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The Oregon Administrative Rules contain OARs filed through March 15, 2014
 
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HOUSING AND COMMUNITY SERVICES DEPARTMENT

 

DIVISION 35

PASS-THROUGH REVENUE BOND
FINANCING PROGRAM

813-035-0005

Purpose and Objectives

The rules of OAR chapter 813, division 035, are established to administer and enforce ORS 456.515 through 456.720, and specifically 456.615 through 456.720. These rules implement the Pass-Through Revenue Bond Financing Program, which has an objective of providing funds to finance the construction, rehabilitation and acquisition of multi-unit housing in the State of Oregon for persons and families of lower income, while providing sufficient safeguards to protect the financial interest of the state. Other objectives of the Program include providing for additional flexibility in the Department's overall financial loan structuring, and providing an efficient process for simplifying underwriting, approval and Project monitoring so as to accommodate pass-through revenue bond financing.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.555 & 456.625
Hist.: OHCS 1-2000(Temp), f. 6-8-00, cert. ef. 6-8-00 thru 12-4-00; OHCS 3-2000, f. & cert. ef. 9-15-00; OHCS 1-2007, f. & cert. ef. 1-11-07

813-035-0011

Definitions

(1) All terms are used in OAR chapter 813, division 035, as defined in the Act, and as provided in OAR 813-005-0005 and herein.

(2) As used in these rules, unless the context indicates otherwise:

(a) "Bond Documents" means the Trust Indenture, the Loan Agreement, the Regulatory Agreement, Operating Agreement and related documents executed by one or more of the parties to the financing and development of the Project, including without limitation the Department, the Borrower, and the Trustee.

(b) "Borrower" or "Sponsor" means that legal entity to which bond proceeds are loaned. While the term "Borrower" generally is used in this Division, it and "Sponsor" are used interchangeably in Department rules, statutes, and documents

(c) "Operating Agreement" means the Operating Agreement and Declaration of Restrictive Covenants and Equitable Servitude executed by one or more of the parties to the financing and development of the Project, including without limitation the Department and the Borrower.

(d) "Project" means the project site and all buildings, structures, fixtures, equipment and other improvements now or later constructed or located upon the project site.

(e) "Pass-Through Revenue Bond Financing Program" or "Program" means the Program established pursuant to this division 035.

(f) "Private Placement" with respect to municipal securities, a negotiated sale in which the new issue securities are sold directly to institutional or private investors rather than through a Public Offering. The offer and sale of the securities by the issuer is directly to one or more investors, rather than through an underwriter.

(g) "Public Offering" as used in this Division means any offering of bonds by the Department to finance Project(s) other than a private placement with a single financial institution.

(h) "Transferee" means the person, or entity, to whom the Borrower sells, transfers to or disposes of the Project or any portion therof (other than by leasing or renting for individual tenant use.)

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.620, 456.645 & 456.675
Hist.: OHCS 1-2000(Temp), f. 6-8-00, cert. ef. 6-8-00 thru 12-4-00; OHCS 3-2000, f. & cert. ef. 9-15-00; OHCS 1-2007, f. & cert. ef. 1-11-07

813-035-0016

Standard Underwriting Criteria

In reviewing any Project financing application for approval, the Department and the State Housing Council, in addition to requirements elsewhere stated in the Program rules, may consider factors including but not limited to the following:

(1) The location of the Project site, including its proximity to transportation, shopping, social, commercial and recreational facilities, medical services, and such other facilities and services as may best serve the prospective residents.

(2) Availability of street, sewer, water, utilities and other public services.

(3) Availability of public transportation.

(4) Financial feasibility of the Project, including any relevant commercial or other elements as they may impact Project viability.

(5) Architectural design, including aesthetic quality, soundness of construction, energy efficiency, and suitability to the needs of the residents to be served.

(6) Compliance with land use regulations.

(7) Market demand in the area.

(8) The financial strength, credit reputation and history of the Borrower.

