of the award in an amount determined by the LEDC Board or by the LED or LEDC staff. Performance credits, may include jobs credits, payroll credits or jobs/payroll credits, earned by the awardee through the performance of its required obligations during the term of the award agreement; and in the event such credits are utilized and earned, any interest due may also be waived, all as determined by the LEDC board or by the LED or LEDC staff.

b. Default Interest. Interest payable after default may be at a higher rate, but not to exceed 12 percent per annum, from the date of default, if that date can be determined, or otherwise from the date of the discovery of the default, at a rate determined by the LEDC board or by the LED or LEDC staff.

3. Repayment. The award agreement may provide for the repayment of such awarded funds on a stated date, or within a stated time, in annual installments or on demand, as determined by the LEDC board in its discretion, considering the recommendations of the secretary and/or the staff of LED or LEDC as to such repayment terms, or by the staff of LED or LEDC in the absence of a determination by the LEDC board. If necessary and appropriate, a repayment term may be structured with a balloon payment at the end of the last year of the term of the repayment obligation; however, refinancing of the balloon payment will not be permitted.

4. Collateral Ratio. In connection with unsponsored projects, for the purposes of establishing an acceptable award to value (AtV) ratio for collateral in connection with any awards, or a loan to value (LtV) ratio for collateral in connection with loan awards, the applicant must present to the LED or LEDC staff a current appraisal of the property, improvements or other items being funded or being offered as collateral, or its documented purchase price. After the award or loan request has been approved and the value of the property, improvements or other items to be funded or used as collateral has been substantiated, the LED or LEDC staff will determine the eligible AtV or LtV based on the criteria established by the LED or LEDC staff and these rules. The LED or LEDC staff shall have the discretion and ability to reduce the AtV or LtV based on the applicant's financial ability to repay the award or the loan. If the LED or LEDC staff determines the applicant is financially unable to meet a predetermined debt service coverage ratio of 1.25 to 1 (1.25:

1), the award amount or the loan amount shall be reduced in order that the AtV or the LtV may be reduced accordingly to meet the required debt service coverage ratio.

5. Security Interest. When appropriate, and if required by the LEDC board in its discretion, considering the recommendations of the secretary and/or the staff of LED or LEDC as to such security interest, or by the staff of LED or LEDC in the absence of a determination by the LEDC board, the awardee shall execute an appropriate security instrument or document providing the LEDC and/or LED a security interest in either the funded movable and/or immovable property or any other property or assets of the awardee offered as security for the award as the LEDC Board or the LED or LEDC staff shall deem appropriate in the circumstances considering the project and the specific interests and properties relating thereto; such security instrument or document to contain all appropriate, usual, customary, and generally accepted Louisiana security provisions.

6. Financed Lease. When appropriate, and if required by the LEDC board in its discretion, considering the recommendations of the secretary and/or the staff of LED or LEDC as to such security interest, or by the staff of LED or LEDC in the absence of a determination by the LEDC Board, the awardee shall execute an appropriate financed lease for the purpose of financing and providing security for the award as the LEDC board or the LED or LEDC staff shall deem appropriate in the circumstances considering the project and the specific interests and properties relating thereto; such financed lease to contain all appropriate, usual, customary, and generally accepted Louisiana lease and security provisions.

7. Examination/Audit of Books, Records and Accounts. LED, LEDC and the state shall retain and shall have the right to examine/audit all appropriate books, records and accounts of the awardee relating to the project at any reasonable time and from time to time, as well as such books, records and assets of any and all guarantors of the obligations of the awardee.

8. Guaranties. Should the circumstances warrant, and if required by the LEDC Board in its discretion, considering the recommendations of the secretary and/or the staff of LED or LEDC as to the need for any such guaranty, a guaranty of an awardee's obligations to pay or repay the award proceeds or any part thereof, and/or a guaranty or guaranties of a company's obligations to perform any or all of its performance requirements or obligations under the award agreement, shall be required from any appropriate person, persons, company, companies, business enterprise, or any public entity, sponsoring entity or governmental authority.

