77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session
Enrolled
Senate Bill 547
Sponsored by COMMITTEE ON FINANCE AND REVENUE
CHAPTER ................
AN ACT
Relating to capital costs financed with local bonded
indebtedness; amending ORS 198.810, 287A.001, 287A.050,
287A.100, 287A.145, 305.586 and 310.140; and declaring an
emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 310.140, as amended by section 17, chapter 31,
Oregon Laws 2012, is amended to read:
310.140. { + (1) + } The Legislative Assembly finds that
{ - section 11b, - } Article XI { + , section 11b, + } of the
Oregon Constitution, was drafted by citizens and placed before
the voters of the State of Oregon by initiative petition.
{ - Section 11b, - } Article XI { + , section 11b, + } of the
Oregon Constitution, uses terms that do not have established
legal meanings and require definition by the Legislative
Assembly. { - Section 11b, - } Article XI { + , section
11b, + } of the Oregon Constitution, was amended by { - section
11 (11), - } Article XI { + , section 11 (11), + } of the Oregon
Constitution. This section is intended to interpret the terms of
{ - section 11b, - } Article XI { + , section 11b, + } of the
Oregon Constitution, as originally adopted and as amended by
{ - section 11 (11), - } Article XI { + , section 11 (11), + }
of the Oregon Constitution, consistent with the intent of the
people in adopting these provisions, so that the provisions of
{ - section 11b, - } Article XI { + , section 11b, + } of the
Oregon Constitution, may be given effect uniformly throughout the
State of Oregon, with minimal confusion and misunderstanding by
citizens and affected units of government. As used in the revenue
and tax laws of this state, and for purposes of { - section
11b, - } Article XI { + , section 11b, + } of the Oregon
Constitution:
{ - (1) - } { + (a)(A) + } 'Actual cost' means all direct
or indirect costs incurred by a government unit in order to
deliver goods or services or to undertake a capital construction
project. The ' actual cost' of providing goods or services to a
property or property owner includes the average cost or an
allocated portion of the total amount of the actual cost of
making a good or service available to the property or property
owner, whether stated as a minimum, fixed or variable amount.
{ + (B) + } 'Actual cost' includes, but is not limited to,
the costs of labor, materials, supplies, equipment rental,
property acquisition, permits, engineering, financing, reasonable
program delinquencies, return on investment, required fees,
Enrolled Senate Bill 547 (SB 547-A) Page 1
insurance, administration, accounting, depreciation,
amortization, operation, maintenance, repair or replacement and
debt service, including debt service payments or payments into
reserve accounts for debt service and payment of amounts
necessary to meet debt service coverage requirements.
{ - (2) - } { + (b) + } 'Assessment for local improvement'
means any tax, fee, charge or assessment that does not exceed the
actual cost incurred by a unit of government for design,
construction and financing of a local improvement.
{ - (3) - } { + (c) + } 'Bonded indebtedness' means any
formally executed written agreement representing a promise by a
unit of government to pay to another a specified sum of money, at
a specified date or dates at least one year in the future.
{ - (4) 'Capital construction': - }
{ - (a) - } { + (d)(A) 'Capital construction' means, + }
for bonded indebtedness issued prior to December 5, 1996, and for
the proceeds of any bonded indebtedness approved by electors
prior to December 5, 1996, that were spent or contractually
obligated to be spent prior to June 20, 1997, { - means - }
the construction, modification, replacement, repair, remodeling
or renovation of a structure, or addition to a structure, that is
expected to have a useful life of more than one year, and
includes, but is not limited to:
{ - (A) - } { + (i) + } Acquisition of land, or a legal
interest in land, in conjunction with the capital construction of
a structure.
{ - (B) - } { + (ii) + } Acquisition, installation of
machinery or equipment, furnishings or materials that will become
an integral part of a structure.
{ - (C) - } { + (iii) + } Activities related to the capital
construction, including planning, design, authorizing, issuing,
carrying or repaying interim or permanent financing, research,
land use and environmental impact studies, acquisition of permits
or licenses or other services connected with the construction.
{ - (D) - } { + (iv) + } Acquisition of existing
structures, or legal interests in structures, in conjunction with
the capital construction.
