Oregon Bulletin
January 1, 2011
Rule
Caption: Procedures and standards for
administration of the Columbia River Basin Water Development Loan Program.
Adm.
Order No.: WRD 2-2010
Filed with Sec. of
State: 12-14-2010
Certified to be
Effective: 12-14-10
Notice Publication
Date: 9-1-2010
Rules Adopted: 690-095-0005, 690-095-0010, 690-095-0015, 690-095-0020,
690-095-0025, 690-095-0030, 690-095-0035, 690-095-0040, 690-095-0045,
690-095-0050, 690-095-0055, 690-095-0060, 690-095-0065, 690-095-0070,
690-095-0075, 690-095-0080, 690-095-0085, 690-095-0090, 690-095-0095,
690-095-0100
Subject: HB 3369, enacted into law by the Oregon Legislature in
2009, directs the Oregon Water Resources Commission to adopt rules establishing
standards for borrowers obtaining loans issued from the Water Development Fund.
In addition, HB 3369 establishes a separate and distinct process for certain
applicants seeking a loan from the Water Development Fund. These applicants
include qualified water developers that are not a municipality or a provider of
water for municipal purposes and that are applying for a loan to enable the
construction of a water development project in the Columbia River Basin. The
adopted rules provide procedures an establish standards for administration of a
Water Development Loan Program for applicants that are not a municipality or a
provider of water for municipal purposes and that are applying for a loan to
enable the construction of a water development project in the Columbia River
Basin in accordance with HB 3369 (Chapter 907, Oregon Laws 2009).
Rules Coordinator: Ruben Ochoa—(503) 986-0874
690-095-0005
Purpose, Statutory Authorization
(1) The Water Development Fund [Article XI-I(1),
Constitution of Oregon] provides financing for loans for the construction of water
development projects for irrigation, drainage, fish protection, watershed
restoration and municipal uses and for the acquisition of easements and rights
of way for water development projects authorized by law.
(2) These rules establish procedures and standards for
administration of the Columbia River Basin Water Development Loan Program to
provide for loans that have a high probability of repayment and are adequately
secured in the event of default. The Columbia River Basin Water Development
Loan Program implements provisions of Chapter 907, Oregon Laws 2009 related to
loans to finance water development projects in the Columbia River Basin and
various provisions of ORS Chapter 541, as amended by Chapter 907. These rules
are authorized by ORS 541.646 and ORS Chapter 183.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0010
Definitions
The words and phrases used in these rules have the
meaning given in ORS 541.600 and ORS 541.700, unless they are otherwise
specifically defined in this division.
(1) “Adequate Security” means the pledge of real or
personal property or a credit enhancement or other collateral of value
authorized by the director to secure a loan against default.
(2) “Applicant” means a qualified water developer
applying to borrow moneys through the loan program for a water development
project in the Columbia River Basin.
(3) “Application” includes all documents and forms
required by the department under these rules and pursuant to ORS 541.600 to
541.855.
(4) “Bonds” mean the State of Oregon general obligation
bonds issued under Article XI-I(1) of the Oregon Constitution to fund the loan
program.
(5) “Columbia River Basin” means the area of land
comprising the drainage areas of all river basins within Oregon that drain
directly to the Columbia River or Snake River and includes the main stem of the
Columbia River.
(6) “Commission” means the Oregon Water Resources
Commission.
(7) “Community” means an incorporated or unincorporated
town or locality with more than three service connections.
(8) “Department” means the Oregon Water Resources
Department.
(9) “Director” means the director of the Oregon Water
Resources Department or the director’s designee.
(10) “Federal Water Development Project” means any
water development project that receives funding from the federal government, or
any agency or instrumentality of the United States.
(11) “Loan” means the moneys loaned by the department
under the loan program to finance a water development project.
(12) “Loan Advisory Board” means a board appointed by
the director to review applications made under Section 20 of chapter 907,
Oregon Laws 2009 and make recommendations thereon to the director.
(13) “Loan Document” means the loan agreement, any
supplemental loan agreement, promissory note, mortgage, security agreement and
any related documents, including but not limited to any pledge of or lien
against collateral, entered into by the department and an applicant related to
a loan from the department to a borrower under the loan program, and any
documentation required by the department to change a loan’s terms and
conditions.
(14) “Loan Program” means the Columbia River Basin
Water Development Loan Program.
(15) “Provider of water for municipal purposes” means a
public body as defined in ORS 174.109, a community or a private entity whose
primary purpose is to operate a water distribution system that delivers potable
water for community needs, either to individual customers or through another
water distribution system.
