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OREGON BUSINESS DEVELOPMENT DEPARTMENT

 

DIVISION 165

RECOVERY ZONE BONDS

123-165-0010

Purpose and Objectives

The Oregon Business Development Department allocates, reallocates and otherwise manages Oregon’s Recovery Zone Economic Development Bonding authority and Recovery Zone Facility Bonding authority. These rules are promulgated under authority granted by enacted 2009 Legislative Session HB 3199, Section 12 (4) and Section 12 (7)(a)–(c).

Stat. Auth.: ORS 286A.630 & 285A.075
Stats. Implemented: ORS 286A.630(4) & 285A.075
Hist.: OBDD 3-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10; OBDD 16-2010, f. 4-30-10, cert. ef. 5-1-10

123-165-0020

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, unless the context requires otherwise the following definitions apply:

(1) "Allocation" means an original allocation or reallocation of recovery zone bond volume cap.

(2) "ARRA" means the American Recovery and Reinvestment Act of 2009, H.R. 1, as amended.

(3) "Code" means the Internal Revenue Code of 1986, as amended.

(4) "Notice" means Notice 2009-50, published by the U.S. Treasury Department on June 12, 2009.

(5) "Notice of Intent" means a notice of intent to issue Recovery Zone Bonds on a form provided by the Department, which shall include the following:

(a) Name of Recipient receiving Allocation,

(b) Name of unit of local government that will issue the Recovery Zone Bonds,

(c) Type of Recovery Zone Bonds to be issued,

(d) Description of area designated as Recovery Zone,

(e) Description of project to be financed,

(f) Dollar amount of the bond issue and amount of Allocation to be used and amount of Allocation (if any) remaining after such issuanc,e

(g) Any Reallocation requested by the Recipient for the project,

(h) If applicable, that the Recipient does not intend to use some or all of its Allocation, and is waiving such Allocation (or if less than all, the portion of Allocation being waived). In connection with any such waiver, the Recipient may designate a project being undertaken by another unit of local government within the jurisdiction using Recovery Zone Bonds, and request that the waived Allocation be reallocated to such unit of local government in connection with such project.

(i) Such other information as may be prescribed by the Department.

(6) “Original allocation” means the initial authorization for units of local government to issue Recovery Zone Facility Bonds or Recovery Zone Economic Development Bonds pursuant to ARRA. Oregon received $155,175,000 in Allocation for Recovery Zone Facility Bonds and $103,450,000 in Allocation for Recovery Zone Economic Development Bonds for 2009 and 2010; the original allocations awarded to counties and municipalities in the State are found in the Notice.

(7) “Originally awarded locality” means a city or county that received an original allocation of recovery zone economic development bond or recovery zone facility bond authority.

(8) "Reallocation" or “Reallocate” means an action by the department to allocate waived Recovery Zone Facility or Recovery Zone Economic Development Bonds volume cap to an eligible unit of local government.

(9) "Recipient" means any unit of local government that received an original allocation or reallocation.

(10) "Recovery Zone" means any area within the jurisdiction of the Recipient, designated as a "recovery zone" in accordance with Code Section 1400U-1(b) by the Internal Revenue Service or local determination in compliance with the Code.

(11) "Recovery Zone Bonds" means Recovery Zone Economic Development Bonds and Recovery Zone Facility Bond. authorized under Section 1401 of Title I of Subtitle B of the American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, 123 Stat. 115 (2009), that may be issued by states, counties, certain municipalities and other qualified issuers within each state before January 1, 2011.

(12) "Recovery Zone Economic Development Bonds" means Recovery Zone Economic Development Bonds issued pursuant to Code Section 1400U-2, which in general are governmental bonds issued by a qualified issuer for economic development purposes (as defined in Code Section 1400U-2) that provide for a refundable tax credit paid to the issuer of the bonds in an amount equal to 45% of the taxable interest payable to investors in such bonds.

(13) "Recovery Zone Facility Bonds" means Recovery Zone Facility Bonds issued pursuant to Code Section 1400U-3, which in general are a type of private activity, exempt facility bond that permit financing of recovery zone property (as defined in Code Section 1400U-3) for use in any trade or business other than certain prohibited businesses enumerated in Section 1400U-3(c)(2).