{ - (b) - } { + (B) 'Capital construction,' + } for bonded
indebtedness issued on or after December 5, 1996, except for the
proceeds of any bonded indebtedness approved by electors prior to
December 5, 1996, that were spent or contractually obligated to
be spent before June 20, 1997, has the meaning given that term in
{ - paragraph (a) of this subsection, except that 'capital
construction': - } { + subparagraph (A) of this paragraph
except as provided in subparagraphs (C) and (D) of this
paragraph. + }
{ - (A) - } { + (C) 'Capital construction' + } includes
public safety and law enforcement vehicles with a projected
useful life of five years or more { + . + } { - ; and - }
{ - (B) - } { + (D) 'Capital construction' + } does not
include:
(i) Maintenance and repairs, the need for which could be
reasonably anticipated;
(ii) Supplies and equipment that are not intrinsic to the
structure; or
(iii) Furnishings, unless the furnishings are acquired in
connection with the acquisition, construction, remodeling or
renovation of a structure, or the repair of a structure that is
required because of damage or destruction of the structure.
Enrolled Senate Bill 547 (SB 547-A) Page 2
{ + (e)(A) 'Capital costs' means costs of land and of other
assets having a useful life of more than one year, including
costs associated with acquisition, construction, improvement,
remodeling, furnishing, equipping, maintenance or repair.
(B) 'Capital costs' does not include costs of routine
maintenance or supplies. + }
{ - (5) 'Capital improvements': - }
{ - (a) - } { + (f)(A) 'Capital improvements' means, + }
for bonded indebtedness issued prior to December 5, 1996, and for
the proceeds of any bonded indebtedness approved by electors
before December 5, 1996, that were spent or contractually
obligated to be spent before June 20, 1997, { - means - }
land, structures, facilities, personal property that is
functionally related and subordinate to real property, machinery,
equipment or furnishings having a useful life longer than one
year.
{ - (b) - } { + (B) 'Capital improvements,' + } for bonded
indebtedness issued on or after December 5, 1996, except for the
proceeds of any bonded indebtedness approved by electors prior to
December 5, 1996, that were spent or contractually obligated to
be spent before June 20, 1997, has the meaning given that term in
{ - paragraph (a) of this subsection, except that 'capital
improvements': - } { + subparagraph (A) of this paragraph
except as provided in subparagraphs (C) and (D) of this
paragraph. + }
{ - (A) - } { + (C) 'Capital improvements' + } includes
public safety and law enforcement vehicles with a projected
useful life of five years or more { + . + } { - ; and - }
{ - (B) - } { + (D) 'Capital improvements' + } does not
include:
(i) Maintenance and repairs, the need for which could be
reasonably anticipated;
(ii) Supplies and equipment that are not intrinsic to the
structure; or
(iii) Furnishings, unless the furnishings are acquired in
connection with the acquisition, construction, remodeling or
renovation of a structure, or the repair of a structure that is
required because of damage or destruction of the structure.
{ - (6) - } { + (g) + } 'Direct consequence of ownership'
means that the obligation of the owner of property to pay a tax
arises solely because that person is the owner of the property,
and the obligation to pay the tax arises as an immediate and
necessary result of that ownership without respect to any other
intervening transaction, condition or event.
{ - (7)(a) - } { + (h)(A) + } 'Exempt bonded indebtedness'
means:
{ - (A) - } { + (i) + } Bonded indebtedness authorized by a
specific provision of the Oregon Constitution;
{ - (B) - } { + (ii) + } Bonded indebtedness incurred or to
be incurred for capital construction or capital improvements that
was issued as a general obligation of the issuing governmental
unit on or before November 6, 1990;
{ - (C) - } { + (iii) + } Bonded indebtedness incurred or
to be incurred for capital construction or capital improvements
that was issued as a general obligation of the issuing
governmental unit after November 6, 1990, with the approval of
the electors of the issuing governmental unit { + prior to
December 5, 1996 + }; { - or - }
{ - (D) - } { + (iv) + } Bonded indebtedness incurred or to
be incurred for capital construction or capital improvements
Enrolled Senate Bill 547 (SB 547-A) Page 3
{ - , - } if the issuance of the bonds is approved by voters on
or after December 5, 1996, in an election that is in compliance
with the voter participation requirements of { - section 11
(8), - } Article XI { + , section 11 (8), + } of the Oregon
Constitution { - . - } { + , or if the issuance of the bonds is
approved by voters on or after December 4, 2008, in an election
that is in compliance with the voter participation requirements
of Article XI, section 11 (8), of the Oregon Constitution, as
limited by Article XI, section 11k, of the Oregon Constitution;
or
(v) Bonded indebtedness incurred or to be incurred for capital
costs on or after January 1, 2011, if the issuance of the bonds
is approved by voters in an election that is in compliance with
the voter participation requirements of Article XI, section 11
(8), of the Oregon Constitution, as limited by Article XI,
section 11k, of the Oregon Constitution. + }
{ - (b) - } { + (B) + } 'Exempt bonded indebtedness'
includes bonded indebtedness issued to refund or refinance any
bonded indebtedness described in { - paragraph (a) of this
subsection - } { + subparagraph (A) of this paragraph + }.
