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Oregon Bulletin

February 1, 2011

 

Oregon Facilities Authority
Chapter 172

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.

2.) Copyright 2011 Oregon Secretary of State: Terms and Conditions of Use

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