(9) The experience of the developer, contractors, architects, consultants and management agent in developing, constructing and operating housing Projects.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.625 & 456.666
Hist.: OHCS 1-2000(Temp), f. 6-8-00, cert. ef. 6-8-00 thru 12-4-00; OHCS 3-2000, f. & cert. ef. 9-15-00; OHCS 1-2007, f. & cert. ef. 1-11-07

813-035-0018

Investment Grade Bonds

The Department has responsibility for several Department bond programs and its Publicly Offered bonds normally must be of investment grade credit quality. Private Placement bonds need only address the purchaser's investment grade interests. To ensure investment grade credit quality for its Publicly Offered bonds or other financing funds, the Department may require that Borrower and its participating institution provide an appropriate credit enhancement device that will secure the bonds in a manner that will result in investment grade credit quality. Any exceptions to this investment grade credit quality standard will only be at the Department's sole determination and must be appropriately supported and documented.

Stat Auth: ORS 456.559 & 456.625
Stats. Implemented: ORS 456.620, 456.645 & 456.675
Hist.: OHCS 1-2000(Temp), f. 6-8-00, cert. ef. 6-8-00 thru 12-4-00; OHCS 3-2000, f. & cert. ef. 9-15-00; OHCS 1-2007, f. & cert. ef. 1-11-07

813-035-0021

Financing Commitments and Charges

(1) The Department may finance Projects pursuant to written Commitments made to eligible Borrowers.

(2) Projects may be financed directly with proceeds from the issuance of Bonds or other available funds obtained by the Department. The Department may establish charges and interest rates for financing Projects based upon factors including but not limited to the following:

(a) The cost of borrowing through Bond issuance; and

(b) Other funds required to carry out the Program.

(3) The Borrower shall comply with all provisions of the Program and the Act.

(4) The Department may take appropriate enforcement action in accordance with the Commitment and other Project documents, or as otherwise available at law.

(5) The Department may finance Projects in such order, as in the sole judgment of the Department, best achieves the purposes of the Program and the Act.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650 \
Stats. Implemented: ORS 456.515 - 456.720
Hist.: OHCS 1-2000(Temp), f. 6-8-00, cert. ef. 6-8-00 thru 12-4-00; OHCS 3-2000, f. & cert. ef. 9-15-00; OHCS 1-2007, f. & cert. ef. 1-11-07

813-035-0029

Transfer of Ownership

(1) Except for transfers in connection with refinancing of the Bond by or through the Department and/or low income housing tax credits provided by the State, the parties agree that during the term of the Department's Operating Agreement, if the Borrower sells, transfers or otherwise disposes of any interest in the Project or any portion thereof (other than by leasing or renting for individual tenant use as contemplated in the application for financing) without obtaining the prior written consent of the Department, an event of default shall occur under the terms of the Operating Agreement and Bond Documents and the remedies provided in said documents may be exercised by the Department, the trustee or otherwise. The Department's consent shall not be unreasonably withheld or delayed, but may be conditioned upon one or more of the following:

(a) The execution of transfer, assumption and modification documents satisfactory to the Department;

(b) Reasonable evidence satisfactory to the Department that the Borrower is not then in default beyond any applicable grace period or cure period;

(c) An opinion of counsel for the Transferee, delivered to the Department and trustee, to the effect that the Transferee has assumed in writing and in full all duties and obligations of the Borrower under the Operating Agreement and Bond Documents, and that the Operating Agreement and the Bond Documents constitute legal, valid and binding obligations of the Transferee;

(d) An opinion of bond counsel to the effect that the sale, transfer or disposition of the Project or any portion thereof will not adversely affect the exclusion of the interest on the Bond from the gross income of the bondowners and will not adversely affect the award of low-income housing tax credits to the Project, and;

(e) Such other conditions which reasonably may be imposed by the Department or the trustee to assure compliance with federal or stte law, including but not limited to the Borrower providing the Department with current financial information with respect to the Transferee and a full description of such Transferee's and its principal's experience in real property development and management.

(2) A transfer of ownership means a sale, conveyance or other transfer of:

(a) Any interest of a general partner;

(b) Any interest in a joint venture;

(c) More than 25 percent of the limited partner's interest;

(d) More than 10 percent of a corporate or a limited liability company owner's interest; or

(e) Any individual interest when the ownership is not a limited partnership, general partnership, joint venture, limited liability company, or corporation.