{ - (8)(a) - } { + (i) + } 'Incurred charge' means a charge
imposed by a unit of government on property or upon a property
owner that does not exceed the actual cost of providing goods or
services and that can be controlled or avoided by the property
owner because:
(A) The charge is based on the quantity of the goods or
services used, and the owner has direct control over the
quantity;
(B) The goods or services are provided only on the specific
request of the property owner; or
(C) The goods or services are provided by the government unit
only after the individual property owner has failed to meet
routine obligations of ownership of the affected property, and
such action is deemed necessary by an appropriate government unit
to enforce regulations pertaining to health or safety.
{ - (b) For purposes of this subsection, an owner of property
may control or avoid an incurred charge if the owner is capable
of taking action to affect the amount of a charge that is or will
be imposed or to avoid imposition of a charge even if the owner
must incur expense in so doing. - }
{ - (c) For purposes of paragraph (a)(A) of this subsection,
an owner of property has direct control over the quantity of
goods or services if the owner of property has the ability,
whether or not that ability is exercised, to determine the
quantity of goods or services provided or to be provided. - }
{ - (9)(a) - } { + (j) + } 'Local improvement' means a
capital construction project, or part thereof, undertaken by a
local government, pursuant to ORS 223.387 to 223.399, or pursuant
to a local ordinance or resolution prescribing the procedure to
be followed in making local assessments for benefits from a local
improvement upon the lots that have been benefited by all or a
part of the improvement:
(A) That provides a special benefit only to specific properties
or rectifies a problem caused by specific properties;
(B) The costs of which are assessed against those properties in
a single assessment upon the completion of the project; and
(C) For which the property owner may elect to make payment of
the assessment plus appropriate interest over a period of at
least 10 years.
Enrolled Senate Bill 547 (SB 547-A) Page 4
{ - (b) For purposes of paragraph (a) of this subsection, the
status of a capital construction project as a local improvement
is not affected by the accrual of a general benefit to property
other than the property receiving the special benefit. - }
{ - (10) 'Maintenance and repairs, the need for which could
be reasonably anticipated': - }
{ - (a) - } { + (k)(A) 'Maintenance and repairs, the need
for which could be reasonably anticipated' + } means activities,
the type of which may be deducted as an expense under the
provisions of the federal Internal Revenue Code, as amended and
in effect on December 31, 2011, that keep the property in
ordinarily efficient operating condition and that do not add
materially to the value of the property nor appreciably prolong
the life of the property { + . + } { - ; - }
{ - (b) - } { + (B) 'Maintenance and repairs, the need for
which could be reasonably anticipated' + } does not
include { + : + }
{ + (i) + } Maintenance and repair of property that is
required by damage, destruction or defect in design, or that was
otherwise not reasonably expected at the time the property was
constructed or acquired, or the addition of material that is in
the nature of the replacement of property and that arrests the
deterioration or appreciably prolongs the useful life of the
property; and
{ - (c) - } { + (ii) + } { - Does not include - } Street
and highway construction, overlay and reconstruction.
{ - (11) - } { + (L) + } 'Projected useful life' means the
useful life, as reasonably estimated by the unit of government
undertaking the capital construction or capital improvement
project, beginning with the date the property was acquired,
constructed or reconstructed and based on the property's
condition at the time the property was acquired, constructed or
reconstructed.
