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Oregon Bulletin

February 1, 2012

 

Oregon Business Development Department
Chapter 123

Rule Caption: These Capital Access Program rules are amending definitions, reporting and loan eligibility requirements.

Adm. Order No.: OBDD 9-2011(Temp)

Filed with Sec. of State: 12-19-2011

Certified to be Effective: 12-19-11 thru 6-15-12

Notice Publication Date:

Rules Amended: 123-018-0010, 123-018-0065, 123-018-0140

Subject: On September 27, 2010 The Small Business Jobs Act (Congressional HB 5297) was signed into law. One component of the Small Business Jobs Act was the creation of the State Small Business Credit Initiative (SSBCI). SSBCI will support at least $15 billion in small business lending by strengthening state small business programs that leverage private-sector lenders to extend additional credit. $1.5 billion has been allocated to provide capitalization for existing state loan and loan guarantee programs. As a result of the bill, Oregon has been allocated more than $16.5 million for the purpose of providing capitalization to state managed business finance programs (revolving loan programs, forgivable loan programs, loan guarantee programs, capital access programs and venture capital
programs).

      The primary deliverable associated with the SSBCI program will be to demonstrate a 10:1 public/private leverage ratio. As a result, by December 31, 2016, to comply with the terms and intent of the program will need to demonstrate that over $165 million in private financing (debt and equity) result from the $16.5 million investment in the Business Finance programs outlined in the application. As a result, the Capital Access Program was identified as a fund to receive capitalization.

      In order to begin enrolling new loans using the SSBCI funds which will help Oregon begin to meet the $165 million private leverage requirement associated with the SSBCI funds, these rules have been amended to reflect the program changes and restrictions associated with the federal funding.

Rules Coordinator: Mindee Sublette—(503) 986-0036

123-018-0010

Definitions

For the purposes of these rules additional definitions may be found in Procedural Rules, OAR 123-001 as used in this division of administrative rules, the following definitions apply, unless the context requires otherwise:

(1) “Agreement” means a contract between a Financial Institution and the Department authorizing the Financial Institution to participate in the Program as required under ORS 285B.113.

(2) “Borrower” means a Qualified Business, including but not limited to a corporation, partnership, limited liability company, joint venture, sole proprietorship, cooperative, or non-profit corporation, that has received a Qualified Loan from a Participating Financial Institution. The borrower, or any principal of the borrower, may not be an executive officer, director, or principal shareholder of the financial institution lender; a member of the immediate family of such executive officer, director or principal shareholder; or a related interest to any of the above. The terms “executive officer”, “director”, “principal shareholder”, “immediate family”, and “related interest” are described in 12 C.F.R. part 215.

(3) “Brownfield” means any real property where expansion or redevelopment is complicated by actual or perceived environmental contamination.

(4) “Department” means the State of Oregon Business Development Department under ORS Chapter 285A.

(5) “Distressed Area” means a geographic area so designated as described in division 024 of these administrative rules.

(6) “Enrolled Loan” means a Qualified Loan enrolled in the Program as described in OAR 123-018-0080, including but not limited to a term loan or line of credit.

(7) “Environmental action” on a brownfield(s) means activities undertaken to:

(a) Determine if a release has occurred, or may occur, if the release or potential release poses a significant threat to human health or the environment, or if additional remedial actions may be required at the site;

(b) Conduct a remedial investigation and a feasibility study;

(c) Plan for remedial action or removal; or

(d) Conduct a remedial action or removal action at a site.

(8) “Fund” means the Capital Access Fund in the State Treasury under ORS 285B.109.

(9) “Loss” means any principal amount due and not paid, accrued interest due and not paid, and actual and necessary, documented out-of-pocket collection expenses at the time the Participating Financial Institution determines, in a manner consistent with its standard lending and loan loss criteria and normal method for making such determinations, that an Enrolled Loan is uncollectible and is to be charged off as a loss. The amount of principal and interest included in the Loss shall not exceed the principal amount of the Enrolled Loan, plus accrued and unpaid interest on covered principal amount from the date the Qualified Loan is made.

