Oregon Bulletin
February 1, 2011
Rule
Caption: Amends Oregon Facilities
Authority’s Rules for Approving Projects; Adds Rule Specifying Amounts for
Fees.
Adm.
Order No.: OFA 1-2011
Filed with Sec. of
State: 1-10-2011
Certified to be
Effective: 1-10-11
Notice Publication
Date: 10-1-2010
Rules Adopted: 172-005-0065
Rules Amended: 172-001-0005, 172-005-0000, 172-005-0010,
172-005-0020, 172-005-0030, 172-005-0040, 172-005-0050, 172-005-0060,
172-005-0070
Subject: The amended rules relate to OAR chapter 172, division
005, which contains the Authority’s rules for evaluating and approving projects
that qualify for tax-exempt financing. These amended rules make changes to
certain procedures followed by the Authority, including a provision allowing
the Authority to approve certain applications and approve the financing
proposed in those applications at the same meeting; add a requirements that if
bonds receive a rating of investment grade but below BBB+, the participating
institution must procure a second rating of at least investment grade; provide
that unrated bonds or bonds not receiving a rating of at least investment grade
may be sold only to “qualified institutional buyers” as defined under federal
law; allow such bonds to be sold to more than three qualified institutional
buyers; clarify that the Authority may require participating institutions to
provide indemnity and other contractual obligations for any bonds, not just
those sold in a public offering; amend the definition of “public offering”, and
expand the ability of the Authority to modify the requirements for the
financing of any low income housing project. A new rule specifies the amounts
for the application fee and closing fees; indicates that the Authority may
collect a reasonable share of its annual costs and charges in connection with
audits performed and services rendered; allows the Authority to increase fees
for transactions that involve new or complex financing structures or special
provisions; and requires the participating institution to pay fees charged by
the Authority’s bond counsel and financial advisor.
Rules Coordinator: Gwen Griffith—(503) 802-5710
172-001-0005
Model Rules of Procedure
The Model Rules of Procedure under the Administrative
Procedure Act, as promulgated by the Attorney General of the State of Oregon,
effective as of February 12, 2010, are adopted as the rules of procedure for
administrative rulemaking and other administrative law functions of the
Authority.
[ED. NOTE: The full text of the
Attorney General’s Model Rules of Procedure is available from the office of the
Attorney General or the Oregon Facilities Authority.]
Stat. Auth.: ORS 183.341(1) &
289.240(2)
Stats. Implemented: ORS 183.341
Hist.: HECF 1-1990(Temp), f. &
cert. ef. 1-30-90; HECF 3-1990, f. & cert. ef. 6-14-90; OFA 1-2011, f.
& cert. ef. 1-10-11
172-005-0000
Form of Application for Financing
Any participating institution desiring to obtain
financing for a project through the Authority shall file with the Executive
Director an application in the manner and form approved by the Authority, which
shall be accompanied by a non-refundable application fee in the amount
prescribed in OAR 172-000-0065(2). In addition to the information called for by
the application, a participating institution may be required to provide such
additional information and supporting materials concerning the participating
institution and the proposed project as the Authority or the Executive Director
deems necessary or appropriate in order to enable the request for financing to
be properly evaluated.
Stat. Auth.: ORS 289.240(2) &
289.125(1)
Stats. Implemented: ORS 289.125
Hist.: HECF 2-1990(Temp), f. &
cert. ef. 3-26-90; HECF 4-1990, f. & cert. ef. 10-4-90; OFA 1-2011, f.
& cert. ef. 1-10-11
172-005-0010
Processing of Applications
(1) Upon receipt of a substantially complete
application for financing and review thereof by the Executive Director and the
Authority’s financial advisor and bond counsel, the Executive Director shall,
at the earliest practicable time, call a meeting of the Authority by giving
notice thereof in the manner required by law, and shall place on the agenda for
the meeting such substantially complete application for consideration by the
Authority. For purposes of this section, an application shall be deemed to be
substantially complete if it contains all required information and is
accompanied by all required supporting materials other than the feasibility
study (if required), the commitment for credit enhancement (if any), the
501(c)(3) determination letter from the Internal Revenue Service and such other
items and information the absence of which, in the judgment of the Executive
Director, will not materially impair the ability of the Authority to properly
evaluate and act upon the application.
