15 AAC 151.419. Construction loans

(a) The Corporation will consider involvement in construction lending for multi-family, special needs, and congregate housing only as a last alternative and if, in its opinion, the risk to the Corporation has been mitigated to the greatest degree possible.

(b) In determining the feasibility of a construction loan under this section, the Corporation will review the following:

(1) mitigating project characteristics, such as:

(A) limited land development. The Corporation will not participate in a construction loan, if in its opinion, extensive land development is involved, such as, but not limited to, installing or constructing nonresidential improvements, including water, sewer, and other utilities, roads, streets, curbs, gutters, sidewalks, storm drainage facilities, and other installations or works that are necessary to prepare the land primarily for residential housing construction;

(B) suitable land characteristics - minimal unknowns that could affect construction, such as water table depths, permafrost and wetlands;

(D) mainstream type of construction which is not on the edge of construction technology.

(2) the financial capacity of the borrower, developer, contractor and other parties, if applicable; and

(3) the experience of the borrower, developer, contractor, architect, engineer and other parties, if applicable.

(c) If the Corporation determines that involvement in a construction loan is feasible, then the extent of the Corporation's participation will be based on the following:

(1) there must be a lead lender which is acceptable to the Corporation. In determining the acceptability of the lead lender, the Corporation will consider, at a minimum, the following:

(A) its financial capacity;

(B) its experience in construction lending;

(D) its construction policies and procedures; and

(E) its regulatory limitations;

(2) the Corporation's maximum participation shall not exceed the lesser of 33% of the loan amount or $5,000,000;

(3) the Corporation's participation is either on a pro-rata basis or the last in; and

(4) lead lender's justification as to why the Corporation's participation is required and as a last alternative to assure construction of the project.

History: Eff. 10/21/98, Register 148

Authority: AS 18.56.088

AS 18.56.090

AS 18.56.099

AS 18.56.730

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