(16) “Municipality” means a city as defined in ORS
174.100(2); includes any incorporated village or town.
(17) “Qualified Water Developer” means a “water
developer” as defined in ORS 541.700 that is not a municipality, a community or
a provider of water for municipal purposes.
(18) “Security Value” means the value assigned by the
department to the project or other security.
(19) “Water Development Fund” means the fund created
through the adoption of Article XI-I of the Constitution of Oregon by general
election in November, 1977, as amended.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0015
Eligibility: Applicant and Project
(1) To be eligible, an applicant must be a qualified
water developer seeking to finance a water development project in the Columbia
River Basin under the loan program.
(2) To be eligible, projects shall meet the definition
of a “water development project” as defined in ORS 541.600.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0020
Eligible Costs
The department shall determine the eligible costs
during the pre-application conference or the loan review process. Subject to
these rules, a loan may be approved to pay the “startup costs” relating to a
water development project. “Startup costs” must be allowable as capital costs
or reimbursable costs that may be financed with federally tax-exempt bonds
under the Internal Revenue Code and may include, but are not limited to:
(1) The costs of buying or otherwise acquiring,
constructing, installing, rehabilitating or reconstructing a water development
project, including site costs and acquisition of water rights relevant to the
project;
(2) The costs of obtaining a loan from the department
under these rules;
(3) Design and engineering costs;
(4) The costs to acquire licenses and permits for a
water development project;
(5) Reserves, interest costs related to construction or
interim financing;
(6) Grant matching funds or other costs of funds needed
for a water development project; and
(7) Costs for preparation of claim of beneficial use
and costs incurred up to and including obtaining applicable water right
certificates and limited licenses.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0025
Ineligible Costs
The director may not issue a loan to provide assistance
for ‘on-going’ operation or maintenance costs of a water development project. A
loan may not be used to pay any capital costs incurred prior to execution of
the loan document without prior approval of the director.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0030
Authority of Director
(1) Loans over three million dollars that meet the
statutory requirements of ORS 541.600 through 541.855 and these rules may only
be approved by the commission.
(2) The director is authorized by the commission to
approve loans under three million dollars that meet the statutory requirements
of ORS 541.600 through 541.855 and these rules; approve, deny, amend, or set
conditions of loans; establish loan interest rates; execute bond and loan
documents; and sign all loan documents.
(3) The director shall:
(a) Give a periodic written report on all loan activity
to the commission;
(b) Assess each project in consultation with the State
Department of Fish and Wildlife, the State Parks and Recreation Department, the
Department of Environmental Quality and affected tribal governments, and notify
other interested parties who may be consulted, as deemed appropriate. If a
project may affect agricultural use, the department shall also assess the
project in consultation with the State Department of Agriculture; and
(c) Take such steps as are needed to recover loan funds
and prevent their misuse, or to prevent loan funds from being diverted from the
originally approved purpose.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0035
Loan Advisory Board
(1) The director may appoint a loan advisory board to
review applications made under the loan program and pursuant to these rules
make recommendations thereon to the director. The scope of application review
shall be limited to the adequacy of security, the potential for repayment, and
economic feasibility of the project. Members shall be knowledgeable and
experienced in the fields of banking, finance, economics, or related field. The
members appointed to the board shall be subject to the approval of the commission.
(2) After its review, the loan advisory board shall
advise the director in writing and recommend the amount in which any loan
should be made. The director may accept, modify or reject the recommendation of
the loan advisory board.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0040
Application
(1) Applications for loans to fund water development
projects in the Columbia River Basin shall be filed under these rules and
pursuant to ORS 541.600 through 541.855. The terms used in the application
shall have the meanings given in these rules, ORS 541.600 and 541.700.
(2) Loan applications shall be submitted in the manner
and format and contain or be accompanied by any and all information as
prescribed by the commission and required by the department.
(3) If an application submitted under this rule lacks
any information required by the department, the department may reject the
application or require the applicant to submit additional information.
(4) It is recommended that potential applicants contact
the director for a pre-application conference prior to submitting an
application. The director or designee may give advice on a loan before an
application is submitted and may advise whether the proposed project appears to
comply with these rules, whether funds are likely to be available under the
loan program, and which costs may be eligible for financing through a loan. Any
such advice, however, does not constitute a loan approval or any other binding
commitment.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0045
Public Notice and Review Period
(1) Upon receipt of an application that the director
determines is complete in accordance with these rules, the director will
provide public notice of the application by posting it on the department
website for 60 days beginning with the date the department determines the
application is complete. The notice shall contain a summary of the application
including the names of the applicant, the location, purpose of the loan, and
other relevant information.