(2) The Executive Director shall cause a copy of each
application to be delivered to each member of the Authority, the Treasurer,
bond counsel and the financial adviser as soon as practicable after receipt and
review thereof by the Executive Director. In addition, within a reasonable time
prior to the meeting of the Authority at which an application is to be
considered, the Executive Director shall deliver to each member of the
Authority the Executive Director’s written summary of the proposed project and
financing and any recommendations with respect thereto.
Stat. Auth.: ORS 289.240(2) &
289.125(1)
Stats. Implemented: ORS 289.005(9)
Hist.: HECF 2-1990(Temp), f. &
cert. ef. 3-26-90; HECF 4-1990, f. & cert. ef. 10-4-90; OFA 1-2011, f.
& cert. ef. 1-10-11
172-005-0020
Consideration of Application by
the Authority
(1) At the meeting for which an application has been
placed on the agenda, the Authority shall consider whether to approve or
disapprove such application; provided that action by the Authority on an
application may be deferred to a later meeting upon the vote of a majority of
the members of the Authority. With the permission of the chairperson of the
Authority and subject to such reasonable regulation as may be imposed from time
to time by the Authority or the chairperson of the Authority, representatives
of the participating institution filing the application and members of the
public shall have the right to address the Authority, orally or in writing,
concerning the merits of the proposed project and financing plan. The Authority,
at any time while an application is pending, may in its discretion require the
participating institution filing such application to provide additional
information with respect to, or clarification of, any matter pertaining to the
application, the participating institution, the proposed project or the
financing thereof as the Authority determines to be reasonably necessary,
convenient or appropriate to the Authority’s discharge of its functions under
ORS Chapter 289 or these rules.
(2) In considering whether to approve or disapprove an
application, the Authority shall consider the extent to which the proposed
project qualifies as a “project” within the meaning of ORS 289.005 in addition
to any other factors it deems relevant, which may include any of the following:
(a) The extent to which the proposed project and the
financing plan conform to the requirements under the Internal Revenue Code for
federally tax-exempt financing or are eligible for a federal tax credit or
subsidy;
(b) The economic viability of the proposed project,
including the creditworthiness of the participating institution and credit
enhancement provider (if any), the experience of the participating institution
in constructing, equipping and operating projects of the type proposed, and the
likelihood that all amounts owing on any bonds issued to finance the proposed
project will be paid when due;
(c) The public benefits expected to be derived from the
proposed project, including the extent to which the proposed project furthers
the objectives sought to be promoted under ORS 289.005 to 289.240, and the
benefits to and impact on the community in which the project is to be located;
(d) The ability of the participating institution to
provide such information concerning itself and the proposed project as may be
necessary or appropriate in order to ensure that any bonds issued are sold on
the basis of full and complete disclosure of all material information; and
(e) The likelihood that any bonds issued can be
successfully marketed at rates of interest which will not jeopardize the
economic viability of the proposed project or the participating institution.
(3) Approval by the Authority of an application for
financing shall be by a resolution in the form provided by the Authority’s bond
counsel, but with such additional provisions, terms or conditions as the
Authority deems necessary or appropriate, which resolution shall require the
execution and delivery by the participating institution of a preliminary
agreement regarding the requested financing substantially in the form which is
attached to the resolution as an exhibit.. Upon the approval of an application
by the Authority, the Executive Director shall promptly request the Treasurer
to consider the approval or disapproval of the application. Notwithstanding the
approval of an application and regardless of whether the legal requirements and
other terms and conditions imposed are met, the approval of an application
shall not bind the Authority or the Treasurer to proceed with the requested
financing, but shall merely evidence the intent of the Authority and the
Treasurer to proceed with the financing subject always to the exercise of their
discretion to refuse to proceed. Unless extended by the Authority upon request
of the participating institution that filed the application, the financing of a
project described in an approved application must be closed within six months
of the date upon which such application is approved by the Authority; provided
that the foregoing shall not preclude a participating institution from
resubmitting an application for the financing of a project which was not closed
within such six months period (as the same may have been extended by the
Authority), but such resubmitted application shall be filed in the same manner and
accompanied by payment of the application fee required by OAR 172-005-0065(2).
