Bill Text: OR SB266 | 2013 | Regular Session | Engrossed

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relating to financing agreements; and declaring an emergency.

Sponsorship: Committee Bill

Status: (Passed) 2013-08-21 - Effective date, August 14, 2013. [SB266 Detail]

Download: Oregon-2013-SB266-Engrossed.html

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     77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session

NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .

LC 819

                           A-Engrossed

                         Senate Bill 266
                 Ordered by the Senate April 11
           Including Senate Amendments dated April 11

Printed pursuant to Senate Interim Rule 213.28 by order of the
  President of the Senate in conformance with presession filing
  rules, indicating neither advocacy nor opposition on the part
  of the President (at the request of Senate Interim Committee on
  Education and Workforce Development for Oregon University
  System)

                             SUMMARY

The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.

  Creates individualized process for Oregon University System to
enter into financing agreements.
  Declares emergency, effective July 1, 2013.

                        A BILL FOR AN ACT
Relating to financing agreements; creating new provisions;
  amending ORS 283.085, 283.087, 283.089, 286A.001 and 367.040;
  and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
  SECTION 1.  { + (1) As used in this section:
  (a) 'Available funds' means funds appropriated or otherwise
made available by the Legislative Assembly, or other lawfully
available funds, to pay amounts due under a financing agreement
for the fiscal period in which the payments are due, unexpended
proceeds of the financing agreement and reserves or other amounts
that have been deposited in trust to pay amounts due under the
financing agreement.
  (b) 'Financing agreement' means a lease purchase agreement, an
installment sale agreement, a loan agreement or any other
agreement:
  (A) To finance real or personal property that is, or will be,
owned or operated by the Oregon University System;
  (B) To finance infrastructure, including but not limited to
telecommunications systems, systems for water, sewage,
electricity, steam or natural gas and other equipment or
improvements that are necessary or appropriate to support a
facility that is, or will be, owned or operated by the Oregon
University System; or
  (C) To refinance financing agreements previously executed
pursuant to this section or under ORS 283.085 to 283.092 for the
benefit of the Oregon University System.
  (2) The Chancellor of the Oregon University System may enter
into financing agreements on terms the chancellor finds to be
advantageous to the Oregon University System if the debt service,
when combined with existing debt service that is paid from
revenues of the Oregon University System, does not exceed the
maximum allowed by State Board of Higher Education policy.
  (3) A financing agreement entered into by the Oregon University
System pursuant to this section is subject to the following
requirements:
  (a) The Oregon University System may not pay amounts due under
a financing agreement from any source other than available funds.
If available funds are not sufficient to pay amounts due under a
financing agreement, the lender may exercise property rights
granted by the Oregon University System in the financing
agreement against the property that was purchased with proceeds
of the financing agreement and may apply the amounts received to
payments scheduled to be made under the financing agreement.
  (b) The Oregon University System may not grant property rights
in property unless the property is being acquired, substantially
improved or refinanced with proceeds of a financing agreement or
the property is land on which financed improvements are located.
  (c) The State Treasurer shall review and approve, pursuant to
rules adopted by the State Treasurer, the terms and conditions of
financing agreements to be entered into by the Oregon University
System.
  (d) A financing agreement is not an obligation of any agency of
the State of Oregon, other than the Oregon University System.
  (4) Financing agreements entered into by the Oregon University
System under this section are in addition to and not in lieu of
financing agreements entered into by the Oregon Department of
Administrative Services for the benefit of the Oregon University
System under ORS 283.085 to 283.092. + }
  SECTION 2. ORS 283.087 is amended to read:
  283.087.  { + (1) + } With the approval of the State Treasurer,
the Director of the Oregon Department of Administrative Services
may enter into financing agreements in accordance with ORS
283.085 to 283.092, and may exercise the powers granted to a
related agency, as defined in ORS 286A.001, by ORS chapter 286A
for bonds in connection with those financing agreements upon
 { - such - }  terms   { - as - } the director and the treasurer
find to be advantageous to the state.
   { +  (2) + } Financing agreements   { - shall be - }
 { + are + } subject to the following limitations:
    { - (1) - }   { + (a) + }   { - Amounts payable by the state
under a financing agreement shall be limited to available funds.
In no circumstance shall the state be obligated to - }
 { + Neither the director, the State Treasurer nor any other
agency of the state may + } pay amounts due under a financing
agreement from any source other than available funds. If there
are insufficient available funds to pay amounts due under a
financing agreement, the lender may exercise any property rights
which the state has granted to it in the financing agreement,
against the property which was purchased with the proceeds of the
financing agreement, and apply the amounts so received toward
payments scheduled to be made by the state under the financing
agreement.
    { - (2) No property rights may be granted in property unless
the property is being acquired, substantially improved or
refinanced with the proceeds of a financing agreement, or is land
on which such property is located. - }
    { - (3) The principal amount of - }
   { +  (b) Neither the director, the State Treasurer nor any
other agency of the state may grant property rights in property
unless the property is being acquired, substantially improved or
refinanced with proceeds of a financing agreement or the property
is land on which financed improvements are located.

