(a) Loans shall be made only to local governments that:

(1) Operate a wastewater facility that is on the department's project priority ranking list established pursuant to § 68-221-804 and regulations thereunder;

(2) In the opinion of the authority, demonstrate sufficient revenues to operate and maintain the facility for its useful life and to repay the loan;

(3) Pledge security as required by the authority for repayment of the loan;

(4) Agree to adjust periodically fees and charges for services of the wastewater facility in order that loan payments and costs of the wastewater facility are timely paid; provided, however, upon determination that fees and charges are reasonable, the authority may in its discretion make a loan to a local government which is relying upon and using ad valorem taxes or other lawful sources of revenue, in addition to fees and charges, to pay timely loan payments and costs of the facility;

(5) Certify to comply with a plan of operations approved by the department regarding the quality, compensation and number of facility personnel for the life of the loan;

(6) Agree to maintain financial records in accordance with governmental accounting standards and to conduct an annual audit of the facility's financial records in accordance with generally accepted governmental auditing standards and with minimum standards prescribed by the comptroller of the treasury, and to file such audit with the comptroller. In the event of the failure or refusal of the local government to have the audit prepared, then the comptroller of the treasury may appoint an accountant or direct the department of audit to prepare the audit at the expense of the local government; and

(7) Provide such assurances as are reasonably requested by the authority and the department.

(8) [Deleted by 2017 amendment.]

(b) Loans for public purpose projects relating to privately owned, non-point sources of pollution shall not be made to a local government which pledges its credit to secure such loan except upon the assent of three fourths (¾) of the votes cast in an election of the qualified voters of the local government.

(c) A local government may use the proceeds from a loan made from the fund to provide a local match for a federal (except for EPA Title II construction grants) or state wastewater facility grant.

(d) A loan shall be made for a period of time not to exceed thirty (30) years or the design life of the wastewater facility; however, loans made with funds governed by the Clean Water Act, compiled in 33 U.S.C. § 1251 et seq., shall be for such period of time as provided in that act. For each loan, the authority shall determine the interest rate and the payment schedule for repayment of the loan.

(e) Loans shall be made only for items approved by the department.

(f) The requirements of this section with respect to “local governments” are deemed satisfied when any one (1) of the entities jointly participating in the wastewater facility being funded pursuant to the loan agreement and qualifying as a local government as provided in § 68-221-1003(7) satisfies the requirement.

(g) The comptroller of the treasury, through the department of audit, shall be responsible for determining that any audit required in this chapter is prepared in accordance with generally accepted governmental auditing standards. The comptroller of the treasury is authorized to direct the department of audit to make an audit of financial review of the books and records of the local government.