SRF staff told the Tennessee Local Development Authority on Oct. 20 that a substantial number of SRF borrowers have not requested disbursements for extended periods and said staff is preparing changes to loan documents to reduce inactivity.

Ms. Jones, SRF staff, presented a “no activity” report and identified multiple borrowers with delayed draws. She said the City of Chattanooga has two loans with no recent disbursements and that some delays are tied to other funding sources such as ARP money or procurement and bidding delays. “A lot of their pause is because they're working so much to spend ARP money,” she said.

Other examples cited: Chuckey Utility District (bids under way), the City of Etowah (engineer delays but invoices forthcoming), Erwin Utilities (weather-related delays), Fayetteville (bids expected next calendar year), Northwest Dyersburg (plans and specs under regulatory review), Oak Ridge (a federal-compliance investigation resolved; pay requests recently submitted), White Pine (planning and design loans; first pay requests expected soon), Winchester (bidding delays) and Woodbury (will draw on a companion loan after finishing the initial loan).

Ms. Jones outlined proposed changes SRF staff is drafting for loan documents: penalize entities that do not submit a first draw request within six months of an executed loan; penalize entities that do not start construction within 12 months of loan execution; penalize lapses in draws of six months or more; and require entities to request disbursement at least quarterly and no more than monthly. “So we're hoping that some modification to our loan document will help us eliminate some unforced errors and ensure that we get a timely and expeditious use of those funds,” she said.

Board members did not take a vote; staff indicated the changes are being finalized to meet federal regulatory requirements and executive-order guidance. Ms. Jones said the SRF program is also finalizing new loan documents to ensure compliance with federal regulations.

No public comments were received during the meeting on this item.