  (c)  + }Financing agreements entered into by the state pursuant
to ORS 283.085 to 283.092   { - shall be treated as an amount of
bonds and is - }   { + are + } subject to ORS 286A.035.
    { - (4) - }   { + (3) + } The limitations of subsection
 { - (3) - }   { + (2)(c) + } of this section   { - shall - }
 { + do + } not apply to financing agreements   { - which are - }
used to refinance previously executed financing agreements. The
expenditure of funds used to finance previously executed
financing agreements   { - and - }   { + or to + } pay the costs
incurred to issue the new financing agreements   { - shall - }
 { + must + } be recorded using administrative budget
limitations.
    { - (5) - }   { + (4) + } The state or any state agency
 { - shall - }   { + may + } not enter into financing agreements
under any provision of law other than ORS 283.085 to 283.092 if
the principal amount of the financing agreement  { - , together
with - }   { + and + } the principal amount of any financing
agreement previously issued by the state or a state agency for
the same project  { - , - }  exceeds $100,000.
    { - (6) - }   { + (5) + } Upon the request and with the
approval of the Chief Justice of the Supreme Court or the State
Court Administrator, the Director of the Oregon Department of
Administrative Services may enter into financing agreements in
accordance with ORS 283.085 to 283.092, on behalf of the Judicial
Department.
  SECTION 3. ORS 283.085 is amended to read:
  283.085. As used in ORS 283.085 to 283.092:
  (1) 'Available funds' means funds appropriated or otherwise
made available by the Legislative Assembly to pay amounts due
under a financing agreement for the fiscal period in which the
payments are due,   { - together with any - }  unexpended
proceeds of the financing agreement  { - , and any - }
 { + and + } reserves or other amounts
  { - which - }   { + that + } have been deposited in trust to
pay amounts due under the financing agreement.
  (2) 'Credit enhancement agreement' means any agreement or
contractual relationship between the state and any bank, trust
company, insurance company, surety bonding company, pension fund
or other financial institution providing additional credit on or
security for a financing agreement or certificates of
participation authorized by ORS 283.085 to 283.092.
    { - (3) 'Director' means the Director of the Oregon
Department of Administrative Services. - }
    { - (4)(a) - }   { + (3) + } 'Financing agreement' means a
lease purchase agreement, an installment sale agreement, a loan
agreement or any other agreement:
    { - (A) - }   { + (a) + } To finance real or personal
property that is or will be owned and operated by the state or
any of its agencies;
    { - (B) - }   { + (b) + } To finance infrastructure { + ,
including but not limited to telecommunications systems, systems
for water, sewage, electricity, steam or natural gas and other
equipment or improvements that are necessary or appropriate to
support + }   { - related to - }  a facility that is { + , or
will be, + } owned   { - and - }   { + or + } operated by the
state;
    { - (C) - }   { + (c) + } To finance infrastructure
components that are { + , or will be, + } owned or operated by a
local government agency of this state if the Director  { + of the
Oregon Department of Administrative Services + } determines that
financing the infrastructure   { - will facilitate - }
 { + facilitates + } the construction or operation of an adult or
juvenile corrections facility or a public safety training
facility owned   { - and - }  { +  or + } operated by the state
or any of its agencies;