(2) The public may comment on the posted application by
submitting comments as directed by the department on its website. The director
need not respond to the commentator or the applicant in connection with any
submitted comments. The director will determine the weight, if any, to be given
to submitted comments in its evaluation of an application.
(3) The director shall begin review of a completed
application no later than 60 days after receiving the completed application.
The review shall comply with requirements of OAR 690-095-0050, these rules and
any other requirements made by the department, and shall be done in a timely
basis as determined by the director.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0050
Criteria for Granting a Loan
(1) Loans shall not be approved unless:
(a) The applicant demonstrates and the department finds
that the loan will comply with the
requirements of Article XI-I(1) of the Oregon Constitution,
ORS 541.600 to 541.855, and any
applicable federal and state requirement.
(b) The director determines that the applicant meets
the following standards:
(A) Demonstrated revenues or other resources available
to:
(i) Repay the loan in accordance with its terms, and
(ii) Provide for the continued operation and
maintenance of the project.
(B) Satisfactory credit history or rating from a rating
agency; or
(C) Good and sufficient collateral is available to
secure and provide repayment of the loan, and
(D) The project plan assures timely completion and
includes schedules with measurable performance benchmarks.
(c) The application requirements and qualifications are
met.
(d) The commission finds that all conditions of ORS
541.720 are met.
(2) The director, under the authority of the
commission, may issue an initial non-binding letter of intent to an applicant,
indicating a present intention to approve a loan application in a specified
amount but subject to:
(a) Receipt of certain additional and specified
information in the letter,
(b) The director’s review and approval of such
additional information, or
(c) The applicant’s receipt of any required permits or
other regulatory licenses or approvals necessary to construct or operate the
project.
(3) For application to fund a federal water development
project, the director must determine that all required federal approval for
funding and construction of the project has been obtained.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0055
Appeal Process
(1) If the director rejects an application or approves
a loan amount different than that requested by the applicant, the applicant may
file an appeal to the commission. The commission, upon making a finding, may
reverse, modify or affirm the director’s action on the application.
(2) An applicant must file a written request for an
appeal of the director’s action; the written request shall be received by the
department on or before the thirtieth (30th) day after the date of the written
notice to the applicant of the director’s action on the application.
(3) An appeal of a decision of the commission as a
final order of the agency as authorized under ORS Chapter 183.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0060
Loan Security
(1) The director shall require repayment of an approved
loan to be secured by a first priority lien or by other good and sufficient
collateral as described in ORS 541.740, as applicable to the applicant. The
director, in his or her discretion, using the information in an application and
any other information available, will determine the security value of the
collateral provided under the loan document.
(2) An applicant may demonstrate adequate security or
good and sufficient collateral if:
(a) The applicant has ad valorem taxing power that it
has exercised and pledged to secure the loan;
(b) The applicant is an individual, profit-making
partnership or corporation or non-profit corporation subject to ORS Chapter 65
whose principal income is from farming in Oregon, the loan shall be secured by
a mortgage or security agreement in the full amount of the loan and the loan
amount does not exceed 70 percent of the appraised value of the security for
the loan; or
(c) The applicant is a qualified water developer that
is not an individual, profit-making partnership or corporation or non-profit
corporation subject to ORS Chapter 65, security may include:
(A) First lien to the State of Oregon attached to the
real property of the water developer, and the user charges owed to or received
by the water developer;
(B) A lien attached to all real property whether owned
by the water developer or others, which is served by the water development
project or which is served by a water source enhanced or restored by the water
development project; or
(C) An agreement entered into by the water developer
wherein assessments, user charges or other revenue is pledged for security of
loan repayment and that such revenue shall be maintained at no less than 125
percent of the debt service on the loan.
(d) The commission determines, in consultation with the
State Treasurer, that such other good tendered as collateral by the applicant
is “sufficient” collateral to secure the loan instead of, or in addition to, a
lien.
(3) Real property used for securing the loan shall have
been appraised by a licensed appraiser, county assessor, or department
appraiser, at the discretion of the director, within six months prior to the
date of the letter of intent or if there is no letter of intent, the loan
document.
(4) Where the applicant is a water developer described
in ORS 541.700(7) (a), (b), (c) or (d), the loan shall be secured by a mortgage
or security agreement in the full amount of the loan. The mortgage or security
agreement shall be a first lien upon such real property of the water developer
as the commission shall require for adequate security. The commission, in
consultation with the State Treasurer, may accept other good and sufficient
collateral to secure a loan instead of, or in addition to, a lien.