(3) The Department may require a transfer application charge from owners of projects that receive financing through the Department, who request the Department's approval of a change in Project ownership.

(4) The Department may assess a transfer review charge to Project owners and transferees who effect a change in project ownership without prior written approval by the Department.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.620, 456.645 & 456.675
Hist.: OHCS 1-2000(Temp), f. 6-8-00, cert. ef. 6-8-00 thru 12-4-00; OHCS 3-2000, f. & cert. ef. 9-15-00; OHCS 1-2007, f. & cert. ef. 1-11-07

813-035-0032

Approved Borrowers

(1) Any person or appropriate legal entity may apply to become a Borrower.

(2) In evaluating the capacity of a prospective Borrower to develop, own, maintain and manage a Project, the Department may require, review and use any documents, credit reports, financial statements, or other information consistent with the provisions of the Equal Credit Opportunity Act as it may relate to the Department.

(3) Production of information to the Department by the Borrower or prospective Borrower shall be at the Borrower's own cost and shall be without cost or liability to the Department.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.555 & 456.625
Hist.: OHCS 1-2000(Temp), f. 6-8-00, cert. ef. 6-8-00 thru 12-4-00; OHCS 3-2000, f. & cert. ef. 9-15-00

813-035-0033

Project Financing

(1) To be eligible for Project financing, a prospective Borrower shall comply with the terms contained in the State Housing Council approval, the Project financing documents, and other Program or Department requirements.

(2) Program financing may not exceed that portion of the Project's appraised value appropriate to prudent underwriting, as determined by the lender and reviewed by the Department.

(3) Program financing may have a final maturity of not more than 40 years from the date of its making unless allowed by law, and shall be secured by a first lien deed of trust granted by the Borrower, or others as appropriate, in the Project and other property securing the loan.

(4) Program financing may provide financing for Projects to be newly constructed or to be acquired and substantially rehabilitated.

(5) Project documents, including all Loan Documents, must be in form and substance as approved or required by the Department at its sole discretion.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.555 & 456.625
Hist.: OHCS 1-2000(Temp), f. 6-8-00, cert. ef. 6-8-00 thru 12-4-00; OHCS 3-2000, f. & cert. ef. 9-15-00; OHCS 1-2007, f. & cert. ef. 1-11-07

813-035-0036

Eligible Projects

(1) The Department shall evaluate each Project for consistency with sound architectural and planning principles and underwriting standards.

(2) This Department evaluation may include, but is not limited to the following:

(a) Site; location; market demand; financial feasibility; qualifications of general contractor, management agent, and developer; appraisal; financial strength and credit worthiness of the prospective Borrower; management plan; final architectural package; prospective Borrower's organizational documents; title report; and any other information the Department may prescribe;

(b) If subject to a Federal Housing Assistance Payments contract, whether or not the Project complies with any standards required by the U.S. Department of Housing and Urban Development (HUD);

(c) Whether or not the Project meets all applicable state and local land use and zoning requirements, housing codes, and similar requirements;

(d) Whether or not the Project is located in the State of Oregon; and

(e) Whether or not the Project meets all applicable laws and other Program requirements.

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

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.555 & 456.625
Hist.: OHCS 1-2000(Temp), f. 6-8-00, cert. ef. 6-8-00 thru 12-4-00; OHCS 3-2000, f. & cert. ef. 9-15-00; OHCS 1-2007, f. & cert. ef. 1-11-07

813-035-0040

Resident Eligibility and Occupancy

(1) To be eligible to occupy a Project, a Person or household shall:

(a) Be a Resident of the state.

(b) Have an annualized gross household income that does not exceed the limit established by the Department from time to time in compliance with the Act, and the limits of Section 142(d)(1) of the Code, if applicable.

(c) The project shall conform to the maximum income requirement of ORS 456.620(4). With the approval of the council, establish maximum household income limits for all or a portion of the units in housing projects, housing developments or other residential housing financed in whole or in part by the department. A maximum of one-third of the units in a housing Project, housing development or other residential housing financed by the department may be rented to households with an income level exceeding 120 percent of the median family income level, as determined by the department. If the income level in any unit exceeds 120 percent of the median family income, the department shall, to the extent practicable, require that the Project, development or other housing financed by the department has a percentage of low income units that is higher than the minimum percentages established in 456.120(19) for Projects financed by local housing authorities or income limitations that are lower than the limits described in 455.120(19) or a combination thereof.