    { - (D) - }   { + (d) + } To finance all or a portion of the
state's pension liabilities for retirement, health care or
disability benefits, in an amount that produces net proceeds that
do not exceed the State Treasurer's estimate of those liabilities
based on information provided to the State Treasurer by the
Public Employees Retirement System; or
    { - (E) - }   { + (e) + } To refinance previously executed
financing agreements.
    { - (b) As used in this subsection, 'infrastructure'
includes, but is not limited to, sewer and water systems and road
improvements. - }
   { +  (4) 'Financing costs' means costs or expenses that the
Director of the Oregon Department of Administrative Services or
the State Treasurer determines are necessary or desirable in
connection with entering into financing agreements and
maintaining the certificate of participation program, including
but not limited to payment of:
  (a) Amounts due under financing agreements;
  (b) Costs and obligations the director, the State Treasurer or
any other agency of the state incurs in connection with the
exercise of a power granted by ORS 283.085 to 283.092; and
  (c) Amounts due in connection with the investment of proceeds
of financing agreements. + }
  (5) 'Personal property' means tangible personal property,
software and fixtures.
  (6) 'Property rights' means, with respect to personal property,
the rights of a secured party under ORS chapter 79, and, with
respect to real property, the rights of a trustee or lender under
a lease authorized by ORS 283.089 (1)(e).
  (7) 'Software' means software and training and maintenance
contracts related to the operation of computing equipment.
  (8) 'Treasurer' means the State Treasurer.
  SECTION 4. ORS 283.089 is amended to read:
  283.089. (1) With the approval of the State Treasurer, the
Director of the Oregon Department of Administrative Services may:
  (a) Enter into agreements with trustees to hold financing
agreement proceeds, payments and reserves as security for
lenders, and to issue certificates of participation in the right
to receive payments due from the state under a financing
agreement.  { + The trustee shall invest + } amounts held
 { - with a trustee shall be invested - }  by the trustee at the
direction of the State Treasurer.  Interest earned on any
investments held by a trustee as security for a financing
agreement   { - may - } , at the option of the director,  { +
may + } be credited to the accounts held by the trustee and
applied in payment of sums due under a financing agreement.
  (b) Enter into credit enhancement agreements for financing
agreements or certificates of participation, provided that
 { - such - }  { + amounts due under + } credit enhancement
agreements   { - shall be - }   { + are + } payable solely from
available funds and amounts received from the exercise of
property rights granted under   { - such - }   { + the + }
financing agreements.
  (c) Use the gross proceeds of financing agreements for the
purposes described in ORS 283.085   { - (4) - }   { + (3) + } and
to pay the costs of reserves, credit enhancements and other costs
associated with issuing, administering and maintaining the
financing.
  (d) Use a single financing agreement to finance property to be
used by multiple state agencies.
  (e) Subject to ORS 283.087 (2) { + (b) + }, grant leases of
real property with a trustee or lender.   { - Such - }
 { + The + } leases may be for a term   { - which - }
 { + that + } ends on the date on which all amounts due under a
financing agreement have been paid or provision for payment has
been made, or 10 years after the last scheduled payment under a
financing agreement, whichever is later.   { - Such - }
 { + The + } leases may grant the trustee or lender the right to
evict the state and exclude it from possession of the real
property for the term of the lease if the state fails to pay when
due the amounts scheduled to be paid under a financing agreement
or otherwise defaults under a financing agreement. Upon default,
the trustee or lender may sublease the   { - land - }   { + real
property + } to third parties and apply any rentals toward
payments scheduled to be made under a financing agreement.
  (f) Subject to ORS 283.087 (2) { + (b) + }, grant security
interests in personal property to trustees or lenders.
 { - Such - }   { + The + } security interests   { - shall - }
attach and   { - be - }   { + are + } perfected on the date the
state takes possession of the personal property, or the date the
lender advances money under a financing agreement, whichever is
later. A security interest authorized by this section   { - shall
have - }  { + has + } priority over all other liens and claims.
Upon default, the secured party   { - shall have - }
 { + has + } the rights and remedies available to a secured party
under ORS chapter 79 for a first, perfected security interest in
goods and fixtures.   { - No later than - }   { + Within + } 10
days after a security interest authorized by this section
attaches, the state shall cause a financing statement for the
security interest to be filed with the Secretary of State in the
same manner as financing statements are filed for goods
 { - ; - }  { + . + } However, failure to file   { - such a
statement shall - }   { + the statement does + } not affect the
perfection of the security interest.
  (g) Pledge for the benefit of trustees and lenders any amounts
 { - which - }   { + that + } are deposited with a trustee in