(10) “Loss Reserve Account” means an account in the State Treasury or any Financial Institution that is established and maintained by the Department for the benefit of a Financial Institution participating in Program.

(11) “Participating Financial Institution” means a Financial Institution that has executed an Agreement with the Department to participate in the Program, has enrolled one or more qualified loans, and has adequate capacity, as determined by the Department, to underwrite and monitor business-purpose loans.

(12) “Primary Economic Effect” means the majority of economic benefit resulting from a business activity. A business’s Primary Economic Effect is in a particular geographic location if either at least 51 percent of the business’s total revenues are generated, or at least 51 percent of the business’s total jobs are created or retained, in that location.

(13) “Principal” in regards to a Borrower is defined as:

(a) If a sole proprietorship, the proprietor;

(b) If a partnership, each managing partner and each partner who is a natural person and holds a twenty percent (20%) or more ownership interest in the partnership; and

(c) If a corporation, limited liability company, association or a development company, each director, each of the five most highly compensated executives or officers of the entity, and each natural person who is a direct or indirect holder of twenty percent (20%) or more of the ownership stock or stock equivalent of the entity.

(14) “Principal” in regards to a Lender is defined as:

(a) If a sole proprietorship, the proprietor;

(b) If a partnership, each partner; and

(c) If a corporation, limited liability company, association or a development company, each director, each of the five most highly compensated executives, officers or employees of the entity, and each direct or indirect holder of twenty percent (20%) or more of the ownership stock or stock equivalent of the entity.

(15) “Program” means the Capital Access Program authorized by ORS 285B.109 to 285B.119.

(16) “Qualified Business” means any person, conducting business for profit or not for profit, which is authorized to conduct business in the State of Oregon.

(17) “Qualified Loan” means a loan or portion of a loan made by a Participating Financial Institution to a Qualified Business for any business activity that has its Primary Economic Effect in Oregon. The term does not include a loan or portion of a loan used for any of the following purposes:

(a) The purchase of owner-occupied residential housing or for the construction, improvement, or purchase of residential housing that is owned or to be owned by the Borrower;

(b) The purchase of real property that is intended for resale or not used for the business operations of the Borrower;

(c) Refinance of the balance of an existing loan that is not an Enrolled Loan. Any portion of the loan used for a qualified purpose (i.e., that is in excess of the balance of an existing loan that is not an Enrolled Loan) may be eligible to be enrolled.

(d) The purchase of securities;

(e) Lobbying activities;

(f) Repayment of delinquent federal or state income taxes unless the Borrower has a payment plan in place with the relevant taxing authority;

(g) Repayment of taxes held in trust or escrow;

(h) Reimbursement of funds owed to any owner, including any equity injection or injection of capital for the business’ continuance;

(i) Purchase of any portion of the ownership interest of any owner of the business; or

(j) Refinance of any portion of a loan enrolled in another state or federal credit enhancement or credit insurance program. The term also does not include a loan where any Principal of the Borrower has been convicted of a sex offense against a minor as such terms are defined in section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. 16911).

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 285A.075, 285B.115(3) & 285B.117(4)

Stats. Implemented: ORS 285B.109 - 285B.119

Hist.: EDD 27-1990(Temp), f. & cert. ef. 10-16-90; EDD 3-1991, f. & cert. ef. 4-17-91; EDD 15-1991(Temp), f. & cert. ef. 10-31-91; EDD 11-1992, f. & cert. ef. 8-18-92; EDD 1-1994(Temp), f. & cert. ef. 1-11-94; EDD 9-1994, f. 5-27-94, cert. ef. 6-1-94; EDD 10-1997(Temp), f. & cert. ef. 10-7-97; EDD 9-1998, f. & cert. ef. 5-22-98; EDD 8-2005, f. & cert. ef. 10-24-05; EDD 8-2007(Temp), f. & cert. ef. 9-4-07 thru 2-29-08; EDD 6-2008(Temp), f. & cert. ef. 3-4-08 thru 8-1-08; EDD 22-2008, f. 7-31-08, cert. ef. 8-1-08; OBDD 13-2010, f. 4-30-10, cert. ef. 5-1-10; OBDD 9-2011(Temp), f. & cert. ef. 12-19-11 thru 6-15-12