(d) Relating specifically to acquisition/rehabilitation projects only, where tenants already reside in the project, the Department, at its sole discretion, may allow up to a one (1) year grace period for implementation of the standards identified in subsection (c) above in order to reduce the impact of displacement for over-income residents.

(2) Rental of units shall not violate the Fair Housing provisions of the 1968 Civil Rights Act or other applicable provision of state or federal law.

(3) Lower-income Persons or households residing in the Project shall have equal access to and enjoyment of all common facilities of the Project.

(4) The Borrower shall accept as residents in compliance with Section 8 programs, lower-income Persons or households who are holders of certificates for federal housing assistance payments pursuant to Section 8 of the United States Housing Act of 1937 or a successor federal program, on the same basis as all other prospective residents. The Borrower shall not apply resident selection criteria to such Section 8 certificate holders which are more burdensome than the criteria applied to any other prospective resident.

(5) The Borrower shall conduct timely annual income certifications of residents to the Department's satisfaction to assure compliance with the income requirements of the Program.

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

Stat. Auth.: ORS 456.559 & 456.625
Stats. Implemented: ORS 456.620, 456.645 & 456.675
Hist.: OHCS 1-2000(Temp), f. 6-8-00, cert. ef. 6-8-00 thru 12-4-00; OHCS 2-2000(Temp), f. & cert. ef. 9-15-2000 thru 3-13-01; OHCS 3-2000, f. & cert. ef. 9-15-00; OHCS 1-2001, f. & cert. ef. 2-15-01; OHCS 1-2007, f. & cert. ef. 1-11-07

813-035-0045

Inspections and Audits

(1) The Department will have the ability to conduct, and Borrowers shall cooperate fully with the Department in accomplishing, such physical inspections of the Project(s) as the Department may from time to time require.

(2) Borrowers shall provide annual audited financial reports and such other information and documents concerning the Project as the Department from time to time may require, and in form and substance satisfactory to the Department at its sole discretion.

(3) The purposes of inspections, audited financial reports and other requested information may include, but are not limited to reviews of tenant occupancy income verification procedures and documents, maintenance and reserves compliance verification, and financial management of the Project.

(4) The Borrower shall at all times manage the Project so as to comply with Program requirements, the terms of the Project documents and all applicable laws.

Stat. Auth.: ORS 456.559 & 456.625
Stats. Implemented: ORS 456.620, 456.645 & 456.675
Hist.: OHCS 1-2000(Temp), f. 6-8-00, cert. ef. 6-8-00 thru 12-4-00; OHCS 3-2000, f. & cert. ef. 9-15-00; OHCS 1-2007, f. & cert. ef. 1-11-07

813-035-0051

Loan Security

Notwithstanding any other representation or provision contained in the Program rules or otherwise, financing funds shall not be disbursed for the Project loan until:

(1) Fully executed Bond Documents, or other adequate instrument as required by the Department fully secures the Project.

(2) The Borrower and other necessary parties have executed all Project documents required by the Department at its sole discretion.

(3) The Borrower and other necessary parties have satisfied all program financing conditions contained , as well as the requirement for assuring investment grade credit quality bond-financing for the Project as determined by the Department at its sole discretion.

Stat. Auth.: ORS 90.800 - 90.840, 91.886, 183, 456.515 - 456.723 & 458.210 - 458.650
Stats. Implemented: ORS 456.555 & 456.625
Hist.: OHCS 1-2000(Temp), f. 6-8-00, cert. ef. 6-8-00 thru 12-4-00; OHCS 3-2000, f. & cert. ef. 9-15-00; OHCS 1-2007, f. & cert. ef. 1-11-07

813-035-0070

Waiver

The Department may waive or modify any requirements of OAR 813, division 060, unless such waiver or modification would violate applicable federal or state statutes or regulations.

Stat. Auth.: ORS 456.515 - 456.720
Stats. Implemented: ORS 456.555
Hist.: OHCS 1-2007, f. & cert. ef. 1-11-07

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