accordance with a financing agreement. The pledge   { - shall
be - }   { + is + } valid and binding from the time it is made
 { - , the amounts so pledged shall immediately be - }  { + .
Amounts pledged are + } subject to the lien of the pledge
 { + immediately + } without filing, physical delivery or other
act  { - , and - }  { + . + } The lien of the pledge   { - shall
be - }   { + is + } superior to all other claims and liens of any
kind whatsoever.
  (h) Bill any state agency that benefits from a financing
agreement for an appropriate share of the financing costs on a
monthly or other periodic basis, and deposit payments received in
connection with the billings with a trustee as security for a
financing agreement. Any state agency receiving such a bill shall
pay the amounts billed from the first amounts legally available
to it. The director shall allocate in appropriate shares the
financing costs of a financing agreement entered into for the
purpose described in ORS 283.085   { - (4)(a)(D) - }  { +
(3)(d) + } among all state agencies based on their payroll costs.
  (i) Purchase fire and extended coverage or other casualty
insurance for property   { - which is - }  acquired or refinanced
with proceeds of a financing agreement, assign the proceeds
 { - thereof - }  { + of the insurance + } to a lender or trustee
to the extent of their interest  { - , - }  and covenant to
maintain   { - such - }   { + the  + }insurance while the
financing agreement is unpaid, so long as available funds are
sufficient to purchase   { - such - }   { + the  + }insurance.
  (2) As used in this section  { - : - }  { + , + }
    { - (a) 'Financing costs' means the costs or expenses that
the State Treasurer or the Director of the Oregon Department of
Administrative Services determines are necessary or desirable in
connection with entering into financing agreements and
maintaining the certificate of participation program, including
but not limited to paying: - }
    { - (A) Amounts due under financing agreements; - }
    { - (B) Costs and obligations the state incurs in connection
with the exercise of a power granted by this section; and - }
    { - (C) Amounts due in connection with the investment of
proceeds of financing agreements. - }
    { - (b) - }  'state agency' has the meaning given that term
in ORS 286A.730.
  SECTION 5. ORS 286A.001 is amended to read:
  286A.001. As used in this chapter:
  (1) 'Agreement for exchange of interest rates' means a
contract, or an option or forward commitment to enter into a
contract, for the exchange of interest rates that provides for:
  (a) Payments based on levels of or changes in interest rates;
or
  (b) Provisions to hedge payment, rate, spread or similar
exposure including, but not limited to, an interest rate floor or
cap or an option, put or call.
  (2) 'Bond':
  (a) Means a contractual undertaking or instrument of the State
of Oregon to repay borrowed moneys.
    { - (b) Does not mean a financing agreement, as defined in
ORS 283.085, if the principal amount of the agreement is $100,000
or less, or a credit enhancement device. - }
   { +  (b) Does not mean:
  (A) A credit enhancement device.
  (B) An agreement that satisfies the definition of a financing
agreement in ORS 283.085 but is authorized by a provision of law
other than ORS 283.085 to 283.092 or section 1 of this 2013 Act
when the principal amount of the agreement is $100,000 or less.
  (C) A financing agreement entered into under section 1 of this
2013 Act. + }
  (3) 'Counterparty' means an entity with whom the State of
Oregon enters into an agreement for exchange of interest rates.
  (4) 'Credit enhancement device':
  (a) Means a letter of credit, line of credit, standby bond
purchase agreement, bond insurance policy, reserve surety bond or
other device or facility used to enhance the creditworthiness,
liquidity or marketability of bonds or agreements for the
exchange of interest rates; and
  (b) Does not mean a bond.
  (5) 'Credit enhancement device fee' means a payment required to
be made to the provider of a credit enhancement device securing a
bond or securing an agreement for the exchange of interest rates.
  (6) 'General obligation bond' means a bond that constitutes
indebtedness of the state under   { - section 7, - }  Article
XI { + , section 7, + } of the Oregon Constitution, and that is
exempt from the $50,000 limitation on indebtedness set forth in
that section.
  (7) 'Operative document' means a bond declaration, trust
agreement, indenture, security agreement or other document in
which the State of Oregon pledges property as security for an
obligation, as defined in ORS 286A.100.
  (8) 'Refunding bond' means a bond of the State of Oregon that
is issued to refund another bond, regardless of whether the
refunding is on a current, advance, forward delivery, synthetic
or other basis.
  (9) 'Related agency' means the state agency that requests the
State Treasurer to issue bonds pursuant to ORS 286A.025 or for
which the State Treasurer has issued bonds.
  (10) 'Related bond' means a bond for which the State of Oregon
enters into an agreement for exchange of interest rates.
  (11) 'Revenue' means all fees, tolls, excise taxes,
assessments, property taxes and other taxes, rates, charges,
rentals and other income or receipts derived by a state agency or
to which a state agency is entitled.
  (12) 'Revenue bond' means a bond of the State of Oregon that is
not a general obligation bond.
  (13) 'State agency':