123-018-0065

Loan Eligibility

A Participating Financial Institution may determine that a Qualified Loan is eligible for the Department to enroll in the Program if the Participating Financial Institution determines the Qualified Loan meets the following conditions:

(1) The Qualified Loan is not for a business enterprise in which a person described in section (2) of this section has a shared ownership, investment or other significant pecuniary interest; and

(2) The Qualified Loan is provided to a Borrower, who is not an executive officer, director or principal shareholder of the Participating Financial Institution, or person with comparable official capacity with or significant ownership in the Participating Financial Institution, or a member of the immediate family of such a person.

(3) The Borrower may not be:

(a) A business engaged in speculative activities that develop profits from fluctuations in price rather than through normal course of trade unless those activities are incidental to the regular activities of the business and part of a legitimate risk management strategy to guard against price fluctuations related to the regular activities of the business; or

(b) A business that earn more than half of its annual net revenue from lending activities; or

(c) A business engaged in pyramid sales, where a participant’s primary incentive is based on the sales made by an ever-increasing number of participants; or

(d) A business engaged in activities that are prohibited by federal law or applicable law in the jurisdiction where the business is located or conducted; or

(e) A business engaged in gambling enterprises, unless the business earns less than 33% of its annual net revenue from lottery sales.

Stat. Auth.: ORS 285A.075 & 285B.115(3)

Stats. Implemented: ORS 285B.115 & 285B.119

Hist.: EDD 8-2005, f. & cert. ef. 10-24-05; OBDD 9-2011(Temp), f. & cert. ef. 12-19-11 thru 6-15-12

123-018-0140

Reporting

(1) When a Loss Reserve Account is domiciled with the Participating Financial Institution, the Participating Financial Institution shall provide the Department with a monthly statement providing details of the balance and the payments and receipts activity in the Loss Reserve Account for the prior month.

(2) On or before January 15, April 15, July 15, and October 15 of each year, a Participating Financial Institution must file a quarterly report with the Department providing a complete list of Enrolled Loans and indicating the outstanding balance of each of its Enrolled Loans.

(3) When a Participating Financial Institution computes the aggregate outstanding balance of all its Enrolled Loans, it may only consider the balance of the portion of a loan enrolled in the Program.

Stat. Auth.: ORS 285A.075 & 285B.115(3)

Stats. Implemented: ORS 285B.115

Hist.: EDD 27-1990(Temp), f. & cert. ef. 10-16-90; EDD 3-1991, f. & cert. ef. 4-17-91; EDD 15-1991(Temp), f. & cert. ef. 10-31-91; EDD 11-1992, f. & cert. ef. 8-18-92; EDD 8-2005, f. & cert. ef. 10-24-05; OBDD 9-2011(Temp), f. & cert. ef. 12-19-11 thru 6-15-12

 

Rule Caption: The Special Public Works Fund rules are amended to lengthen the loan repayment period.

Adm. Order No.: OBDD 10-2011

Filed with Sec. of State: 12-30-2011

Certified to be Effective: 1-1-12

Notice Publication Date: 12-1-2011

Rules Amended: 123-042-0026, 123-042-0045

Subject: The Special Public Works Fund rules are amended to conform to HB 2069 passed in the 2011 Legislative Session. The loan repayment period has been extended from 25 years to 30 years.