(14) "Volume cap" or “Cap” means the recovery zone bond volume limitation allocated to each state and to counties and municipalities within each state in accordance with Code Section 1400U-1.

Stat. Auth.: ORS 286A.630 & 285A.075
Stats. Implemented: ORS 286A.630(4) & 285A.075
Hist.: OBDD 3-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10; OBDD 16-2010, f. 4-30-10, cert. ef. 5-1-10

123-165-0030

Use of Original Allocation and Reallocation

(1) For the purposes of recovery zone economic development bond and recovery zone facility bond allocations, a recipient of an original allocation may use its allocation or designate other issuing localities within the jurisdiction of the originally awarded locality to use all or a portion of its original allocation by any procedure mutually acceptable to both parties subject to federal requirements.

(2) An originally awarded locality that intends to use its original allocation or intends to designate another issuer within the jurisdiction of the originally awarded locality to use the original allocation must file a Notice of Intent form by March 1, 2010 with supporting documentation.

(3) An originally awarded locality that has used the Notice of Intent form to express its intent to use or designate another issuer within the jurisdiction to use its original allocation may amend the Notice of Intent at a later time if it is determined that the locality is unable to use its original allocation in the manner previously stated or has decided to waive all or part of the original allocation for reallocation by the state pursuant to subsection (6) below.

(4) An originally awarded locality intending to use its original allocation and has filed a Notice of Intent pursuant to subsection (2) above must provide the department with project information and supporting documents by April 16, 2010 that shows substantial progress. Supporting documents include bond counsel and underwriter statement of intent documents and a certified copy of a resolution of the governing body of the recipient designating a recovery zone and stating its intent to use its original allocation. A recipient may request a time extension if filed by April 16, 2010.

(5) If an originally awarded locality is not able to or chooses not to use all or a portion of its original allocation or does not offer all or a portion of the original allocation to another issuer within the jurisdiction of the originally awarded locality, the original allocation may be waived. In cases where original allocation is not used, federal code provisions and U.S. Department of Treasury guidance in IRS Notice 2009-50 allow original allocations to be waived by the recipient and then used by the state or reallocated by the state to other issuing localities. The department, as authorized in statute, has accepted the reallocation role on behalf of the state. Waived recovery zone economic development bond or recovery zone facility bond authority may be used by the state or reallocated by the department to other issuing localities.

(6) Any recipient of original allocation or reallocation may affirmatively waive all or a portion of its allocation to the state pursuant to the following procedure:

(a) Submitting an appropriately completed Notice of Intent form; and

(b) The form must be signed by the official(s) of the recipient authorized to execute the form pursuant to a resolution waiving the allocation adopted by the recipient’s governing body.

(7) If a recipient of original allocation or reallocation has not provided the department with the Notice of Intent to subsection (2) above or supporting documentation pursuant to subsection (4) above or subsection (12) below the department may issue a Notice of Intent to Reallocate, informing the recipient of the department’s intent to deem the allocation to have been waived to the state and to make such allocation available to reallocate to another locality or use by the state.

(8) A recipient will have fifteen calendar days from receipt of a Notice of Intent to Reallocate to respond to the department with the required documentation or to ask the department to reconsider its waiver determination.

(9) The department will respond to the request to reconsider its waiver determination within ten business days with a decision by the department director or the director’s designee to grant an extended time in which the issuing jurisdiction must demonstrate substantial progress toward a recovery zone economic development bond or recovery zone facility bond issuance, or a decision to go forward with the waiver of the allocation. The length of the time of the extension shall be determined at the discretion of the department.

(10) Any local government issuer may request a reallocation of recovery zone facility bonds and/or recovery zone economic development bonds authority by submitting a department supplied Recovery Zone Bonds Request for Reallocation form to the department. The department will acknowledge the request within five business days and provide a determination on the reallocation of cap within fifteen business days of the acknowledgement.

(11) The department will notify a recipient of its determination to award reallocation of volume cap in writing in a Reallocation Award Letter.