{ - (12) - } { + (m) + } 'Routine obligations of ownership'
means a standard of operation, maintenance, use or care of
property established by law, or if established by custom or
common law, a standard that is reasonable for the type of
property affected.
{ - (13) - } { + (n) + } 'Single assessment' means the
complete assessment process, including preassessment, assessment
or reassessment, for any local improvement authorized by ORS
223.387 to 223.399, or a local ordinance or resolution that
provides the procedure to be followed in making local assessments
for benefits from a local improvement upon lots that have been
benefited by all or part of the improvement.
{ - (14) - } { + (o) + } 'Special benefit only to specific
properties ' shall have the same meaning as 'special and peculiar
benefit' as that term is used in ORS 223.389.
{ - (15) - } { + (p) + } 'Specific request' means:
{ - (a) - } { + (A) + } An affirmative act by a property
owner to seek or obtain delivery of goods or services;
{ - (b) - } { + (B) + } An affirmative act by a property
owner, the legal consequence of which is to cause the delivery of
goods or services to the property owner; or
{ - (c) - } { + (C) + } Failure of an owner of property to
change a request for goods or services made by a prior owner of
the property.
{ - (16) - } { + (q) + } 'Structure' means any temporary or
permanent building or improvement to real property of any kind
Enrolled Senate Bill 547 (SB 547-A) Page 5
that is constructed on or attached to real property, whether
above, on or beneath the surface.
{ - (17) - } { + (r) + } 'Supplies and equipment intrinsic
to a structure' means the supplies and equipment that are
necessary to permit a structure to perform the functions for
which the structure was constructed, or that will, upon
installation, constitute fixtures considered to be part of the
real property that is comprised, in whole or part, of the
structure and land supporting the structure.
{ - (18) - } { + (s) + } 'Tax on property' means any tax,
fee, charge or assessment imposed by any government unit upon
property or upon a property owner as a direct consequence of
ownership of that property, but does not include incurred charges
or assessments for local improvements. As used in this
{ - subsection - } { + paragraph + }, ' property' means real
or tangible personal property, and intangible property that is
part of a unit of real or tangible personal property to the
extent that such intangible property is subject to a tax on
property.
{ + (2) For purposes of subsection (1)(i) of this section, an
owner of property may control or avoid an incurred charge if the
owner is capable of taking action to affect the amount of a
charge that is or will be imposed or to avoid imposition of a
charge even if the owner must incur expense in so doing.
(3) For purposes of subsection (1)(i)(A) of this section, an
owner of property has direct control over the quantity of goods
or services if the owner of property has the ability, whether or
not that ability is exercised, to determine the quantity of goods
or services provided or to be provided.
(4) For purposes of subsection (1)(j) of this section, the
status of a capital construction project as a local improvement
is not affected by the accrual of a general benefit to property
other than the property receiving the special benefit. + }
SECTION 2. ORS 287A.001 is amended to read:
287A.001. As used in this chapter:
(1) 'Advance refunding bond' means a bond all or part of the
proceeds of which are to be used to pay an outstanding bond one
year or more after the advance refunding bond is issued.
(2) 'Agreement for exchange of interest rates' means a
contract, or an option or forward commitment to enter into a
contract, for an exchange of interest rates for related bonds
that provides for:
(a) Payments based on levels 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.
{ - (3) 'Bond': - }
{ - (a) - } { + (3)(a) 'Bond' + } means a contractual
undertaking or instrument of a public body to repay borrowed
moneys.
(b) { + ' Bond' + } does not mean a credit enhancement
device.
(4) 'Capital construction' has the meaning given that term in
ORS 310.140.
{ + (5) 'Capital costs' has the meaning given that term in
ORS 310.140. + }
{ - (5) - } { + (6) + } 'Capital improvements' has the
meaning given that term in ORS 310.140.
{ - (6) 'Credit enhancement device': - }
Enrolled Senate Bill 547 (SB 547-A) Page 6
{ - (a) - } { + (7)(a) 'Credit enhancement device' + }
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 exchange of
interest rates.
(b) { + ' Credit enhancement device' + } does not mean a
bond.