Rules Coordinator: Mindee Sublette—(503) 986-0036

123-042-0026

Loan and Grant Information

(1) The moneys in the fund shall be used primarily to provide loans to municipalities for projects. Grants may be given only when loans are not feasible due to the financial need of the municipality or special circumstances of a project. The level of loan or grant funding, if any, may be determined by the authority on a case-by case-basis. The authority shall determine awards in a manner that maximizes the use of available resources and maintains the desired credit standards of the fund according to the following criteria:

(a) Amount requested;

(b) Type;

(c) Interest rate;

(d) Terms and conditions of an award. The authority may offer an alternate mix or lower amount of assistance than requested, and it may investigate and recommend other sources of funds for all or part of a proposed project.

(2) Grants:

(a) If the authority determines that a firm business commitment project meets the minimum criteria for a grant, the authority may make a further determination on the amount of the grant. The maximum grant amount is $500,000 per project or 85% of allowable project costs, whichever is less. The amount of grant will be based primarily on the number of eligible commercial and industrial jobs proposed to be created or retained with a maximum of $5,000 for each job created or retained. The maximum grant amount will be awarded only in special circumstances as described in the authority’s adopted policy.

(b) If a grant is for the acquisition and improvement of real property, the maximum grant amount shall not exceed the fair market value of the real property after the improvements have been made or the value placed on the real property and improvements on the assessment rolls, whichever is less.

(c) The authority shall receive in accordance with OAR 123 division 70 a copy of the appropriate First Source Hiring Agreement or assurance from the municipality that one will be entered into before the grant is dispersed.

(d) Not less than 60 percent of the grants awarded from the Special Public Works Fund in any biennium shall be used to provide assistance to distressed or rural areas.

(e) The authority may not expend more than $900,000 for grants or direct assistance, if any, for planning projects to municipalities in a biennium.

(f) A development project that qualifies as an eligible commercial jobs project or a firm business commitment project may be eligible to receive a grant. When making a determination to award a grant, the authority will apply prudent fiscal management of the fund in order to manage constrained funding resources. In addition to the criteria and process contained in its policies on grant and loan funding, the authority shall apply the following minimum criteria for grants:

(A) The authority’s financial analysis determines that the municipality’s borrowing capacity is insufficient to support the amount of the loan requested for the project;

(B) Jobs will be created or retained as a result of the grant being awarded; and

(C) The authority has received confirmation that the firm business commitment or the eligible commercial jobs project will not occur, or that the jobs will be lost, if the municipality does not receive a grant.

(3) Loans:

(a) Maximum loan amount for a project will be based on the authority’s financial and credit analysis of the municipality’s capacity to repay, the availability of moneys in the fund, and prudent fund management. Projects that the authority determines are not financially feasible, or loans that cannot be adequately secured, will not be funded.

(b) When the authority makes a loan to finance temporary project financing, all of the following apply:

(A) The municipality must receive an award from the authority before project construction begins

(B) The award will consist of loan only, and will not exceed the cost of the project;

(C) The repayment terms of the loan can include deferred repayment of principal and/or interest for the term of the loan.

(c) A development project may receive loan funding as follows:

(A) The initial or renegotiated term is limited to the usable life of the contracted project, or 30 years from the year of project completion, whichever is less.

(B) The interest rate on a loan will be based on market conditions for similar debt, and will be set at the time of the award.

(C) The interest rate on a state revenue bond loan will be equal to the coupon rates on the bonds. Until the state revenue bonds are sold, the municipality will pay interest on the outstanding principal balance of the loan at the rate established by the authority.

(d) The maximum loan amount per project is $10,000,000.

(e) A loan amount requiring Board approval shall be established by the Board.

(f) The loan shall be a full faith and credit obligation, which is payable from any taxes that the municipality may levy within the limitations of Article XI, Sections 11 and 11b, of the Oregon Constitution and all legally available funds of the municipality. Additional pledges of revenue or other collateral may also be required and may include, but are not limited to:

(A) Specific revenues of the municipality may also be required to be pledged as security, including revenues of the project, special assessment revenues and other collateral.