(4) If an application is not approved by the Authority,
the participating institution filing such application may request that such
application be placed on the agenda for the Authority’s next regular meeting
for reconsideration.
Stat. Auth.: ORS 289.240(2) &
289.125(1)
Stats. Implemented: ORS
289.005(11), 289.010, 289.125 & 289.200
Hist.: HECF 2-1990(Temp), f. &
cert. ef. 3-26-90; HECF 4-1990, f. & cert. ef. 10-4-90; OFA 1-2011, f.
& cert. ef. 1-10-11
172-005-0030
Preliminary Agreement
Immediately following approval of an application by the
Authority and the Treasurer, the Executive Director, acting for and on behalf
of the Authority, and the participating institution filing such application
shall execute and deliver a preliminary agreement described in OAR
172-005-0020(3) that shall contain appropriate provisions, terms and conditions
concerning the requested financing, including the agreement of the
participating institution to pay costs related to the proposed financing,
whether or not the financing is closed, and the undertaking of the
participating institution to indemnify and hold harmless the State of Oregon,
the Authority, and their respective officials, members, officers, staff and
employees from and against any and all claims, losses or damages, howsoever
arising, incurred in connection with the proposed project or the financing
thereof, regardless of whether or not the financing proceeds.
Stat. Auth.: ORS 289.240(2) &
289.125(1)
Stats. Implemented: ORS 289.240(2)
& 289.125(1)
Hist.: HECF 2-1990(Temp), f. &
cert. ef. 3-26-90; HECF 4-1990, f. & cert. ef. 10-4-90; OFA 1-2011, f.
& cert. ef. 1-10-11
172-005-0040
Approval of Financing by
Authority; Issuance of Bonds; Single Meeting Approval Process
(1) Except as provided in OAR 172-005-0040(2), at such
time as the Executive Director determines that all legal and other requirements
for the issuance of bonds to finance a proposed project described in an
approved application which has not expired have been met or will be met prior
to the issuance of any bonds to finance such project, including but not limited
to the fulfillment of any terms or conditions set forth in the resolution
approving such application or the preliminary agreement pertaining thereto, the
Executive Director shall call a meeting of the Authority at the earliest
practicable time by giving notice thereof in the manner required by law, and
shall place a resolution regarding the financing of such project on the agenda
for the meeting of the Authority. Such resolution shall be in the form prepared
by bond counsel and shall be distributed by the Executive Director to the
members of the Authority prior to the meeting together with the Executive
Director’s written summary of the proposed financing and any recommendations
with respect thereto. The indenture of trust, loan or lease purchase agreement,
official statement (if any), bond purchase contract and similar operative
documents, instruments and agreements related to the proposed financing, all in
substantially final form, shall be placed on file with the Executive Director
by the participating institution prior to the time such resolution is
considered by the Authority and shall be available for inspection by members of
the public. If the Authority approves the proposed financing, the Executive
Director shall forward a certified copy of the resolution approving the
proposed financing to the Treasurer together with a written request that the
Treasurer consider authorizing the issuance of bonds for the purpose of
financing the related project.
(2) The Authority may approve certain applications and
approve the financings proposed in such applications at the same meeting,
subject to such terms and conditions as the Authority in its discretion may
impose. Approval of an application and approval of a proposed financing at the
same meeting may be appropriate for assignment and assumption transactions,
projects undertaken by participating institutions with significant experience
in the bond market, refundings of existing Authority bonds, and certain
transactions pursuant to the Authority’s Small Nonprofit Accelerated Program
(SNAP) bond issuance process. Approval shall be granted by a resolution of the
Authority in the form prepared by bond counsel, and the resolution shall be
distributed by the Executive Director to the members of the Authority prior to
the meeting together with the Executive Director’s written summary of the
proposed financing and any recommendations with respect thereto. When
available, the indenture of trust, loan or lease purchase agreement, official
statement (if any), bond purchase contract and other operative documents,
instruments and agreements related to the proposed financing, all in
substantially final form, shall be placed on file with the Executive Director
by the participating institution and shall be available for inspection by
members of the public. The Executive Director shall certify as a condition to
closing the fulfillment of any conditions or terms imposed by the Authority on
its approval of the financing. At any time after adoption of a resolution of
the Authority approving an application but before the financing is closed, the
Executive Director may for any reason, and shall, upon request by the Treasurer
or a member of the Authority, place on the agenda of a duly called meeting of
the Authority the proposed financing for additional consideration by the
Authority. If a proposed financing is placed on the agenda of a meeting of the
Authority pursuant to this OAR 172-005-0040(2), the provisions of OAR
172-005-0040(1) shall apply to the approval of the proposed financing.