9. Execution of Documents. If an awardee does not execute the appropriate documentation which has been prepared by the staff of LED or LEDC for the award transaction within 60 days after the completed documentation has been forwarded to the awardee, in the LEDC board's discretion the awardee shall be required to appear before the LEDC board to explain the delay, and the LEDC board shall have the right to reconsider the award, and may either withdraw the award or grant an extension of time to the awardee. In the event the awardee does not execute the documentation within the additional time extended to it, the LEDC board, in its discretion, may reconsider and withdraw the award.

10. Funding.

a. Eligible project costs may include costs related to the acquisition, improvement, design, location, construction and/or installation of assets and other improvements, including, but not limited to, the following:

i. site (land) and/or buildings;

ii. engineering and architectural expenses related to the project;

iii. site preparation;

iv. construction, renovation and/or rebuilding expenses; and/or

v. building materials;

vi. and only with regard to unsponsored projects, real estate fees and/or commissions paid in connection with the acquisition or leasing of land, buildings and/or office space for the location of the business operation;

vii. and again, only with regard to unsponsored projects, purchases or rebuilding of capital machinery and/or equipment that has been approved by the LEDC Board, in its discretion, considering the recommendations of the secretary and/or the staff of LED or LEDC . If any such machinery and/or equipment to be financed by the award is not to be located on property owned by the awardee, the owners, lessors and lessees of such private or public property shall each execute an appropriate written lien waiver or release allowing representatives of LED or LEDC to enter upon such private or public property and remove therefrom any or all of such machinery and/or equipment at any time either the LED or LEDC staff shall determine such to be in its security interests to do so.

b. Project costs ineligible for award funds include, but are not limited to:

i. recurrent expenses associated with the project (e.g., operation and maintenance costs);

ii. company moving expenses;

iii. expenses already approved for funding through the general appropriations bill, or for cash approved through the capital outlay bill, or approved for funding through the state's capital outlay process for which the Division of Administration and the Bond Commission have already approved a line of credit and the sale of bonds;

iv. refinancing of existing debt, public or private;

v. only with regard to sponsored projects, costs related to furniture, fixtures, computers, consumables, machinery, equipment, transportation equipment, rolling stock or movable equipment;

vi. and again, only with regard to sponsored projects, improvements to privately-owned property, unless provisions are included in the project for the transfer of ownership to a public or quasi-public entity; and

vii. only with regard to unsponsored projects, purchases or rebuilding of capital machinery and/or equipment that has not been approved by the LEDC board, in its discretion, considering the recommendations of the secretary and/or the staff of LED or LEDC.

11. Loan Participation. If and when appropriate, LED or LEDC, as the originator, may share a part or portion of a loan award, with another lender or other lenders, whereby the participant or participants may provide a portion of the loan award funds or may purchase a portion of the loan award; or LED or LEDC, as a participant, may share in a part or portion of a loan originated by another lender or other lenders, by providing a portion of the loan funds or by purchasing a portion of the loan; in either of which cases the participant or participants shall share in the proceeds of the loan repayments and interest income, and an appropriate loan participation agreement shall be executed between the lenders designating the shares of the parties, outlining the various rights and responsibilities of the parties, providing for the servicing and/or collecting of the indebtedness, providing for the payment of any fees and reimbursement of any expenses of the servicing party, and containing the usual and customary provisions of such sgreements.

B. Allocation of Amount for Awards. Following the state's appropriation of funds for each fiscal year, the board of directors of LEDC, considering the recommendations of the secretary and/or the staff of LED or LEDC, shall allocate, and may revise from time to time, the amount of such funds available for awards.

1. For all EDAP awards, matching funds shall be a consideration; and

a. the portion of the total project costs financed by the award may not exceed:

i. 90 percent for projects located in parishes with per capita personal income below the median for all parishes; or

ii. 75 percent for projects in parishes with unemployment rates above the statewide average; or

iii. 50 percent for all other projects.

b. other state funds cannot be used as the match for EDAP funds;

c. all monitoring will be done by the staff of LED or LEDC and/or their regional representatives. Expenditures for monitoring or fiscal agents may be deducted from such awards, in the discretion of the LEDC board, considering the recommendations of the secretary and/or the staff of LED or LEDC as to such deductions;

d. the award amount shall not exceed 25 percent of the total funds allocated to the Economic Development Award Program during a fiscal year, plus any rollover funds from the previous year, unless the project creates in excess of 200 jobs, or creates an annual payroll in excess of $3.1 million;

e. the LEDC board of directors, in its discretion, considering the recommendations of the secretary and/or the staff of LED or LEDC, may limit the amount of awards to effect the best allocation of resources based upon the number of projects requiring funding and the availability of program funds.