(B) If repayment of a loan substantially depends on revenues the municipality will receive from a lessee or payments from a benefiting business, the authority will assess the financial capacity of the payor, the adequacy of the security, the financial instrument(s) requiring such payments to the municipality, and any liens, pledge(s), or assignments of collateral from the payor to the municipality. The authority may require an assignment of such revenue and collateral from the municipality.

(C) If repayment of the loan substantially depends on a pledge of tax increment revenues from an urban renewal agency to the borrowing municipality, the authority’s financial analysis will extend to the financial feasibility of the projected revenues and the financial and legal adequacy of the proposed pledge of tax increment revenue.

Stat. Auth.: ORS 285B.419 & 285A.075

Stats. Implemented: ORS 285B.410 - 285B.482

Hist.: EDD 10-2006, f. & cert. ef. 11-1-06; EDD 13-2008(Temp), f. & cert. ef. 4-9-08 thru 10-5-08; EDD 31-2008, f. 10-2-08, cert. ef. 10-3-08; OBDD 41-2010, f. 11-30-10, cert. ef. 12-1-10; OBDD 10-2011, f. 12-30-11, cert. ef. 1-1-12

123-042-0045

Planning Project Eligibility, Criteria and Funding

(1) A planning project, as defined in ORS 285B.410(9), may be eligible for a loan. The authority will make awards for loans based on availability of moneys in the fund and prudent fund management as well as its financial analysis of the municipality’s ability to repay the loan;

(2) A planning project conducted for the purpose of developing industrial lands, including planning for industrial site certification, is eligible for a grant of up to $60,000 per site, per biennium or 85% of the allowable planning project cost, whichever is less. This type of planning project must meet the following criteria:

(a) The land must be zoned ‘industrial”; and

(b) The land meets marketability standards as determined by the department using its adopted policy

Stat. Auth.: ORS 285B.419 & 285A.075

Stats. Implemented: ORS 285B.410 - 285B.482

Hist.: EDD 10-2006, f. & cert. ef. 11-1-06; OBDD 41-2010, f. 11-30-10, cert. ef. 12-1-10; OBDD 10-2011, f. 12-30-11, cert. ef. 1-1-12

 

Rule Caption: These rules are being amended to correct small errors made in a former filing.

Adm. Order No.: OBDD 11-2011

Filed with Sec. of State: 12-30-2011

Certified to be Effective: 1-1-12

Notice Publication Date: 12-1-2011

Rules Amended: 123-475-0012, 123-475-0025, 123-475-0030

Subject: These rules are being amended due to small spelling errors and the addition of the word “compatible” in 123-475-0030.

Rules Coordinator: Mindee Sublette—(503) 986-0036

123-475-0012

Public Art Advisory Committee

The Oregon Arts Commission may establish a Public Art Advisory Committee consisting of two Oregon Arts Commissioners and up to seven arts professionals designated by the Oregon Arts Commission. The Oregon Arts Commission may use the Public Art Advisory Committee to make recommendations regarding general policies of the Program. The Public Art Advisory Committee will serve as a review panel for creation of a Roster of Prequalified Artists, may nominate and review artists for consideration by individual Art Selection Committees, and will serve as a review panel for Relocation or Deaccession requests. The Public Art Advisory Committee will not make selections for individual Program projects.

Stat. Auth.: ORS 359.025, 359.142

Stats. Implemented: ORS 276.073 – 276.090

Hist.: OAC 1-2010, f. 6-30-10, cert. ef. 7-1-10; Renumbered from 190-020-0012, OBDD 36-2010, f. 10-14-10, cert. ef. 11-1-10; OBDD 11-2011, f. 12-30-11, cert. ef. 1-1-12

123-475-0025

Selection Committee Procedure

(1) The Selection Committee shall meet to consider the particular needs of the Project including budget, suitable art forms, appropriate locations, and method of artist/artwork selection.

(2) The Selection Committee may use any of the following methods for selection of Works of Art for a Project:

(a) Open Competition: A prospectus will be prepared by the Oregon Arts Commission with the approval of the Selection Committee and will be made broadly available to artists. Artists will be asked to submit images or other materials to the Commission. The Selection Committee may commission new work and also may purchase available work.