Stat. Auth.: ORS 289.240(2) &
289.125(1)
Stats. Implemented: ORS
289.125(5)(c), 289.205 & 289.220
Hist.: HECF 2-1990(Temp), f. &
cert. ef. 3-26-90; HECF 4-1990, f. & cert. ef. 10-4-90; OFA 1-2011, f.
& cert. ef. 1-10-11
172-005-0050
Investment Grade Bonds; Agent for
Disclosure Purposes
(1)(a) It is the policy of the Authority that all bonds
proposed to be sold pursuant to a public offering shall have received an
investment grade rating at the time of issuance and if such investment grade
rating cannot be attained on the basis of the project or the participating
institution’s credit rating, the participating institution must procure an
appropriate credit enhancement device which will secure the bonds in a manner
that will result in an investment grade rating at the time of issuance. If
bonds proposed to be sold pursuant to a public offering receive a rating of at
least investment grade but below BBB+ by Standard & Poor’s, Baa1 by Moody’s
Investors Service or BBB+ by Fitch, the participating institution shall procure
a second rating on the bonds of at least investment grade at the time of
issuance. In addition, it is the policy of the Authority that unrated bonds or
bonds not receiving a rating of at least investment grade at the time of
issuance may not be sold pursuant to a public offering and may be sold only to
(i) a bank as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended (the “1933 Act”), or a savings and loan association or other
institution described in Section 3(a)(5)(a) of the 1933 Act or (ii) qualified
institutional buyers, as such term is defined under Rule 144A promulgated under
the 1933 Act. The Authority, in its discretion, may make exceptions to the
foregoing policy based upon such factors as it deems appropriate, which factors
shall be set forth in the record of the Authority meeting granting any such
exception.
(b) In connection with the issuance of any bonds, the
Authority may require the participating institution and the underwriter to
undertake certain contractual obligations and to provide indemnity or other
protection to the Authority, the State of Oregon and their respective members,
officials, officers and employees with respect to the requirements of federal
and state securities laws, based on the advice of bond counsel or the
Department of Justice of the State of Oregon and the established practice of
other conduit bond issuers.
(2) As used in this section “investment grade” shall
mean a rating of at least BBB- by Standard & Poor’s, Baa3 by Moody’s
Investors Service or BBB- by Fitch.
(3) As used in this section “underwriter” shall mean
any person conducting a public or other offering as managing underwriter,
senior managing underwriter, placement agent, lead financial institution in a
placement with several financial institutions or other similar role.
Stat. Auth.: ORS 289.240(2) &
289.125(1)
Stats. Implemented: ORS 289.205
Hist.: HECF 2-1990(Temp), f. &
cert. ef. 3-26-90; HECF 4-1990, f. & cert. ef. 10-4-90; OFA 1-2011, f.
& cert. ef. 1-10-11
172-005-0060
Definition of Low Income
For purposes of bonds issued to finance any housing project,
the term “low income” shall mean persons or families whose household income is
not greater than eighty percent of the median income for the relevant area in
which the project is to be located, with the relevant area to be determined by
the Authority based upon such factors as it deems appropriate. A housing
project shall be considered to be a low income housing project if, at all times
during the period commencing on the later to occur of the date of issuance of
the related bonds or the date of completion of the project and ending on the
later to occur of fifteen years following such commencement date or the date of
the final stated maturity of the bonds, not less than twenty percent of the
units in the project are occupied by, or set aside and reserved for occupancy
by, persons or families of low income (determined as of the date upon which
such persons or families first occupy such units). It is the policy of the
Authority in issuing bonds to finance low income housing projects to take such
steps as shall be reasonable to maximize the number of low income housing units
in each project without jeopardizing the economic viability of such project.