(5) A partial release of lien may be granted by the
director upon written request of a borrower if the remaining property provides
adequate security as required by law and these rules.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0065
Interest Rates
(1) The director shall consult the State Treasurer before setting
the interest rate on a loan in order to determine that the interest rate on the
loan is sufficient to pay all costs associated with the bond issuance and
expenses incurred in issuing the bonds.
(2) If the bonds have been sold, the director will set the
interest rate paid under a loan
document at a rate that is at least equal to the interest rate
paid to bondholders and is sufficient to pay the State of Oregon for:
(a) The administrative expenses incurred by the department, the
State Treasurer and any other agency of the state in connection with the
issuance of the bonds and the loan program;
(b) Any costs related to administration of the bonds, including
but not limited to the costs of any credit enhancement for the bonds and the
establishment of the Water Development Administration and Bond Sinking Fund
reserves; and
(c) An amount to be deposited to the Water Development Fund for
the purpose of increasing the amount available for loans from that fund.
(3) If, after consultation with the State Treasurer, the director
believes that a project is unlikely to produce a net profit for the borrower,
the director may set the loan interest rate in a loan document at a level that
reduces or eliminates that portion of the loan rate above the bond interest
rate.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0070
Loan Contract
(1) The loan contract shall contain the provisions
required by Section 26(3) and (4) of chapter 907, Oregon Laws 2009, any
provisions the director considers necessary to ensure expenditure of the loan
proceeds for the purposes set forth in the approved application and any other
provisions required by law or that the director determines are necessary to
ensure timely repayment of the loan.
(2) Where the applicant is a water developer described
in ORS 541.700(7)(e) through (o), the water developer shall represent and
warrant in the loan contract that it is fully authorized to, and does, grant
the State of Oregon, the liens required under the loan program and that
granting the lien will not violate or conflict with any other agreement, pledge
or contract to which the water developer is a party, or with any decree, order
or judgment of any competent tribunal to which the water developer is subject.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0075
Conditions to Disbursement of Loan
Funds
The director shall withhold payment of funds under a
loan contract until any necessary federal and state environmental impact
approval processes have been completed for the project and any relevant approvals
and permits from any regulatory authority pertaining to the construction or
operation of the project have been obtained.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0080
Fees and Charges
(1) At the time an applicant first submits any part of
an application with the department, the applicant must pay an application fee
equal to the lesser of 0.10 percent of the requested loan amount or $2,500.
(2) The director may require the applicant to pay for
costs that exceed the initial application fee if the director determines that
the costs are incurred solely in connection with processing the application.
Before in-curring the additional costs, the director will advise the applicant
of the additional costs to be paid by the applicant.
(3) An applicant seeking a loan for a qualified water
development project that is for fish protection or for watershed enhancement
may be assessed a reduced fee as determined by the director when the applicant
first submits any part of an application with the department.
(4) In addition to any other fee or charge, the
commission may charge a loan processing fee, not to exceed one percent of the
loan amount.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0085
Issuance of Bonds
Bonds may be issued at the request of the director and
administered as provided in ORS chapter 286A and 541.780 to 541.840. Bonds may
be issued prior to and after the execution of any loan contracts entered into
with respect to the bonds.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0090
Loan Servicing
The provisions of OAR 690-090-0050 apply to loans and
loan contracts entered into under the loan program and these rules.
Stat. Auth: ORS 536.027 &
541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0095
Collection of Delinquencies
The provisions of OAR 690-090-0055 apply to loans and
loan contracts entered into under the loan program and these rules.
Stat. Auth: ORS 536.027
&541.646
Stats. Implemented: ORS 541-600 -
541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
690-095-0100
Property Management
The provisions of OAR 690-090-0060 apply to loans and
loan contracts entered into under the loan program and these rules.
Stat. Auth: ORS 536.027; ORS
541.646
Stats. Implemented: ORS
541-600-541.646
Hist.: WRD 2-2010, f. & cert.
ef. 12-14-10
Notes
1.) This online version of the OREGON BULLETIN is provided for convenience of reference and enhanced access. The official, record copy of this publication is contained in the original Administrative Orders and Rulemaking Notices filed with the Secretary of State, Archives Division. Discrepancies, if any, are satisfied in favor of the original versions. Use the OAR Revision Cumulative Index found in the Oregon Bulletin to access a numerical list of rulemaking actions after November 15, 2010.
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