2. Resources shall be allocated by the board of directors of LEDC, in its discretion, considering the recommendations of the secretary and/or the staff of LED or LEDC, in order to effect the best allocation of resources, based upon the number of projects anticipated to require similar funding and the availability of program funds.

C. Conditions for Disbursement of Funds

1. With regard to sponsored projects, award funds will be disbursed to the sponsoring entity, and with regard to unsponsored projects, award funds will be disbursed to the awardee/company. Award funds will be available for disbursement as needed, on a reimbursement basis in accordance with the award agreement following submission of required documentation to LED or LEDC from the sponsoring entity and/or the awardee/company, as the case may be. After the achievement of conditions required by the award agreement before the advancement of funds will be permitted, funding disbursements or advances of award funds may be made to the awardee at any time during the term of the award agreement, either before, at the same time as, or after other performance requirements or objectives have been accomplished or performance credits have been earned by the awardee.

2. Program Funding Source

a. If the program is funded through the state's general appropriations bill, only funds spent on the project after the approval of the award by the LEDC Board of Directors will be considered eligible for reimbursement.

b. If the program is funded through a capital outlay bill, eligible expenses cannot be incurred until a cooperative endeavor agreement (contract) has been agreed upon, signed and executed.

3. Award funds will not be available for disbursement until:

a. LED or LEDC receives signed commitments by the project's other financing sources (public and/or private);

b. LED or LEDC receives signed confirmation that all technical studies or other analyses (e.g., environmental or engineering studies), and licenses or permits needed prior to the start of the project have been completed, issued and/or obtained, in the event such are required in connection with the project; and

c. all other closing conditions specified in the award agreement have been satisfied.

4. Awardees will be eligible for the advancement of award funds on an as-needed reimbursement basis, with requests for such funds supplemented with copies of invoices or appropriate documentation showing the use of the funds, after the achievement of any, all or substantially all of the conditions required by the award agreement before the advancement of funds can be made have been met, achieved, performed or completed. After the awardee has met or achieved such conditions, or performed or completed or substantially performed or substantially completed the conditions required by the award agreement before the advancement of funds can be made, the award amount may be disbursed to the awardee as provided in the paragraphs below after the staff of LED or LEDC or its designee has determined, or, if deemed to be appropriate by the staff, inspects the project, circumstances or documentation to assure that all or substantially all of the conditions required by the award agreement before the advancement of funds can be made have been met, achieved, performed or completed. Such conditions shall be considered substantially met, substantially performed or substantially completed when the LED or LEDC staff has determined, in its discretion, that the benefits to the state or results anticipated or expected as a result of the conditions to be performed have been achieved, even though 100 percent of all stated conditions of the award agreement may not have been fully met or achieved.

5. After the conditions required by the award agreement have been met, achieved or satisfactorily performed or completed as provided above, and in the event the award is intended to fund one or more purchases, all award funds (100 percent) needed to fund the purchase price shall be available for disbursement or reimbursement following the completion of each of the respective purchases and appropriate inspections of the project by the LED or LEDC staff, or following the receipt and the LED or LEDC staff approval of copies of appropriate invoices or sales describing the items or improvements purchased.

6. After the conditions required by the loan award agreement have been met, achieved or satisfactorily performed or completed as provided above, awardees will be eligible for disbursement or reimbursement of other award funds for the performance of tasks, work or construction projects at 90 percent of the award amount until all or substantially all of the tasks or work required by the award agreement have been performed or completed. Ten percent of the amount of the award shall be held as a "retainage" until the completion or the substantial completion of such work. After the awardee has performed or completed or substantially performed or substantially completed the tasks or work required by the award agreement, the final 10 percent "retainage" of the award amount will be paid after the LED or LEDC staff or its designee inspects the project to assure that all or substantially all of the tasks or work required by the award agreement have been performed or completed. Such tasks or work shall be considered substantially performed or substantially completed when the LED or LEDC staff has determined that the benefits to the state anticipated or expected as a result of the project, tasks or work performed have been achieved, even though 100 percent of all stated objectives of the award agreement may not have been fully achieved.