{ - (7) - } { + (8) + } 'Current refunding bond' means a
bond the proceeds of which are to be used to pay or purchase an
outstanding bond less than one year after the current refunding
bond is issued.
{ - (8) - } { + (9) + } 'Forward current refunding' means
execution and delivery of a purchase agreement or similar
instrument under which a public body contracts to sell current
refunding bonds for delivery at a future date that is one year or
more after execution of the purchase agreement or similar
instrument.
{ - (9) - } { + (10) + } 'General obligation bond' means
exempt bonded indebtedness, as defined in ORS 310.140, that is
secured by a commitment to levy ad valorem taxes outside the
limits of sections 11 and 11b, Article XI { + , + } of the Oregon
Constitution.
{ - (10) - } { + (11) + } ' Lawfully available funds'
means revenues or other moneys of a public body including, but
not limited to, moneys credited to the general fund of the public
body, revenues from an ad valorem tax and revenues derived from
other taxes levied by the public body that are not dedicated,
restricted or obligated by law or contract to an inconsistent
expenditure or use.
{ - (11) - } { + (12) + } 'Operative document' means a bond
declaration, trust agreement, indenture, security agreement or
other document in which a public body pledges revenue or property
as security for a bond.
{ - (12) - } { + (13) + } 'Pledge' means:
(a) To create a lien on property pursuant to ORS 287A.310.
(b) A lien created on property pursuant to ORS 287A.310.
{ - (13) - } { + (14) + } 'Public body' means:
(a) A county of this state;
(b) A city of this state;
(c) A local service district as defined in ORS 174.116 (2);
(d) A special government body as defined in ORS 174.117;
(e) Oregon Health and Science University; or
(f) Any other political subdivision of this state that is
authorized by the Legislative Assembly to issue bonds.
{ - (14) - } { + (15) + } 'Refunding bond' means an advance
refunding bond, a current refunding bond or a forward current
refunding bond.
{ - (15) - } { + (16) + } 'Related bond' means a bond for
which the public body enters into an agreement for exchange of
interest rates or obtains a credit enhancement device.
{ - (16) - } { + (17) + } 'Revenue' means all fees, tolls,
excise taxes, assessments, property taxes and other taxes, rates,
charges, rentals and other income or receipts derived by a public
body or to which a public body is entitled.
{ - (17) - } { + (18) + } 'Revenue bond' means a bond that
is not a general obligation bond.
{ - (18) - } { + (19) + } '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
Enrolled Senate Bill 547 (SB 547-A) Page 7
whole or part, of the agreement prior to the expiration of the
stated term.
SECTION 3. ORS 287A.050 is amended to read:
287A.050. { - (1) A city may issue general obligation bonds
to finance capital construction or capital improvements upon
approval of the electors of the city. - }
{ + (1) Upon approval of the electors of a city, the city may
issue general obligation bonds to finance:
(a) Capital construction or capital improvements permitted by
Article XI, sections 11 and 11b, of the Oregon Constitution.
(b) Capital costs permitted by Article XI, section 11L, of the
Oregon Constitution. + }
(2) Unless the city charter provides a lesser limitation, a
city may not issue or have outstanding at the time of issuance
general obligation bonds in a principal amount that exceeds three
percent of the real market value of the taxable property within
its boundaries, calculated as provided in ORS 308.207.
(3) The limitation described in subsection (2) of this section
does not apply to general obligation bonds issued { + :
(a) + } To finance the costs of local improvements assessed and
paid for in installments under statutory or charter authority
{ - or - } { + .
(b) + } To finance capital construction or capital improvements
{ + permitted by Article XI, sections 11 and 11b, of the Oregon
Constitution, or to finance capital costs permitted by Article
XI, section 11L, of the Oregon Constitution, + } for:
{ - (a) - } { + (A) + } Water supply, treatment or
distribution;
{ - (b) - } { + (B) + } Sanitary or storm sewage collection
or treatment;
{ - (c) - } { + (C) + } Hospitals or infirmaries;
{ - (d) - } { + (D) + } Gas, power or lighting; or
{ - (e) - } { + (E) + } Off-street motor vehicle parking
facilities.