(b) Two-stage competition. An open competition may occur in two stages whereby a limited number of finalists selected from the first stage of competition will be asked to submit more detailed proposals. Each of the finalists may enter into a contract with the Contracting Agency that provides for payment of a professional fee for preparation of a detailed proposal or consultation interview. The Oregon Arts Commission or Selection Committee may recommend the amount of the professional fee.

(c) Prequalified Artist Roster: The Selection Committee may interview or commission proposals from one or more artists on the Prequalified Artist Roster, or may make direction selection(s) from the Roster.

(d) Nominated Pool: The Selection Committee may designate an informal panel of arts professionals to nominate artists appropriate for consideration for the Project. The resulting pool will be reviewed by the Selection Committee.

(e) The Public Art Advisory Committee may designate an informal panel of arts professionals to nominate artists appropriate for consideration to the State of Oregon Art Collection. The resulting pool(s) may be reviewed by individual Selection Committees.

(f) Limited Competition: In cases when, in the judgment of the Oregon Arts Commission, it is not feasible to conduct an open competition for a specific Work of Art, the Oregon Arts Commission will initiate a Limited Competition by inviting several artists to submit materials to the Selection Committee. If detailed proposals or consultation interviews are requested, each artist will be paid a professional fee for preparation of the detailed proposal or consultation interview. The Oregon Arts Commission or Selection Committee may recommend the amount of the professional fee.

(g) Direct Selection: When budget constraints or construction schedules are such that the Selection Committee determines that an open competition cannot be held, Direct Selection of the artist(s) or completed work will be made by the Selection Committee.

Stat. Auth.: ORS 359.025, 359.142

Stats. Implemented: ORS 276.073-276.090

Hist.: AC 1-1979, f. & ef. 7-23-79; AC 1-1991, f. 3-22-91, cert. ef. 3-21-91; OAC 1-2010, f. 6-30-10, cert. ef. 7-1-10; Renumbered from 190-020-0025, OBDD 36-2010, f. 10-14-10, cert. ef. 11-1-10; OBDD 11-2011, f. 12-30-11, cert. ef. 1-1-12

123-475-0030

Criteria for Selecting Works of Art

(1) Style and Nature: Works of Art of any aesthetic persuasion that are compatible in scale, material, form and content with their surroundings may be considered.

(2) Diversity of the Collection: The Oregon Arts Commission seeks to encourage and maintain a diverse collection for the state, including site-specific works developed with collaboration between an artist and design team, existing works of art created by an artist and purchased for permanent installation, and, when appropriate, documented time-based works or installations.

(3) Quality: The inherent quality of the work itself will be the highest priority for selection.

(4) Media: All forms of Works of Art may be considered. Works of Art may be either portable or permanently affixed or integral to the building or structure, or part of a temporary exhibition.

(5) Permanence: Due consideration will be given to structural and surface soundness and to permanence in terms of relative protection against theft, vandalism, weathering, or excessive maintenance or repair costs.

(6) Method of Acquisition: Either existing works or those commissioned for specific Projects may be acquired.

Stat. Auth.: ORS 359.025, 359.142

Stats. Implemented: ORS 276.073 – 276.090

Hist.: AC 1-1979, f. & ef. 7-23-79; AC 1-1991, f. 3-22-91, cert. ef. 3-21-91; OAC 1-2010, f. 6-30-10, cert. ef. 7-1-10; Renumbered from 190-020-0030, OBDD 36-2010, f. 10-14-10, cert. ef. 11-1-10; OBDD 11-2011, f. 12-30-11, cert. ef. 1-1-12

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, 2011.

2.) Copyright 2012 Oregon Secretary of State: Terms and Conditions of Use

Oregon Secretary of State • 136 State Capitol • Salem, OR 97310-0722
Phone: (503) 986-1523 • Fax: (503) 986-1616 • oregon.sos@state.or.us

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