(12) A recipient of reallocated cap must provide the department with project information and supporting documents within 45 days of the date of the Reallocation Award Letter, or sooner if required by the department, that shows substantial progress. Supporting documents include bond counsel and underwriter statement of intent documents and a certified copy of a resolution of the governing body of the recipient designating a recovery zone and stating its intent to use its allocation.

(13) The department will carry out continual review of the use of recovery zone facility bonds and/or recovery zone economic development bonds authority to determine if original allocations as well as reallocations were used or are likely to be used before year end. To the extent recovery zone bond authority is identified to not be used, a final reallocation will occur late in 2010 for any bonding projects in the state meeting the code qualifications.

(14) Following the issuance of any recovery zone bond, the issuer of such bond shall promptly deliver a copy of the report required to be filed with the Internal Revenue Service (e.g. the Form 8038 for recovery zone facility bonds and the Form 8038G for recovery zone economic development bonds) to the department. The department will maintain a list of all recovery zone bonds issued and all allocations used, waived, and available for full or partial reallocation.

Stat. Auth.: ORS 286A.630 & 285A.075
Stats. Implemented: ORS 286A.630(4) & 285A.075
Hist.: OBDD 3-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10; OBDD 16-2010, f. 4-30-10, cert. ef. 5-1-10

123-165-0040

Criteria for Reallocation Award of Recovery Zone Economic Development Bonds Cap

In accordance with the intent of the code and state priorities, the following criteria will be used to prioritize reallocation requests by the department:

(1) The relative level of economic distress in the local community.

(2) The number of citizens benefiting from the project.

(3) The estimated positive economic, health, or environmental impact of the project on the local community, region, and state.

(4) The number of jobs created or retained by the project as can be best estimated.

(5) Whether the availability of the reallocation is a crucial part of attracting a new company or keeping an existing company in place;

(6) Whether the requested reallocation will benefit a project for which a recipient or other unit of local government is issuing recovery zone bonds;

(7) Whether the requested reallocation will benefit a project that was designated by a recipient in connection with a previous waiver of its allocation.

(8) The readiness of the project to proceed including consideration for the likelihood that the issuer will use the allocation within the timelines.

(9) The amount of other public and private funding leveraged by the recovery zone economic development bond allocation.

(10) The amount of local community support for the project, other agency support, and the degree the project supports efficient use of resources.

Stat. Auth.: ORS 286A.630 & 285A.075
Stats. Implemented: ORS 286A.6304 & 285A.075
Hist.: OBDD 3-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10; OBDD 16-2010, f. 4-30-10, cert. ef. 5-1-10

123-165-0045

Criteria for Reallocation Award of Recovery Zone Facility Bonds Cap

In accordance with the intent of the code and state priorities, the following criteria will be used to prioritize reallocation requests by the department:

(1) The relative level of economic distress in the local community.

(2) The number of citizens benefiting from the project.

(3) The estimated positive economic impact of the project on the local community, region and state.

(4) The number of jobs created or retained by the project as can be best estimated.

(5) Whether the availability of the reallocation is a crucial part of attracting a new company or keeping an existing company in place;

(6) Whether the requested reallocation will benefit a project for which a recipient or other unit of local government is issuing recovery zone bonds;

(7) Whether the requested reallocation will benefit a project that was designated by a recipient in connection with a previous waiver of its allocation.

(8) The readiness of the project to proceed including consideration for the likelihood that the issuer will use the allocation within the timelines.

(9) The amount of other public and private funding leveraged by the recovery zone facility bond allocation.

(10) The amount of local community support for the project, other agency support, and the degree the project supports efficient use of resources.

Stat. Auth.: ORS 286A.630 & 285A.075
Stats. Implemented: ORS 286A.6304 & 285A.075
Hist.: OBDD 3-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10; OBDD 16-2010, f. 4-30-10, cert. ef. 5-1-10

123-165-0050

Rule Waiver

The director may waive any non-statutory requirements of OAR chapter 123, division 165 if it is demonstrated such a waiver will further the goals and objectives of the program.

Stat. Auth.: ORS 286A.630 & 285A.075
Stats. Implemented: ORS 285A.075
Hist.: OBDD 3-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10; OBDD 16-2010, f. 4-30-10, cert. ef. 5-1-10

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