SECTION 4. ORS 287A.100 is amended to read:
287A.100. { - (1) Unless the county charter expressly
provides otherwise, a county may issue general obligation bonds
to finance capital construction or capital improvements upon
approval of the electors of the county. - }
{ + (1) Unless the county charter expressly provides
otherwise, upon approval of the electors of a county, the county
may issue general obligation bonds to finance:
(a) Capital construction or capital improvements permitted by
Article XI, sections 11 and 11b, of the Oregon Constitution.
(b) Capital costs permitted by Article XI, section 11L, of the
Oregon Constitution. + }
(2) Unless the county charter provides a lesser limitation, a
county may not issue or have outstanding at the time of issuance
general obligation bonds in a principal amount that exceeds two
percent of the real market value of the taxable property in the
county, calculated as provided in ORS 308.207.
SECTION 5. ORS 287A.145 is amended to read:
287A.145. (1) If a court of competent jurisdiction determines
that the proceeds of an issue of general obligation bonds have
been used by a public body for expenditures that are not
{ + capital costs permitted by Article XI, section 11L, of the
Oregon Constitution, or that are not costs of + } capital
construction or capital improvements { + permitted by Article
XI, sections 11 and 11b, of the Oregon Constitution + }, the
court may order the public body to:
Enrolled Senate Bill 547 (SB 547-A) Page 8
(a) Replace the misspent proceeds with interest, on a
reasonable schedule determined by the court, from moneys other
than the tax revenues that the public body levies to pay the debt
service; and
(b) Use the replaced moneys { - for - } { + , as
appropriate, for capital costs, for the costs of + } capital
construction or capital { + improvements + } { - improvement
expenditures - } or to pay the debt service.
(2) If the public body fails to comply with an order to replace
the misspent proceeds or acknowledges that the public body is
unable to replace the misspent proceeds, the court may determine
that a portion of the future levies to pay the debt service is
subject to the limits of { - sections 11 and 11b, - } Article
XI { + , sections 11 and 11b, + } of the Oregon Constitution, by
calculating the amount of the tax revenues that are necessary to
pay the principal and interest on the bonds that is allocable to
the misspent proceeds.
(3) An action may not be filed or maintained against a public
body because of an alleged expenditure of the bond proceeds of
general obligation bonds for purposes other than { + capital
costs, + } capital construction or capital improvements, if the
misspent moneys are less than $5,000.
SECTION 6. ORS 198.810 is amended to read:
198.810. (1) The county board shall approve, modify or reject a
petition for formation using only the criteria set forth in ORS
198.805.
(2) If the county board approves the petition for formation, as
presented or as modified, or if the boundary commission considers
the petition for formation pursuant to ORS 198.800 (1)(a),
approves the petition, as presented or as modified, and transmits
its approval to the county board in accordance with ORS 199.480,
the county board shall enter an order so declaring. The order
shall set forth the name of the district and the boundaries as
determined by the board or by the boundary commission. The order
shall also fix a place, and a time not less than 20 nor more than
50 days after the date of the order, for a final hearing on the
petition. The order shall declare that if written requests for an
election are not filed as provided by subsection (3) of this
section, the board, at the time of the final hearing, will enter
its order creating the district. The board shall cause notice of
the hearing to be given by publication.
(3) An election may not be held unless written requests for an
election are filed at or before the hearing by not less than 15
percent of the electors or 100 electors, whichever is the lesser
number, registered in the proposed district.
(4) Notwithstanding subsections (2) and (3) of this section, if
the petition for formation includes:
(a) A permanent rate limit for operating taxes for the proposed
district and the petition is approved by the county board or
boundary commission, as presented or as modified, the county
shall hold an election on the question of forming the district.
(b) In addition to the permanent rate limit for operating
taxes, a separate ad valorem tax for bonded indebtedness for
capital construction { + , capital improvement or capital costs,
as those terms are defined in ORS 310.140, + } within the
proposed district and the petition is approved by the county
board, as presented or as modified, the county shall hold an
election on the question of incurring the bonded indebtedness
when the election on the question of formation of the district is
held. The question on incurring bonded indebtedness may be
Enrolled Senate Bill 547 (SB 547-A) Page 9
approved only if electors approve formation of the district, and
the ballot measure must clearly state that the bonded
indebtedness may be approved only if electors approve formation
of the district.