  (a) Includes a statewide elected officer, board, commission,
department, division, authority or other entity, without regard
to the designation given to the entity, that is within state
government, as defined in ORS 174.111; and
  (b) Does not include:
  (A) A statewide elected judge;
  (B) The State Treasurer;
  (C) A local government, as defined in ORS 174.116;
  (D) The Oregon Health and Science University;
  (E) A special government body, as defined in ORS 174.117,
except to the extent a special government body must be considered
a state agency in order to achieve the purposes of Article XI-K
of the Oregon Constitution; or
  (F) A semi-independent state agency listed in ORS 182.454,
377.835 or 674.305, or any other state agency denominated by
statute as a semi-independent state agency.
  (14) 'Termination payment' means the amount payable under an
agreement for exchange of interest rates by one party to another
party as a result of the termination, in whole or part, of the
agreement prior to the expiration of the stated term.
  SECTION 6. ORS 367.040 is amended to read:
  367.040. (1) Notwithstanding ORS 283.087   { - (5) - }  { +
(4) + }, an agency may obtain an infrastructure loan  { + the
principal amount of which, when combined with the principal
amount of financing agreements previously entered into for the
same project, is more than $100,000 for the project + }. An
agency may agree to pay the infrastructure loan from any or all
of the available moneys of the agency and may pledge all or any
portion of those moneys to repay the infrastructure loan. An
infrastructure loan of an agency does not constitute a debt of
the state or a lending of the credit of the state within the
meaning of any constitutional or statutory limitation.
  (2) If an infrastructure loan is made to an agency, the terms
of the infrastructure loan contract bind the State of Oregon and
the agency, and the agency shall unconditionally repay the
infrastructure loan from the moneys the agency has pledged in
accordance with the terms of the infrastructure loan contract.
  SECTION 7.  { + Section 1 of this 2013 Act and the amendments
to ORS 283.085, 283.087, 283.089, 286A.001 and 367.040 by
sections 2 to 6 of this 2013 Act apply to financing agreements
entered into on or after July 1, 2013. + }
  SECTION 8.  { + This 2013 Act being necessary for the immediate
preservation of the public peace, health and safety, an emergency
is declared to exist, and this 2013 Act takes effect July 1,
2013. + }
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