Therefore in connection with the financing of any low income housing project,
the Authority, in its discretion, may modify the requirements of this section.
Stat. Auth.: ORS 289.240(2) &
289.125(1)
Stats. Implemented: ORS 289.005(6)
Hist.: HECF 2-1990(Temp), f. &
cert. ef. 3-26-90; HECF 4-1990, f. & cert. ef. 10-4-90; OFA 1-2011, f.
& cert. ef. 1-10-11
172-005-0065
Fees
(1) The Authority shall collect the fees set forth in
OAR 172-005-0065(2) and (3) from an applicant that seeks to have a project
declared eligible for financing. The fee identified in OAR 172-005-0065(2) may
be collected even though the project has not been determined to be eligible for
financing.
(2) The Authority shall collect a $500 application fee
from the applicant.
(3) The Authority shall collect the following closing
fee:
(a) For Small Nonprofit Accelerated Program (SNAP)
bonds: 0.5% of the amount of the bond up to $600,000, plus 0.3% of the amount
of the bond in excess of $600,000.
(b) For other bonds:
(i) For bond issues up to $5,000,000, 0.3% of the
amount issued.
(ii) For bond issues between $5,000,000 and
$10,000,000, $15,000 plus 0.2% of the amount issued in excess of $5,000,000.
(iii) For bond issues between $10,000,000 and
$20,000,000, $25,000 plus 0.15% of the amount issued in excess of $10,000,000.
(iv) For bond issues over $20,000,000, $40,000 plus
0.05% of the amount issued in excess of $20,000,000.
(c) For refinancing existing Authority-related bonds,
0.05% of the amount of the Authority-related bonds refinanced
(4) Payment of the closing fee by a participating
institution shall not preclude the Authority from assessing against a
participating institution a reasonable share of the Authority’s annual costs
and charges incurred in connection with the audits performed and other services
rendered by the Secretary of State or the State Treasurer with respect to the
Authority.
(5) For transactions that involve new or complex
financing structures or special provisions,the Authority may increase any of
the fees described in this Section to be charged to a participating institution,
and any such increased fees will be stated in the resolution approving the
application.
(6) In addition to the fees described in OAR
172-005-0065 (1) through (5) above, the participating institution will be
required to pay the fees charged by or for the services of the Authority’s bond
counsel and financial advisor.
(7) If in the opinion of the Authority an amendment or
action by the Authority in regard to the terms of an existing bond series is
desirable or required, the participating institution will be required to pay
the charges imposed by the Authority and the fees charged by its bond counsel
to implement such amendment or action. From time to time the Authority may
promulgate a schedule of a fixed charges for such amendments or actions, which
charges may vary to reflect the complexity of the amendment or action or
increased costs of the Authority.
Stat. Auth: ORS 289.125(4) &
ORS 289.125(5)
Stats. Implemented: ORS 289.125(4)
& ORS 289.125(5)
Hist.: OFA 1-2011, f. & cert.
ef. 1-10-11
172-005-0070
Waiver of Requirements
Upon the recommendation of the Executive Director or at
the request of any member of the Authority, the Authority may, in its
discretion, waive any of the requirements of these administrative rules to the
extent such requirements are not otherwise imposed by law. Any such waiver
shall be by resolution of the Authority, and the resolution shall set forth the
particular circumstances which, in the judgment of the Authority, warrant such
waiver.
Stat. Auth.: ORS 289.240(2) &
289.125(1)
Stats. Implemented: ORS 289.240(2)
& 289.125(1)
Hist.: HECF 2-1990(Temp), f. &
cert. ef. 3-26-90; HECF 4-1990, f. & cert. ef. 10-4-90; OFA 1-2011, f.
& cert. ef. 1-10-11
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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