(5) Notwithstanding subsection (3) of this section and ORS
198.815, an order of a boundary commission authorizing a county
service district established to provide sewage works to also
provide drainage works shall be effective upon the filing of the
order with the county board. The order of the boundary commission
is subject to referendum by the electors of the county service
district in the manner provided for district measures under ORS
255.135 to 255.205. If the order of a boundary commission is
referred to the electors, the order does not take effect until
the order is approved by a majority of the votes cast on the
question and the results of the election are certified. The
question in the ballot title for a measure referred under this
subsection shall be worded so that an affirmative response to the
question corresponds to a vote in favor of authorizing the county
service district to provide drainage works.
SECTION 7. ORS 305.586 is amended to read:
305.586. { + (1) As used in this section:
(a) 'Capital construction' has the meaning given that term in
ORS 310.140.
(b) 'Capital costs' has the meaning given that term in ORS
310.140.
(c) 'Capital improvements' has the meaning given that term in
ORS 310.140. + }
{ - (1) - } { + (2) + } The Legislative Assembly finds
that, when general obligation bonds are issued by a government
unit to finance { + capital costs or to finance + } the
{ - cost - } { + costs + } of capital construction or
{ + capital + } improvements, subjecting the taxes imposed to
pay the principal and interest on that bonded indebtedness to the
limits of { - section 11b (1), - } Article XI { + , section
11b (1), + } of the Oregon Constitution, reduces the credit
quality of the bonds, injures bondholders and increases the cost
of borrowing for all local governments in Oregon. The Legislative
Assembly also finds that it is in the best interests of the State
of Oregon and local governments in Oregon to ensure that, if a
local government body expends proceeds from { - such - }
{ + the + } bonds for other than { + capital costs, + } capital
construction or { + capital + } improvements { + , whichever is
an authorized use of proceeds of the bonds + }, the holders of
the bonds, who are innocent with regard to { - such - }
{ + the + } expenditure, will not suffer impairment of their
security and interest in the bonds as a result.
{ - (2) - } { + (3) + } It is the policy of the State of
Oregon and a matter of statewide concern that, notwithstanding
ORS 305.587 (1) and 305.589 (8), if in a proceeding commenced
under ORS 305.583 or 305.589, the Oregon Tax Court finds that the
proceeds of general obligation bonds issued for capital
construction or { + capital + } improvements { - under section
11b (3)(b), Article XI of the Oregon Constitution, - } { + as
defined in Article XI, section 11 (13), of the Oregon
Constitution, or general obligation bonds issued for capital
costs, as defined in Article XI, section 11L, of the Oregon
Constitution, + } have been expended for purposes other than
{ + capital costs or the costs of + } capital construction
or { + capital + } improvements, the court shall endeavor, to
the fullest extent practicable and consistent with equitable
Enrolled Senate Bill 547 (SB 547-A) Page 10
principles, to fashion a remedy that does not impair the security
or value of the bonds to the bondholders and does not prejudice
the ability of the local government body to satisfy its
obligations under the bonds.
{ - (3) - } { + (4) + } In addition, the court shall
fashion any remedy in a manner that takes into account the
financial capacity and practical alternatives available to the
local government body, and shall ensure that the remedy is
proportional to, and restricted to correcting the amount of, any
unlawful expenditure of bond proceeds. To the fullest extent
possible, the court shall avoid any remedy that either
invalidates, in whole or in part, the bonds or taxes levied or to
be levied for payment of the bonds, or that makes any amount of
the bonds for which the proceeds lawfully were expended subject
to the limits of { - section 11b (1), - } Article XI { + ,
section 11b (1), + } of the Oregon Constitution.
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. + }
----------
Passed by Senate April 29, 2013
.............................................................
Robert Taylor, Secretary of Senate
.............................................................
Peter Courtney, President of Senate
Passed by House June 12, 2013
.............................................................
Tina Kotek, Speaker of House
Enrolled Senate Bill 547 (SB 547-A) Page 11
Received by Governor:
......M.,............., 2013
Approved:
......M.,............., 2013
.............................................................
John Kitzhaber, Governor
Filed in Office of Secretary of State:
......M.,............., 2013
.............................................................
Kate Brown, Secretary of State
Enrolled Senate Bill 547 (SB 547-A) Page 12