D. Compliance Requirements

1. Companies and public entities shall be required to submit progress reports, describing the progress toward the achievement of performance objectives, obligations and requirements specified in the award agreement. Progress reports by a public entity and/or a company shall include a review and certification of a company's award repayment record, if appropriate, the company's hiring records and the extent of a company's compliance with contract employment commitments, including the number of jobs created, retained and/or maintained, and the compensation or payroll amounts or levels achieved and maintained. Copies of the company's Louisiana Workforce Commission (LWC) ES-4 Forms (quarterly report of wages paid) filed by the company may be required to be submitted with periodic progress reports or as otherwise requested by the LED or LEDC staff to support the company's reported progress toward the achievement of performance objectives, job creation, employment and compensation or payroll level requirements. Further, the public entity shall oversee the timely submission of reporting requirements of the company to LED or LEDC.

2. Award agreements will contain "clawback" or refund provisions to protect the state in the event of a default. In the event a company or public entity fails to timely start or to proceed with and/or complete its project, or fails to timely meet its performance objectives and/or any job creation or employment requirements, including but not limited to the retention or creation of the number of jobs or the achieving or maintaining of compensation or payroll amounts or levels within the time and for the term agreed, as specified in its award agreement with LED and LEDC; if the awardee/company ceases its operations, reduces its employment numbers or payroll amounts or levels to less than the required amounts; if the awardee/company transfers ownership of the company (or substantially all of its assets) to an entity that is not approved by the state; any such acts, omissions or failures shall constitute a default under the award agreement, and LED and LEDC shall retain all rights to withhold award funds, modify the terms and conditions of the award, and to reclaim disbursed funds from the company and/or public entity in an amount commensurate with the scope of the unmet performance objectives and the foregone benefits to the state. Reclamation shall not begin unless the LED or LEDC staff has determined, after an analysis of the benefits of the project to the state and the unmet performance objectives, that the state has not satisfactorily or adequately recouped its costs through the benefits provided by the project.

3. In the event an applicant, a company, public entity, awardee or other party to an award agreement knowingly files a false statement in its application or in a progress report or other filing, the applicant, company, public entity, awardee or other party to an award agreement and/or their representatives may be guilty of the offense of filing false public records, and may be subject to the penalty provided for in R.S. 14:133. In the event an applicant, company, public entity, awardee or other party to an award agreement is reasonably believed to have filed a false statement in its application, a progress report or any other filing, LED and/or LEDC is authorized to notify the district attorney of East Baton Rouge Parish, Louisiana, and may also notify any other appropriate law enforcement official or personnel, so that an appropriate investigation may be undertaken with respect to the false statement and the application of state funds to the project.

4. LED and LEDC shall retain the right to require and/or conduct, at any reasonable time and from time to time, financial and performance audits of a company, public entity, or guarantor, and its project, including all relevant accounts, records and documents of the company, the public entity and/or the guarantor.

La. Admin. Code tit. 13, § III-115

Promulgated by the Department of Economic Development, Economic Development Corporation, LR 23:38 (January 1997), amended by the Department of Economic Development, Office of the Secretary, LR 23:1640 (December 1997), LR 25:239 (February 1999), LR 26:238 (February 2000), amended by the Department of Economic Development, Office of Business Development, Louisiana Economic Development Corporation, LR 29:864 (June 2003), LR 31:905 (April 2005), LR 35:874 (May 2009), amended by the Department of Economic Development, Office of the Secretary, Office of Business Development and the Louisiana Economic Development Corporation, LR 40:269 (February 2014).

AUTHORITY NOTE: Promulgated in accordance with R.S. 36:104, 36:108, 51:2302, 51:2312, and 51:2341, et seq.